by Rachel Greene*

Issue classes are a form of aggregate litigation wherein courts certify only specific claims or elements within those claims for class treatment. While issue classes have not always been a popular tool, plaintiffs’ attorneys today should take seriously the protections this device can afford their clients and consider pursuing issue classes over alternative aggregate litigation tools, such as multi-district litigation. This Contribution argues that issue classes should be a more widely used aggregate litigation device and outlines the mechanics of its use.

Issue classes are a management tool of class litigation. Federal Rule of Civil Procedure 23(c)(4) states “[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues.”1 Issue classes achieve judicial efficiency by front-loading the resolution of common issues across many claims. In certain circumstances, a collection of plaintiffs that might not otherwise be certifiable as a class can attain class treatment by becoming certified as an issue class. In essence, issue classes expand opportunities for aggregation of claims by ensuring for example, that plaintiffs’ individual injuries or damages calculations do not thwart the aggregated resolution of key issues, such as determinations of liability. While the concept of issue classes was first introduced as part of the 1966 Amendment to Rule 23, a series of judicial opinions issued in the 1990s made obtaining class certification, particularly for an issue class, substantially more difficult.2 However, in recent years issue classes have started to come back into the aggregate litigation conversation.3

Issue classes have built-in protections for plaintiffs that other forms of aggregate litigation, such as multi-district litigation (MDL), do not. Because issue classes are governed by Rule 23, both plaintiffs’ counsel and the judge overseeing the litigation are obligated to safeguard the interests of the class in a way that is not mandated in the MDL context. For example, Rule 23 specifically states that class actions can be settled only with the court’s approval.4 Moreover, the judicial concerns that initially torpedoed the development of issue classes, such as apprehension around issue classes leading to violations of the Seventh Amendment’s Reexamination Clause and increased blackmail settlements, have proven to be unfounded.

The time is ripe for plaintiffs’ counsel and courts to take seriously the opportunity to use issue classes to break through the broader class certification stalemate caused by a rising hostility to engagement with individualized injuries and damages in the class action context, while reaping the benefits of certification under Rule 23.5

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Both issue classes and MDL create opportunities to maximize judicial efficiency. Issue classes do so by generating binding precedent that sets the baseline for future actions concerning individual issues, including damages. MDL aggregates civil actions involving one or more common questions of fact for coordinated or consolidated pretrial proceedings.6 The actions are collectively transferred to a single court, known as the “transferee” court, for pretrial proceedings. Pretrial proceedings can include rulings on pretrial motions, discovery, class certification, and Daubert hearings.7 Consolidation in one court creates the circumstances for an MDL judge to become an expert on the matter. Informational bellwether trials conducted as part of an MDL can also serve as valuable sources of information for plaintiffs across the consolidated actions.

These litigation devices theoretically set the stage for a high volume of individual actions down the road, but the reality is that they both tend to be the wellspring of settlement negotiations. Because settlement negotiations are typically the final stage of most aggregate litigation, choosing a litigation vehicle with an eye towards those negotiations is key. Due to the distinctive protections afforded to plaintiffs in the issue class settlement context, client-centric plaintiffs’ lawyers should feel emboldened to pursue issue classes in place of MDLs where appropriate.

There can be enormous pressure on individual plaintiffs to accept a settlement negotiated as part of an MDL.8 Elizabeth Chamblee Burch’s research has revealed that transferee judges regularly appoint repeat player-lawyers to leadership positions within an MDL.9 Repeat players tend to be selected because of their experience working on MDLs, their ability to fund the litigation, and a determination that they can work well with the other players.10 Unlike in the class action context, adequacy of representation is not considered. However, these features also “tend to produce leadership slates of repeat, inside players focused on settlement.”11 When working well with others can lead to an attorney being appointed to more MDL leadership positions in the future, there’s little incentive to voice the concerns of a minority of plaintiffs and risk being labeled a dissenter. Moreover, members of the MDL leadership do not hold a fiduciary duty to the entire class. In a recent MDL, In re General Motors LLC Ignition Switch Litigation, one attorney, Lance Cooper, filed a motion to remove the court-appointed lead plaintiffs’ counsel for personal injury and wrongful death cases, Robert C. Hilliard, from his leadership position.12 Cooper argued that Hilliard had breached fiduciary duties owed to all the plaintiffs in the MDL.13 Judge Jesse Furman ruled that “while the duties Hilliard owes to personal injury and wrongful death plaintiffs represented by other counsel [in the MDL] are significant, they are not as strong as the duties that lead counsel owes to absentee members of a class action.”14 By contrast, in the class action context, counsel for the plaintiffs must represent the interests of the entire class and holds a fiduciary duty to the class.15 The higher duty owed to issue class plaintiffs serves as a check on plaintiffs’ attorneys who might otherwise be inclined to negotiate with their own interests front of mind, rather than their clients’.

In addition, judges in class actions have an increased responsibility to the plaintiffs under Rule 23(e), which states that “claims, issues, or defenses of a certified class—or a class proposed to be certified for purposes of settlement—may be settled, voluntarily dismissed, or compromised only with the court’s approval.”16 The judge effectively acts as a gatekeeper in the settlement process. In Reynolds v. Beneficial National Bank, Judge Richard Posner reminded judges that they are required to “exercise the highest degree of vigilance in scrutinizing proposed settlements of class actions.”17 He also said that in the settlement phase of a class action suit, judges must act as “a fiduciary of the class, who is subject therefore to the high duty of care that the law requires of fiduciaries.”18 By comparison, 28 U.S.C. § 1407, the MDL statute, does not endow transferee judges with any additional authority to manage MDLs beyond what is available to them through the Federal Rules of Civil Procedure more generally.19

Worth considering at this juncture are concerns about the use of issue classes violating the Seventh Amendment and generating blackmail settlements. The Seventh Amendment Reexamination Clause states that “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rule of the common law.”20 As a result of this Clause, a jury cannot reexamine facts that have already been reviewed and decided by a separate jury. Judge Posner expressed reservations about bifurcation leading to the same issue being reexamined by different juries while considering whether to allow an issue class to go forward in In re Matter of Rhone-Poulenc Rorer, Inc.21 He felt that the way in which the issues were divided would necessarily cause the subsequent trials on comparative negligence and proximate causation to overlap with the initial negligence determination. Judge Posner ultimately directed the decertification of the class.22 However, since Rhone-Poulenc, judges have been more willing to engage directly with the issue of reexamination in order to get the benefits of common adjudication.23 The risk of Reexamination Clause violations can be mitigated through the use of special verdict forms and careful attention by judges to instructing subsequent juries on the first jury’s findings.24 As Gilles & Friedman have noted, “there is not much left now of the Seventh Amendment objection to Rule 23(c)(4) issue classes.”25

Rhone-Poulenc is also the leading case for the proposition that issue classes generate blackmail settlements. As part of his decision directing the district judge to decertify the class, Judge Posner focused on the fact that the defendants had won twelve out of thirteen individual cases (92.3 percent) that had been tried.26 He argued that certification of an issue class would force the defendants “to stake their companies on the outcome of a single jury trial,” rather than allow for a pattern of results from individual trials to determine the scope of the defendants’ liability.27 As a result, Judge Posner argued that the defendants would be under enormous pressure to settle rather than risk an adverse judgment in that one trial.28 There are judges who agree with Judge Posner that overwhelming settlement pressure on the defendant is a valid reason not to certify a class action.29 However, there are academics who argue that charges of blackmail are overblown. For example, Bruce Hay and David Rosenberg determined that “the risks of . . . blackmail settlements have been overstated . . . these problems can effectively be handled by courts through appropriate class action safeguards, without resorting to the drastic remedy of eliminating or reducing the use of the damage class action.”30 Charles Silver has also not found the blackmail argument particularly persuasive after a thorough review of the “soundness of each version of the blackmail charge.”31 With so much uncertainty about the extent to which blackmail settlements emerge from issue class settlements, the idea of restricting access to such a powerful device in light of this potential consequence seems ill-conceived. Issue classes should be a widely utilized tool of aggregate litigation.

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Now that the reasoning undergirding why issue classes should be pursued is clear, it’s important to understand their quirks so that they may be used effectively. Rule 23 controls all class action litigation in the federal courts. To be certified, a class must meet the threshold eligibility requirements outlined in Rule 23(a) and at least one of three types of classes described in Rule 23(b).32 Rule 23(a) contains four components: (1) numerosity: the proposed class must be “so numerous that joinder of all members is impracticable,” (2) commonality: there must be “questions of law or fact common to the class,” (3) typicality: the claims or defenses of the representative parties must be “typical of the claims or defenses of the class,” and (4) adequacy of representation: the representative parties must “fairly and adequately protect the interests of the class.”33

Rule 23(b) defines three different types of class actions. Classes certified under Rule 23(b)(1) are prejudice class actions. The goal of these actions is to avoid “inconsistent or varying” judgments that would establish “incompatible standards of conduct” for the party opposing the class, dispose of the interests of individuals who are not members of the class, or “substantially impair or impede the ability [of non-class members] to protect their interests.”34 Rule 23(b)(2) class actions are equitable class actions where “final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”35 Finally, Rule 23(b)(3) class actions involve money damages. For these actions, the court must find “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”36

Rule 23 also includes other provisions that concern the management of class actions. Courts that choose to deploy Rule 23(c)(4), the issue class provision, must also ensure that the class being certified satisfies the criteria specified in Rule 23(a) and (b).37

There is some disagreement in academic circles as to whether it is preferable for courts to certify issue classes under Rule 23(b)(2) or (b)(3). Myriam Gilles and Gary Friedman argue that Rule 23(b)(2) is the better issue class vehicle, finding support for their claim in the text of Rule 23(b)(2) and its policy logic.38 However, even if one were convinced by Gilles & Friedman’s arguments in favor of Rule 23(b)(2) issue classes, constitutional concerns weigh in favor of using Rule 23(b)(3). Under the Due Process Clause, members of a (b)(3) class must be given notice and an opportunity to be heard, be given an opportunity to opt out of the litigation, and the named plaintiff must adequately represent the interests of the absent class members.39 No plaintiff’s attorney wants to risk a class certification order being undermined by a determination that the class violates the Due Process Clause. Even Gilles & Friedman recognize to some degree that constitutionality could be their argument’s downfall, but they try and hand wave it away by saying that even though there is no opt-out right in a Rule 23(b)(2) action, under Rule 23(c)(2)(A), courts can, in their discretion, “direct appropriate notice to the [(b)(2)] class.”40 However, notice without opt-out does not cure the deficiency. Gilles & Friedman say that so long as the individual has a right to seek damages in the event that the class wins the Rule 23(c)(4) action, then the right to an opt-out is not triggered.41 But they also acknowledge that the Rule 23(b)(2) class action “risks a possible total loss for all plaintiffs.”42 Gilles & Friedman do not address why a potential total loss at this stage of the litigation does not trigger the need for opt-out. One purpose of the opt-out is to ensure that, like a property interest, there is no unauthorized use of an individual’s claim.43 The fact that the very basis of an individual’s claim could be undermined by a loss at the issue class action stage of the litigation appears to cut to the heart of the need for an opt-out. Justice Scalia expressed concerns about how issue preclusion resulting from (b)(2) actions could prevent claimants from successfully bringing (b)(3) damages actions in his decision in Wal-Mart Stores, Inc. v. Dukes.44 There is little reason to think today’s Supreme Court would be less concerned about de facto issue preclusion than the Dukes Court had been.

While pursuing certification of an issue class under Rule 23(b)(3) appears preferable, and most issue classes are certified under Rule 23(b)(3),45 not all circuit courts have adopted the same understanding of what satisfies Rule 23(b)(3) in the Rule 23(c)(4) context. In Castano v. American Tobacco Co., the Fifth Circuit held that (b)(3)’s superiority and predominance requirements needed to be satisfied before the action was divided into an issue class.46 Judge Jerry E. Smith reasoned that to allow courts to carve away at the case until only issues that could satisfy predominance remained would “eviscerate” the (b)(3) predominance requirement and lead to “automatic certification in every case where there is a common issue.”47

However, most other circuit courts that have addressed the issue have ruled that predominance and superiority only need to be satisfied as to the particular issues being considered in the issue class.48 The Third Circuit initially stated that “rather than joining either camp in the circuit disagreement,” district courts should consider a non-exhaustive list of factors drawn from Hohider v. United Parcel Service, Inc.49 and the Final Draft of the American Law Institute’s Principles of Aggregate Litigation when determining whether to certify an issue class.50 However, when Judge L. Felipe Restrepo examined an issue class certification in Russell v. Educational Commission for Foreign Medical Graduates, he articulated the test for determining whether the class could survive as including the question: “does the proposed issue class fit within one of Rule 23(b)’s categories?”51 The formulation of this question implies that the Third Circuit has in fact adopted the more permissive conception of how the predominance and superiority analysis operates in an issue class determination, since the focus is on whether the proposed issues can satisfy the (b)(3) requirements, not whether the whole case satisfies those requirements. Clearly the weight of this circuit split favors the more lenient interpretation of (b)(3)’s requirements in the issue class context. Moreover, this formulation appears to better satisfy the manageability focus of Rule 23(c)(4) and permits more issue classes to move forward.

By offering more judicial oversight and a higher duty of care on the part of class counsel, issue classes are a more effective tool for protecting plaintiffs than MDLs. Plaintiff’s attorneys should not shy away from deploying the issue class device and gaining these advantages on behalf of their clients. The issue class can be a powerful tool of aggregate litigation and now is the time to utilize it.

* Rachel Greene is a J.D. Candidate (2024) at New York University School of Law. This Contribution is an expansion of a paper drafted for Judge Jed Rakoff’s Class Actions Seminar, taught in Fall 2023.

1. Fed. R. Civ. P. 23(c)(4).

2. Elizabeth Chamblee Burch, Judging Multidistrict Litigation, 90 N.Y.U. L. Rev. 71, 78 (2015); see Myriam Gilles & Gary Friedman, The Issue Class Revolution, 101 B.U. L. Rev. 133, 136 n.12 (2021) (identifying In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir. 1995) and Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996) as key cases that waylaid the development of issue classes).

3. See Interview by Samuel Issacharoff with Arthur R. Miller, An Oral History of Rule 23, 74 Ann. Survey Am. L. 105, 127 (2018) (“ISSACHAROFF: . . . you’ve had this provision in 23(c)(4) that sat there for decades, as best I can tell, never being used. And now, all of a sudden, it has sprung to life.”).

4. Fed. R. Civ. P. 23(e).

5. See Comcast Corp. v. Behrend, 569 U.S. 27, 32 n.4 (2013) (explaining that a class should only be certified if a case is “susceptible to awarding damages on a class-wide” basis); see, e.g., Baker v. State Farm Mut. Auto. Ins. Co., 2022 WL 3452469, at *1 (11th Cir. Aug. 18, 2022) (finding that the central liability question required individualized inquiries and denying class certification); Bowerman v. Field Asset Servs., Inc., 39 F.4th 652, 663 (9th Cir. 2022) (interpreting Comcast Corp. to find that class members could not establish predominance).

6. 28 U.S.C. § 1407(a).

7. See David L. Noll, MDL as Public Administration, 118 Mich. L. Rev. 403, 414 (2019) (explaining that the transferee judge can “generally do everything that a district judge does during pretrial”).

8. Gilles & Friedman, supra note 2, at 176.

9. See Chamblee Burch, supra note 2, at 96 (noting that “repeat players held 749 out of 1177 available leadership positions, or 63.6%” in the seventy-two product liability and sales practices MDLs pending as of May 14, 2013); see also Elizabeth Chamblee Burch, Unsettling Efficiency: When Non-Class Aggregation of Mass Torts Creates Second-Class Settlements, 65 La. L. Rev. 157, 160 (2004) (“The concerns and symptoms of settlement collusion in class actions are nearly identical to those in post-aggregation settlements: a few attorneys who specialize in representing mass tort victims and defendants have repeated contact with one another and with the transferee judge who handles the factually similar claims. Allowing aggregation of these claims in a single forum combined with ‘repeat player’ attorneys presents opportunities for collusion.”).

10. Abbe R. Gluck & Elizabeth Chamblee Burch, MDL Revolution, 96 N.Y.U. L. Rev. 1, 67 (2021).

11. Id.

12. See In re Gen. Motors LLC Ignition Switch Litig., 2016 WL 1441804 at *1 (S.D.N.Y. Apr. 12, 2016).

13. Id. at *6.

14. Id. at *7.

15. See Medical & Chiropractic Clinic, Inc. v. Oppenheim, 981 F.3d 983, 991 (11th Cir. 2020) (“One cardinal rule defines the scope of counsel’s ethical obligations in class actions: class counsel owes a duty to the class as a whole and not to any individual member of the class.”).

16. Fed. R. Civ. P. 23(e).

17. 288 F.3d 277, 279 (7th Cir. 2002).

18. Id. at 280.

19. Chamblee Burch, supra note 2, at 79.

20. U.S. Const. amend. VII.

21. 51 F.3d 1293, 1303 (7th Cir. 1995) (explaining that “[t]he plan of the district judge in this case is inconsistent with the principle that the findings of one jury are not to be reexamined by a second, or third, or nth jury”).

22. Id. at 1304.

23. See Elizabeth Chamblee Burch, Constructing Issue Classes, 101 VA. L. Rev. 1855, 1925 (2015) (observing that the Reexamination Clause objection only appears relevant for a “handful of courts”).

24. Id. at 1926–27.

25. Myriam Gilles & Gary Friedman, Rediscovering the Issue Class in Mass Tort MDLs, 53 Ga. L. Rev. 1305, 1322 (2019).

26. Daniel Klerman, Posner and Class Actions, 86 U. Chi. L. Rev. 1097, 1105 (2019).

27. Rhone-Poulenc Rorer Inc., 51 F.3d at 1299.

28. See id. at 1298.

29. See, e.g., Newton v. Merrill Lynch, 259 F.3d 154, 167 n.8 (3d Cir. 2001) (Scirica, C.J.) (explaining that the Court weighed settlement pressure on the defendants in its “certification calculus” and denied class certification); In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1016 (7th Cir. 2002) (Easterbrook, C.J.) (denying class certification after determining that the case was “so unwieldy, and the stakes so large, that settlement becomes almost inevitable”).

30. Bruce Hay & David Rosenberg, “Sweetheart” and “Blackmail” Settlements in Class Actions: Reality and Remedy, 75 Notre Dame L. Rev. 1377, 1379 (2000).

31. See Charles Silver, “We’re Scared to Death”: Class Certification and Blackmail, 78 N.Y.U. L. Rev. 1357, 1429–30 (2003) (explaining that “[s]ome versions of the argument [about blackmail settlements] conflict with others. Some versions rest on factual claims that are wrong, doubtful, unproven, or outdated. Some versions conflict with the due process imperative to maximize claim values. Some versions require an account of optimal settlement pressures in lawsuits involving risk-averse parties that has not been set out and that may never be.”)

32. See General Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982) (explaining a class action “may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied”); Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997) (“In addition to satisfying Rule 23(a)’s prerequisites, parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2), or (3).”).

33. Fed. R. Civ. P. 23(a)(1)–(4).

34. Fed. R. Civ. P. 23(b)(1)(A)–(B).

35. Fed. R. Civ. P. 23(b)(2).

36. Fed. R. Civ. P. 23(b)(3); see also Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 453 (2016) (explaining how courts should identify a common question).

37. Harris v. Med. Transp. Mgmt., Inc., 77 F. 4th 746, 752 (D.C. Cir. 2023).

38. Gilles & Friedman, supra note 2, at 145–51.

39. Phillips Petroleum v. Shutts, 472 U.S. 797, 812 (1985).

40. Gilles & Friedman, supra note 2, at 148 n.55.

41. Id. at 148.

42. Id.

43. See Ryan C. Williams, Due Process, Class Action Opt Outs, and the Right Not to Sue, 115 Colum. L. Rev. 599, 604 (2015).

44. 564 U.S. 338, 364 (2011) (“If it were determined, for example, that a particular class member [in a (b)(2) class] is not entitled to backpay because her denial of increased pay or a promotion was not the product of discrimination, that employee might be collaterally estopped from independently seeking compensatory damages based on that same denial. That possibility underscores the need for plaintiffs with individual monetary claims to decide for themselves whether to tie their fates to the class representatives’ or go it alone—a choice Rule 23(b)(2) does not ensure that they have.”).

45. See, e.g., Cent. Wesleyan Coll. v. W.R. Grace & Co., 6 F.3d 177 (4th Cir. 1993) (conditionally certifying a class on eight common issues under Rule 23(b)(3) and Rule 23(c)(4)(A) of colleges and universities seeking damages in suit against manufacturers of asbestos).

46. 84 F.3d 734, 745 n.21 (5th Cir. 1996) (“The proper interpretation of the interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that allows courts to sever the common issues for a class trial.”).

47. Id.

48. See, e.g., Harris, 77 F.4th at 760 (explaining that the problem with the district court’s class certification order is that it “failed to find that within the issues for the certified class . . . common questions of law or fact predominate over individual questions, as Rule 23(b)(3) requires”); In re Nassau County Strip Search Cases, 461 F.3d 219, 221 (2d Cir. 2006) (holding that “a court may employ Rule 23(c)(4)(A) to certify a class as to an issue regardless of whether the claim as a whole satisfies the predominance test”); Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 439 (4th Cir. 2003) (finding the Fifth Circuit’s approach would render Rule 23(c)(4) superfluous since a management determination must already be made under Rule 23(b)(3)(D)).

49. 574 F.3d 169, 200–01 (3d Cir. 2009).

50. Gates v. Rohm and Haas Co., 655 F.3d 255, 273 (3d Cir. 2011).

51. 15 F.4th 259, 262 (3d Cir. 2021).