                               In the
 United States Court of Appeals
                For the Seventh Circuit
                           ____________

No. 04-8022
IN RE:   ALLSTATE INSURANCE COMPANY;
         AGENT TRANSITION SEVERANCE PLAN,
                                                             Petitioners.
                           ____________
           Petition to Appeal from an Order Granting Class
            Certification by the United States District Court
         for the Northern District of Illinois, Eastern Division.
                No. 01 C 1541—James B. Moran, Judge.
                           ____________
    SUBMITTED JANUARY 30, 2005—DECIDED MARCH 8, 2005
                           ____________



  Before POSNER, RIPPLE, and SYKES, Circuit Judges.
  POSNER, Circuit Judge. Allstate petitions us under
Fed. R. Civ. P. 23(f) for leave to appeal the district court’s
decision to certify under Rule 23(b)(2) a class of plaintiffs
who allege that Allstate constructively discharged them in
order to deprive them of benefits to which ERISA entitled
them. We grant the petition (and proceed to decide the
merits) because it presents a novel and important issue:
whether certification under Rule 23(b)(2) is proper when,
though injunctive or declaratory relief is sought rather than
damages, individual hearings may be necessary to deter-
mine causation and hence liability.
2                                                   No. 04-8022

  The plaintiffs’ complaint, which the district court held
states a claim, alleges the following facts: In 1998 Allstate
decided to replace its employee insurance agents with inde-
pendent contractors, and before announcing a severance
package for employees who would lose their jobs harassed
them, in violation of ERISA § 510, 29 U.S.C. § 1140, so that
they would quit before they could take advantage of the
severance benefits. It harassed them by extending office
hours, imposing burdensome reporting requirements, reduc-
ing or eliminating reimbursement for office expenses, and
setting unrealistic sales quotas. As a result of the campaign
of harassment, between December 1998 and May 1999 176
agents quit outright and 1,106 others quit as employees but
became independent contractors. The class seeks a judgment
declaring that the members are entitled to the benefits they
would have received under Allstate’s ERISA plan had they
been fired rather than quitting. Armed with the declaration,
they will then ask the court to award them those benefits.
   A Rule 23(b)(2) class action does not require giving class
members notice of the suit and a chance to opt out of it and
bring their own, individual suits; a Rule 23(b)(3) class action
does. The thinking behind this distinction is that declaratory
or injunctive relief will usually have the same effect on all
the members of the class as individual suits would. Lemon
v. International Union of Operating Engineers, Local No. 139,
216 F.3d 577, 580 (7th Cir. 2000); Jefferson v. Ingersoll Interna-
tional, Inc., 195 F.3d 894, 897 (7th Cir. 1999); Holmes v.
Continental Can Co., 706 F.2d 1144, 1157 (11th Cir. 1983). For
example, were Allstate enjoined from issuing a particular
type of insurance policy, there wouldn’t be any purpose in
allowing individual members of the class to opt out and
seek their own injunction. They would all sink or swim
together. Indeed, as Judge Friendly explained in Galvan v.
Levine, 490 F.2d 1255, 1261 (2d Cir. 1973), “insofar as the
No. 04-8022                                                       3

relief sought [in a class action] is prohibitory, an action
seeking declaratory or injunctive relief . . . is the archetype
of one where class action designation is largely a formality,
at least for the plaintiffs.” In contrast, when damages are
sought, it is quite likely that some individual class members
will want to sue on their own (provided that the potential
damages per class member are substantial) rather than
participate in a class-wide award, because they may have
greater than average damages.
  But this is in general rather than in every case. When the
main relief sought is injunctive or declaratory, and the dam-
ages are only “incidental,” the suit can be maintained under
Rule 23(b)(2). Jefferson v. Ingersoll International Inc., supra, 195
F.3d at 898; Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415
(5th Cir. 1998); Probe v. State Teachers’ Retirement System, 780
F.2d 776, 780 (9th Cir. 1986); see Berger v. Xerox Corp.
Retirement Income Guarantee Plan, 338 F.3d 755, 763-64 (7th
Cir. 2003); Murray v. Auslander, 244 F.3d 807, 812 (11th Cir.
2001). The operational meaning of “incidental” damages in
this setting is that the computation of damages is mechani-
cal, “without the need for individual calculation,” Manual
for Complex Litigation (Fourth) § 21.221 (2004), so that a
separate damages suit by individual class members would
be a waste of resources. See Allison v. Citgo Petroleum Corp.,
supra, 151 F.3d at 415. The present case is one of incidental
damages because if the plaintiffs get the declaration they are
seeking, the benefits to which the ERISA plan entitles them
will simply be read off from the plan. Compare Robinson v.
Metro-North Commuter R.R. Co., 267 F.3d 147, 163-64 (2d Cir.
2001).
  When limited to incidental damages as the cases define
the term, the award of damages by a judge does not run
afoul of the Seventh Amendment’s right to a jury trial in
federal civil cases. For when calculation of damages is
4                                                 No. 04-8022

mechanical, there is no right to a jury trial because summary
judgment would be granted. When, moreover, the basic
relief sought in a case is equitable, the judge can award
damages in the exercise of his equity powers, and thus
without calling in a jury, under the “clean up” doctrine of
equity. For the application of this principle to ERISA, see
May Dept. Stores Co. v. Federal Ins. Co., 305 F.3d 597, 603 (7th
Cir. 2002). The present suit is an ERISA suit.
  But just as the presence of a damages claim does not
always require insisting that the case proceed under Rule
23(b)(3), so the fact that declaratory or injunctive relief is
sought (and no, or only incidental, damages) should not
automatically entitle the class to proceed under Rule 23(b)(2).
There can be critical differences among class members that
are independent of differences in the amount of damages. In
this case, the critical difference concerns the circumstances
that induced the members of the class to quit their employ-
ment with Allstate. One of the named plaintiffs alleges that
he was constructively discharged because he was unable to
comply with the new office-hour requirements, another
because he was harassed by his manager’s enforcement of
Allstate’s new policies, and another because he was forced
to attend too many unnecessary meetings. This variance in
circumstances doubtless pervades the entire class. Given the
size of the class, more than a thousand individual hearings
will be necessary in order to determine which members
were really forced to quit and which quit voluntarily; only
the former are entitled to relief.
  This is not to say that the case is unsuitable for class
treatment. It may well be highly suitable. A single hearing
may be all that’s necessary to determine whether Allstate
had a policy of forcing its employee agents to quit. This
issue could be decided first and then individual hearings
conducted to determine which of the members of the class
No. 04-8022                                                    5

were actually affected by the policy rather than having de-
cided to quit for their own reasons. Fed. R. Civ. P. 23(c)(4)(A).
That would be a more efficient procedure than litigating the
class-wide issue of Allstate’s policy anew in more than a
thousand separate lawsuits. We explained this kind of
hybrid procedure in Carnegie v. Household International, Inc.,
376 F.3d 656, 661 (7th Cir. 2004), and need not repeat the
explanation here. But when, though the suit is for declara-
tory relief, the effect of the declaration on individual class
members will vary with their particular circumstances, they
should be given notice of the class action so that they can
decide whether they would be better off proceeding individ-
ually. In re Monumental Life Ins. Co., 365 F.3d 408, 417 (5th
Cir. 2004).
  Several cases suggest that it might not be necessary to
convert such a proceeding to Rule 23(b)(3) because adequate
notice and an opportunity to opt out could be provided
within the context of a Rule 23(b)(2) proceeding. See, be-
sides Monumental, Jefferson v. Ingersoll International Inc.,
supra, 195 F.3d at 898 (“instead of divided certification—
perhaps equivalent to it—the judge could treat a Rule
23(b)(2) class as if it were under Rule 23(b)(3), giving notice
and an opportunity to opt out on the authority of Rule
23(d)(2)” (emphasis in original)), and Lemon v. International
Union of Operating Engineers, Local No. 139, supra, 216 F.3d at
582 (“the third option discussed in Jefferson is that the
district court might certify the class under Rule 23(b)(2) for
both monetary and equitable remedies but exercise its plenary
authority under Rules 23(d)(2) and 23(d)(5) to provide all
class members with personal notice and opportunity to opt
out, as though the class was certified under Rule 23(b)(3)”).
The statement in Lemon is dictum, however, and Jefferson
carefully left open the question whether the procedure we
quoted from that opinion is ever proper. See 195 F.3d at 899.
6                                               No. 04-8022

As the quotation from Lemon makes clear, such an effort to
restructure Rule 23(b)(2) would be complicated and
confusing—unnecessarily so, given the ready availability of
the 23(b)(3) procedure.
  We conclude that this class action should have been
certified, if at all, under Rule 23(b)(3) rather than under
(b)(2). The certification is therefore VACATED.

A true Copy:
       Teste:

                         _____________________________
                          Clerk of the United States Court of
                            Appeals for the Seventh Circuit




                   USCA-02-C-0072—3-8-05
