     Case: 12-30084   Document: 00512034018    Page: 1   Date Filed: 10/26/2012




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                     FILED
                                                                October 26, 2012

                                  No. 12-30084                   Lyle W. Cayce
                                                                      Clerk

LOUIS ACKAL, Sheriff and Ex Officio Tax Collector of Iberia Parish; TOWN
OF DELCAMBRE,

                                            Plaintiffs - Appellees
v.

CENTENNIAL BEAUREGARD CELLULAR L.L.C., doing business as
Centennial Wireless, formerly known as Iberia Cellular Telephone Company
L.L.C.; CENTENNIAL MOREHOUSE CELLULAR L.L.C.; CENTENNIAL
HAMMOND CELLULAR L.L.C.; CENTENNIAL COMMUNICATIONS
CORPORATION,

                                            Defendants - Appellants



                  Appeal from the United States District Court
                     for the Western District of Louisiana


Before KING, SMITH, and BARKSDALE, Circuit Judges.
KING, Circuit Judge:
        Before the court is an interlocutory appeal from an order granting
Plaintiffs’ motion for class certification pursuant to Rules 23(a) and 23(b)(3) of
the Federal Rules of Civil Procedure. The certified class putatively consists of
various governmental entities within the State of Louisiana whose
representatives entered into contracts with Defendants for cellular telephone
service.    In the underlying suit, Plaintiffs, who are or were customers of
Defendants, allege that Defendants engaged in deceptive billing practices that
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                                       No. 12-30084

constituted a breach of contract and violated the Louisiana Unfair Trade
Practices and Consumer Protection Law. In appealing the district court’s class
certification order, Defendants argue, inter alia, that the district court abused
its discretion when it certified Plaintiffs’ class because, in so doing, it effectively
certified an “opt in” class, which is impermissible under Rule 23. We agree.
Accordingly, we REVERSE and VACATE the district court’s class certification
order, and REMAND for further proceedings consistent with this opinion.
              I. FACTUAL AND PROCEDURAL BACKGROUND
      On September 11, 2001, a group of cellular telephone customers filed suit
in Louisiana state court against its members’ respective service providers,
including Defendants–Appellants Centennial Beauregard Cellular L.L.C. and
its related entities (“Centennial”). The suit—which alleges causes of action for
breach of contract and violation of the Louisiana Unfair Trade Practices and
Consumer Protection Law, La. Rev. Stat. Ann. § 51:1401 et seq.—is predicated
on claims that Defendants engaged in improper and deceptive billing practices,
the most notable of which is Defendants’ alleged practice of overcharging
customers by “rounding up” partial minute telephone calls to the next full
minute.
      The case was removed to federal court on the basis of diversity jurisdiction
on October 17, 2001, and, thereafter, the parties engaged in extensive motion
practice. As relevant here, this eventually led to the dismissal from the suit of
several defendants, the limitation of the claims to Louisiana only, and the
joinder, as plaintiffs, of the Iberia Parish Sheriff (“Iberia”), the Town of
Delcambre (“Delcambre”), and the City of Jeanerette (“Jeanerette”).1
Additionally, in light of the settlement in Louisiana state court of a class action
addressing claims similar to those raised in this suit, on May 19, 2009, the


      1
          The district court subsequently stayed Jeanerette’s claims pending arbitration.

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district court dismissed all claims against certain of the Centennial defendants,
except those raised by any state, federal, foreign, or local government. See
Abrusley v. Centennial Lafayette Cellular Corp., No. C-99-380 (La. Dist. Ct. May
6, 2008).2
       On August 6, 2010, Plaintiffs moved for class certification of various
Centennial customers, defining the proposed class as follows:
              All governmental entities who entered into contracts for
              a specific amount of airtime for a certain amount of
              money per minute for cellular service or wireless
              telephone service as provided by Centennial
              Communications Corp. and all of its related entities, in
              the State of Louisiana from 1991 to 2001; and
              All natural persons, businesses and/or related entities
              who entered into contracts for a specific amount of
              airtime for a certain amount of money per minute for
              cellular service or wireless telephone service as
              provided by Centennial Communications Corp. and all
              of its related entities, in the United States’ territories of
              Puerto Rico and the US Virgin Islands and Jamaica
              from 1991 to present; and
              All natural persons, businesses and/or related entities
              who entered into contracts for a specific amount of
              airtime for a certain amount of money per minute for
              cellular service or wireless telephone service as
              provided by Centennial Communications Corp. and all
              of its related entities, in the United States, its
              territories of Puerto Rico and the US Virgin Islands and
              Jamaica from 1991 to present.
Ultimately, the district court denied the motion as to the individual and
corporate customers, finding that those customers did not satisfy the
requirements for class certification under Rules 23(a) or 23(b)(3). However, the


       2
         These governmental entities had been expressly excluded from the class definition in
Abrusley. As for the non-governmental entities, the class included only “present and former”
customers—through October 19, 2007, the date the class was certified—of the Centennial
entities that were parties in Abrusley.

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                                        No. 12-30084
court granted Plaintiffs’ motion as to the governmental customers, certifying a
class composed of “certain named governmental entities within the State of
Louisiana.”      This class purportedly consists of 299 governmental entities,
including parish police juries, parish school boards, and other local boards and
commissions.3
       Centennial timely appeals, raising numerous challenges to the district
court’s class certification order. First, Centennial argues that the district court
erred in certifying a class of governmental entities to be represented in this
action by private counsel. According to Centennial, Louisiana law requires that
many of the entities satisfy various substantive criteria before they may retain
private representation. Because those conditions were not satisfied as to most
class members prior to certification, Centennial contends that the class requires
members to “opt into” the suit, a result impermissible under Rule 23. Second,
Centennial submits that Plaintiffs did not satisfy the requirements of Rule 23
that (1) issues common to the class predominate over individual issues, and (2)
the certified class be manageable for trial. Finally, Centennial argues that the
district court erred in certifying the class because, in so doing, the court failed
to recognize enforceable arbitration clauses in many of the class members’
contracts.4



       3
          Centennial argues that the class certification was improper because its membership
is not limited to state governmental entities, but rather includes at least one federal entity and
one Native American tribal entity. Centennial also submits that the certified class improperly
includes private organizations, special purpose subdivisions with no authority to sue, and
Louisiana state entities that can be represented only by the state’s attorney general. Finally,
Centennial contends that at least 50 of the 299 listed entities purportedly constituting the
class are duplicates, or are subdivisions of other members. Given our holding that the certified
class impermissibly requires members to “opt in,” we need not resolve this issue.
       4
         Because we agree that the district court improperly created an “opt in” class, we need
not address Centennial’s arguments that individual issues impermissibly predominate over
issues common to the class, that the class is not manageable, and that the district court erred
in declining to enforce the applicable arbitration clauses.

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                                    No. 12-30084
                           II. STANDARD OF REVIEW
        A district court’s decision to grant class certification is reviewed for abuse
of discretion. McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 548 (5th Cir.
2003). “The decision to certify is within the broad discretion of the court, but
that discretion must be exercised within the framework of [R]ule 23.” Castano
v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996) (citing Gulf Oil Co. v.
Bernard, 452 U.S. 89, 100 (1981)). Application of an incorrect legal standard is,
by definition, an abuse of discretion, and is reviewed de novo. Benavides v. Chi.
Title Ins. Co., 636 F.3d 699, 701 (5th Cir. 2011).
                                 III. DISCUSSION
A.      Class Certification Under Rule 23
        Plaintiffs moved for class certification under Federal Rules of Civil
Procedure 23(a) and 23(b)(3). Rule 23(a) imposes four prerequisites on a class
seeking certification: “(1) numerosity (a ‘class [so large] that joinder of all
members is impracticable’); (2) commonality (‘questions of law or fact common
to the class’); (3) typicality (named parties’ claims or defenses ‘are typical . . . of
the class’); and (4) adequacy of representation (representatives ‘will fairly and
adequately protect the interests of the class’).” Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 613 (1997) (alterations in original) (quoting Fed. R. Civ. P. 23(a)).
“In addition to these prerequisites, a party seeking class certification under Rule
23(b)(3) must also demonstrate both (1) that questions common to the class
members predominate over questions affecting only individual members, and (2)
that class resolution is superior to alternative methods for adjudication of the
controversy.” Feder v. Elec. Data Sys. Corp., 429 F.3d 125, 129 (5th Cir. 2005)
(internal quotation marks and citation omitted).
        Significantly, Rule 23 also contains a so-called “opt out” clause, providing
that “[f]or any class certified under Rule 23(b)(3), the court must direct to class
members . . . notice . . . that the court will exclude from the class any member

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                                  No. 12-30084
who requests exclusion.” Fed. R. Civ. P. 23(c)(2)(B)(v). The ability to “opt out”
of a Rule 23(b)(3) action is necessary because, by operation of the rule’s
provisions, “a class is described [and] if the action is maintainable as a class
action, each person within the description is considered to be a class member
and, as such, is bound by judgment . . . unless he has ‘opted out’ of the suit.”
Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 916 (5th Cir. 2008) (quoting
LaChapelle v. Owens–Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975) (per
curiam)). This process is to be distinguished from collective actions maintained
under statutes like the Fair Labor Standards Act, 29 U.S.C. § 216(b), under
which “no person can become a party plaintiff and no person will be bound by or
may benefit from judgment unless he has affirmatively ‘opted into’ the class; that
is, given his written, filed consent.” Sandoz, 553 F.3d 913 at 916 (quoting
LaChapelle, 513 F.2d at 288) (emphasis added).
      Unlike these types of statutory collective actions, however, proceedings
under Rule 23 do not require that class members affirmatively “opt in,” nor is
such a requirement mandated by due process considerations. See Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985) (“We reject petitioner’s
contention that the Due Process Clause of the Fourteenth Amendment requires
that absent plaintiffs affirmatively ‘opt in’ to the class, rather than be deemed
members of the class if they do not ‘opt out.’”). Indeed, as one of our sister
circuits aptly has noted, “[n]ot only is an ‘opt in’ provision not required, but
substantial legal authority supports the view that by adding the ‘opt out’
requirement to Rule 23 . . ., Congress prohibited ‘opt in’ provisions by
implication.” Kern v. Siemens Corp., 393 F.3d 120, 124 (2d Cir. 2004). This view
is bolstered by the fact that, in drafting Rule 23, the Advisory Committee on
Civil Rules “rejected the suggestion ‘that the judgment in a [Rule 23](b)(3) class
action, instead of covering by its terms all class members who do not opt out,
should embrace only those individuals who in response to notice affirmatively

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                                      No. 12-30084
signify their desire to be included.’” Id. (quoting Benjamin Kaplan, Continuing
Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil
Procedure (I), 81 Harv. L. Rev. 356, 397 (1967)).
       The rationale behind the Committee’s decision to include only an “opt out”
provision in Rule 23 was that requiring individuals to affirmatively “opt in”
“would result in freezing out the claims of people—especially small claims held
by small people—who for one reason or another, ignorance, timidity,
unfamiliarity with business or legal matters, will simply not take the affirmative
step.” Id. (quoting Kaplan, 81 Harv. L. Rev. at 397–98). This sentiment was
echoed by the Supreme Court in Shutts, in which the Court explained:
       Requiring a plaintiff to affirmatively request inclusion would
       probably impede the prosecution of those class actions involving an
       aggregation of small individual claims, where a large number of
       claims are required to make it economical to bring suit. The
       plaintiff’s claim may be so small, or the plaintiff so unfamiliar with
       the law, that he would not file suit individually, nor would he
       affirmatively request inclusion in the class if such a request were
       required by the Constitution.
472 U.S. at 812–13 (internal citation and footnote omitted).5
       Thus, as we have explained previously, because “the clear thrust of [Rule
23(b)(3)] . . . is to minimize the requirement of active intervention by numerous
members of an affected class,” “[o]pting in [is] not necessary before the
determination of liability.” Robinson v. Union Carbide Corp., 544 F.2d 1258,
1261 (5th Cir. 1977), modifying on reh’g, 538 F.2d 652 (5th Cir. 1976); see also
id. at 1262 (Wisdom, J., concurring) (explaining that the notice at issue in
Robinson was not defective under “Rule 23(c)(2) because it [did] not require




       5
         While the Shutts Court was considering the propriety of an “opt out” class certified
under a state procedure rather than under Rule 23, 472 U.S. at 802–03, the Court’s reasoning
applies equally well here.

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members to opt-into the class action in order to be bound by it”).6 Other courts
are in accord.7 In Kern, for example, the court explained that it could not
“envisage any circumstances when Rule 23 would authorize an ‘opt in’ class in
the liability stage of a litigation.” 393 F.3d at 128. Likewise, in Clark v.
Universal Builders, Inc., the Seventh Circuit held that a lower court committed
error by “requiring an affirmative response for inclusion” in a class certified
pursuant to Rule 23, because “an affirmative request for inclusion in the class
is contrary to the express language of Rule 23(c)(2)(B).” 501 F.2d 324, 340 (7th
Cir. 1974).8
        Simply put, “[t]here is no authority for establishing ‘opt-in’ classes in
which the class members must take action to be included in the class.” 5 James
Wm. Moore et al., Moore’s Federal Practice § 23.104[2][a][ii] (3d ed. 2004).
B.      Plaintiffs’ Class Impermissibly Requires Members to “Opt In”
        In hearings related to their motion for class certification, Plaintiffs
described the class here at issue as “almost like an opt-out” class.                        This
measured characterization was based on Plaintiffs’ acknowledgment that
Louisiana law limits the ability of certain governmental entities—including


       6
         Although “opt in” provisions are impermissible under Rule 23 at the class certification
stage, this should be distinguished from the recovery stage, when class members may well be
required “to come forward to establish their entitlement to portions of the recovery.”
Robinson, 544 F.2d at 1260–61.
       7
          Legal scholars likewise are in agreement that “[n]othing in Rule 23(c) authorizes
courts to impose a requirement that individual class members file a notice affirmatively opting
in to the class or affirmatively requesting inclusion as a condition of participation in the class
action or any recovery that the class may obtain.” 5 James Wm. Moore et al., Moore’s Federal
Practice § 23.104[3][a] (3d ed. 2004); see also 7AA Charles Alan Wright et al., Federal Practice
and Procedure § 1787 (3d ed. 2005) (explaining that “opt in” provisions for classes certified
under Rule 23 are “directly contrary to the philosophy of Rule 23(c)(2)”).
       8
        See also Enter. Wall Paper Mfg. Co. v. Bodman, 85 F.R.D. 325, 327 (S.D.N.Y. 1980)
(“Rule 23(c)(2)(B) calls for a notice that enables prospective members to opt-out, in language
strongly suggesting the impropriety of opt-in requirements (i.e. ‘the judgment, whether
favorable or not, will include all members who do not request exclusion’).”).

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                                       No. 12-30084
many of those in the certified class—to be represented by private counsel as
prescribed by this class action. In particular, Louisiana Revised Statute section
42:263 provides:
       No parish governing authority, levee board . . . , parish school board,
       city school board, or other local or state board shall retain or employ
       any special attorney or counsel to represent it in any special matter
       or pay any compensation for any legal services whatever unless a
       real necessity exists, made to appear by a resolution thereof stating
       fully the reasons for the action and the compensation to be paid.
       The resolution then shall be subject to the approval of the attorney
       general and, if approved by him, shall be spread upon the minutes
       of the body and published in the official journal of the parish.
La. Rev. Stat. Ann. § 42:263(A) (2010).
       In explicating the requirements contained in section 42:263, the Louisiana
attorney general has issued a written opinion properly stating that the statute
authorizes those governmental entities subject to it “to retain special counsel
only when (1) a real necessity exists (2) which is declared and memorialized by
a resolution stating the reasons for employment of counsel and the compensation
to be paid, (3) which resolution must be approved by the attorney general and
(4) if approved, spread upon the minutes of the body and published in the official
journal of the parish.” La. Att’y Gen. Op. No. 1989-612, 1989 La. AG LEXIS 543,
at *1–2. The attorney general also has noted that except as provided in section
42:263, “it is unlawful for any governmental entity subject to the ex officio legal
representation of the district attorney to retain or employ private counsel.”9 La.
Att’y Gen. Op. No. 1999-413, 2000 La. AG LEXIS 16, at *6.


       9
        Louisiana Revised Statute section 42:261 sets forth the entities subject to a district
attorney’s legal representation. As relevant, that statute provides: “the district attorneys of
the several judicial districts other than the parish of Orleans shall, . . . be the regular
attorneys and counsel for the parish governing authorities, parish school boards, and city
school boards within their respective districts and of every state board or commission
domiciled therein, the members of which, in whole or in part, are elected by the people or
appointed by the governor or other prescribed authority.” La. Rev. Stat. Ann. §
42:261(A)(2011).

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      Here, neither party disputes that, to this point in the litigation, only the
class representatives, Iberia and Delcambre, have satisfied the procedures set
forth in section 42:263 for the retention of private counsel.10 Additionally, both
parties agree that numerous other entities within the certified class are subject
to the statute’s mandates. Plaintiffs argue, however, that it is sufficient, at the
class certification stage, that the class representatives have satisfied the
requirements of section 42:263. Plaintiffs maintain that “upon completion of the
appellate process, [they will] pursue the same process and seek approval from
every entity listed in order to comply with any statutory requirements for
certification.” In other words, Plaintiffs view the satisfaction of section 42:263’s
requirements as a mere “procedural issue” that can be addressed after class
certification.
      Plaintiffs underestimate, however, the import of this “procedural issue.”
First, nothing in section 42:263 suggests that private representation of entities
subject to the statute may be undertaken while the entities pursue satisfaction
of the statute’s requirements. As importantly, given the various “procedural”
hurdles that must be cleared under section 42:263 before a class member even
is authorized to participate in this action, Plaintiffs have effectively created an
“opt in” class. In other words, contrary to the requirements of a Rule 23(b)(3)
action, here, a potential class member’s decision to take no action upon receipt
of notice does not result in the entity’s inclusion in the class. Rather, the default
position of each class member is that it is not in the class until it successfully
completes a series of actions required by law for it to participate in the suit.
Requiring such affirmative acts from putative class members before they may
actually participate in a Rule 23 action is contrary to the express provisions of
Rule 23(c)(2)(B).

      10
         While Jeanerette also has received authorization to obtain private counsel in
connection with this suit, as noted, its claims have been stayed pending arbitration.

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      In fact, Plaintiffs’ attempt to certify the class here is analogous to the
scenario presented in Kern. 393 F.3d 120. There, plaintiffs moved to certify a
class composed of heirs, beneficiaries, and personal representatives of
individuals who died in a ski train fire in Austria. Id. at 122. Class members
were to be defined, in part, by “their willingness to take [the] affirmative action
of consent[ing] to be bound by the judgment.” Id. at 126 (internal quotation
marks and citation omitted, alterations in original). Such a class was justified,
from the district court’s perspective, on the basis that “it would be unfair to
presumptively include members in a class for which membership depends on a
waiver of . . . the right of foreign class members to relitigate their claim in
foreign courts.” Id. (citation omitted). The Second Circuit rejected the district
court’s reasoning, however, agreeing with the defendants’ argument that the
lower court had “overstepped the bounds of Rule 23 by certifying an ‘opt in’
class.” Id. at 122.
      Likewise here, the district court abused its discretion in certifying a class
under Rule 23 that operates as an “opt in” class. Had Plaintiffs received
authorization under section 42:263 for all class members to retain private
counsel prior to seeking certification of the class, the outcome of this class
certification issue might have been different. As is, however, class members
must effectively “opt into” the class by satisfying a number of preconditions
before they legally may be included in the class, for even if they wish to
participate in the action, they may not do so until they affirmatively: (1)
establish that a “real necessity exists” for the retention of private counsel, (2)
enact a resolution “stating fully the reasons for the action and the compensation
to be paid,” (3) receive the attorney general’s approval of the resolution, and (4)
publish the resolution in their minutes and the official journal of the applicable




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parish.11 La. Rev. Stat. Ann. § 42:263(A) (2010). As we have discussed, no
authority exists under Rule 23 for certifying a class of this nature.
                                    IV. CONCLUSION
       Accordingly, we REVERSE and VACATE the district court’s class
certification order, and REMAND for further proceedings consistent with this
opinion.




       11
          In fact, it is not a foregone conclusion that all putative class members will eventually
satisfy the necessary legal requirements for participating in this action, as section 42:263
“clearly grants to the Attorney General the discretion to either approve or disapprove the
resolutions presented to him pursuant to that section.” Flanagan v. Guste, 359 So. 2d 686, 688
(La. Ct. App. 1978).

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