In the

United States Court of Appeals

For the Seventh Circuit

No. 99-4101

Jeff Lemon, Karen Meyer, John Duncan,

Odell Williams, Virgil Eiland, Pat Haynes,

Craig Anderson, Shirley Nyman and 

Franklin Edmonds,

Plaintiffs-Appellees,

v.

International Union of Operating Engineers,

Local No. 139, AFL-CIO,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 97 C 0857--John W. Reynolds, Judge.

Argued April 12, 2000--Decided June 9, 2000

 Before Cudahy, Coffey and Kanne, Circuit Judges.

 Kanne, Circuit Judge. The district court,

deciding class certification in this Title VII

class action without the benefit of Jefferson v.

Ingersoll International Inc., 195 F.3d 894 (7th

Cir. 1999), held that the requested equitable

relief predominated the requested monetary relief

and certified the class under Rule 23(b)(2). We

vacate the district court’s certification of the

class under Rule 23(b)(2) because the request for

money damages was not incidental and remand for

further consideration of class certification

under Jefferson and this opinion. 

I. History

 International Union of Operating Engineers Local

139 ("Local 139" or the "Local") represents

heavy-equipment operators in Wisconsin and

administers an employment referral hall through

which its members can find work. Members of Local

139 in search of employment may fill out data

cards listing their qualifications and place

themselves on the referral hall’s "out-of-work

list." Contractors seeking heavy-equipment

operators in Wisconsin regularly contact Local

139, and the Local matches those contractors with
members on the out-of-work list qualified to

handle the jobs. According to the Local, the

referral hall doles out work assignments to

registered operators according to their

qualifications, geographic proximity and ordinal

seniority on the out-of-work list. 

 The named plaintiffs are members of the Local

who sought work through the referral hall and

claim that Local 139 intentionally discriminated

against them as racial minority members and women

by diverting work opportunities to white males.

On August 12, 1997, they filed a class-action

lawsuit on behalf of all minority and female

members of Local 139, alleging that Local 139

violated Title VII of the Civil Rights Act, 42

U.S.C. sec.sec. 2000e to 2000e-17, by operating

the referral system in an intentionally

discriminatory manner. The plaintiffs sought a

jury trial for declaratory and injunctive relief,

as well as compensatory and punitive damages. In

support of their claim, the plaintiffs planned to

introduce testimony from witnesses who observed

discriminatory conduct by Local 139 officials.

Namely, the plaintiffs intended to offer the

testimony of Dale Miller, the current president

of the Local, who told the EEOC that the former

business manager of the Local, Donald Shaw, was

racist and manipulated the referral system to

pass over minorities and women. In addition, the

plaintiffs promised to adduce statistical

evidence demonstrating that the Local’s low

hiring, placement and referral rates for women

and minorities could not have occurred as a

result of chance. 

 On June 1, 1998, the plaintiffs moved under

Rules 23(b)(2) and 23(b)(3) of the Federal Rules

of Civil Procedure to certify a class of more

than 400 minority and female members against whom

Local 139 allegedly discriminated in its

operation of the referral system. Magistrate

Judge Patricia Gorence recommended certification

of the class under Rule 23(b)(2) and mentioned in

passing that "the plaintiffs [also] have

satisfied the criteria of Rule 23(b)(3)." On

September 24, 1999, the district court adopted

the magistrate’s recommendation and certified the

class under Rule 23(b)(2) to proceed with its

Title VII claims. The court designated Jeff

Lemon, Karen Meyer, John Duncan, Odell Williams,

Pat Haynes, Craig Anderson, Shirley Nyman and

Franklin Edmonds as class representatives. Local

139 then filed an interlocutory appeal to

challenge certification of the plaintiff class. 

II. Analysis

 Rule 23(b)(2) declares that class certification

under that subsection is appropriate when "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). The Rule itself is silent regarding

whether Rule 23(b)(2) certification is

permissible when, as in this case, the plaintiffs

request monetary damages as well as "final

injunctive relief or corresponding declaratory

relief." However, the advisory note to Rule

23(b)(2) explains that the subsection "does not

extend to cases in which the appropriate final

relief relates exclusively or predominantly to

money damages." Fed. R. Civ. P. 23(b)(2) advisory

committee’s note. 

 As we explained in Jefferson v. Ingersoll

International Inc., 195 F.3d 894, 896 (7th Cir.

1999), the problem is that Rule 23(b)(2) provides

for binding litigation on all class members

without guarantees of personal notice and the

opportunity to opt out of the suit. By virtue of

its requirement that the plaintiffs seek to

redress a common injury properly addressed by a

class-wide injunctive or declaratory remedy, Rule

23(b)(2) operates under the presumption that the

interests of the class members are cohesive and

homogeneous such that the case will not depend on

adjudication of facts particular to any subset of

the class nor require a remedy that

differentiates materially among class members. A

suit for money damages, even if the plaintiffs

seek uniform, class-wide equitable relief as

well, jeopardizes that presumption of cohesion

and homogeneity because individual claims for

compensatory or punitive damages typically

require judicial inquiry into the particularized

merits of each individual plaintiff’s claim. 

 Indeed, in recognition of the potential

divergence of interests within the class, each

class member in actions for money damages is

entitled as a matter of due process to personal

notice and an opportunity to opt out of the class

action. See Ortiz v. Fibreboard Corp., 527 U.S.

815, 119 S.Ct. 2295, 2314-15 (1999). Accordingly,

Rule 23(c)(2) guarantees those rights for each

member of a class certified under Rule 23(b)(3).

See Eisen v. Carlisle & Jacquelin, 417 U.S. 156,

173 (1974); Fed. R. Civ. P. 23(c)(2). However,

the Federal Rules of Civil Procedure do not

provide comparable procedural guarantees of those

rights for a class certified under subsections

(b)(1) or (b)(2), and as a result, Rule 23(b)(2)

certification does not ensure personal notice or

opportunity to opt out even if some or all the

plaintiffs pray for monetary damages. The

question therefore is whether the district court

abused its discretion in certifying a class under
Rule 23(b)(2), without notice or opportunity to

opt out, when the plaintiffs sought monetary

damages in addition to equitable relief. 

 In Jefferson, 195 F.3d at 898, we adopted the

Fifth Circuit’s reasoning on this point from

Allison v. Citgo Petroleum Corp., 151 F.3d 402

(5th Cir. 1998). Allison held that "nonequitable

monetary relief may be obtained in a class action

certified under Rule 23(b)(2) only if the

predominant relief sought is injunctive or

declaratory," Allison, 151 F.3d at 425, and

explained further that certification under Rule

23(b)(2), without notice or opportunity to opt

out, is impermissible unless the requested

monetary damages are "incidental" to requested

injunctive or declaratory relief. Id. at 415. The

court defined "incidental" as "damages that flow

directly from liability to the class as a whole

on the claims forming the basis of the injunctive

or declaratory relief." Id. Thus, incidental

damages do not depend "in any significant way on

the intangible, subjective differences of each

class member’s circumstances" and do not "require

additional hearings to resolve the disparate

merits of each individual’s case." Id. 

 Like the Allison plaintiffs, the plaintiffs here

sued for both equitable relief and monetary

damages to remedy alleged violations of Title

VII. Damages can be awarded only after proof of

discrimination and injury specific to the

individual plaintiff, see, e.g., Miller v.

American Family Mut. Ins. Co., 203 F.3d 997, 1005

(7th Cir. 2000), so deciding the damages claims

depends on an individualized analysis of each

class member’s circumstances and requires

additional hearings to resolve the disparate

merits of each individual’s case. See Allison,

151 F.3d at 417. Even if the plaintiffs prove

that Local 139 administered the referral hall in

a discriminatory manner and won injunctive and

declaratory relief on that ground, each

individual plaintiff pursuing damages claims

still would need to establish that Local 139’s

discrimination caused her personal injury and

would need to show the magnitude of injury to

determine compensatory damages. Similarly, to win

punitive damages, an individual plaintiff must

establish that the defendant possessed a reckless

indifference to the plaintiff’s federal rights--a

fact-specific inquiry into that plaintiff’s

circumstances. See Kolstad v. American Dental

Ass’n, 527 U.S. 526, 119 S.Ct. 2118 (1999). As

the Fifth Circuit found in Allison, the requested

monetary damages for the plaintiffs’ Title VII

claims were not incidental to the requested

injunctive and declaratory relief. Allison, 151

F.3d at 418; cf. Boughton v. Cotter Corp., 65

F.3d 823, 827 (10th Cir. 1995).
 As a result, Jefferson instructs the district

court to consider three alternatives for handling

the case. Jefferson, 195 F.3d at 898-99. The

first option is certifying the class under Rule

23(b)(3) for all proceedings. See id. at 899.

Rule 23(b)(3) permits class certification when

"questions of law or fact common to the members

of the class predominate over any questions

affecting only individual members, and that a

class action is superior to other available

methods for the fair and efficient adjudication

of the controversy." Fed. R. Civ. P. 23(b)(3). In

this category of lawsuit, the class members may

seek either predominantly legal or equitable

remedies, but each member must share common

questions of law or fact with the rest of the

class, therefore making class-wide adjudication

of the common questions efficient compared to

repetitive individual litigation of the same

questions. In contrast to Rule 23(b)(2), however,

certification under Rule 23(b)(3) entails

mandatory personal notice and opportunity to opt

out for all class members, thereby satisfying the

due process concerns in Ortiz. See Fed. R. Civ.

P. 23(c)(2); see also Jefferson, 195 F.3d at 898.

 The second option is divided certification. See

Jefferson, 195 F.3d at 898-99; Williams v.

Burlington Northern, Inc., 832 F.2d 100, 103 (7th

Cir. 1987); see also Eubanks v. Billington, 110

F.3d 87, 96 (D.C. Cir. 1997). The district court

could certify a Rule 23(b)(2) class for the

portion of the case addressing equitable relief

and a Rule 23(b)(3) class for the portion of the

case addressing damages. This avoids the due

process problems of certifying the entire case

under Rule 23(b)(2) by introducing the Rule

23(b)(3) protections of personal notice and

opportunity to opt out for the damages claims.

Since the Civil Rights Act of 1991 entitles the

parties to a jury trial on claims of intentional

discrimination, see 42 U.S.C. sec. 1981a, a

district court that proceeds with divided

certification must adjudicate the damages claims

first before a jury to preserve the Seventh

Amendment right to a jury trial, even if

adjudication of these claims decides the

equitable claims as well. See Dairy Queen, Inc.

v. Wood, 369 U.S. 469 (1962); Beacon Theatres,

Inc. v. Westover, 359 U.S. 500 (1959); Jefferson,

195 F.3d at 898. 

 The third option discussed in Jefferson is that

the district court might certify the class under

Rule 23(b)(2) for both monetary and equitable

remedies but exercise its plenary authority under

Rules 23(d)(2) and 23(d)(5) to provide all class

members with personal notice and opportunity to
opt out, as though the class was certified under

Rule 23(b)(3). Jefferson, 195 F.3d at 898; see

also Thomas v. Albrecht, 139 F.3d 227, 234 (D.C.

Cir. 1998); Eubanks, 110 F.3d at 94; County of

Suffolk v. Long Island Lighting Co., 907 F.2d

1295, 1304 (2d Cir. 1990); Holmes v. Continental

Can Co., 706 F.2d 1144, 1160 (11th Cir. 1983). In

fact, a district court handled a class certified

under Rule 23(b)(2) much this way in Williams. We

affirmed and held that the district court

provided opportunities to object that "were

tantamount to the protections envisioned by

Fed.R.Civ.P. 23(c)(2) [for classes certified

under subsection (b)(3)]." Williams, 832 F.2d at

104.

 The district court abused its discretion because

it did not consider class certification either in

part or in full under Rule 23(b)(3), nor did the

court stipulate that it would provide the class

members with personal notice and opportunity to

opt out of the class action. The district court’s

treatment of the case is understandable because

Jefferson had not been decided at the time of the

district court’s consideration of class

certification. However, since the requested

monetary damages are not incidental to the

plaintiffs’ requested equitable relief, we Vacate

class certification under Rule 23(b)(2) and Remand

with directions to consider alternative class

certification under the options presented in this

opinion and Jefferson.