"CARVING AT THE JOINTS": USING ISSUE CLASSES TO REFRAME CONSUMER CLASS ACTIONS
Jenna C. Smith
Abstract: Achieving class certification in consumer litigation is a highly controversial and greatly debated area of civil procedure. Historically, certification under Federal Rule of Civil Procedure 23(b)(3) has been difficult to achieve due to the tension between the presence of individual issues and Rule 23(b)(3)'s predominance, superiority, and management considerations. The future of certification for Rule 23(b)(3) classes was further put in question with the United States Supreme Court's landmark decision in Wal-Mart v. Dukes in 2011, which enhanced the level of scrutiny courts apply at the Rule 23(a) level of analysis. The Court's 2013 decisions in Comcast Corp. v. Behrend and Amgen v. Connecticut Retirement Plan and Trust Fund further highlight the difficulties Rule 23(b)(3) classes face in achieving certification. Despite these developments, there are signs of continued vitality. In 2012, the Seventh Circuit allowed issue class certification in a large employment discrimination class, notwithstanding the presence of individual issues in McReynolds v. Merrill Lynch . McReynolds placed Rule 23(c)(4) (a historically seldom used subsection of Rule 23) in the spotlight as a means of allowing consumer claims to achieve certification in the post-Dukes era. This Comment explores the use of issue class certification under Rule 23(c)(4) and attempts to clarify when issue class certification is appropriate, with a particular focus on consumer class actions. By breaking complex issues into smaller, more manageable pieces, Rule 23(c)(4) allows litigants to frame common issues for class treatment and avoid an unnecessarily rigorous analysis of the merits of a claim at the certification stage.
INTRODUCTION
The efficacy of using class actions to pursue mass consumer claims is the subject of much controversy and great uncertainty.(fn1) Courts are frequently reluctant to certify mass consumer classes because of the tension between Federal Rule of Civil Procedure 23 and the prevalence of individual issues.(fn2) The future of mass-consumer class actions was further called into question in the landmark decision, Wal-Mart Stores, Inc. v. Dukes ,(fn3) in which the United States Supreme Court set forth a more stringent test for satisfying Rule 23(a)'s commonality requirement.(fn4) As one commentator noted, Dukes "raises more questions than it answers."(fn5)
In light of the heightened standard for achieving certification post-Dukes, the use of issue classes under Rule 23(c)(4) is an increasingly attractive option for litigants.(fn6) Rule 23(c)(4) allows a court to divide litigation into smaller pieces, a process often referred to as bifurcation.(fn7) Most commonly, courts employ bifurcation first to decide the issue of liability, followed by determinations of individual damages in follow-on proceedings.(fn8) While bifurcation of a case between liability and damages is the most common use of Rule 23(c)(4) and the focus of most legal scholarship on the issue, "there is no rule that if a trial is bifurcated, it must be bifurcated between liability and damages."(fn9) Increasingly, the debate among courts has shifted to the use of Rule 23(c)(4) to isolate a threshold issue for class treatment-even if class members' suits might ultimately need to be adjudicated individually-as long as the resolution of the class issue will substantially advance the disposition of the litigation as a whole.(fn10)
The reinvigoration of Rule 23(c)(4) is in tension not only with traditional perceptions of Rule 23 classes but also with specific provisions of Rule 23(a) and Rule 23(b). This textual tension, combined with the relative paucity of case law interpreting Rule 23(c)(4), has resulted in a three-way circuit split.(fn11) The majority of circuits, including the Second, Sixth, Seventh, and Ninth, interpret Rule 23(c)(4) expansively, and will certify an issue class even if the claim as a whole does not satisfy Rule 23.(fn12) The Fifth Circuit rejects this construction of Rule 23(c)(4) and instead maintains that courts may certify an issue class only if the claim as a whole merits class-wide treatment.(fn13) The Third Circuit follows a slightly different approach, and applies a multi-factor balancing test to determine whether Rule 23(c)(4) issue classes should be certified.(fn14)
The Seventh Circuit's decision in McReynolds v. Merrill Lynch, Pierce, Fenner and Smith, Inc. (fn15) is perhaps the most high-profile case to endorse a liberal use of Rule 23(c)(4) post-Dukes .(fn16) In McReynolds, 700 African-American employees sued Merrill Lynch, alleging that two specific company policies had a disparate impact on racial minorities.(fn17) While the individual nature of damage determinations would likely have prevented the class from satisfying Rule 23(b)(3)'s predominance requirement, the Seventh Circuit approved the use of Rule 23(c)(4) to certify the class under Rule 23(b)(2) only on the issue of liability.(fn18) Writing for the court, Judge Posner found that the greatest efficiency and fairness would be achieved by "carving at the joints" of the parties' dispute and resolving the issue of liability on a class-wide basis.(fn19) While some courts and commentators view McReynolds as a direct contradiction of Dukes ,(fn20) others view it as a straightforward application of Rule 23(c)(4)(fn21) and a practical model for future consumer class actions to follow.(fn22) The Supreme Court denied certiorari in McReynolds, thereby leaving the boundaries of Rule 23(c)(4) unsettled.(fn23)
In light of recent Supreme Court jurisprudence, Rule 23(c)(4) is increasingly relevant as a way to avoid a more searching inquiry into the merits of a case at the certification stage.(fn24) In Amgen Inc. v. Connecticut Retirement Plans and Trust Funds (fn25) the Court suggested that it would not continue to endorse a more exacting inquiry into the merits of a case beyond what the text of Rule 23 requires.(fn26) However, just a month later, in Comcast Corp. v. Behrend ,(fn27) the Court relied heavily on Dukes in determining that plaintiffs must show that damages are capable of measurement on a class-wide basis in order to satisfy Rule 23(b)(3)'s predominance requirement.(fn28) Consequently, it is unclear whether Dukes should be viewed as the high-water mark of hostility toward class certification, or whether the Court will continue to ratchet up class certification requirements.
Despite recent hostility toward certification of large consumer classes, for many types of consumer cases, the class action is the only appropriate mechanism for relief.(fn29) Especially where consumers have incurred relatively minor harm or damages, filing individual litigation is neither economically feasible nor an efficient use of judicial resources.(fn30)
Additionally, class actions promote several important public policies. By aggregating claims into a single lawsuit, class actions avoid duplicative litigation and prevent inconsistent results-thereby promoting judicial economy and maximizing efficiency.(fn31) Class actions provide social utility by allowing an aggregation of private individuals to enforce laws, where the cost of litigation and relatively minor amount of recovery might prevent the claims from moving forward on an individual basis.(fn32) Additionally, if a class action is successful at the certification stage, the threat of bearing the cost of the harm causes many defendants to settle immediately, which can have powerful deterrent effects.(fn33)
This Comment explores the viability of issue class certification under Rule 23(c)(4) as a means of achieving certification in consumer litigation. Part I of this Comment explains the requirements for achieving certification under Rule 23. Part II highlights the importance of achieving a uniform interpretation of Rule 23(c)(4) in the wake of expanded federal jurisdiction over class actions. Part III discusses how recent Supreme Court decisions will impact the way courts interpret Rule 23. Part IV discusses the viability of issue class certification in the wake of Dukes , with a particular focus on the Seventh Circuit's decision in McReynolds . Part V argues that other circuits should adopt the expansive interpretation of Rule 23(c)(4) that is in favor in the majority of federal circuits. Part VI discusses the limitations of issue class certification and provides guidance as to when issue class certification might not be appropriate.
I. TO ACHIEVE CERTIFICATION, A PUTATIVE CLASS MUST SATISFY RULE 23(A)'S FOUR PREREQUISITES, AS WELL AS ONE SUBCATEGORY OF RULE 23(B)
The class action mechanism is an important procedural device that allows courts to resolve common claims impacting many individuals in a single action.(fn34) Rule 23 establishes the requirements for certification of a federal class action.(fn35) In order to achieve certification, which is required before class-action litigation can commence, a class must first meet the four requirements of Rule 23(a) and must also meet the separate (though overlapping) requirement for any one of Rule 23(b)'s subsections.(fn36) The four Rule 23(a) prerequisites are numerosity,(fn37) commonality,(fn38)typicality,(fn39) and adequacy of representation.(fn40) Prior to Dukes, most courts interpreted Rule 23(a)'s prerequisites liberally.(fn41) The rationale behind this approach was that the...
