216 F.3d 577 (7th Cir. 2000)
Jeff Lemon, Karen Meyer, John Duncan,  Odell Williams, Virgil Eiland, Pat Haynes,  Craig Anderson, Shirley Nyman and   Franklin Edmonds,    Plaintiffs-Appellees,v.International Union of Operating Engineers,  Local No. 139, AFL-CIO,    Defendant-Appellant.
No. 99-4101
In the  United States Court of Appeals  For the Seventh Circuit
Argued April 12, 2000Decided June 9, 2000

Appeal from the United States District Court  for the Eastern District of Wisconsin.  No. 97 C 0857--John W. Reynolds, Judge. [Copyrighted Material Omitted]
Before Cudahy, Coffey and Kanne, Circuit Judges.
Kanne, Circuit Judge.


1
The district court,  deciding class certification in this Title VII  class action without the benefit of Jefferson v.  Ingersoll International Inc., 195 F.3d 894 (7th  Cir. 1999), held that the requested equitable  relief predominated the requested monetary relief  and certified the class under Rule 23(b)(2). We  vacate the district court's certification of the  class under Rule 23(b)(2) because the request for  money damages was not incidental and remand for  further consideration of class certification  under Jefferson and this opinion.

I.  History

2
International Union of Operating Engineers Local  139 ("Local 139" or the "Local") represents  heavy-equipment operators in Wisconsin and  administers an employment referral hall through  which its members can find work. Members of Local  139 in search of employment may fill out data  cards listing their qualifications and place  themselves on the referral hall's "out-of-work  list." Contractors seeking heavy-equipment  operators in Wisconsin regularly contact Local  139, and the Local matches those contractors with  members on the out-of-work list qualified to  handle the jobs. According to the Local, the  referral hall doles out work assignments to  registered operators according to their  qualifications, geographic proximity and ordinal  seniority on the out-of-work list.


3
The named plaintiffs are members of the Local  who sought work through the referral hall and  claim that Local 139 intentionally discriminated  against them as racial minority members and women  by diverting work opportunities to white males.  On August 12, 1997, they filed a class-action  lawsuit on behalf of all minority and female  members of Local 139, alleging that Local 139  violated Title VII of the Civil Rights Act, 42  U.S.C. sec.sec. 2000e to 2000e-17, by operating  the referral system in an intentionally  discriminatory manner. The plaintiffs sought a  jury trial for declaratory and injunctive relief,  as well as compensatory and punitive damages. In  support of their claim, the plaintiffs planned to  introduce testimony from witnesses who observed  discriminatory conduct by Local 139 officials.  Namely, the plaintiffs intended to offer the  testimony of Dale Miller, the current president  of the Local, who told the EEOC that the former  business manager of the Local, Donald Shaw, was  racist and manipulated the referral system to  pass over minorities and women. In addition, the  plaintiffs promised to adduce statistical  evidence demonstrating that the Local's low  hiring, placement and referral rates for women  and minorities could not have occurred as a  result of chance.


4
On June 1, 1998, the plaintiffs moved under  Rules 23(b)(2) and 23(b)(3) of the Federal Rules  of Civil Procedure to certify a class of more  than 400 minority and female members against whom  Local 139 allegedly discriminated in its  operation of the referral system. Magistrate  Judge Patricia Gorence recommended certification  of the class under Rule 23(b)(2) and mentioned in  passing that "the plaintiffs [also] have  satisfied the criteria of Rule 23(b)(3)." On  September 24, 1999, the district court adopted  the magistrate's recommendation and certified the  class under Rule 23(b)(2) to proceed with its  Title VII claims. The court designated Jeff  Lemon, Karen Meyer, John Duncan, Odell Williams,  Pat Haynes, Craig Anderson, Shirley Nyman and  Franklin Edmonds as class representatives. Local  139 then filed an interlocutory appeal to  challenge certification of the plaintiff class.

II.  Analysis

5
Rule 23(b)(2) declares that class certification  under that subsection is appropriate 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  respect to the class as a whole." Fed. R. Civ. P.  23(b)(2). The Rule itself is silent regarding  whether Rule 23(b)(2) certification is  permissible when, as in this case, the plaintiffs  request monetary damages as well as "final  injunctive relief or corresponding declaratory  relief." However, the advisory note to Rule  23(b)(2) explains that the subsection "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.


6
As we explained in Jefferson v. Ingersoll  International Inc., 195 F.3d 894, 896 (7th Cir.  1999), the problem is that Rule 23(b)(2) provides  for binding litigation on all class members  without guarantees of personal notice and the  opportunity to opt out of the suit. By virtue of  its requirement that the plaintiffs seek to  redress a common injury properly addressed by a  class-wide injunctive or declaratory remedy, Rule  23(b)(2) operates under the presumption that the  interests of the class members are cohesive and  homogeneous such that the case will not depend on  adjudication of facts particular to any subset of  the class nor require a remedy that  differentiates materially among class members. A  suit for money damages, even if the plaintiffs  seek uniform, class-wide equitable relief as  well, jeopardizes that presumption of cohesion  and homogeneity because individual claims for  compensatory or punitive damages typically  require judicial inquiry into the particularized  merits of each individual plaintiff's claim.


7
Indeed, in recognition of the potential  divergence of interests within the class, each  class member in actions for money damages is  entitled as a matter of due process to personal  notice and an opportunity to opt out of the class  action. See Ortiz v. Fibreboard Corp., 527 U.S.  815, 119 S.Ct. 2295, 2314-15 (1999). Accordingly,  Rule 23(c)(2) guarantees those rights for each  member of a class certified under Rule 23(b)(3).  See Eisen v. Carlisle & Jacquelin, 417 U.S. 156,  173 (1974); Fed. R. Civ. P. 23(c)(2). However,  the Federal Rules of Civil Procedure do not  provide comparable procedural guarantees of those  rights for a class certified under subsections  (b)(1) or (b)(2), and as a result, Rule 23(b)(2)  certification does not ensure personal notice or  opportunity to opt out even if some or all the  plaintiffs pray for monetary damages. The  question therefore is whether the district court  abused its discretion in certifying a class under  Rule 23(b)(2), without notice or opportunity to  opt out, when the plaintiffs sought monetary  damages in addition to equitable relief.


8
In Jefferson, 195 F.3d at 898, we adopted the  Fifth Circuit's reasoning on this point from  Allison v. Citgo Petroleum Corp., 151 F.3d 402  (5th Cir. 1998). Allison held that "nonequitable  monetary relief may be obtained in a class action  certified under Rule 23(b)(2) only if the  predominant relief sought is injunctive or declaratory," Allison, 151 F.3d at 425, and  explained further that certification under Rule  23(b)(2), without notice or opportunity to opt  out, is impermissible unless the requested  monetary damages are "incidental" to requested  injunctive or declaratory relief. Id. at 415. The  court defined "incidental" as "damages that flow  directly from liability to the class as a whole  on the claims forming the basis of the injunctive  or declaratory relief." Id. Thus, incidental  damages do not depend "in any significant way on  the intangible, subjective differences of each  class member's circumstances" and do not "require  additional hearings to resolve the disparate  merits of each individual's case." Id.


9
Like the Allison plaintiffs, the plaintiffs here  sued for both equitable relief and monetary  damages to remedy alleged violations of Title  VII. Damages can be awarded only after proof of  discrimination and injury specific to the  individual plaintiff, see, e.g., Miller v.  American Family Mut. Ins. Co., 203 F.3d 997, 1005  (7th Cir. 2000), so deciding the damages claims  depends on an individualized analysis of each  class member's circumstances and requires  additional hearings to resolve the disparate  merits of each individual's case. See Allison,  151 F.3d at 417. Even if the plaintiffs prove  that Local 139 administered the referral hall in  a discriminatory manner and won injunctive and  declaratory relief on that ground, each  individual plaintiff pursuing damages claims  still would need to establish that Local 139's  discrimination caused her personal injury and  would need to show the magnitude of injury to  determine compensatory damages. Similarly, to win  punitive damages, an individual plaintiff must  establish that the defendant possessed a reckless  indifference to the plaintiff's federal rights--a  fact-specific inquiry into that plaintiff's  circumstances. See Kolstad v. American Dental  Ass'n, 527 U.S. 526, 119 S.Ct. 2118 (1999). As  the Fifth Circuit found in Allison, the requested  monetary damages for the plaintiffs' Title VII  claims were not incidental to the requested  injunctive and declaratory relief. Allison, 151  F.3d at 418; cf. Boughton v. Cotter Corp., 65  F.3d 823, 827 (10th Cir. 1995).


10
As a result, Jefferson instructs the district  court to consider three alternatives for handling  the case. Jefferson, 195 F.3d at 898-99. The  first option is certifying the class under Rule  23(b)(3) for all proceedings. See id. at 899.  Rule 23(b)(3) permits class certification when  "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." Fed. R. Civ. P. 23(b)(3). In  this category of lawsuit, the class members may  seek either predominantly legal or equitable  remedies, but each member must share common  questions of law or fact with the rest of the  class, therefore making class-wide adjudication  of the common questions efficient compared to  repetitive individual litigation of the same  questions. In contrast to Rule 23(b)(2), however,  certification under Rule 23(b)(3) entails  mandatory personal notice and opportunity to opt  out for all class members, thereby satisfying the  due process concerns in Ortiz. See Fed. R. Civ.  P. 23(c)(2); see also Jefferson, 195 F.3d at 898.


11
The second option is divided certification. See  Jefferson, 195 F.3d at 898-99; Williams v.  Burlington Northern, Inc., 832 F.2d 100, 103 (7th  Cir. 1987); see also Eubanks v. Billington, 110  F.3d 87, 96 (D.C. Cir. 1997). The district court  could certify a Rule 23(b)(2) class for the  portion of the case addressing equitable relief  and a Rule 23(b)(3) class for the portion of the  case addressing damages. This avoids the due  process problems of certifying the entire case  under Rule 23(b)(2) by introducing the Rule  23(b)(3) protections of personal notice and  opportunity to opt out for the damages claims.  Since the Civil Rights Act of 1991 entitles the  parties to a jury trial on claims of intentional  discrimination, see 42 U.S.C. sec. 1981a, a  district court that proceeds with divided  certification must adjudicate the damages claims  first before a jury to preserve the Seventh  Amendment right to a jury trial, even if  adjudication of these claims decides the  equitable claims as well. See Dairy Queen, Inc.  v. Wood, 369 U.S. 469 (1962); Beacon Theatres,  Inc. v. Westover, 359 U.S. 500 (1959); Jefferson,  195 F.3d at 898.


12
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). Jefferson, 195 F.3d at 898; see  also Thomas v. Albrecht, 139 F.3d 227, 234 (D.C.  Cir. 1998); Eubanks, 110 F.3d at 94; County of  Suffolk v. Long Island Lighting Co., 907 F.2d  1295, 1304 (2d Cir. 1990); Holmes v. Continental  Can Co., 706 F.2d 1144, 1160 (11th Cir. 1983). In  fact, a district court handled a class certified  under Rule 23(b)(2) much this way in Williams. We  affirmed and held that the district court  provided opportunities to object that "were  tantamount to the protections envisioned by  Fed.R.Civ.P. 23(c)(2) [for classes certified  under subsection (b)(3)]." Williams, 832 F.2d at  104.


13
The district court abused its discretion because  it did not consider class certification either in  part or in full under Rule 23(b)(3), nor did the  court stipulate that it would provide the class  members with personal notice and opportunity to  opt out of the class action. The district court's  treatment of the case is understandable because  Jefferson had not been decided at the time of the  district court's consideration of class  certification. However, since the requested  monetary damages are not incidental to the  plaintiffs' requested equitable relief, we Vacate  class certification under Rule 23(b)(2) and Remand  with directions to consider alternative class  certification under the options presented in this  opinion and Jefferson.

