In Harris et. al. v. Medical Transportation Management, Inc. et. al., the D.C. Circuit Court of Appeals held that a putative class cannot be certified as an “issue” class under Rule 23(c)(4) without also satisfying the requirements in Rule 23(a) and (b). This ruling is important because it prohibits putative classes from using the “issue” class mechanism of Rule 23(c)(4) to skirt the important procedural requirements in Rule 23(a) and (b) that are meant to protect both the litigants and absent parties. The court also encouraged the use of the partial summary judgment mechanism, rather than Rule 23(c)(4), to resolve discrete legal issues common to many class members.
In Harris,nonemergency medical transportation drivers filed a class action lawsuit alleging their employer failed to pay them their full wages under federal and District of Columbia law. The case raised two important substantive issues. First, whether Medical Transportation Management (“MTM”) is a joint employer with a subcontractor over the drivers. Second, whether MTM is a general contractor under D.C. law, and therefore strictly liable for any wage law violations committed by its subcontractors. The district court certified a putative class for these issues under Rule 23(c)(4), which allows for class actions to be brought and maintained “when appropriate with respect to particular issues.” The district court did not, however, decide whether the class satisfied the requirements for class certification under Rule 23(b). Thus, on appeal, the D.C. Circuit considered whether the district court could certify an “issue” class under Rule 23(c)(4) without finding that the class satisfies the other prerequisites to class certification in 23(a) and (b).
The D.C. Circuit answered no. In doing so, the court explained that Rule 23(c)(4) does not create a “fourth category” of class actions allowing putative classes to flout the requirements of Rule 23(a) and (b). Instead, the court found that the district court abused its discretion by certifying the issue class without analyzing the requirements in Rule 23(b)(3). Under that Rule, the district was required to certify that (i) the issues for the putative class predominate over the questions affecting individual members; and (ii) a class action is the superior method of resolving the controversy. The court then provided a helpful roadmap to the district court about how to analyze the “predominance” and “superiority” requirements in the context of certifying an “issue” class under Rule 23(c)(4).
As to the predominance requirement set forth in Rule 23(b), the court acknowledged that “Rule 23(c)(4) may be used to certify an issue that is less than an entire cause of action.” For example, an issue class may be certified as to liability, affirmative defenses, or other aspects of the controversy that would materially advance the end of litigation. Even so, the court explained that the issue class cannot be “overly narrow,” effectively placing it at “war” with Rule 23(b)(3)’s predominance requirement. The district court must explain how the common questions for the issue class predominate within that component of the litigation, and how dividing the litigation through the issue class protects all the parties’ interests in the case.
The D.C. Circuit then addressed Rule 23(b)’s “superiority” requirement, which exists to ensure that courts explain how adjudicating a case as a class (as opposed to individually) makes the litigation more manageable and promotes the efficient resolution of the case. But for Rule 23(c)(4) “issue” class, the court noted that a class action might not always be the superior method of resolving the case. The court surmised that in some cases a partial summary judgment motion might be the more efficient way to dispose of a case. And when the case has been languishing for some time (in this instance, three years), the court held that district courts must consider whether a class action remains the most efficient way to adjudicate the issues, or whether an alternative method (such as partial summary judgment) to disposing of the issues is the best path forward.
Some class action lawyers have sought to use Rule 23(c)(4) as a workaround to avoid satisfying the more stringent requirements of Rule 23(b). By clarifying that a putative class certification sought under Rule 23(c)(4) must also satisfy the requirements of 23(a) and (b) – notably, the predominance and superiority requirements – the D.C. Circuit made it more difficult for class action lawyers to improperly use the “issue certification” provision of Rule 23 when seeking class certification against employers.