In re National Football League Players Concussion Injury Litigation, 775 F.3d 570 (3d Cir. 2014). Federal Rule of Civil Procedure 23(f) states that “[a] court of appeals may permit an appeal from an order granting or denying class-action certification” upon a timelypetition from a party seeking such interlocutory review. The question in today’s 2-1 decision of the Third Circuit was whether an order granting preliminary approval of a class action settlement, directing notice to the class, and setting a date for a final hearing at which full review of whether the proposed settlement is fair, reasonable, and adequate and should be approved is “an order granting … class-action certification.” In an opinion by Judge Smith, in which Judge Jordan joined, the Third Circuit ruled that such a grant of preliminary approval (actually denominated by the District Court as “conditional approval,” which was the subject of much discussion in the amjority opinion) is not an order that is subject to Rule 23(f) review. Judge Ambro dissented.
The case involves claims by professional football players arising out of concussions that they suffered while playing in the National Football League. The players contended that the league had failed to take reasonable action to protect them from the risks of such concussions. A settlement involving a fund of hundreds of millions of dollars was reached, and the parties proposed that a nationwide settlement class “be conditionally certified, for settlement purposes only,” by the District Court. Seven players filed objections to the proposed settlement. Despite those objections, the District Court issued an order that “preliminarily approved” the settlement agreement and stated that settlement classes were “conditionally certified, for settlement purposes only.”
The objectors sought Rule 23(f) review in the Third Circuit. Several months ago, the Third Circuit issued an order that dismissed that appeal and stated that an opinion would follow. Today’s opinion redeemed that promise.
Judge Smith first noted that Rule 23 was amended in 2003 to delete language that had permitted courts to issue “conditional” class certification. The purpose of that amendment was to make clear that “[a] court that is not satisfied that the requirements of Rule 23 have been met should refuse certification until they have been met.” Thus, “conditional certification,” a term used by the District Court here, “should not be a preferred term of art in this Circuit. District courts should not couch a ruling as providing ‘conditional certification’ when they actually intend to issue a certification order at a later date. Instead, district courts should more appropriately note that they are conducting a ‘preliminary determination’ regarding class certification for a settlement class in order to provide notice to absent class members and they are reserving the certification decision for a later date.” That type of two-step procedure– preliminary approval to allow notice to the class, followed by a final hearing at or after which a decision on settlement approval and class certification will be made– is the one described by the Manual for Complex Litigation and followed by most, if not all, courts.
The majority went on to hold that only an order that actually grants class certification under Rule 23(c)(1) can be the subject of a Rule 23(f) petition. “An order issued under some other subdivision of Rule 23, such as a case management order issued pursuant to Rule 23(e) that ‘preliminarily’ or ‘conditionally’ addresses class certification but reserves the class certification determination for a later time, does not qualify as ‘an order granting or denying class-action certification’ that is subject to interlocutory review under Rule 23(f).” The District Court’s ruling here was such a determination, under Rule 23(e), that was “managing a class-action settlement agreement as requested by the parties.” Far from certifying any class, the District Court had reserved the issue until a final hearing, on notice to class members, could be held.
Judge Smith’s lengthy majority opinion is endlessly layered and detailed. It includes good discussions of the history and rationale of Rule 23(f), what is “dictum,” the effect of the Advisory Committee Notes to Rule 23 and of the Manual for Complex Litigation, the idea of “conditional certification” (as to which the Third Circuit diverged from the view adopted by the Second Circuit in Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006)), and much else, all in the service of its ultimate conclusion. It is well worth reading and studying.