Allison v. Citgo Petroleum Corp.

This interlocutory appeal presents the question whether the district court properly refused to certify a class action challenging employment practices by the Citgo Petroleum Corporation ("Citgo") under Title VII (as amended in 1991) and the Civil Rights Act of 1866, 42 U.S.C. § 1981. The plaintiffs, Allison and over 130 other named plaintiffs and intervenors, filed suit on behalf of black employees and applicants for employment alleging that Citgo engaged in class-wide racial discrimination with respect to general hiring, promotion, compensation, and training policies at its manufacturing facilities in Lake Charles, Louisiana. The plaintiffs challenged these policies under disparate impact and systemic disparate treatment theories of discrimination. Seeking injunctive, declaratory, and monetary relief, the plaintiffs moved for class certification under Rule 23 of the Federal Rules of Civil Procedure, which Citgo opposed. The district court denied the motion. On appeal, the plaintiffs contend that the district court's denial of class certification was an abuse of discretion. Before the passage of the Civil Rights Act of 1991, which for the first time provided plaintiffs with a right to compensatory and punitive damages as well as a jury trial (each demanded here), aspects of this case clearly would have qualified for class certification. As we shall explain, however, the plaintiffs' claims for money damages and the constitutional right of both parties to a jury trial, with all its substantive rights and procedural complications, ultimately render this case unsuitable for class certification under Rule 23. We therefore affirm and hold that the district court did not abuse its discretion in denying class certification.

* This race discrimination case involves a potentially huge and wide-ranging class action lawsuit concerning employment practices at Citgo's Lake Charles manufacturing complex. Specifically, the plaintiffs identified the following employment practices as resulting in unlawful race discrimination: (1) failure to post or announce job vacancies; (2) use of an informal word-of-mouth announcement process for filling job vacancies; (3) use of racially biased tests to evaluate candidates for hire or promotion; and (4) use of a subjective decision-making process by a predominantly white supervisory staff in reviewing applicants for hire and employees for promotion. The plaintiffs challenged each of these policies under both the disparate impact and systemic disparate treatment theories of Title VII.

In September 1993, the plaintiffs filed a motion for the certification of a class estimated to contain more than 1000 potential members. The class was identified as "[a]ll African-American employees and applicants of Citgo Petroleum Corporation (Citgo) from April 11, 1979 until the present." Its members are current and former employees and unsuccessful applicants for employment in "hourly" positions at Citgo's Lake Charles complex. They are spread across two separate facilities. They are represented by six different unions, come from five different skill groups, and work in seven different functional areas at the complex. Nevertheless, the plaintiffs maintain that a class action is appropriate because they are challenging general hiring, training, and promotional policies applied uniformly throughout the complex.

To remedy the alleged discrimination, the plaintiffs seek every available form of injunctive, declaratory, and monetary relief. In terms of affirmative injunctive relief, the plaintiffs seek restructuring of offending policies, instatement into existing jobs, and retroactive seniority and benefits. As for monetary relief traditionally available under Title VII, the plaintiffs request back pay, front pay, pre-judgment interest, and attorneys' fees. Furthermore, invoking the provisions added to Title VII by the Civil Rights Act of 1991, the plaintiffs seek compensatory and punitive damages to the maximum amount permissible under the law. Finally, the plaintiffs demand a jury trial on their claims of intentional discrimination, to which they are now also entitled under the 1991 amendments.

The district court referred the plaintiffs' motion for class certification to a magistrate judge, who conducted an evidentiary hearing and subsequently entered a report and recommendation denying class certification. The magistrate judge determined that, although the proposed class met the requirements of Rule 23(a) of the Federal Rules of Civil Procedure, it could not be certified under any of the alternatives provided in 23(b). The plaintiffs sought certification primarily under subsection (b)(2), but the magistrate judge found certification under (b)(2) inappropriate because money damages were the "predominant" form of relief sought. Focusing on the individualized nature of the damages claims and the consequent need for significant individualized proof, he reasoned that they were not sufficiently incidental to the injunctive relief to warrant class certification under 23(b)(2). The magistrate judge also considered class certification under Rule 23(b)(3), but found that the need for individualized damages determinations caused individual issues to predominate over common ones and that a class action would not be a superior method for fair and efficient adjudication of the controversy.

Finally, the magistrate judge contemplated bifurcating the trial into liability and damages stages and certifying a class on only the claims for injunctive relief. He expressed concern, however, over Seventh Amendment complications arising out of bifurcated proceedings with multiple juries and the difficulty in separating liability and damages issues in discrimination cases. The magistrate judge suggested that the proper use of consolidation under Rule 42 of the Federal Rules of Civil Procedure would permit the court to avoid the problems presented by a class action in this case while still achieving some degree of efficiency.

The district court adopted the report and recommendation in its entirety and denied class certification. On petition by the plaintiffs, the court certified the question for interlocutory appeal under 28 U.S.C. § 1292(b), which we granted in May 1996. This appeal followed.

We note at the outset that the district court maintains substantial discretion in determining whether to certify a class action, a decision we review only for abuse. See Jenkins v. Raymark Indus., 782 F.2d 468, 471-72 (5th Cir.1986). Implicit in this deferential standard is a recognition of the essentially factual basis of the certification inquiry and of the district court's inherent power to manage and control pending litigation. See Pegues v. Mississippi State Employment Serv., 699 F.2d 760, 763 (5th Cir.), cert. denied, 464 U.S. 991, 104 S.Ct. 482, 78 L.Ed.2d 679 (1983). Whether the district court applied the correct legal standard in reaching its decision on class certification, however, is a legal question that we review de novo. See Forbush v. J.C. Penney Co., 994 F.2d 1101, 1104 (5th Cir.1993).

Perhaps it is best at the beginning of this rather extended opinion to say a preliminary word about the task before us. The breadth and complexity of the issues relating to the plaintiffs' broad claims for monetary relief and demand for a jury trial, raised in the context of multiple alternative arguments, make it necessary for us to examine the nature of class actions under Rule 23 and its subparts, as they relate specifically to this case. The plaintiffs urge primarily that the entire case is certifiable as a class action under Rule 23(b)(2). Because they argue that the wide array of monetary remedies they seek does not predominate over requested injunctive or declaratory relief, we must dwell at some length on what "predomination" means for the purposes of Rule 23(b)(2) and how it applies here.

Next, we consider the plaintiffs' argument that, if this case cannot be certified in a (b)(2) class action, it may nevertheless be certified under Rule 23(b)(3). In addressing this argument, we consider whether issues common to the class predominate over issues relating solely to individuals, and whether a (b)(3) class action would be an efficient and manageable means of resolving this case in the light of the plaintiffs' claims for compensatory and punitive damages and their demand for a jury trial.

Finally, given that the plaintiffs ultimately resort to a request for a class action on any available basis (but without foregoing any of their class claims for monetary relief), we consider whether this case can be severed in such a way as to make class certification appropriate for any of the plaintiffs' claims, while reserving the question whether to certify the remaining claims for subsequent proceedings. Because of the plaintiffs' demand for a jury trial, resolving this issue requires us to consider the Seventh Amendment implications of severing claims that share common factual issues with the remainder of the case.

Class actions brought under Title VII typically proceed under two theories, disparate impact and systemic disparate treatment, both of which are advanced in this case. The disparate impact theory is used to challenge a facially neutral employment policy that falls more harshly on a protected class of employees. Pouncy v. Prudential Ins. Co. of Am., 668 F.2d 795, 799 (5th Cir.1982). The systemic disparate treatment theory focuses on whether the employer engaged in a "pattern or practice" of intentional discrimination, that is, whether discrimination was the employer's standard operating procedure rather than a sporadic occurrence. See International Bhd. of Teamsters v. United States, 431 U.S. 324, 336, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977). In years past, we have routinely upheld certification of class actions to resolve Title VII cases involving disparate impact and pattern or practice claims of discrimination. See, e.g., Richardson v. Byrd, 709 F.2d 1016 (5th Cir.), cert. denied, 464 U.S. 1009, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983); Robinson v. Union Carbide Corp., 538 F.2d 652 (5th Cir.1976), cert. denied, 434 U.S. 822, 98 S.Ct. 65, 54 L.Ed.2d 78 (1977); Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir.1974).

In doing so, we have recognized that the class action device could be implemented effectively to eradicate widespread or institutional-scale discrimination. See Jenkins v. United Gas Corp., 400 F.2d 28, 34 & n. 14 (5th Cir.1968); see also Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, 7A Federal Practice and Procedure § 1776, at 495-96 (2d ed.1986) (civil rights cases frequently involve group discrimination). Disparate impact cases in particular, which challenge specific, facially-neutral policies with proof of statistical disparities resulting from their uniform application to an employer's workforce, by their very nature implicate class-based claims. We also have molded class actions to accommodate claims that an employer engaged in a pattern or practice of intentional discrimination. Ordinarily, such cases are handled in bifurcated proceedings imposing on the plaintiffs different burdens of proof. See Shipes v. Trinity Indus., 987 F.2d 311, 318 (5th Cir.), cert. denied, 510 U.S. 991, 114 S.Ct. 548, 126 L.Ed.2d 450 (1993). During the first or "liability" stage, the plaintiffs seek to prove a pattern or practice of invidious class-based discrimination. See id. If successful, individual class members benefit from a presumption of back pay, their entitlement to which is determined at the second or "remedial" stage. To obtain back pay, class members need only prove that they were denied employment opportunities and the extent of their loss, while the burden then shifts to the employer to demonstrate that those class members were denied employment opportunities for legitimate reasons. See Richardson, 709 F.2d at 1021; see also Teamsters, 431 U.S. at 362, 97 S.Ct. 1843. Although this final determination typically involves separate hearings for each individual, see Johnson v. Goodyear Tire & Rubber Co., 491 F.2d 1364, 1375 (5th Cir.1974), courts, without the need to consider the implications of a jury trial, developed techniques such as the use of special masters to streamline the process, see Newberg & Conte, Newberg on Class Actions §§ 24.119-24.121 (3d ed.1992).

The Civil Rights Act of 1991, however, made fundamental changes in both the procedures and remedies available to Title VII litigants. Among other things, the Act now permits plaintiffs to recover compensatory and punitive damages from an employer who engaged in unlawful intentional discrimination (to include individual disparate treatment and pattern or practice cases). See 42 U.S.C. § 1981a(a)(1). Compensatory damages include relief for "future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses." § 1981a(b)(3). The Act also allows punitive damages if the employer discriminated "with malice or with reckless indifference to the federally protected rights of an aggrieved individual," § 1981a(b)(1)(2), with the total recovery of compensatory and punitive damages capped at a maximum of $300,000 per plaintiff, see § 1981a(b)(3). Finally, in all cases where the plaintiff seeks compensatory and punitive damages, either party is entitled to demand a trial by jury. See § 1981a(c).

In the class action context, the changes to Title VII are not inconsequential.1 It is important to remember that the class action device exists primarily, if not solely, to achieve a measure of judicial economy, which benefits the parties as well as the entire judicial system. It preserves the resources of both the courts and the parties by permitting issues affecting all class members to be litigated in an efficient, expedited, and manageable fashion. See Jenkins v. Raymark Indus., 782 F.2d 468, 471 (5th Cir.1986) (citing General Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 155, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). Before passage of the Civil Rights Act of 1991, liability and the appropriate remedies in all Title VII cases were determined in bench trials. Monetary relief was limited to back pay and other equitable remedies. By bringing additional monetary claims within the scope of intentional discrimination cases, the Civil Rights Act of 1991 added to the complexity and diversity of the issues to be tried and decided. By injecting jury trials into the Title VII mix, the 1991 Act introduced, in the context of class actions, potential manageability problems with both practical and legal, indeed constitutional, implications. The broad question we consider here is whether and to what extent these factors affect a class action in this case.

The plaintiffs' principal argument is that the district court erred in refusing to certify the entire case as a class action under Rule 23(b)(2). The district court determined that a primary limitation on the (b)(2) class action is the requirement that injunctive or declaratory relief be the predominant relief sought for the class. Provided this requirement were met, claims for related monetary relief could be entertained in the class action. To ascertain the predominant form of relief sought, the district court considered whether: (1) the request for money damages was integral to and flowed directly from the injunctive or declaratory relief; (2) the request for money damages affected the cohesiveness of the class and the homogeneity of interests; (3) issues common to the claims for injunctive or declaratory relief predominated; and (4) the money damages arose out of conduct based on policies generally applicable to all plaintiffs. Applying these factors, the court concluded that the plaintiffs' claims for money damages predominated over their claims for nonmonetary relief, making certification of the class inappropriate under (b)(2).

The plaintiffs argue that the district court committed legal error in this respect. They first contend that Rule 23(b)(2) contains no predomination requirement. Next, assuming that it does, the plaintiffs argue that the district court erred in its formulation of the (b)(2) predomination requirement as well as in its application of that requirement to deny class certification.A

We consider first whether the district court erred in determining that the primary limitation on a Rule 23(b)(2) class action is the requirement that injunctive or declaratory relief be the predominant relief sought for the class. Naturally, we begin by looking at the plain language of the rule. Rule 23(b)(2) permits cases meeting the requirements of Rule 23(a)2 to be certified as class actions if:

the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.

The rule is clear that claims seeking injunctive or declaratory relief are appropriate for (b)(2) class certification. Thus, if the plaintiffs sought only injunctive and declaratory relief, this case could readily be certified as a class action under Rule 23(b)(2).

The plaintiffs, however, also seek monetary relief. Rule 23(b)(2) is silent as to whether monetary remedies may be sought in conjunction with injunctive or declaratory relief. The Advisory Committee Notes on Rule 23 state that class certification under (b)(2) "does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages." Fed.R.Civ.P. 23 (advisory committee notes) (emphasis added). This commentary implies that the drafters of Rule 23 believed that at least some form or amount of monetary relief would be permissible in a (b)(2) class action. See Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 257 (5th Cir.1974).

In addressing what monetary relief is permissible in a (b)(2) class action, this circuit has chosen an intermediate approach, neither allowing certification without regard to the monetary remedies being sought, nor restricting certification to classes seeking exclusively injunctive or declaratory relief. See Johnson v. General Motors Corp., 598 F.2d 432, 437 (5th Cir.1979). We, like nearly every other circuit, have adopted the position taken by the advisory committee that monetary relief may be obtained in a (b)(2) class action so long as the predominant relief sought is injunctive or declaratory.3 See Jenkins, 400 F.2d at 34 n. 14; see also, e.g., Eubanks v. Billington, 110 F.3d 87, 92 (D.C.Cir.1997); Boughton v. Cotter Corp., 65 F.3d 823, 827 (10th Cir.1995); Zimmerman v. Bell, 800 F.2d 386, 389-90 (4th Cir.1986); In re School Asbestos Litigation, 789 F.2d 996, 1008 (3d Cir.), cert. denied, 479 U.S. 852, 107 S.Ct. 182, 93 L.Ed.2d 117 (1986); Holmes v. Continental Can Co., 706 F.2d 1144, 1155 (11th Cir.1983); Simer v. Rios, 661 F.2d 655, 668 n. 24 (7th Cir.1981), cert. denied, 456 U.S. 917, 102 S.Ct. 1773, 72 L.Ed.2d 177 (1982); Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 564 (2d Cir.1968). The district court's decision to impose a predomination requirement for (b)(2) class certification is fully consistent with these cases and, therefore, was not error.

We consider next the substantially more difficult question whether the district court's formulation of (b)(2)'s predomination requirement was correct. As the district court noted, there is little discussion by appellate courts as to what it means for a particular form of relief to be "predominant." The Advisory Committee Notes make no effort to define or explain the concept. Interpreting the term literally, predominant means "controlling, dominating, [or] prevailing." Webster's Third New International Dictionary 1786 (1993). But how that translates into a workable formula for comparing different types of remedies is not at all clear. Commentators have taken the position that determining whether one form of relief actually predominates in some quantifiable sense is a wasteful and impossible task that should be avoided. See, e.g., Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, supra, at § 1775; Newberg, supra, at § 4.14. Nevertheless, the requirement that injunctive or declaratory relief predominate in a (b)(2) class action is the standard our cases have adopted and which we are bound to apply here. We must determine, therefore, what the concept of predomination means in the context of Rule 23(b)(2).

(1)

In the absence of clear guidance from the Rule or our cases, we turn to the principles and assumptions underlying the (b)(2) class and class actions in general to ascertain whether they add substance to the concept of predomination under Rule 23(b)(2). Cf. United Savings Ass'n v. Timbers of Inwood Forest Assoc., Ltd., 484 U.S. 365, 371, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988) (Scalia, J.) (explaining that statutory construction is a "holistic endeavor" because provisions that seem ambiguous in isolation are often clarified by the remainder of the statutory scheme).

(a)

Under Rule 23, the different categories of class actions, with their different requirements, represent a balance struck in each case between the need and efficiency of a class action and the interests of class members to pursue their claims separately or not at all. See Amchem Prod., Inc. v. Windsor, 521 U.S. 591, ----, 117 S.Ct. 2231, 2246, 138 L.Ed.2d 689 (1997); United States Parole Comm'n v. Geraghty, 445 U.S. 388, 402-03, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980); Rutherglen, Title VII Class Actions, 47 U. Chi. L.Rev. 688, 697-98 (1980) (citing Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure, 81 Harv. L.Rev. 356, 387-92 (1967)). The different types of class actions are categorized according to the nature or effect of the relief being sought. The (b)(1) class action encompasses cases in which the defendant is obliged to treat class members alike or where class members are making claims against a fund insufficient to satisfy all of the claims. See Amchem, 521 U.S. at ----, 117 S.Ct. at 2245. The (b)(2) class action, on the other hand, was intended to focus on cases where broad, class-wide injunctive or declaratory relief is necessary. See Holmes v. Continental Can Co., 706 F.2d 1144, 1155 n. 8 (11th Cir.1983). Finally, the (b)(3) class action was intended to dispose of all other cases in which a class action would be "convenient and desirable," including those involving large-scale, complex litigation for money damages. See Amchem, 521 U.S. at ----, 117 S.Ct. at 2245; see also Penson v. Terminal Transp. Co., 634 F.2d 989, 993 (5th Cir. Unit B Jan.1981) (citing Fed.R.Civ.P. 23 (advisory committee notes)). Limiting the different categories of class actions to specific kinds of relief clearly reflects a concern for how the interests of class members will vary, depending upon the nature of the class injury alleged and the nature of the relief sought.

First, different presumptions with respect to the cohesiveness and homogeneity of interests among members of (b)(1), (b)(2), and (b)(3) classes are reflected in the different procedural safeguards provided for each potential class. See Holmes, 706 F.2d at 1155-56. For example, the drafters of Rule 23 found it unnecessary to provide (b)(1) and (b)(2) class members with the absolute right to notice or to opt-out of the class--procedural safeguards made mandatory under (b)(3) for class members who might wish to pursue their claims for money damages in individual lawsuits and to not be bound by membership in a class action. See Fed.R.Civ.P. 23(c)(2).4 Providing these rights exclusively to (b)(3) classes demonstrates concern for the effect of monetary claims on class cohesiveness. See Fed.R.Civ.P. 23 (advisory committee notes) ("[i]n the degree there is cohesiveness or unity in the class and the representation is effective, the need for notice to the class will tend toward a minimum"). Monetary remedies are more often related directly to the disparate merits of individual claims. See Holmes, 706 F.2d at 1155-56 (citing Rosen, Title VII Classes and Due Process: To (b)(2) Or Not To (b)(3), 26 Wayne L.Rev. 919, 923 (1980); Note, Antidiscrimination Class Actions Under the Federal Rules of Civil Procedure: the Transformation of Rule 23(b)(2), 88 Yale L.J. 868, 875-76 (1979)). As a result, a class seeking substantial monetary remedies will more likely consist of members with divergent interests.

In contrast, because of the group nature of the harm alleged and the broad character of the relief sought, the (b)(2) class is, by its very nature, assumed to be a homogenous and cohesive group with few conflicting interests among its members.5 See Penson, 634 F.2d at 994; Holmes, 706 F.2d at 1155. The underlying premise of the (b)(2) class--that its members suffer from a common injury properly addressed by class-wide relief--"begins to break down when the class seeks to recover back pay or other forms of monetary relief to be allocated based on individual injuries." Eubanks v. Billington, 110 F.3d 87, 95 (D.C.Cir.1997). Thus, as claims for individually based money damages begin to predominate, the presumption of cohesiveness decreases while the need for enhanced procedural safeguards to protect the individual rights of class members increases, see id.; Johnson v. General Motors Corp., 598 F.2d 432, 437-38 (5th Cir.1979), thereby making class certification under (b)(2) less appropriate.6

We know, then, that monetary relief "predominates" under Rule 23(b)(2) when its presence in the litigation suggests that the procedural safeguards of notice and opt-out are necessary, that is, when the monetary relief being sought is less of a group remedy and instead depends more on the varying circumstances and merits of each potential class member's case. Cf. Sosna v. Iowa, 419 U.S. 393, 398 n. 4, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975) ("[T]he absence of a claim for monetary relief and the nature of the claim asserted disclose that a Rule 23(b)(2) class action was contemplated. Therefore, the problems [of notice and opt-out] associated with a Rule 23(b)(3) class action ... are not present in this case."). Because it automatically provides the right of notice and opt-out to individuals who do not want their monetary claims decided in a class action, Rule 23(b)(3) is the appropriate means of class certification when monetary relief is the predominant form of relief sought and the monetary interests of class members require enhanced procedural safeguards.7(b)

The fact that the predomination requirement serves to protect the rights of class members regarding their monetary interests does not imply, however, that the availability of monetary relief in a (b)(2) class action depends solely or directly on whether class members are entitled to notice or opt-out rights. Such a narrow focus would ignore the other half of the balance struck by the different categories of Rule 23(b)--the need and efficiency of a class action. As we have earlier observed, the chief purpose behind the class action device is to achieve a significant measure of judicial economy, see Jenkins, 782 F.2d at 471, an interest for which (b)(2)'s predomination requirement must also account. By requiring the predomination of injunctive or declaratory remedies, (b)(2) was intended to serve this purpose by inherently concentrating the litigation on common questions of law and fact. See Holmes, 706 F.2d at 1156; Antidiscrimination Class Actions, supra, at 875-76.

Actions for class-wide injunctive or declaratory relief are intended for (b)(2) certification precisely because they involve uniform group remedies. Such relief may often be awarded without requiring a specific or time-consuming inquiry into the varying circumstances and merits of each class member's individual case. When it does, the relatively complex calculations typically required in class actions for money damages are unnecessary. For these reasons, proposed (b)(2) classes need not withstand a court's independent probe into the superiority of the class action over other available methods of adjudication or the degree to which common issues predominate over those affecting only individual class members, as (b)(3) classes must. See Amchem, 521 U.S. at ---- - ----, 117 S.Ct. at 2245-46; Forbush v. J.C. Penney Co.,