Piazza v. Ebsco Industries Inc.

Decision Date30 November 2001
Docket NumberNo. 99-14220,99-14220
Citation273 F.3d 1341
Parties(11th Cir. 2001) CHARLES J. PIAZZA, JR., an individual and as a representative for a class of persons similarly situated, Plaintiff-Appellee , v. EBSCO INDUSTRIES, INC., COOPERS & LYBRAND, LLP, et al. , Defendants-Appellants
CourtU.S. Court of Appeals — Eleventh Circuit

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeals from the United States District Court for the Northern District of Alabama

Before CARNES , MARCUS and FARRIS*, Circuit Judges.

MARCUS, Circuit Judge:

This is an interlocutory appeal from a grant of class certification. Charles Piazza ("Piazza"), a former employee of EBSCO Industries, Inc. ("EBSCO"), and a former participant in the EBSCO Savings and Profit Sharing Trust Plan (the "Plan"), brought this action against EBSCO, certain EBSCO directors, certain trustees and fiduciaries of the Plan (together, the "EBSCO Defendants") and Pricewaterhouse Coopers, LLP ("PwC"),1 alleging violations of Alabama law and the Employee Retirement Income Security Act, 29 U.S.C. § 1001-1461 ("ERISA"). The district court granted Piazza's motion for class certification, and, pursuant to Fed. R. Civ. P. 23(b)(3), certified against all defendants a class of all persons who are or have been Plan participants or beneficiaries from 1983 through the present. PwC and the EBSCO Defendants argue on appeal that the district court abused its discretion by certifying a class against them. We reverse certification of a class against PwC, vacate certification of the class against the EBSCO Defendants, and remand to the district court with instructions.

I.

The facts surrounding this appeal are straightforward. The Plan is funded by employee contributions and fifteen percent of EBSCO's annual profits. Among other assets, the Plan also held EBSCO stock, which comprised 30% of the corpus by 1993. In 1994, the Plan sold the EBSCO stock back to EBSCO, based on a valuation by PwC. AmSouth Bank, the Plan trustee, hired PwC for this purpose. PwC delivered its report on January 31, 1994, and valued the stock at approximately $17 million. The sale was completed between March and June 1994.

Piazza was an EBSCO employee and Plan participant from 1988 until 1995. He retired in 1995 and withdrew his funds from the Plan in 1996. Piazza first learned of the 1994 stock sale from another EBSCO employee in November 1995. He also learned that some impropriety may have occurred in the valuation of EBSCO stock for the sale. Upon investigation, Piazza discovered that the EBSCO Defendants secretly operated competing companies.

Piazza filed suit on July 18, 1997, alleging that the EBSCO Defendants had undervalued the stock for the 1994 sale and pressured the trustee to undervalue the stock in prior years. From the outset, Piazza sought to certify a class and proceed with a class action suit. Piazza initially named only the EBSCO Defendants and PwC as defendants. He did not seek to join AmSouth until August 1998, near the close of discovery. The district court granted joinder in February 1999 and extended the discovery period.

Piazza moved for class certification pursuant to Fed. R. Civ. P. 23(b)(1), (2), and (3). Defendants vigorously opposed. On July 7, 1999, the district court held a class certification hearing. At the hearing, Piazza abandoned his earlier claim that the class should begin in 1959, the year the Plan was established, in favor of 1983, when the EBSCO Defendants began operating competing companies. On August 13, 1999, the district court issued an order certifying against all defendants a Rule 23(b)(3) class of all persons who were Plan participants or beneficiaries from 1983 through the pendency of the action.2

We granted the defendants' interlocutory motions to appeal class certification by order of October 27, 1999. See Fed. R. Civ. P. 23(f).

On February 8, 2000, the district court granted AmSouth's motion for summary judgment, holding that Piazza's claims against it were barred by the statute of limitations. The district court certified this order as a final judgment, and Piazza did not appeal in the time allotted. On April 3, 2000, we dismissed AmSouth's appeal of the class certification as moot.

II.

We review orders granting class certification for abuse of discretion. See Andrews v. American Tel. & Tel. Co., 95 F.3d 1014, 1022 (11th Cir. 1996). Whether the named plaintiffs have standing to assert their claims is a legal issue subject to de novo review. See Wooden v. Board of Regents of Univ. Sys. of Georgia., 247 F.3d 1262, 1271 n.9 (11th Cir. 2001).

Rule 23(a) sets out four requirements which must be satisfied before a class can be certified. The Rule states:

(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members 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.

Id. These four requirements commonly are referred to as "the prerequisites of numerosity, commonality, typicality, and adequacy of representation," and they are designed to limit class claims to those "fairly encompassed" by the named plaintiffs' individual claims. General Tel. Co. of S.W. v. Falcon, 457 U.S. 147, 156, 102 S. Ct. 2364, 2370, 72 L. Ed. 2d 740 (1982) (quoting General Tel. Co. of N.W. v. E.E.O.C., 446 U.S. 318, 330, 100 S. CT.. 1698, 1706, 64 L. Ed. 2d 319 (1980)). Typicality, along with the related requirement of commonality, focuses on whether a sufficient nexus exists between the legal claims of the named class representatives and those of individual class members to warrant class certification. See Washington v. Brown & Williamson Tobacco Corp., 959 F.2d 1566, 1569 n. 8 (11th Cir.1992); see also 7A C. Wright & A. Miller, Federal Practice and Procedure § 1764 (1986). Traditionally, commonality refers to the group characteristics of the class as a whole, while typicality refers to theindividual characteristics of the named plaintiff in relation to the class. See Prado-Steiman v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000). Typicality also encompasses the question of the named plaintiff's standing, for "[w]ithout individual standing to raise a legal claim, a named representative does not have the requisite typicality to raise the same claim on behalf of a class." Id. "Adequacy of representation" means that the class representative has common interests with unnamed class members and will vigorously prosecute the interests of the class through qualified counsel. Andrews, 95 F.3d at 1023. These four requirements "serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and 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." Prado-Steiman v. Bush, 221 F.3d at 1279 (11th Cir. 2000) (quoting Falcon, 457 U.S. at 157, n.13, 102 S. Ct. at 2370).

In addition to the requirements of Rule 23(a), before a class can be certified, at least one of the alternative requirements of Rule 23(b) must be satisfied. Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1005 (11th Cir.1997). The alternative requirements provided by Rule 23(b) are as follows:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or

(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(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) 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. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.

Fed. R. Civ. P. 23(b)(1)-(3). These alternative requirements "describe[] the additional elements which in varying situations justify the use of a class action." Fed. R. Civ. P. 23 advisory committee's note (1966 amend.).

A. PwC

PwC argues that the Rule 23(a) prerequisites were not met here because (1) commonality was defeated by the fact that plan participants live in thirty-seven states and therefore the laws of thirty-seven different states would have to be applied; (2) there is no typicality because Piazza cannot establish the reliance element necessary to prove each individual class member's claim; and (3) Piazza cannot serve as a class representative since he does not have standing because his claim is barred by the statute of limitations.

Because the question is dispositive in this case, we begin our analysis with Piazza's standing to...

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