# UnitedStates C ourt of App eals 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
. C ordova-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, 2010-2- BOUDIN, Circuit Judge . Colegio de Abogados de Puerto Rico ("Colegio") is a state-created, i n t egrated 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, Cole g i o h a d f o r m a n y y e a r s p r o v i d e d c o mp u l s o r y l i f e i n s u r a n c e 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 or d e r to practice before Puerto Rican courts. The district court granted summary judgment in Colegio's favor and dismissed the c l aim 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 m e mb e r ship in an integra t e d b ar 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 ofThe first group of attorneys requested tha t t h e y be excused 1 from p a r t i c ipating in the life insurance program on November 30, 2005. Colegio did not issue a response by the d e a d l i ne for attorneys to pay their annual dues, so the group paid in full. On February 2, 2006, Colegio said that it would reimbu r s e 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 Col e g io refund the portion of their 2006 dues attributable to the life -3- l o c a l law. The district court then held that the life insurance program was not germane and was therefore unconstitutional, awarded Romero d a m ages--the amount of his dues attributable to the life insurance program since he had initially objected--and entered an injunction "prohibit[ing] [Co l e g io] from collecting . . . that portion of his futur e 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 i ts 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 n o 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. 1insurance 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 attorn e y s t he dues for the portion of their 2006 coverage "unearned" by the insurer. -4- 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 decisio n 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 l i fe 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 v i o l a t ions [would] not recur." On July 31, 2008, the court certified both of the requested classes: a declaratory class encompassing all present and futur e C o l egio members, and a damages class consisting ofNon-mutual offensive collateral estoppel, now usually called 2 issue preclusion, is a branch of res j u d icata 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). -5- attorneys who were me mb ers 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 i t s members' annual dues for purposes of operating the compulsory life insurance program, later amending its judgment to add damages in the amount of $ 4 , 1 5 6 , 9 8 8
. 7 0 , p l u s c o s t s , i n t e r e s ta n da t t o r n e y s ' f e e s. 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 itsCompare 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 d i s t r ict 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."). -6- internal decision to e l i m i nate 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

en j o i n e d, 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 dismis s a l , and then-7-

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 al l e g edly 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, C o l e gio 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, Coleg io says that it was wrongly granted because there was no irreparable harm, ordinarily a requirement for such relief. See eBay Inc. v.Comp a r e 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 a g a i n st a state criminal prosecution and holding that "the fact that [the plaintiff] is asserting First Amendment rights does not automatically require a finding o f i r reparable injury"). See also Pub. Serv. Co. of New Hamp s h i r e v . T o w no fW e s tN e wb u r y , 8 3 5 F . 2 d3 8 0 , 3 8 2 ( 1 s tC ir. 1987). -8- MercExchange, L.L.C., 5 47 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 d a m ages 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 Colegi o ' s n o t i o n 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 l a wconverting Colegio into a voluntary bar association. Depending on Colegio's new status--most-9-

importantly, whether i t is truly voluntary--it may no longer be prohibi t e dby 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. T h e 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.
T h e damages, of course, are unaffected by any argument about mootness based on the new statute. But Colegio ch a l l e nges both the class c e r t ification 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.
Mas s . I n s t . o fT e c h
. , 9 5 0 F . 2 d1 3 , 2 2 ( 1 s tC i r . 1 9 9 1 ) , c e r t. 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 t h o se challenges, Colegio failed to raise any substantive objections to certification.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 Di s t r i c t of Puerto Rico by attorneys Herbert Brown III, J o s e 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. -10- 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

m e mb e r ship 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 C o . , 7 8 2 F.2d 5, 7 (1st Cir. 1986), but the vote is an inadequate basis fo rreconsideration, 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 indica t e w h at 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. N o r d o Colegio's earlier tactics inspire confidence in the resolution.-11- Colegio's final attack on the class certification is that the plaintiffs failed to provid e n o t i c e of the law suit as is required by Rule 23(c)(2). F o rthe 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 circu m s t ances." 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 o pt out; but some may prefer as aA damage award by the district judge may involve questions of 6 law reviewed de novo but is otherwise reviewed for abuse of disc r e t ion. 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-mo v i ng party. Simas v. First Citizens' Fed. Credit Union, 170 F.3d 37, 43 n.1, 50-51 (1st Cir. 1999). -12- 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 & J a c quelin, 417 U.S. 156, 176 (1974); Am. Pipe & Constr. Co. v. Uta h , 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 t a ke 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 mot i o n for summary judgment was then filed; and their damage claim was then added by amendment. But the original complaint and summary judgment motion-13-

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 no n - o bjecting 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 stat u t e of limitations or any concern about vicarious liability.

In September 2008, the district judge in granting summary judgment conclude d t hat the plaintiffs were also entitled to damages and ordered the p l a i ntiffs 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.-14- 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

memb e rs 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, C o l e g i o'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 t o s ummary judgment; and Colegio had over the many months between the finding of liability an d t h e final damagesThe 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 Br y a n County v. Brown, 520 U.S. 397, 403 (1997). Whether it might have cut back on damages on statute of limitations grounds i s a closer question, given the otherwise applicable one year statute. See Rivera-Ramos v. Roman, 156 F.3d 276, 282 (1st Cir. 1998). -15- determination an obligation to make clear its sta t u t e of limitations and vicarious liability objections. Although both were mentioned summarily in Colegio's or i g i nal 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-obj e c ting parties who got the benefit of the insurance protection and that therefore no damages sh o u l d be awarded. This assumes, per h a p s 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 thei r p a ym e n t 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-16-

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 m e mb ers who did not want the insurance, we reject Colegio's claim that those class members
cannot recover their premiums because they "benefitte d " f r om 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 e x c eption 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 for c e d to pay dues--required of them because the union represented them in bargaining--that included thecost of very modest death benefits available to members and nonmembers alike. But in holding that the un i o n'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.-17- The question whether the death b e n e f its charge was improper under the rele v a n t labor statute was plainly close--thebenefits were somewhere between union activities for which nonmembers could be charged and thos e f o r w h i ch they could not; in fact, t h e c i r c u i t c o u r t h a d h e l d t h a t s u c h b e n e f i t s f e l l in the former class. Id. a t 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 ent i t ybut accepted the Colegio-imposed insurance as a sub s t i tute 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 prov e ndamages, cf. Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867, 876 (1984), it is w e l l a c c e pted that in some cases an approximation of damages or a uniform figure for theSee, e.g., McClain v. Lufkin Indus., 519 F.3d 264 (5th Cir.), 8 cert. denied, 129 S. Ct. 198 (2008) (allowing cla s s - w i de formula rather than individual heari n g s t o 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 classwi d e 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 e qu a lly among class members because there was no method to determine the amount that any particular subscriber was overcharged by the defendant). -18- 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 k n owingly 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 significantl y r e ducing 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-19-

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 c a l c u l ated as before but this time excluding damages otherwise attributable to those who have opted out of the class.

It is so ordered.