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

No. 12-30084

LOUIS ACKAL, Sheriff and Ex Officio Tax Collector of Iberia Parish; TOWN OF DELCAMBRE, Plaintiffs - Appellees
v. CENTENNIAL BEAUREGARD CELLULAR L.L.C., doing business as Centennial Wireless, formerly known as Iberia Cellular Telephone Company L.L.C.; CENTENNIAL MOREHOUSE CELLULAR L.L.C.; CENTENNIAL HAMMOND CELLULAR L.L.C.; CENTENNIAL COMMUNICATIONS CORPORATION, Defendants - Appellants

Appeal from the United States District Court for the Western District of Louisiana

Before KING, SMITH, and BARKSDALE, Circuit Judges. KING, Circuit Judge: Befo r e t h e court is an interlocutory appeal from an order granting Plaintiffs’ motion for class certification pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. The certified class putatively consists of various governmental entities within the State of Louisiana whose representatives entered into contracts with Defendants for cellular telephone service. In the underlying suit, Plaintiffs, who are or were customers of Defendants, allege that Defendants engaged in deceptive billing practices that 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 

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constituted a breach of contra c t and violated the Louisiana Unfair Trade Practices and Consumer Protection Law. In appealing the district court’s class certification order, Defendants argue, inter alia , that the district court abused its discretion when it certified Plaintiffs’ class because, in so doing, it effectively certified an “opt in” c l a s s , w h i ch is impermissible under Rule 23. We agree. Accordingly, we REVERSE and VACATE the district court’s class certification order, and REMAND for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND On September 11, 2001, a group of cellular telephone customers filed suit in Louisiana state court against its members’ respective service provi d e rs, including Defendants–Appellants Centennial Beaureg a rd Cellular L.L.C. and its related entities (“Centennial”). The suit—which alleges causes of action for b r e a ch of contract and violation of the Louisiana Unfair Trade Practices and Consumer Protection Law, La. Rev. Stat. Ann. § 51:1401 et seq. —is predicated

on claims that Defendants engaged in improper and deceptive billing practices, t he most notable of which is Defendants’ alleged practice of overchargi n g customers by “rounding up” partial minute telephone calls to the next full minute. The case was removed to federal court on the basis of diversity jurisdiction

o n October 17, 2001, and, thereafter, the parties engaged in extensive motion practice. As relevant here, this eventually led to the dismissal from the suit of several defendants, the limitation of the claims to Louisiana only, a n d the joinder, as plaintiffs, of the Iberia P a ri s h Sheriff (“Iberia”), the Town of D e lcambre (“Delcambre”), and the City of Jeanerette (“Jeanerette”). 1 Additionally, in light of the settlement in Louisiana state court of a class action addressing claims similar to those raised in this suit, on May 19, 2009, the

Thed ist ric t cour t sub se quent ly s tayedJe aner ett e’s c laim s pend ing arbitr atio n. 1
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district court dismissed all claims against certain of the Centennial defendants, except those raised by any state, fede r a l , foreign, or local government. See Abrusley v. Centennial Lafayette Cellular Corp. , No. C-99-380 (La. Dist. Ct. May 6, 2008). 2 On August 6, 2010, Plaintiffs moved for class certific a tion of various Centennial customers, defining the proposed class as follows:

All governmental entities who entered into contr act s f or a specific amount of airtime f or a certain amount of money per minute for cellular service or wirel e ss t e l e p h o n e s e rvi c e a s p r o v i d e d b y C e n t e n n i a l Communications Corp. and all of its related entities, in the State of Louisiana from 1991 to 2001; and All natural persons, businesses and/or related entities who entered into contracts for a specific amount of airtime f

o r a certain amount of money per minute for cellular service or wireless tele p hone service as provided by Centennial Communications Corp. and all of its related entities, in the United States’ territories of Puerto Rico and the US Virgi n Islands and Jamaica from 1991 to present; and All natural persons, businesses and/or related entities who entered into contracts for a specific amount of airtime for a c e rtain amount of money per minute for cel l ular service or wireless telephone service as provided by Centennial Communications Corp. and all o f i ts related entities, in the United States, its territories of Puerto Rico and the US Virgin Islands and Jamaica from 1991 to present. Ultimately, the district co u r t denied the motion as to the individual and corporate customers, finding that thos e customers did not satisfy the requirements for class certification under Rules 23(a) or 23(b)(3). However, the

Thes e governm enta l enti tie s had been expr es sly exclud ed fr om the clas s def init ion in 2 Abr usley . As for the non- governm enta l enti tie s, the clas s inclu ded only “p res ent and for me r” cus tom ers—t hrough Oc tobe r 19, 2007, the dat e the cla s s wa s certif ied—of the Cente nnial enti tie s thatw erep art iesin Abr usley . 3 Case: 12-30084 Document: 00512034018 Page: 3 Date Filed: 10/26/2012No. 12-30084

court granted Plaintiffs’ motion as to the governmental customers, certifying a class composed of “c e rt ai n named governmental entities within the State of Louisiana.” This class purportedly consists of 299 governmental e n t i t ies, including parish police juries, parish school boards, and other local boards and commissions. 3 Centennial timely appeals, raising n u merous challenges to the district court’s class certification order. First, Centennial argues that the district court erred in c e r t i f

yi n g a class of governmental entities to be represented in this action by private counsel. According to Centennial, Louisiana law requires that
many of the entities satisfy various substantive criteria before they may retain private representation. Because those conditions were not satisfied as to most class members prior to certification, Centennial contends that the class requires members to “opt into” the suit, a result impermissible under Rule 23. Second, C e n t e n nial submits that Plaintiffs did not satisfy the requirements of Rule 23 that (1) issues common to the class predominate over individual issues, and (2) the certified class be manageable for trial. Finally, Centennial argues that the dist rict court erred in certifying the class because, in so doing, the court failed to recogn i z e enforceable arbitration clauses in many of the class members’ contracts. 4

Cente nnial argues that the clas s cer tif icat ion wa s im pr ope r beca use its me mbe rs hip 3 is not lim ite d to st ate governm ental enti tie s, but rat her inclu des at leas t one fed eral enti ty and one Nat ive Ame ric an tribal enti ty. Cente nnial als o sub mi ts that the certif ied clas s im pr ope rly inclu des private organi zatio ns, sp ecia l pur pos e sub divis ions wi th no autho rity to sue , and Louis iana st ate enti tie s that can be rep res ente d only by the st ate’ s att orne y genera l. Finally, Cente nnial cont ends that at leas t 50 of the 299 lis t e d e n t i t i es pur por ted ly cons tit uting the clas s are dup lica tes , or are sub divis ions of othe r me mbe rs . Given our holding that the cer tif ied clas s im per mi ss ibly requ ires m em bers t o “ optin ,” w e n eedno t res olve this is sue . Becaus e we agree that the dis tri ct cour t im pr ope rly cre ated an “op t in” clas s, we need 4 not add res s Cente nnial’ s argum ents that individual iss ues im per mi ss ibly pr edo mi nateove r iss ues com mo n to the clas s, that the clas s is not man ageable , and that the dis tri ct cour t err ed in dec lining to enf

orc e the app licable arbit rat ion claus es . 4 Case: 12-30084 Document: 00512034018 Page: 4 Date Filed: 10/26/2012No. 12-30084 II. STANDARD OF REVIEW A district court’s decision to grant class certification is reviewed for abuse of discretion. McManus v. Fleetwood Enters., Inc. , 320 F.3d 545, 548 (5th Cir. 2003). “The decision to c e r t i f y i s within the broad discretion of the court, but that discretion must be exercised within the framework of [R]ule 23.” Castano

v . A m . T

o b acco Co. , 84 F.3d 734, 740 (5th Cir. 1996) (citing Gulf Oil Co. v . Bernard , 452 U.S. 89, 100 (1981)). Application of an incorrect legal standard is, by definition, an abuse of discretion, and is reviewed de novo. Benavides v. Chi. Title Ins. Co. , 636 F.3d 699, 701 (5th Cir. 201 1). III. DISCUSSION A. Class Certification Under Rule 23 Plaintiffs moved for class certification under Federal Rules of Civil Proc e dure 23(a) and 23(b)(3). Rule 23(a) imposes four prerequisites on a class seeking certification: “(1) numerosity ( a ‘ c l a ss [so large] that joinder of all members is impracticab le’); (2) commonality (‘questions of law or fact common to the class’); (3) typicality (named parties’ claims or defenses ‘are typical

. . . of the class’); and (4) adequacy of repre s e n t a t i on (representatives ‘will fairly and adequately protect the interests of the class’).” Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 613 (1997) (alterations in original) (quoting Fed. R. Civ. P. 23(a)). “In addition to these prerequisites, a party seeking class certification under Rule 23(b)(3 ) m u s t also demonstrate both (1) that questions common to the class members predominate over questions affecting only individual members , an d (2) that class resolution is superior to alternative metho ds for adjudication of the controversy.” Feder v. Elec. Data Sys. Corp. , 429 F.3d 125, 129 (5th Cir. 200 5) (internal quotation marks and citation omitted). Significantly, Rule 23 also contains a so-called “opt out” clause, providing that “[f]or any class certified under Rule 23(b)(3), the court must direct to class members

. . . notice

. . . that the court will exclude from the c l a s s a n y m e m ber

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who requests exclusion.” Fed. R. Civ. P. 23(c)(2)(B)(v). The ability to “opt out” of a Rule 23(b)(3) a c t i o n i s necessary because, by operation of the rule’s provisions, “a c l a s s is described [and] if the action is maintainable as a class action, each person within the descript i o n i s considered to be a class member

a n d , a s s u c h , is bound by judgment

. . . unless he has ‘opted out’ of the suit.” Sandoz v. Cingular Wirele s s LL C, 553 F.3d 913, 916 (5th Cir. 2008) (quoting LaChapelle v. Owens–Illinois, I n c . , 513 F.2d 286, 288 (5th Cir. 1975) (per curiam)). This process is to be distinguished from collective actions maintained under st a t u t e s l i ke the Fair Labor Standards Act, 29 U.S.C. § 216(b), under which “no person can become a party plaintiff and no person will be bound by or may benefit from judgment unless he has affirmatively ‘ opted into ’ the class; that is, given his written , filed consent.” Sandoz , 553 F.3d 913 at 916 (quoting LaChapelle , 513 F.2d at 288) (emphasis added). Unlike these typ e s of statutory collective actions, however, proceedings under Rule 23 do not require that class membe r s a f f ir m atively “opt in,” nor is such a requirement mandated by due process c o n s i d erations. See Phillips Petroleum Co. v. Shutts , 472 U.S. 797, 812 (198 5 ) (“W e reject petitioner’s contention that the Due Process Clause of the Fourteenth Amendment requires that absent plaintiff

s affirmatively ‘opt in’ to the class, rather than be deemed members of the cl a s s i f th e y d o not ‘opt out.’”). Indeed, as one of our sister circuits aptly has noted, “[n]ot only is an ‘opt in’ provision not r e qu i r e d , but substantial legal authority supports the view that by a d di n g t he ‘opt out’ requirement to Rule 23

. . ., C o n gress prohibited ‘opt in’ provisions by implication.” Kern v. Siemens Corp. , 393 F.3d 120, 124 (2d Cir. 2004). This view is bolstered by the fact that, in dr a f t i n g Rule 23, the Advisory Committee on Civil Rules “rejected the suggestion ‘that the judgment in a [Rule 23](b)(3) class action, instead of covering by it s t erms all class members who do not opt out,

s h o uld embrace only those individuals who in response to notice affirmatively

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signify their desire to be included.’” Id. (quoting Benjamin Kaplan, Continuing Work of the Civil Commi t t e e: 1966 Amendments of the Federal Rules of Civil Procedure (I) , 81 Harv. L. Rev. 356, 397 (1967)). The rationale behind the Committee’s decision to include only an “opt out” provis i o n i n Rule 23 was that requiring individuals to affirmatively “opt in” “would result in freezing out the claims of people—especially small claims held by small people—who for one reason or another, ignorance, ti m i dity, unfamiliarity with business or legal matter s , will simply not take the affirmative step.” Id. (quoting Kaplan, 81 Harv. L. Rev. at 397–98). This sentiment was echoed by the Supreme Court in Shutts , in which the Court explained: Requiring a plaintiff to a f f irmatively request inclusion would probably impede the prosecution of those class actions involving an aggregation of small indivi d u a l claims, where a large number of claims are required to make it e c o n omical to bring suit. The plaintiff’s claim may be so small, or the plaintiff so unfamiliar with the law, that he would not file suit i n dividually, nor would he affirmatively request inclusion in th e c lass if such a request were required by the Constitution. 472 U.S. at 812–13 (internal citation and footnote omitted). 5 Thus, as we have explained previously, because “the clear thrust of [Rule 23(b)(3)]

. . . is to minimize the requirement of active intervention by numerous members of an affected class,” “[o] pting in [is] not necessary before the determination of liability.” Robinson v . U n ion Carbide Corp. , 544 F.2d 1258, 1261 (5th Cir. 1977), modifying on re h ’ g, 538 F.2d 652 ( 5th Cir. 1976); see also id. at 1262 (Wisdom, J., concurring) (e xplaining that the notice at issue in Robins o n w a s n o t defective under “Rule 23(c)(2) because it [did] not require

While the Shutts Court wa s c o n sid erin g the pr opr iet y of an “op t out” clas s cer tif ied 5 unde r a st ate pr oce dur e rat her than unde r Rule 23, 472 U. S. at 802–03, the Court ’s reas oning app lies equally we ll here

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members to opt-into the class action in order to be bound by it”). Other courts 6

are in accord. In Kern , for example, the court explaine d t h a t it could not 7 “envisage any circumstances when Rule 23 would authorize an ‘opt in’ class in the liability stag e o f a litigation.” 393 F.3d at 128. Likewise, in Clark v. Universal Builders, Inc. , the Seventh Circuit held that a lower court committed

error by “requiring an affirmative response for inclusion” in a cla ss certified pursuant to Rule 23, be c a u se “an affirmative request for inclusion in the class is contrary to the express language of Rule 23(c)(2)(B).” 501 F.2d 324, 340 (7th Cir. 1974). 8 Simply put, “[t]here is no authority for establishing ‘opt-i n ’ c l asses in which the class members must take action to be included in the class.” 5 James Wm. Moore et al., Moore’s Federal Practice § 23.104[2][a][ii] (3d ed. 2004). B. Plaintiffs’ Class Impermissibly Requires Members to “Opt In” In hearings related to their motion for class certification, Plaintiffs described the class here at issue as “almost like an opt-out” class. This measured charac terization was based on Plaintiffs’ acknowledgment that Louisiana law limits the ability of certain governmental entities—including

Altho ugh “op t in” pr ovis ions are im per mi ss ible unde r Rule 23 at the clas s cer tif icat ion 6 st age, this sho uld be dis tinguis hed fr om the rec overy st age, wh en clas s me mbe rs may we ll be re q u i r ed “to com e for wa rd to es tabl ish thei r enti tle me nt to por tio ns of the rec overy. ” Robi nson , 544 F.2dat126 0–61.

Le g a l s c h o l ars lik ew ise are in agree me nt that “[ n]o thing in Rule 23(c) autho rizes 7
cour ts to im pos e a requ irem ent that individual clas s me mbe rs fil e a noti ce aff irm ativel y opt ing in to the clas s or aff

irm ativel y requ es ting inc lus ion as a cond itio n of par tic ipat ion in the clas s act ion or any rec overy that the clas s may obta in. ” 5 Jam es Wm

. Mo ore et al. , Mo ore ’s Federal Prac tice § 23.1 04[3 ][ a] (3d ed. 2004) ; see also 7AA Charle s Alan Wright et al. , Federal Prac tice and Pro c e d u re § 1787 (3d ed. 2005) (exp lainin g that “op t in” pr ovis ions for clas se s cer tif ied unde r Rule 23 a re “direc tly cont rary t o t he phil os ophy of Rule 23(c)( 2)” ).
See also Enter. Wal l Pap er Mf g. Co. v. Bod ma n , 85 F.R. D. 325, 327 (S .D .N .Y

. 1980) 8 (“Rule 23(c)( 2)( B) call s for a noti ce thatenables pros pec tive memb ers to opt- out, in language st rongly sugges ting the im pr opriet y of opt -in requ irem ents (i. e. ‘ the judgm ent, wh ethe r favor able or not, w ill inclu de all me mbe rs w ho do not requ es t exclus ion’). ”)

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many of those i n t h e c e r tified class—to be represented by private counsel as prescribed by this class action. In particular, Louisiana Revised Statute section 42:263 provides: No parish governing authority, levee board

. . . , parish school board, city school board, or other local or state board shall retain or employ any special attorney or counsel to represent it in any special matter or pay any com p e n sation for any legal services whatever unless a real necessity exists, made to appear by a resolution thereof stating fully the reasons for the action and the compensation to be paid. The resolution then shall be subject to the approval of the attorney general and, if approved by him, shall be spread upon the minutes of the body and published in the official journal of the parish. La. Rev. Stat. Ann. § 42:263(A) (2010). In explicating the requirements contained in sectio n 4 2 : 2 6 3, the Louisiana attorney general has issued a written opinion properly stating that the statute authorizes those governmental entities subject to it “to re t ain special counsel only when (1) a real necessity exists (2) which is declared and memorialized by

a resolution stating the reasons for employment of c o un s el and the compensation to be paid, (3) which resolution must be approved by the attorney general and (4) if approved, spread upon the minutes of the body and published in the official journal of the parish.” La. Att’y Gen. Op. No. 1989-612, 1989 La. AG LEXIS 543, at *1–2. The attorney general also has noted that except as provided in section 42:263, “it is unlawful for any governmental entity subject to the ex officio legal representation of the district attorney to retain or employ private counsel.” La. 9 Att’y Gen. Op. No. 1999-413, 2000 L a. AG LEXIS 16, at *6.

Louis iana Revis ed Sta tut e s ect ion 42:2 61 s ets f orth t he enti tie s subjectt o a dis tri ct 9 att orne y’s legal repr es enta tio n. As rele vant, that st atut e pro vides : “t he dis tri ct attor neys of the se veral judic ial dis tri cts othe r than the par ish o f O r l e a ns sha ll,

. . . be the regula r att orne ys and couns el for the par ish governi ng aut h o ri t ies , par ish sc hool boar ds , and cit y sc h o o l boar ds wi thin thei r res pec tive dis tri cts and of every st ate boar d or com mi ss ion do m i c i l e d t h e rein , the me mbe rs of wh ich, in wh ole or in par t, are elec ted by the peo ple or app oint ed by the govern o r o r othe r pr es cribed autho rity.” La. Rev. Sta t. Ann. § 42:2 61(A) (201 1). 9 Case: 12-30084 Document: 00512034018 Page: 9 Date Filed: 10/26/2012No. 12-30084

Here, neither party disputes that, to this point in the litigation, only the class representativ e s, Iberia and Delcambre, have satisfied the procedures set forth in section 42:263 for the retention of private counsel. Additionally, both 1 0 parties agree that numerous other entities within the certified class are subject to the statute’s mandates. Plaintiffs argue, however, that it is sufficient, at the class certification stage, that the class representatives have satisfi e d the requirements of section 42:263. Plaintiffs maintain that “upon completion of the appellate process, [they will] pursue the s a m e p r ocess and seek approval from
every entity listed in order to comply with a n y s t a t utory requirements for certification.” In other words, Plaintiffs view the satisfaction of section 42:263’s requirements as a m e r e “procedural issue” that can be addressed after class certification. Plaintiffs underestimate, however, the import of this “procedural issue.” First, nothing in section 42:263 suggests that private representation of entities subject to the statute may be undertaken while the entities pursue satisfaction

o f the statute’s requirements. As importantly, given the various “procedural” hurdles that must be cleared under section 42:263 before a class member even is authorized to participate in this action, Plaintiffs have effectively created an “opt in” class. In other words, contrary to the requirements of a Rule 23 (b)(3) action, here, a potential class member’s decision to take no action upon receipt of notice does not result in the entity’s inclusion in the class. Rather, the default position of each class member is that it is no t i n t h e c l a ss until it successfully completes a series of actions required by law for i t to participate in the suit. Requiring such affirmative acts from putative class members bef o re they may actually participate in a Rule 23 action is contrary to the express provisions of Rule 23(c)(2)(B).

While Jeane ret te als o has rec eived autho rizat ion to obtain private couns el in 1 0
conne cti on wi th this s uit, as no ted , its c laim s have been st ayed pending arbitr atio n. 10 Case: 12-30084 Document: 00512034018 Page: 10 Date Filed: 10/26/2012No. 12-30084

In fact, Plaintiffs’ attempt to certify the class here is analogous to the scenario presented in Kern

. 393 F.3d 120. There, plaintiffs moved to certify a class composed of heirs, beneficiaries, and personal represent a t iv e s of individuals who died in a ski train fire in Austri a . I d

. at 122. Class members

were to be defined, in part, by “their willingness to take [the] affirmative action of consent[ing] to be bound by the judgment.” I d

. at 126 (internal quotation marks and citation omitted, alterations in original). Such a class was justified, from the district court’s perspective, on the basis that “i t would be unfair to presumptively include members in a class for which membership depends on a waiver of

. . . the right of foreign class members to relitigate their claim in foreign courts.” Id. (citation omitted). The Second Circuit rejected the district court’s reasoning, however, agreeing with the defendants’ argument t h at the lower court had “overstepped the bounds of Rule 23 by certifyin g a n ‘opt in’ class.” Id. at 122. Likewise here, the district court abused its discretion in certifying a class

u n d er Rule 23 that operates as an “opt in” class. Had Plaintiffs receive d authorization under section 42:263 for all c l a s s members to retain private

co u n s e l prior to seeking certification of the class, the outcome of this class certification issue migh t h av e been different. As is, however, class members must effectively “opt into” the class by satisfying a number of p reconditions befo r e t h e y legally may be included in the class, for even if they wish to participate in the action, they may not do so until t h e y af f irmatively: (1)

e stablish that a “real necessity exists” for the retention of private counsel , ( 2 ) enact a resolution “stating fully the reasons for the action and the compensation to be paid,” (3) receive the attorney general’s approval of the resolution, and (4) publish the resolution in their minutes and the official journal of the applicable

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parish. La. R e v . S tat. Ann. § 42:263(A) (2010). As we have discussed, no

1 1 authority exists under Rule 23 for certifying a class of this nature. IV. CONCLUSION Ac cordingly, we REVERSE and VACATE the district court’s cla s s certification order, and REMAN D f o r f urther proceedings consistent with this opinion.

In fac t, it is not a for egone conc lus ion that all put ative clas s me mbe rs wi ll event ually 1 1 sat isf y the nece ss ary le gal requ irem ents for par tic ipat ing in this act ion, as se cti on 42:2 63

“ clea rly grant s to the Atto rney Ge nera l the dis cre tio n to eit her app rove or dis app rove the
res olut ions pr es ente d to him pur sua nt to that se cti on. ” Fla naga n v. Gu ste , 359 So. 2d 686, 688 (La. Ct

. App

. 1978)

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