Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the October 7, 2024 edition of the National Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Before 1966, Rule 23 was silent on how to determine which class members would be bound by a judgment before it was entered. American Pipe & Construction v. Utah, 414 U.S. 538, 545–46 (1974). Instead, some took Rule 23 as an open invitation for potential class members to join the lawsuit without any commitments, allowing them to sit and wait until a trial was over to determine whether to definitively accept the invitation to join. If the class claims were successful, class members could intervene and reap the benefits; if the class claims failed, class members could stay on the sideline and avoid having their claims precluded. Thus, one way intervention was equivalent to “a free-agent baseball player … [sitting] on the sidelines during the middle of the playoffs while watching the Astros and the Rangers play a game, then decid[ing] which team to sign onto only after that team has won.” In re Parish, 81 F.4th 403, 413 (5th Cir. 2023) (emphasis in original). This potential right of “one-way intervention” prompted the Advisory Committee to close this perceived loophole when it significantly revised Rule 23 in 1966. American Pipe, 414 U.S. at 547.
Rule 23 now provides a clear mechanism for determining who will be bound by a judgment on the merits: class certification. If the proposed class is sufficiently cohesive—i.e., it meets the requirements of Rule 23(a) and at least one of the requirements of Rule 23(b)—then Rule 23 currently reflects the policy that it is both efficient and fair to bind all class members to the eventual judgment. Importantly, Rule 23(c)(1)(A) directs courts to determine “at an early practicable time” whether to certify an action as a class action. Otherwise, without such a certification, the court’s ultimate findings are only binding on the named plaintiffs. See Smith v. Bayer, 564 U.S. 299, 315 (2011) (“Neither a proposed class action nor a rejected class action may bind nonparties.”).
One of the underappreciated aspects of the modern version of Rule 23 is that, by emphasizing the early resolution of the class certification question, it moved away from an unrestrained right to one-way intervention. Courts decide the issue of class certification in advance of trial, providing plaintiffs and defendants with some certainty as to who will be bound by a judgment. In the wake of this success, however, the so-called “rule against one-way intervention” has arisen.
As the Seventh Circuit has noted, “the rule against one-way intervention prevents plaintiffs from moving for class certification after acquiring a favorable ruling on the merits of a claim.” Costello v. BeavEX, 810 F.3d 1045, 1057 (7th Cir. 2016). Defendants commonly raise the rule in response to a plaintiff’s pre-certification motion on the merits, sometimes deferring consideration of the motion until after class certification is decided. For example, in Spring House Tavern. v. American Fire and Casualty, 337 F.R.D. 371 (E.D. Pa. 2020), a restaurant brought a proposed class action against its insurer seeking a declaration that the insurance company wrongly denied insurance claims to recover losses that businesses suffered due to the COVID-19 pandemic. Before the court decided whether to certify the proposed class, the restaurant filed a motion on the pleadings for its individual claim. After the defendant raised the rule against one-way intervention, the court dismissed the motion, reasoning that because the rulings the plaintiff sought were generally applicable to all members of the putative class, the rule against one-way intervention was implicated, and a pre-certification ruling would be unfair to the defendant.
The Advisory Committee’s notes to Rule 23 recognize that “the party opposing the class may prefer to win dismissal or summary judgment as to the individual plaintiffs without certification and without binding the class that might have been certified.” FED. R. CIV. P. 23 Committee Notes on Rules—2003 Amendment. In such situations, courts have held that the defendant waives the rule against one-way intervention. Thus, by filing a precertification dispositive motion, a defendant loses the potential to bind the entire class to a favorable ruling and risks subsequent suits from other plaintiffs. Moreover, even when a class has been certified, if the unnamed plaintiffs have not yet been notified under Rule 23(c)(2) of their inclusion in the class and their right to opt out, summary judgment for the defendant is not binding on them. See, e.g., Schwarzschild v. Tse, 69 F.3d 293, 297 (9th Cir. 1995). Rightfully so, as “post-judgment notice would present no meaningful opportunity for [unnamed] class members to make their case.” Faber v. Ciox Health LLC, 944 F.3d 593, 602–05 (6th Cir. 2019).
The Eleventh Circuit has recently expressed skepticism of the rule against one-way intervention. In Sos v. State Farm Mutual Automobile Insurance, 2023 WL 5608014 (11th Cir. 2023), the court decided whether class certification was proper when the district court had previously granted the named plaintiff’s cross-motion for summary judgment. Having never recognized the rule against one-way intervention, the court explained that it would significantly interfere with a district court’s discretion to decide the merits of a claim before deciding that claim’s susceptibility to class certification (citing Telfair v. First Union Mortgage, 216 F.3d 1333, 1343 (11th Cir. 2000)). Ultimately, the Eleventh Circuit concluded that “even if we were inclined to adopt a rule against one-way intervention, [the defendant] waived its application by moving for summary judgment before the court addressed class certification.”
The Eleventh Circuit’s opinion stands in contrast to other opinions applying the defendant’s waiver of the rule. For example, in Nia v. Bank of America, 2024 WL 1298004 (S.D. Cal. 2024), the court held that the plaintiff’s pre-certification cross-motion for summary judgment was “untimely and unfair on the grounds of the one-way intervention rule.” By filing a pre-certification motion for summary judgment, the defendant waived the possibility of a favorable summary judgment ruling having binding class-wide effect, but it did not waive its right to raise the rule in response to the plaintiff’s cross-motion.
The risks motivating the rule against one-way intervention seem increasingly overstated. A finding on the merits for the named plaintiff is not guaranteed to bind the defendant as to the entire class, as certification is only proper if “the trial court is satisfied, after a rigorous analysis,” that the prerequisites to class certification are met. Wal-Mart Stores v. Dukes, 564 U.S. 338, 350–51 (2011). As plaintiffs’ lawyers are all too familiar, courts are regularly dissatisfied in this regard.
Even if courts are inclined to keep the rule, the defendant’s waiver of the rule should be applied broadly, just as the Eleventh Circuit did. There’s a simple fairness in allowing the plaintiff to file a motion for summary judgment when a defendant chooses to file one.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected].
Thank you to DiCello Levitt partner John Tangren and associate Eli Savage for contributing to this column.