Rose Belle Thorn; Rosa M. Thorn, Individually and as Personal Representatives of the Estate of Leroy Thorn, Deceased; Robert Pugh; Evelyn D. Pugh, on behalf of themselves and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
JEFFERSON-PILOT LIFE INSURANCE COMPANY, as successor of Pilot Life Insurance Company, Defendant-Appellee.
American Council of Life Insurers, Amicus Supporting Appellee.
No. 05-1162.
United States Court of Appeals, Fourth Circuit.
Argued September 19, 2005.
Decided February 15, 2006.
Corrected Opinion Filed March 9, 2006.
COPYRIGHT MATERIAL OMITTED ARGUED: Sanford Svetcov, Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, L.L.P., San Francisco, California, for Appellants. James F. Jorden, Jorden Burt, L.L.P., Washington, DC, for Appellee. ON BRIEF: Andrew S. Friedman, Wendy J. Harrison, Bonnett, Fairbourn, Friedman & Balint, P.C., Phoenix, Arizona; William M. Audet, Michael McShane, Alexander, Hawes & Audet, L.L.P., San Francisco, California; W. Christian Hoyer, Christa L. Collins, James, Hoyer, Newcomer & Smiljanich, P.A., Tampa, Florida; John J. Stoia, Jr., Alreen Haeggquist, Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, L.L.P., San Francisco, California; Charles Mathis, Mathis, Adams & Tate, P.C., Atlanta, Georgia; Barry A. Weprin, Brad N. Friedman, Milberg, Weiss, Bershad & Schulman, L.L.P., New York, New York; Christopher A. Seeger, David R. Buchanan, Seeger, Weiss, L.L.P., New York, New York; Herman Watson, Jr., Rebekah Keith McKinney, Watson, Jimmerson, Givhan, Martin & McKinney, P.C., Huntsville, Alabama; T. English McCutchen, William E. Hopkins, Jr., McCutchen, Blanton, Johnson & Barnette, L.L.P., Columbia, South Carolina; Ronald R. Parry, David Futscher, Parry, Deering, Futscher & Sparks, P.S.C., Covington, Kentucky; J.P. Strom, Jr., Mario A. Pacella, Strom & Young, L.L.C., Columbia, South Carolina; Joe R. Whatley, Whatley, Drake, L.L.C., Birmingham, Alabama, for Appellants. Brent O.E. Clinkscale, Jacquelyn D. Austin, Womble, Carlyle, Sandridge & Rice, P.L.L.C., Greenville, South Carolina; Debbie W. Harden, Womble, Carlyle, Sandridge & Rice, P.L.L.C., Charlotte, North Carolina; Waldemar J. Pflepsen, Jr., Stephen H. Goldberg, Jorden Burt, L.L.P., Washington, DC, for Appellee. Victoria E. Fimea, American Council of Life Insurers, Washington, DC; Evan M. Tager, Craig W. Canetti, Mayer, Brown, Rowe & Maw, L.L.P., Washington, DC for Amicus Supporting Appellee.
Before WILLIAMS and MICHAEL, Circuit Judges, and James C. DEVER III, United States District Judge for the Eastern District of North Carolina, sitting by designation.
Affirmed and remanded by published opinion. Judge WILLIAMS wrote the majority opinion, in which Judge DEVER concurred. Judge MICHAEL wrote a separate dissenting opinion.
OPINION
WILLIAMS, Circuit Judge.
The named plaintiffs (Appellants) in this case filed an individual and class-action complaint against Jefferson-Pilot Life Insurance Company on behalf of themselves and approximately 1.4 million African-American policyholders. The complaint alleged that Jefferson-Pilot's corporate predecessors discriminated against the class members in violation of federal law by charging them higher premiums than whites for similar insurance policies. The district court denied certification under Fed.R.Civ.P. 23(b)(3), finding that because it could not resolve Jefferson-Pilot's statute of limitations defense on a class-wide basis, issues common to the class did not predominate over individual ones. The district court also denied certification under Fed.R.Civ.P. 23(b)(2), finding that Appellants' requested remedy was merely a predicate for monetary damages. Appellants moved for an immediate interlocutory appeal under Fed.R.Civ.P. 23(f) and 28 U.S.C.A. § 1292(e) (West Supp. 2005), which we accepted under Fed. R.App. P. 5.
We hold that Appellants bear the burden of proving compliance with Rule 23 and that the district court did not clearly err in finding that Jefferson-Pilot's statute of limitations defense did not present common issues that could be resolved on a class-wide basis. We also hold that the district court correctly held certification was improper under Rule 23(b)(2) because Appellants' requested relief was not predominantly injunctive or declaratory in nature. We therefore affirm and remand for further proceedings on Appellants' individual claims.
I.
The parties agree on most of the facts relevant to this appeal. From 1911 to 1973, Jefferson-Pilot Insurance Company's corporate predecessors (collectively Jefferson-Pilot) issued approximately 1.4 million industrial life insurance policies1 to African-Americans in North Carolina, South Carolina, Georgia, and Virginia. Jefferson-Pilot admits that it charged African-American policyholders higher premiums than it charged white policyholders for policies with similar benefits. Jefferson-Pilot contends, however, that its "dual-rate"2 policies were not the product of racial animus. Instead, it argues that the price difference was nothing more than a wise business decision based on mortality tables showing that African-Americans had shorter life expectancies and were thus higher life-insurance risks than similarly situated whites.3
Jefferson-Pilot stopped issuing industrial life insurance policies altogether in 1973, but continued to collect premiums on the dual-rate policies that were still in effect at that time. In 1988, Jefferson-Pilot adjusted the race-based premiums on all active policies according to blended mortality tables, which were not based on race. Even after this adjustment, however, African-American policyholders still paid more than whites for similar benefits because whites' premiums had been determined according to mortality tables for whites only. In 2000, about the time the instant action was filed,4 Jefferson-Pilot declared that all still-active industrial insurance policies, whether owned by African-Americans or whites, were "paid up"; i.e., that no further premiums would be charged on the policies. At that time, only approximately 45,000 of the 1.4 million dual-rate policies issued to African-Americans were still in effect.5
In September 2000, Appellants Rose Belle Thorn, Rosa M. Thorn, Robert Pugh, and Evelyn D. Pugh — four African-Americans insured under a Jefferson-Pilot industrial life insurance policy — filed a class-action complaint against Jefferson-Pilot alleging that its dual-rate policies violated 42 U.S.C.A. §§ 1981 (West 2003) (granting equal rights to "make and enforce contracts" without regard to race) and 1982 (West 2003) (granting equal rights to "inherit, purchase, lease, sell, hold, and convey real and personal property" without regard to race).6 The complaint also alleged that Jefferson-Pilot took steps to conceal these practices from its policyholders, such as instructing its agents not to disclose the race-based premium disparities. The complaint sought, inter alia, an injunction prohibiting Jefferson-Pilot from collecting any future premiums on its dual-rate policies, restitution for the difference in premium payments made by African-American and white policyholders, punitive damages, and attorney's fees. In its answer, Jefferson-Pilot, inter alia, denied that it took steps to conceal its dual-rate practices, denied that Appellants were entitled to relief, and raised a statute of limitations defense.
In October 2003, Appellants moved under Fed.R.Civ.P. 23(b)(3) and 23(b)(2) to certify a class of "all African-Americans who [were insured by a race-based dual-rate] industrial life insurance policy that was issued [by Jefferson-Pilot]." (J.A. at 284.)7 Jefferson-Pilot opposed the motion. It argued, in pertinent part, that certification was improper under Rule 23(b)(3) because individual members of the class could have been exposed to sufficient information to give them either actual or constructive knowledge of its dual-rate practices outside of the limitations period. In Jefferson-Pilot's view, this fact required the district court to conduct individual hearings for each class member to determine when he or she learned of the dual-rate practices, a requirement that defeated the benefits of class certification. In support of this argument, Jefferson-Pilot submitted an expert report from Henry M. McKiven, a professor in the History Department at the University of South Alabama. In the report, Dr. McKiven detailed the news media's reports of race-based insurance practices over the course of the twentieth century, noted the objections to the practices raised in the African-American community, particularly by African-American church leaders, through the middle part of the century, and explained that a number of African-Americans formed their own insurance companies early in the century in an effort to offer an alternative to white-owned insurance companies' race-based practices. Dr. McKiven claimed that "based on these numerous sources of information, ... an African American living in the Southeast could have become aware" of insurance companies' dual-rate practices. (J.A. at 101.) Jefferson-Pilot also argued that certification was improper under Rule 23(b)(2) because Appellants sought primarily monetary relief.
Appellants argued that the district court could resolve Jefferson-Pilot's statute of limitations defense on a class-wide basis — i.e., without conducting individual hearings — because Jefferson-Pilot had not shown that any class member had actual knowledge of its dual-rate practices and because all of the class members would have been exposed to the same information that could have given them actual or constructive knowledge of the practices. In support of this argument, Appellants submitted an expert report from Robert J. Norrell, a professor in the history department at the University of Tennessee. Dr. Norrell claimed that although there had been some media reporting of the issue during the twentieth century, "the public, or the average citizen of the United States, including African-Americans, was not generally aware of [these] practices." (J.A. at 70.) Appellants also argued that certification was proper under Rule 23(b)(2) despite the fact they sought monetary relief, because the relief they sought was equitable, not legal, in nature.
In May 2004, the district court conducted an extensive hearing, most of which was devoted to whether the class should be certified. (J.A. at 126-275.) In December 2004, the district court denied the motion to certify by a thorough, well-written opinion. The district court noted that "[t]he claims at issue in this action relate to policies issued as early as 1911 and, at the latest, in 1973. The initial (and possibly only) actionable discrimination would, therefore, have occurred no later than the date of issuance of the policy, in other words, from twenty-seven to eighty-nine years before suit was instituted. This very significant period of time raised critical questions as to when the claim accrued." (J.A. at 296 (footnote and internal quotation marks omitted).) Focusing on this critical question, the district court found that the record was devoid of evidence that resolution of the issue could occur on a class-wide basis. (J.A. at 296, 298 ("[Jefferson-Pilot] has presented a strong prediction of evidence that there were numerous sources available during the relevant period which could have alerted class members to the fact that the practices now complained of were common in the industry, if not uniform among White-owned companies.... In light of the information which [Jefferson-Pilot] has shown was available, the court cannot assume that none of the members of the proposed class gained sufficient information to put them on inquiry notice at some point which would result in their claim being time barred.").) The district court held that this fact meant that Jefferson-Pilot was entitled to present evidence as to individual class members' actual or constructive knowledge, thereby rendering the class members' claims uncommon from one another and precluding certification under Rule 23(a). (J.A. at 298-300.) In the alternative, the district court held that certification was improper under Rule 23(b)(3) because individual hearings on the statute of limitations and the issue of damages were required, management of the class would be difficult due to the need for such individual hearings, and the class device was not superior to individual litigation. The district court also held, again in the alternative to the Rule 23(a) holding, that certification was improper under Rule 23(b)(2) because Appellants' requested injunctive and equitable relief was merely a predicate for money damages.
II.
On appeal, Appellants argue that the district court misapplied Rule 23(a), 23(b)(3) and 23(b)(2) in denying their motion to certify. "A district court has broad discretion in deciding whether to certify a class." Lienhart v. Dryvit Sys., Inc.,
We first address Appellants' Rule 23(b)(3) arguments.
III.
Appellants argue that the district court abused its discretion in denying the certification motion under Rule 23(b)(3) because Jefferson-Pilot failed to satisfy its burden of showing that its statute of limitations defense presented individual issues that could not be resolved on a class-wide basis. They argue in the alternative that even if they have the burden of proving that Jefferson-Pilot's statute of limitations defense presents common issues that can be resolved on a class-wide basis, they have satisfied that burden. Jefferson-Pilot argues that Appellants bear the burden of proving that its statute of limitations defense presents common issues and that the district court did not clearly err in finding that Appellants failed to satisfy this burden. Before addressing these arguments, we pause to set forth the legal landscape in which they arise.
A.
The class-action device, which allows a representative party to prosecute his own claims and the claims of those who present similar issues, is an exception to the general rule that a party in federal court may vindicate only his own interests. See Gen. Tel. Co. of Sw. v. Falcon,
To be certified, a proposed class must satisfy Rule 23(a) and one of the three sub-parts of Rule 23(b). Gunnells v. Healthplan Servs., Inc.,
The district court found that Appellants' proposed class did not satisfy Rule 23(a). Because we base our decision on the district court's alternative holdings that certification was improper under Rules 23(b)(3) and 23(b)(2), we assume, without deciding, that Appellants satisfied Rule 23(a), and turn our attention to Rule 23(b)(3).9
Rule 23(b)(3) has two components: predominance and superiority. The predominance requirement is similar to but "more stringent" than the commonality requirement of Rule 23(a). Lienhart,
(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.
Fed.R.Civ.P. 23(b)(3).
At the class certification phase, the district court must take a "close look" at the facts relevant to the certification question and, if necessary, make specific findings on the propriety of certification. Gariety,
Here, the district court found that Jefferson-Pilot's statute of limitations defense presented individual issues that could not be resolved on a class-wide basis, a fact that contributed to its conclusion that common issues did not predominate under Rule 23(b)(3). (J.A. at 292, 294-300.) We therefore turn our attention to the statute of limitations defense.
While Congress has not enacted a specific statute of limitations for §§ 1981 and 1982, we interpret these federal statutes to "borrow" the statute of limitations and equitable tolling rules applicable to the state cause of action that is most analogous to §§ 1981 and 1982. See Goodman v. Lukens Steel Co.,
Whether state or federal law supplies the length of the limitations period, federal law determines when the clock begins to run against that period, or, phrased technically, when the cause of action "accrues." Nasim v. Warden, Md. House of Corr.,
Our circuit's accrual rule, which focuses on the contents of the plaintiff's mind, is not readily susceptible to class-wide determination. Examination of whether a particular plaintiff possessed sufficient information such that he knew or should have known about his cause of action will generally require individual examination of testimony from each particular plaintiff to determine what he knew and when he knew it. See Broussard v. Meineke Disc. Muffler Shops, Inc.,
B.
1.
With this background in mind, we return to Appellants' arguments. Appellants first argue that Dr. McKiven's expert report failed to satisfy Jefferson-Pilot's burden of proving that its statute of limitations defense presents issues that must be decided on an individual basis. This argument, of course, assumes that Jefferson-Pilot bears such a burden. Our cases prove this assumption false; we have stressed in case after case that it is not the defendant who bears the burden of showing that the proposed class does not comply with Rule 23, but that it is the plaintiff who bears the burden of showing that the class does comply with Rule 23. Windham v. Am. Brands, Inc.,
Seeking to avoid this conclusion, Appellants argue that because Jefferson-Pilot bears the burden of proving the merits of its statute of limitations defense, it should also bear the burden of demonstrating that resolution of that defense cannot occur on a class-wide basis. Even assuming that Jefferson-Pilot has the burden of proving its statute of limitations defense on the merits,11 we reject this argument. Our cases permit no exception to the rule that the plaintiff bears the burden of showing compliance with Rule 23. See Gunnells,
Appellants next contend that even if they have the burden of proving that Jefferson-Pilot's statute of limitations defense presents common questions that can be resolved on a class-wide basis, the evidence in this case satisfies this showing. First, Appellants argue that Dr. Norrell's expert report demonstrates that the public was not generally aware of insurance companies' dual-rate practices. That report concludes that "the public, or the average citizen of the United States, including African-Americans, was not generally aware of [these] practices." (J.A. at 70.) Whether the "average citizen" (whoever that is) or "the public" (whoever that is) was or was not "generally aware" of insurance companies' dual-rate practices, is, however, irrelevant to the question that the trier of fact will have to answer to resolve Jefferson-Pilot's statute of limitations defense on the merits: Were any of the individual class members aware, actually or constructively, outside of the limitations period that Jefferson-Pilot was treating him or her differently from white policyholders? Dr. Norrell's report, therefore, does not support a finding that the trier of fact could resolve this question on a class-wide basis.12
Second, Appellants argue that because their depositions show that none of them had actual or constructive knowledge of Jefferson-Pilot's dual-rate practices, it is reasonable to infer that none of the class members had such knowledge. Even assuming Appellants' argument accurately represents the record, this argument is without merit. As the Supreme Court has consistently pointed out, the question at this stage in the proceedings is not whether the district court will arrive at the same conclusion in resolving each class member's accrual issue, but whether it can resolve those issues in a class-wide manner. See, e.g., Eisen,
Third, Appellants argue that because of the homogeneity of the class, which they describe as being comprised of "blue-collar African-Americans" (Appellants' Br. at 14), any question of whether the members of the class were exposed to sufficient information to cause their claims to accrue can be determined on a class-wide basis. But short of the fact that the class members are all African-American and all purchased industrial life insurance policies from Jefferson-Pilot, the record reveals no information that would allow us to conclude that the class members — 1.4 million African-Americans of all ages and both sexes, who are spread out geographically over four states and temporally over 62 years — are so homogeneous that media reports and other information about dual-rate practices would affect them all in precisely the same manner. We refuse to make such broad generalizations about the class members based on nothing more than the color of their skin and inferences about their socio-economic status arising from the fact that they purchased an industrial life insurance policy from Jefferson-Pilot. To do so would be to engage in the very brand of stereotyping about which Appellants complain.
Fourth, Appellants argue that because Jefferson-Pilot instructed its agents to conceal the dual-rate practices, we should create a class-wide presumption of unawareness of those practices that Jefferson-Pilot failed to rebut by failing to offer any evidence that any class member knew or should have known about the practices. According to Appellants, this unrebutted class-wide presumption allows the district court to resolve the statute of limitations issue (in their favor) on a class-wide basis.
A presumption arises when proof of one fact gives rise to a "natural inference" that another fact is true and proof of the second fact is difficult to obtain. See McCormick on Evidence § 344; see also Basic Inc. v. Levinson,
Our good colleague in dissent does not make any argument (short of simple assertion) that the evidence in this case demonstrates that Jefferson Pilot's statute of limitations defense can be resolved on a class-wide basis, post at 336 n. 3, yet he repeatedly argues that the district court abused its discretion in denying the certification motion because Jefferson-Pilot failed to show that its statute of limitations defense requires individualized adjudication. We believe, however, that burdens of proof and standards of review matter. As we have demonstrated, the relevant inquiry is not whether Jefferson-Pilot has shown that the statute of limitations defense requires individualized adjudication, but whether the district court clearly erred in finding that Appellants failed to show that the statute of limitations defense can be resolved on a class-wide basis. For the reasons set forth above, we believe that it did not.
2.
We recognize that parts of our analysis of these issues are in some tension with the Fifth Circuit's decision in In re Monumental Life Ins. Co.,
While this holding seems apposite to the issue presented here, closer inspection reveals that the court in Monumental neither held what Appellants ask us to hold nor even directly addressed the question before us today. In Monumental, the insurance companies relied on a theory of constructive notice in support of their statute of limitations defense; i.e., that because of the widespread media coverage of insurance companies' dual-rate practices, the court could find that reasonable persons, including class members, should have been aware of sufficient information to provide actual or constructive knowledge of the practices. Id. at 421 ("[D]efendants rely on a theory of constructive notice, arguing that widespread media reporting of the issue over the last several decades should have excite [d] the inquiry of a reasonable person. Where events receive widespread publicity, plaintiffs may be charged with knowledge of their occurrence." (alterations in original and citations omitted)). The court held that because the record contained no evidence that media coverage of the issue varied from state to state, the question of whether a reasonable person could be held to have been exposed to sufficient information to provide actual or constructive knowledge presented a question that could be resolved on a class-wide basis. Id.16
Here, by contrast, Jefferson-Pilot does not argue that the district court should hold that widespread media treatment of the issue provided a reasonable person with sufficient information to give him either actual or constructive knowledge. Instead, it argues that individual class members were actually exposed to sufficient information to give them either actual or constructive knowledge of Jefferson-Pilot's dual-rate practices outside the limitations period. Whereas in Monumental resolution of the defendants' theory of their statute of limitations defense allowed the district court to create a hypothetical "reasonable person," ask what information that person should be charged with knowing, and then determine whether such information would have given rise to actual or constructive knowledge of the defendant's practices, Jefferson-Pilot's theory, which is focused on the actual information possessed by individual class members, allows no such hypothetical. Instead, the district court here must conduct an individual inquiry into the information each class member actually possessed to determine whether each class member had actual or constructive knowledge of Jefferson-Pilot's dual-rate practices. Whatever the merits of Monumental's holding, and we need not further discuss them here, it is clear that the holding was not based on the legal theory of the statute of limitations defense that Jefferson-Pilot pursued.17
Our interpretation of Monumental is buttressed by the proceedings on remand in that case. Instead of relying on a theory of constructive notice in support of their statute of limitations defense, as they had before the Fifth Circuit, the insurance companies on remand relied on a theory of actual notice, as Jefferson-Pilot does here. In re: Industrial Life Ins. Litigation, MDL No. 1371, slip. op. at 13 n. 18,
3.
We therefore conclude that the district court did not clearly err in finding that Jefferson-Pilot's statute of limitations defense presented issues that cannot be determined on a class-wide basis. As our discussion reveals, this conclusion is not born of a view that individual questions necessarily arise any time a defendant raises a statute of limitations defense. Such a holding would be inconsistent with Gariety's requirement that the district court take a "close look" at the facts relevant to the certification question.
4.
As noted, the district court did not base its Rule 23(b)(3) denial of Appellants' certification motion solely on its finding that the individual issues presented by Jefferson-Pilot's statute of limitations defense predominated over the common issues present in the case, such as whether Jefferson-Pilot's acts violated §§ 1981 and 1982. Rather, the district court also found that because each class member suffered unique damages, the class's claim for equitable restitution was likewise not susceptible to class-wide determination. Moreover, the district court found that allowing the case to proceed as a class action would present substantial manageability problems at trial. In particular, it focused on the facts that (1) at the individual hearings required for resolution of the statute of limitations defense, the fact-finder would have to apply one of four different states' laws (and, to some of the claims, possibly even federal law, see footnote 10) to supply the limitations period and the rules of equitable tolling, and (2) that the fact finder would be unable to evaluate the class's damages on a common basis. Finally, the district court found that the class-action device was not necessarily superior to individual trials. Significantly, the district court noted that the small amount of each class member's claim would not dissuade an attorney from taking class member's individual cases because 42 U.S.C.A. § 1988 (West 2003) allows prevailing plaintiffs in §§ 1981 and 1982 actions to recover attorney's fees.20
Appellants neither challenge these additional findings nor do they argue that, even assuming Jefferson-Pilot's statute of limitations defense is an individual issue, common issues still predominate over individual ones. Instead, in contesting the district court's Rule 23(b)(3) ruling, they rely exclusively on their argument that Jefferson-Pilot's statute of limitations defense presents common questions that can be resolved on a class-wide basis.21 Because, as we have shown, the district court's finding otherwise was not clearly erroneous, we agree with the district court that certification was improper under Rule 23(b)(3).22
IV.
Appellants also argue that certification was proper under Rule 23(b)(2) because the class seeks an injunction and equitable restitution. Jefferson-Pilot argues that Rule 23(b)(2) certification is improper because Appellants' injunction request is illusory and because Appellants' equitable demand is essentially a request for monetary relief.
A putative class satisfies Rule 23(b)(2) if "[1] the party opposing the class has acted on grounds generally applicable to the class, [2] thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole."23 The 1966 Advisory Committee Notes to this rule provide that it was
intended to reach situations where a party has taken action or refused to take action with respect to a class, and final relief of an injunctive nature or of a corresponding declaratory nature, settling the legality of the behavior with respect to the class as a whole, is appropriate.... The [Rule] does not extend to cases in which the appropriate final relief relates exclusively or predominately to money damages.
Rule 23(b)(2) advisory committee's note. Accordingly, we have held that Rule 23(b)(2) does not "cover cases where the primary claim is for damages, but is only applicable where the relief sought is ... predominantly injunctive or declaratory." Lukenas,
The twin requirements of Rule 23(b)(2) — that the defendant acted on grounds applicable to the class and that the plaintiff seeks predominantly injunctive or declaratory relief — make that Rule particularly suited for class actions alleging racial discrimination and seeking a court order putting an end to that discrimination. See Amchem Prods., Inc. v. Windsor,
The requirement that declaratory or injunctive relief predominate, of course, echoes the predominance requirement of Rule 23(b)(3), and, albeit indirectly, "serves essentially the same function[]." See Allison v. Citgo Petroleum Corp.,
Appellants argue that certification was proper under Rule 23(b)(2) because their request for injunctive relief from Jefferson-Pilot's collection of discriminatory premiums predominates over any monetary relief they seek. The district court found, however, and Appellants do not contest, that Jefferson-Pilot declared all of its outstanding industrial life insurance policies "paid up" and that it is, therefore, no longer collecting any premiums on those policies. Appellants' requested injunctive relief is therefore moot and cannot serve as a predicate for Rule 23(b)(2) certification. See Monumental,
This conclusion brings us to the class's request for restitution. Appellants argue that Rule 23(b)(2) authorizes certification when the predominant relief the class seeks is equitable in nature. They also argue that their request is an equitable one. We disagree with both of these arguments.
The text of Rule 23(b)(2) says nothing whatsoever about equitable relief, but authorizes class treatment only when the plaintiff seeks predominantly "injunctive" or "declaratory" relief. "[W]hen the terms of a statute are clear and unambiguous, [as they are here,] our inquiry ends and we should stick to our duty of enforcing the terms of the statute as Congress has drafted it." Sigmon Coal Co. v. Apfel,
Appellants seek to counter this conclusion by arguing that such a holding is incompatible with Title VII case law where courts, including our own, have found certification proper under Rule 23(b)(2) despite the fact the prevailing plaintiffs are entitled to monetary relief in the form of backpay, which the courts have characterized as a form of equitable relief. See, e.g., Albemarle Paper Co. v. Moody,
Even assuming that Rule 23(b)(2) authorizes certification when the class seeks a predominantly equitable remedy, we conclude that Appellants do not seek equitable relief. Restitution can be a legal or an equitable remedy. See Great-West Life & Annuity Ins. Co. v. Knudson,
V.
For the foregoing reasons, we affirm the district court's denial of Appellants' motion for class certification and remand for further proceedings on Appellants' individual claims.
AFFIRMED AND REMANDED.
Notes:
Notes
Industrial life insurance policies are low premium/low benefit insurance policies, some with premiums as low as $0.05 weekly and benefits as little as several hundred dollars. The benefits from these policies are often used to cover funeral and burial expenses
The term "dual-rate" refers to the practice identified in the text;i.e., the practice of charging African-Americans higher premiums than whites for similar benefits. See In re Monumental Life Ins. Co.,
We express no opinion on the merits of Jefferson-Pilot's argument
It is unclear from the record whether Jefferson-Pilot's declaration occurred before or after this suit was filed. This factual ambiguity is immaterial to our resolution of this case
It is undisputed that the remainder of the policies had either matured due to the death of the policyholder or had been terminated for any number of reasons, such as non-payment
In addition, the complaint alleged that Jefferson-Pilot's dual-rate policies violated state tort law. Because Appellants did not seek certification on this claim, we do not consider it
Appellants actually sought certification of a class of African-Americans with an "ownership interest" in the dual-rate policies. (J.A. at 284.) The district court was concerned that this term could create conflicts by pitting two class members against one another for the same funds, and narrowed the class request to include only those "insured" under a dual-rate policy. (J.A. at 284.) Appellants do not appeal this decision
InGunnells v. Healthplan Servs., Inc.,
Appellants did not invoke Rule 23(b)(1)
In 1990, Congress enacted a residual statute of limitations applicable to all federal causes of action created after the date of its enactment. 28 U.S.C.A. § 1658 (West Supp. 2005). This statute provides a four-year window in which a plaintiff can bring suit "after the cause of action accrues." It does not, however, define the word "accrue[ ]."Id.
While § 1981 was enacted well before 1990, Congress amended § 1981 in 1991 to provide additional protections in the right to "make and enforce contracts." See 42 U.S.C.A. § 1981(b). The Supreme Court has held that a cause of action that relies on these additional rights is subject to the four-year statute of limitations found in § 1658. Jones v. R.R. Donnelley & Sons Co.,
For purposes of this appeal, we need not consider whether Appellants' claims rely on the 1991 amendments to § 1981, thus triggering § 1658 instead of borrowed state law, because neither party disputes that accrual occurs when the class members knew or should have known of Jefferson-Pilot's dual-rate practices, regardless of whether the limitations period is determined by § 1658 or state law.
It is by no means settled that Jefferson-Pilot bears the burden of proving its statute of limitations defense. Indeed, several of our sister circuits have held that when the plaintiff's injury occurs outside of the limitations period, the plaintiff bears the burden of showing that he first knew or should have known about his cause of action within the limitations periodSee O'Connor v. Boeing N. Am., Inc.,
Appellants argue that the district court abused its discretion by failing to mention Dr. Norrell's report in denying their motion for certification. We will not assume, however, that simply because the district court did not mention the report in its written order it failed to consider the evidence. In any event, because we conclude that Dr. Norrell's report would not support a finding that Jefferson-Pilot's statute of limitations defense presented a common issue that could be resolved on a class-wide basis, we need not decide whether the district court (properly) discredited or (improperly) ignored that report
Our good colleague in dissent argues that such an inspection of the Appellants' deposition testimony is actually required underGariety v. Grant Thornton, LLP,
Appellants also argue that we should create a presumption of concealment that equitably tolls the statute of limitations, thereby making resolution of the statute of limitations defense susceptible to class-wide determination. This argument is different, although subtly so, from the one we address in the text. In the text, we consider (and reject) Appellants' argument that Jefferson-Pilot's concealment creates a class-wide presumption of unawareness thatprevents accrual. Here, we consider Appellants' argument that Jefferson-Pilot's concealment creates a class-wide presumption of unawareness that equitably tolls the statute of limitations once it has accrued. Subtleties aside, we reject the equitable-tolling argument as well. As discussed, under a borrowed statute of limitations, we apply state rules of equitable tolling. See Wade v. Danek Med., Inc.,
The court inMonumental also held that the plaintiffs were entitled to a class-wide presumption of unawareness because the defendants concealed their dual-rate policies. Id. at 420 n. 22 ("Here, accrual of the statute of limitations is premised on defendants' common practice of concealment, so a presumption of unawareness by the plaintiff class is warranted."). For the reasons already discussed, we respectfully disagree with this holding.
Although often used loosely, the terms "constructive notice" and "constructive knowledge" are not synonymous. Constructive notice refers to the factual information a reasonable person can be presumed to know because of widespread publicity. Constructive knowledge, by contrast, refers to the legal question of whether knowledge of certain information is sufficient to spur an inquiry into whether a claim exists. InMonumental then, the defendant argued that information about its dual-rate practices was so widespread that the plaintiffs should be charged with either actual knowledge of the practices or charged with knowledge of sufficient information to spur a reasonable inquiry.
The dissent suggests that our case is identical toMonumental because "Jefferson-Pilot has nothing but widespread media treatment and publicity to rely on for its defense" of actual notice that gave rise either to actual or constructive knowledge. Post at 337. There are two problems with this suggestion. First, it assumes that simply because of the color of the class members' skin and their socio-economic status they were each exposed to identical news reports (and the like) regarding insurance companies' race-based practices. For reasons already discussed, we will not indulge this assumption. Second, the dissent again forgets that the burden of proving the propriety of certification rests on the Appellants, not Jefferson-Pilot. It is not Jefferson-Pilot's task to show that its statute of limitations defense presents individualized questions, but Appellants' task to show that it presents common ones.
The dissent contends that the district court inMonumental denied the certification motion on remand because the insurance companies "proved" that their statute of limitations defense required individualized adjudication. Post at 338 (internal quotation marks omitted). While the dissent accurately represents the district court's finding in that case, it fails to recognize that such a finding was not necessary for its decision. As we have been at pains to emphasize, and as the district court recognized on remand in Monumental, the relevant question in considering a certification motion is not whether the defendant has shown certification is improper, but whether the plaintiff has shown certification is proper. If the defendant shows by affirmative evidence that certification is improper, that fact certainly means that the plaintiff has failed to show the opposite, but it does not mean that the motion would have prevailed had the defendant not made such a showing.
One such situation might have arisen here if, for example, Jefferson-Pilot had sent mailings to all of its insureds on a particular date informing them of its dual-rate practices and relied on knowledge of the content of those mailings in arguing its statute of limitations defense, and Appellants argued only that the mailings were insufficient to cause accrual. Another such situation would have arisen if Appellants had shown that Jefferson-Pilot's statute of limitations defense was so patently without merit that the district court could find that the defense was not even a real "issue" in the caseCf. Gunnells,
Our dissenting colleague seems to think that this second situation was satisfied here. He does not argue that the record fails to support the district court's finding that information from numerous sources was available during the relevant period to the class members that "could have alerted" them of Jefferson-Pilot's race-based practices. Rather, he contends that the "could have alerted" standard is incorrect as a matter of law, that the correct legal standard is whether class members had actual or constructive knowledge of Jefferson-Pilot's practices, and that the evidence did not satisfy this standard. Post at 338-39. We disagree. The dissent again confuses the merits of Jefferson-Pilot's statute of limitations defense with the certification issue before us today. In evaluating whether Jefferson-Pilot's limitations defense is even an "issue" in the case, the question is not whether the record demonstrates that any particular class members had actual or constructive knowledge of Jefferson-Pilot's race-based practices — as it would be on the merits — but whether the record demonstrates that an argument that any class members had such knowledge is patently without merit. We believe that the "could have alerted" standard appropriately captures this inquiry.
The dissent's pronouncement that our decision "means that Jefferson-Pilot Life Insurance Company will never be held to account" for any unlawful discrimination it committed is therefore puzzlingPost at 332. The dissent does not attempt to discredit the district court's factual finding that, based in part because of the lure of attorney's fees, denial of the certification motion is no impediment to resolution of the Appellants' complaint or the complaint of anyone similarly situated. Instead, the dissent argues that this factual finding was "fueled in large measure by the district court's erroneous finding that the statute of limitations defense could not be resolved on a classwide basis." Post at 339. This argument, however, is incorrect. Even assuming the district court erred in finding that Jefferson-Pilot's statute of limitations defense presented issues that cannot be resolved on a classwide basis, this (assumed) error had no bearing whatsoever on the district court's finding that individual plaintiffs will be able to pursue individual actions in the absence of a class action.
Moreover, the district court's factual finding on this point is correct. Every potential class member who believes that his §§ 1981 and 1982 rights were violated may file an action in state or federal court. See Sullivan v. Little Hunting Park, Inc.,
While we are empathetic to Appellants' plight, even assuming that the class-action device is more favorable to Appellants than individual actions would be, it is not the task of the federal court to create class-action rules that favor those with whom we empathize.
Appellants do argue in their reply brief that the district court erred in concluding that the individual issues presented by the statute of limitations defense prevented common issues from predominating, but those arguments come too lateSee Edwards v. City of Goldsboro,
InBroussard v. Meineke Discount Muffler Shops, Inc.,
For a class to be certified under Rule 23(b)(2), it must also satisfy Rule 23(a). As we did in the Rule 23(b)(3) context, we also assume here that Appellants satisfied Rule 23 (a)
Indeed, Rule 23(b)(2) was created to facilitate civil rights class-actionsSee 7AA Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1775 (3d ed.2005).
Unlike Rule 23(b)(3), Rule 23(b)(2) neither requires that absent class members be given notice of class certification nor allows class members the opportunity to opt-out of the class actionSee Fed.R.Civ.P. 23(c)(2)(A). By requiring that injunctive or declaratory relief predominate, therefore, Rule 23(b)(2) ensures that the benefits of the class action inure to the class as a whole without running the risk of cutting off the rights of absent class members to recover money damages and class members who want individualized evaluation of their claim for money damages. Whereas Rule 23(b)(3) protects these rights by requiring notice and the opportunity to opt-out, Rule 23(b)(2) protects these interests indirectly by allowing certification only when the relief sought is predominantly injunctive or declaratory. See Allison v. Citgo Petroleum Corp.,
EvenMonumental, on which Appellants so heavily rely in support of their Rule 23(b)(3) arguments, did not hold that Rule 23(b)(2) authorizes class-action suits that only seek equitable relief. Rather, in Monumental, the court found that injunctive relief predominated because the plaintiffs sought to compel the defendants to stop collecting premiums, and the record showed that 1 million to 4.5 million of the 5.6 million policies issued were still in effect.
On remand, the insurance companies in Monumental submitted evidence showing that only 2%, or approximately 112,000 of the policies at issue in that case, were still in force and less than 1/10th of 1%, or fewer than 5,600, of those policies were still collecting premiums. In re: Industrial Life Ins. Litigation,
MICHAEL, Circuit Judge, dissenting:
The majority's decision to affirm the denial of class certification means that Jefferson-Pilot Life Insurance Company will never be held to account if it discriminated against 1.4 million African-Americans by charging them higher premiums for industrial life insurance than it charged whites. This case makes sense only as a class action because the liability issues are complex and the maximum loss suffered by any class member "is at most, hundreds of dollars." J.A. 280. My point is hardly "puzzling." See ante at 328 n. 20. As the Supreme Court has said, "The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights." Amchem Prods., Inc. v. Windsor,
The majority errs by accepting at face value Jefferson-Pilot's argument that class certification is precluded because the Company's statute of limitations defense raises questions that must be decided individually for every class member. The facts tendered at the class certification stage reveal that the Company has at most a defense that the policyholders had constructive knowledge of their injury within the limitations period. The constructive knowledge theory is based solely on the assertion of the Company's expert that there was widespread publicity, both nationally and in the Southeast, about the dual-rate practices of white-owned insurance companies. The record, however, does not contain any facts to suggest that there are individual differences in what class members "could have known" about the dual-rate practices. Thus, the limitations defense can be determined on a classwide basis, and the Rule 23(b)(3) requirement that common issues predominate over any individual ones is met. For this reason, I respectfully dissent.
I.
The facts alleged, if proven true, portray a grievous wrong against well over a million African-Americans. From the early 1900s until the mid-1970s, Jefferson-Pilot (or its predecessors) charged African-Americans higher premiums than similarly situated whites for industrial life insurance. These policies have a low face value (often less than $500), with premiums collected by company agents at the home of the policyholder on a weekly or monthly basis. The Company sold these policies to 1.4 million African-Americans in Georgia, North Carolina, South Carolina, and Virginia. (Ninety percent of the policies were sold in North Carolina.) In 2000 Jefferson-Pilot declared all active industrial life policies to be paid up, and no further premiums were collected. About 45,000 of the policies were still in effect as of 2004. The plaintiffs allege the Company targeted occupations and geographic areas known to have a high concentration of African-Americans. More specifically, the plaintiffs allege that the Company "targeted low income, impoverished, and disadvantaged African-Americans who typically were unsophisticated with respect to life insurance." J.A. 29 ¶ 17. Finally, it is alleged that African-Americans did not know and could not have reasonably known they were charged higher premiums than whites because the Company engaged in a pervasive scheme to conceal this practice. These discriminatory practices, the plaintiffs allege, violate the Civil Rights Act, 42 U.S.C. §§ 1981-1982. The complaint requests injunctive relief, equitable restitution, and punitive damages. In its defense, Jefferson-Pilot maintains that the higher rates charged to African-Americans were based on mortality tables. The Company also asserts the statute of limitations as a defense.
The named plaintiffs seek to represent a class of 1.4 million African-Americans who bought industrial life insurance from Jefferson-Pilot. When the plaintiffs moved for class certification, a key issue was whether the Company's statute of limitations defense required individualized determinations. At the certification stage, the parties offered the following evidence concerning the nature and merits of the Company's limitations defense. Four potential class members were deposed, and none had actual knowledge of his or her injury outside the limitations period. In addition, both sides submitted expert reports from historians about the availability of public information concerning discriminatory life insurance rates. The plaintiffs' expert, Robert J. Norrell, Ph.D., opined that past practices of race discrimination in life insurance underwriting did not become common knowledge among any subset of the American public prior to the year 2000, when this action was filed. Dr. Norrell bases his conclusion on (1) the failure of Jefferson-Pilot and similar companies to inform policyholders of their discriminatory practices and (2) the absence of discussion of the issue in widely read historical literature on American race relations. Although there were some government reports, law review articles, and limited media coverage concerning discriminatory pricing, Norrell found no evidence to show widespread public awareness of the issue. On the other hand, Jefferson-Pilot's expert, Henry M. McKiven, Ph.D., offered the opinion that publicity about discriminatory pricing was widespread nationally and in the Southeast. Dr. McKiven says that this information was available in books, scholarly journals, newspapers, and magazines. He also says that black-owned insurance companies, civil rights organizations, and unions spread the word about discrimination by white-owned insurance companies. McKiven opined that an African-American living in the Southeast could have become aware of the discriminatory pricing. Relying on McKiven's report, the district court found that Jefferson-Pilot's limitations defense would require individualized inquiry for each class member. It therefore held that our cases of Broussard v. Meineke Discount Muffler Shops, Inc.,
II.
A.
The district court found that Jefferson-Pilot's statute of limitations defense requires individualized proof as to each class member. This finding is erroneous as a matter of law, and it misled the court to conclude that Rule 23(b)(3)'s predominance requirement cannot be met here. The record shows that the limitations defense presents not individualized questions, but common ones that can be answered on a classwide basis. If the district court had undertaken the rigorous analysis of the record required by Gariety v. Grant Thornton, LLP,
In Gariety we noted that "Rule 23(b)(3) on its face requires [a district] court to `find [ ] that the questions of law or fact common to members of the class predominate over questions affecting only individual members.'" Id. at 365 (emphasis and second alteration in original). In making the necessary findings, a district court is not required "simply to accept the [parties'] allegations at face value," for "sometimes it may be necessary ... to probe behind the pleadings." Id. at 365-66 (citation omitted). Otherwise, there would be nothing to prevent parties from making unsupported allegations in order "to bolster or undermine a finding of predominance." Id. at 365 (citation omitted). In all events, a district court has the responsibility "for taking a `close look' at relevant matters" and "for conducting a `rigorous analysis' of such matters" before making the findings required by Rule 23(b)(3). Id. (citation omitted). We recognized in Gariety that findings made under Rule 23 may "overlap [with] findings that will have to be made on the merits." Id. at 366. This is permissible, we said, because findings made to resolve class certification questions do not bind the ultimate decisionmaker's finding on the merits. Although the district court in this case went beyond the pleadings and examined the report of the defense expert, the court accepted too readily the expert's unsupported conclusion that it was necessary to make an individual inquiry about each class member's access to the available information. The "rigorous analysis" required by Gariety demonstrates that the limitations defense can be determined on a classwide basis.
Jefferson-Pilot raises both actual and constructive knowledge as the basis for its limitations defense, and it argues that neither theory is capable of classwide adjudication. I disagree. With respect to the Company's actual knowledge theory, there is no evidence of actual knowledge to support the district court's finding that individualized inquiry is necessary to adjudicate the limitations defense. The Company deposed four class representatives, and their testimony reveals that not a single one knew Jefferson-Pilot charged African-Americans higher premiums because of their race.2 The Company did not seek to establish actual knowledge by deposing additional African-American policyholders in the four states where it sold industrial life policies. In addition, the expert's report cites no evidence to show that any class member actually knew of discriminatory pricing. Thus, the Company has utterly failed to demonstrate that individualized inquiry into actual knowledge is necessary because, as the record stands, no one had actual knowledge. By accepting Jefferson-Pilot's actual knowledge theory at face value, the district court allowed the Company to use an unsupported allegation "to [forestall] a finding of predominance." See Gariety,
Jefferson-Pilot's more plausible argument is that the class members had constructive knowledge of the challenged conduct outside the limitations period. A federal claim accrues under the constructive knowledge theory when the plaintiff "possessed sufficient facts to ... have reason to know of the alleged injury." Brooks v. City of Winston-Salem, N.C.,
Dr. McKiven, Jefferson-Pilot's expert, asserts there was "widespread publicity," both nationally and regionally, about the race-based "pricing differential." J.A. 82, 101. This assertion suggests that the same kind of information was available classwide. In his report McKiven identifies about forty newspaper and magazine articles and about twenty books, scholarly articles, and reports published over a ninety-five-year period (1906-2001) that discussed dual rates or race discrimination in the sale of insurance. Three of the magazines, Time (one article in 1964), Ebony (articles in 1946, 1954, 1969, and the early 1970s), and Black Enterprise (articles in 1973, 1975, and 1977), have national circulation. A few of the cited newspaper articles appeared in the national press, and a dozen or so articles appeared in southeastern newspapers.
Dr. McKiven also refers to other information on the issue. Black-owned insurance companies encouraged their agents to speak out in churches and in their sales calls about the race-based pricing of white-owned companies. The Congress of Industrial Organizations issued results of a survey indicating that African-Americans did not receive equal treatment from white-owned insurance companies. The NAACP and the Urban League published a few articles in their national magazines addressing the dual-rate practices. Finally, at three congressional hearings testimony was presented on the issue. All of these efforts had a broad regional or national focus.
Dr. McKiven thus concludes that "widespread publicity about [higher life insurance rates for African-Americans] existed in the Southeast" and nationally. J.A. 82. Tellingly, he offers no facts in his twenty-page report to suggest that there are individualized differences in what the class members "could have" known about the dual-rate practices. In other words, McKiven does not say that there was any variation among individual class members as to what they could have known. This lack of variation makes classwide treatment appropriate.
This case, then, is like the case presented on appeal in In re Monumental Life Insurance Co.,
Jefferson Pilot does not argue [as did the defendants in Monumental] that the district court should hold that widespread media treatment of the issue provided a reasonable person with sufficient information to give him either actual or constructive knowledge. Instead, it argues that individual class members were actually exposed to sufficient information to give them either actual or constructive knowledge of Jefferson Pilot's dual-rate practices outside the limitations period.
Ante at 326. Thus, the majority concludes that "the district court here must conduct individual inquiry into the information each class member actually possessed to determine whether each class member had actual or constructive knowledge of Jefferson Pilot's dual-rate practices." Ante at 326. The problem with this argument is that Jefferson-Pilot has nothing but widespread media treatment and publicity to rely on for its defense that, in the majority's words, class members were "exposed to sufficient information to give them either actual or constructive knowledge." Ante at 325-26. Jefferson-Pilot's expert said the information about the discrimination was "widespread," J.A. 82, and he offers nothing to suggest that the information available varied among class members. The Company has thus offered nothing to show that the limitations defense turns on facts that are specific or individual to each class member. The Company has no choice but to proceed like the insurance companies in the Monumental appeal, which relied on "the national media market" and local publications (including newspapers), with both arenas giving the discrimination issue consistent treatment. Because there was no attempt to "geographically splic[e] constructive notice," the Fifth Circuit had "no difficulty concluding that whether plaintiffs were provided constructive notice is an issue that can be decided on a classwide basis." Monumental,
The Fifth Circuit remanded the Monumental case to the Eastern District of Louisiana for further proceedings on class certification. The plaintiffs then renewed their motion to certify a class against two insurance companies that administrated industrial life insurance policies issued by more than 280 companies. In response the insurance companies offered evidence showing "regional differences in media treatment" of discriminatory pricing and an expert who, according to the Louisiana district court, "proved that whether and when any individual would have learned about industrial life insurance pricing practices depends on where they lived, the time period, what newspapers and articles they read, and what oral conversations they had in local churches or through other social networks." In re Indus. Life Ins. Litig., MDL No. 1371, slip op. at 14,
What the defense expert "proved" on remand in Monumental underscores what is lacking in this case. Here, the evidence concerning the information about the dual-rate practices focuses on its wide-spread dissemination rather than on whether the information available varied from place to place or from time period to time period. Accordingly, the district court's finding here — that "numerous sources available... could have alerted class members" to the discriminatory pricing, J.A. 296 — does not establish that individualized inquiry is necessary. I would not, however, foreclose the possibility of the district court's later reconsideration of the issue of whether the limitations defense presents individual questions. If discovery on the merits was to show that information about the dual-rate practices varied materially from place to place or from time period to time period in the four relevant states, then the issue of any class certification could be revisited by the district court.
In sum, as the record now stands, the statute of limitations defense presents issues that are common to the class. In addition, the plaintiffs' direct case involves a collective or common claim that the Company engaged in a single, sustained course of intentional discrimination against African-American policyholders by charging them higher rates for industrial life insurance than similarly situated whites. Rule 23(b)(3)'s requirement that common issues predominate is therefore satisfied.
B.
Rule 23(a)'s prerequisites for a class action, numerosity, commonality, typicality, and adequacy of representation are also satisfied in this case. See Fed.R.Civ.P. 23(a). First, there is no dispute that the proposed class meets the numerosity requirement. Second, as I have just demonstrated, the plaintiffs' affirmative case of discrimination and Jefferson-Pilot's statute of limitations defense both present questions that are common to the class. Third, because the claims of the representative parties are the same as the claims of the class, the typicality requirement is satisfied. Fourth, the district court concluded that any potential representational conflicts could be avoided by limiting the class to "insureds," and "if necessary, by subclassing." J.A. 294. Thus, "the representative parties will fairly and adequately protect the interests of the class." Fed. R.Civ.P. 23(a)(4).
* * *
The prerequisites of Rule 23(a) and the predominance requirement of Rule 23(b)(3) have been met. I would therefore vacate the district court's order denying class certification. In its order denying class certification, the district court briefly mentioned "[a]dditional Rule 23(b)(3) [c]oncerns," J.A. 303, relating to whether the class action method would be superior in this case. Because these concerns were fueled in large measure by the district court's erroneous finding that the statute of limitations defense could not be resolved on a classwide basis, I would remand to allow the district court to reconsider the Rule 23(b)(3) superiority issues.
Notes:
Contrary to the district court's view,Broussard and Gunnells are of little relevance here because those cases presented significant individual issues while this case does not, as I explain in part II. The two cases are worth discussing, however, because the district court's restrictive reading of them led it to the erroneous conclusion that the Fourth Circuit is quick to deny class certification whenever individual issues are present. Both Broussard and Gunnells, however, are faithful to the text of Rule 23 and allow class certification when questions "common to members of the class predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b)(3).
In Broussard a class of former and current Meineke muffler shop franchisees was awarded judgment against the franchisor on various claims, including breach of contract, fraud, and negligence. We reversed certification of the class because none of Rule 23(a)'s four prerequisites was satisfied. The lack of adequate representation was our main reason for reversal, but we also found that the central issues, including whether the statute of limitations was tolled, presented individual questions. We said in Broussard that "tolling the statute of limitations on each of [the] plaintiffs' claims depends on individualized showings" because the "representations made to each franchisee varied considerably."
In Gunnells purchasers and beneficiaries of a defunct multi-employer health plan sued the claims administrator for breach of duty and the insurance agents who marketed the plan for negligence, fraud, and breach of contract. We reversed certification of a class action against the insurance agents because the claims of the plaintiffs and the affirmative defenses of the agents, taken together, presented too many issues requiring individualized inquiry. Gunnells,
In sum, neither Broussard nor Gunnells stands for the proposition that the existence of individual issues precludes class certification when common issues predominate.
The majority contends that "[t]he very fact that [the plaintiffs] ask us to inspect their individual deposition testimony ... reveals that resolution of the statute of limitations defense will ... require the trier of fact to examine the particular circumstances of each individual class member."Ante at 323. The majority is mistaken. Inspection of the deposition testimony is necessary under Gariety, which requires a district court to take a close look at the evidence proffered at the certification stage "to identify the nature of the issues that actually will be presented at trial." Gariety,
The majority suggests my analysis ignores that the plaintiffs have the burden of establishing that the requirements of Rule 23 are satisfiedSee ante at 324. To the contrary, my analysis places the burden of producing class certification facts, or pointing out the lack of such facts, in proper context. Here, once the plaintiffs offered facts sufficient to show that there are common questions that predominate, the burden shifted to Jefferson-Pilot to rebut those facts. See 3 Alba Conte & Herbert Newberg, Newberg on Class Actions § 7:23, at 74-75 (4th ed. 2002). The Company's evidence not only failed to show that its statute of limitations defense presented individual questions, its evidence indicated just the opposite — that the defense presents common questions. The Company's evidence thus affirmatively assists the plaintiffs in their burden to show that the action is proper for class certification.