In Johnsonv. Meriter Health Services Employee Retirement Plan, --- F.3d ----, 2012 WL 6013457 (7th Cir. Dec. 4, 2012), participants in a defined benefit plan sponsored by their employer, Meriter Health Services (“Meriter”), filed a putative class action under ERISA, alleging that they had not been credited with all pension benefits to which the plan entitled them. The putative class consisted of more than 4,000 participants in the Meriter pension plan. Some of the class members had received benefits 23 years ago, and now claim the benefits are inadequate. Other class members had only recently received benefits. Some class members were current, and some former, participants in the plan. In addition, the plan had been amended a number of times over the 23 years at issue. All of this resulted in wide variation among the circumstances of the individual class members, and their claims had to be divided into 10 subclasses, each of which had to be certified as a subclass with a different subclass representative. Id. at *1.

Chief Judge William Conley of the Western District of Wisconsin certified the class under Fed. R. Civ. P. 23(b)(2), which authorizes class action treatment if the defendant “has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Each subclass seeks a declaration of the rights of its members under the plan and an injunction directing that the plan’s records be reformed to reflect those rights. Id.

Meriter appealed to the Seventh Circuit, challenging the propriety of certification of the subclasses under section (b)(2) of the class action rule. Meriter argued that “because the subclasses make so many different claims, the class action does not satisfy the requirement of Rule 23(b)(2) that the defendant have ‘acted . . . on grounds that apply generally to the class.’” Id. at 4.

Judge Posner rejected this argument, holding that the Rule 23(b)(2) requirement that defendant act “on grounds that apply generally to the class” applies to subclasses, rather than to class action out of which subclasses have been carved:

Trying to determine which subclasses make which claims is dizzying, but as long as each subclass is homogeneous, in the sense that every member of the subclass wants the same relief, and each subclass otherwise satisfies the requirements for certifying a class, so that each could be the plaintiff class in a separate class action, there is no objection to combining them in a single class action. Indeed that’s the superior approach because an understanding of the entire plan, and of its evolution over the 23–year complaint period, provides essential background for understanding the claims of the members of all the subclasses.

Id. at * 4. Judge Posner further noted that the fact that a class is overbroad and should be divided into subclasses is not in itself a reason for refusing to certify the case as a class action. Id. Judge Posner opined that one could view this action “as actually 10 separate class actions,” and apply the standard in Rule 23(b)(2) to all of them – and, because each of them satisfies the standard, certification is appropriate. Id.

Meriter also argued that Wal–Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), precludes a Rule 23(b)(2) class action in which monetary as well as declaratory or injunctive relief is sought. Id. at *5. Judge Posner rejected this argument. Judge Posner noted that what the class is seeking (and what all of the subclasses are seeking), is a reformation of the Meriter pension plan—a declaration of the rights that the plan confers and an injunction ordering Meriter to conform the text of the plan to the declaration. Thus, Judge Posner held that the award of monetary relief will just be a matter of laying each class member's pension-related employment records alongside the text of the reformed plan and computing the employee's entitlement by subtracting the benefit already credited it to him from the benefit to which the reformed plan document entitles him, therefore, the monetary relief will be merely “incidental” to the declaratory and injunctive relief. Id. at *6.

Finally, Judge Posner rejected Meriter’s argument that the class could not be certified at all, even under Fed. R. Civ. P. 23(b)(3), due to conflicts among the class members. Id. at *8. Noting that conflicts of interest are distinct from differences in “entitlements,” and create an issue of adequacy of representation by requiring the class representative to choose between competing class members, Judge Posner held that the alleged conflicts of interest here were too speculative and hypothetical to bar class certification. Id. He opined that it would be premature to declare the alleged conflicts of interest an insoluble bar to the class action, when such conflicts may be easily resolved by dividing subclasses and appointing new representatives. Id.

The Johnson opinion is a must-read for those defending ERISA class actions and looking to oppose class treatment in this post-Dukes landscape. This opinion arguably paves the way for a larger group of plan participants spanning longer periods of time to achieve class status despite internal differences among the class (or subclass) members – at least in the Seventh Circuit.