Beck v. Maximus, Inc.

Opinions of the United

2006 Decisions States Court of Appeals

for the Third Circuit

8-4-2006

Beck v. Maximus Inc

Precedential or Non-Precedential: Precedential

Docket No. 05-3530

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 05-3530

DONNA M. BECK,

ON BEHALF OF HERSELF AND ALL

OTHERS SIMILARLY SITUATED

v.

MAXIMUS, INC.,

Appellant

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

D.C. Civil Action No. 04-cv-02199

(Honorable Edmund V. Ludwig)

Argued April 27, 2006

Before: SCIRICA, Chief Judge,

NYGAARD and ALARCÓN * , Circuit Judges

(Filed August 4, 2006 )

JAMES A. KELLER, ESQUIRE (ARGUED)

JAMES F. KILCUR, ESQUIRE

Saul Ewing LLP

Centre Square West

1500 Market Street, 38th Floor

Philadelphia, Pennsylvania 19102

Attorneys for Appellant

JAMES A. FRANCIS, ESQUIRE (ARGUED)

Francis & Mailman, P.C.

Land Title Building

100 South Broad Street, 19th Floor

Philadelphia, Pennsylvania 19110

DAVID A. SEARLES, ESQUIRE

Donovan Searles, LLC

1845 Walnut Street, Suite 1100

Philadelphia, Pennsylvania 19103

Attorneys for Appellee

*

The Honorable Arthur L. Alarcón, United States Circuit

Judge for the Ninth Judicial Circuit, sitting by designation.

2

OPINION OF THE COURT

SCIRICA, Chief Judge.

In this consumer class action against a debt collector, the

issue on appeal is whether the District Court erred in certifying

a class when defendant asserted a defense unique to the claims

of the class representative. We will vacate and remand.

I.

Maximus, Inc. has a contract with the U.S. Department

of Education to collect overdue student loans. Between May 20,

2003, and May 20, 2004, Maximus sent a form collection letter

entitled “Employment Verification Request” to the employers of

776 Pennsylvania individuals. The Employment Verification

Request displayed “MAXIMUS Collection Center” in boldface

type at the top and bottom of the page and requested information

about the individual’s location and employment. On May 28,

2003, Maximus sent an Employment Verification Request to

appellee Donna M. Beck’s employer, Inolex Chemical

Company.

Beck did not have an outstanding loan with the

Department of Education. Maximus had confused her with

another woman, with the same name, who lived in the same

Philadelphia neighborhood. The two women had a history of

3

being mistaken for one another. They had been confused on

voter registration rolls, and their credit histories had been mixed

up by the credit information service that provided Maximus with

employment information.

Before sending the Employment Verification Request, a

Maximus representative telephoned Inolex at least twice,

attempting to reach Beck. On one call, Inolex’s human-

resources department informed the Maximus representative that,

based on the social security number he provided, the debtor

“Donna M. Beck” did not work there. The Maximus

representative responded by contending Beck must be using two

different social security numbers. Notified of the inquiries,

Beck called Maximus to clarify she was not the debtor in

question. She also contacted the other Donna M. Beck, met her

in person, and established she had an outstanding debt with the

Department of Education. After this meeting, neither woman

contacted Maximus to clarify the situation. Beck testified that

when she saw the Employment Verification Request, she knew

it was intended for the other Donna M. Beck and was sent to

Inolex in error.

On May 20, 2004, Beck filed a complaint in the District

Court, alleging Maximus violated the Fair Debt Collection

Practices Act, 15 U.S.C. §§ 1692b, 1692c, 1692d, 1692e, and

1692f. The Fair Debt Collection Practices Act is intended to

protect both debtors and non-debtors from misleading and

abusive debt-collection practices. See § 1692(e). Among other

things, the Act expressly prohibits “[a]ny debt collector

4

communicating with any person other than the consumer” from

“stat[ing] that such consumer owes any debt,” § 1692b(2), and

from “indicat[ing] that the debt collector is in the debt collection

business or that the communication relates to the collection of

a debt,” § 1692b(5). The complaint alleged Maximus violated

the Act by sending Beck’s employer a form collection letter,

which improperly identified the sender as a collection agency

and implied the existence of a debt.

Section 1692k(c) of the Act offers a defense to a debt

collector whose violation results from a bona fide error. It

provides:

A debt collector may not be liable in any action

under this subchapter if the debt collector shows

by a preponderance of evidence that the violation

was not intentional and resulted from a bona fide

error notwithstanding the maintenance of

procedures reasonably adapted to avoid such

error.

15 U.S.C. § 1692k(c).

Beck filed a motion for class certification of 776

consumers in Pennsylvania whose employers received an

Employment Verification Request from Maximus. Maximus

responded it had a defense to Beck’s claims under § 1692k(c)

because it made a bona fide error on the identity of the debtor

“Donna M. Beck.” Maximus contended this defense, unique to

Beck’s claims, precluded Beck from being an adequate

5

representative with claims typical of the class. After the District

Court denied Maximus’s motion to dismiss the class allegations,

Maximus filed an answer to the complaint, again contending it

had a defense to Beck’s claims under § 1692k(c).

Maximus designated two corporate witnesses under Fed.

R. Civ. P. 30(b)(6)—the project manager who oversaw student

loan collection, and the collection supervisor in charge of

assuring compliance with the Fair Debt Collection Practices Act.

At depositions prior to class certification, these witnesses

explained the Employment Verification Request was a standard

form letter, drafted by Maximus. It was used to verify whether

a given debtor worked for the employer Maximus had listed in

its records. The witnesses testified Maximus had no specific

procedures governing use of Employment Verification Requests.

They also testified that sending the Employment Verification

Request to Beck’s employer did not violate any established

policy, and that it was not uncommon to send Employment

Verification Requests to the wrong employer.

Following oral arguments, the District Court certified a

class consisting of all individuals in Pennsylvania to whose

employer Maximus had sent an Employment Verification

Request on or after May 20, 2003. The District Court

designated Beck as class representative and the law firms of

Francis & Mailman, P.C., and Donavan and Searles, LLC, as

class co-counsel.

6

In its “findings of facts” supporting class certification

under Fed. R. Civ. P. 23(a),1 the District Court noted neither

numerosity nor commonality was in dispute. Numerosity was

shown by the existence of 776 class members, and commonality

was satisfied because “[t]he principal question is whether

defendant violated the Fair Debt Collection Practices Act by

sending an ‘Employment Verification Request’ or a substantially

same form to the person’s employer(s) on or after the applicable

date.” (App. 4a.) The court concluded typicality was satisfied

because “[t]he claims of plaintiff Donna M. Beck are typical of

the claims of the Class.” (Id.) In a footnote, the court rejected

Maximus’s contention that Beck was atypical because her

claims were subject to a unique defense. The court stated:

[D]efendant says that sending the EVR to

plaintiff’s employer was the result of a bona fide

error and defensible. Plaintiff counters that it is

irrelevant whether the communication was in

error, because the violation—the prohibited

language included in all EVRs—was not an error.

Plaintiff cites deposition testimony of two

representatives of defendant that (1) defendant

drafted the language of the EVR, (2) there was no

1

In deciding whether to certify a class, a court must first

determine whether the proposed class satisfies the four

requirements of Fed. R. Civ. P. 23(a): numerosity, commonality,

typicality, and adequacy.

7

specific procedure for sending EVRs, and (3) it

was not uncommon for EVRs to be sent to

employers for whom debtors did not work. Given

this evidence, the EVR does not appear to have

been sent to Ms. Beck’s employer in error, and

she will not be disqualified from representing the

class on this basis.

(App. 4a n.4 (internal citations to District Court record

omitted).) The court concluded adequacy of representation was

also satisfied, noting Beck “retained qualified counsel, appeared

for deposition, and verified answers to interrogatories.” (App.

5a n.5.) The District Court concluded the class could be

maintained under Rules 23(b)(1), (b)(2), and (b)(3). The court

did not acknowledge Beck had previously withdrawn her request

for certification under Rule 23(b)(2).

Maximus petitioned for an interlocutory appeal under

Fed. R. Civ. P. 23(f), which we granted. Maximus contends if

it prevails on its bona fide error defense, Beck will be precluded

from recovery on the class’s claims. In its view, the District

Court abused its discretion in concluding Beck was a typical and

adequate class representative, and in certifying the class. Beck

responds her interests are aligned with those of the class. That

she was not the “Donna M. Beck” referred to in the Employment

Verification Request, she contends, is a factual variation that

does not create a conflict of interest between her and the class,

and does not render her inadequate or atypical as a class

representative.

8

II.

The District Court had jurisdiction under 28 U.S.C. §

1331. We have jurisdiction under 28 U.S.C. § 1292(e). We

review a district court’s decision to certify a class for abuse of

discretion. In re Prudential Ins. Co. Am. Sales Practice Litig.,

148 F.3d 283, 299 (3d Cir. 1998). A district court abuses its

discretion if its decision “rests upon a clearly erroneous finding

of fact, an errant conclusion of law or an improper application

of law to fact.” Id. (quoting In re Ge. Motors Corp. Pick-Up

Truck Fuel Tank Products Liab. Litig., 55 F.3d 768, 783 (3d Cir.

1995)). A finding of fact is “clearly erroneous when the

reviewing court on the entire evidence is left with the definite

and firm conviction that a mistake has been committed.” United

States v. Igbonwa, 120 F.3d 437, 440 (3d Cir. 1997) (quotations

omitted).

III.

A.

To evaluate typicality, we ask “whether the named

plaintiffs’ claims are typical, in common-sense terms, of the

class, thus suggesting that the incentives of the plaintiffs are

aligned with those of the class.” Baby Neal v. Casey, 43 F.3d

48, 55 (3d Cir. 1994). “‘[F]actual differences will not render a

claim atypical if the claim arises from the same event or practice

or course of conduct that gives rise to the claims of the class

members, and if it is based on the same legal theory.’” Id. at 58

(quoting Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912,

9

923 (3d Cir. 1992)). The adequacy inquiry “serves to uncover

conflicts of interest between named parties and the class they

seek to represent.” Amchem Products, Inc. v. Windsor, 521 U.S.

591, 625 (1997). It “assures that the named plaintiffs’ claims

are not antagonistic to the class and that the attorneys for the

class representatives are experienced and qualified to prosecute

the claims on behalf of the entire class.” Baby Neal, 43 F.3d at

55.

The Supreme Court has noted the typicality and adequacy

inquiries often “tend[] to merge” because both look to potential

conflicts and to “whether the named plaintiff’s claim and the

class claims are so interrelated that the interests of the class

members will be fairly and adequately protected in their

absence.” 2 Amchem, 521 U.S. at 626 n.20 (quoting Gen. Tel.

Co. Sw. v. Falcon, 457 U.S. 147, 157 n.13 (1982)). Because of

the similarity of these two inquiries, certain questions—like

whether a unique defense should defeat class certification—are

relevant under both.

Maximus contends its alleged bona fide error defense

renders Beck neither typical nor adequate as a class

2

Nevertheless, a court should address each Rule 23(a) factor

in a certification decision. Despite areas of overlap, each factor

involves distinct considerations. The adequacy inquiry, for

example, “factors in competency and conflicts of class counsel,”

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 626 n.20

(1997), which the typicality requirement does not.

10

representative. Beck disputes that the alleged defense renders

her atypical, but does not address its effect on her adequacy of

representation. The District Court also addressed the issue

exclusively in terms of typicality. We believe the alleged unique

defense is relevant under both inquiries. Accordingly, we will

address both the typicality and adequacy requirements of Rule

23(a).

Courts of appeals have held that unique defenses bear on

both the typicality and adequacy of a class representative. See,

e.g., Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990)

(“Regardless of whether the issue is framed in terms of the

typicality of the representative’s claims . . . or the adequacy of

its representation . . . there is a danger that absent class members

will suffer if their representative is preoccupied with defenses

unique to it.”); J.H. Cohn & Co. v. Am. Appraisal Assocs., 628

F.2d 994, 999 (7th Cir. 1980) (“[T]he presence of even an

arguable defense peculiar to the named plaintiff or a small

subset of the plaintiff class may destroy the required typicality

of the class as well as bring into question the adequacy of the

named plaintiff’s representative.”). Commentators agree. See

7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,

Federal Practice and Procedure, § 1764 (3d ed. 2005) (noting

securities class actions in which a unique defense defeated

typicality); id. at § 1765 (citing cases in which a unique defense

defeated adequacy of representation); 5 James Wm. Moore et

11

al., Moore’s Federal Practice § 23.24[5] (3d ed. 2006)

(typicality); id. at § 23.25[2][b][iv] (adequacy of representation).

Other courts of appeals emphasize, as do we, the

challenge presented by a defense unique to a class

representative—the representative’s interests might not be

aligned with those of the class, and the representative might

devote time and effort to the defense at the expense of issues

that are common and controlling for the class. See, e.g., Gary

Plastic Packaging, 903 F.2d at 180 (“[T]here is a danger that

absent class members will suffer if their representative is

preoccupied with defenses unique to it.”); see also Hanon v.

Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992); J.H.

Cohn & Co., 628 F.2d at 999. A class representative should

“not be permitted to impose such a disadvantage on the class.”

Koos v. First Nat’l Bank of Peoria, 496 F.2d 1162, 1165 (7th

Cir. 1974).

B.

District courts have discretion under Rule 23 to certify a

class. See Califano v. Yamasaki, 442 U.S. 682, 703 (1979). But

a trial court must clearly articulate its reasons, in part, so we can

adequately review the certification decision on appeal under

Rule 23(f). Under Rule 23(c)(1)(B), the trial court must

“include in class certification orders a clear and complete

summary of those claims, issues, or defenses subject to class

treatment.” Wachtel v. Guardian Life Ins. Co. of America, No.

04-4304, slip op. at 14 (3d Cir. June 30, 2006).

12

A class may be certified only if the court is “satisfied,

after a rigorous analysis, that the prerequisites of Rule 23(a)

have been satisfied.” Falcon, 457 U.S. at 161. In addition,

“parties seeking class certification must show that the action is

maintainable under Rule 23(b)(1), (2), or (3).” In re Warfarin

Sodium Antitrust Litig., 391 F.3d 516, 527 (3d Cir. 2004).

Depending on the circumstances, class certification questions

are sometimes “enmeshed in the factual and legal issues

comprising the plaintiff’s cause of action,” and “courts may

delve beyond the pleadings to determine whether the

requirements for class certification are satisfied.” Newton v.

Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 167

(3d Cir. 2001) (quotations omitted).

Here, we have difficulty discerning the District Court’s

reasons for concluding Beck was a typical and adequate class

representative. We note two problems in particular. First, we

are unclear whether the court concluded the alleged violation

was based on the content of the Employment Verification

Request or on the transmission of the form to third-party

employers. This issue, which the parties contest, is central to a

proper certification analysis in this case. Second, we are unclear

whether the court considered the three requirements of a

successful bona fide error defense in concluding that the

Employment Verification Request had not been sent to Inolex in

error, and that Beck should not be disqualified on these grounds

as a class representative. Because these two issues are closely

related, we address them together.

13

To qualify for the bona fide error defense under the Fair

Debt Collection Practices Act, a defendant’s alleged violation of

the Act must have been “unintentional” and must have “resulted

from a bona fide error notwithstanding the maintenance of

procedures reasonably adapted to avoid such error.” 15 U.S.C.

§ 1692k(c). Accordingly, to avail itself of the defense, Maximus

will have to establish: (1) the alleged violation was

unintentional, (2) the alleged violation resulted from a bona fide

error, and (3) the bona fide error occurred despite procedures

designed to avoid such errors. See Johnson v. Riddle, 443 F.3d

723, 727–28 (10th Cir. 2006); Kort v. Diversified Collections

Servs., Inc., 394 F.3d 530, 537 (7th Cir. 2005).

Beck contends the alleged violation resulted from the

content of the Employment Verification Request. She explains

the “standardized language” of the form gave rise to identical

claims on behalf of each class member, and concludes

“[w]hether the language of the EVR violates the [Act] is the

common overarching issue in this case.” 3 (Appellee’s Br. 11.)

3

At some points in her brief, Beck concedes the importance

of the communication of the Employment Verification Request.

She states, “[t]ypicality was satisfied because all the claims are

based on the sending of the improper EVR form to third-party

employers.” (Appellee’s Br. 12.) And in contending her

interests were aligned with those of the class, she states,

“Maximus sent the EVR to Ms. Beck’s employer just as it sent

the same EVR to Class members’ employers.” (Appellee’s Br.

14

Maximus takes the opposite position—that the transmission and

not the content of the Employer Verification Request gave rise

to the class’s claims. Maximus contends a debt collection

letter’s content alone cannot violate the Fair Debt Collection

Practices Act, and it is only when the content is communicated

to a consumer or a third party that a violation can occur.

The District Court appears to have adopted each party’s

position at different points in its analysis.4 In the text of the

opinion, the court focused on the form’s transmission,

articulating the principal “question[] of law or fact common to

the class” as “whether defendant violated the Fair Debt

Collection Practices Act by sending an ‘Employment

Verification Request’ or a substantially same form to the

person’s employer(s) on or after the applicable date.” (App. 4a.)

15.)

4

The District Court briefly noted the parties’s respective

positions in footnote four, stating:

[D]efendant says that sending the EVR to

plaintiff’s employer was the result of a bona fide

error and defensible. Plaintiff counters that it is

irrelevant whether the communication was in

error, because the violation—the prohibited

language included in all EVRs—was not an error.

(App. 4a n.4 (internal citations to District Court record

omitted).)

15

This is Maximus’s position. But in footnote seven, the court

adopted Beck’s contrary position, focusing on the form’s

content as the basis of the violation. The court stated, “[i]t is

undisputed that the dispositive issue is whether the display of

‘MAXIMUS Collection Center’ at the top and bottom of the

EVR violated the [Act].” (App. 5a n.7.)

The difference between the parties’ positions is central to

determining whether Maximus could possibly establish the three

requirements of a bona fide error defense, and possibly defeat

Beck’s typicality and adequacy as a class representative. The

record demonstrates the drafting of the Employment

Verification Request was neither unintentional nor the result of

a bona fide error under the first two requirements of the defense.

Maximus’s witnesses testified—and Maximus concedes—that

Maximus drafted the form’s language. But the transmission of

the form to Beck’s employer, Inolex, may have been both

unintentional and the result of a good faith, bona fide error on

the identity of the debtor “Donna M. Beck.” Maximus relied on

a credit agency that reported the debtor Beck worked for Inolex.

At issue is whether Maximus was aware this information was

incorrect.5

5

Maximus was arguably alerted to its mistake when Inolex’s

human resources department informed a Maximus representative

that Inolex did not employ the debtor “Donna M. Beck.” But at

oral argument, Maximus explained it is often informed a person

for whom it is looking is not located or employed at a certain

16

If the error resulted from the transmission of the form,

and if Maximus can establish the third requirement of the

defense—adequate procedures to avoid such errors—Maximus

may have a bona fide error defense that might defeat Beck’s

typicality and adequacy. The District Court did not address this

possibility. Rather, it concluded “[b]ased on this evidence, the

EVR does not appear to have been sent to Ms. Beck’s employer

in error.” (App. 4a.) This conclusion does not follow from the

evidence the court cited, which constitutes the entirety of the

court’s analysis.6

The court cited testimony that Maximus had no

procedures in place governing the sending of Employment

Verification Requests. It did not address Maximus’s contention

that Maximus “provided written materials, training, and

seminars to its employees about the pertinent provisions of the

place. Maximus contended if it were to believe every such

statement, it would be entirely unsuccessful in the debt

collection business.

6

The District Court cited testimony that: (1) Maximus drafted

the Employment Verification Request’s language; (2) Maximus

had no specific procedures governing the sending of

Employment Verification Requests; and (3) it was not

uncommon for Maximus to send Employment Verification

Requests to employers for whom the debtor in question did not

work.

17

[Fair Debt Collection Practices Act],” (Reply Br. 3), nor did it

acknowledge a Maximus employee’s testimony that through

“[s]eminars, lectures and materials and testing,” (App. 262a),

Maximus provided “continuous training.” (App. 264a.)

At oral argument on appeal, Maximus conceded it had no

procedures in place “reasonably adapted to avoid” the specific

error that occurred here—a confusion between two individuals

with the same name. But it contends the “‘reasonable

procedures’ must be directed at addressing the enumerated [Fair

Debt Collection Practices Act] violation (here, improper

communication with a third party), not the exact act (here,

sending a unique type of EVR form).” (Reply Br. 2.) Maximus

cites Kort v. Diversified Collections Services, Inc. for the

proposition that the bona fide error defense “does not require

debt collectors to take every conceivable precaution to avoid

errors,” but rather “requires reasonable precaution.” 394 F.3d

at 539; see also Hyman v. Tate, 362 F.3d 965, 968 (7th Cir.

2004) (explaining a debt collector could have done more to

prevent the specific error, but Ҥ 1692k(c) only requires

collectors to adopt reasonable procedures” to avoid errors under

the Fair Debt Collection Practice Act). The District Court did

not consider whether Maximus’s training materials were

reasonably designed to avoid violations of the Fair Debt

Collection Practices Act, sufficient to establish a bona fide error

defense.

We are unable to conclude whether the District Court

exercised its sound discretion in certifying the class with Beck

18

as the class representative. The court should have (1)

distinguished between a violation based on the content of the

Employment Verification Request and a violation based on its

transmission, and (2) addressed the three requirements of the

bona fide error defense. We will vacate the certification order

and remand for further consideration by the District Court,

consistent with this opinion.

C.

Maximus contends the District Court erred by applying

the wrong standard in determining whether its alleged bona fide

error defense defeated class certification. It contends the court

required it to prove the defense in order to disqualify Beck as

the class representative. We are unclear what standard the

District Court applied in concluding the defense did not render

Beck atypical or inadequate.

To defeat class certification, a defendant must show some

degree of likelihood a unique defense will play a significant role

at trial. If a court determines an asserted unique defense has no

merit, the defense will not preclude class certification. See, e.g.,

Hardy v. City Optical Inc., 39 F.3d 765, 770 (7th Cir. 1994).

In Zenith Laboratories, Inc. v. Carter-Wallace, Inc., 530

F.2d 508 (3d Cir. 1976), we addressed what a defendant must

demonstrate to defeat class certification through a defense

unique to the class representative. Bulk purchasers of a patented

drug brought an action to recover royalties after discovering the

patent had been obtained fraudulently. 530 F.2d at 510. In

19

affirming the district court’s holding that a unique defense

defeated the adequacy of the putative class representative

(Zenith), we explained,

If Zenith were allowed to represent the alleged

class, Carter could assert defenses against it

which would not be applicable to the class as a

whole, such as res judicata based on the

disposition of Zenith’s counterclaims in the

earlier suit. Since these unique defenses could

conceivably become the focus of the entire

litigation and divert much of Zenith’s attention

from the suit as a whole, the remaining members

of the class could be severely disadvantaged by

Zenith’s representation.

Id. at 512 (citing Koos, 496 F.2d at 1164–65).

Several of our sister courts of appeals have addressed this

issue and articulated standards under which certification is

improper if the defense might become a “focus” or a “major

focus” of the litigation. See, e.g., Hanon, 976 F.2d at 509 (“[I]t

is predictable that a major focus of the litigation will be on a

defense unique to [the class representative]. Thus, [the class

representative] fails to satisfy the typicality requirement of Rule

23(a).”); Gary Plastic Packaging, 903 F.2d at 180 (“[C]lass

certification is inappropriate where a putative class

representative is subject to unique defenses which threaten to

become the focus of the litigation.”); Koos, 496 F.2d at 1164

20

(7th Cir. 1974) (“Where it is predictable that a major focus of

the litigation will be on an arguable defense unique to the named

plaintiff or a small subclass, then the named plaintiff is not a

proper class representative.”).

We note that these cases set forth standards, while Zenith

appears to describe the defense at issue. Nonetheless, to the

extent Zenith does prescribe a standard, we believe it is

substantially similar to the standards set forth by our sister

courts of appeals. Though phrased slightly differently, they all

ask whether it is predictable that the unique defense will play a

major role in the litigation. Where a defense “could conceivably

become the focus of the entire litigation,” Zenith, 530 F.2d at

512, it also “threaten[s] to become the focus of the litigation.”

Gary Plastic Packaging, 903 F.2d at 180. It is also

“predictable” that the defense will be “a major focus of the

litigation,” Hanon, 976 F.2d at 509; Koos, 496 F.2d at 1164.

We note that Zenith cites Koos, which articulates the standard as

disqualifying a named plaintiff “[w]here it is predictable that a

major focus of the litigation will be on an arguable defense

unique to the named plaintiff.” Koos, 496 F.2d at 1164. Despite

some variations in language, we believe all of these cases set

forth standards that are, in substance, the same.

In articulating a single standard, we align ourselves with

our sister courts of appeals. A proposed class representative is

neither typical nor adequate if the representative is subject to a

unique defense that is likely to become a major focus of the

litigation. We believe this standard strikes the proper balance

21

between protecting class members from a representative who is

not focused on common concerns of the class, and protecting a

class representative from a defendant seeking to disqualify the

representative based on a speculative defense.

D.

In addition to satisfying the requirements of Rule 23(a),

parties seeking class certification must establish the class is

maintainable under one of the categories of Rule 23(b). In re

Warfarin Sodium Antitrust Litig., 391 F.3d at 527. Each

category of Rule 23(b) has different purposes and different

requirements.

Rule 23(b)(1) authorizes the use of class actions when

necessary to prevent potentially adverse effects of separate

actions. Subsection (b)(1)(A) addresses possible prejudice to

the party opposing the class and is intended to eliminate the

possibility of separate actions imposing inconsistent courses of

conduct on the defendant. Subsection 23(b)(1)(B) addresses

possible prejudice to members of the proposed class, and applies

if individual actions “would have the practical if not technical

effect of concluding the interests of the other members as well,

or of impairing the ability of the others to protect their own

interests.” 7AA Wright et al., supra, § 1774 (citation omitted).

Rule 23(b)(2) authorizes class certification when “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

22

respect to the class as a whole.” Fed. R. Civ. P. 23(b)(2). This

rule applies when the putative class seeks injunctive or

declaratory relief, and “does not extend to cases in which the

appropriate final relief relates exclusively or predominantly to

money damages.” Fed. R. Civ. P. 23(b)(2) advisory committee’s

note.

Rule 23(b)(3) authorizes class certification when

“questions of law or fact common to the members of the class

predominate over any questions affecting only individual

members” and a class action would be “superior to other

available methods for the fair and efficient adjudication of the

controversy.” Fed. R. Civ. P. 23(b)(3). Class actions certified

under Rule 23(b)(3) are subject to specific notice and opt-out

requirements. See Fed. R. Civ. P. 23(c)(2)(B).7

Here, the District Court certified the class under Rules

23(b)(1), 23(b)(2), and 23(b)(3). But it did not provide its

7

Fed. R. Civ. P. 23(c)(2)(B) provides, in part:

For any class certified under Rule 23(b)(3), the

court must direct to class members the best notice

practicable under the circumstances, including

individual notice to all members who can be

identified through reasonable effort. The notice

must concisely and clearly state . . . that the court

will exclude from the class any member who

requests exclusion, stating when and how

members may elect to be excluded.

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reasons for doing so. It did not distinguish between the two

subsections of Rule 23(b)(1), nor did it acknowledge that Beck

withdrew her request for Rule 23(b)(2) certification in light of

our decision in Weiss v. Regal Collections, 385 F.3d 337,

341–42 (3d Cir. 2004), holding declaratory and injunctive

unavailable under the Fair Debt Collection Practices Act.

We cannot discern why the District Court certified the

class under all categories of Rule 23(b). We note the conflict

between certification under Rules 23(b)(1) and (b)(2)—which

is binding on all class members—and under Rule

23(b)(3)—which allows class members to opt-out. On remand,

the District Court should further reconsider the class

certification issues and set forth its reasoning.

IV.

For the reasons set forth, we will vacate the order

certifying the class and remand to the District Court for further

proceedings consistent with this opinion.

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