Judge Posner has been quite prolific in writing opinions on class certification.  His latest one addresses under what circumstances a Rule 23(b)(2) class can seek “incidental” monetary relief after Wal-Mart v. Dukes.  

In Johnson v. Meriter Health Servs. Employee Retirement Plan, No. 12-2216, 2012 U.S. App. LEXIS 24854 (7th Cir. Dec. 4, 2012), the Seventh Circuit reviewed on an interlocutory appeal the certification of a class action in an ERISA case.  The case involved some relatively complicated issues (at least mathematically) about the calculation of pension benefits, principally for early retirees, under an employee benefit plan.  The district court certified 10 subclasses, each of which sought “a declaration of the rights of its members under the plan and an injunction directing that the plan’s records be reformed to reflect those rights.”  Id. at *3.  In affirming the certification order, Judge Posner made several points that potentially could have broader applicability: 

  • The Seventh Circuit concluded that it was permissible to seek declaratory relief in this case even where it could be characterized as equivalent to seeking damages.  Judge Posner wrote that “a declaration is a permissible prelude to a claim for damages, that is, monetary relief for a concrete harm already suffered.”  Id. at *12.  In addition, class members could “seek reformation of the Meriter plan as a basis for claiming additional pension benefits” and “[t]hese benefits would not be damages.  They would be the automatic consequence of a judicial order revising the Meriter plan to make it more favorable to participants.”  Id.  This seems contrary to some other cases that have refused to allow certification under Rule 23(b)(2) when the declaratory or injunctive relief being sought is essentially equivalent to a damages claim in disguise. 
  • Judge Posner read Wal-Mart as allowing “incidental” monetary damages under Rule 23(b)(2), although he recognized it was not entirely clear whether the Supreme Court would allow them.  He concluded that Wal-Mart articulated two limitations on monetary damages.  The first one is that the rule “does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.”  Id. at *14 (quoting Wal-Mart, 131 S. Ct. at 2557).  This limitation, however, was “inapplicable to a subclass all of whose members have the same claim,” which was largely the case in JohnsonId. at *15. 
  • The second limitation Wal-Mart places on Rule 23(b)(2) is that “it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.”  Id. at *14-15 (quoting Wal-Mart, 131 S. Ct. at 2557).  The Seventh Circuit found this limitation inapplicable in Johnson because the subclasses were seeking reformation of the plan, and after that was obtained (if it were obtained), it would simply be a relatively ministerial task of applying the terms of the reformed plan to the individual class member’s employment records in order to compute monetary relief.  The court concluded that this would be sufficiently “incidental” to the declaratory relief to be permissible under Rule 23(b)(2).  Id. at *18.  On this point, I’m not sure that the Supreme Court majority who signed onto the Wal-Mart opinion would agree that Judge Posner’s formulation is something different from an “individualized award of monetary damages.”  Even if it is a relatively straightforward calculation, isn’t that still “individualized”? 
  • The Seventh Circuit also concluded that, because of potential harm to class members if averaging was used rather than individual determinations, either: (a) notice should be provided with an opportunity to opt out (notice is optional under Rule 23(b)(2)); or (b) there should be bifurcation, with the (b)(2) proceeding on liability first, and the (b)(3) proceeding on damages second.  Id. at *19.  Judge Posner noted that, under the Seventh Amendment, such bifurcation might not be appropriate in a case in which a jury trial was demanded, but was proper where the case was set for a bench trial.  Id. at *20. 

So what does this mean for insurance class actions?  In insurance cases it is not uncommon to see claims for injunctive and declaratory relief under insurance policies or with respect to insurance practices, and occasionally claims for reformation are made.  So to the extent this opinion suggests that such declaratory relief can be sought as a “prelude” to damages, we might see more plaintiffs’ attorneys taking that kind of approach in an insurance case.  But there are other cases that disagree with this approach.  Where the rubber is likely to meet the road is on the issue of whether the declaratory or injunctive relief being sought would apply across an entire class or subclass, or instead would require individual application, and how individualized that analysis would need to be.

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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.