Opinion ID: 77926
Heading Depth: 2
Heading Rank: 4

Heading: Class Action Suitability

Text: Federal Rule of Civil Procedure 23 governs class actions. The Millses, to represent a class, must establish these four requirements in Rule 23(a): (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a). [11] These four requirements are commonly referred to as numerosity, commonality, typicality, and adequacy of representation. Prado-Steiman, 221 F.3d at 1278. In addition to meeting Rule 23(a)'s requirements, parties seeking to represent a class must establish at least one of these three requirements in Rule 23(b): (1) the prosecution of separate actions by or against individual members of the class would create a risk of (A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or (B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Fed.R.Civ.P. 23(b). In their complaint, the Millses expressly allege that they qualify as class representatives pursuant to each of the three different grounds that are authorized in Rule 23(b). On appeal, the Millses challenge the district court's ruling that their claims are not appropriate for class action treatment because common issues would not predominate. The district court reasoned that the individual inquiry of the facts surrounding the property damage claims of thousands of Foremost policy holders under thousands of separate insurance policies would predominate and overwhelm any common issue. Mills, 2006 WL 3313945, at . Thus, the district court's order was based solely on the lack of common-issue predominance under Rule 23(b)(3). [12] We conclude that the district court's ruling suffers from several errors. First, a lack of predominance under Rule 23(b)(3) does not automatically bar class certification because the putative class representative can still attempt to satisfy the requirements of Rule 23(a) and either Rule 23(b)(1) or (b)(2). In holding that the Millses' claims were inappropriate for class action treatment because common issues would not predominate, the district court either: (1) failed to recognize that the Millses' complaint alleged that they satisfied each of the three grounds for class certification authorized in Rule 23(b); or (2) confused common-issue predominance, which is required only for Rule 23(b)(3) class actions, with the Rule 23(a) requirements that all class actions must satisfy. Additionally, and more fundamentally, the district court's class certification ruling was premature under the particular circumstances of this case. We recognize that Rule 23(c) instructs that the district court must-at an early practicable time-determine by order whether to certify the action as a class action. Fed.R.Civ.P. 23(c)(1)(A). In some instances, the propriety vel non of class certification can be gleaned from the face of the pleadings. See, e.g., Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1006 (11th Cir.1997) (concluding that Rule 23(b)(3)'s predominance requirement could not be satisfied, and that such failure was readily apparent from a reading of the . . . complaint). However, precedent also counsels that the parties' pleadings alone are often not sufficient to establish whether class certification is proper, and the district court will need to go beyond the pleadings and permit some discovery and/or an evidentiary hearing to determine whether a class may be certified. See Falcon, 457 U.S. at 160, 102 S.Ct. at 2372 (Sometimes the issues are plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiff's claim, and sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.); Huff v. N.D. Cass Co. of Ala., 485 F.2d 710, 713 (5th Cir.1973) [13] ( en banc ) (Maintainability may be determined on the basis of pleadings, but the determination usually should be predicated on more information than the complaint itself affords. The court may, and often does, permit discovery relating to the issues involved in maintainability, and a preliminary evidentiary hearing may be appropriate or essential as a part of the vital management role which the trial judge must exercise in class actions to assure that they are both meaningful and manageable. (quotation marks, citations, and footnotes omitted)). [14] This is such a case where the class certification issue cannot be readily resolved by the complaint alone. Here, the parties' pleadings take starkly different positions as to the number and extent of issues that will be involved in this case, and the method and ease of proof for each. We outline the nature of the parties' contentions as they readily show that the district court's conclusion as to the predominance issue at the complaint stage was speculative at best and premature at least. The Millses' complaint contends that the common issue to all class members is whether Foremost improperly excluded overhead, profit, and taxes when paying the actual cash value of their hurricane damage losses. The Millses point out: (1) that Foremost's own adjusters already have prepared claims estimates of the repair costs for each class member's hurricane-damage claim; (2) that the plaintiffs accept Foremost's own adjusters' estimates as to the extent of each repair cost for each class member; and (3) that all that the class members seek to recover is a percentage of those cost estimates for overhead, profit, and sales tax line items, which they claim Foremost improperly excluded from its actual cash value payment to each class member insured with this same Policy who had not actually completed their repairs at the time of the actual cash value payment. The Millses argue that the amount due to each class member can thus be determined with relative ease through basic forensic accounting using Foremost's own claims data. [15] Foremost, on the other hand, contends that individual issues will abound. Foremost argues that, even if an actual cash value payment does not require all work to be completed first, the issue of whether general contractor overhead and profit is properly owing to each of its insureds still depends on whether the services of a general contractor would be reasonably required under the circumstances. And, with respect to the sales tax issue, Foremost argues that there may be instances in which the insureds, depending on their individual circumstances, might buy materials but incur no sales tax. Thus, according to Foremost, in order to prevail each potential class member will still have to prove that he was likely to require the services of a general contractor, or to pay sales tax; therefore, thousands of claims files will have to be analyzed in depth and numerous legal and factual issues will arise as to each. In response, the Millses stress that proof of whether a general contractor's services or sales taxes were reasonably likely to be incurred can be determined from the face of Foremost's own adjusters' estimates, which Plaintiffs accept, and through forensic review of Foremost's own adjusters' estimates. The Millses contend that industry professionals make such determinations every day in the course of their adjusting duties. The Millses assert that the class's acceptance of the damage estimates of Foremost's own adjusters for purposes of their lawsuit obviates the need to painstakingly analyze each class member's individual circumstances. The parties' disputes as to issues and proof cannot be resolved simply by reviewing the face of the Millses' complaint but warrant, at a minimum, production and examination of a representative sample of the estimates of Foremost's adjusters, which Plaintiffs have accepted as accurate but for the Withheld Payments. That being the case, the district court abused its discretion in determining, at this complaint-pleading stage in the litigation, that class action treatment of the Millses' claims is inappropriate. Given the vastly differing claims of the parties about the relative ease and practicability of calculating overhead, profit, and sales tax from Foremost's estimates and resolving liability, the Millses at least should have been granted an opportunity to conduct limited discovery relevant to the certification issue and thereafter the court should have determined whether an evidentiary hearing was needed to enable the district court to make any necessary factual findings. Accordingly, we conclude only that the district court erred in determining that class action treatment was inappropriate as a matter of law from the face of the Millses' particular complaint, and we remand for further proceedings. In so holding, we express no opinion as to whether class certification is or is not appropriate in this case.