Court Opinion

ID: 6984112
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:46:07.081273+00
Date Added: 2024-06-11T16:09:21.174265
License: Public Domain

MOORE, Circuit Judge,
concurring in the judgment.
Having certified a plaintiff class only as to certain claims, the district court proceeded to enter judgment in favor of the defendants on a variety of other claims raised in this Federal Rule of Civil Procedure 23(b)(3) class action (the “Becherer action”). Subsequently, the district court determined that a number of absent class members (the “Florida plaintiffs”) were bound by the judgment on the non-class claims under the doctrine of virtual representation.
Like the majority, I believe that preclusion through virtual representation should be applied very sparingly in the class action context. To do otherwise is to undermine the procedural protections afforded by the Federal Rules of Civil Procedure and to discourage the efficient litigation of claims through class actions. Applying the doctrine sparingly and observing that the conduct of the absent members in this ease generally was consistent with legitimate class behavior, I too would hold that the Florida plaintiffs were not virtually represented by the Becherer plaintiffs, and that the Florida plaintiffs should be bound by the Becherer judgment only to the extent of their inclusion in the certified class.
In my view, however, the majority has adopted an unduly narrow rule of virtual representation in the class action context. According to the majority, a plaintiff who opts out of a Rule 23(b)(3) class and does not control the litigation may be bound by the judgment only if a party to the action is legally accountable to the opt-out plaintiff for the result. Because I believe that such a formulation essentially nullifies the virtual representation doctrine and that other factors may warrant a finding of preclusion by virtual representation in the class action context, I concur only in the judgment.
I
The majority opinion sets forth the facts and procedural history of this case clearly and accurately, and I will not repeat the exercise. Because the Becherer action was a putative class action, however, I think it appropriate to consider the application of the class action rules and precedents to this case before turning to the virtual representation analysis.
Before 1966, actions for damages could be prosecuted in the federal courts as class actions without binding the absent class members prior to judgment. See Premier Elec. Constr. Co. v. National Elec. Contractors Ass’n, 814 F.2d 358, 362 (7th Cir.1987). Absent class members were permitted to intervene and take advantage of a victory by the plaintiff in a “spurious class action,” but only the named plaintiff was bound if the defendant prevailed. The 1966 revisions to Rule 23 were designed, in part, to end this one-way intervention. See id. Now the district court is required to determine whether a class is maintainable, “[a]s soon as practicable after the commencement of an action brought as a class action.” Fed.R.Civ.P. 23(c)(1). If an action is to be maintained pursuant to Rule *43023(b)(3), absent class members are to be provided “the best notice practicable under the circumstances” and an opportunity to exclude themselves from the class. Fed.R.Civ.P. 23(c)(2). Once this opt-out date has passed, absent members are bound by the judgment. In order to prevent one-way intervention, it is critical that the district court make the certification determination and direct notice to the absent class members at an early stage in the litigation.
Here, the district court properly certified a class with respect to the contract claims against Shelter Seagate Corporation and its affiliates (“SSG”) and a conditional class for the purposes of ratifying the proposed settlement. I believe the district court erred, however, when it conducted hearings, issued judgments, and otherwise permitted the litigation of the fraud and other claims against Merrill Lynch and the remaining defendants to proceed without first addressing the class certification issue. It is not enough that the “plaintiffs’ [November, 1989] motion to certify a class on the fraud and remaining claims was not denied by” the district court, or that “no party raised the need to again certify a class.” Becherer v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 809 F.Supp. 1259, 1266 (E.D.Mich.1992) (“Becherer II”). The district “court has an independent obligation to decide whether an action brought on a class basis is to be maintained even if neither of the parties moves for a ruling” on certification. 7B Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Prooedure § 1785, at 89-90 (2d ed.1986). In order to curtail one-way intervention, the district court must rule expeditiously on certification and provide an early opt-out date that limits the opportunity of the absent class members to sit on the sidelines without committing to the class.
Neither the district court nor Merrill Lynch have argued that the Florida plaintiffs are bound by the Becherer judgment on the basis of their status as class members; nor could they, as a contrary result clearly would violate due process. The Supreme Court has held that in a Rule 23(b)(3) class action seeking to bind known plaintiffs on claims predominantly for monetary relief, the absent plaintiffs must be provided with notice and an opportunity to opt out. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). Again, it is up to the district court to ensure that the absent plaintiffs’ due process rights are satisfied through the issuance of appropriate notice. Here, the potential class members may have been informed of the progress of the litigation by the Association of Unit Owners (“AUO”), but the district court was not entitled to rely on this mechanism. Moreover, even if the absent investors had notice of the fraud litigation, a formal opt-out opportunity was required. The court already had certified two Rule 23(b)(3) classes (one conditionally) for limited purposes and had provided opt-out opportunities. Given the procedures adopted by the district court for the management of this action, the absent investors surely were entitled to expect to receive notice and an opportunity to opt out with respect to the litigation of the remaining claims against the remaining defendants.1
*431By failing to rule on class certification with respect to the remaining claims, the district court rendered judgments with uncertain preclusive effect. The result has been six years of additional litigation.
II
Although the district court purported to rule against the “plaintiff class” in resolving the non-contract claims in Becherer I, see Becherer v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 799 F.Supp. 755, 767-79 (E.D.Mich.1992) (“Becherer I”), the foregoing analysis establishes that the nonparties to this action cannot be bound by the judgment on these claims as class members. Recognizing this, the district court turned in Becherer II to the theory of adequate or virtual representation. See Becherer II, 809 F.Supp. at 1267-69.
Traditionally, only a party or one held to be in privity with a party could be bound by a judgment. The privity concept has been stretched over the years, but the circumstances under which preclusion may be exercised against a nonparty remain limited. To be bound, a nonparty must exercise control over an action, consent to be bound by a judgment, or, in certain circumstances, be represented by a party to an action. See 18 Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 4448 (2d ed.1986). Under the doctrine of virtual representation, a nonparty whose interests are aligned with a party to an action may be bound by the judgment in that action if due process is satisfied and the equities so dictate. In balancing the equities, courts generally have considered whether there is an express or implied legal relationship between the nonparty and the party to the action; whether the nonparty had notice of, participated in, or consented to have its interests represented in the action; whether there is a family or other close nonlitigating relationship between the nonparty and the party; whether the party to the action had a sufficient incentive to litigate; and whether the party or nonparty was engaged in maneuvering to avoid the preclusive effect of the action. See id. § 4457; Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 760-62 (1st Cir.1994); Tyus v. Schoemehl, 93 F.3d 449, 455-56 (8th Cir.1996), cert. denied, 520 U.S. 1166, 117 S.Ct. 1427, 137 L.Ed.2d 536 (1997).
The doctrine of virtual representation originated in probate practice, in which it often is necessary to bind absent interests, but the theory has made inroads into general civil litigation. See Wright, Miller, and Cooper, supra, § 4457. It appears, however, that the doctrine may have reached its zenith several decades ago. In 1975 the Fifth Circuit stated a particularly broad theory of the doctrine in Aerojet-General Corp. v. Askew, 511 F.2d 710, 719 (5th Cir.), cert. denied, 423 U.S. 908, 96 S.Ct. 210, 46 L.Ed.2d 137 (1975): “Under the federal law of res judicata, a person may be bound by a judgment even though not a party if one of the parties to the suit is so closely aligned with his interests as to be his virtual representative.” In recent years the theory has been utilized sporadically, additional requirements have been recognized, and the amorphous nature of the doctrine has been criticized. See, e.g., Tice v. American Airlines, Inc., 162 F.3d 966 (7th Cir.1998) (concluding that virtual representation adds nothing to traditional privity analysis).
The theory of virtual representation, like preclusion doctrine generally, reflects a tension between competing interests. In order to resolve that tension and apply the equitable doctrine in a principled fashion in a specific case, courts may find it helpful to consider the matter in two steps. First, I would ask whether the context of the case, here, Rule 23(b)(3) class action litigation, warrants relatively liberal or sparing application of the doctrine. Second, I would consider whether the facts of the *432case justify the application of virtual representation given the context.
In assessing how readily virtual representation should be applied in a given context, courts should consider the strength of the litigant’s claim to a day in court, the fairness of requiring a party to a previous action to relitigate, and the implications for judicial efficiency. It is “[o]ur deep-rooted historic tradition that everyone should have his own day in court....” Wright, Miller, and Cooper, supra, § 4449, at 417. The right of each individual to assert her own cause of action and to be heard is grounded in the Due Process Clauses of the Fifth and Fourteenth Amendments. Thus, while one need not always be a party to a judgment in order to be bound by it, nonparty preclusion should not be applied lightly. Moreover, courts should be particularly circumspect in applying preclusion doctrines when individualized rights are at stake. See Richards v. Jefferson County, Alabama, 517 U.S. 793, 803, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996). See generally Robert G. Bone, Rethinking the “Day in Court” Ideal and Nonparty Preclusion, 67 N.Y.U. L.Rev. 193 (1992). Courts also must recognize the complexity of the efficiency analysis, as a finding of preclusion does not necessarily preserve resources in either the short or the long run. In the short run the judicial resources involved in the preclusion determination detract from the savings attributable to precluded actions. In the long run ready preclusion based on virtual representation may discourage efficient, coordinated action on the part of litigants.
I conclude that virtual representation should be applied sparingly in the context of class action litigation undertaken pursuant to Rule 23(b)(3).2 The claim of an absent plaintiff in a Rule 23(b)(3) class to an independent day in court is particularly strong: Unlike the absent members of a(b)(l) or (b)(2) class, the potential (b)(3) member cannot be bound by the judgment as a class member unless the notice and opt-out provisions of Rule 23(c) are complied with.
Efficiency considerations also caution against finding virtual representation too readily in cases in which a plaintiff has opted out of a class or in which a class was proposed but never was certified. In order to avoid discouraging efficient litigation through class actions, we must not penalize prospective class members from participating in and consenting to the representation up until the time that a class has been formed and the opt-out date has passed. Likewise, a certain amount of “maneuvering” is intended in the class action process. The potential class member is encouraged to monitor the litigation and make a decision as to whether her interests are being served up until the opt-out date.
Moreover, it generally will not be unfair to the defendant to permit relitigation by an excluded class member. Typically, when virtual representation has been invoked to preclude a bystander to the first action from pursuing a subsequent action, it has been the case that the bystander would have prevailed in effect had the plaintiff to the first action prevailed.3 In *433this situation the bystander loses nothing by failing to join the plaintiff in the' first action: If the plaintiff prevails in the first action, the bystander prevails; if the defendant prevails in the first action, the bystander can relitigate, unless precluded by virtual representation. It is the asymmetry of the situation, as well as the difficulty of achieving repose in cases in which the potential number of plaintiffs is very large, that generates concerns regarding fairness to the defendant.
By contrast, in a class action for damages the excluded class member generally will not be entitled to take advantage of a favorable judgment. The excluded party cannot invoke the judgment directly, and she probably will not be permitted to invoke offensive nonmutual collateral estoppel (“offensive estoppel”) to avoid re-litigation in a subsequent action. In Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), the Supreme Court approved the use of offensive estoppel but held that “[t]he general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where ... the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.” Because a plaintiff who opts out of a class action easily could have joined it, that plaintiff generally will not be permitted to invoke offensive estoppel. See, e.g., Premier Elec. Constr. Co., 814 F.2d at 367. If offensive estoppel is unavailable, the excluded class member and the defendant are in same position: neither is bound with respect to the other. In such a case there is no incentive for a potential class member to adopt a bystander role and no strong fairness or efficiency reason for the application of virtual representation.
Ill
Given the class action context and the desirability of applying virtual representation doctrine sparingly, I conclude that the Florida plaintiffs are not precluded from pursuing their fraud claims by the Becherer judgment. As an initial matter, although I would apply the virtual representation doctrine sparingly in this context, I do not believe that it is appropriate to limit the factors a district court may consider in the second stage of the analysis, that is, in judging the equities. It is on this point that my approach diverges from that of the majority. Virtual representation has been applied to a broad range of cases and, as an equitable doctrine, cannot be cabined usefully into a bright-line rule. Thus, by sparing application, I mean that preclusion should not be found unless the case is compelling; I do not mean to limit the breadth of the equitable inquiry. Accordingly, I would hold that the district court, properly guided by concerns for the litigants’ right, to a day in court, the fairness of permitting relitigation, and judicial efficiency, may consider the factors listed in Part II above, as well as other relevant considerations. I would hold that the only absolute prerequisite to a finding of privity by means of virtual representation is that there exist an identity of interests between the parties to the two actions. See Weight, Miller, and Cooper, supra, § 4457; Gonzalez, 27 F.3d at 760.4 Much *434more, of course, will be needed to justify preclusion through virtual representation, particularly when the first stage of the analysis dictates sparing application of the doctrine, but, having found an identity of interests, the district court should then consider a broad range of factors in balancing the equities.5
In the present case it is uncontested that the Florida plaintiffs and the Becherer plaintiffs share an identity of interests, and thus I turn to the other factors considered by the district court and suggested by the cases. Whether control is considered as an element of virtual representation or as a separate doctrine of privity, the facts do not support the conclusion that the Florida plaintiffs controlled the Beeherer suit directly or through the AUO. Although the AUO initiated the litigation and coordinated funding, it is not clear that the AUO controlled the litigation. The Beeherer action was not litigated by an organization on behalf of its membership; this case was brought as a putative class action on behalf of six named investors and the class of investors, and the case largely was treated as such. Moreover, as to the fraud claims, I cannot agree with the district court that there existed an express or implied legal relationship through which the Beeherer plaintiffs were accountable to the Florida plaintiffs. Although the class representative assumes a fiduciary relationship with respect to a certified class, see Sondel v. Northwest Airlines, Inc., 56 F.3d 934, 938 (8th Cir.1995); Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1077-78 (2d Cir.1995), the fiduciary responsibilities of the representatives to a putative class, if any, are uncertain.6 See Deposit Guar. Nat’l Bank, Jackson, Mississippi v. Roper, 445 U.S. 326, 340 n. 12, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980).
The Beeherer plaintiffs certainly had a sufficient incentive to litigate the fraud claims. In fact, each of the class members had a sizeable claim. Thus, adequacy of representation does not weigh against a finding of virtual representation. However, I question the district court’s conclusion that the Beeherer plaintiffs and the Florida plaintiffs had a close nonlitigating relationship. Aside from their common participation in the hotel venture and their involuntary joint membership in the AUO, there was no relationship between these plaintiffs prior to the litigation.
There is no doubt that the Florida plaintiffs had notice of the action. Even if the AUO had not provided updates, the court had twice directed notice with respect to the two classes that it certified.7 As noted above, however, I believe that the notice factor weighs against a finding of virtual representation in this case. Having received notice and an opportunity to opt out of two classes, the absent investors reasonably could expect to receive the same no*435tice and opportunity to opt out with respect to the fraud litigation. Moreover, given the significant rejection of the proposed global settlement of these claims, it is clear that the opportunity to opt out was not a mere formality.
Further, although it is evident that a number of the Florida plaintiffs participated in the Becherer litigation and provided financial support, it must be remembered that the Florida plaintiffs were members of a certified class with respect to the contract claims against SSG, one of which was not resolved until August 1992, when the fraud claims were resolved. Moreover, even after the proposed settlement failed, the Florida plaintiffs may have expected to become members of a litigating class with respect to the fraud claims. As the district court noted, the plaintiffs’ motion for class certification remained open throughout the action. See Becherer II, 809 F.Supp. at 1266.
The Florida plaintiffs apparently were apprized of the progress of the litigation in the final months preceding the resolution of the fraud claims; many of the Florida plaintiffs provided affidavits in this period. See Becherer IV, 920 F.Supp. at 1367. The district court inferred from this knowledge and participation that the Florida plaintiffs consented to be bound by the litigation: “All parties in the several hearings proceeded on the basis that my decisions would bind all investors.” Becherer II, 809 F.Supp. at 1265. The first problem with this conclusion is that the Florida plaintiffs were not parties to the Becherer litigation of the fraud claims, and the Becherer plaintiffs' could not speak for them. The second problem is that true consent to be bound in this fashion would have been foolish. Had the Florida plaintiffs wished to be bound, surely they would have pushed for certification on the fraud claims in order to bind the defendants expressly. Thus, although tacit consent to be bound has served as a basis for finding preclusion by virtual representation, see, e.g., Cauefield v. Fidelity & Cas. Co. of New York, 378 F.2d 876, 877 (5th Cir.) (stay of one proceeding indicated tacit agreement to be bound by result of second proceeding), cert. denied, 389 U.S. 1009, 88 S.Ct. 571, 19 L.Ed.2d 606 (1967), I cannot conclude that bystanding in the present case indicates a consent to be bound. See also Wright, Miller, and Cooper, supra, § 4453, at 454 (“Great care should be taken ... to ensure that the circumstances actually warrant the implication that there was in fact an agreement to be bound.”).
Similarly, I am not persuaded that maneuvering or manipulation on the part of the Florida plaintiffs justifies preclusion. In order to find a forfeiture of the due process right to a day in court in the class action context, the court must find maneuvering that extends beyond the confines of that sanctioned under Rule 23. The district court and Merrill Lynch focus on the fact that the Florida plaintiffs used the Becherer suit in seeking to gain a stay in separate foreclosure proceedings, that these plaintiffs intended to use a favorable ruling in the Becherer action for preclusive effect in the foreclosure litigation, and that the Florida plaintiffs postponed pursuing individual actions, taking a “wait and see” approach to the Becherer litigation. The district court’s fact finding indicates, however, that the Florida plaintiffs sought to stay the foreclosure actions in 1990. At this point, of course, the complaint had been filed and class certification had been sought, but no certification decisions had been made. Thus, it was reasonable for the Florida plaintiffs to have assumed and argued that their claims would be litigated as part of the class in the Becherer action and that the outcome of the action would have preclusive effect.8 Similarly, it was *436not unreasonable or manipulative for the Florida plaintiffs to take a “wait and see” approach regarding the fraud claims until the district court certified a class on those claims and provided a deadline for opting out. The Becherer plaintiffs moved for certification as to all of the claims back in 1989. Had the defendants felt that the potential class members were being allowed to stand by for an excessive period, the defendants could have moved for a certification decision on the fraud claims. Ultimately, however, it was the responsibility of the district court to ensure timely certification and provide a deadline for exclusion that would force the absent investors to decide whether to opt out of the class.
Finally, I think it important to consider what would have happened if the Becherer plaintiffs had prevailed on one or more of the fraud claims. In the absence of certification of the class prior to judgment, I do not believe that the Florida plaintiffs could have recovered directly on the judgment. As Rule 23 is intended to end one-way intervention, post-judgment certification in a Rule 23(b)(3) case generally should be impermissible.9 See International Union, UAW v. Donovan, 746 F.2d 839 (D.C.Cir.1984) (post-judgment certification impermissible), rev’d on other grounds, 477 U.S. 274, 106 S.Ct. 2523, 91 L.Ed.2d 228 (1986); but see Postow v. OBA Fed. Sav. & Loan Ass’n, 627 F.2d 1370 (D.C.Cir.1980) (post-judgment certification permissible in certain circumstances). The Florida plaintiffs could have attempted to use a favorable judgment on the fraud claims in the Bech-erer action offensively to estop relitigation of these issues in the Florida action, but it appears that Florida does not recognize offensive nonmutual collateral estoppel in purely civil actions. See Florida Bar v. Clement, 662 So.2d 690, 697 (Fla.1995), cert. denied, 517 U.S. 1210, 116 S.Ct. 1829, 134 L.Ed.2d 933 (1996). Moreover, even if the Florida courts were to follow the rule of Parklane and permit nonmutual estop-pel, I think it unlikely that offensive non-mutual collateral estoppel would have been available in this instance. Had the Florida plaintiffs sought to do so, they could have formally or informally pushed for class certification. In any event the hypothetical preclusive effect of a plaintiff victory in this action is as uncertain as the effect of the actual loss has been. Thus, it is unlikely that the Florida plaintiffs expected to be able to stay out of a class with respect to the fraud claims and yet profit from a favorable result. I do not see the risk or reality of manipulation in this case.
IV
Rule 23 is designed to protect the due process rights of absent class members. While I would not hold that a putative class member never may be bound by a judgment in the absence of complete compliance with Rule 23, I believe we should be very hesitant to apply preclusion through virtual representation in order to fill in gaps in the provision of notice and the right to opt out of Rule 23(b)(3) class actions. I am not persuaded that the Florida plaintiffs engaged in activity that is inconsistent with their role as members of one class and potential members of another. Certainly, I do not see behavior that justifies preclusion by virtual representation. Applying that doctrine sparingly, I conclude that the Florida plaintiffs are not bound by the Becherer judgment on the claims that were resolved outside the certified class.
Accordingly, I concur in the judgment.

. The complaint alleged a class pursuant to Rule 23(b)(3), and the district court certified one class and conditionally certified a second class pursuant to this rule. Although absent members need not be given notice and an opportunity to opt out of Rule 23(b)(1) and (2) class actions, I believe that the court was correct in certifying the classes pursuant to Rule 23(b)(3), and that certification under the other provisions would have been inappropriate, particularly with respect to the fraud claims. Because recovery was not sought from a common fund and the risk of inconsistent adjudication as to damages does not constitute prejudice for the purposes of Rule 23(b)(1), there was no potential prejudice to the plaintiffs or the defendants that would justify certification pursuant to Rule 23(b)(1). Moreover, certification pursuant to Rule 23(b)(2) would have been inappropriate as the plaintiffs principally sought damages. See Jack H. Friedenthal, Mary Kay Kane, & Arthur *431R. Miller, Civil Procedure § 16.2, at 732-34 (2d ed.1993).

. I express no opinion as to the applicability of the doctrine to Rule 23(b)(1) or (2) class actions. At least one court has applied the doctrine in the context of an unperfected state-law class action seeking declaratory relief, an action apparently analogous to a Rule 23(b)(2) action. See Jackson v. Hayakawa, 605 F.2d 1121, 1124 (9th Cir.1979), cert. denied, 445 U.S. 952, 100 S.Ct. 1601, 63 L.Ed.2d 787 (1980).

. See, e.g., Petit v. City of Chicago, 766 F.Supp. 607 (N.D.Ill.1991) (police officers precluded from challenging promotion examination by prior suit); Crane v. Commissioner of Dep't of Agric., 602 F.Supp. 280 (D.Me.1985) (milk producers seeking to challenge state act held to be in privity with association that brought prior suit); see also Bezanson v. Bayside Enters., Inc. (In re Medomak Canning), 922 F.2d 895 (1st Cir.1990) (junior claimants bound by settlement agreed between bankruptcy trustee and senior claimants); Eubanks v. FDIC, 977 F.2d 166 (5th Cir.1992) (Mrs. Eubanks's claims precluded as derivative of claims of her husband that *433were settled in a previous bankruptcy confirmation action).

. Some of our opinions also have required " 'the existence of an express or implied legal relationship in which parties to the first suit are accountable to non-parties who file a subsequent suit raising identical issues,’ ” Becherer v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 43 F.3d 1054, 1070 (6th Cir.1995) ("Becherer III") (quoting Benson and Ford, Inc. v. Wanda Petroleum Co., 833 F.2d 1172, 1175 (5th Cir.1987)), and this, essentially, is the position of the majority. I agree with Professors Wright, Miller, and Cooper, however, that making this relationship a prerequisite vitiates the doctrine of virtual representation. See Wright, Miller, and Cooper, supra, § 4457, at 500. Thus, I would consider the existence of such a relationship to be a factor rather than a prerequisite in the virtual representation analysis. Accord Gonzalez, 27 F.3d at 760.
*434Professors Wright, Miller, and Cooper suggest that adequacy of the litigation also should be a central requirement. Most courts have treated adequacy of representation as a factor rather than as a prerequisite, see Gonzalez, 27 F.3d at 761-62, and courts generally have viewed the incentive to litigate the first action as a proxy for the adequacy of the litigation. See Tyus, 93 F.3d at 455-56.

.For similar reasons, I do not find the categorical approach of the Restatement of Judgments to be helpful in virtual representation analysis. See Restatement (Second) of Judgments §§ 39-41 (1980). Under the Restatement, a nonparty may be bound who can be placed within a particular cubbyhole: One who substantially controls an action may be bound under § 39. One who agrees to be bound by an action may be bound under § 40. One who is represented by a trustee, fiduciary, or class representative may be bound under § 41. Under virtual representation doctrine, however, courts may consider several of these factors and determine that preclusion is warranted based on the totality of the circumstances.

. Even if class representatives are legally accountable to putative members, I would discount the legal relationship that flows solely from the class relationship. To do otherwise is to penalize attempted class formation.

. Only conditional certification was granted with respect to the settlement class.

. Even after the district court’s 1992 rulings, certain Unit Owners sought to continue to delay the foreclosure actions pending appeal of the Becherer action. See Becherer IV, 920 F.Supp. at 1366. At that point, of course, the district court' had ruled that all of the Unit Owners were bound by the judgment. Thus, it was not unreasonable to seek delay of the *436foreclosure actions until the effect of the Becherer litigation was finalized.

. By contrast, this court has upheld the contemporaneous entry of a judgment in favor of a plaintiff class and the certification of that class in a Rule 23(b)(2) class action in which provision of notice and an opportunity to opt out are not required. See Alexander v. Aero Lodge No. 735, 565 F.2d 1364 (6th Cir.1977), cert. denied, 436 U.S. 946, 98 S.Ct. 2849, 56 L.Ed.2d 787 (1978).