United States Court of Appeals

Fifth Circuit

FILED

April 2, 2004

Charles R. Fulbruge III

Clerk

In the

United States Court of Appeals

for the Fifth Circuit

_______________

m 02-30540

_______________

IN THE MATTER OF:

MONUMENTAL LIFE INSURANCE COMPANY,

INDUSTRIAL LIFE INSURANCE LITIGATION.

MATTIE BRATCHER, ET AL.,

Plaintiffs,

MATTIE BRATCHER; JOHN BRATCHER;

CAROLINE BROWN,

ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED;

MARY SUE TRUESDALE;

MAXINE CASH,

ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED;

MILDRED BUFORD,

ALSO KNOWN AS MILDRED GAMLIN,

ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED,

Plaintiffs-Appellants,

VERSUS

NATIONAL STANDARD LIFE INSURANCE COMPANY, ET AL.,

Defendants,

MONUMENTAL LIFE INSURANCE COMPANY,

Defendant-Appellee.
2

* * * * * * * * * * * * * * * * * * * * * * * * *

IN THE MATTER OF:

UNITRIN, INC.,

INDUSTRIAL LIFE INSURANCE LITIGATION.

ROSIE LEE COTHRAN, ET AL.,

Plaintiffs,

ELIZABETH WALKER,

Plaintiff-Appellee,

VERSUS

SECURITY INDUSTRIAL INSURANCE COMPANY, ET AL.,

Defendants,

MONUMENTAL LIFE INSURANCE COMPANY,

Defendant-Appellee.
3

* * * * * * * * * * * * * * * * * * * * * * * * *

IN THE MATTER OF:

AMERICAN NATIONAL INSURANCE COMPANY,

INDUSTRIAL LIFE INSURANCE LITIGATION.

ROSE MARY ROACH,

ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED,

Plaintiff-Appellant,

VERSUS

AMERICAN NATIONAL INSURANCE COMPANY,

Defendant-Appellee.
4

* * * * * * * * * * * * * * * * * * * * * * * * *

IN THE MATTER OF:

WESTERN & SOUTHERN LIFE INSURANCE CO.,

INDUSTRIAL LIFE INSURANCE LITIGATION.

JOSEPH BELL, ETC., ET AL.,

Plaintiffs,

JOSEPH BELL,

INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED;

WILLA ELLIS, DOCTOR;

THELMA WALKER OATIS,

ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED;

ALMA HYDE,

Plaintiffs-Appellants,

VERSUS

WESTERN & SOUTHERN LIFE INSURANCE COMPANY,

Defendant-Appellee.

_______________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

MDL Docket No. 1371,

Consolidated with No. 1391 and No. 1395

_________________________
5

ON PETITION FOR REHEARING

(Opinion Aug. 13, 2003, 343 F.3d 331)

Before SMITH, DENNIS, and CLEMENT, 

Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The petition for panel rehearing is

DENIED, and no judge in regular active service having requested that the court be polled

on rehearing en banc, the petition for rehearing

en banc is DENIED. The opinion, 343 F.3d

331 (5th Cir. 2003), is withdrawn for the

limited purpose of making minor adjustments

in the analyses contained in parts III.A, III.B,

and V. Although by far the greater portion of

the opinion remainsintact, we now issue a new

opinion, as follows:

* * * * * * * * * * *

In what may be the ultimate negative value

class action lawsuit,

1

plaintiffs challenge defendants’ alleged practice of paying lower benefits and charging higher premiumsto blacksin

the sale of low-value life insurance. The district court denied plaintiffs’ motion to certify

a class pursuant to FED. R. CIV. P. 23(b)(2),

finding, inter alia, that the majority of class

members would not benefit from injunctive

relief. Based primarily on Allison v. Citgo

Petroleum Co., 151 F.3d 402 (5th Cir. 1998),

we reverse and remand.

I.

Thisis a consolidation of civilrights actions

against three life insurance companies: Monumental Life Insurance Company (“Monumental”), American National Insurance Company

(“ANICO”), and Western and Southern Insurance Company (“Western and Southern”).

Plaintiff policyowners, all of whom are black,

allege that, for decades, defendants discriminated against them in the sale and administration of low-value life insurance policies,

known as industrial life policies,2that have

face amounts of $2000 or less and require

small weekly or monthly premiums. Defendants comprise over 280 companiesthat issued

industriallife policies over a fifty-to sixty-fiveyear period.3

 

Plaintiffs allege two overtly discriminatory

practices. First, they accuse defendants of

placing blacksin industrialpolicies offering the

same benefits as do policiessold to whites, but

at a higher premium (dual rates). Second,

defendants allegedlyplaced blacksin speciallydesigned substandard industrial policies providing fewer or lower benefits than do com1 A “negative value”suit is one in which class

members’ claims “would be uneconomical to litigate individually.” Phillips Petroleum v. Shutts,

472 U.S. 797, 809 (1985); see also Castano v.

Am. Tobacco Co., 84 F.3d 734, 748 (5th Cir.

1996).

2 Defendants defend this practice on the basis

that (1) the race-distinct pricing was justified;

(2) the practicewas approved by regulators; (3) the

racially discriminatory policies were no more profitable than were those sold to whites; and (4)some

of the discriminatory policies were remediated.

3 Over theyears, defendants have acquired other

insurance companies and thereby assumed blocks

of in-force insurance policies issued by them.

Monumental currently administers policies issued

by 200 different companies, while Western and

Southern administers policies issued by approximately 80 companies. ANICO has assumed an indeterminate number of in-force policies.
6

parable plans sold to whites (dual plans).

These practices are memorialized in the insurer’s rate books and records, which explicitly distinguish dual rate and dual plan policies

by race.4 Although, before filing their motion

for class certification, plaintiffs challenged the

insurers’ alleged practice of charging blacks

substandard premiums because of non-racial

underwriting factors,suchasmentalcondition,

occupation, socioeconomic status, educational

level, living conditions, and personal habits,

plaintiffsno longer complainofsuch pretextual

underwriting procedures. 

Defendants state that they issued “hundreds, perhaps thousands, of different industrial life insurance products” encompassing a

countless variety of underwriting standards. It

is undisputed that all companies that sold dual

rate or dual plan policies have not done so

since the early 1970’s. Also, as early as 1988,

some insurers voluntarily adjusted premiums

and/or death benefitsto equalize the amount of

coverage per premium dollar. Still, plaintiffs

estimate that over 4.5 million ofthe 5.6 million

industrial policies issued by defendantsremain

in-force; many other policies have been terminated,surrendered, or paid-upwithout remediation.5

 Defendants’ expert estimates that the

ratio ofterminated policiesto outstanding policiesis approximatelyfive to one, meaning that

slightly more than one million policies remain

in-force. 

Plaintiffs sued for violations of 42 U.S.C.

§§ 1981 and 1982, seeking (1) an injunction

prohibiting the collection of discriminatory

premiums, (2) reformationofpoliciesto equalize benefits, and (3) restitution of past premium overcharges or benefit underpayments.

Pursuant to 28 U.S.C. § 1407, the Judicial

Panel for Multidistrict Litigation (“MDL”)

consolidated the actions against Monumental

and transferred them to the Eastern District of

Louisiana for pretrial proceedings. Later, the

MDL Panel took the same action with the

cases against ANICO and Western and Southern. 

Plaintiffs moved for certification of a class

pursuant to rule 23(b)(2), requesting that class

members be provided notice and opt-out

rights. The district court denied certification,

finding that plaintiffs’ claims for monetary relief predominate over their claims for injunctive relief, making rule 23(b)(2) certification

inappropriate. The court also found that, given the large number of companies and policies

involved, individualized hearings were necessary to determine damages and whether claims

were barred by the statute of limitations. Defendants sought, and this court granted, interlocutory review pursuant to FED. R. CIV. P.

23(f). 

II.

Defendants contend that class members

cannot be readily identified by way of the class

definition. A precise class definition is necessary to identify properly “those entitled to

relief, those bound by the judgment, and those

entitled to notice.” 5 JAMES W. MOORE ET

AL., MOORE’S FEDERAL PRACTICE § 23.21[6],

at 23-62.2 (3d ed. 2003); see DeBremaecker

v. Short, 433 F.2d 733, 734 (5th Cir. 1970).

Some courts have stated that a precise class

definition is not as critical where certification

4 As an example, a 1962 ANICO rate book

shows that, for a twenty-year-old black, a $500

“20 Pay Life” industrial policy charged a weekly

premium of $0.41, while a twenty-year-old white

paid only $0.32.

5

 Plaintiffs allege that Monumental has not adjusted any of its dual rate or dual plan policies.

ANICO adjusted one of its four discriminatory

“Standard No. 3 plans.
7

of a class for injunctive or declaratory relief is

sought under rule 23(b)(2).6 Where notice and

opt-out rights are requested, however, a precise class definition becomes just as important

as in the rule 23(b)(3) context.

Plaintiffssought to certifya class comprised

of “[a]ll African-Americans who own, or

owned at the time of policy termination, an

industrial life insurance policy that was issued

as a substandard plan or at a substandard

rate.” Defendants argue that the plain language ofthat definition does not comport with

the class plaintiffs seek to certify. As we have

noted, beforemoving for certificationplaintiffs

had included not only blacks who had purchased dual rate or dual plan policies, but also

blacks who allegedly were forced into substandard plans, or forced to pay substandard

rates, through the use of non-racial underwriting factors.

In their motion for certification, plaintiffs

narrowed the class, stating that “[t]he proposed class does not include those who may

have been subjected to covert socio-economic

forms of racial discrimination.” Plaintiffs specified that “the term ‘substandard’ applies to

overt race-distinct dual premiums and plans,

not to policies called substandard because of

other factors such as socio-economic underwriting.” 

We agree with defendants’ observation

that, as written, the class definition includes all

blacks who paid substandard rates or were

issued substandard plans. The definition

makes no distinction between class members

who purchased dual rate or dual plan policies

and those forced into substandard rates orsubstandard plans through the use of pretextual

underwriting practices. In other words, one

must look to the certification motion for an

adequate description of the proposed class.

Holding plaintiffs to the plain language of

the class definition would be overly formalistic. In the first place, the district court, in denying certification, apparently did not consider

the pretextual claims as part of the proposed

class. Though referring to the “mass of policies involved” and the “differing underwriting

practices among some 280 companies,” the

court stated that in calculating damages, individualized hearings were necessary to account

for the idiosyncracies of each policy. At no

point did the court suggest that individualized

hearings were necessary to determine liability,

as would be necessary if pretextual underwriting claims were part of the class. 

Second, holding plaintiffsto the plain language of their definition would ignore the ongoing refinement and give-and-take inherent in

class action litigation, particularly in the formation of a workable class definition. District

courts are permitted to limit or modify class

definitionsto provide the necessaryprecision.7

6

See Battle v. Commonwealth, 629 F.2d 269,

271 n.1 (3d Cir. 1980) (“Where . . . the class action seeks only injunctive or declaratory relief, for

which the notice provision of Fed. R. Civ. P. 23-

(c)(2) is not mandatory, the district court has even

greater freedom in both the timing and specificity

of its class definition.”); Rice v. City of Philadelphia, 66 F.R.D. 17, 19 (E.D. Pa. 1974) (“[T]he

precise definition of the [(b)(2)] class is relatively

unimportant. If relief is granted to the plaintiff

class, the defendants are legally obligated to comply, and it is usually unnecessary to define with

precision the persons entitled to enforce compliance

. . . .”). 

7

See, e.g., Robidoux v. Celani, 987 F.2d 931,

937 (2d Cir. 1993) (“A court is not bound by the

(continued...)
8

Ifthe classis certified on remand, we trust that

the plaintiffs or district court will amend the

definition accordingly.

Defendants also argue that the definition

terms “own, or owned,” “industrial life insurance policy,” “substandard plan,” and “substandard rate” are ambiguous, further complicating identification of class members. This

argument, too, is overly formalistic. See Forbush, 994 F.2d at 1105-06. 

Plaintiffs’ filings in the district court clarified any ambiguities by stating that “the class

is limited to industrial policies sold at a substandard (i.e., higher) rate for African-Americans and a lower rate for Caucasians, or as a

substandard plan (i.e., a more costly plan) for

African-Americans and a corresponding less

expensive plan for Caucasians.” Plaintiffs define industrial life insurance policies as

“(1) policieslabeled as‘industrial’ or (2) those

policies with a face amount of less than

$2,000.00 and weekly or monthly home premium collection.” Defendants were provided

adequate notice and discovery by which to argue that the narrowed class cannot be certified

pursuant to rule 23(b)(2).

III.

We review for abuse of discretion the denial

of class certification. Jenkins v. Raymark Indus., 782 F.2d 468, 471-72 (5th Cir. 1986).

“Implicit in this deferentialstandard is a recognition ofthe essentially factual basis of the certification inquiry and of the district court’s inherent power to manage and control pending

litigation.” Allison, 151 F.3d at 408. We review de novo however, the question whether

the district court applied the correct legalstandard. Forbush, 994 F.2d at 1104.

All classes must satisfy the four baseline requirements of rule 23(a): numerosity, commonality, typicality, and adequacyofrepresentation.8

 FED.R.CIV.P. 23(a). Assuming these

requirements are satisfied, a rule 23(b)(2) class

may be certified if “the party opposing the

class has acted or refused to act on grounds

generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the

class as a whole.” FED. R. CIV. P. 23(b)(2).

Plaintiffs premise rule 23(b)(2) certification on

their request for an injunction prohibiting the

further collection of discriminatory premiums.

A.

The court observed that “many” proposed

class membersSSthose whose policies have

lapsed, those whose policies have alreadybeen

voluntarily adjusted by defendants, and those

whose death benefits already have been

paidSSwould not benefit frominjunctive relief.

The court concluded that “this is a case in

which individualityoverrides any bland groupthink, and money becomes the prime goal . . .

7

(...continued)

class definition proposed in the complaint and

should not dismiss the action simply because the

complaint seeks to define the class too broadly.”);

Harris v. Gen. Dev. Corp., 127 F.R.D. 655, 659

(N.D. Ill. 1989) (“[I]t is certainly within this

court’s discretion to limit or redefine the scope of

the class.”); Meyer v. Citizens & S. Nat’l Bank,

106 F.R.D. 356, 360 (M.D. Ga. 1985) (“The

Court has discretion in ruling on a motion to certify

a class. This discretion extends to defining the

scope of the class.”) (citations omitted).

8 The district court noted that “oral argument

unveiled serious adequacy of representation issues,” but did not rely on this basis in denying

certification. 
9

not injunctive relief.” Rule 23(b)(2) certification is improper, the court held, where the

class’s request for injunctive relief merely

serves as a bootstrap for a claim of monetary

damages.

In Allison, we carefully explained the statement in the advisory committee notesthat rule

23(b)(2) certification “does not extend to cases in which the appropriate final relief relates

exclusively or predominantly to money damages.” FED. R. CIV. P. 23 advisory committee

notes(emphasis added).9 Allison did not hold,

asthe district court believed, that monetary relief predominates where it is the “prime goal”

or a mere bootstrap to injunctive relief. Instead, “determining whether one form of relief

actually predominates in some quantifiable

sense is a wasteful and impossible task that

should be avoided.” Allison, 151 F.3d at 412

(citing 7A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1775, at

470 (2d ed. 1986)). In other words, certification does not hinge on the subjective intentions

ofthe classrepresentatives and their counselin

bringing suit.10

Instead, Allison looked to the nature of the

rule 23(b)(2) device in definingwhenmonetary

relief predominates. That rule’s focus on injunctive and declaratoryrelief presumes a class

best described as a “homogenous and cohesive

group with few conflicting interests among its

members.” Id. at 413. Class certification

centers on the defendants’ alleged unlawful

conduct, not on individual injury. Once monetary damages enter the picture, however, class

cohesiveness is generally lost, because

“[m]onetary remedies are more often related

directly to the disparate merits of individual

claims.” Id. (citations omitted). Where the

need to address the merits of individual claims

requires separate hearings, the efficiency

gained by class litigation is lost.

In Allison, therefore, we held, id. at 415,

that monetary relief, to be viable in a rule

23(b)(2) class, must “flow directly from

liability to the class as a whole on the claims

forming the basis of the injunctive or

declaratory relief.” Monetary relief must be

incidental, meaning that it is “capable of

computation by means of objective standards

and not dependent in any significant way on

the intangible, subjective differences of each

class member’s circumstances.”11Id.

Additional hearings to resolve “the disparate

merits of each individual’s case” should be

unnecessary. Id.

9 Allison, 151 F.3d at 411-12 (“The Advisory

Committee Notes make no effort to define or explain the concept. Interpreting the term literally,

predominant means ‘controlling, dominating, [or]

prevailing.’ But how that translates into a workable formula for comparing different types of remedies is not at all clear.”) (citation omitted).

10 But see Molski v. Gleich, 318 F.3d 937, 950

(9th Cir. 2003) (expressly rejecting Allison and instead “focus[ing] on the language of Rule 23(b)(2)

and the intent of the plaintiffsin bringing the suit”);

Robinson v. Metro-North Commuter R.R., 267

F.3d 147, 163-64 (2d Cir. 2001) (stating that rule

23(b)(2) certification is appropriate only where

“reasonableplaintiffs would bring the suit to obtain

(continued...)

10(...continued)

the injunctive or declaratory reliefsought” and “the

injunctive or declaratory relief sought would be

both reasonably necessary and appropriate were

the plaintiffs to succeed on the merits”).

11 The predomination requirement serves two

basic purposes, namely the interests of class members who may wish to pursue monetary claims individually, and interests of judicial economy. Allison, 151 F.3d at 415.
10

Of course, certification under rule 23(b)(2)

is appropriate only ifmembers of the proposed

class would benefit from the injunctive relief

they request. The question whether the

proposed class members are properly seeking

such reliefis antecedent to the questionwhether that relief would predominate over money

damages. 

In Bolin v. Sears Roebuck & Co., 231 F.3d

970 (5thCir. 2000), we considered a proposed

rule 23(b)(2) class of one million consumers

who claimed to seek injunctive relief, alleging

that defendant had employed various unlawful

practices to coerce payment of otherwise-discharged pre-bankruptcydebt. Before applying

the Allison predominance test, however, we

observed that “[m]ost of the class consists of

individuals who do not face further harm from

Sear’s[sic] actions.” Id. at 978. Because only

a negligible proportion of proposed class

members were properly seeking injunctive relief, we held that rule 23(b)(2) certification

was inappropriate.

Here, by contrast, defendants’ and

plaintiffs’ experts estimate that between one

million and 4.5 million of 5.6 million issued

policies remain in-force. Although the exact

number of class members continuing to pay

discriminatory premiums is unknown, the

proportion is sufficient, absent contrary

evidence from defendants, that the class as a

whole is deemed properly to be seeking injunctive relief.

B.

Bolin reflects a concern that plaintiffs may

attempt to “shoehorn damages actionsinto the

Rule 23(b)(2) framework, depriving class

members of notice and opt-out protections.”12

Indeed, we suggested in Allison , 151 F.3d at

413, that monetary relief may predominate

“when its presence in the litigation suggests

that the procedural safeguards of notice and

opt-out are necessary.” Defendants seize on

this point, arguing that plaintiffs’ request for

notice and opt-out is a tacit admission that rule

23(b)(2) certification is inappropriate. This

ignores the discretion given a district court to

order notice and opt-out rights when certifying

a rule 23(b)(2) class. See FED. R. CIV. P.

23(d)(2). 

As “fundamental requisites of the

constitutional guarantees of procedural due

process,” Eisen v. Carlisle & Jacquelin, 417

U.S. 156, 174 (1974), notice and opt-out are

mandatory for damage classes certified under

rule 23(b)(3). Though rule 23 does not

explicitly extend these safeguards to rule

23(b)(2) classes, due process requires the

provision of notice where a rule 23(b)(2) class

seeks monetary damages.13 

On the other hand, there is no absolute

right of opt-out in a rule 23(b)(2) class, “even

where monetary relief is sought and made

12 Bolin, 231 F.3d at 976; see also McManus v.

Fleetwood Enters., 320 F.3d 545, 554 (5th Cir.

2003) (“[C[]lass members would potentially receive a poor substitute for individualized money

damages, without the corresponding notice and optout benefits of Rule 23(b)(3) . . . .”).

13 Allison, 151 F.3d at 412 n.4 (citing Johnson

v. Gen. Motors Corp., 598 F.2d 432, 436-38 (5th

Cir. 1979)); Penson v. Terminal Transp. Co., 634

F.2d 989, 994 (5th Cir. Unit B Jan. 1981). The

type of notice afforded to rule 23(b)(2) class members seeking monetary relief will not always be

“equivalent to that required in (b)(3) actions.”

Johnson, 598 F.2d at 438.
11

available.” Penson, 634 F.2d at 994; Kincade

v. Gen. Tire & Rubber Co., 635 F.2d 501,

605-07 (5th Cir. Jan. 1981). Under our precedent, should the class be certified on remand,

class members must be provided adequate

notice, and the district court should consider

the possibility of opt-out rights.14

Allison’s statement that monetary relief

maypredominate where notice and opt-out are

necessaryreflects onlythe inescapable fact that

such safeguards are most appropriate where

individual issues diminish class cohesiveness.

Then, conflicts among class members and issues of adequate representation are most likely

to surface. Rule 23(b)(3) is the default vehicle

for certification, but only because notice and

opt-out rights are mandatory components. A

district court is empowered by rule 23(d)(2) to

provide notice and opt-out for any class

action,so rule 23(b)(2) certificationshould not

be denied on the mistaken assumption that a

rule 23(b)(3) class is the only means by which

to protect class members.15

All of this further demonstrates the futility

of the district court’s and dissent’s inquiry as

to whether the “prime goal” of the class is injunctive or monetary relief. The rule 23(b)(2)

predominance requirement, byfocusing on uniform relief flowing from defendants’ liability,

“serves essentially the same functions as the

proceduralsafeguards and efficiency and manageability standards mandated in (b)(3) class

actions.” Allison, 151 F.3d at 414-15.

Therefore, to deny certification on the basis

that the damage claims would be better

brought as a rule 23(b)(3) class serves no

function other than to elevate form over

substance.16 Indeed, interests of judicial

economy are best served by resolving

14 See Jefferson v. Ingersoll Int’l, Inc., 195

F.3d 894, 898 (7th Cir. 1999) (contemplating the

use of opt-out rights for a rule 23(b)(2) class); Eubank v. Billington, 110 F.3d 87, 94 (D.C. Cir.

1997) (holding that the language of rule 23 is sufficiently flexible to afford district courts the

discretion to grant opt-out rights for rule 23(b)(2)

classes).

15 One of the dissent’s two reasons for finding

class certification inappropriate concerns our supposed “suggestion” that notice and opt-out rights

are necessary. In Allison, 151 F.3d 414, however,

we explained that “[t]he fact that thepredomination

requirement serves to protect the rights of class

members . . . does not imply . . . that the

availability of monetary relief in a (b)(2) class

action depends solely or directly on whether class

(continued...)

15(...continued)

members are entitled to notice or opt-out rights.”

As mentioned, this court’s precedent requires that

notice be provided where a rule 23(b)(2) class

seeks damages, see supra note 13 and

accompanying text, so it is circular for the dissent

to argue notice as a basis for denying certification.

Our direction to the district court to consider the

possibility of opt-out rights speaks nothing as to

whether such rights are necessary or even

desirable.

16 Our view that the rule 23(b)(2) and (b)(3)

devices may work in tandem is strengthened by the

roots of subdivision (b)(2), which was added “to

Rule 23 in 1966 primarily to facilitate the bringing

of class actions in the civil rights area.” 7A

CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE

AND PROCEDURE § 1775, at 470 (2d ed. 1986).

Before its adoption, the rules made no explicit

reference to class actions involving injunctive or

declaratory relief, and “there wassome uncertainty

whether a class action seeking one of those

remedies was an appropriate device for vindicating

civil rights.” Id. at 470-71. Rule 23(b)(2) was

adopted to facilitate the use of injunctive relief, not

to compartmentalize claimsfor damages under rule

23(b)(3).
12

plaintiffs’ claims for injunctive and monetary

relief together.

IV.

Applying Allison’s predominance test, the

district court determined that the requested

monetary relief does not flow from liability to

the class as a whole. The court stated that

“many and a variety of hearings would be required to determined personalized harm to

each individual plaintiff because of the mass of

policies involved, differing underwriting practices among some 280 companies, differing

built-in benefits, account dividends, and age at

policy issuance.”

A.

Plaintiffs contend they seek equitable restitution in the form of a constructive trust for

class members who no longer have in-force

policies. By characterizing this relief as

equitable, plaintiffs hope to demonstrate that

that that relief is inherently compatible with

rule 23(b)(2) certification, thereby avoiding

Allison’smonetarypredominance inquiry. Defendants argue that plaintiffs, who never used

the term “constructive trust” in the district

court, are trying to “re-package” their

straightforward request for damages. 

Equitable monetary relief is compatible with

a rule 23(b)(2) class.17 Importantly, this pronouncement has been limited to the context of

title VII backpay, a remedy designated by statute as “equitable.” 42 U.S.C. § 2000e-5(g)(1);

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 218 n.4 (2002). Backpay

is therefore unique in that it is “an integral

component of Title VII’s ‘make whole’

remedial scheme.” Allison, 151 F.3d at 415;

see also Johnson v. Ga. Highway Express,

Inc., 417 F.2d 1122, 1125 (5th Cir. 1969).

Not coincidentally, as compared to compensatory damages, “calculation of back pay generally involves less complicated factual determinations and fewer individual issues.”

Coleman v. Gen. Motors Acceptance Corp.,

296 F.3d 443, 449 (6th Cir. 2002). In Allison,

151 F.3d at 415, we recognized that, for this

reason, backpay generally does not

predominate over injunctive or declaratory

relief.

It would be mistaken to presume that because backpaySSa remedyreadily calculable on

a classwide basisSSis compatible with a rule

23(b)(2) class, any other remedy designated as

equitable may automaticallypiggyback a claim

for injunctive relief. To be sure, equitable

monetary remedies are less likely to

predominate over a class’s claim for injunctive

relief, but this has more to do with the uniform

character of the reliefrather than with itslabel.

Therefore, rather than decide whether

plaintiffs’ claim for restitution is legal or

equitable in nature, we apply Allison and examine whether the claim predominates over

the request for injunctive relief. 

B.

This is not a case in which class members

are entitled to a one-size-fits-all refund;

17 See Allison, 151 F.3d at 415-16 (“If the instant case involved only claims for equitable monetary relief, Pettway [v. Am. Cast. Iron Pipe Co.,

494 F.2d 211, 257 (5th Cir. 1974)] would control.

Pettway, however, did not address the availability

in (b)(2) class actions of other forms of monetary

relief, such as compensatory and punitive damages

. . . .”); Pettway, 494 F.2d at 257 (“All that need

be determined isthat conduct of the party opposing

the class is such as makes such equitable relief

17(...continued)

appropriate.”).
13

assuming liability is established, individual

damages will depend on the idiosyncracies of

the particular dual rate or dual plan policy.

For example, the age at which a class member

purchased a dual rate policy will have an impact on how long the insured paid premiums

and consequently on the amount of damages.

Some policies contain built-in benefits

covering occurrences outside of death,such as

loss of limb; others pay periodic dividends. As

we have observed, some defendants,

beginning in 1988, voluntarily adjusted

premiums and benefits for some policies sold

on a race-distinct basis.

Plaintiffs propose using standardized

formulas or restitution grids to calculate

individual class members’ damages.

Defendants counter that “thousands” of grids

must be constructed to account for the myriad

of policy variations. That may be so, but the

monetary predominance test does not contain

a sweat-of-the-brow exception. Rather, we

are guided by its command that damage

calculation “should neither introduce new and

substantial legal or factual issues, nor entail

complex individualized determinations.”

Allison, 151 F.3d at 415. 

In the list of policy variables cited by defendants and the district court, none requires

the gathering of subjective evidence.18 This is

not, for example, like Allison, a title VII case

in which class members’ claims for

compensatory and punitive damages

necessarily “implicate[] the subjective

differences of each plaintiff’s circumstances.”

Id. at 417. Rather, assuming that unlawful

discrimination is found, class members

automatically will be entitled to the difference

between what a black and a white paid for the

same policy. Not coincidentally, such

damages flow from liability in much the same

manner that an award of backpay results from

a finding of employment discrimination.

Pettway, 494 F.2d at 256-58.

We are well aware that, as Allison qualifies,

151 F.3d at 415, the calculation of monetary

damages should not “entail complex individualized determinations.” Although it is arguable that the construction of thousands of

restitution grids, though based on objective

data, involvesthe sort of complex data manipulations forbidden by Allison, we read Allison

to the contrary. The policy variables are identifiable on a classwide basis and, when sorted,

are capable of determining damages for individual policyowners; none of these variablesis

unique to particular plaintiffs.19 The pre

18 Had plaintiffs not limited their proposed class

to dual rate and dual plan policies, individual hearings would be necessary to determine whether pretextual underwriting practices were used to force

the respective class members into substandard

plans. In that instance, we agree with the district

court that the large number of defendants and underwriting practices would be relevant to finding

the predominance of monetary damages.

19 In this sense, the instant case is unlike O’Sullivan v. Countrywide Home Loans, Inc., 319 F.3d

732, 744-45 (5th Cir. 2003), in which we found

monetary damages predominant in a proposed rule

23(b)(3) class alleging violations of Texas’s

statute prohibiting the unauthorized practice of

law. Non-lawyers were alleged to have used “legal

skill or knowledge” in the preparation of mortgage

closing documents. Whether certain practices by

the non-lawyers violated the statute was

determinable on a classwide basis; we explained,

however, that monetary damages predominated,

because the extent of these practices varied by

transaction, and plaintiffs were entitled to a refund

only for those practices that violated the statute.

(continued...)
14

valence of variables common to the class

makes damage computation “virtually a mechanical task.” Alabama v. Blue Bird Body

Co., 573 F.2d 309, 326-27 (5th Cir. 1978)

(quoting Windham v. Am. Brands, Inc., 565

F.2d 59, 68 (4th Cir. 1977)).20

Finally, defendants’ records contain the information necessary to determine disparities

between, on the one hand, dual rate and dual

plan policies, and on the other hand, planssold

to whites. Damage calculations do not require

the manipulation of data kept outside

defendants’ normal course of business.

Defendants’ complaints to the contrary are

belied by the fact that, since 1988, many

policies have been adjusted to account for

racial disparity. 

V.

As noted, defendants have not sold dual

plan or dual rate policies since the 1970’s;

some class members purchased their policies

as far back as the 1940’s. The district court

denied certification also on the basis that individualized hearings are necessary to determine

expiration of the statute of limitations for particular sets of policies. The predominance of

individual issues necessaryto decide an affirmative defense may preclude class certification.

Castano, 84 F.3d at 744. Limitations is an affirmative defense. FED. R. CIV. P. 8(c);

2 JAMES W. MOORE ET AL., MOORE’S

FEDERAL PRACTICE § 8.07[1], at 8-34 (3d ed.

2003).

Although, under §§ 1981 and 1982, state

law governsthe substantive limitations period,

federal law determines when the period

accrues. Perez v. Laredo Junior Coll., 706

F.2d 731, 733 (5th Cir. 1983). It commences

when the plaintiff either has actual knowledge

ofthe violation or has knowledge offactsthat,

in the exercise of due diligence, would have

led to actual knowledge.21 State law may

further toll the running oflimitations. Gartrell

v. Gaylor, 981 F.2d 254, 257 (5th Cir. 1993).

Doubtlessmost classmembers, themajority

of whom are poor and uneducated, remain

unaware of defendants’ discriminatory

practices. Of the thirteen representative

plaintiffs, defendants point to only one,Jo Ella

Brown, whose claim may have expired

because of actual knowledge of defendants’

practices. 

To hold that each class member must be de19(...continued)

Therefore, each transaction had to be dissected to

determine the extent of liability and damages.

20 One is left wondering in what circumstances

(if any) the dissent would permit monetary

damages in a rule 23(b)(2) class. Remarkably, the

dissent makes no attempt to explain its view that

insurance policy factors such as premium rate,

issue age, and benefits paid are based on

“intangible, subjective differences.” Allison, 151

F.3d at 415. Instead, Allison’s statement that

damages be “capable of computation by means of

objective standards” is ideal for refund-type cases

such asthis, in which damages are calculable using

factors developed and maintained in the course of

defendants’ business. Id. The dissent evidently

would limit damages in rule 23(b)(2) classes to

instances in which there is no variance among the

“specific characteristics of each policy and

policyholder,” a standard that necessarily would

require that each class members’ damages be

identical. It is safe to say that the dissent’s novel

approach is unsupported by caselaw.

21 E.g., Harris v. Hegmann, 198 F.3d 153, 156-

57 (5th Cir. 1999); Jensen v. Snellings, 841 F.2d

600, 606 (5th Cir. 1988).
15

posed asto precisely when, if at all, he learned

of defendants’ practices would be tantamount

to adopting a per se rule that civil rights cases

involving deception or concealment cannot be

certified outside a two- or three-year period.22

Waste Mgmt. Holdings, Inc., 208 F.3d 288,

296 (1st Cir. 2000). Such a result would foreclose use of the class action device for a broad

subset of claims, a result inconsistent with the

efficiency aims of rule 23. Though individual

class members whose claims are shown to fall

outside the relevant statute of limitations are

barred from recovery, this does not establish

that individualissues predominate, particularly

in the face of defendants’ common scheme of

fraudulent concealment.

Instead, defendantsrely 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.” ConmarCorp. v. Mistui

& Co. (U.S.A.), Inc., 858 F.2d 499, 504 (9th

Cir. 1998). Where events receive “widespread

publicity, plaintiffs may be charged with

knowledge oftheir occurrence.” UnitedKlans

of Am. v. McGovern, 621 F.2d 152, 154 (5th

Cir. 1980); In re Beef Antitrust Indus. Litig.,

600 F.2d 1148, 1170 (5th Cir. 1979). The district court believed constructive notice to be

an individual issue, or at least a regional one,

stating that “whether a plaintiffinMichigan, as

compared to a plaintiff in Louisiana, had constructive notice, is a fact issue which needs to

be determined individually and not on a classwide basis.”

Whetherthe media reportswere sufficiently

publicized so asto provide constructive notice

is an issue reserved for the merits. Our analysis is limited to whether this issue is

determinable on a classwide basis. Had

defendants provided evidenceSSor even

allegedSSthat media treatment of this issue

was more prevalent in some regions of the

country than in others, the district court’s

observation that individualized hearings are

required to determine the geographic reach of

constructive notice might be sustainable. 

The requirement of “widespread publicity,”

McGovern, 621 F.2d at 154, suggests,

however, that the appropriate frame of

reference isthe national media market, at least

for issues of national importance. Several

publicationslisted bydefendants, including the

Washington Post, the Wall Street Journal, and

USA Today, are available throughout the United States, and although many other

publications are local newspapers, that fact is

entirely consistent with national treatment of

the issue. Neither the district court nor

defendants give good reason for

geographically splicing constructive notice.

We therefore have no difficulty concluding

that whether plaintiffs were provided

constructive notice is an issue that can be

decided on a classwide basis.

The order denying class certification is

REVERSED, and this matter is REMANDED

22 The district court’s reliance on Barnes v. Am.

Tobacco Co., 161 F.3d 127 (3d Cir. 1998), is misplaced. The proposed class, all smokers before age

nineteen, brought medical monitoring claims

against defendant tobacco companies. The court,

id. at 149, determined that individual issues existed

as to the accrual of the statute of limitations, which

required a determination for each plaintiff as to

when “he began smoking and how much he has

smoked since then.” By definition, the limitations

period had commenced for each and every class

member. 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.
16

for further proceedings consistent with this

opinion. We express no view on the district

court’s ultimate decision whether to certify in

light of today’s opinion, nor do we opine on

the ultimate merits of the substantive claims.

EDITH BROWN CLEMENT, Circuit Judge, dissenting:

It is a factual determination that relief sought relates predominantly to money damages. Allison

v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir. 1998). It is a legal conclusion that this factual

determination should control class certification. Id. The former factual determination is subject to a

review for abuse of discretion; the latter legal conclusion issubject to de novo review. Id. This Court

reviews de novo whether a district court has applied the correct factual examination to certify a class

under Rule 23(b)(2). See id. Upon concluding that the district court has applied the correct factual

examination, this Court reviews the factual findings of that examination for clear error. 

The majority seemsto muddle these distinct standards of review. The majority engages in de novo

factfinding as it reviews the district court’s determination that the reliefsought relates predominantly

to money damages. The majority does so with regard to two of the district court’s findings: (1) that

money damages do not flow from liability to the class as a who le; and (2) that a predominant

proportion of the class does not seek injunctive relief. In setting aside these factual findings, the

majority fails to show that the district court has committed clear error.
17

The majority acknowledges that “the district court determined that the requested monetary relief

does not flow from liability to the class as a whole,” and further accedes that “it is arguable” that the

damages calculations “involve[] the sort of complex data manipulations forbidden by Allison . . . .”

Nevertheless, the majority concludes that class certification is proper merely because “variables

common to the class” exist. In effect, the majority identifies a reason supporting the district court

opinion—the appearance of complex damages calculations—and a reason contravening that

opinion—the existence of variables common to the class. The majority then proceeds to credit the

latter reason as being more credible than the former. Yet although the majority does cite this reason

for its factual determination, it fails to show that the district court’s finding rises to the level of clear

error. Given the fact that the damages calculations appear complex, the alleged inconsistent reason

does not imply that the court abused its discretion.

The second finding of fact that the majority reviews de novo concernsthe proportion of injunctiverelief beneficiaries. The majority concludes that the proportion of injunctive-relief beneficiaries

predominates the class. This is a necessary determination to grant certification under Rule 23(b)(2).

See Bolin v. Sears, Roebuck & Co., 231 F.3d 970, 978 (5th Cir. 2000) (denying certification because

“most of the class” consists of individuals who do not face further harm, and opining that because

those plaintiffs have nothing to gain from an injunction, “the definition of the class shows that most

of the plaintiffs are seeking only damages”); accord Majority Opinion, __ F.3d __ , __ (5th Cir. 2004)

(“Because only a negligible proportion of proposed class members were properly seeking injunctive

relief, we held [in Bolin] that rule 23(b)(2) certification was inappropriate.”) (emphasis added). As

Bolin indicates, this factual “proportionality” determination can be dispositive.

Here, the Plaintiffs allege that the proportion ofinjunctive-relief beneficiaries constitutes over 80%
18

of the class, whereas the Defendants assert that the proport ion is only 18%. After conducting a

hearing, the district court opined that the “true centralreliefsought bythe plaintiffs[was] for monetary

damages.” 208 F.R.D. 571, 574 (E.D. La. 2002). This finding implies that the district court

discredited the Plaintiffs’ factual assertion of 80%. Nothing in the record intimates that the court

would have abused its discretion in only crediting the Defendants’ estimate. 

Unlike the finding of the district court, the majority credits the Plaintiffs’ factual assertion. Were

the majority to have credited only the Defendants’ estimate of 18%, it would not have been able to

declare that “the proportion is sufficient”; it would not have been able to determine that the relief

sought does not relate predominantly to money damages. To reach its ultimate finding of fact, then,

the majority is forced to give credence to the Plaintiffs’ assertion of injunctive-relief beneficiaries.

Notably, the majority fails to provide any stated reason for crediting the Plaintiffs’ assertion with as

much weight asit doesthe Defendants’. It fails to explain how the district court abused its discretion

on this issue. 

Furthermore, even ifit were unclear whetherthe district court onlycredited the Defendants’factual

assertion, this would be no cause for the majority to give weight to the Plaintiffs’ assertion. Because

the underlying factual issue of proportionality is central to the ultimate question of fact, this Court

should have at least remanded this case for clarification of this proportionality issue. On remand, the

district court could specifywhether it in fact did credit the Plaintiffs’ assertion. A district court, rather

than an appellate court, isthe proper judicialforum to make findings of fact. The majority’s crediting

of the Plaintiffs’ factual assertion regarding the proportion of injunctive-relief beneficiaries is

unwarranted. 

Under the applicable abuse-of-discretion standard, the majority’s determination that the Plaintiffs’
19

claims for money damages do not predominate is unjustified appellate factfinding. I respectfully

dissent.