Plaintiffs sometimes seek to certify an “issues class” under Federal Rule of Civil Procedure 23(c)(4) (or an equivalent state court rule) if they anticipate difficulty certifying the entire case for class treatment, but certain issues maybe more likely to qualify for class treatment. The federal rule provides that “[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues.” Federal circuits have taken different approaches to applying Rule 23(c)(4) along with the requirement under Rule 23(b)(3) that common issues must predominate over individualized issues. The Seventh Circuit recently weighed in on this debate, finding the superiority requirement dispositive in affirming decertification of the class.
In Jacks v. DirectSat USA, LLC, — F.4th –, 2024 WL 4380256 (7th Cir. Oct. 3, 2024), technicians that service satellite dishes brought claims against their employer alleging wage and hour violations. This was not your typical wage-and-hour case because the technicians were paid specific dollar amounts for particular tasks but also recorded their hours to ensure they were paid at least minimum wage. The plaintiffs alleged that they were underpaid because they worked overtime without being paid for it and were encouraged to perform tasks “off the clock.” A district court judge certified a Rule 23(c)(4) class to decide fifteen issues, focused on whether commuting time and certain tasks, if performed before or after the “workday,” were compensable. After the case was reassigned to a different judge, the class was decertified as trial approached because the new judge concluded that most of the issues varied for individual class members and could not be answered for the entire class.
On appeal, the Seventh Circuit weighed in on the debate about how to apply Rule 23(c)(4). It explained that the Fifth Circuit requires that the entire cause of action must satisfy the predominance requirement, while five circuits (the Second, Third, Fourth, Sixth, and Ninth) require only that common questions predominate in resolving specific certified issues. The D.C. Circuit takes another approach, requiring district courts to evaluate the relationship between certified issues and the entire case.
The Seventh Circuit agreed with the majority of other circuits that plaintiffs “must show that common questions predominate in the resolution of the specific issue or issues that are the subject of the certification motion,” not the entire case. But the superiority requirement also must be satisfied – “a party seeking certification under Rule 23(c)(4) must show that certifying the proposed issues would be the most practical and efficient way to resolve the litigation.” In this case, the superiority requirement was not met because the technicians varied in whether they performed certain tasks “off the clock,” how much time they spent on them, and how they recorded their time. Thus, even if the fourteen certified questions were answered, there would have to be individual trials on liability and damages, rendering certification inappropriate.
The superiority requirement is sometimes an afterthought in class action briefing and decisions, with courts often merging it with the predominance requirement. This case highlights how important superiority can be if an “issues class” is sought.
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