### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 11-40056

In the Matter of: YDALIA RODRIGUEZ, Debtor

YDALIA RODRIGUEZ; MARIA ANTONIETA HERRERA; DAVID HERRERA; LUCY MORENO; ALFONSO MORENO, Plaintiffs - Appellees
v. COUNTRYWIDE HOME LOANS, INCORPORATED, Defendant - Appellant

Appeal from the United States District Court for

the Southern District of Texas

Before GARZA, DENNIS, and HIGGINSON, Circuit Judges. HIGGINSON, Circuit Judge. Countrywide appeals a class certification order of the ba n kruptcy court. We AFFIRM. Named plaintiffs Ydalia Rodriguez, Maria Antonieta and David Herrera, and Lucy and Al f o n s o Moreno are former chapter 13 debtors with mortgages serviced by Countrywide Home Loans, Inc. (“Countrywi de”). The P l a intiffs each cured their pre-petition mortgage arrearages, completed thei r chapter 13 plans, and received a discharge from their bankruptcy cases. They allege that after they emerged from bankruptcy, C o u n trywide threatened to U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D Sep tem ber 1 4, 2 012 Lyle W . Cayce Clerk Case: 11-40056 Document: 00511988853 Page: 1 Date Filed: 09/14/2012No. 11-40056

foreclose on their homes if they did not pay fees that were ch a r g ed while their bankruptcy cases we r e still pending. Plaintiffs claim that these fees were unreasonable, unapproved, and undisclosed under Federal Rule of Bankruptcy Procedur e 2 016(a). Additionally, they claim that Countrywide misapplied 1 mortgage payments to satisfy some of the unauthorized fees, instead of properly applying the payments as they were intended—to satisfy the amount due each month on their mortgages. Plaintiffs sought (1) a decla r a t o ry j udgment that Countrywide’s conduct violated the Bankruptcy Code, (2) an injunction
p r ev e ntin g C o u ntrywi d e f rom trying to collect undisclosed fees, (3) compens at o ry damages (including disgorgement and restitution), (4) punitive dama ge s , a nd (5) sanctions from the bankruptcy court. The bankruptcy court found that Countrywide “admits that it misapplied plan payments and charge d f ees without first receiving Court approval” but Countrywide contended that (1) the misapplications and charges were sporadic

Fed

. R. of Bank r. P. 201 6(a) r ead s: 1 App lica tio n for Com pens atio n or Reim burs em ent. An enti ty se ek ing inte rim or fina l com pens atio n for se rvice s, or reim burs em ent of nece ss ary expe nse s, fr om the es tat e sha ll fil e an app lica tio n set ting fo rtha detail ed s tat em ent of (1) the
se rvice s ren der ed, time expend ed andexpens es incurr ed, and (2) the am ount s requ es ted

. An app lica tio n for com pens atio n sha ll inclu de a st atem ent as to wh at paym ents have ther eto for e been mad e or pr om ise d to the app lica nt for se rvice s rend ere d or to be rend ere d in any c apac ity wh ats oever in conne cti on wi th the
cas e, the so urc e of t h e c o m p ens atio n so paid or pr om ise d, wh ethe r any com pens atio n pr evious ly rec eived has been sha red and wheth er an agree me nt o r unde rs tand ing exis ts betw een the app lica nt and any othe r enti ty fo r t h e sha ring of com pens atio n rec eived o r t o b e rec eived for se rvice s rend ere d in or in conne cti on wi th the cas e, and the par tic ulars of any sha ring of com pens atio n or agree me nt or unde rs tand ing t here for , excep t thatdetai ls of any agree me nt by the app lica nt for the sha rin g o f c o m p e nsa tio n as a me mbe r or regula r ass ocia te of a fir m of law yers or acc ount ants sha ll not be requ ired

. The requ irem ents of this sub divis ion sha ll app ly to an app lica tio n for com pens atio n for se rvice s rend ere d by an att orne y or acc ount ant even thou gh the app lica tio n is fil ed by a cre dit or or othe r enti ty. Unle ss the cas e is a chap ter 9 mun icip alit y cas e, the app lica nt sha ll tra nsm it to the Unit ed Sta tes tru st ee a cop y of the app lica tio n.

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rather than part of a regular practice and (2) the fees did not violate Rule 2016(a). In response, the bankruptcy co u r t held that, “‘[u]nder the plain language of Rule 2016, a mortgage lender must file a Rule 2016 application before col l e c t i n g a ny reimbursable fees and costs while a chapter 13 case remains pending.’” Rodriguez v. Countrywide Homes Loans, Inc. (In re Rodriguez), 421 B

. R

. 3 5 6 , 372 (Bankr. S.D. Tex. 2009). The bankruptcy court concluded that Rule 2016(a) applied to fe e s t h a t were “assessed during bankruptcy but not collected until post-bankruptcy,” rejecting Countrywide’s arguments. Plaintiffs moved for class certification of both a Rule 23(b)(2) class and also

a Rule 23(b)(3) class on December 2, 2009. See Fed. R. Civ. P. 23. After a threeday hearing, the bankruptcy court denied Rule 23(b)(2) as well as Rule 23(b)(3) class certification for Plaintiffs’ damage s c l ai m s b e c au s e th e y did not satisfy Rule 23(b) but granted narrow class certification for Plaintiffs’ injunctive relief claim. In doing so, th e b ankruptcy court determined that the proposed injunction would state that, “Countrywide shall not collect or attempt to collect any fees that (1)

were incurred during the pendency of a class member’s bankruptcy case, (2) are governed by Rule 2016(a), and (3) have not yet been authorized pursuant to Rule 2016(a).” It a l so exercised its “great discretion in certifying and managing an action,” Vizena v. Union Pac. R.R. Co. , 360 F.3d 496, 502 (5th Cir. 2004) (citation and internal quotation marks omitted), and redefined the class, narrowing it to only include individuals: (a) who owed funds on a Countrywide serviced note as of February 26, 2008; (b) who have not fully paid the relevant mortgage note, fees, or costs owed to Countrywide, its successors and assigns; (c) who filed a chapter 13 proceeding in the United States Bankrup t cy Court for the Southern District of Texas on or before October 15, 2005 and have confirmed chapter 13 plans that treated mortgages serviced by Countrywide; and

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(d) as to whom Countrywide has assessed a fee or cost governed by Rule 2016(a), attributable to a time after the filing of a bankruptcy petition and before the date on which the individual rece iv e d a chapter 13 discharge, unless such fee or cost was approved i n a Bankruptcy Court order. The narrowed class definition exc l uded those who would not be able to benefit from redeeming time because they either had already pa i d t h eir mortgages in full or no longer had a mortgage serviced by Countrywide. See In re Monumental Life Ins. Co. , 365 F.3d 408, 416 (5th Cir. 2004) (citing Bolin v. Sears, Roebuck & Co. , 231 F.3d 970, 978 (5th Cir. 2000)) (requiring that “most of the class” seeking injunctive relief be able to benefit from the injunction). On appeal, Countrywide challenges the b ankruptcy court’s class certification order, arguing that (1) the grant of class certification is precluded by Rule 23(b) and our holding in Wilborn v. Wells Fargo Bank, N.A. (In re Wilborn) (“ Wilborn II

”), 609 F.3d 748 (5th Cir. 2010)); (2) the bankruptcy court 2 d i d n ot define an ascertainable class; and (3) the bankruptcy court abused its discretion in failing to reconsider class certification after a consent judgment in the United States District Court for the Central Dist r ict of California (“the consent judgment”) rendered injunctive relief in the instant case moot. I. Class Certification We review a denial of class certification for abuse of discretion and legal questions implicated by the d e n i a l de novo. Alaska Elec. Pension Fund v. Flowserve Corp. , 5 7 2 F.3d 221, 227 (5th Cir. 2009); Vizena , 360 F.3d at 502. “‘Implicit in this deferential standard is a recognition of the essentially factual basis of the certification inquiry and of the [trial] court’s inherent power to

When cit ing Wil born v. Wel ls Fargo Bank, N. A. (In re Wil born), we cit e the bank rup tcy 2

cour t’s dec isi on, Wil born v. Wel ls Fargo Bank, N. A. (In re Wil born) ( “Wi lbo rn I” ), 404 B.R. 841, 860 (Bank r. S. D. Tex. 2009) , rev ers ed on clas s cer tif ic atio n grounds by Wil born II , 609 F.3d 748 (quo ting Ge nenba che r v
. Ce n tu ryT el Fibe r Co. II

, 244 F.R. D. 485, 488 (C. D. Ill. 2007) ), as

“ Wil bornI

,” andou r rever salof

t hat dec isi on as “ Wil bornII. ”

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manage and co n t r o l pending litigation.’” Monumental Life , 365 F.3d at 414 (quoting Allison v. Citgo Petroleum Corp. , 151 F.3d 402, 408 (5th Cir. 199 8)). Parties seeking to certify a class must satisfy Fed. R. Civ. P. 23(a)’s four threshold requirements and the requirements of Fed. R. Civ. P. 23(b)(1), (2), or 3 (3). M a l donado v. Ochsner Clinic Found. , 493 F.3d 521, 523 (5th Cir. 2007). “The party seeking class certif ic ati o n bears the burden of demonstrating that the requirements of [R]ule 23 have been met.” O’Sullivan v. Countrywide Home Loans, Inc. , 319 F.3d 732, 737–38 ( 5 t h C ir. 2003) (citing Allison , 151 F.3d at 408). Countrywide contests the bankruptcy court’s holding that Plaintiffs met the requirements of Rule 23(b )(2). “[Rule 23(b)(2)’s] focus on injunctive and 4 declaratory relief pre s umes a class best described as a ‘homogenous and cohesive
group with few conflicting interests among its members.’ Class certification centers on the defendants’ alleged unlawful conduct, not on individual injury.” Monumental Life , 365 F.3d at 415 (quoting Allis o n , 151 F.3d at 413). Rule 23(b)(2) requires that (1) the defendant’s actions or refusal to act are generally

5

Fed

. R. Civ. P. 23(a) st ates : 3 (a) Prer e q uis ite s. On e or mo re me mbe rs of a clas s may sue or be sue d as rep res enta tive par tie s on behalf of all me mbe rs only if: (1) the cl a s s i s so num ero us that joind er of all me mbe rs is impr act icabl e; (2) ther e are questi ons of law or fac t com mo n to the clas s; (3) the clai ms or def ens es of th e rep res enta tive par tie s are typi cal of the clai ms or def ens es of the clas s; and (4) the rep res enta tive par tie s wi ll fai rly and ade quate ly pr ote ct the inte res ts of the clas s.

Though Countr ywi de argues that the bank rup tcy cour t did not pr ope rly conc lude that 4 the clas s me t the requ irem ents of 23( a), Cou ntr ywi de has wa ived this ar gume nt sin ce it did not rais e this argum ent until its rep ly brie f. “An app ellant aband ons all iss ues not rais ed and arguedinit s ini tial brie f on app eal. ” Cine l v. Con nic k , 15 F. 3d 1338, 134 5 ( 5th Cir. 199 4).
Fed

. R. Civ. P. 23(b )( 2) st ates t hat: 5 A class actio n may be main taine d if Rule 23(a) is sat isf iedand if . . . the par ty opp os ing t he clas s has actedor ref use d to actongro unds t hat app ly gene rall y to the clas s, so that fina l injunct ive reli ef or cor res pond ing dec larat ory reli ef is 5 Case: 11-40056 Document: 00511988853 Page: 5 Date Filed: 09/14/2012No. 11-40056

a p p l i c ab l e to the class as a whole and (2) injunctive relief predominates over damages sought. Bolin , 231 F.3d at 975. A. General Applicability to the Class “Instead of requiring common issues, 23(b)(2) requires common behavior by the defendant towar d s th e class.” Casa Orlando Apartments, Ltd. v. Fed. Nat’l Mortg. Ass’n , 624 F.3d 185, 198 (5th Cir. 2010). “The court may certify a class under Rule 23(b)(2) if ‘the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making ap p ropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.’” Bolin , 231 F.3d at 975 (citing Fed. R. Civ. Proc. Rule 23(b)(2)). The bankruptcy court did not abuse its discretion when it concluded that Countrywide’s fee charging actions in alleged derogation of Rule 2016(a) w e re gene r a l l y a pplicable to the narrowly certified “unapproved fees” class of

a pproximately 125 individuals. Countrywide charged every class mem b e r purportedly unauthorized fees in contravention of Rule 20 1 6 (a). It is this alleged

common behavior towards all members of the class—“systematically ignor[ing] Rule 2016(a) by charging unauthorized fees”—that l e d t o the class members allegedly being harmed in the same way. See Bolin , 231 F.3d at 975 n.22. As the bankruptcy court explained, “[t]he [class action] therefore eliminates piecemeal litigation concerning whether Countrywide must seek Court approval for fees that it imposes: once the class is certified a n d the injunction is granted or denied, that issue will be resolved as to all class members.” Countrywide argues that our decision in W i l b o rn I I , invo lving similar facts to the instant case, mandates that class certification be denied. Wilborn II , however, was exactingly adhered to by the bankruptcy court, which extensively applied Wilborn II

’s reas o n i n g to redefine and narrow the instant class and

app rop riat e r es pec ting the clas s as a w hole.

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proposed injunction and to deny class certification as to any damages. The Wilborn II plaintiffs alleged that, “for each named plaintiff and each unnamed class member Wells Fargo impermissibly charged post-petition fee s and costs without obtaining approval from the bankruptcy court, as purportedly required by Title 11 and [Federal Rule of Bankruptcy Procedure 2016].” 609 F.3d at 752. The b a n k r u p tcy court granted class certification for the plaintiffs’ claims for declaratory judgment, disgorgement, injunctive relief, and sanctions. Id. at 751. On appeal, after rejecting class certification under Rule 23(b)(3), we determined that class certification was also improperly granted under Rule 23(b)(2) because “[a]gain, the circumstances and court orders differ between the judges an d cases. And the injunctive or declaratory relief sou gh t b y the plaintiffs must predominate over claims for monetary relief.” Id. at 757 (citing Maldonado , 493 F.3d at 524). We concluded that t o d e t e rmine which fees should be disgorged, the bankruptcy court w o u l d h ave to conduct an individual assessment of each individual’s claims to figure out how and why certain fees were charged or paid. Id. at 756–57. S uch an assessment would include deciding whether debtors 6 agreed to the fees, whether the parties entered into an agreement to modify the stay or agreed to a loan modification, whether the bankruptcy court approved of the fees, and wh e t h e r the defendant had a viable defense to each particular plaintiff’s fees. Id. In the instant case, t h e bankruptcy court conformed its ruling explicitly to our Wilborn II decision, explaining how it would not include damages claims in its class certification grant because, “when damages e n t e r the fray, individualized issues begin to predominate as the Court must consider the harm

Altho ugh th e s e cit atio ns ref er to the por tio n of Wil born II that analyzes clas s 6

cer tif icat ion unde r Rule 23(b )( 3), the Rule 23(b ) ( 2 ) dis cus sio n inco rp orat es by ref ere nce the
e a rlie r Rule 23(b )( 3) dis cus sio n. See Wil born II , 609 F.3d at 757 (“ For sim ilar reas ons , clas s cer tif icat ion is im pr ope r unde r Rule 23(b )( 2).

. . . Again, the cir cum st ance s and cour t ord ers dif ferbe tw een the judges andc ase s. ”)

. 7 Case: 11-40056 Document: 00511988853 Page: 7 Date Filed: 09/14/2012No. 11-40056

suffered by each class member on a case-by-case bas i s
. ” Similarly, because disgorg e m e n t and other damages claims were also excluded from this class action, Countrywide w i l l not be required to adjudicate and repay fees, again, responding to our direction in Wilborn II that individualized disgorgements not be resolved through class action procedure. “[Rule 23(b)(2)] is clear that claims seeking injunctive or declarator y r e lief are appropriate for (b)(2) class certification.” Allison , 151 F.3d at 411. The injunction being sought would target only the alleged Countrywide practice of viewing Rule 2016(a) as i n a p p l i cable to any fee assessed post-petition but charged post-discharge and, acc o rdingly,

a n y p ractice of never seeking approval of such fees under Rule 2016(a). I f Plaintiffs prevail, Countrywide would no longer be able to collect or attempt to collect fees with i n t h e scope of Rule 2016(a) that, according to its own readily accessed and comprehensive AS-400 database, were incurred post-petition and pre-discharge yet have not been authorized for collection pursuant to Rule 2016(a). “The focus is properly upon Countrywide’s fee assessment and

7

c o ll e c tion practice, not on the individualized manner in which each cla s s m e mb e r may have been affected by the practices.” As a result, the injunctive claim on 8

In abund ance of caut ion to avoid individua l i z e d l i t i gation and a los s of clas s 7 hom og e n e i t y , t he bank rup tcy cour t mad e clea r that even injunct ive suc ces s for the clas s to ens ure Countr ywi de’ s com pli ance wi th Rule 2016( a) mi ght me an sp ecif ic fee s validl y coll ect ed by Cou ntr ywi de wi ll be ret ained

. The bank rup tcy cour t’s sin gle-i ss ue injunct ive clas s r e d e fini tio n and app lica tio n of 8 Wil burn II dem ons tra te that Countr ywi de’ s alleged fee pr act ice def ens es wi ll not be im pli cat ed
or com pr om ise d in this litigat ion. In f act , thatc once rn, w ith car efu l i nquir y int o t he nam ed Plaint iffs’ cas es , wa s the bas is for the bank rup tcy cour t’s broa d app lica tio n of Wi l b o r n II to ref use cer tif

icat ion even as to non- dis gorgem ent dam ages clai ms
. Regard les s, our cas elaw is clea r that cour ts are “ f r e e
. . . as oft en as nece ss ary bef ore judgm ent” to rec ons ide r wh ethe r clas s cer tif

icat ion cont inues to be app rop riat e. McNa ma ra v. Fel der hof , 410 F.3d 277, 280 (5t h Cir. 2005) (c itat ions om itt ed) ; see also Ric har d v. Byrd , 709 F.2d 1016, 1019 (5t h Cir. 1983) (ho ldi ng, bef

ore the 2003 ame ndm ents to Rule 23, that a dis tri ct judge mus t dec ert ify a clas s as app rop riat e). As cont em plat ed by the bank rup tcy cour t, it can det erm ine acr os s individual
cas es at tri al wh ethe r autho rizat ion pur sua nt to Rule 2016( a) is unnec es sar y in cir cum st ance s wh ere Countr yw i d e w ould invok e wa iver, es top pel , volunt ary paym ent, or res judi ca ta as a 8 Case: 11-40056 Document: 00511988853 Page: 8 Date Filed: 09/14/2012No. 11-40056

its own does not i nv o l v e “the myriad issues that may arise in each case as to whether and how fees and costs were imposed.” Wilborn II , 609 F.3d at 757. 9 The bankruptcy c o urt made factual findings based on multiple days of testimony and the fifty volume record and concluded therefrom that many of the factors cited by Countrywi d e a s r e quirin g a n individualized assessment of claims

are readily identifiable in Countrywide’s AS-400 database. For each mortgagor, the AS-400 database tracks the type and amount of all fees; whether a fee was classifie d a s recoverable (collectable) or non-recoverable (not collectable); the funds pre- and post-petition; all payments; the mortgagor’s bankruptcy filings; the status, case number, and c h a pter of the mortgagor’s bankruptcy case; the

name of the trustee handling the mortgagor’s bankruptcy case; the date of the chapter 13 plan confirmation; and al l i n f o r mation relevant to the escrow and principal balance of the mortgage. After a firsthand review of the evidence, the bankruptc y c o urt determined, based on testimony by one of Countrywide’s witn e s s e s , that Countrywide’s AS-400 database was searchable, making the information easily ascertainable without court intervention. Since 1 0

def ens e. The injunct ion, the cour t c l a r i fie d, wo uld not im ped e the ret enti on or rec overy of validl y as se ss ed fee s.

Add itio nally, “th ere is no conc ern that ‘th e legit im ate inte res ts of pot enti al clas s 9

me mbe rs who m ight wi sh to pur sue thei r mo neta ry [da mage s] claim s ind ividua lly’ w ouldbe inte rf ere d wi th by this clas s cer tif icat ion. ” Jam es v. City of Da llas , Tex

. , 254 F.3d 551, 572–73 (5t h Cir. 200 1 ) ( q u o t i ng Al li son , 151 F.3d 415) , abrogated on other grounds by M. D. ex rel

. Stukenbe rg v. Perry , 675 F.3d832, 839–41 ( 5th Cir. 201 2) (exp lainin g t hat, c ontr ary to pr ior Fift h Circ uit cas elaw that “[ t] he fac t that so me of the Plaint iffs may have dif fer ent clai ms , or clai ms that may requ ire so me individual ized analys is, is not fat al to com mo nalit y,” the Sup rem e Court held in Du kes v. Wal ma rt , 131 S. Ct. 2541 (201 1), that “[ c] om mo nalit y requ ires the plai ntif

f to dem ons tra te that the clas s me mbe rs have suf fer ed the sam e injury. ” (int erna l quot atio n mar ks om itt ed) ). The pr opo se d injunct ion doe s not indi cat e that it wo uld have any pr eclu siveef

fec t on any o f the individualp laint iffs’d ama ges clai ms
. The bank rup tcy cour t poi nted out that “[ t] he only rele vant dat a n oti ceab ly abs ent 1 0 fr om the AS-4 00 dat abas e is i n f orm atio n conc erni ng cour t autho rizat ion of fee aw ard s” ; cons equent ly, the bank rup tcy cour t expla ined that any fee s alre ady agree d upon by the par tie s wo uld not be cons ide redas a par t of the clas s act ion. 9 Case: 11-40056 Document: 00511988853 Page: 9 Date Filed: 09/14/2012No. 11-40056

“Countrywide could [] query all the fees charged to every Countrywide account in the Southern Distric t o f T e xas, or even to every mortgage account nationwide,” the bankruptcy court faced unique facts that allowed it to conclude that it would not need to determine on a loan-by-loan basi s w h e t her fees were improperly charged. Next, Countrywide argues that its conduct cannot be generally applicable to the class because Countrywide had n o p o l i cy concerning Rule 2016(a) compliance. However , t h e b a nkruptcy court did not abuse its discretion when it determined that because “Countrywide assessed and charged fees to the class

a c c o r d i n g to its understanding that its conduct was not regulated by Rule 2016(a)

. . . . Plaintiffs have sufficiently alleged behavior applicable to the class

as a w h o l e u nder Rule 23(b)(2) and Bolin .” The bankruptcy court reasonably d e t ermined, based on the extensive record, that Countrywide had a regula r practice for dealing with fees accrued post-petition but charged post-discharge and Rule 2016(a). When it perceived that compliance with Rule 2016(a) was not required, Countrywide had a practice of noncompliance. The bankruptcy court summarized its findings from evidence submitted to it as follows: Multiple employees o f Countrywide, each of whom was intimately familiar with Countrywide’s relevant bankruptcy and fee collection policies, testified that Countrywide would regularly as s e s s fees wit h o u t any concern for Rule 2016(a)’s requirements. The employees also testified that Countrywide would regularly classify unauthorized fee s a s recoverable from debtors in the AS-400 database. 1 1

The ins tant cas e, ther efo re, is dis tinguis hable fac tuall y fr om Du kes v. Wal ma rt , 1 1 wh ere the Sup rem e Court held that the plai ntif fs had off

ere d ins uff

icie nt e vi d e nce to sho w thatt he dis cri mi nato ry t reat me nt at is sue was typic al of Wal- Mar t’s em plo ymen t pr act ices

. 131 S. Ct

. at 2554–55 ( dis cus sin g andap plying Boli n). The Sup rem e Court note d that WalMar t had a sp ecif

ic pol icy forbidd ing se x dis cri mi natio n, and individual Wal- Mar t man agers we re us ing theird isc ret ion over hirin g m att ers t o dis cri mi nate

. Id. at 2553–5 4. In contra st , the bank rup tcy cour t fou nd that Plaint iffs in the pr es e n t cas e have ide ntif ied a regula r pr act ice w ithi n Countryw ideof not fo llow ing Rule 2 016( a). See also id. at 2555. It is notthe
cas e that Countr ywi de requ ired its em plo yees to fol low Rule 2016( a) but individual em plo yees 10 Case: 11-40056 Document: 00511988853 Page: 10 Date Filed: 09/14/2012No. 11-40056

In addition, Countrywide contends that the bankruptcy court was mistaken when it con c l u ded that Countrywide’s behavior was generally applicable to the class because there was no legal consensus regarding whether Rule 2016(a) applied to post-petition mortgage fees. However, this fact does not i m p ac t the general applicability of Countrywide’s behavior b e c au s e C o u ntrywi d e treated all class members the sam e , failing to seek approval in every case. Irrespective of any legal uncertainty as to Rule 2016(a), Countrywide consistently did not apply for authorization pursuant to Rule 2016(a); there was

no contradictory or sporadic treatment of Rule 2016(a) b y Countrywide that would militate against certification of this class. 1 2 Finally, Countrywide argues, citing Meyer v. Brown & Root Construction Co. , 661 F.2d 369 (5th Cir. 1981), that the proposed injunction would be improper because it merely orders Countrywide to obey the law. Countrywide’s argument misinterprets M e y e r
. In Meyer , the district court enjoined the defendant from “‘engaging in the stated unlawful employment practice .’” Id. at 373. The defendant argued that such language was too vague because it merely ordered t h e defendant to obey the law generally rather than identifying what conduct was specifically prohibited. Id. We rejected that argument, holding that the injunction was sufficiently specific because the judgment made it clear that the unlawful employment practice being prohibited was “constructively discharging plainti f

f w h e n s he was pregnant” in violation of Title VII. Id.

chos e not to; in fac t, no Countr ywi de em plo yee fil ed a Rule 2016( a) app lica tio n dur ing the tim e per iodid enti fie d in the clas s def init ion.
Countr ywi de argues that to the exten t that it did have a Rule 2016( a) pol icy, th at 1 2 pol icy wa s to def

er dec isi on- mak ing to loca l couns el. Ho we ver, loca l couns el wa s not char ged wi th det erm ining wh ethe r a f ee fel l wi thin the sc ope of Rule 2016( a) or dec idi ng wh ethe r or not bank rup tcy cour t app roval in c o m p l i a n c e wi th Rule 2016( a) sho uld be so ught; ins tead , Co u n t r y w i d e only ass ert s that loca l couns el det erm ined wh ethe r to se ek app roval of fee s in
wa ys othe r than com plying wi th Rule 2016( a), inclu ding agree d ord e r s a n d ame nded pr oof s of clai m. 11 Case: 11-40056 Document: 00511988853 Page: 11 Date Filed: 09/14/2012No. 11-40056

Injunctions are problematic when they order a defendant to obey the law but do not simultaneously indicate what law the defendant needs to obey. Id. We did not hold that injunctions that order a defendant to obey a speci f i c law are problematic. See id. Therefore, we conclude that the bankruptcy court did not ab u se its discretion by determining that Countrywide’s failure to seek bankruptcy court approval under Rule 2016(a) is generally applicable, under these facts probingly ascertained by the bankruptcy court, to this narrow class. B. Damages are “Incidental” to Injunctive Relief Since no damages are part of this case’s class certification, the bankruptcy court did not abuse its discretion when, after three d a y s of hearings and consideration of extensive supporting evidence, it co n c l u d ed that the Rule 23(b)(2) requirement that damages must be sufficiently incidental to injunctive relief was met. “[Tri a l] c ourts ‘are in the best position to assess whether a monetary remedy is sufficiently incidental to a claim for injunctive or declaratory relief.’” Casa Orlando Apartments , 624 F.3d at 201 (quoting Allison , 151 F.3d at 416). The bankruptcy court recognized that, “monetary relief, to be viable in a [R]ule 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,’” and properly applied the relevant analysis from Wilborn II to Plaintif f s ’ d a m a ges claims, denying class certification for those issues. The bankruptcy court then held tha t R u le 23(b)(2)’s predominance requirement was easily satisfied since only injunctive relief was at issue. Si n ce no monetary relief is sought, 1 3

Theban kr upt cy c ourt ’s li mi tedgra nt of cl ass cert ifi cat ion is es pec ially app rop riat e 1 3 beca use “a cour t sho uld cer tif y a clas s on a clai m- by-c laim ba s i s, tre ating each clai m individual ly and cer tif ying the clas s w ith re sp ectto only t hos e c laim s forw hich ce rti fic atio n is app rop riat e.” Boli n , 231 F.3d at 976. Acco rd ing to Boli n , “Rule 23(c )( 4) expli cit ly rec ognizes the fle xibilit y that cour ts need in clas s cer tif icat ion by al low ing c ert ifi cat ion ‘w ith res pec t to par tic ular iss ues ’ and divis ion of the clas s intos ubcla ss es .” Id.
12 Case: 11-40056 Document: 00511988853 Page: 12 Date Filed: 09/14/2012No. 11-40056

monetary relief cannot be more than incidental to injunctive relief. This comports with our reasoning in James that since “much of the requested redress is pure injunctive relief,” the pure injunctive relief “does not implicate a concern about monetary damages.” 254 F.3d a t 5 7 2; see also Allison , 151 F.3d at 411 (explaining that class certification would have been proper if the plaintiffs were only seeking injunctive relief because the plain language of Rule 23(b)(2) would have been satisfied). Because the bankruptcy court’s decision was not an abuse of discretion, we affirm its grant of class certification for Plaintiffs’ injunctive relief claim. II. Class Definition Countrywide argues that the bankruptcy court adopted an improper class definition by certifying a so-called “fail-safe class.” A fail-safe class is a class whose membership can only be ascertained by a determination of the merits of the case because the class is defined in terms of the ultimate question of liability. Cf. Intratex Gas Co. v. Beeson , 22 S.W.3d 398, 404 (Tex. 2000) ( d e s c r ib ing the concept). “‘[T]he class definiti o n p r e c lu d e s th e p o s s ibility of an adverse judgment against class members; the class members either win or are n ot in the class.’” Wilborn I

, 404 B.R. at 860 (citation omitted); see also Adashunas v. Negley , 626 F.2d 600, 603–04 ( 7 t h Cir.1980) (holding that a reasonably defined class of “children entitled to a public education who have learning disabilities and ‘who

are not properly identified and/or who are not receiving’ special education” did not exist because the class was “so highly diverse and so difficult to identify that it is not adequately defined or nearly as c e r tainable” and the proposed class definiti o n would result in a “fail-safe” class); Beeson , 22 S.W.3d at 403–05. Stated otherwise, the class definition is framed as a legal conclusion. Beeson , 22 S.W.3d at 404. C ountrywide does not cite any case where we have rejected a cl a s s definitio n because it created a so-called fail-safe class. We rejected a rule

13 Case: 11-40056 Document: 00511988853 Page: 13 Date Filed: 09/14/2012No. 11-40056

against fail-safe classes in Mullen v. Treasure Chest Casino , 186 F.3d 620 (5th Cir. 1999), and Forbush v. J.C. Penney Co. , 9 9 4 F

. 2 d 1101 (5th Cir. 1993), abrogated on other grounds by Dukes , 131 S. Ct 2541. The plaintiff in Forbush proposed that the court should define its class as, “employees ‘ w h o s e pension benefits have be e n , or will be, reduced or eliminated as a result of the

over e s t i m a t ion of their Social Security benefits.’” 994 F.2d at 1105. The defendant argued that the class was not defined with sufficient specificity and

was “hopelessly ‘circ u l a r,’ as the court must first determine whether an employee’s pension benefits were improperly reduced before that person may be said to be a member of the class. ” Id. In response, we stated that, “[t]his argument is meritless and, if accepted, would preclude certification of just about
any class of persons alleging injury from a particular action. These persons are linked by this common compla i n t , a n d the possibility that some may fail to prevail on their individual claims will not defeat class membership.” Id. In Mullen , the class was defined as, “all members of the crew of the M/V Treasure Chest Casi n o w h o have been stricken with occupational respiratory illness caused by or exacerbated by the de f e c tive ventilation system in place aboard the vessel.” 186 F.3d at 623. The defendant argued that, “any class must be capable of objective identification before it can be cert i f i e d” and because membership in the class was contingent upon “ultimate issues of causation,” the defendant was “prejudiced by being forced to defend against claimants who may not end up being members of the class.” Id. at 624 n.1. Relying on Forbush , we rejected this argument, holding that, “because the class is similarly linked by a

common complaint, the fact that the class is defined with reference to an ultimate issue of causation does not prevent certifi c a t i o n
. ” Id. Because our precedent rejects the fail -safe class prohibition, we conclude that the bankruptcy court did not abuse its discretion when it defined the class in the present case.

14 Case: 11-40056 Document: 00511988853 Page: 14 Date Filed: 09/14/2012No. 11-40056

III. Motion for Reconsideration Countrywide filed a Rule 59( e ) motion for reconsideration, arguing that Plaintiffs’ claim for injunctive relief was mooted by a consent judgment agreed to by the Federal Trade Commission ( “ F TC”) and Countrywide in the United States District Court for th e C e n tral District of California (the “consent judgment”). The bankruptcy court denied Countrywide’s Rule 59(e) motion for

1 4 reconsideration, holding that the nationwide injunction i n s ection IX of the consent judgment did not include all of the relief available to the class in the proposed injunction. Specifically, the bankruptcy court determined that the consent judgment did not moot the proposed injunction because (1) the consent judgment allows Countrywide to colle c t fees without Rule 2016(a) bankruptcy court authorization by following instead debtor notice procedures set forth in the FTC consent judgement and (2) t h e c o nsent judgment fails to provide relief to Plaintiffs who had payments misapplied by Countrywide. 1 5

Ther elevantp ort ion fort he cons ent judgm ent st ates : 1 4 IT IS FURTH ER ORD ERED that De fen dant s, thei r off icer s, em plo yees , agents , rep res enta tives , an d all othe r Pers ons or enti tie s in act ive conc ert or par tic ipat ion wi t h them wh o rec eive act ual noti ce of this Or der by per so nal
se rvice or o ther wi se , dir ect ly or thro ugh any corpo rat ion, subs idi ary, divis ion,
or othe r devic e, are here by per man entl y res tra ined and enjoine d, in conne cti on wi th the Servicing of any Loan that incur red any Fee, Esc row Shor tage, and/ or Esc row De fic ienc y dur ing a Chapt er 13 Bank rup tcy, fr om coll ect ing any suc h Fee, Esc row Shor tage, and/ or Esc row De fic ienc y aft er De fen dant s obta in reli ef fr om the bank rup tcy st ay or , if reli ef fr om st ay is not so ught or grant ed, aft er the deb tor is dis char ged or the bank rup tcy cas e is dis mi ss ed, unles s De fen dant s (1) ob t a i n e d sp ecif

ic cour t app roval for the char ges dur ing the Chapt er 13 Bank rup tcy cas e, or (2) pr ovide d to the c o n s u m e r the noti ces requ ired unde r Sec tio ns VIII and IX of this O rd er.

We als o agree wi th the bank rup tcy cour t’s analys is of the me rit s o f Countr ywi de’ s 1 5

mo tio n. Theban kr upt cy c ourtexam inedw heth er Countr ywi de me t its bur den to sho w that ther e wa s a real ist ic pr os pec t that the violat ions allege d by Plaint iffs wo uld c o ntinu e notw iths tand ing the cons ent judgment

. The text of the cons ent judgment doe s not del ineat e the sc ope of Rule 2016( a) and coul d allow Countr ywi de to bypas s bank rup t c y cour t autho rizat ion by giving mo rtgago rs noti ce of the fee s thr ough the cons ent judgm ent’ s noti ce pr o c e d u r es
. As the bank rup tcy cour t cor rec tly expla ined , “th is cas e is pr im aril y about 15 Case: 11-40056 Document: 00511988853 Page: 15 Date Filed: 09/14/2012No. 11-40056

We affirm the bankruptcy court’s denial of Countrywid e ’ s motion for reconsideration of the certification order. Rule 59(e) motions are “not the proper vehicle for r e h a s hing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment.” Templet v. HydroChem Inc. , 367 F.3d 473, 478–79 (5th Cir. 2004) (citing Simon v. United States , 891 F.2d 1154, 1159 (5th Cir. 1990)). They are used to “call[] into question the correctness of a judgment”and are “properly invoked ‘to correct manifest errors of law or fact or to present newly discovered evidence.’” In re Transtexas Gas Corp. , 303 F.3d 571, 581 (5th Cir. 2002) (quoting Waltman v. Int’l Paper Co. , 875 F.2d 468, 473 (5th Cir. 1989)). “Reconsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly.” Templet , 367 F.3d at 479 (internal citations omitted). We perceive no manifest error requiring the a p p l i c a t i on of this extraordinary remedy because of Countrywide’s consent judgment with the FTC. In Templet , we refused to reverse a district court’s rejection of a Rule 59(e) motion when “the underlying facts were well within the [plaintiffs’] knowledge prior to the district court’s entry of judgment.” Id. Here, the consent judgment

was entered by the C e n t r a l District of California on June 15, 2010. The

Plaint iffs’ des ire to for ce Countr ywi de to c om ply wi th Rule 2016( a) autho rizat ion bef ore coll ect ing fee s incur red dur ing Plaint iffs’ bank rup tci es .” The cons ent judgm ent wo uld not nece ss aril y re quire t his c om pli ance
. Furt herm ore , App elle es argue that Countr ywi de coul d rec las sif y fee s fr om rec overable to non- rec overable back to rec overable so that it coul d use the cons ent jud g m e n t ’ s noti ce pr ovis ion to avoid se ek ing bank rup tcy co urt authoriz atio n. This com por ts wi th the bank rup tcy cour t find ing in its clas s cer tif icat ion dec isi on, bas ed on evide nce cons ide red by i t, that Countr ywi de’ s em plo yees “tes tif iedthat Countr ywi de w ouldregularl y class ify unaut hori zed fee s as rec overable fr om deb tor s in the AS-4 00 dat ab a s e ,” and that ther e wa s a real ist ic pos sib i l i ty that Countr ywi de coul d rec las sif y fee s fr om non- rec overable to rec overable to cir cumvent Rule 2016( a) by “co llec t[ ing] unauth orize d fee s, wh ich we re dee me d cur rent dur ing this c las s act ion, af

tert he conc lus ion of this c ase .” Finally, the cons ent judgm ent expli cit ly doe s not inclu de bank s aff iliat e d wi th Countr ywi de beca use bank s are outs ide the juris dic tio n of the FTC. The pr opo se d injunct ion has nos uch lim itat ion. 16 Case: 11-40056 Document: 00511988853 Page: 16 Date Filed: 09/14/2012No. 11-40056

bankruptcy court issued its order on July 21, 2010. The defendants first brought the consent judgment to the bankruptcy c o u r t ’s attention in its Rule 59(e) motion, filed on August 4, 2010. As the bankruptcy court e m p h a sized, Countrywide could have filed a supplemental motion notifying the bankruptcy court of the consent judgment just as Countrywide had done after Wilborn II was decided. Because Countrywide had forty-one days to apprise the bankruptcy court of the consent judgment b e f o re the bankruptcy court issued its certification order, the consent j u d gment did not constitute newly discovered evidence compelling Rule 59(e) relief as Countrywide alleges. Countrywide argues that it could not have known that t h e b a n k ruptcy court would certify the class only for injunctive relief and therefore, that it could not hav e known that the consent judgment would moot the class certification grant. However, the consent judgment was relevant to the case no matter how broadly t h e bankruptcy court granted class certification. Although the bankruptcy court certified a narrower class than the one sought by Plaintiffs, Countrywide k n e w that Plaintiffs were seeking injunctive relief before the bankruptcy court issued its class certification order. The bankruptcy court could have explored and accepted Countrywide’s argument and determined that Plaintiffs’ claim for injunctive relief was moot even if the bankruptcy court had certified both a damages and an injunctive class. Bec a u s e w e c onclude that Countrywide’s Rul e 5 9 ( e ) motion for reconsideration was not based on newly discovered evidence, we do not revisit the bankruptcy court’s separate merits denial of the motion. VI. Conclusion For the above reasons, we AFFIRM the certification of the injunctive class, the bankruptcy court’s class definition, and the denial of Countrywide’s motion for reconsideration.

17 Case: 11-40056 Document: 00511988853 Page: 17 Date Filed: 09/14/2012