In In re Marriott Int’l, Inc., No. 22-1744, 2023 WL 5313006, at *6 (4th Cir. Aug. 18, 2023), the Court of Appeals for the 4th Circuit rejected class certification in a data breach case. First, the Court of Appeals found that addressing the Defendant’s contractual class-action waiver defense needed to be done prior to class certification and not after.
The threshold question on appeal is whether the district court erred by certifying classes against Marriott without first addressing this class-action waiver defense. See Marriott III, 341 F.R.D. at 149 n.26 (explaining that the court will address the class-waiver defense, along with other affirmative defenses, after certification and at the merits stage of the litigation). Marriott argues vigorously that class waivers must be addressed and (if appropriate) enforced at the certification stage, not after a class action already has been litigated through to the merits. And, notably, the plaintiffs seem not to disagree – at least, not by much. Apart from a half-sentence referring to a district court’s general discretion to manage its docket, the plaintiffs’ brief does not join issue on this timing question at all; instead, it jumps straight to the merits of Marriott’s defense, arguing that Marriott repudiated or otherwise waived the defense and that the class waiver is in any event unenforceable and largely inapplicable. If there is an argument in favor of deferring consideration of a class waiver until after certification, the plaintiffs have not made it, and it may well be forfeited. See Grayson O Co. v. Agadir Int’l LLC, 856 F.3d 307, 316 (4th Cir. 2017) (“A party waives an argument … by failing to develop it – even if its brief takes a passing shot at the issue.” (cleaned up)). Regardless, we agree with Marriott that the time to address a contractual class waiver is before, not after, a class is certified. Although it seems no court has had occasion to expressly hold as much, that is the consensus practice. Courts consistently resolve the import of class waivers at the certification stage – before they certify a class, and usually as the first order of business. See, e.g., Kaspers v. Comcast Corp., 631 F. App’x 779, 784 (11th Cir. 2015) (per curiam) (“[B]ecause we have concluded that the class-action waiver was valid, the district court did not need to consider the requirements for class certification under Rule 23.”); Archer v. Carnival Corp. & PLC, No. 2:20-CV-04203, 2020 WL 6260003, at *4, *8 (C.D. Cal. Oct. 20, 2020) (finding that because the plaintiffs’ motion for certification was barred by class waiver there was no need to address whether the plaintiffs’ claims satisfied the requirements for certification set forth in Rule 23(a) and 23(b)(3)); Ranzy v. Extra Cash of Tex., Inc., No. Civ. A. H-09-3334, 2011 WL 13257274, at *8 (S.D. Tex. Oct. 14, 2011) (concluding that class-action waivers precluded plaintiff from asserting claims on behalf of a class, obviating need to reach the Rule 23 requirements); Lindsay v. Carnival Corp., No. C20-982, 2021 WL 2682566, at *4 (W.D. Wash. June 30, 2021) (denying the plaintiffs’ motion for class certification as barred by class waiver without addressing the requirements of Rule 23); cf. Palacios v. Boehringer Ingelheim Pharms., Inc., No. 10-22398-CIV, 2011 WL 6794438, at *2–4 (S.D. Fla. Apr. 19, 2011) (finding that class-action waiver prevented plaintiff from participating in any class action, including collective actions brought pursuant to 29 U.S.C. § 216(b)). We think this is the only approach consistent with the nature of class actions and the logic of class waivers.
Next, the Court of Appeals found no superiority because the District Court only certified ‘elements’ of certain causes of action, intended to deal with the remaining elements of the causes of action during administration; i.e. the issue of damages.
Having vacated the district court’s certification order as to the classes against Marriott, we turn now to the negligence issue classes against Accenture.6 As described above, the district court certified Rule 23(c)(4) issue classes on two and only two elements of the plaintiffs’ negligence claims against Accenture – whether Accenture owed a duty of care to the plaintiffs and whether it had breached any such duty. The remaining elements – injury and causation, or whether a breach of duty established classwide caused injury to a given plaintiff – would be litigated in follow-on individual proceedings, along with damages. Marriott III, 341 F.R.D. at 167–71. Accenture objects to these issue classes on multiple grounds, arguing, inter alia, that Rule 23(c)(4) does not permit the certification of some but not all elements of a cause of action, and that even if it does, these classes do not satisfy Rule 23(b)(3)’s superiority requirement. As explained below, we agree that the district court’s superiority analysis cannot stand, and on that ground, we vacate the certification of the classes against Accenture. . . The district court here recognized as much. Marriott III, 341 F.R.D. at 170 (explaining need to “additionally consider whether the efficiency gains of certification outweigh the fact that individualized issues requiring significant time and attention remain for later” (cleaned up)). And it acknowledged that the efficiency of class proceedings would be affected by the fact that “important issues related to causation, affirmative defenses, and damages related to Accenture’s conduct [would] not be resolved during issue-class adjudication.” Id. But that loss of efficiency, the court concluded, would be outweighed by one thing: the efficiency benefits of certifying the issue classes together with the damages classes against Marriott. Because it had “certified damages classes against Marriott,” the court explained, it would “already be analyzing the intertwined factual circumstances relevant to the duty and breach issues.” Id. And given the damages classes against Marriot, not certifying issue classes against Accenture “would result in totally unnecessary duplication as Plaintiffs and Defendants litigated the Marriott class action and the presumably numerous individual Accenture-related cases.” Id.