United States Court of Appeals
For the First Circuit
No. 08-2432
HERBERT W. BROWN III; JOSÉ L. UBARRI; DAVID W. ROMÁN,
Plaintiffs, Appellees,
v.
COLEGIO DE ABOGADOS DE PUERTO RICO,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin and Lipez, Circuit Judges.
Harold D. Vicente with whom Nelson N. Cordova-Morales and
Vicente & Cuebas were on brief for appellant.
David C. Indiano with whom Seth A. Erbe, María Ligia Giráldez,
Indiano & Williams, P.S.C., Andrés W. López and The Law Offices of
Andrés W. López were on brief for appellees.
July 23, 2010
BOUDIN, Circuit Judge. Colegio de Abogados de Puerto
Rico ("Colegio") is a state-created, integrated bar association;
membership has been statutorily required in order to practice law
before the Commonwealth of Puerto Rico's courts. P.R. Laws Ann.
tit. 4, § 774 (2009). At the time the present dispute began,
Colegio had for many years provided compulsory life insurance to
its members, funded by a portion of their annual dues. The present
appeal is the latest phase of litigation stemming from this
compulsory insurance.
The procedural history traces back to a law suit filed in
1994. Carlos Romero, Jr., a Colegio member, claimed that the
organization was acting unlawfully by requiring him to purchase
life insurance in order to practice before Puerto Rican courts.
The district court granted summary judgment in Colegio's favor and
dismissed the claim in 1999 but was reversed on appeal by this
court. Romero v. Colegio de Abogados de Puerto Rico, 204 F.3d 291,
295-96, 304-06 (1st Cir. 2000).
This court held that the First Amendment allowed Colegio
to compel its members to purchase life insurance only if this was
germane to the purposes that justify compelling membership in an
integrated bar association, id. at 302; but, to avoid needlessly
deciding a constitutional question, we directed the district court
to certify the question of Colegio's authority, id. at 305-06. The
Puerto Rico Supreme Court affirmed that authority as a matter of
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local law. The district court then held that the life insurance
program was not germane and was therefore unconstitutional, awarded
Romero damages--the amount of his dues attributable to the life
insurance program since he had initially objected--and entered an
injunction "prohibit[ing] [Colegio] from collecting . . . that
portion of his future annual dues attributable to the Colegio's
mandatory group life insurance program." Romero v. Colegio de
Abogados de Puerto Rico, No. 94-2503, slip op. at 9, 14-16 (D.P.R.
Sept. 26, 2002).
Despite the injunction, Colegio continued to provide life
insurance funded by its members' annual dues after the district
court's decision became final, and although mentioning the decision
in its 2003 and 2004 Treasurer's Reports, did not otherwise advise
its members that insurance need no longer be purchased. In late
2005 and early 2006, two groups of attorneys requested and received
reimbursements for those dues attributable to their life insurance
coverage, but only after much delay by Colegio.1
1
The first group of attorneys requested that they be excused
from participating in the life insurance program on November 30,
2005. Colegio did not issue a response by the deadline for
attorneys to pay their annual dues, so the group paid in full. On
February 2, 2006, Colegio said that it would reimburse their
premiums only on various conditions, including that the attorneys
make a new request to be excluded every year--the claim being that
one board could not bind the next--and that their reimbursement not
serve as precedent for future cases. The attorneys refused and
Colegio eventually refunded their premiums on March 3, 2006.
A second group requested on February 27, 2006 that Colegio
refund the portion of their 2006 dues attributable to the life
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The named plaintiffs in this law suit are Colegio members
who neither objected to their participation in Colegio's life
insurance program nor requested reimbursement. They filed this
class action on June 27, 2006, requesting declaratory judgment and
an injunction forbidding Colegio from charging its members for life
insurance; the complaint was later amended to add a claim for
damages reflecting forced participation in the program between the
2002 Romero decision and the time the program was eventually
canceled. The plaintiffs sought to certify two classes, one for
damages and another for declaratory relief, and moved for summary
judgment, arguing that Romero had preclusive effect.
Colegio ended its life insurance program on August 29,
2006, and then filed a motion to dismiss, arguing that the case was
now moot. The district court denied its motion, finding that
"Colegio's prior pattern of contradictory behavior [left] the Court
with no assurance that the alleged constitutional violations
[would] not recur." On July 31, 2008, the court certified both of
the requested classes: a declaratory class encompassing all present
and future Colegio members, and a damages class consisting of
insurance program. Colegio submitted the matter to a review board
and there argued that the Romero decision "is not extensive to
other Bar Association members"; that the attorneys' request was
untimely because it occurred after their 2006 dues had already been
paid; and that the board should allow it to reimburse the attorneys
with vouchers for Colegio seminars, books or other programs rather
than cash. Colegio eventually reimbursed the attorneys the dues
for the portion of their 2006 coverage "unearned" by the insurer.
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attorneys who were members between the conclusion of the Romero
litigation in 2002 and the ending of the life insurance program in
2006.
Not long afterwards, the district court granted summary
judgment for the plaintiffs, finding (based on non-mutual offensive
collateral estoppel2) that Colegio's compulsory life insurance
program violated the federal constitution. The court then issued
a permanent injunction barring Colegio from using its members'
annual dues for purposes of operating the compulsory life insurance
program, later amending its judgment to add damages in the amount
of $4,156,988.70, plus costs, interest and attorneys' fees.
Colegio now appeals.
Colegio's jurisdictional objection, which we consider
first, is that the case is moot because, after this law suit began,
it ceased to offer life insurance. See Iron Arrow Honor Soc'y v.
Heckler, 464 U.S. 67, 70 (1983) ("Federal courts lack jurisdiction
to decide moot cases . . . ."); County of Los Angeles v. Davis, 440
U.S. 625, 631 (1979). The district court found that it was "not
'absolutely clear' that the Colegio [would] permanently enforce its
2
Non-mutual offensive collateral estoppel, now usually called
issue preclusion, is a branch of res judicata doctrine which
prevents in certain circumstances re-litigation of issues
previously decided against one of the parties. Application is
"non-mutual" where the party asserting preclusion was not a party
to the prior case, and it is termed "offensive" when used by a
plaintiff to bind a defendant. See Acevedo-Garcia v. Monroig, 351
F.3d 547, 573-75 (1st Cir. 2003); Wright, Miller & Cooper, 18A
Federal Practice and Procedure § 4464 (2d ed. 2002).
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internal decision to eliminate the compulsory life insurance
component from the annual dues collection."
The substantive standard for mootness is variously
expressed in the cases; behavior certain not to recur ought not be
enjoined, Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 189 (2000), but absent such certainty,
likelihood of reoccurrence might not be the only factor to be
considered. E.g., Horizon Bank & Trust Co. v. Massachusetts, 391
F.3d 48, 54 (1st Cir. 2004)(ability of a harm to evade review). As
for the standard of appellate review, some cases speak of de novo
review without qualification although conceivably factual findings
might deserve some deference.3
We need not resolve these issues because, even if review
were entirely de novo and confined purely to risk of repetition,
the district court's conclusion is sound. Indeed, as a general
rule of thumb, a defendant may not render a case moot by
voluntarily ceasing the activity of which the plaintiff complains;
were the opposite true, a defendant could immunize itself from suit
by altering its behavior so as to secure a dismissal, and then
3
Compare Ramirez v. Sanchez Ramos, 438 F.3d 92, 96-97 (1st
Cir. 2006)("We review . . . mootness determination[s] de novo,
accepting as true the material factual allegations contained in the
complaint. . . ."), with Adams v. Bowater Inc., 313 F.3d 611, 613
(1st Cir. 2002) ("[W]here the district court applies an abstract
standard to known facts, the extent of deference accorded on review
varies from substantial deference to none at all, depending on the
subject matter and on other circumstances.").
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immediately reinstate the challenged conduct afterwards. See City
of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289 (1982);
United States v. W.T. Grant Co., 345 U.S. 629, 632 (1953).
Nevertheless, a case may become moot if the defendant
meets the "heavy burden" of showing that it is "absolutely clear
that the allegedly wrongful behavior could not reasonably be
expected to recur." Friends of the Earth, Inc., 528 U.S. at 189
(quoting United States v. Concentrated Phosphate Export Ass'n, 393
U.S. 199, 203 (1968)); see also Adams, 313 F.3d at 613. But
Colegio's past obstinacy and its own claims that one board's action
does not bind the next (see note 1, above) justify a fear of
repetition.
After Romero, Colegio did not fully advise its members
that they no longer had to buy insurance, threw obstacles in front
of those trying to opt out, and delayed refunds. In fact it moved
to disbar one member who refused to pay the portion of his dues
attributable to the program, see In re Rivera, No. TS-9645, 2006 WL
3782863 (P.R. Nov. 14, 2006). This sorry record answers the claim
of mootness and also defeats any claim that the district court
abused its discretion on the separate issue of whether as a matter
of discretion an injunction was warranted.
In a related argument against the injunction, Colegio
says that it was wrongly granted because there was no irreparable
harm, ordinarily a requirement for such relief. See eBay Inc. v.
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MercExchange, L.L.C., 547 U.S. 388, 391 (2006). In particular,
Colegio claims that the damages are quantifiable and hence not
"irreparable," and that the plaintiffs suffered no injuries because
they received the benefit of the life insurance policy and because
objectors were ultimately reimbursed. The first part of the
argument is readily disposed of; the second part is complicated.
When a preliminary injunction is sought, the merits are
often an open question and, where it is clear that damages are
easily determined, this may well counsel against injunctive relief.
But where the merits have been determined and repetition is a risk,
it is fanciful to argue that a vast number of members should be
relegated to bringing law suits--possibly every year based on
Colegio's notion that one board does not bind another. This is
sufficient without even considering the relevance of First
Amendment rights.4
Colegio now claims in its brief that the Puerto Rico
legislature has recently enacted a law converting Colegio into a
voluntary bar association. Depending on Colegio's new status--most
4
Compare Elrod v. Burns, 427 U.S. 347, 373 (1976) ("The loss
of First Amendment freedoms, for even minimal periods of time,
unquestionably constitutes irreparable injury."), with Rushia v.
Town of Ashburnham, 701 F.2d 7, 10 (1st Cir. 1983) (distinguishing
Elrod as not involving an injunction against a state criminal
prosecution and holding that "the fact that [the plaintiff] is
asserting First Amendment rights does not automatically require a
finding of irreparable injury"). See also Pub. Serv. Co. of New
Hampshire v. Town of West Newbury, 835 F.2d 380, 382 (1st Cir.
1987).
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importantly, whether it is truly voluntary--it may no longer be
prohibited by Romero from operating a mandatory life insurance
program. But there is nothing in record about such matters. On
remand, Colegio is free to ask the district court to consider them
and seek dismissal of the injunctive element of the relief granted
on the ground that it is no longer appropriate.
This brings us to damages. The district court granted
class certification--relevant primarily to damages since an
injunction and declaratory judgment could have been granted to any
named plaintiff--and ultimately awarded large damages to the class.
The damages, of course, are unaffected by any argument about
mootness based on the new statute. But Colegio challenges both
the class certification and the damages award itself on numerous
grounds.
Colegio's first argument--that the district court should
have allowed discovery before class certification--is forfeit
because it was never raised in the district court. See McCoy v.
Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991), cert.
denied, 504 U.S. 910 (1992). When plaintiffs moved to certify two
classes, Colegio asked to reserve the right to oppose certification
if its jurisdictional challenges failed, but after the district
court rejected those challenges, Colegio failed to raise any
substantive objections to certification.
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Colegio next argues that the class representatives do not
adequately represent the interests of the class as required by Rule
23(a)(4) and points to an October 18, 2008, resolution passed at a
membership meeting opposing the present law suit.5 Courts may
alter certification orders prior to final judgment, Fed. R. Civ. P.
23(c)(1)(C), cf. Key v. Gillette Co., 782 F.2d 5, 7 (1st Cir.
1986), but the vote is an inadequate basis for reconsideration,
especially when circumstances of the resolution are considered.
It appears from the record that the meeting that adopted
the resolution was attended by only a few hundred of Colegio's
12,000 members; an affidavit suggests that the matter was voted on
but never discussed; and there is no information from Colegio to
indicate what was actually disclosed to the members about the
nature of the suit, the interests of the members in the suit, or
the basis for opposing a law suit aiming to recover damages for the
members. Nor do Colegio's earlier tactics inspire confidence in
the resolution.
5
The wording of the resolution is as follows:
Be it resolved by the special general membership meeting
of the [Colegio de Abogados de Puerto Rico ("CAPR")]: .
. . Second: Reject the class action suit presented at the
U.S. District Court for the District of Puerto Rico by
attorneys Herbert Brown III, Jose L. Ubarri, and David
Roman, on their own right and representing all members of
the CAPR, as it does not represent the individual or
collective sentiments of the General Meeting's
membership.
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Colegio's final attack on the class certification is that
the plaintiffs failed to provide notice of the law suit as is
required by Rule 23(c)(2). For the declaratory relief class
(certified under Rule 23(b)(2)), the court "may" notify the class;
but for the damages class (certified under Rule 23(b)(3)), the
court "must direct to class members the best notice that is
practicable under the circumstances." Fed. R. Civ. P.
23(c)(2)(A),(B). What Colegio objects to here is the failure to
give notice to the latter class.
The notice to those in the damage class must include, as
stated in the rule, the right of the class member to seek to appear
by his or her own attorney or to opt out of the class and--if he or
she fails to opt out--a warning that he or she will be bound by the
judgment. Fed. R. Civ. P. 23(c)(2)(B). Although the rule does not
say when notice must be given, "[t]he purpose of Rule 23(c)(2) is
to ensure that the plaintiff class receives notice of the action
well before the merits of the case are adjudicated." Schwarzschild
v. Tse, 69 F.3d 293, 295 (9th Cir. 1995), cert. denied, 517 U.S.
1121 (1996); see Wright, Miller & Kane, 7AA Federal Practice &
Procedure § 1788 (3d ed. 2005).
As the district court awarded the damages class seemingly
the best relief imaginable (reimbursement of the entirety of their
premiums paid during the class period), few members of the class
may now have any incentive to opt out; but some may prefer as a
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matter of principle to support Colegio rather than win a judgment
against it. Anyway, the notice requirement for 23(b)(3) class
actions is rooted in due process and clearly mandatory under Rule
23(c)(2)(B), Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176
(1974); Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 548-49
(1974), so on remand the district court must provide the notice,
which ought to be done promptly.
Colegio's final arguments take issue with the district
court's award, on summary judgment, of roughly $4 million in money
damages representing the charges Colegio collected for the
insurance from 2002 to the end of the program. The standard of
review varies with the issue.6 There is also a procedural quirk--
relating to the adequacy of notice to Colegio that damages were to
be determined without full-scale litigation--which provides
necessary context for certain of our rulings.
The plaintiffs' original complaint requested only
declaratory and injunctive relief; their motion for summary
judgment was then filed; and their damage claim was then added by
amendment. But the original complaint and summary judgment motion
6
A damage award by the district judge may involve questions of
law reviewed de novo but is otherwise reviewed for abuse of
discretion. Lawton v. Nyman, 327 F.3d 30, 37 (1st Cir. 2003).
That damages were awarded on summary judgment adds the further
requirement that the district court not resolve fairly disputable
factual issues against the non-moving party. Simas v. First
Citizens' Fed. Credit Union, 170 F.3d 37, 43 n.1, 50-51 (1st Cir.
1999).
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did seek a declaration that plaintiffs' rights had been violated--a
predicate for damages. And, by the time Colegio filed its
opposition to summary judgment, the amendment to the complaint had
been allowed.
The opposition to summary judgment, filed over 22 months
after the motion for summary judgment itself, asserted (correctly)
that the request for damages was not part of the summary judgment
motion; but it noted Colegio's position that the non-objecting
class of plaintiffs had gotten the benefit of their payments. The
opposition offered no objection to non-mutual offensive collateral
estoppel--which had been expressly sought in the summary judgment
motion--nor did it mention the statute of limitations or any
concern about vicarious liability.
In September 2008, the district judge in granting summary
judgment concluded that the plaintiffs were also entitled to
damages and ordered the plaintiffs to identify, subject to
objection by Colegio, "the monetary amount of membership dues that
was allocated to the compulsory life insurance program between the
entry of judgment in the Romero litigation in 2002 and the
present," as well as costs and attorneys' fees. Eventually, the
figure ($4,156,988.70) was elicited from Colegio, and, in April
2009, the district court entered a final judgment in that amount,
reserving attorneys' fees for later disposition.
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On this appeal, Colegio now argues that the damage award
is improper for a succession of reasons: that notice and discovery
as to damages should have been allowed, that the plaintiff class
members had benefitted from the insurance and so deserved no
damages, that non-mutual offensive collateral estoppel was
improper, that some of the damage claims are barred by the statute
of limitations, and that liability is being imposed on Colegio
vicariously and inconsistent with precedent. It also makes an
undeveloped evidentiary objection of which nothing more need be
said.
When the district judge proposed that Colegio return the
premiums it had charged after Romero held mandatory insurance
unlawful, Colegio had ample opportunity to state its objections and
explain what discovery or other proceedings it needed. Instead, in
the course of a number of filings made after the district court's
request for data as to the premiums, Colegio's contention was
simply that it owed nothing because the class members had not
objected to paying for insurance and had benefitted from coverage.
Thus, three of the objections now pressed by Colegio are
forfeit. The objection to collateral estoppel, see Parklane
Hosiery Co. v. Shore, 439 U.S. 322, 329-31 (1979) (disfavoring
certain applications), ought initially to have been made in
opposition to summary judgment; and Colegio had over the many
months between the finding of liability and the final damages
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determination an obligation to make clear its statute of
limitations and vicarious liability objections. Although both were
mentioned summarily in Colegio's original answer, no effort to
assert or explain these objections occurred thereafter and attempts
to do so on appeal come too late. McCoy, 950 F.2d at 22.7
One argument remains. Colegio has consistently argued,
starting with its opposition to summary judgment, that the class is
composed of non-objecting parties who got the benefit of the
insurance protection and that therefore no damages should be
awarded. This assumes, perhaps mistakenly, that the premium
charged by Colegio was no more than the fair market value of the
insurance; but a further assumption, even more clearly flawed, is
that the insurance was in fact desired by the class members on whom
it was inflicted.
Perhaps some members of the class wanted the insurance,
were even willing to have part of their payment go to Colegio
rather than the insurer, and would have purchased it even if a box
on the dues notice made the purchase optional. But we know from
prior protests that some lawyers did not want the insurance: some
7
The vicarious liability objection, at least as briefed by
Colegio, is hopeless; Colegio is responsible under 42 U.S.C. § 1983
for the authorized action of its board and officers in maintaining
the insurance program. Bd. of County Comm'rs of Bryan County v.
Brown, 520 U.S. 397, 403 (1997). Whether it might have cut back on
damages on statute of limitations grounds is a closer question,
given the otherwise applicable one year statute. See Rivera-Ramos
v. Roman, 156 F.3d 276, 282 (1st Cir. 1998).
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class members may have been unaware of the Romero decision; others
may have accepted Colegio's remarkable claim that only Romero
himself could benefit from the decision; and still others may have
learned enough of how Colegio treated objectors (see note 1, above)
to stay silent because of the threatening obstruction and
penalties.
Starting with those members who did not want the
insurance, we reject Colegio's claim that those class members
cannot recover their premiums because they "benefitted" from
coverage that they did not desire. The ordinary rule in tort law
is that damages are not reduced by conferring undesired benefits of
some other species. Restatement (Second) of Torts, § 920 & cmt. f
(1979); 1 D. Dobbs, Law of Remedies, § 3.8(2), at 378 (2d ed.
1993). There are exceptions but only where the equities favor the
wrongdoer, Restatement, supra, cmt. f.
An example of an equitable exception is Ellis v.
Brotherhood of Railway, Airline & Steamship Clerks, 466 U.S. 435,
453-55 (1984). There the Supreme Court declined to decide whether
non-union members could be forced to pay dues--required of them
because the union represented them in bargaining--that included the
cost of very modest death benefits available to members and non-
members alike. But in holding that the union's decertification
mooted the issue for the future, the Court said, "We doubt that
the equities call for a refund of those payments." Id. at 455.
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The question whether the death benefits charge was
improper under the relevant labor statute was plainly close--the
benefits were somewhere between union activities for which non-
members could be charged and those for which they could not; in
fact, the circuit court had held that such benefits fell in the
former class. Id. at 454. The union's good faith was surely a
relevant equity. Here, where Colegio collected all of the
premiums in question in the teeth of Romero, we have no doubt that
the equities weigh very much against the defendant and warrant no
exception to the ordinary tort rule.
This leaves those members who did want the insurance from
Colegio or, conceivably, those who wanted it instead from some
other entity but accepted the Colegio-imposed insurance as a
substitute and curtailed other insurance. But Colegio has
suggested no practical means to distinguish those groups from other
members of the class. Even if endless mini-trials were conducted
at great expense, every member would be free in light of Colegio's
conduct to claim that--even had he heard of Romero--he was an
unwilling purchaser.
Although in class actions there is a preference for
individually proven damages, cf. Cooper v. Fed. Reserve Bank of
Richmond, 467 U.S. 867, 876 (1984), it is well accepted that in
some cases an approximation of damages or a uniform figure for the
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class is the best that can be done.8 This is an unusually suitable
case for the district judge's blanket remedy: from Romero onward,
Colegio knowingly inflicted all of the insurance on willing and
unwilling members alike in the teeth of a ruling that it was not
entitled to do so; and it has offered no practical solution to the
problem apart from paying nothing at all.
There is one caveat. We have already ruled that class
members are entitled on remand to opt out of the class and be
excluded from the judgment. If Colegio is right about the degree
of its support among the membership, this opt-out group may well
include most or all those who were happy to have the insurance at
the price charged, thereby significantly reducing the ultimate
judgment. To the extent of such opt-outs, Colegio is entitled to
a proportionate reduction of the damage award.
We affirm the district court's declaration of liability
and its grant of injunctive relief but vacate its judgment insofar
as it determines the amount of damages, and remand to allow notice
8
See, e.g., McClain v. Lufkin Indus., 519 F.3d 264 (5th Cir.),
cert. denied, 129 S. Ct. 198 (2008) (allowing class-wide formula
rather than individual hearings to determine back pay); White v.
Carolina Paperboard Corp., 564 F.2d 1073 (4th Cir. 1977) (dividing
damages equally among all class members who might have been
qualified for a job); Stewart v. General Motors Corp., 542 F.2d
445, 452-53 (7th Cir. 1976), cert. denied, 433 U.S. 919 (1977)
(averaged classwide relief is preferable to no relief); Barr v.
WUI/TAS, Inc., No. 74 Civ. 2687-LFM, 1976 WL 1205 (S.D.N.Y. 1976)
(distributing equally among class members because there was no
method to determine the amount that any particular subscriber was
overcharged by the defendant).
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to be given to class members including their right to opt out of
the class. Following the expiration of the notice period, the
district court may reinstate a damage award calculated as before
but this time excluding damages otherwise attributable to those who
have opted out of the class.
It is so ordered.
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