Regular readers of my blog may recall that my post last week about the ABA Premier Speaker Series webinar on class actions described how Mark Perry had made an interesting point that courts should focus more intently on Rule 23(c)(1)(B).  This is a sometimes overlooked subsection of Rule 23 that requires an order certifying a class to “define the class and the class claims, issues, or defenses . . . .”  Coincidentally enough, only a few days after Mark Perry’s comments, the Seventh Circuit issued a new decision focusing on this very issue, an issue of first impression in that circuit. 

In Ross v. RBS Citizens, N.A., No. 10-3848, 2012 U.S. App. LEXIS 1478 (7th Cir. Jan. 27, 2012), the court strongly enforced Rule 23(c)(1)(B) as written, requiring district courts to specifically and precisely describe each claim, issue or defense to be treated on a class basis.  My takeaway is that this decision provides insurers and other defendants with an important angle to focus the court on the importance of specific issues and defenses that they do not believe can be tried on a class basis, and thereby strengthen their arguments in opposition to certification.  Andrew Trask made a similar point in a recent post about this case on his Class Action Countermeasures blog.  I think this case also demonstrates that the importance of giving careful thought at the class certification stage to how the defendant would try a class action and all of the defenses you would want to raise at trial.  There is some risk that if a defense is not included in a class certification order that is detailed as provided for in Rule 23(c)(1)(B), the court might not include the defense in a trial plan or allow it to be presented at trial.  This new opinion also had a somewhat troubling footnote regarding the applicability of the “Trial by Formula” portion of the Supreme Court’s opinion in Wal-Mart v. Dukes, which I address below.

Ross was a putative employment class action alleging violations of the Fair Labor Standards Act and Illinois Minimum Wage Law, alleging improper failure to pay overtime compensation.  The district court certified a class, and the lead issue raised on appeal was a claimed failure by the district court to comply with Rule 23(c)(1)(B).  After Wal-Mart v. Dukes was decided by the Supreme Court, the Seventh Circuit also asked the parties to brief its applicability to the case.

Rule 23(c)(1)(B)

The Seventh Circuit concluded that a “precise definition of the class, claims, issues and defenses” was necessary: (1) under the plain text of Rule 23(c)(1)(B); (2) in order to provide an appropriate basis for appellate review; and (3) so that parties can adequately prepare for a class action trial.  The court adopted the Third Circuit’s statement that a decision certifying a class is required to include:

(1) a readily discernible, clear, and precise statement of the parameters defining the class or classes to be certified, and

(2) a readily discernible, clear, and complete list of the claims, issues or defenses to be treated on a class basis.

Id. at *11 (quoting Wachtel ex rel. Jesse v. Guardian Life Ins. Co. of Am., 453 F.3d 179, 187-88 (3d Cir. 2006)).

The Seventh Circuit found this test satisfied in Ross because the district judge had adequately defined the class as everyone who had worked for the defendant bank in Illinois in certain positions over a three-year period, and had adequately defined the issues the plaintiffs sought to pursue regarding an allegedly unlawful overtime policy, and the defense that employees were exempt.  The opinion did not describe in much detail what the defendant claimed the deficiencies in the trial court order were, but the Seventh Circuit found the defendant’s contentions to be “merely issues of trial strategy or proof, rather than overall claims or issues necessitating resolution.”  Id. at *17.

Wal-Mart v. Dukes

On the issue of whether the district court’s finding on commonality satisfied the new standard in Wal-Mart v. Dukes, the Seventh Circuit held that commonality was satisfied.  It explained that the plaintiffs “maintain a common claim that [defendant] broadly enforced an unlawful policy denying employees earned-overtime compensation.  This unofficial policy is the common answer that potentially drives the resolution of this litigation.”  Id. at *23.  Not a surprising result on the facts of this case, a much smaller and much more focused case than Wal-Mart.

I was somewhat troubled, however, by the following footnote in the opinion:

Misreading Dukes, Charter One also contends that it has a statutory right to present its affirmative exemption defenses on an individualized basis, and thus, there is no commonality. However, the Dukes passage the defendant cites in support of its argument discusses how the Ninth Circuit improperly certified a Rule 23(b)(2) class that sought equitable relief. In so ruling, the Court struck down the Ninth Circuit’s attempt to circumvent 42 U.S.C. § 2000e-5(g)(2)(A) by holding that Wal-Mart had a statutory right to avoid equitable damages by showing that “it took an adverse employment action for any reason other than discrimination.” Dukes, 131 S. Ct. at 2560-61 (emphasis added). Charter One has no such statutory right because both classes are seeking only monetary relief through a Rule 23(b)(3) class.

Id. at *21 n.7. 

Most commentators have been interpreting this part of the Wal-Mart opinion as having a broader reach than merely applying to equitable claims sought to be certified under Rule 23(b)(2).  The Supreme Court wrote that “[b]ecause the Rules Enabling Act forbids interpreting Rule 23 to ‘abridge, enlarge or modify any substantive right,’ a class cannot be certified on the premise that Wal–Mart will not be entitled to litigate its statutory defenses to individual claims.”  Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011) (citations omitted).  As I, and a number of other commentators have read this, the Supreme Court was saying that, because the procedural mechanism of a class action cannot modify substantive rights, a trial court cannot disregard a defendant’s right to present individual defenses where it would have that right under applicable substantive law.  The Supreme Court’s rationale did not seem narrowly applicable only to equitable claims.  I am not sure if the Seventh Circuit thoroughly considered this Rules Enabling Act issue in its footnote.  The issue is likely to arise in a number of future cases, and time will tell.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.