Friday, April 07, 2006

Eleventh Circuit Holds that Class Certification for ERISA Action Is Inappropriate Where Each Individual Must Prove Reliance

Per Heffner v. Blue Cross, --- F.3d ----, 2006 WL 784782 (11th Cir. Mar. 29, 2006):

. . . [I]n order to be entitled to relief each class member must prove that he relied on the no deductible term of his plan's [summary plan description (SPD)] where the other plan documents do provide that there is a calendar year deductible. In a variety of contexts, we have held that the reliance element of a class claim presents problems of individualized proof that preclude class certification. See, e.g., Sikes v. Teleline, Inc., 281 F.3d 1350, 1361-63 (11th Cir.2002) (reversing Rule 23(b)(3) class certification of civil RICO claim in part because the district court erred in presuming reliance); Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1023-24 (11th Cir.1996) (reversing certification of Rule 23(b)(3) class action asserting mail and wire fraud claims on grounds of unmanageability in part because each plaintiff would be required to prove reliance which meant that the claims were "not wholly subject to class-wide resolution"); Hudson v. Delta Air Lines, Inc., 90 F.3d 451, 457 (11th Cir.1996) (affirming denial of class certification based on lack of commonality prerequisite of Rule 23(a)(2) because reliance element of ERISA claims was "not susceptible to class-wide proof"). Although this Court has not determined that individual reliance issues weigh against Rule 23(b)(2) certification, the Fifth Circuit has. See Bolin v. Sears, Roebuck & Co., 231 F.3d 970, 978 (5th Cir.2000) (concluding that "individual findings of reliance necessary to establish RICO liability and damages preclude ... (b)(2) certification"). We agree with the Bolin decision.

Even if Heffner proves that he purchased prescription drugs in reliance on the Funding Plus SPD's calendar year deductible provision, only he will be entitled to relief on that proof. Other class members will not. "[F]inal injunctive relief or corresponding declaratory relief with respect to the class as a whole" would not be warranted. See Fed.R.Civ.P. 23(b)(2); see also Jones v. Am. Gen. Life & Accident Ins. Co., 213 F.R.D. 689, 702 (S.D.Ga.2002) (refusing to certify class under Rule 23(b)(2) "[b]ecause each individual's reliance would be in question" and "there would be no way to say with any certainty that the same relief would be appropriate for all class members").

As we have explained, "the claims contemplated in a(b)(2) action are class claims, claims resting on the same grounds and applying more or less equally to all members of the class." Holmes v. Continental Can Co., 706 F.2d 1144, 1155 (11th Cir.1983). Moreover, the forms of relief available in Rule 23(b)(2) class actions are in the nature of group remedies that benefit the entire class. See Cooper, 390 F.3d at 720 ("the basic premise of ... a [Rule 23(b)(2)] class action [is] that class members suffer a common injury properly addressed by class-wide equitable relief"); Murray, 244 F.3d at 812 (vacating Rule 23(b)(2) class certification because plaintiffs' claim for compensatory damages predominated over class's claim for equitable relief where plaintiffs "[did] not seek damages as a group remedy" but "[i]nstead ... [sought] damages as a remedy for their alleged individual pain and suffering") (quotation marks and citations omitted); Holmes, 706 F.2d at 1155 n. 8 ("Injuries remedied through (b)(2) actions are really group, as opposed to individual injuries.") (quotation marks and citation omitted). Certification under Rule 23(b)(2) is proper when the relief sought necessarily affects all class members. See Holmes, 706 F.2d at 1157.

Success by the class representative in this case, however, will not result in relief to other class members. That is because, in order to be entitled to the relief that the class seeks, each plaintiff must prove reliance on the SPD of his or her plan. Injunctive or declaratory relief, and any other equitable relief based on it, will not automatically flow to the class "as a whole" even if Heffner succeeds in proving reliance on his SPD. Accordingly, we hold that it was abuse of discretion to certify under Rule 23(b)(2) the plaintiffs' ERISA claims seeking individualized relief for Blue Cross' imposition of the calendar year deductibles. Cf. In re Elec. Data Sys. Corp. "ERISA" Litig., 224 F.R.D. 613, 629 (E.D.Tex.2004) (certifying ERISA breach of fiduciary duty class action brought on the plan's behalf under Rule 23(b)(2) because "monetary relief will go to the Plan itself" and "is in the nature of a group remedy").

0 Comments:

Post a Comment

<< Home