976 F.3d 664
6th Cir.2020Background
- This MDL consolidates ~1,300 public-entity lawsuits (cities/counties) alleging opioid manufacturers, distributors, and pharmacies engaged in a nationwide scheme causing municipal harms and costs.
- Plaintiffs moved to certify a nationwide "negotiation class" under Fed. R. Civ. P. 23(b)(3): ~34,458 municipal entities would be class members unless they opted out within 60 days.
- A negotiation class (as proposed) would be certified before any settlement; members would (1) have a county-level allocation formula available pre-opt-out and (2) vote on any eventual settlement (75% supermajority across six voting groups) and likely not get a second opt-out opportunity.
- The district court certified the negotiation class, finding Rule 23(a) and 23(b)(3) requirements met as to certain federal claims (RICO and CSA-related issues), and that the device would promote global settlement.
- Distributor and pharmacy defendants and several cities objected and obtained permission to appeal under Rule 23(f). The Sixth Circuit majority reversed certification; Judge Moore dissented.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 23 authorizes certification of a novel "negotiation class" (distinct from litigation or settlement classes). | Rule 23's text and structure do not expressly forbid negotiation classes; courts have flexibility to certify classes for varied purposes and negotiation fits within settlement-related functions. | Rule 23's text and structure authorize litigation and (post-proposal) settlement classes but do not authorize certification solely for pre-settlement negotiation; negotiation class invents a new category outside the Rule. | Reversed: Rule 23 does not authorize the negotiation-class device as certified; court may not create a new form of class action untethered to the Rule’s text and structure. |
| Appellate standing of objecting defendants and opt-out cities to challenge certification under Rule 23(f). | Plaintiffs argued the appeal was improvidently granted or that defendants lack appellate standing because they are not compelled to deal with the class. | Defendants and objectors asserted they are "aggrieved"—the negotiation class alters the MDL settlement landscape and pressures defendants, so they have a personal stake. | Held: Defendants and objecting cities have appellate standing; the motions panel properly allowed interlocutory appeal, and the Sixth Circuit exercised review. (Majority rejects plaintiffs’ prematurity/standing objections.) |
| Whether the district court satisfied Rule 23(a) and 23(b)(3) (numerosity, commonality, typicality, adequacy; predominance and superiority) when certifying the negotiation class based on federal RICO/CSA issues while negotiations could cover broader state-law claims. | Plaintiffs: The RICO and CSA issues are common and predominate; Rule 23(c)(4) (issue classes) permits class treatment of particular issues and supports certification for negotiation. | Defendants: The court ignored myriad state-law differences and marginalized predominance/superiority analysis by certifying a class that could settle many disparate claims without proper (b)(3) analysis. | Held: Majority—district court abused discretion because the negotiation class materially departs from Rule 23’s structure and the court failed adequately to reconcile certification of limited federal issues with empowering classwide negotiation of broader claims. (Dissent disagreed and would uphold certification.) |
| Procedural fairness: opt-out timing, voting/allocation scheme, and due process (one pre-settlement opt-out window). | Plaintiffs and dissent: Pre-certification disclosure of an allocation formula, detailed voting rules, objection procedures, and the district court's retained discretion to allow a second opt-out protect class members; negotiation-class features increase participation and transparency. | Defendants and objectors: Forcing opt-out before knowing settlement binds members without meaningful consent, removes leverage and late opt-out safeguards, and risks abridging rights of class members (esp. re: diverse state-law claims). | Held: Majority found these procedural features heightened concerns about Rule 23 compliance and individual rights in a way that counselled against authorizing the negotiation class absent Rule change. The dissent concluded the safeguards were adequate and consistent with Rule 23. |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (Rule 23 limits and structural features constrain creation of novel class devices)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (limits on settlement-class certification; Rule 23 safeguards and manageability concerns)
- Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326 (1980) (appellate standing: an appellant must be "aggrieved" to appeal)
- Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) (rationale for class actions where individual stakes are small)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (RICO causation does not require proof of individual reliance)
- Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (due process requires at least one opportunity to opt out of a Rule 23(b)(3) class)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (modern approach to summary judgment and Rule-based adaptability)
- In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838 (6th Cir. 2013) (abuse-of-discretion standard for class-certification review)
- Martin v. Behr Dayton Thermal Prods. LLC, 896 F.3d 405 (6th Cir. 2018) (permitting Rule 23(c)(4) issue-class treatment when appropriate)