Fail-safe class definitions are a hot topic. Once treated as little more than a formality, there is increasing judicial awareness that a flawed class definition may reveal flaws in the class itself. Given the enormous costs of class certification—to courts, plaintiffs, and defendants alike—there is good reason to scrutinize class definitions early in the process. Like any good carpenter, when it comes to the class definition, a good judge will measure twice, and cut once.
The Sixth Circuit recently recognized these concerns. In Randleman v. Fidelity Title Ins. Co., 646 F.3d 347 (6th Cir. 2011) (discussed in detail here) the court affirmed decertification of class alleging entitlement to a discount on a title insurance policy where a borrower refinanced the same property with the same lender within 10 years. A class of those “entitled to relief” was deemed fail-safe because “[e]ither the class members win or, by virtue of losing, they are not in the class and, therefore, not bound by the judgment.” Id. at 352. The court stated that the fail-safe class definition was an “independent ground for denying class certification.” Id.
Most recently, in Jones-Turner v. Yellow Enters. Systems, LLC, 2011 WL 4861882 (W.D. Ky. Oct. 13, 2011), a Kentucky District Court Judge decertified a conditionally certified class asserting state wage and hour claims. This is the latest case within the Sixth Circuit to strike a fail-safe class definition, and the first to do so relying on Randleman. The case is important because it reflects a judicial willingness to revisit crucial threshold issues even after a preliminary decision on class certification, and without the necessity of an appeal to the Sixth Circuit. Perhaps more important, it suggests that the Randleman decision is empowering district judges to root out fail-safe class definitions.
The lessons learned from Jones-Turner are of critical importance for those defending motions seeking class certification. While the Jones-Turner decision turned primarily on the lack of commonality, i.e., too many individualized claims, the fail-safe definition was an independent basis for decertifying the class.
In fact, fail-safe definitions often occupy the other side of the commonality coin. Classes that assert highly individualized claims—especially those that seek individual money damages—frequently implicate fail-safe issues precisely because the heightened precision required to establish the common issues often answers the ultimate questions, too. Judge Simpson’s recognition of this phenomenon suggests a multi-prong attack on Rule 23(b)(3) class definitions.
To read the full article and learn more about the Jones-Turner decision and the lessons learned from it for those defending against class certification motions, click here.