IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 92-1131
MARY JANE FORBUSH,
Plaintiff-Appellant,
versus
J.C. PENNEY COMPANY, INC.,
PENSION PLAN, ET AL.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Texas
(June 25, 1993)
Before REYNALDO G. GARZA, HIGGINBOTHAM, and EMILIO M. GARZA,
Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
I.
This is an interlocutory appeal from the district court's
refusal to certify a class. Plaintiff Mary Jane Forbush, a vested
retiree under the J.C. Penney Company Pension Plan, sued Penney on
behalf of herself and all those similarly situated. Forbush worked
at a California Penney store from 1970 until 1983, when she was
laid off at the age of 62. Under the applicable terms of the
Penney pension plan, Forbush became eligible to receive her
benefits when she reached the age of 65 in 1985. The plan in
effect at that time, however, offset the money due Forbush under
the plan by the amount she was estimated to receive from Social
Security. Since Forbush's estimated Social Security benefits
exceeded her benefits under the plan, the company determined that
she was entitled to nothing.
Forbush filed this class action suit in U.S. District Court
for the District of Maryland in 1988, claiming that the plan's
method of estimating Social Security benefits violated several
provisions of ERISA. See 29 U.S.C. § 1001 et seq. After the
Maryland district court ordered the case transferred to the
Northern District of Texas, Forbush moved for certification of the
class. In her motion Forbush sought to represent all former and
current Penney employees:
1) who have been employed by Penney at any time after
January 1, 1976;
2) who have, or may obtain, a vested right to benefits
under the pension plan; and
3) whose pension benefits have been or will be reduced
or eliminated as a result of the plan's
overestimation of their Social Security benefits.
Forbush estimated the size of the class at 10,000.
II.
Penney opposed Forbush' motion on several grounds, but relied
most heavily on the fact that the potential class was covered by
four different pension plans. From 1976 to 1982, the plan used the
"prior earnings method" in estimating a retiree's Social Security
benefits. This method assumed that an individual's earnings before
joining the company were similar to the wages she received during
her first year with Penney. As Forbush points out, this method had
an especially negative impact upon women retirees, for whom the
2
assumption of full-time employment during all of the years before
coming to Penney was unrealistic.
In July 1982, Penney offered an alternative method for
estimating Social Security benefits. In addition to the prior
earnings method, retirees could request that their Social Security
benefits be determined under the "zero earnings method." This
second method relied entirely on the employee's earnings with
Penney, assuming zero earnings elsewhere, and then offset that
amount by 60%. Penney instituted yet a third method of estimating
Social Security benefits in 1984, a two-step "prorated method." It
first determined the retiree's total wages by disregarding all non-
Penney earning years, and then prorated this sum by multiplying it
by the number of years in service and then dividing by thirty.
Penney finally decided to eliminate the social security offset from
the pension plan in 1989.
Forbush sought certification of the class under Fed.R.Civ.P.
23 (b) (2).1 The district court, however, denied Forbush's motion,
1
Rule 23 sets out four prerequisites for any class action:
1) the class is so numerous that joinder is impracticable;
2) there are questions of law or fact common to the class;
3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and 4) the
representative parties will fairly and adequately protect
the interests of the class.
Fed. R. Civ. P. 23 (a). Assuming these threshold requirements
are met, the action may be maintained as a class action if:
(b) (2) the party opposing the class has acted or refused to
act on grounds generally applicable to the class, thereby
making appropriate final injunctive relief or corresponding
declaratory relief with respect to the class as a whole; or
3
holding that the "problem with the proposed class is that the
merits of each class member's claim will have to be decided on an
individual basis." Since several "issues will have to be resolved
in each individual case before members of the class would be
entitled to relief," the district court found that "the class
proposed by Plaintiffs will in no way effectuate the principal
purpose of Rule 23."
Forbush's primary contention on appeal is that the district
court improperly imported 23 (b) (3)'s "predominance" and
"manageability" requirements in denying her motion to certify the
class under 23 (b) (2). The parties initially disagree on the
proper standard of review. Penney contends that a district court's
denial of a certification motion may be reversed only where the
court has abused its "substantial discretion." Richardson v. Byrd,
709 F.2d 1016, 1019 (5th Cir.) ("complex cases cannot be run from
the tower of the appellate court"), cert. denied sub nom. Dallas
County Comrs. Court v. Richardson, 104 S.Ct. 527 (1983). Forbush
agrees that a district court's application of Rule 23 to the facts
of a particular case is entitled to great deference, but argues
that this relaxed standard of review is not appropriate where, as
here, the court has applied the wrong rule or misinterpreted the
requirements of the governing provision. Such legal errors,
Forbush contends, should be reviewed de novo. Penney does not
(3) the court finds that the questions of law or fact common
to the members of the class predominate over any questions
affecting only individual members, and that a class action
is superior to other available methods for the fair and
efficient adjudication of the controversy.
4
question this higher scrutiny for legal issues, but argues that the
alleged error cited by Forbush is the product of her willful
misreading of the district court's decision. The dispute over the
standard of review thus reduces itself to a question of
interpreting of the district court's opinion.
The district court found it "unnecessary to resolve the issue
of whether certification under (b) (2) or (b) (3) is more
appropriate," for it believed that "[c]ertification under either of
these subdivisions is improper." The court then specifically
rejected Forbush's contention "that a class action is necessary
because of the common issue of whether the alleged overestimation
of social security benefits violates [ERISA]." As the district
court saw it, "[t]he problem with the proposed class is that the
merits of each class member's claim will have to be decided on an
individual basis. The propriety of injunctive relief sought by
Plaintiffs will turn upon a consideration of the individual
circumstances of each class member." The court concluded by
identifying five separate issues that would "have to be resolved in
each individual case before members of the class [would] be
entitled to relief."2
2
These five issues, according to the district court, were:
(1) whether social security benefits were actually
overestimated, which necessarily involves calculating the
pension benefits for every J.C. Penney employee that has
retired since January 1, 1976;
(2) the extent of overestimation;
(3) the amount of foregone past pension benefits each class
member is entitled to;
5
The court then discussed Dameron v. Sinai Hospital of
Baltimore, 595 F.Supp. 1404 (D.Md. 1984), aff'd in part and rev'd
in part, 815 F.2d 975 (4th Cir. 1987), a case in which a similar
challenge to methods of calculating social security benefits was
certified as a class action. The court found that the
"predominance of individual issues in the present case
distinguishes it from Dameron." While Dameron involved a class of
fifty plaintiffs, the court noted that the class here was 10,000.
Moreover, while "Dameron involved only one plan, Forbush's claims
involve the analysis of at least four different J.C. Penney pension
plans." These two factors "increased the issues that will have to
be resolved on an individual basis." Given the number of potential
plaintiffs and differing claims, the district court concluded that
"certification of the proposed class will not promote judicial
economy, nor will class injunctive relief be appropriate in light
of the prevailing individual issues."
IV.
Forbush reads the district court's opinion to hold that
certification of the class "was inappropriate because individual
relief issues predominated over common ones, resulting in increased
litigation costs and making the case difficult to manage." If so
read, the decision indisputably rested on two considerations
relevant under 23 (b) (3), not 23 (b) (2). First, the question of
(4) whether family members of a deceased former employee
are entitled to foregone pension benefits; and
(5) whether a particular person's claim is barred by the
statute of limitations.
6
whether common issues "predominate" over individual ones has no
place in determining whether a class should be certified under 23
(b) (2). See, e.g., Adamson v. Bowen, 855 F.2d 668, 676 (10th Cir.
1988) (Plaintiff "sought relief under Rule 23 (b) (2), which
contains no requirement of 'predominance.' The district court
placed upon the class a burden that the rule does not authorize").
Second, questions of manageability and judicial economy are also
irrelevant to 23 (b) (2) class actions. See, e.g., Johnson v.
American Credit Co., 581 F.2d 526, 531 n.9 (5th Cir. 1978) ("The
defendants argue that the class is unmanageable because it is too
large and too diversified. This argument would be relevant only if
[plaintiff] had sought class certification under Rule 23 (b) (3)").
It would follow that the district court applied the wrong legal
standards and the order denying class certification could not
stand.
Penney agrees that Rule 23 (b) (2) contains no requirements of
"predominance" and "manageability." But it contends that the
district court's denial of Forbush's certification motion does not
rest there. Rather, the court's discussion should be read, Penney
asserts, as a determination that Forbush has not satisfied the
threshold requirements set out in 23 (a), assertedly six in number:
(1) that plaintiff define the class with some specificity; (2) that
plaintiff be a member of the class; (3) that the class be so
numerous that joinder is impracticable; (4) that there are issues
of law or fact common to the class; (5) that the claims of the
representative plaintiff be typical of the class; (6) that the
7
named plaintiff adequately represent the interests of the class.
Penney contends that Forbush has not satisfied the requirements of
(1) specificity, (4) commonality, (5) typicality, and (6) adequacy
of representation.3
Penney concedes that the first requirement of specificity is
not contained within Rule 23 (a)'s express provisions, but asserts
that it has been "implied" by courts. A requirement that the class
be defined with some specificity is sensible in the abstract, but
the application of this "rule" in the manner proposed by Penney is
not. Forbush defines the class as including all current and former
Penney employees "whose pension benefits have been, or will be,
reduced or eliminated as a result of the overestimation of their
Social Security benefits." Penney asserts that this definition is
hopelessly "circular," as the court must first determine whether an
employee's pension benefits were improperly reduced before that
person may be said to be a member of the class. This argument is
meritless and, if accepted, would preclude certification of just
about any class of persons alleging injury from a particular
3
At the outset, we note that the district court rejected the
primary contention advanced by Penney below and renewed here.
Class actions are appropriate under Rule 23 (b) (2) only where
plaintiffs seek "final injunctive relief or corresponding
declaratory relief with respect to the class as a whole." Penney
has repeatedly claimed that 23 (b) (2) is not available to
Forbush because she seeks to recover money damages, namely the
benefits she was denied under the pension plan. The able
district court properly declined to rest its decision on this
basis. "Class certification under Rule 23 (b) (2) does not
automatically preclude an award of monetary damages when the
primary relief sought is injunctive or declaratory." Parker v.
Local Union No. 1466, 642 F.2d 104, 107 (5th Cir. 1981); Johnson
v. General Motors Corp., 598 F.2d 432, 437 (5th Cir. 1979).
8
action. These persons are linked by this common complaint, and the
possibility that some may fail to prevail on their individual
claims will not defeat class membership.
Penney's "specificity" argument is best seen as an assertion
of its "commonality" claim in a different guise. Penney contends
that certification is improper because there is no question of law
or fact common to the members of the proposed class. The various
employees included in the class, in addition to their different
terms of service, are covered by four different pension plans and
consequently four different means of allegedly overestimating
Social Security benefits. Because this case presents not one
question, but several, Penney claims that there is no commonality
among the class members. Any attempt by Forbush to depict the case
as raising a single challenge must be regarded, Penney concludes,
as illegitimate "bootstrapping."
The common issue alleged by Forbush is whether Penney's
alleged overestimation of social security benefits violates ERISA's
nonforfeiture provisions. See, e.g., 29 U.S.C. §§ 1054, 1202; see
also Dameron v. Sinai Hospital of Baltimore, Inc., 815 F.2d 975,
978-81 (4th Cir. 1987). Framed in this manner, Forbush has met the
commonality requirement, despite the fact that four different
pension plans are involved. See, e.g., Johnson, 581 F.2d at 532
(plaintiffs attack six different methods of pre-judgment
attachment). The interests and claims of the various plaintiffs
need not be identical. Rather, the commonality test is met when
there is "at least one issue whose resolution will affect all or a
9
significant number of the putative class members." Stewart v.
Winter, 669 F.2d 328, 335 (5th Cir. 1982). For this reason, "[t]he
threshold of 'commonality' is not high." Jenkins v. Raymark
Industries, 782 F.2d 468, 472 (5th Cir. 1986). Although the
subsequent determinations of individual awards are likely to be far
less mechanical than Forbush suggests, the necessity for even
somewhat complex individual calculations does not supply a basis
for concluding that Forbush has not met the commonality
requirement.
Penney finally argues that Forbush's claims are not "typical"
of the class and that she will not, for this reason, adequately
represent the interests of the class. The test for typicality,
like commonality, is not demanding, Shipes v. Trinity Industries,
987 F.2d 311, 316 (5th Cir. 1993), and Penny's argument here fails
for similar reasons. It is true that much of the putative class is
covered by plans other than the one applicable to Forbush, but
Forbush has framed her challenge in terms of Penney's general
practice of overestimating social security benefits. Her claim is
therefore typical and thus provides no basis for suspecting that
she will not adequately represent the interests of the class.
The order denying class certification is reversed and this
case is remanded with instructions to certify the class as
requested by Forbush. We are aware of the sometime abuse of the
class device; but that unfortunate reality makes all the more
important that we not reflexively reject its use in appropriate
cases. The concerns expressed by Judge Emilio M. Garza, as well as
10
the district court, regarding the necessity of individualized
determinations are important but not, we believe, dispositive, at
least at this stage of the litigation. District courts retain
substantial discretion in managing their cases and, should the
conditions apprehended by Judge Garza materialize, the district
judge may of course take measures, such as redefining the class and
creating sub-classes, to resolve this dispute with fairness and
efficiency. Concerns that the course of the lawsuit may require
modifications to the class structure, however, should not serve to
defeat this device at the outset.
REVERSED and REMANDED.
EMILIO M. GARZA, Circuit Judge, dissenting:
My main disagreement with the majority lies in their
acceptance))for the purpose of Rule 23(b)(2)))of the common issue
alleged by Forbush which, in my opinion, sweeps too broadly.4
As "Professors Wright and Miller state[,] a rule 23(b)(2)
class action is appropriate when `the party opposing the class
. . . has established a regulatory scheme common to all class
members . . . . What is necessary is that the challenged conduct
or lack of conduct be premised on a ground that is applicable to
the entire class.'" Johnson v. American Credit Co. of Georgia, 581
F.2d 526, 532 (5th Cir. 1978) (alteration in original) (quoting 7A
Charles A. Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE §
4
"The common issue alleged by Forbush is whether Penney's alleged
overestimation of social security benefits violates ERISA's nonforfeiture
provisions." Maj. op. at 9.
11
1775, at 19-20, 21 (1972)). Clearly, the district court was
correct in distinguishing Dameron on the basis that "`Dameron
involves only one plan, [while] Forbush's claims involve the
analysis of at least four different J.C. Penney pension plans.'"
Maj. op. at 6 (quoting Amended Order Denying Plaintiffs' Motion for
Certification of a Class, Staying Case, and Certification for
Interlocutory Appeal); see Dameron v. Sinai Hosp. of Baltimore,
Inc., 815 F.2d 975 (4th Cir. 1987) ("Sinai employs a method of
calculating an employee's primary social security benefit which is
not mentioned in the plan and which is unreasonable." (emphasis
added)).
Rule 23(b)(2) simply does not allow for such a broadly defined
class. See Johnson, 581 F.2d at 532 ("In contrast, rule 23(b)(2)
will not allow an action for this broadly defined class premised on
her third argument))that a prior hearing is required because the
six situations in which attachment is allowed are not
`extraordinary situations' under Fuentes. This argument obviously
raises six discrete issues not common to the members of the broadly
defined class." (emphasis added)).5
For these reasons, and for the reasons stated by the district
court,6 I respectfully dissent. See Richardson v. Byrd, 709 F.2d
5
The Johnson court went on to remark that, under Rule 23(c)(4)(B)
which allows for subclasses, "Johnson may represent only a subclass consisting
of all persons who, like her, have had or will have property attached prior to
judgment because they allegedly were removing the property from the state."
Id.
6
Certification of the proposed class will not promote
judicial economy, nor will class injunctive relief be appropriate
in light of the prevailing individual issues. Resolution of the
issue of whether overestimation of social security benefits for
purposes of calculating pension benefits violates ERISA, does not,
1016, 1019 (5th Cir.) ("Complex cases cannot be run from the tower
of the appellate court"), cert. denied, ___ U.S. ___, 104 S. Ct.
527, ___ L. Ed. ___ (1983).
by itself, call for certification of a class action. In this
case, class certification will not reduce litigation expenses in
any appreciable quantity, of any persons seeking to recover past
pension benefits or ensure proper calculation of future benefits.
Each plaintiff will have to prove entitlement to relief on an
individual basis. Each claim will be based on facts and
circumstances unique to the party involved.
Petitioner's Record Excerpts, Tab 4, at 6-7.
-13-
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