Federal court plaintiffs seeking class treatment of an action or claim must prove that they meet all of Federal Rule of Civil Procedure 23(a)’s requirements (numerosity, commonality, typicality, and adequacy) and that they fall under one of Rule 23(b)’s categories. Plaintiffs seeking primarily monetary relief must satisfy Rule 23(b)(3)’s test that questions of law or fact common to class members predominate over individual questions and that a class action is superior to other adjudicatory methods.
Given the challenges associated with these thresholds, some plaintiffs invoke Rule 23(c)(4) as a fallback where aspects of an action or claim – such as injury, causation, or damages – may not be susceptible to class-wide proof. Specifically, Rule 23(c)(4) states that “when appropriate,” an action may be brought or maintained as a class action with respect to “particular issues.” But the rule does not delineate when, precisely, issue certification is “appropriate” or what types of “issues” are suitable for certification. Accordingly, disputes arise over questions such as whether issue certification is proper in connection with specific elements of a claim for relief, or whether it should be limited to situations where the issue certified would completely resolve the defendant’s liability, leaving only remedies issues for possible individual determination.
The Third Circuit recently grappled with these and other questions in Russell v. Educational Commission for Foreign Medical Graduates, No. 20-2128 (Sept. 24, 2021), and ultimately concluded that the district court abused its discretion by certifying an issue class under Rule 23(c)(4) without conducting a sufficiently rigorous analysis.
The defendant in Russell was a nonprofit organization that certified the credentials of foreign candidates seeking U.S. medical residencies. The plaintiffs brought a putative class action for negligent infliction of emotional distress, alleging that the defendant had failed to properly investigate an individual who rendered medical services to them after obtaining credentials through fraudulent means. The district court certified a Rule 23(c)(4) class on the issues of whether the defendant owed a duty to the class members and whether it breached that duty, leaving for individual proceedings questions of causation, injury, damages, and applicability of affirmative defenses.
The Third Circuit vacated and remanded for further proceedings. The Court found that, in deciding whether to certify an issue class under Rule 23(c)(4), a district court must first determine if the class satisfies Rule 23(a) and fits within one of Rule 23(b)’s categories. These inquiries involve whether the court can certify the class. But district courts must also determine the “appropriateness” of issue certification—i.e., whether the district court should certify the class—by applying the non-exclusive list of nine factors set forth in Gates v. Rohm & Haas, 655 F.3d 255 (3d Cir. 2011). The “Gates factors” consider, inter alia, the efficiencies to be gained by issue certification and the impact of issue certification on the fairness of resolution of the remaining issues.
Here, the district court did not assess whether the duty and breach elements of the plaintiffs’ claims satisfied Rule 23(b)(3) or any other prong of Rule 23(b). Further, the district court failed to “rigorously consider” several of the Gates factors. For example, the district court had not analyzed whether certification of an issue class might place an undue burden on the defendant to settle. Nor had it properly examined the efficiency of issue certification in light of the several remaining questions to be tried individually (e.g., causation and damages) or whether individual juries from the non-class phase would need to reexamine evidence from the class phase. In a partial victory for the plaintiffs, however, the Court rejected the view that plaintiffs seeking issue certification are required to satisfy Rule 23(b) with respect to all elements of their claims or that the issue certified must be sufficient to resolve the defendant’s liability.
As illustrated by Russell, defendants opposing Rule 23(c)(4) issue certification should urge rigorous application of Rule 23(a) and (b) requirements and rigorous scrutiny of whether certification of the “particular” issue is “appropriate” under the specific circumstances of the case. General assertions of efficiency should not suffice, and depending on the circumstances, the district court may simply be “kicking the can” with regard to individual inquiries that will ultimately render class treatment inappropriate.