Russell v. Educ. Comm'n for Foreign Med. Graduates

RESTREPO, CIRCUIT JUDGE

Argued February 11, 2021

On Appeal from the United States District Court for the Eastern District of Pennsylvania (District Court No. 2:18-cv-05629) District Judge: Honorable Joshua D. Wolson

William R. Peterson [ARGUED] Morgan, Lewis &Bockius Matthew D. Klayman Brian W. Shaffer Morgan Lewis &Bockius Counsel for Appellant

Nicholas M. Centrella Robin S. Weiss Conrad O'Brien Brent P. Ceryes Schochor Federico &Staton Brenda Harkavy Patrick A. Thronson [ARGUED] Janet Janet &Suggs Scott L. Nelson Public Citizen Litigation Group Paul M. Vettori Law Offices of Peter G. Angelos Cory L. Zajdel Z Law Counsel for Appellee

Diana Huang American Medical Association Leonard A. Nelson American Medical Association Counsel for Amicus American Medical Association, Association of American Medical Colleges, and Pennsylvania Medical Society in support of Appellant

Gilbert Dickey McGuireWoods Matthew A. Fitzgerald McGuireWoods Counsel for Amicus Chamber of Commerce in support of Appellant

Before: RESTREPO, BIBAS, and PORTER, Circuit Judges

OPINION

RESTREPO, CIRCUIT JUDGE

This case presents the question whether the District Court abused its discretion when it certified an "issue class" pursuant to Rule 23(c)(4) of the Federal Rules of Civil Procedure. We hold that it did. According to Rule 23(c)(4), "[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues." For "an action" to be "brought or maintained as a class action," the party seeking class status must satisfy Rule 23 and all its requirements. Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). Further, in Gates v. Rohm &Haas Co., 655 F.3d 255 (3d Cir. 2011), we enumerated a "non-exclusive list of factors" relevant to assessing whether the certification of an issue class under Rule 23(c)(4) is "appropriate." Id. at 272 (quoting Chiang v. Vene-man, 385 F.3d 256, 267 (3d Cir. 2004)). So when a party seeks to certify "particular issues" for class treatment, the district court must ask three questions. First, does the proposed issue class satisfy Rule 23(a)'s requirements? Second, does the proposed issue class fit within one of Rule 23(b)'s categories? Third, if it does, is it "appropriate" to certify this as an issue class? Fed.R.Civ.P. 23(c)(4). Here, lacking clear guidance, the District Court failed to determine whether the issues identified for class treatment fit within one of Rule 23(b)'s categories and then failed to explicitly consider a few of the Gates factors. Accordingly, for the reasons that follow, we will vacate the District Court's issue-class certification and remand for further proceedings.

I. Factual Background

A. The Educational Commission for Foreign Medical Graduates

Graduates of foreign medical schools who wish to be accepted to a United States medical-residency program must have graduated from a recognized foreign institution, demonstrated English-language proficiency, and passed the first two steps of the United States Medical Licensing Examination. Defendant-Appellant Educational Commission for Foreign Medical Graduates ("the Commission") is a Philadelphiabased nonprofit that certifies that such graduates have satisfied those requirements. The Commission carries out this function in two ways. First, it administers the English-language and medical examinations the foreign medical school graduates must pass. Second, the Commission verifies, using primary sources, that the applicant received a medical degree from a qualifying institution.

As the central certification agency for graduates of foreign medical schools, the Commission also investigates what it calls "irregular behavior." According to internal policies, the Commission may investigate "all actions or attempted actions on the part of applicants . . . that would or could subvert the examination, certification or other processes, programs, or services of [the Commission]." J.A. 254. The Commission's investigation of such behavior proceeds as follows. When the Commission receives an allegation that an applicant committed irregular behavior, it reviews the allegation and determines whether sufficient evidence supports the charge. If sufficient evidence supports the charge, the Commission notifies the applicant of the allegation and invites him to submit a written explanation or present any other relevant information. The applicant may also request a hearing and hire legal counsel. After the applicant is heard, the Commission then determines whether, by a preponderance of the evidence, the applicant engaged in the irregular behavior that was charged. The Commission may take various disciplinary actions, up to and including permanent revocation of a certification. The charged individual has a right of appeal, but petitions to reconsider decisions are granted "only in extraordinary cases." Id. And whatever the case, if the Commission "determines that an individual engaged in irregular behavior, a permanent annotation to that effect will be included in the individual's [Commission] record." Id.

B. A Foreign Doctor Named Charles Igberase

In early 1992, a man named Oluwafemi Charles Ig-berase applied to the Commission for certification. He eventually passed the medical-licensing and English-language examinations and was issued the Commission's certification. But no residency program accepted him. So, in March 1994, Igberase submitted a second application for certification to the Commission. In that application, however, Igberase rearranged his name ("Igberase Oluwafemi Charles" instead of "Oluwafemi Charles Igberase"); used a different date of birth (April 17, 1961 instead of April 17, 1962); and responded "No" to the question of whether he had ever previously submitted an application to the Commission. Igberase passed each required examination and was certified by the Commission for a second time. But in June 1995, the Commission learned that Igberase had obtained two of its certifications under different names and dates of birth, and had lied on his second application about not seeking certification previously. So it invalidated Igberase's second certification and revoked the first, and informed the United States Medical Licensing Examination Committee of his deception. J.A. 237.

In 1996, Igberase applied to the Commission for certification for yet a third time. In this application, Igberase ditched his first two names and 1996) ("Even if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)[] and proceed with class treatment of these particular issues.").

The Fifth Circuit, however, in a footnote adopted what is known as "the narrow view," which prohibits issue-class certification if Rule 23(b)(3) predominance has not been satisfied for the cause of action as a whole. Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996) ("A district court cannot manufacture predominance through the nimble use of subdivision (c)(4). The proper interpretation of the interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that allows courts to sever the common issues for a class trial."). But Castano's approach has not been adopted by any other circuit, and subsequent caselaw from the Fifth Circuit suggests that any potency the narrow view once held has dwindled. See Steering Comm. v. Exxon Mobil Corp., 461 F.3d 598, 603 (5th Cir. 2006) (noting that bifurcation might serve "as a remedy for the obstacles preventing a finding of predominance" but that the plaintiffs had not made such a proposal to the district court).

The Commission's attempts to avoid the majority view by arguing not so much that full-class Rule 23(b)(3) certification must precede Rule 23(c)(4) certification, but that the District Court here failed to consider Rule 23(b)(3) at all. But "certifying a Rule 23(c)(4) class is analytically independent from the predominance inquiry under Rule 23(b)(3)," though predominance concerns may be relevant to both. See Gonzalez v. Corning, 885 F.3d 186, 202 (3d Cir. 2018) ("While Plaintiffs are correct to point out that the appropriateness of certifying a Rule 23(c)(4) class is analytically independent from the predominance inquiry under Rule 23(b)(3), a case may present concerns relevant to both.").

Amicus Chamber of Commerce offers yet another reason to reverse the District Court: that the District Court's Rule 23(c)(4) ruling, if adopted, "will permit a flood of abusive class actions, with troubling and far-reaching consequences for businesses, shareholders, employees, customers, and the judicial system." Brief for U.S. Chamber of Commerce as Amici Curiae Supporting Appellant 16-18. The Chamber's concerns seem overblown. Even capacious rules for issue-class certification (which we do not purport to advance in this holding) likely will not encourage "a flood of abusive class actions" because few lawyers will have an incentive to file them. Any lucrative potential payday for class action lawyers arises from securing a damages award, not from obtaining an order on a particular issue. That order, which can be thought of as a type of declaratory judgment, may eventually transform into a judgment awarding damages, but even then it is not clear that the future individualized proceedings would be controlled by the lawyers that won the issue-class order. In any case, even if a lawyer could obtain a quasi-declaratory ruling on a subset of common issues, the transformation of the case from a proposed class action to a set of individualized proceedings would spoil any settlement leverage that the lawyer had. Of course, the lawyer representing the class would prefer a favorable issue-class order to no order at all, but the defendant, once facing just individualized proceedings, could return to the very tactics that may have given it an advantage in the first place. From the defense perspective, such tactics could have the added benefit of deterring other class-action lawyers from attempting similar bifurcated class actions in the future.

Because the District Court failed to determine whether the proposed issues satisfied a subsection of Rule 23(b), and because it failed to rigorously analyze several Gates factors, we will vacate the District Court's issue-class certification and remand for further proceedings consistent with this opinion.

IV. Conclusion

For these reasons, we vacate the District Court's Order certifying for aggregate treatment the duty and breach elements of Plaintiffs' negligent infliction of emotional distress claim, and remand for further proceedings consistent with this opinion.