Johnson v. Meriter Health Services Employee Retirement Plan, 702 F.3d 364

ERISA suit certified as a class action; Meriter appealed under Rule 23(f).
Original named plaintiff was dismissed as inadequate; another named plaintiff substituted; Meriter plan described through record digging.
Class includes >4,000 participants with varying accruals and 23-year plan amendments; 10 subclasses with different representatives were certified under Rule 23(b)(2).
Plan is a cash balance defined-benefit plan; benefits computed as a cash balance with a lump-sum factor and index rate; whipsaw involves projecting to retirement age and discounting back to present value under ERISA rules.
Disputes focus on (i) whipsaw calculation, (ii) index rate method, (iii) wear-away (re-earnment of benefits), and (iv) the 2003 amendments reducing the index rate; plaintiffs seek declaratory/injunctive relief and monetary relief potentially incidental to declaratory relief.
Court emphasizes that subdividing into homogeneous subclasses under 23(b)(2) can comply with Rule 23; Wal-Mart concerns about damages under (b)(2) are addressed by allowing incidental monetary relief or bifurcation as needed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Can a Rule 23(b)(2) class action certify subclasses seeking monetary relief?	Plaintiffs contend subclasses share common issues and seek relief that includes damages.	Meriter argues monetary relief cannot be certified under (b)(2) except incidental to injunctive relief.	Yes, if relief is incidental or can be bifurcated to preserve (b)(2) integrity.
Does Wal-Mart prohibit monetary damages in (b)(2) classes?	Monetary relief can be incidental to declaratory/injunctive relief and determined after liability is established.	Wal-Mart forecloses monetary claims not incidental to class-wide relief.	Monetary relief can be incidental; bifurcation or careful sequencing may be used.
Are potential conflicts of interest among class members fatal to certification?	Conflicts are at most hypothetical; class representation can be preserved.	Conflicts could undermine adequacy under Rule 23(a)(4).	Not at this stage; conflicts may be addressed by subdividing into subclasses.
Do 2003 plan amendments and wear-away raise Rule 23 issues?	Amendments could create uniform entitlement or require application of wear-away; certification should proceed with proper notice.	Amendments may be unlawful or require individualized determinations; certification should be limited.	Pending resolution; rulings allow possible notice/opt-out or divided certification depending on claims.

Berger v. Xerox Corp. Retirement Income Guarantee Plan, 338 F.3d 755 (7th Cir. 2003) (explains ERISA whipsaw and present-value calculations)
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011) (limits on monetary relief in (b)(2) class actions; need for commonality)
Thompson v. Retirement Plan for Employees of S.C. Johnson & Son, Inc., 651 F.3d 600 (7th Cir. 2011) (accrual timing for ERISA claims; limitations considerations)
Culver v. City of Milwaukee, 277 F.3d 908 (7th Cir. 2002) (overbreadth not fatal to certification if subclasses are homogeneous)
Lemon v. International Union of Operating Engineers, Local No. 139, 216 F.3d 577 (7th Cir. 2000) (divided certification and opt-out discussions; role of notice)
Jefferson v. Ingersoll International Inc., 195 F.3d 894 (7th Cir. 1999) (opt-out and notice considerations in (b)(2) actions)
Randall v. Rolls Royce, Inc., 637 F.3d 818 (7th Cir. 2011) (purely mechanical monetary relief may be awarded in (b)(2) class actions)
In re Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604 (8th Cir. 2011) (divided certification considerations in complex class actions)