DC Circuit on Fail-Safe Classes and Rule 23

The D.C. Circuit today issued an opinion granting a Rule 23(f) petition and vacating a district court’s denial of class certification on the grounds that the class definition created an impermissible “fail-safe” class– i.e., a class whose membership can only be ascertained through a determination of the merits of the case.

The plaintiffs, former employee participants in Hilton Hotels’ retirement plan, had initially proposed a class definition that was limited to those who had “vested rights to retirement benefits that ha[d] been denied” as a result of specific policies. After the district court declined to certify such a class, the plaintiffs rephrased the definition, but the district court rejected it again.

In its decision today, the D.C. Circuit confirmed that denial of a class-action certification on fail-safe grounds was appropriately resolved via Rule 23(f). On the merits, it held that a district court may not go beyond the textual Rule 23 class certification criteria to find a class is impermissibly structured as a “fail-safe” class. A truly fail-safe class is unlikely to meet these criteria, the Court explained, and, if it did, the solution” is for the district court either to work with counsel to eliminate the problem or for the district court to simply define the class itself.”


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