REVISED, February 17, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-40635 _____________________
IN RE ASBESTOS LITIGATION,
JAMES FLANAGAN, DAVID H. MIDDLETON, EDEE COCHRAN, ESTEBAN YANEZ ORTIZ, JOHN R. ALLGOOD, HENRY WILLIAM EVERS, LESTER EUGENE TAYLOR and SAFETY NATIONAL CASUALTY CORPORATION,
Appellants,
versus
GERALD AHEARN, JAMES MCADAMS DENNIS, CHARLES W. JEEP, JAMES DRAKE, JUANITA DRAKE, JAMES ELLISON, ROLAND DEARBORN, JUDITH DEARBORN, KERWIN BUTCHER, DIR., WORKERS COMP., Director, Office of Workers’ Compensation Programs, U.S. Dept. of Labor, PAUL COCHRAN, IDA BECK, MARION BEHEE, LONGSHORE INTERVENOR, WILLIAM JAMES MITCHELL, FIBREBOARD CORPORATION, BETHLEHEM STEEL CORPORATION, CONTINENTAL CASUALTY COMPANY, PACIFIC INDEMNITY, FRANCIS MCGOVERN, OWENS-ILLINOIS, INC., PENN MUTUAL LIFE INSURANCE COMPANY, COLUMBIA CASUALTY COMPANY, CNA CASUALTY COMPANY OF CALIFORNIA, CELOTEX CORP., DANIEL HERMAN RUDD JR., on behalf if themselves and others similarly situated, JOHN HANSEL, on behalf of themselves and others similarly situated,
Appellees.
_______________________________________________________
Appeals from the United States District Court for the Eastern District of Texas _______________________________________________________ January 27, 1998
Before REAVLEY, DAVIS and SMITH, Circuit Judges.
PER CURIAM: In our prior opinion, we affirmed the judgment below, which
approved class action settlements of asbestos-related claims
involving Fibreboard Corporation. In re Asbestos Litigation, 90
F.3d 963 (5th Cir. 1996), vacated, 117 S. Ct. 2503 (1997). The
Supreme Court vacated our judgment and remanded the case for
reconsideration in light of Amchem Products, Inc. v. Windsor, 117
S. Ct. 2231 (1997). After oral argument and reconsideration, we
can find nothing in the Amchem opinion that changes our prior
decision. We again affirm.
There are two controlling differences between this case and
Amchem. First, this class action proceeded under Rule 23(b)(1);
Amchem was a Rule 23(b)(3) case. Second, there was no allocation
or difference in award, according to nature or severity of injury,
in the present case as there was in Amchem; in the case here all
members of the future claimant class are treated alike. Individual
damage awards will subsequently be decided according to individual
damages.
The district court made extensive findings and found,
specifically, that separate actions by members of the class would
create a risk of 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. The language of the district court matches the language
of Rule 23(b)(1)(B). No one has contested that finding of the
district court, probably because it is incontestable. The Supreme Court stated in Amchem that a settlement class
action, like all federal class actions, cannot proceed unless the
requirements of Rule 23(a) are met, irrespective of whether the
proposed settlement is deemed fair under Rule 23(e). We detailed
in our prior opinion our agreement with the thorough study and
conclusions by the district court, satisfying the requirements of
class certification under Rule 23(a). All members of the class,
and all class representatives, share the common interests:
suffering harm from asbestos exposure and seeking equitable
distribution of compensation from limited funds. None of the
uncommon questions, abounding in Amchem, exist in the present case.
The only conflict between members of the future claimant class
could be competition for larger and earlier shares of available
money, but that is precisely the reason for Rule 23(b)(1)(B) and
the problem it is designed to solve where the money is limited.
That conflict or competition is controlled for the benefit of all
members of the class. It follows that the lawyer representing the
class serves only common interests of the class.
The judgment of the district court is
AFFIRMED.
ENDRECORD
3 JERRY E. SMITH, Circuit Judge, dissenting:
In a five-paragraph unsigned opinion, the panel majority
states that “we can find nothing in the Amchem opinion that changes
our prior decision.”1 Like that prior decision, the new majority
opinion overrides the substantive and procedural rights of large
groups of asbestos claimants. Because this court cannot properly
bless a settlement that Congress has not authorized and the
Constitution forbids, I respectfully dissent.
I.
Even if, arguendo, the law that informs this case was not
plain before the Court decided Amchem Prods. v. Windsor, 117 S. Ct.
2231 (1997), that law is evident now. It is not surprising that
the Court issued a “GVR”2 requiring this court to reconsider the
majority's now-vacated opinion3 in light of Amchem. The Court
issues a GVR order “[w]here intervening developments . . . reveal
a reasonable probability that the decision below rests upon a
premise that the lower court would reject if given the opportunity
for further consideration . . . .” Lawrence, 516 U.S. at 167.
I believe the remand in this immensely important case merits more
1 In published form, the majority opinion will consume only about a page. Accordingly, I will not burden the reader with page references. 2 The acronym “GVR” refers to the Supreme Court's practice of granting certiorari, vacating, and remanding for further consideration in light of some intervening development. The practice is thoroughly explained in Lawrence v. Chater, 516 U.S. 163, 165-75 (1996) (per curiam). See Carter v. Johnson, 131 F.3d 452, 457 n.2 (5th Cir. 1997). 3 See Flanagan v. Ahearn (In re Asbestos Litig.), 90 F.3d 963 (5th Cir. 1996) (“Ahearn I”), vacated, 117 S. Ct. 2503 (1997). thorough consideration than is reflected in the majority's terse
per curiam treatment.
II.
Like the district court a quo, the district court in Amchem
had approved a gigantic settlement, including a complex scheme
for processing claims administratively, in an effort to achieve
efficiency and fairness in the resolution of massive numbers of
asbestos claims without resort to individual trials.4 The Amchem
Court rejected the settlement because it plainly is not
authorized by the applicable rules and statutes:
The argument is sensibly made that a nationwide
administrative claims processing regime would provide
the most secure, fair, and efficient means of
compensating victims of asbestos exposure. Congress,
however, has not adopted such a solution. And [FED.
R. CIV. P.] 23, which must be interpreted with fidelity
to the Rules Enabling Act [, 28 U.S.C. § 2072(b),] and
applied with the interests of absent class members in
close view, cannot carry the large load . . . the
District Court heaped upon it. As this case
exemplifies, the rulemakers' prescriptions for class
actions may be endangered by “those who embrace [Rule
4 For a recitation of the facts and proceedings, the reader is referred to the prior panel majority and dissenting opinions in this case. See Ahearn I, 90 F.3d at 968-74; id. at 993-98 (Smith, J., dissenting).
5 23] too enthusiastically just as [they are by] those
who approach [the rule] with distaste.”
117 S. Ct. at 2252 (footnote and citation omitted, last three
brackets in original).
The lesson is that, regardless of the benefits a particular
settlement might seem to confer, in terms of “the greatest good
for the greatest number” of parties, the niceties of statutory
and constitutional constraints must be observed. Thus, while
parties and district courts can be praised for their
resourcefulness in formulating settlements that resolve mass tort
litigation, the statutory and constitutional constraints, as the
Amchem Court observed, “serve to inhibit appraisals of the
chancellor's foot kindSSclass certifications dependent upon the
court's gestalt judgment or overarching impression of the
settlement's fairness.” Amchem, 117 S. Ct. at 2248.
This general theme, expressed forcefully in Amchem, is
reinforced by the Court's discussion of specific issues, most of
which are highly relevant to the instant case. While Amchem
focuses on the issues of predominance and adequacy of
representation, the Court emphasizes that these are not the only
considerations a court must address when certifying a settlement
class.5
5 See, e.g., Amchem, 117 S. Ct. at 2252 (“Because we have concluded that the class in this case cannot satisfy the requirements of common issue predominance and adequacy of representation, we need not rule, definitively, on the notice given here. . . . [H]owever . . . we recognize the gravity of the (continued...)
6 III.
Before discussing the issues dealt with directly in Amchem,
I note that this is not, as the majority would have it, a
“limited fund” case. I will show, below, that the majority's
analysis is fatally flawed even if we treat this matter as
involving a limited fundSSa question not present in AmchemSSbut I
adhere to my previously-stated view that Fibreboard and its
insurers do not colectively constitute a “limited fund” that
would allow class certification under FED. R. CIV. P. 23(b)(1)(B).
See Ahearn I, 90 F.3d at 1002 n.17 (Smith, J., dissenting).
This issue alone should be dispositive of the matter, for if
this class cannot go forward as a “limited fund” class, it would
require certification under rule 23(b)(3) and would then be
subject to the requirements of predominance and superiority.
Amchem would specifically prevent class certification, for here,
we have precisely the same disparities that destroyed cohesion in
the Amchem class:
“Class members were exposed to different asbestos-containing products, for different amounts of time, in different ways, and over different periods. Some class members suffer no physical injury or have only asymptomatic pleural changes, while others suffer from lung cancer, disabling asbestosis, or from mesothelioma . . . . Each has a different history of cigarette smoking, a factor that complicates the causation inquiry. “The [exposure-only] plaintiffs especially share little in common, either with each other or with the presently injured class members. It is unclear whether
(...continued) question . . . .”).
7 they will contract asbestos-related disease and, if so, what disease each will suffer. They will also incur different medical expenses because their monitoring and treatment will depend on singular circumstances and individual medical histories.”
Amchem, 117 S. Ct. at 2250 (quoting Georgine v. Amchem Prods.,
83 F.3d 610, 626 (3d Cir. 1996)). In Amchem, as here,
differences in state law compound these disparities. Id.
The panel majority concludes that the district court's
finding that Fibreboard is a “limited fund” is “incontestable”.6
This is error, for rule 23(b)(1)(B) cannot reasonably be read to
allow a “limited fund” class where, as here, there is and was no
“fund” except that which was established by the settlement
itself.7 Congress long ago established a comprehensive
bankruptcy scheme to govern situations in which a company is
unable to pay its debts. Here, the district court speculated
6 The panel majority's statement that “[n]o one has contested that finding of the district court” is simply inaccurate: Briefs in the original appeal and on remand vigorously contest the “limited fund” characterization. 7 Rule 23(b)(1)(B) does not mention a “limited fund” but, instead, allows class certification where individual adjudications “would as a practical matter . . . substantially impair” the ability of class members to protect their interests. Thus, the class members' interests might be in mineral reserves, water rights, or a fixed amount of money. The rule necessarily contemplates the allocation of a limited resource, however, for only where the class members' interests are to some degree mutually exclusive will the individuals' litigation “substantially impair” the others' rights. Thus, where the remedy sought is money damages, the paradigm is of a “limited fund” to be distributed for the class members' benefit. Courts have been confronted with at least two different theories under which rule 23(b)(1)(B) would apply to cases that do not fit into this “limited fund” paradigm: the “constructive bankruptcy” and the “punitive damage overkill” theories. See Arthur R. Miller and David Crump, Jurisdiction and Choice of Law in Multistage Class Actions after Phillips Petroleum Co. v. Shutts, 96 YALE L.J. 1, 42 (1986). The instant putative class seeks certification on the basis of “constructive bankruptcy.” That is, the claimants theorize that if Fibreboard continues to pay asbestos settlements and judgments, it will eventually go bankrupt, and this, as a practical matter, will dispose of later-brought claims.
8 that, at some point in the future, Fibreboard may be unable to
pay all of its asbestos tort creditors. The court then, in
effect, discharged the debt owed that particular class of
creditors while avoiding the procedural protections of the
bankruptcy code. This is manifestly incorrect.
A.
The panel majority gives great deference to the district
court's factual finding that the maintenance of individual
actions by class members might be dispositive of the interests of
other parties. The majority accurately notes that “the language
of the district court matches the language of Rule 23(b)(1)(B),”
but the enunciation of these magic words cannot insulate the
underlying legal determination from review, any more than would a
trial court's factual finding that a defendant is liable. As a
matter of law, this “finding,” which is overtly conclusory, is
incorrect.
The class proponents cite cases in which appellate courts
have upheld “limited fund” class certifications under rule
23(b)(1)(B), but these cases invariably involve a “fund” that,
unlike an ongoing concern, is necessarily limited.8 These
8 For example, in In re Joint E. & S. Dist. Asbestos Litig., 982 F.2d 721, 742-43 (2d Cir. 1992), modified on reh'g sub nom. In re Findley, 993 F.2d 7 (2d Cir. 1993), the underlying trust fund had been established during the asbestos defendant's bankruptcy reorganization. It was entirely proper, then, for the claims against that fund to be litigated en masse as a “limited fund” class. In In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285 (2d Cir. 1992), the defendant had established a $350 million fund in settlement of an SEC enforcement action, and subsequently went bankrupt. This, also, involved an actual “fund” that was “limited”. And in Hartford Life Ins. Co. v. Ibs, 237 U.S. (continued...)
9 applications of rule 23(b)(1)(B) are appropriate, for the rule
obviously applies where “claims are made by numerous persons
against a fund insufficient to satisfy all claims.”9 Professor
Newberg states:
A limited fund exists when a fixed asset or piece of property exists in which all class members have a preexisting interest . . . . Classic illustrations include claimants to trust assets, a bank account, insurance proceeds, company assets in a liquidation sale, proceeds of a ship sale in a maritime suit, and others.
1 NEWBERG ON CLASS ACTIONS § 4.09, at 4-33 (emphasis added). Here,
there is neither a fixed asset nor property in which the putative
class members have an interest. Their claims are made not
against a “fund”, but against Fibreboard itself.
It is fundamental that an injured party has an in personam
claim against the person responsible for his injury.10 Such a
claim is not limited by the amount of insurance carried by a
defendant, nor by its liquid assets or net worth. A final
judgment against the defendant becomes much like any other debt,
(...continued) 662 (1915), there was a true “fund” against which the individual causes of action arose: a mortuary fund held by Hartford for the benefit of thousands of members. 9 Rules Advisory Committee, Notes to 1966 Amendments to Rule 23, 39 F.R.D. 69, 101; see also 1 NEWBERG ON CLASS ACTIONS § 4.09, at 4-31 (noting that “the most common use of subsection (b)(1)(B) class actions is in limited fund cases”) 10 Take, as a random example, the admiralty case of Grubart v. Great Lakes Dredge & Dock Co., 513 U.S. 527 (1994), in which the contested issue was whether the Limitation on Vessel Owners' Liability Act, 46 U.S.C. § 181 et seq., should apply. If it did, all the victims of the Chicago flood would be limited in their recovery to the value of a few marine vessels; but if it did not, the victims of the flood could recover in personam against the defendant and its insurers. See Grubart, 513 U.S. at 531.
10 able to be collected from any of a defaulting debtor's existing
or after-acquired assets.11
Here, the panel majority has approved replacing the
claimants' state law causes of action in personam with a claim
against an artificially-imposed “limited fund.” To be sure, the
settlement does establish a limited fund: a res from which
payment for all claims must be distributed. Indeed, for
Fibreboard, the entire point of this settlement was to obtain a
limit on liability that theretofore had been, quite literally,
limitless. But that does not transform the plaintiffs' in
personam claims against Fibreboard into in rem claims against the
newly-established fund.
It is possible that the mounting costs of defending asbestos
claims and paying asbestos judgments would have driven Fibreboard
to take refuge in bankruptcy court.12 This would be unfortunate
for Fibreboard's shareholders and contract creditors, but it
would not be catastrophic: The Johns-Manville Corporation went
through an apparently successful bankruptcy reorganization and
spun off the Manville Personal Injury Settlement Trust in order
to satisfy its tort liabilities. See In re Joint E. & S. Dist.
11 Also, as I note below in part III.B, Fibreboard has been purchased by Owens-Corning, whose assets could be available, in appropriate circumstances, to satisfy tort judgments. Finally, Fibreboard has announced that it is suing the tobacco industry for recovery in the nature of contribution, arguing that injuries caused by smoking aggravate injuries caused by asbestos. See Asbestos Maker Sues Tobacco Industry, N.Y. TIMES, Nov. 8, 1997, at D5. Any sums thus recovered will be available to pay tort judgments. 12 I note the indeterminacy inherent in this speculation: At what point does a “fund” become “limited”? A district court must assess the probability and likely amount of the claimants' recovery, and balance this against its estimation of the defendant's future ability to pay.
11 Litig., 982 F.2d at 725. And in any case, the specter of
eventual bankruptcy does not now render this ongoing concern a
“limited fund.” Up until the time of a bankruptcy discharge,
tort creditors have a legally unlimited font of money from which
they may demand their due.
This proposed settlement class is in fact “a self-evident
evasion of the exclusive legal system established by Congress for
debtors to seek relief.”13 But here, the “constructive
bankruptcy” is reached without the protections of the Bankruptcy
Code: procedural protectionsSSsuch as the creditors' vote on
settlementsSSand substantive protectionsSSsuch as tort creditors'
preferred status. It is, moreover, a colossal bailout for
Fibreboard's shareholders that would not occur in bankruptcy.
Instead of approving this evasion of the mechanisms established
by the legislative branch, we should be mindful that “the
function of federal courts is not to conduct trials over whether
a statutory scheme should be ignored because a more efficient
13 See In re Keene Corp., 14 F.3d 726, 732 (2d Cir. 1993), in which the court noted:
Indeed, the process contemplated by [class proponents] mirrors a bankruptcy proceeding. The finding of a limited fund corresponds to a finding of insolvency. The preliminary injunction serves much the same function as the automatic stay under Section 362(a) of the Bankruptcy Code. 11 U.S.C. § 362(a) (1988). The class representatives correspond to creditors' committees in Chapter 11 proceedings. See 11 U.S.C. § 1102 (1988). The proposed mandatory class settlement mirrors a reorganization plan and "cram-down," see 11 U.S.C. § 1123, 1129(b), followed by a discharge, 11 U.S.C. § 1141(d). Id at 732 (citation omitted).
12 mechanism can be fashioned by judges.” In re Keene, 14 F.3d at
733.14
The panel majority thus supplants the bankruptcy law with a
judge-made system to extinguish the rights of tort creditors.
And the panel ignores the obvious application of rule 2 3
(b)(1)(B), which does not allow a defendant to limit its
substantive liability through the creation of a limited fundSSas
was done hereSSbut rather is a mechanism for the equitable
distribution of a pre-existing fund.
But perhaps most striking is the panel's apparent disregard
for principles of federalism and the limits of the Rules Enabling
Act. Contrary to the Congressional mandate that the rules of
civil procedure not “abridge, enlarge, or modify any substantive
right,” 28 U.S.C. § 2072, this court now takes away state law
rights of those who have been damaged in tort and allows the
asbestos victims only a pro-rata share in an artificially-limited
settlement fund. As a matter of law, this class cannot be
certified under rule 23(b)(1)(B).
B.
14 Commentators have questioned the propriety of using rule 23(b)(1)(B) as a means of avoiding bankruptcy proceedings. See, e.g., 3 NEWBERG ON CLASS ACTIONS § 17.15A, at 3S-16 (3d ed. Supp. 1994) (opining that “a 23(b)(1)(B) class should not serve as a substitute for bankruptcy proceedings”); see also, e.g., John C. Coffee, Jr., Class Wars: The Dilemma of Mass Tort Class Actions, 95 COLUM. L. REV. 1343, 1382-83, 1458-59 (1995); Richard Marcus, They Can't Do That, Can They? Tort Reform Via Rule 23, 80 CORNELL L. REV. 858, 880-81 (1995); William Schwarzer, Settlement of Mass Tort Class Actions: Order Out of Chaos, 80 CORNELL L. REV. 837, 840 (1995).
13 Even assuming, arguendo, that rule 23(b)(1)(B) allows
certification of a “limited fund” class of in personam claimants
against a solvent ongoing concern and its solvent insurers, the
panel majority erred in accepting the district court's factual
decision that this is a limited fund. Fibreboard was recently
acquired by Owens-Corning in a tender offer for about $515
million cash, plus $85 million of assumed debt. See Andrea
Puchalsky, Owens-Corning to Buy Fibreboard for $515 million, WALL
ST. J., May 29, 1997 at A4. This stands in contrast to the
district court's finding, upheld by this court, that Fibreboard
was worth no more than $235 million.
This discrepancy could indicate clear error, but at the very
least it calls for a remand for new fact finding as to the value
of Fibreboard as a potentially “limited fund.” By issuing its
new opinion, the majority declines, by implication, to permit the
district court to reconsider that finding.
IV.
Although the Supreme Court's remand was specifically for
reconsideration in light of Amchem, the instant matter has the
procedural posture of an appeal from the entirety of the district
court's judgment. In other words, the remand does not limit the
scope of our review. Accordingly, I reiterate, briefly, some of
the other points discussed in the original panel opinion and
dissent, simply to indicate that these are still live issues
important to our consideration.
14 For example, even if it were properly certified under
rule 23(b)(1)(B), this class cannot proceed as a mandatory class
in contravention of Phillips Petroleum Co. v. Shutts, 472 U.S.
797, 812 (1985). See Ahearn I, 90 F.3d at 1001-06 (Smith, J.,
dissenting). Moreover, this classSSwhich by definition includes
persons unaware of any injury or even exposure15SScould never meet
rule 23's requirement of notice to class members. See Ahearn I,
90 F.3d at 999-1000 (Smith, J., dissenting); see also Amchem, 117
S. Ct. at 2252 (citing the Ahearn I dissent with approval).
Perhaps most importantly, this classSSwith legions of members who
lack legally cognizable claims, and many members who have not
even suffered injury-in-factSScannot meet the irreducible minimum
standards of justiciability under U.S. CONST. Art. III.16 See
Ahearn I, 90 F.3d at 1015-26 (Smith, J., dissenting); see also
Amchem, 117 S. Ct. at 2244 (declining to reach jurisdictional
issues before deciding “logically antecedent” rule 23
certification issues).
V.
Even if these reasons were invalid, this class must fail
under Amchem because of the lack of common issues and the
15 Indeed, the class includes “persons”SSthe future children of persons exposed to asbestosSSwho had not yet been conceived at the time the complaint was filed. 16 Again, I call attention to the “future children” and “future spouses” categories of claimants. See Ahearn I, 90 F.3d at 1018-19 (Smith, J., dissenting).
15 inadequately- representative named plaintiffs. The Amchem
settlement class, similarly, failed to meet the “adequacy of
representation” requirement of rule 23(a). Amchem, 117 S. Ct. at
2252. The Court stated:
Nor can the class . . . satisfy Rule 23(a)(4)'s requirement that the named parties will fairly and adequately protect the interests of the class. The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent. [A] class representative must be part of the class and possess the same interest and suffer the same injury as the class members.
. . . In significant respects, the interests of those within the single [Amchem] class are not aligned. Most saliently, for the currently injured, the critical goal is generous immediate payments. That goal tugs against the interest of exposure-only plaintiffs in ensuring an ample, inflation-protected fund for the future.
117 S. Ct at 2250-51 (citations and internal quotation marks
omitted).
The Amchem Court firmly established three principles of law
with respect to rule 23(a)(4). Perhaps most importantly,
adequacy of representation must be analyzed as a procedural
safeguardSSa “structural assurance” that the class members'
interests are protected, irrespective of the fairness of the
outcome.17 Id. at 2251. And it is the class representatives who
17 Of great importance here is a point recognized by the panel majority, that a settlement class “cannot proceed unless the requirements of Rule 23(a) are met, irrespective of whether the proposed settlement is deemed fair under Rule 23(e).” See also Amchem, 117 S. Ct. at 2248 (holding that the fairness inquiry is “an additional requirement, not a superseding direction” to the (continued...)
16 matter: the named plaintiffs, not their lawyers. Furthermore,
the Court's treatment of the issue makes plain that the adequacy
of representationSSor its converse, the existence of
conflictsSSis treated as a question of law, not as a factual
matter to be proven by expert testimony.
1.
The Amchem Court was presented with a factual “no conflict”
finding similar to the district court’s finding in this case.
The same legal ethics expert who testified in Ahearn testified in
Amchem that he perceived no intraclass conflict, or that if there
was a small conflict it was overwhelmed by the commonalities.
See Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 297-98 (E.D.
Pa. 1994). The district court agreed. Id. In their briefs, the
class proponents vigorously argued the factual “no conflict”
determination to the Supreme Court. See, e.g., Amchem Brief for
Petitioner at 45-49, 1996 WL 721641, at *45-49.
But the Supreme Court disregarded the expert's testimony and
the Amchem district court’s extensive findings of fact on the
issue of representativeness. Cf. Amchem, 117 S. Ct. at 2250-52.
Instead, from its own review of the various and potentially
adverse interests among class members, the Court determined that
(...continued) requirements of Rules 23(a) and (b)). This directly contradicts Adams Extract Co. v. Pleasure Hours, Inc. (In re Corrugated Container Antitrust Litig.), 643 F.2d 195 (5th Cir. Apr. 1981). See, e.g., id. at 212 (“If the [settlement] terms themselves are fair, reasonable and adequate, the district court may fairly assume that they were negotiated by competent and adequate counsel”).
17 conflicts existedSSwithout regard to the conclusions of expert
witnesses or of the district court. It is thus apparent from
Amchem that the existence of conflicts is very much a question of
law, not fact.18 As did the Amchem district court, however,
the district court and panel majority here incorrectly have
treated the conflict inquiry as a factual one. In Ahearn I, the
majority stated that “[j]ust what measure of representation is
adequate is a question of fact that depends on each peculiar set
of circumstances.” 90 F.3d at 977 (quoting North Am. Acceptance
Corp. v. Arnall, Gordon & Gregory, 593 F.2d 642, 644 n.4. (5th
Cir. 1979)). The new majority opinion apparently draws on that
conclusion when it says that “[w]e detailed in our prior opinion
our agreement with the thorough study and conclusions by the
district court, satisfying the requirements of class
certification under Rule 23(a).” Now, in light of Amchem, we
know this conclusion was incorrect: Adequacy is determined as a
matter of law.
2.
The Amchem court also emphasized the crucial distinction
between the adequacy of the class representatives themselves, on
the one hand, and the adequacy of class counsel, on the other
hand. Thus, the Amchem Court, rather than looking at the
plaintiffs’ lawyers’ competence or ethical conflicts of interest,
18 Of course, the underlying circumstancesSSfor example that certain types of claimants are differently situated in the settlement value of their underlying claimsSSwould be a factual matter.
18 questioned whether the named plaintiffs shared the same interests
as did the class they purported to represent.19 The Court stated
that the rule 23(a)(4) adequacy inquiry requires that “the named
parties will fairly and adequately protect the interests of the
class.” Amchem, 117 S. Ct. at 2250 (emphasis added, internal
quotations omitted). Not just the attorneys, but also the named
parties must be without conflict with the class they seek to
represent. Id. This is especially true where, as here,
claimants are deprived of the right to opt out. See Ahearn I, 90
F.3d at 1009 (Smith, J., dissenting).
3.
Throughout Amchem, the Court reminds us that the rule 23
class composition requirements are structural protections:
prophylactic rules that must be applied even where a seemingly
desirable result has been achieved without their help. Noting
Congress's direction that the rules of procedure “shall not
abridge any substantive right,” 28 U.S.C. § 2072(b), the Court
states that rule 23's “dominant concern” is whether “absent class
members can fairly be bound by decisions of class
representatives.” Amchem, 117 S. Ct. at 2248. The adequacy
inquiry is ultimately designed to protect the members' due
19 Rule 23(a)(4) requires that the both the named plaintiffs and the class counsel be adequately representative. The Court made this distinction explicit, noting, “we decline to address the adequacy-of-counsel issues in light of our conclusion that common questions of law or fact do not predominate and that the named plaintiffs cannot adequately represent the interests of this enormous class.” Amchem, 117 S. Ct. at 2251 n.20.
19 process rights, to keep them from being bound in absentia by
someone who does not adequately protect their interests. See
id.; see also Hansberry v. Lee, 311 U.S. 32 (1940). In other
words, the class certification inquiry does not examine the
merits of the tradeoffs created by a settlement, but examines
whether class representatives and class counsel had the authority
to trade at all.
Amchem thus specifically rejects any attempt to circumvent
the structural safeguards of rule 23(a) by looking only to the
substantive fairness of the outcome under rule 23(e).20 The
rules “designed to protect absentees by blocking unwarranted or
overbroad class definitions [] demand undiluted, even heightened
attention in the settlement context.” Amchem, 117 S. Ct. at
2248. Ignoring the class proponents' protestations that the
settlement was fair, and that the class members' interest in
achieving a fair settlement established a unifying interest among
all the members, see Amchem Brief for Petitioner at 43-48, 1996
WL 721641, at *43-48, the Amchem Court unequivocally reiterated
that structure must prevail over content.
It is not enough that a named plaintiff in fact works for
the overall good of the class. A representative must “possess
the same interest and suffer the same injury as the class
members” and must be aligned in interest such that no conflicts
20 As one academic noted, “[D]ue process must mean something other than that the result is just, otherwise some lynchings would be consistent with due process.” Susan Koniak, Feasting While the Widow Weeps: Georgine v. Amchem Products, Inc., 80 CORNELL L. REV. 1045, 1123 (1995).
20 exist between the representative and any “discrete subclasses”
within the broader class he purports to represent. Amchem, 117
S. Ct. at 2251. Amchem demands a “structural assurance of fair
and adequate representation for the diverse groups and
individuals affected.” Id. (emphasis added).
A corollary of rule 23(a)(4)'s mandate of unconflicted
representation as a “structural assurance” is that any real
conflict, even if minor when compared to interests held in
common, will render the representation inadequate. Thus, Amchem
did not weigh the myriad common interests within that class
against the conflicts, in order to decide whether the conflicts
were “de minimis” or were somehow overcome by the commonalities.
Rather, the analysis was explicitly focused on the mere
existence of some intraclass conflict.21 Cf. Amchem, 117 S. Ct.
at 2250-51. And the Court specifically stated that the class
conflicts were not “made insignificant” by the ample funding
provided by the settlement. Id. at 2251. In accordance with
Amchem, therefore, we should not careSSbecause the Supreme Court
did notSSwhether having maximum dollars in a settlement fund is
in everyone's interest, or even whether that unifying interest
seems to outweigh the singular and disunifying interests among
the various de facto subclasses.
Amchem requires that the class representatives possess an
identity of interest with the class they represent, and also that
21 The only intraclass conflict identified as such by the Court was the conflict between the currently injured and exposure-only plaintiffs. See Amchem, 117 S. Ct. at 2251. The same conflict, of course, exists here.
21 “the named plaintiffs operated under a proper understanding of
their representational responsibilities.” Id. Where discrete
subclasses exist, each “separate constituency” must be
represented as such:
“The class representatives may well have thought that the Settlement serves the aggregate interests of the entire class. But the adversity among subgroups requires that the members of each subgroup cannot be bound to a settlement except by consents given by those who understand that their role is to represent solely the members of their respective subgroups.”
Amchem, 117 S. Ct. at 2251 (quoting In re Joint E. & S. Dist.
Asbestos Litig., 982 F.2d at 742-43).
Therefore, in order for this class properly to be certified,
exposure-only and pre-1959 representatives must have been
representing the interests of their own subgroup, not the
amorphous interest of the class as a whole. But there was no
structural mechanism here to ensure that each discrete interest
(such as the exposure-only claimants' interest in a lower damage
cap) was given an advocate in the settlement negotiations.
Rather, if these discrete interests were voiced at all, it would
have been by someone perfectly willingSSindeed, obligated by his
duty to the class as a wholeSSto subordinate that discrete
interest to his conception of the broader interests of the
class.22
22 As discussed below, the terms of the settlement demonstrate why interested and express advocacy was necessary: It appears that the most cohesive and self-identified groupSSthe presently injuredSSmay perhaps unconsciously have advanced its own interests at the expense of the more diffuse and unidentified future claimants.
22 B.
Two important conflicts exist between certain class members
and their representatives.23 The same conflict between present
and future claimants identified in the Amchem class also is
present here: “Most saliently, for the currently injured, the
critical goal is generous immediate payments. This goal tugs
against the interest of exposure-only plaintiffs in ensuring an
ample, inflation-protected fund for the future.” Amchem, 117
S. Ct. at 2251. Because of that conflict alone, this cannot go
forward as a single class.
Furthermore, this class contains the additional conflict
between the pre- and post-1959 claimants. These groups are
treated alike under the settlement, even though their claims are
worth vastly different amounts in the tort system.24 These
structural conflicts effectively create discrete subgroups within
the Ahearn class. Even if these conflicts are small in
comparison to other arguable common interests, certification of
the conflicted class was improper without proper
23 These two structural conflicts are not the only ones, however. For example, the direct claimantsSSwho allegedly suffered injury from direct exposure to asbestos, and would recover under any tort regimeSSare in opposition to the indirect claimantsSSwho only suffered injuries such as loss of consortium, and whose claims might not be cognizable in some states. See 41 AM. JUR. 2D Husband and Wife § 247 (stating that jurisdictions may treat loss of consortium claims as derivative of the underlying personal injury, and thus a judgment in one establishes res judicata as to the other, or they may treat the loss of consortium claim as a distinct action). Obviously, negotiating the settlement's treatment of indirect claimants will pit these two groups against each other. 24 Before the settlement became imminent, the pre-1959 claims settled for an average of $12,000, while the post-1959 settled for only $4,000. Once the asbestos world expected that the settlement would go through, the pre-1959 claims settled for only $8,000, while the value of the post-1959 claims had risen to $7,000. MEALEY'S LITIG. REP. June 2, 1995, at 20.
23 subclassification and representation.25 Because the panel
majority states that “there was no allocation or difference in
the award, according to the nature or severity of injury,” one is
led to infer that the only interest that was ever in play here
was the unitary interest of all the class members in receiving
money. That inference is incorrect.
The settlement has two essential parts: a common fund and a
mandatory process for distributing that fund. Even if all
claimants are treated alike under the settlementSSwithout regard
to their statusSSthis still reflects an allocation decision, with
the various groups pitted against each other to receive parts of
the fund.
In order to negotiate the settlement fund and establish the
distribution process, the parties engaged in a series of
compromises, attempting to balance the interests of the various
subgroups in order to arrive at a settlement to the benefit of
all. Thus, individual claims are capped at $500,000, regardless
25 I note, however, that the putative class's common interests are not overwhelming. The panel majority describes those interests as “suffering harm from asbestos exposure and seeking equitable distribution of compensation from limited funds.” This is in accord with the original majority opinion, which essentially found the common interest to be maximizing and efficiently distributing the settlement. Ahearn I, 90 F.3d at 981. Amchem refutes the proposition that the class members' common interest in achieving or maximizing a settlement could align their interests sufficiently enough to satisfy rule 23(a)(4). The district court that originally certified the Amchem class relied on this rationale: “So long as all class members are united in asserting a common right, such as achieving the maximum possible recovery for the class, the class interests are not antagonistic for representation purposes.” Georgine v. Amchem Prods., 157 F.R.D. 246, 317 (E.D. Pa. 1994). But the Supreme Court squarely rejected this rationale. The fact that everyone had an interest in receiving money does not suffice to ensure that the named parties would “fairly and adequately protect the interests of the class.” See Amchem, 117 S. Ct. at 2250-51. The putative class members' lack of common interests is dealt with at length in Part V, below.
24 of the nature of the claim or when it manifests itself.26 There
is an outright ban on punitive damages. Pre- and post-judgment
interest is eliminated, despite its availability in many
jurisdictions and its obviously disproportionate impact on latent
claimants. Claims arising under highly different legal
systemsSSsuch as maritime versus non-maritime law, and common law
versus civil codeSSare treated identically.
But perhaps the most salient allocation was the decision to
treat the pre- and post-1959 claimants alike. It is true that
the class as a whole benefited from this, and perhaps from each
of the other compromises.27 It is also true that the settlement
treats everyone the same. But in so doing, it ignores the pre-
settlement statusSSand rightsSSof the widely disparate groups of
claimants.28
26 By contrast, mesothelioma claims had averaged tort recoveries in the millions. Also, consider how this cap reflects an allocation between latent claimantsSSwho desire a low cap, in order to preserve the fund for when their injuries become manifestSSand patent claimantsSSwho would prefer high present damages. 27 It is axiomatic that the class as a whole was giving something up in return for the guaranteed settlement. Fibreboard and its insurers must have thought they were getting a good dealSSthat the settlement cost was less than their actual liabilitySSor they would not have entered into the agreement. The question, though, is whether some claimants' rights were traded away, and whether those claimants were adequately represented. 28 This might be likened to an airline that eliminates both coach and first class seating, creating a new “business class” for everyone, and then applies this new arrangement to a flight on which many of the seats have been sold. Those who bought a coach ticket are thrilled to receive a better level of service, but those who paid for first class have been deprived of their due. Even if the group as a whole is better offSSfor the many coach passengers' happiness outweighs the few first class passengers' disappointmentSSthis would be unacceptable.
In economic terms, this result would be Kaldor-Hicks optimal. But here, in order not to divest vested rights, any acceptable result must come closer to Pareto optimality.
25 The settlement forced the pre-1959 claimants to give up
something of value that is legally their dueSStheir cause of
action against an insured FibreboardSSin order to benefit a group
of claimants to whom they owe nothing. To deprive them of that
right requires that the absent class members have been protected
by rule 23(a)(4)'s structural safeguard of due process through
representation.
It is immaterial that, arguably, the settlement might not
have been different had it been negotiated with representatives
of the subclasses. Likewise irrelevant is whether the settlement
was fair and in everyone's best interest. The gravamen of
prophylactic rules is that they must be followed even where they
seem burdensome and inconsequential.
C.
The panel majority apparently believes the adequacy inquiry
in this case to be distinguishable from that in Amchem, for this
is a rule 23(b)(1)(B) action, while Amchem was not. That
distinction is relevant, but it cuts against certification.
Here, in a limited fund action, it is even more true that the
class members were pitted against one another, and that their
interests needed to be aligned with those of their loyal
representatives.
In Amchem, the Court stated that “[a]lthough this is not a
'limited fund' case certified under Rule 23(b)(1)(B), the terms
of the settlement reflect essential allocation decisions designed
26 to confine compensation and to limit defendants' liability.”
117 S. Ct. at 2251. Thus, even though the Amchem defendants had
a theoretically unlimited supply of dollars with which to pay
future claimantsSSso that the allocation of dollars was not a
zero-sum game, and class members' potentially conflicting
interests were thus arguably not pitted against one
anotherSSstill, that settlement made “essential allocation
decisions” by which some class members won and some lost. Thus,
the Court worried that the settlement had chosen winners and
losers “with no structural assurance of fair and adequate
representation for the diverse groups and individuals affected.”
Id.
Here, there is no question that the settlement makes
“essential allocation decisions.” This is, after all, a “limited
fund” class, in the view of the panel majority. If that is so,
there is only one apple, and anyone who might ever assert a claim
against the defendants is fighting for a bite of it. The need
for adequate representation is even more important where, as
here, one person or group loses for every time another person or
group wins.
The settlement's terms reveal its inter-group allocative
effect. The high cap on damages hurts latent claimants (who
would prefer a lower cap to ensure that there is some money left
when their injuries finally become manifest), while patent
claimants benefit. The ban on punitive damages hurts claimants
from jurisdictions where such awards are generally available,
27 saving a larger slice of the apple for those for whom punitives
would not be available. Perhaps most egregiously, the settlement
eliminates the privileged status of the pre-1959 claimants (who
were covered by Fibreboard's insurance policy) and places them on
equal footing with the post-1959 claimants (whose claims were
largely uninsured). This settlement undeniably picks winners and
losers.
A limited fund only increases the potential of intraclass
conflicts. If the settlement in Amchem was legally flawed, this
one is even more so. Where, as here, there are significant and
potentially adverse subgroups within a class, their interests
must be protected by representation as such.
Although recognizing that the class representatives might
have thought the settlement in the best interests of the class as
a whole, the Court in Amchem demanded a “structural assurance of
fair and adequate representation for the diverse groups and
individuals affected.” Id. at 2251. This case demands no less.
The Amchem class was rejected also, in part, because common
questions of law or fact did not predominate over questions
affecting only individual class members. See id. at 2249 (citing
rule 23(b)(3)). That analysis does not directly control the
instant supposed “limited fund” class, for rule 23(b)(1)(B)
imposes no such predominance requirement, but calls only for rule
23(a)(2) commonality. And, noting that for rule 23(b)(3) classes
28 the test of commonality is subsumed under or superseded by the
more stringent predominance inquiry, the Court declined to
address commonality as such. Id. at 2243.
Here, where common issues need only exist, not predominate,
Amchem's ultimate conclusion has no bearing on the type and
relative significance of the issues necessary to pass muster
under rule 23(a)(2). The Amchem analysis is still pertinent,
however, for Amchem speaks directly to the relevance of the
settlement to either inquiry. Amchem tells us what sort of
common issues may be considered: whether they must preexist the
settlement, or whether an interest in the settlement itself may
provide the common issues in satisfaction of rule 23(a)(2) or
rule 23(b)(3).
Amchem tells us that, although a settlement is “a factor in
the calculus,” 117 S. Ct. at 2249,29 the parties' interest in the
settlement will not suffice to establish a “common interest”
among the class members. “The benefits asbestos-exposed persons
might gain from the establishment of a grand-scale compensation
scheme . . . is not pertinent to the predominance inquiry. That
inquiry trains on the legal or factual questions that qualify
each class member's case as a genuine controversy, questions that
preexist any settlement.” Id. (emphasis added). “If a common
29 The Court found the fact of and terms of a settlement relevant in only three contexts: (1) The terms of the settlement may indicate whether the absentees' interests are adequately represented. 117 S. Ct. at 2248. (2) The fact of a settlement also eliminates the need for a rule 23(b)(3)(D) manageability inquiry. Id. And (3) when a class is a settlement-only class, it requires that heightened attention be given to the class definition, as there will be no way to refine and adjust the class as litigation unfolds. Id.
29 interest in a fair compromise could satisfy the predominance
requirement . . ., that vital prescription would be stripped of
any meaning in the settlement context.” Id. at 2249-50.
The class proponents would object that by its terms, this
rule speaks only of “predominance,” not “commonality.” Here,
though, that is a distinction without a difference. That the
predominance inquiry imposes a higher standardSSby requiring not
only that the common issues exist but that they outweigh the
uncommon issuesSSis irrelevant, for the Court made explicit that
the issues themselvesSSwhether they must be “predominant” or
simply “common”SSmust arise from interests that preexist the
settlement.
That there is a settlement, or that it is fair, does not
eliminate or modify the other requirements of rule 23. Id.
at 2248. The plain text of rule 23 requires the putative class
to meet its requirements by reference to the intrinsic features
of the class members' claims, not to the settlement. Amchem
reminds us that courts “lack authority to substitute for rule
23's certification criteria a standard never adoptedSSthat if a
settlement is 'fair,' then certification is proper.” Id. at
2249. A court must apply the “criteria the rulemakers set.” Id.
A settlement cannot itself be used to establish commonality,
because to do so would cripple the settlement process from its
inception; a putative class unable to meet the requirement of
rule 23(a)(2) without the “commonality” established by a
settlement could never be certified for litigation. And if
30 settlement were allowed despite the impossibility of litigation,
class counsel “could not use the threat of litigation to press
for a better offer,” and the resulting settlement would be a one-
sided deal that sells out the plaintiff class for a pittance and
works only in the true interest of the defendant and its insurers
and the attorneys for both sides. See id. at 2248-49. For
policy reasons as well as adherence to the text of the rule,
then, Amchem mandates that every class meet the rule 23
certification requirements independently of any common interest
they might share in obtaining or maximizing the proposed
In its original opinion, the panel majority relied
exclusively on the common interest of the class members in the
settlement, citing Adams Extract Co. v. Pleasure Hours, Inc. (In
re Corrugated Container Antitrust Litig.), 643 F.2d 195, 211 (5th
Cir. Apr. 1981),30 for the proposition that “the terms of the
settlement were vitally important to the determination that
certification was appropriate.” Ahearn I, 90 F.3d at 975. The
majority went on to cite other authority for the proposition that
“in the settlement class context, common issues arise from the
settlement itself,” id., and then applied its view of the law to
the putative Ahearn class:
30 I reiterate that Corrugated Container's reliance on the fairness of, and interest in, the settlement is invalidated by Amchem. Also in doubt is the viability of Meat Price Investigators Ass'n v. Iowa Beef Processors (In re Beef Indus. Antitrust Litig.), 607 F.2d 167 (5th Cir. 1979), in which this court stated: “[A]s the law now stands, tentative or temporary settlement classes are favored when there is little or no likelihood of abuse, and the settlement is fair and reasonable and under the scrutiny of the trial judge.” Id. at 174.
31 The district court, in its findings of fact, found that the entire Global Health Claimant Class had the following issues in common:
(i) avoiding the potentially disastrous results of a loss by Fibreboard in the Coverage Case appeal; (ii) maximizing the total settlement contribution from Fibreboard and the Insurers; (iii) streamlining the procedures for the filing, processing and resolution of claims, and thereby reducing transactions costs and delays in compensation; (iv) minimizing the percentage of their compensation diverted from them to pay attorneys' fees; and (v) adopting procedures that provide for payments to claimants in an equitable manner.
The intervenors do not disagree that the settlement class holds these issues in common. Instead, they argue that these issues do not support a finding of commonality because they are derived from the settlement rather than from the Ahearn complaint. As we noted above, this argument has no merit and is foreclosed by our holding in Container I. Because the evidence is overwhelming that the class holds the above issues in common under the settlement (even the intervenors concede this point), we agree with the district court that the Ahearn action and the Global Settlement Agreement presented it with questions of law and fact common to the entire Global Health Claimant Class.
Id. at 975-76. This passage makes apparent that the panel
majority based its finding of commonality solely on the now-
discredited theory that the class members' interest in the
settlement itself is sufficient to fulfill rule 23's commonality
requirement.31
31 The common issues described by the district court and the first panel opinion are remarkably similar to one of the common issues relied on by the Amchem district court and squarely rejected by the Supreme Court: “their common 'interest in receiving prompt and fair compensation for their claims, while minimizing the risks and transaction costs inherent in the asbestos litigation process as it occurs presently in the tort system.'” Amchem, 117 (continued...)
32 In its latest opinion, the majority addresses this point in
one sentence: “All members of the class, and all class
representatives, share the common interests: suffering from
asbestos exposure and seeking equitable distribution of
compensation from limited funds.” As I have said, the latter
“interest” in the settlement fund, because it does not preexist
the settlement, cannot establish commonality. And the putative
interest in “suffering from asbestos exposure” is simply
inadequate.
To begin with, it is factually incorrect to say that all the
class members have “suffered from asbestos exposure.”32 The
futures claimants, of course, have, by definition, “suffered”
nothing, although presumably they have been exposed. Likewise,
the future children and future spouses of persons exposed to
asbestos have suffered nothing and have been exposed to nothing.
Presumably the majority means that by the time their claims
ripen and become justiciable, every class member will have a
common interest in that he will deserve some compensation from
Fibreboard that in some way stems from Fibreboard's manufacture
of asbestos. At such an extreme level of generality, the members
(...continued) S. Ct. at 2249 (quoting Georgine v. Amchem Prods., Inc., 157 F.R.D. at 316). This benefit, the Court held, “is a matter fit for legislative consideration, but it is not pertinent to the predominance inquiry.” Id. (emphasis added). 32 This “interest” is like the “interest” the majority identified in its prior opinion: that, in addition to the now discredited “interest in the settlement” theory, commonality exists because “Fibreboard is liable in tort for damages incurred due to exposure to Fibreboard asbestos.” See Ahearn I, 90 F.3d at 975-76.
33 of this class conceivably could possess some level of
commonality. But this is not a justiciable common interest
sufficient to maintain the class. Consider a commercial
airline that suffers several disasters: one in Oregon, one in
Louisiana, and one off the coast of Brazil. The owners of
property that is damaged when the plane crashed into it, the
bystanders injured by flying debris, and the deceased passengers'
and crewmembers' next of kin all have “suffered from” the
crashes.33 But no federal court would allow these disparate
groups, under dissimilar legal systems, asserting divergent legal
claims, all to join together under the aegis of their common
“suffering from the airplane crashes.”
In such a case, then, the superficial commonality of having
suffered some injury will not suffice. Instead, the common issue
must be necessary to the theory of recovery: “[T]he individual's
claim and the class claims [must] share common questions of law
or fact.” General Tel. Co. v. Falcon, 457 U.S. 147, 157 (1982)
(emphasis added). And it must be significant:
The commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.
33 The reader may add facts as needed to sustain the analogy. For example, the claims against the airline add up to a lot of money, so by the panel majority's reasoning, one might consider the airline and its insurers a “limited fund.”
34 Id. at 157 n.13. It is not enough for some general sort of
commonality to exist. The commonality must be justiciable: It
must derive from a substantial legal or factual question that is
necessary to the class members' theories of recovery.
It might be that the members of the putative Ahearn class do
have issues in common, issues preexisting and apart from the
settlement. It might also be that these issues would suffice to
establish rule 23(a) commonality. The district court and the
panel majority did not cite any such common issues, however.
In fact, the gist of this class is that the driving
commonality was the class members' interest in the settlement
itself: that in order to keep the defendants from going bankrupt
and to forestall a possibly disadvantageous result in the
insurance litigation, the plaintiff class members found it in
their common interest to settle. Amchem tells us this is not
enough.
VI.
In sum, this class cannot go forward. It cannot be
certified as a “limited fund” class under rule 23(b)(1)(B),
because it does not concern such a “limited fund,” but rather is
an aggregation of claims against a solvent, ongoing concern and
its insurers.
But even if this class did involve a “limited fund” under
rule 23(b)(1)(B), Amchem makes plain that it must still fail the
requirements of rule 23(a). The pre- and post-1959 claimants and
35 the patent and latent claimants are discrete and often
adversarial subgroups. That the class structure fails to
recognize these groups as such and to afford them proper
representation causes the class to fail the adequacy requirement
of rule 23(a). Further, because Amchem will not allow
commonality to stem from a putative interest in the settlement
itself, this class must also fail for want of common issues.
The panel majority embraces a settlement that it considers a
triumph of practicality. In doing so, it casually dismisses the
teaching of Amchem and blesses a class that falls far short of
legal and constitutional requirements. I do not believe the
Supreme Court spoke cryptically in vacating our earlier opinion
while articulating, in Amchem, the specific standards for us to
apply on remand. Because the majority adheres to an opinion that
is foreclosed by the Court's reasoning, I respectfully dissent.