Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca1-08-02432/USCOURTS-ca1-08-02432-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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United States Court of Appeals

For the First Circuit

No. 08-2432

HERBERT W. BROWN III; JOSÉ L. UBARRI; DAVID W. ROMÁN,

Plaintiffs, Appellees,

v.

COLEGIO DE ABOGADOS DE PUERTO RICO,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jaime Pieras, Jr., U.S. District Judge]

Before

 Lynch, Chief Judge,

Boudin and Lipez, Circuit Judges.

Harold D. Vicente with whom Nelson N. Cordova-Morales and

Vicente & Cuebas were on brief for appellant.

David C. Indiano with whom Seth A. Erbe, María Ligia Giráldez,

Indiano & Williams, P.S.C., Andrés W. López and The Law Offices of

Andrés W. López were on brief for appellees.

July 23, 2010

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BOUDIN, Circuit Judge. Colegio de Abogados de Puerto

Rico ("Colegio") is a state-created, integrated bar association;

membership has been statutorily required in order to practice law

before the Commonwealth of Puerto Rico's courts. P.R. Laws Ann.

tit. 4, § 774 (2009). At the time the present dispute began,

Colegio had for many years provided compulsory life insurance to

its members, funded by a portion of their annual dues. The present

appeal is the latest phase of litigation stemming from this

compulsory insurance.

The procedural history traces back to a law suit filed in

1994. Carlos Romero, Jr., a Colegio member, claimed that the

organization was acting unlawfully by requiring him to purchase

life insurance in order to practice before Puerto Rican courts.

The district court granted summary judgment in Colegio's favor and

dismissed the claim in 1999 but was reversed on appeal by this

court. Romero v. Colegio de Abogados de Puerto Rico, 204 F.3d 291,

295-96, 304-06 (1st Cir. 2000).

This court held that the First Amendment allowed Colegio

to compel its members to purchase life insurance only if this was

germane to the purposes that justify compelling membership in an

integrated bar association, id. at 302; but, to avoid needlessly

deciding a constitutional question, we directed the district court

to certify the question of Colegio's authority, id. at 305-06. The

Puerto Rico Supreme Court affirmed that authority as a matter of

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The first group of attorneys requested that they be excused 1

from participating in the life insurance program on November 30,

2005. Colegio did not issue a response by the deadline for

attorneys to pay their annual dues, so the group paid in full. On

February 2, 2006, Colegio said that it would reimburse their

premiums only on various conditions, including that the attorneys

make a new request to be excluded every year--the claim being that

one board could not bind the next--and that their reimbursement not

serve as precedent for future cases. The attorneys refused and

Colegio eventually refunded their premiums on March 3, 2006.

A second group requested on February 27, 2006 that Colegio

refund the portion of their 2006 dues attributable to the life

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local law. The district court then held that the life insurance

program was not germane and was therefore unconstitutional, awarded

Romero damages--the amount of his dues attributable to the life

insurance program since he had initially objected--and entered an

injunction "prohibit[ing] [Colegio] from collecting . . . that

portion of his future annual dues attributable to the Colegio's

mandatory group life insurance program." Romero v. Colegio de

Abogados de Puerto Rico, No. 94-2503, slip op. at 9, 14-16 (D.P.R.

Sept. 26, 2002).

Despite the injunction, Colegio continued to provide life

insurance funded by its members' annual dues after the district

court's decision became final, and although mentioning the decision

in its 2003 and 2004 Treasurer's Reports, did not otherwise advise

its members that insurance need no longer be purchased. In late

2005 and early 2006, two groups of attorneys requested and received

reimbursements for those dues attributable to their life insurance

coverage, but only after much delay by Colegio.1

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insurance program. Colegio submitted the matter to a review board

and there argued that the Romero decision "is not extensive to

other Bar Association members"; that the attorneys' request was

untimely because it occurred after their 2006 dues had already been

paid; and that the board should allow it to reimburse the attorneys

with vouchers for Colegio seminars, books or other programs rather

than cash. Colegio eventually reimbursed the attorneys the dues

for the portion of their 2006 coverage "unearned" by the insurer.

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The named plaintiffs in this law suit are Colegio members

who neither objected to their participation in Colegio's life

insurance program nor requested reimbursement. They filed this

class action on June 27, 2006, requesting declaratory judgment and

an injunction forbidding Colegio from charging its members for life

insurance; the complaint was later amended to add a claim for

damages reflecting forced participation in the program between the

2002 Romero decision and the time the program was eventually

canceled. The plaintiffs sought to certify two classes, one for

damages and another for declaratory relief, and moved for summary

judgment, arguing that Romero had preclusive effect.

Colegio ended its life insurance program on August 29,

2006, and then filed a motion to dismiss, arguing that the case was

now moot. The district court denied its motion, finding that

"Colegio's prior pattern of contradictory behavior [left] the Court

with no assurance that the alleged constitutional violations

[would] not recur." On July 31, 2008, the court certified both of

the requested classes: a declaratory class encompassing all present

and future Colegio members, and a damages class consisting of

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Non-mutual offensive collateral estoppel, now usually called 2

issue preclusion, is a branch of res judicata doctrine which

prevents in certain circumstances re-litigation of issues

previously decided against one of the parties. Application is

"non-mutual" where the party asserting preclusion was not a party

to the prior case, and it is termed "offensive" when used by a

plaintiff to bind a defendant. See Acevedo-Garcia v. Monroig, 351

F.3d 547, 573-75 (1st Cir. 2003); Wright, Miller & Cooper, 18A

Federal Practice and Procedure § 4464 (2d ed. 2002).

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attorneys who were members between the conclusion of the Romero

litigation in 2002 and the ending of the life insurance program in

2006.

Not long afterwards, the district court granted summary

judgment for the plaintiffs, finding (based on non-mutual offensive

collateral estoppel ) that Colegio's compulsory life insurance 2

program violated the federal constitution. The court then issued

a permanent injunction barring Colegio from using its members'

annual dues for purposes of operating the compulsory life insurance

program, later amending its judgment to add damages in the amount

of $4,156,988.70, plus costs, interest and attorneys' fees.

Colegio now appeals.

Colegio's jurisdictional objection, which we consider

first, is that the case is moot because, after this law suit began,

it ceased to offer life insurance. See Iron Arrow Honor Soc'y v.

Heckler, 464 U.S. 67, 70 (1983) ("Federal courts lack jurisdiction

to decide moot cases . . . ."); County of Los Angeles v. Davis, 440

U.S. 625, 631 (1979). The district court found that it was "not

'absolutely clear' that the Colegio [would] permanently enforce its

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Compare Ramirez v. Sanchez Ramos, 438 F.3d 92, 96-97 (1st 3

Cir. 2006)("We review . . . mootness determination[s] de novo,

accepting as true the material factual allegations contained in the

complaint. . . ."), with Adams v. Bowater Inc., 313 F.3d 611, 613

(1st Cir. 2002) ("[W]here the district court applies an abstract

standard to known facts, the extent of deference accorded on review

varies from substantial deference to none at all, depending on the

subject matter and on other circumstances.").

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internal decision to eliminate the compulsory life insurance

component from the annual dues collection."

The substantive standard for mootness is variously

expressed in the cases; behavior certain not to recur ought not be

enjoined, Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.

(TOC), Inc., 528 U.S. 167, 189 (2000), but absent such certainty,

likelihood of reoccurrence might not be the only factor to be

considered. E.g., Horizon Bank & Trust Co. v. Massachusetts, 391

F.3d 48, 54 (1st Cir. 2004)(ability of a harm to evade review). As

for the standard of appellate review, some cases speak of de novo

review without qualification although conceivably factual findings

might deserve some deference.3

We need not resolve these issues because, even if review

were entirely de novo and confined purely to risk of repetition,

the district court's conclusion is sound. Indeed, as a general

rule of thumb, a defendant may not render a case moot by

voluntarily ceasing the activity of which the plaintiff complains;

were the opposite true, a defendant could immunize itself from suit

by altering its behavior so as to secure a dismissal, and then

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immediately reinstate the challenged conduct afterwards. See City

of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289 (1982);

United States v. W.T. Grant Co., 345 U.S. 629, 632 (1953).

Nevertheless, a case may become moot if the defendant

meets the "heavy burden" of showing that it is "absolutely clear

that the allegedly wrongful behavior could not reasonably be

expected to recur." Friends of the Earth, Inc., 528 U.S. at 189

(quoting United States v. Concentrated Phosphate Export Ass'n, 393

U.S. 199, 203 (1968)); see also Adams, 313 F.3d at 613. But

Colegio's past obstinacy and its own claims that one board's action

does not bind the next (see note 1, above) justify a fear of

repetition.

After Romero, Colegio did not fully advise its members

that they no longer had to buy insurance, threw obstacles in front

of those trying to opt out, and delayed refunds. In fact it moved

to disbar one member who refused to pay the portion of his dues

attributable to the program, see In re Rivera, No. TS-9645, 2006 WL

3782863 (P.R. Nov. 14, 2006). This sorry record answers the claim

of mootness and also defeats any claim that the district court

abused its discretion on the separate issue of whether as a matter

of discretion an injunction was warranted.

In a related argument against the injunction, Colegio

says that it was wrongly granted because there was no irreparable

harm, ordinarily a requirement for such relief. See eBay Inc. v.

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Compare Elrod v. Burns, 427 U.S. 347, 373 (1976) ("The loss 4

of First Amendment freedoms, for even minimal periods of time,

unquestionably constitutes irreparable injury."), with Rushia v.

Town of Ashburnham, 701 F.2d 7, 10 (1st Cir. 1983) (distinguishing

Elrod as not involving an injunction against a state criminal

prosecution and holding that "the fact that [the plaintiff] is

asserting First Amendment rights does not automatically require a

finding of irreparable injury"). See also Pub. Serv. Co. of New

Hampshire v. Town of West Newbury, 835 F.2d 380, 382 (1st Cir.

1987).

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MercExchange, L.L.C., 547 U.S. 388, 391 (2006). In particular,

Colegio claims that the damages are quantifiable and hence not

"irreparable," and that the plaintiffs suffered no injuries because

they received the benefit of the life insurance policy and because

objectors were ultimately reimbursed. The first part of the

argument is readily disposed of; the second part is complicated.

When a preliminary injunction is sought, the merits are

often an open question and, where it is clear that damages are

easily determined, this may well counsel against injunctive relief.

But where the merits have been determined and repetition is a risk,

it is fanciful to argue that a vast number of members should be

relegated to bringing law suits--possibly every year based on

Colegio's notion that one board does not bind another. This is

sufficient without even considering the relevance of First

Amendment rights.4

Colegio now claims in its brief that the Puerto Rico

legislature has recently enacted a law converting Colegio into a

voluntary bar association. Depending on Colegio's new status--most

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importantly, whether it is truly voluntary--it may no longer be

prohibited by Romero from operating a mandatory life insurance

program. But there is nothing in record about such matters. On

remand, Colegio is free to ask the district court to consider them

and seek dismissal of the injunctive element of the relief granted

on the ground that it is no longer appropriate. 

This brings us to damages. The district court granted

class certification--relevant primarily to damages since an

injunction and declaratory judgment could have been granted to any

named plaintiff--and ultimately awarded large damages to the class.

The damages, of course, are unaffected by any argument about

mootness based on the new statute. But Colegio challenges both

the class certification and the damages award itself on numerous

grounds.

 Colegio's first argument--that the district court should

have allowed discovery before class certification--is forfeit

because it was never raised in the district court. See McCoy v.

Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991), cert.

denied, 504 U.S. 910 (1992). When plaintiffs moved to certify two

classes, Colegio asked to reserve the right to oppose certification

if its jurisdictional challenges failed, but after the district

court rejected those challenges, Colegio failed to raise any

substantive objections to certification.

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The wording of the resolution is as follows: 5

Be it resolved by the special general membership meeting

of the [Colegio de Abogados de Puerto Rico ("CAPR")]: .

. . Second: Reject the class action suit presented at the

U.S. District Court for the District of Puerto Rico by

attorneys Herbert Brown III, Jose L. Ubarri, and David

Roman, on their own right and representing all members of

the CAPR, as it does not represent the individual or

collective sentiments of the General Meeting's

membership.

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Colegio next argues that the class representatives do not

adequately represent the interests of the class as required by Rule

23(a)(4) and points to an October 18, 2008, resolution passed at a

membership meeting opposing the present law suit. Courts may 5

alter certification orders prior to final judgment, Fed. R. Civ. P.

23(c)(1)(C), cf. Key v. Gillette Co., 782 F.2d 5, 7 (1st Cir.

1986), but the vote is an inadequate basis for reconsideration,

especially when circumstances of the resolution are considered.

It appears from the record that the meeting that adopted

the resolution was attended by only a few hundred of Colegio's

12,000 members; an affidavit suggests that the matter was voted on

but never discussed; and there is no information from Colegio to

indicate what was actually disclosed to the members about the

nature of the suit, the interests of the members in the suit, or

the basis for opposing a law suit aiming to recover damages for the

members. Nor do Colegio's earlier tactics inspire confidence in

the resolution.

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Colegio's final attack on the class certification is that

the plaintiffs failed to provide notice of the law suit as is

required by Rule 23(c)(2). For the declaratory relief class

(certified under Rule 23(b)(2)), the court "may" notify the class;

but for the damages class (certified under Rule 23(b)(3)), the

court "must direct to class members the best notice that is

practicable under the circumstances." Fed. R. Civ. P.

23(c)(2)(A),(B). What Colegio objects to here is the failure to

give notice to the latter class.

The notice to those in the damage class must include, as

stated in the rule, the right of the class member to seek to appear

by his or her own attorney or to opt out of the class and--if he or

she fails to opt out--a warning that he or she will be bound by the

judgment. Fed. R. Civ. P. 23(c)(2)(B). Although the rule does not

say when notice must be given, "[t]he purpose of Rule 23(c)(2) is

to ensure that the plaintiff class receives notice of the action

well before the merits of the case are adjudicated." Schwarzschild

v. Tse, 69 F.3d 293, 295 (9th Cir. 1995), cert. denied, 517 U.S.

1121 (1996); see Wright, Miller & Kane, 7AA Federal Practice &

Procedure § 1788 (3d ed. 2005).

As the district court awarded the damages class seemingly

the best relief imaginable (reimbursement of the entirety of their

premiums paid during the class period), few members of the class

may now have any incentive to opt out; but some may prefer as a

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A damage award by the district judge may involve questions of 6

law reviewed de novo but is otherwise reviewed for abuse of

discretion. Lawton v. Nyman, 327 F.3d 30, 37 (1st Cir. 2003).

That damages were awarded on summary judgment adds the further

requirement that the district court not resolve fairly disputable

factual issues against the non-moving party. Simas v. First

Citizens' Fed. Credit Union, 170 F.3d 37, 43 n.1, 50-51 (1st Cir.

1999). 

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matter of principle to support Colegio rather than win a judgment

against it. Anyway, the notice requirement for 23(b)(3) class

actions is rooted in due process and clearly mandatory under Rule

23(c)(2)(B), Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176

(1974); Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 548-49

(1974), so on remand the district court must provide the notice,

which ought to be done promptly.

Colegio's final arguments take issue with the district

court's award, on summary judgment, of roughly $4 million in money

damages representing the charges Colegio collected for the

insurance from 2002 to the end of the program. The standard of

review varies with the issue. There is also a procedural quirk-- 6

relating to the adequacy of notice to Colegio that damages were to

be determined without full-scale litigation--which provides

necessary context for certain of our rulings.

The plaintiffs' original complaint requested only

declaratory and injunctive relief; their motion for summary

judgment was then filed; and their damage claim was then added by

amendment. But the original complaint and summary judgment motion

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did seek a declaration that plaintiffs' rights had been violated--a

predicate for damages. And, by the time Colegio filed its

opposition to summary judgment, the amendment to the complaint had

been allowed.

The opposition to summary judgment, filed over 22 months

after the motion for summary judgment itself, asserted (correctly)

that the request for damages was not part of the summary judgment

motion; but it noted Colegio's position that the non-objecting

class of plaintiffs had gotten the benefit of their payments. The

opposition offered no objection to non-mutual offensive collateral

estoppel--which had been expressly sought in the summary judgment

motion--nor did it mention the statute of limitations or any

concern about vicarious liability.

In September 2008, the district judge in granting summary

judgment concluded that the plaintiffs were also entitled to

damages and ordered the plaintiffs to identify, subject to

objection by Colegio, "the monetary amount of membership dues that

was allocated to the compulsory life insurance program between the

entry of judgment in the Romero litigation in 2002 and the

present," as well as costs and attorneys' fees. Eventually, the

figure ($4,156,988.70) was elicited from Colegio, and, in April

2009, the district court entered a final judgment in that amount,

reserving attorneys' fees for later disposition.

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On this appeal, Colegio now argues that the damage award

is improper for a succession of reasons: that notice and discovery

as to damages should have been allowed, that the plaintiff class

members had benefitted from the insurance and so deserved no

damages, that non-mutual offensive collateral estoppel was

improper, that some of the damage claims are barred by the statute

of limitations, and that liability is being imposed on Colegio

vicariously and inconsistent with precedent. It also makes an

undeveloped evidentiary objection of which nothing more need be

said.

When the district judge proposed that Colegio return the

premiums it had charged after Romero held mandatory insurance

unlawful, Colegio had ample opportunity to state its objections and

explain what discovery or other proceedings it needed. Instead, in

the course of a number of filings made after the district court's

request for data as to the premiums, Colegio's contention was

simply that it owed nothing because the class members had not

objected to paying for insurance and had benefitted from coverage.

Thus, three of the objections now pressed by Colegio are

forfeit. The objection to collateral estoppel, see Parklane

Hosiery Co. v. Shore, 439 U.S. 322, 329-31 (1979) (disfavoring

certain applications), ought initially to have been made in

opposition to summary judgment; and Colegio had over the many

months between the finding of liability and the final damages

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The vicarious liability objection, at least as briefed by 7

Colegio, is hopeless; Colegio is responsible under 42 U.S.C. § 1983

for the authorized action of its board and officers in maintaining

the insurance program. Bd. of County Comm'rs of Bryan County v.

Brown, 520 U.S. 397, 403 (1997). Whether it might have cut back on

damages on statute of limitations grounds is a closer question,

given the otherwise applicable one year statute. See Rivera-Ramos

v. Roman, 156 F.3d 276, 282 (1st Cir. 1998).

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determination an obligation to make clear its statute of

limitations and vicarious liability objections. Although both were

mentioned summarily in Colegio's original answer, no effort to

assert or explain these objections occurred thereafter and attempts

to do so on appeal come too late. McCoy, 950 F.2d at 22.7

One argument remains. Colegio has consistently argued,

starting with its opposition to summary judgment, that the class is

composed of non-objecting parties who got the benefit of the

insurance protection and that therefore no damages should be

awarded. This assumes, perhaps mistakenly, that the premium

charged by Colegio was no more than the fair market value of the

insurance; but a further assumption, even more clearly flawed, is

that the insurance was in fact desired by the class members on whom

it was inflicted.

Perhaps some members of the class wanted the insurance,

were even willing to have part of their payment go to Colegio

rather than the insurer, and would have purchased it even if a box

on the dues notice made the purchase optional. But we know from

prior protests that some lawyers did not want the insurance: some

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class members may have been unaware of the Romero decision; others

may have accepted Colegio's remarkable claim that only Romero

himself could benefit from the decision; and still others may have

learned enough of how Colegio treated objectors (see note 1, above)

to stay silent because of the threatening obstruction and

penalties.

Starting with those members who did not want the

insurance, we reject Colegio's claim that those class members

cannot recover their premiums because they "benefitted" from

coverage that they did not desire. The ordinary rule in tort law

is that damages are not reduced by conferring undesired benefits of

some other species. Restatement (Second) of Torts, § 920 & cmt. f

(1979); 1 D. Dobbs, Law of Remedies, § 3.8(2), at 378 (2d ed.

1993). There are exceptions but only where the equities favor the

wrongdoer, Restatement, supra, cmt. f.

An example of an equitable exception is Ellis v.

Brotherhood of Railway, Airline & Steamship Clerks, 466 U.S. 435,

453-55 (1984). There the Supreme Court declined to decide whether

non-union members could be forced to pay dues--required of them

because the union represented them in bargaining--that included the

cost of very modest death benefits available to members and nonmembers alike. But in holding that the union's decertification

mooted the issue for the future, the Court said, "We doubt that

the equities call for a refund of those payments." Id. at 455.

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The question whether the death benefits charge was

improper under the relevant labor statute was plainly close--the

benefits were somewhere between union activities for which nonmembers could be charged and those for which they could not; in

fact, the circuit court had held that such benefits fell in the

former class. Id. at 454. The union's good faith was surely a

relevant equity. Here, where Colegio collected all of the

premiums in question in the teeth of Romero, we have no doubt that

the equities weigh very much against the defendant and warrant no

exception to the ordinary tort rule.

This leaves those members who did want the insurance from

Colegio or, conceivably, those who wanted it instead from some

other entity but accepted the Colegio-imposed insurance as a

substitute and curtailed other insurance. But Colegio has

suggested no practical means to distinguish those groups from other

members of the class. Even if endless mini-trials were conducted

at great expense, every member would be free in light of Colegio's

conduct to claim that--even had he heard of Romero--he was an

unwilling purchaser.

Although in class actions there is a preference for

individually proven damages, cf. Cooper v. Fed. Reserve Bank of

Richmond, 467 U.S. 867, 876 (1984), it is well accepted that in

some cases an approximation of damages or a uniform figure for the

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See, e.g., McClain v. Lufkin Indus., 519 F.3d 264 (5th Cir.), 8

cert. denied, 129 S. Ct. 198 (2008) (allowing class-wide formula

rather than individual hearings to determine back pay); White v.

Carolina Paperboard Corp., 564 F.2d 1073 (4th Cir. 1977) (dividing

damages equally among all class members who might have been

qualified for a job); Stewart v. General Motors Corp., 542 F.2d

445, 452-53 (7th Cir. 1976), cert. denied, 433 U.S. 919 (1977)

(averaged classwide relief is preferable to no relief); Barr v.

WUI/TAS, Inc., No. 74 Civ. 2687-LFM, 1976 WL 1205 (S.D.N.Y. 1976)

(distributing equally among class members because there was no

method to determine the amount that any particular subscriber was

overcharged by the defendant).

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class is the best that can be done. This is an unusually suitable 8

case for the district judge's blanket remedy: from Romero onward,

Colegio knowingly inflicted all of the insurance on willing and

unwilling members alike in the teeth of a ruling that it was not

entitled to do so; and it has offered no practical solution to the

problem apart from paying nothing at all.

There is one caveat. We have already ruled that class

members are entitled on remand to opt out of the class and be

excluded from the judgment. If Colegio is right about the degree

of its support among the membership, this opt-out group may well

include most or all those who were happy to have the insurance at

the price charged, thereby significantly reducing the ultimate

judgment. To the extent of such opt-outs, Colegio is entitled to

a proportionate reduction of the damage award.

We affirm the district court's declaration of liability

and its grant of injunctive relief but vacate its judgment insofar

as it determines the amount of damages, and remand to allow notice

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to be given to class members including their right to opt out of

the class. Following the expiration of the notice period, the

district court may reinstate a damage award calculated as before

but this time excluding damages otherwise attributable to those who

have opted out of the class.

It is so ordered.

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