Affirming a lower court decision, the 7th U.S. Circuit Court of Appeals, noted that the district court divided the plaintiffs of the Employee Retirement Income Security Act (ERISA) case into 10 subclasses. The appellate court said as long as each subclass is homogeneous, in the sense that every member of the subclass wants the same relief, and each subclass otherwise satisfies the requirements for certifying a class, so that each could be the plaintiff class in a separate class action, there is no objection to combining them in a single class action.
The court rejected Meriter Health Services argument that because the subclasses make so many different claims, the class action does not satisfy the requirement of Rule 23(b)(2) that the defendant have “acted … on grounds that apply generally to the class.” The court noted the requirement applies to the subclasses, and cited its previous ruling in Culver v. City of Milwaukee that “the fact that a class is overbroad and should be divided into subclasses is not in itself a reason for refusing to certify the case as a class action.”
Meriter tried to rely on a statement in Dukes v. Wal-Mart decision (see “High Court Says Giant Wal-Mart Class Action Cannot Move Forward”) against certifying a class of 1.6 million women claiming discrimination, that said: “Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class.  It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.  Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.”
The 7th Circuit noted that in the Meriter case the subclasses seek only a reformation of the Meriter pension plan—a declaration of the rights that the plan confers and an injunction ordering Meriter to conform the text of the plan to the declaration. An award of monetary relief will just be “incidental” to the declaratory and injunctive relief and, generally, the court said it is at that time subclasses may be dismissed or further divided.
According to the court’s opinion, the class was divided due to differing claims, such as failure to “whipsaw,” a change in the plan’s discount rate or the plan’s “wear away” feature, although many claims overlap. In addition, some subclasses were created just because of the different dates at which employees participated in the plan, the different claims of early retirees versus those who retired at 65, and the different forms of pension benefit (lump sum versus annuity).The 7th Circuit’s opinion is here.
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