Issue Certification under Rule 23(c)(4) Experiences a Resurgence Despite a Circuit Split

The Three Paths to Class Certification

Rule 23(a) sets forth the several threshold requirements for any class to be certified: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of the proposed class representatives. Plaintiffs who meet these requirements may seek class certification under Rule 23(b)(2), Rule 23(b)(3), or Rule 23(c)(4).

Rule 23(b)(2) provides for certification of a class seeking injunctive or declaratory relief—rather than damages—and requires a plaintiff to show only that the defendant “acted or refused to act on grounds that apply generally to the class.” Certification of an injunctive class under this provision is inappropriate where the class is primarily or predominantly seeking monetary relief or where the request for injunctive relief “merely serves as a bootstrap for a claim of monetary damages.” In re Monumental Life Ins. Co., 365 F.3d 408, 415 (5th Cir. 2004). In other words, any monetary relief sought must be merely “incidental.” Id.

Certification under Rule 23(b)(3), in contrast, allows plaintiffs to seek money damages on a class-wide basis. Rule 23(b)(3) requires a plaintiff to show “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other methods for fairly and efficiently adjudicating the controversy” in order to obtain certification. These two requirements set out in Rule 23(b)(3) are commonly known as the “predominance” and “superiority” requirements. For obvious reasons, this is by far the most common type of class that plaintiffs seek to certify.

Rule 23(c)(4) provides for the third, and final, type of class certification: “When appropriate, an action may be brought or maintained as a class action with respect to particular issues.” This type of class certification is known as “issue certification.” Issue certification is generally used to encourage the resolution of common liability issues, where other issues in the case (such as reliance or damages) are not susceptible to common resolution. When certifying a class under Rule 23(c)(4), the court will expressly articulate the precise issues for which certification is granted. Issue certification can be a useful tool where individual plaintiffs are likely to have substantial damages claims that can be pursued after the certified liability issues are decided. The mechanism may not be so useful where class members have relatively small individual claims.

Is Predominance Required for Issue Certification?

Over the past few decades, a circuit split has emerged over whether Rule 23(b)(3)’s predominance requirement applies to the issue certification analysis.

The Fifth Circuit and the Eleventh Circuit have adopted a “narrow” view, requiring that Rule 23(b)(3)’s predominance requirement be satisfied for the cause of action as a whole in order for issue certification to be granted. See Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996) (“The proper interpretation of the interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that allows courts to sever the common issues for a class trial.”); Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1176 (11th Cir. 2010).

The majority of the circuits, however, have rejected this view and adopted instead the “broad” view that permits issue certification in the absence of a finding that common issues predominate over individual issues with respect to the action as a whole. See Martin v. Behr Dayton Thermal Prods. LLC, 896 F.3d 405, 411–16 (6th Cir. 2018). For instance, in Martin, the court held that “Rule 23(c)(4) contemplates using issue certification to retain a case’s class character where common questions predominate within certain issues and where class treatment of those issues is the superior method of resolution” and that “[a] requirement that predominance must first be satisfied for the entire cause of action would undercut the purpose of Rule 23(c)(4) and nullify its intended benefits.” Id. at 413; see also In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006) (permitting issue certification “regardless of whether the claim as a whole satisfies Rule 23(b)(3)’s predominance requirement”); Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) (“Even if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4) and proceed with class treatment of these particular issues.”); see also McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 491 (7th Cir. 2012); Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 439–45 (4th Cir. 2003).

The Supreme Court declined to resolve this split as recently as April 2019. See Martin v. Behr Dayton Thermal Prods. LLC, No. 18-472, 2019 WL 1231762 (U.S. Mar. 18, 2019) (denying certiorari). Thus, whether and to what degree a plaintiff must convince a court that the predominance requirement is satisfied, even in the absence of a request for certification under Rule 23(b)(3), depends on where the case is pending.

Issue Certification Must Advance the Litigation as a Whole

Even in circuits that have adopted the “broad” approach, courts will deny Rule 23(c)(4) issue certification where it does not “significantly advance the resolution of the underlying case, thereby achieving judicial economy and efficiency.” D.C., by and through Garter v. Cty. of San Diego, 783 F. App’x 766, 767–68 (9th Cir. Nov. 5, 2019) (quoting Valentino, 97 F.3d at 1229) (affirming denial of issue certification where individual issues regarding injury would “potentially require tens of thousands of trials” even if common liability issues were resolved on a class basis); see also Rahman v. Mott’s LLP, 693 F. App’x 578, 579–80 (9th Cir. July 5, 2017) (affirming denial of issue certification where plaintiff failed to show that it would “materially advance resolution of the entire case”); Dungan v. Acad. at Ivy Ridge, 344 F. App’x 645, 647–48 (2d Cir. Aug. 20, 2009) (affirming denial of issue certification where “the significance of individualized issues of reliance, causation, and damages . . . meant that issue certification would not meaningfully reduce the range of issues in dispute and promote judicial economy”) (quotations omitted)). This means that even though courts applying the “broad” approach may not require predominance, the issues to be certified still need to be sufficiently central to the action to justify class treatment.

Courts Are Increasingly Raising the Possibility of Issue Certification Sua Sponte

Counsel for plaintiffs in putative class actions typically do not pursue Rule 23(c)(4) issue certification—possibly because of the uncertainty surrounding its availability or requirements, but more likely due to a desire to pursue monetary relief on a class-wide basis. At least twice in the past few months, however, courts have raised the possibility of issue certification on their own—without any request from the plaintiff—as an alternative to certification under Rule 23(b). See, e.g., In re Foreign Exch. Benchmark Rates Antitrust Litig., 2019 WL 4171032, at *10 (denying plaintiffs’ motion for class certification under Rule 23(b)(3), but granting issue certification sua sponte with respect to two liability issues); In re FCA US LLC Monostable Elec. Gearshift Litig., 2019 WL 6696110, at *10–16 (identifying sua sponte three “discrete issues apparent from the record that are suitable subjects for class-wide adjudication” while denying class certification under Rule 23(b)(3)). Thus, practitioners should be aware that certification of an issue class is a possibility even if it is never raised or briefed by the parties.

Strategic Considerations

Counsel for both plaintiffs and defendants in class actions should consider and analyze the possibility of issue certification alongside the potential for certification of an injunctive or damages class when developing case strategy. In light of the Supreme Court’s reluctance to resolve the circuit split on the issue of predominance, counsel should also be aware of whether their jurisdiction follows the “narrow” or “broad” approach.

Julie C. Webb and J. Matthew Goodin are partners with Locke Lord LLP in Chicago, Illinois.

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