The U.S. Court of Appeals for the Eleventh Circuit recently reversed a trial court's certification of an injunction class, holding that the injunctive relief sought by the class was improper because the true relief sought was really damages.
A copy of the opinion is available at: Link to Opinion
In 2012, Florida's law requiring automobile insurance policies must provide personal injury protection ("PIP") benefits up to $10,000 was amended so that "not every injured motorist will be eligible to access all $10,000 in benefits." Coverage is capped at $2,500 unless the injured motorist has an "emergency medical condition" ("EMC") as defined by the statute.
Two chiropractic clinics and a medical provider who treated injured motorists insured by the defendant insurer "who thereafter assigned their insurance benefits to the providers" sued the insurer and two of its underwriters in Florida state court, alleging that they "denied PIP benefits in an illegal manner" because they "relied on negative EMC determinations from non-treating providers to limit coverage to $2,500, and that Florida law allows only treating providers to make negative EMC determinations."
The insurer defendant removed the case to federal court pursuant to the federal Class Action Fairness Act, "which grants federal jurisdiction over certain class actions where the amount in controversy exceeds $5 million and there is minimal diversity."
The Second Amended Complaint "asserted two counts: one for declaratory and injunctive relief and another for damages based on breach of contract."
The plaintiffs "moved to certify two classes: an injunction class under Federal Rule of Civil Procedure 23(b)(2) for count one, and a damages subclass under Rule 23(b)(3) for count two."
The trial court "refused to certify the damages subclass — which, under rule 23(b)(3), would require the court to find predominance and superiority — because doing so would necessitate individualized assessments and case management. But it certified the injunction class, in part because" the plaintiffs "assured it that once the legal issue is determined, there will be no more supervision required to determine individual damages."
The insurer sought leave to file "an interlocutory appeal of the injunction class certification[,]" which was granted. The sole issue raised in the appeal was "whether the injunction class should have been certified" because plaintiffs did not appeal the "denial of certification of the damages subclass…."
The Eleventh Circuit began by analyzing Federal Rule of Civil Procedure 23, "which lays down the ground rules for certifying a class action. To win certification under Rule 23, every class must present a named plaintiff who has standing to bring the claim. … Every class must be 'adequately defined and clearly ascertainable[,]' … [a]nd every class must satisfy the four requirements of Rule 23(a): numerosity, commonality, typicality, and adequacy of representation."
However, after Rule 23(a) is satisfied, the remaining provisions of Rule 23 differ depending on what type of class the plaintiff purports to represent. "For an injunction class under Rule 23(b)(2), the plaintiff must show that 'the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.' … For a damages class under Rule 23(b)(3), the plaintiff must show that 'questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.'"
The plaintiffs argued that it was "not seeking any damages award at all (at least not as a class)[,]" but instead wanted a declaration that the insurer's "practice of relying on non-treating physicians is unlawful, along with an injunction."
In response, the Eleventh Circuit explained that "[t]he problem with this argument is that the injunction … requested is not an injunction at all, and its declaratory request is both minimal and unconnected to members of [the] class." This is because the "requested relief is not designed to address the treatment of future claims; it would instead … 'restore claimants to the claims-handling process free of the improper cap on PIP benefits imposed by [the insurer].' … This strategy of converting its claim for damages into a claim for injunctive relief sidesteps the Rule 23(b)(3) problems by shaving away all the issues that would require individualized determinations. But what the damages-to-injunction strategy cannot manage to do is request relief that would prevent future injury rather than redress past harms."
The Court further explained that this "attempt to excise all the damages-based problems with certification thus runs into a fundamental issue: its creative conception of injunctive relief is not a viable theory of recovery under Rule 23(b)(2) … [because] [a]s we have said, an injunction must be geared toward preventing future harm … [and] [e]verything about [plaintiffs'] claim—from its theory of standing to its request for relief to its class definition—looks back at past harms."
After examining each part of plaintiffs' claim, the Eleventh Circuit concluded that "[s]imply put, this class is not suitably crafted for prospective relief. … In the end, the retrospective nature of [plaintiffs'] class and claim make clear that an injunction is not the right remedy in this case—indeed, it is not really the remedy that [the] class is seeking. And because an injunction is not the right remedy, Rule 23(b)(2) is not the right path to class certification: 'the policies underlying the requirements of (b)(3) should not be subverted by recasting and bifurcating every class suit for damage as one for final declaratory relief of liability under (b)(2), followed by a class suit for damages under (b)(3).'"
Finally, the Eleventh Circuit ruled, the "request for declaratory relief does not save this class … [because] [f]or one thing, like an injunction, declaratory relief requires a likelihood of future harm."
Because an injunction was not the right remedy "for the class as certified[,]" the trial court's certification of the class under Rule 23(b)(2) was reversed and the case remanded.
Ralph T. Wutscher
Maurice Wutscher LLP
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