Rudolph KERN, And on behalf of the Estate of Erich Kern, Angela Kern, And on behalf of the Estate of Erich Kern, John S. Habblett, LTC (Ret.), and on behalf of the Estates of Jennifer Kirkpatrick Habblett Goodridge, Michael Jonclair Goodridge and Kyle William Goodridge, Suzanne K. Habblett, And on behalf of the Estates of Jennifer Kirkpatrick Habblett Goodridge, Michael Jonclair Goodridge and Kyle William Goodridge, Dick Baker, Dr., And on behalf of the Estate of Carrie Lynn Baker, Carol Baker, Dr., and on behalf of the Estate of Carrie Lynn Baker, Claire Goodridge, Individually as surviving father and as personal representative of the estate of Maj. Michael Clair Goodridge, deceased and individually as surviving grandfather and as personal representative of the estates of Michael Jonclair Goodridge, deceased and Kyle William Goodridge, deceased for himself and on behalf of decedents' estates, the distributes thereof and on behalf of decedents' surviving next of kin, including Julianne V. Goodridge, the surviving mother of Maj. Michael Clair Goodridge and surviving grandmother of Michael Jonclair Goodridge and Kyle William Goodridge, Plaintiffs-Appellees,
v.
SIEMENS CORPORATION, Siemens AG, Waagner-Biro Binder AG in Abwicklung, Waagner-Biro Binder Beteiligungs AG, WB Holding AG, Binder and Co. AG, Bosch Rexroth AG, Bosch Rexroth Corporation, and Omniglow Corporation Defendants-Appellants,
Leitner Lifts USA Inc., Leitner S.P.A., Osterreichische Elektrizitatswirtschafts AG, Swoboda Karoserie AG, Bauberdarfszentrum Stadlbauer AG, Gletscherbahnen Kaprun AG, ABC Corporations 1-10, John Does 1-10, Swoboda Karoserie-Und, Stahlbau Gmbh, Tauren Touristik, Gmbh, Thyssen Schachtbau, Gmbh, Thyssenkrupp AG, Intersport Austria Gmbh, Intersport International Corp., Intersport Marketing USA, Heitkamp, Inc., Gletscherbahnen Kaprun Aktiengesellschaft Defendants.
No. 04-0957-CV.
United States Court of Appeals, Second Circuit.
Argued: November 2, 2004.
Decided: December 20, 2004.
Robert A. Swift, Kohn, Swift & Graf, Philadelphia, PA (Jay J. Rice, Diane E. Sammons, Randee M. Matloff, Nagel, Rice & Mazie, LLP, Livingston, NJ; Martin J. D'Urso, Hilary E. Cohen, Kohn, Swift & Graf, Philadelphia, PA; Kenneth P. Nolan, Christina M. Fry, Speiser, Krause, Nolan & Granito, New York, NY, of counsel), for Plaintiffs-Appellees.
Christopher Landau (Thomas D. Yannucci, P.C., Brant W. Bishop, Susan Engel, of counsel), Kirkland & Ellis LLP, Washington, DC, for Defendants-Appellants Siemens Corporation and Siemens AG.
Frederick W. Reif, Debra Tama, Riker Danzig Scherer Hyland & Perretti LLP, New York, NY, for Defendants-Appellants Waagner-Biro Binder AG in Abwicklung, Waagner-Biro Binder Beteiligungs AG, WB Holding AG, Binder and Co AG.
Arthur J. Liederman, Dylan C. Braverman, Morrison, Mahoney & Miller, LLP, New York, NY, for Defendant-Appellant Bosch Rexroth AG.
Arnd N. von Waldow, Reed Smith, LLP, Pittsburgh, PA; Paul P. Rooney, Reed Smith, LLP, New York, NY, for Defendant-Appellant Bosch Rexroth Corporation.
E. Gordon Haesloop, Bartlett, McDonough, Bastone & Monaghan, LLP, Mineola, NY, for Defendant-Appellant Omniglow Corporation.
Before: CARDAMONE, CABRANES, and SOTOMAYOR, Circuit Judges.
JOSÉ A. CABRANES, Circuit Judge.
Defendants Siemens Corporation, Siemens AG, Waagner-Biro Binder AG in Abwicklung, Waagner-Biro Binder Beteiligungs AG, WB Holding AG, Binder and Co AG, Bosch Rexroth AG, Bosch Rexroth Corporation, and Omniglow Corporation (collectively, "defendants") appeal from the order of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge), dated November 12, 2003, granting plaintiffs' motion for class certification. See In re Ski Train Fire in Kaprun, Austria on November 11, 2000, No. MDL 1428 (S.D.N.Y. Nov. 12, 2003). The District Court certified the class, pursuant to Fed.R.Civ.P. 23(b)(3) "for liability purposes only," as "limited to the claims of heirs, beneficiaries and personal representatives of individuals who died in the Ski Train Fire at Kaprun [,] Austria on November 11, 2003." Id. To join this class, the District Court's order further required that prospective members "opt in" by affirmatively consenting to inclusion. See In re Ski Train Fire in Kaprun, Austria on November 11, 2000,
BACKGROUND
The history of this case is reported in the opinion and order of the District Court, and we recount below only those facts relevant to the disposition of this appeal. See In re Ski Train Fire,
In their amended complaint before the District Court, plaintiffs sought damages, as well as declaratory and injunctive relief, from various entities, alleging that the train and tunnel were improperly designed, constructed, and maintained, as well as negligently operated and promoted. Plaintiffs also alleged, inter alia, that certain defendants fraudulently misrepresented the safety of the train and the tunnel and intentionally inflicted emotional distress. Most significantly for the purposes of this appeal, plaintiffs brought their claims "on their own behalf, and on behalf of a class of heirs and representatives of victims" of the Kaprun tragedy "who consent in being included as members of the class." If certified, the plaintiffs' class would consequently include the heirs and beneficiaries of foreign victims. Plaintiffs asked the District Court to certify this class pursuant to Rule 23(b)(2) and 23(b)(3).2
In an amended order dated October 14, 2003, the District Court certified plaintiffs' class pursuant to Fed.R.Civ.P. 23(b)(3),3 to resolve "liability issues only," rather than damages. In re Ski Train Fire,
Defendants challenge the District Court's decision on four grounds. First, they argue that Rule 23 does not permit certification of a class with an "opt in" provision. Second, they argue that a class of "all heirs, beneficiaries and personal representatives" is unmanageable because identifying class members would require an individualized inquiry into each decedent's estate. Third, defendants challenge the suitability of the class action mechanism for resolving issues of legal liability in an accident with mass fatalities. Finally, defendants argue that the District Court erred by certifying a class to pursue claims of fraud and intentional infliction of emotional distress, since such claims may require individual determinations.
DISCUSSION
I. Standard of Review
We review a district court's decision to certify a class for abuse of discretion. See, e.g., Parker v. Time Warner Entm't Co.,
II. An "Opt in" Class
We first consider whether the District Court erred by certifying what it described as an "opt in" class. Rule 23(c) contains a so-called "opt out" requirement, mandating that members of a class certified under Rule 23(b)(3) be afforded an opportunity to "request exclusion" from that class.5 The language of Rule 23 does not, however, require members of any class affirmatively to opt into membership. Nor is such an "opt in" provision required by due process considerations. See Phillips Petroleum Co. v. Shutts,
Not only is an "opt in" provision not required, but substantial legal authority supports the view that by adding the "opt out" requirement to Rule 23 in the 1966 amendments, Congress prohibited"opt in" provisions by implication. Professor Benjamin Kaplan of Harvard Law School, who served as Reporter of the Advisory Committee on Civil Rules from 1960 to 1966, and later as a Justice of the Supreme Judicial Court of Massachusetts, explained that the Committee rejected the suggestion "that the judgment in a (b)(3) class action, instead of covering by its terms all class members who do not opt out, should embrace only those individuals who in response to notice affirmatively signify their desire to be included...." Benjamin Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 Harv. L.Rev. 356, 397 (1967). He elaborated the rationale of the Committee's decision:
[R]equiring the individuals affirmatively to request inclusion in the lawsuit would result in freezing out the claims of people — especially small claims held by small people — who for one reason or another, ignorance, timidity, unfamiliarity with business or legal matters, will simply not take the affirmative step. The moral justification for treating such people as null quantities is questionable. For them the class action serves something like the function of an administrative proceeding where scattered individual interests are represented by the Government. In the circumstances delineated in subdivision (b)(3), it seems fair for the silent to be considered as part of the class. Otherwise the (b)(3) type would become a class action which was not that at all — a prime point of discontent with [the pre-1966 version of Rule 23].
Id. at 397-98, cited with approval in Shutts,
Admittedly, we have never squarely held that Rule 23 prohibits certification of an "opt in" class. This is unsurprising since it appears, as the District Court concedes,
Despite substantial authority indicating that Rule 23 precludes certification of "opt in" classes, the District Court relied on a handful of cases to announce a new rule of civil procedure, namely that "opt in" classes are not only permissible, but may in fact "be necessary in certain circumstances." In re Ski Train Fire,
The District Court's certification of an "opt in" class in this case was error. Zervos,
Crazy Eddie is likewise unavailing. In that case, a district court denied a request to send an information statement to putative class members, citing sources that counsel against certifying "opt in" classes.
Second, even assuming for the argument that Rule 23 permits courts to certify "opt in" classes when "certain circumstances" prove them "necessary," In re Ski Train Fire,
On appeal, plaintiffs suggest three additional reasons why an "opt in" class "was appropriate in this action." Appellees' Br. at 14. "First, non-American Class members must accept the risk that, if they are required to litigate damages in their own countries [and if these foreign courts decline to recognize the liability judgment of American courts], an American judgment may only be evidence of a Defendant's liability." Id. This argument has essentially the same flaw as the District Court's argument — the purported necessity of the "opt in" provision is a function not of the circumstances of this case, but of the particular litigation strategy that plaintiffs chose to pursue. "Second, the opt-in procedure avoided any question as to whether Class members received adequate notice — another issue likely to arise in international class actions"; and "[t]hird, the opt-in procedure assured that absent Class members desired to be represented by Class Counsel — a concern that often arises in the context of serious personal injury claims." Id. Whatever the merits of these two arguments, they would expand the use of "opt in" provisions far wider than the present Rule 23 jurisprudence conceivably contemplates. After all, adequate notice and satisfactory class representation are salient issues in most class actions.
In short, we cannot envisage any circumstances when Rule 23 would authorize an "opt in" class in the liability stage of a litigation. But even if circumstances necessitating the certification of such a class could be shown, neither the District Court nor plaintiffs have done so in the case before us.
Nor does the District Court's analogy to the FLSA provide support for this novel reconstruction of Rule 23. The Court is correct that, unlike Rule 23, the FLSA provides that "[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought." 29 U.S.C. § 216(b); see also De Asencio v. Tyson Foods, Inc.,
Lastly, the District Court erroneously invoked its "equitable powers." That Rule 23 does not authorize "opt in" classes is "immaterial," the Court held, because courts have "equitable powers" to certify such classes. In re Ski Train Fire,
We therefore hold that the District Court erred in granting plaintiffs' request to certify a class with an "opt in" provision. Since plaintiffs' amended complaint defined prospective members by reference to their affirmative consent to inclusion in the class — and since the District Court concluded that the "opt in" feature is "necessary" to effectuate plaintiffs' class certification request, In re Ski Train Fire,
CONCLUSION
For the reasons stated above, we hold that the District Court erred by certifying an "opt in" class pursuant to Rule 23(b)(3). The judgment of the District Court is therefore reversed, and the cause is remanded to the District Court with instructions to enter an order denying plaintiffs' motion for class certification.
Notes:
Notes
A funicular railway is a cable railway ascending a mountain, typically by partly or wholly counterbalancing the weight of the ascending car by the weight of the descending carSee Merriam-Webster's Third New International Dictionary Unabridged (1976), available at http:// mwu.eb.com/mwu. According to one writer in The New York Times, the "definitive" online source for information about funicular transportation is the magazine Funimag, which one can find at http://www.funimag.com. Joyce Cohen, Glory Days of the Incline, Before the Decline, N.Y. Times, Mar. 23, 2000, at G8.
Fed.R.Civ.P. 23 provides, in part:
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if
(1) the class is so numerous that joinder of all members is impracticable,
(2) there are questions of law or fact common to the class,
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and
(4) the representative parties will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(1) the prosecution of separate actions by or against individual members of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:
(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum;
(D) the difficulties likely to be encountered in the management of a class action.
The District Court denied class certification pursuant to Rule 23(b)(2)See In re Ski Train Fire,
On October 8, 2004, the District Court dismissed four of the defendants from the underlying action for lack of personal jurisdiction, leaving only Siemens AG, Siemens Corporation, Bosch Rexroth Aktiengesellschaft, Bosch Rexroth Corporation, and Omniglow CorporationSee In re Ski Train Fire in Kaprun, Austria on November 11, 2000,
Rule 23(c)(2)(B) provides, in relevant part, that notice to members of "any class certified under Rule 23(b)(3) ... must concisely and clearly state in plain, easily understood language... that the court will exclude from the class any member who requests exclusion...."
Eminent authorities on the Rules agreeSee 5 James Wm. Moore, et al., Moore's Federal Practice § 23.104[2][a][ii] (3d ed. 2004) ("There is no authority for establishing `opt-in' classes in which the class members must take action to be included in the class. Indeed, courts that have considered `opt-in' procedures have rejected them as contrary to Rule 23."); 2-14A James Wm. Moore, et al., Moore's Manual — Federal Practice and Procedure § 14A.23[5][f] (2004) ("Federal class action procedures do not provide for `opt-in' classes in which the class members need to take action to be included in the class. Therefore, a class member may do nothing and rely on the class counsel and class representative to conduct the action, in which case the class member is bound by the judgment.") (internal citations omitted); 7B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1787, at 214 (2d ed. 1986) ("The ability of a member to secure the benefits of a successful termination of the action without affirmatively pressing his own claim is particularly important because it assures that small claimants who would be unable to protect their rights through separate suits can take advantage of the judgment in the class action without the burden of actually participating. It was for this reason that the Advisory Committee specifically rejected the notion of requiring absent class members to opt-into the action to secure its benefits.") (internal citations omitted); id. at 216 (stating that "bar[ring] the claims of the passive members unless within a reasonable period they file a brief statement of their intent to prove damages" would have "the effect of obliging absent class members to opt-in, [which] is directly contrary to the philosophy of Rule 23(c)(2)") (internal citations and quotation marks omitted).
Plaintiffs fall into the same trap in this appeal. They principally rely on cases — for example,Kyriazi v. Western Electric Co.,
We also have significant doubts whether without the "opt in" provision — or perhaps even with that provision — plaintiffs' class is "superior to other available methods for the fair and efficient adjudication of the controversy," as Rule 23(b)(3) would require it to be. The District Court observed that "non-American plaintiffs will be unable to bring their damages actions against the foreign defendants in the United States because there is no diversity jurisdiction over a foreign plaintiff suing a foreign defendant in the United States."In re Ski Train Fire,
plaintiffs have ameliorated the potential preclusion problems by conditioning participation in this class action on each class member's agreement to be bound by a final determination on the merits as to liability. Therefore, even if plaintiffs ultimately are disappointed with the result of the United States litigation, they will be precluded from re-litigating their claims against these defendants in Austria or any other jurisdiction. Thus, a verdict of no liability from a United States court will give defendants complete finality.
Id. at 209. Thus, the District Court relied, at least in part, on the "opt in" provision of the plaintiffs' class when it certified that class under Rule 23(b)(3). Since we now hold that the "opt in" provision here violated Rule 23, we need not decide whether the District Court correctly found that the provision resolved concerns about the asserted inefficiency of the proposed class.