The subdivision under which a class is certified determines the class members' procedural rights, the permissible scope of relief, and whether the judgment binds absent members who never received notice. Getting that choice wrong is not merely a technical error—it can invalidate a settlement years later.
Doctrinal Framing
Rule 23(b) creates three mutually exclusive—though sometimes overlapping—grounds for certifying a class action. The distinction between a mandatory class under Rule 23(b)(1) or (b)(2) and an opt-out class under Rule 23(b)(3) is constitutionally significant: mandatory classes bind absent members without providing them an opportunity to exit, whereas (b)(3) classes require the best practicable notice and an opportunity to opt out. Fed. R. Civ. P. 23(c)(2). Class counsel who select the wrong subdivision risk decertification, reversal on appeal, or—in settlement contexts—collateral attack on a judgment years after it is entered.
Rule 23(b)(1): Incompatible Standards and Limited Fund Classes
Rule 23(b)(1) certifies classes where prosecuting separate individual actions would create a risk of (A) inconsistent or varying adjudications that would establish incompatible standards of conduct for the opposing party, or (B) adjudications that would, as a practical matter, impair or impede the interests of absent members.
The (b)(1)(B) "limited fund" variant historically permitted class certification in mass-tort cases where a defendant's finite assets could not satisfy all claims—meaning early individual plaintiffs might exhaust the fund, leaving later plaintiffs without any recovery. The Supreme Court sharply curtailed this doctrine in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), imposing strict requirements: the fund must be genuinely limited, the fund itself must be the subject of the action, and the plaintiffs must be treated equitably within the class. Ortiz effectively ended the use of (b)(1)(B) as a vehicle for global asbestos settlements.
(b)(1)(A) classes are certified most commonly where the defendant must act uniformly toward a defined group—for example, a pension administrator who cannot lawfully provide different benefit calculations to different plan participants. The absence of notice and opt-out rights reflects the practical reality that individual inconsistent adjudications would harm the defendant and, indirectly, the class.
Practice trap. Because (b)(1) classes are mandatory, they cannot include individualized damages claims without running afoul of due-process constraints. Counsel who include significant damages claims in a (b)(1) framework invite decertification.
Rule 23(b)(2): Uniform Injunctive or Declaratory Relief
Rule 23(b)(2) is the natural vehicle for civil rights and structural reform litigation. It certifies a class where "the party opposing the class 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." The provision was drafted with Title VII pattern-or-practice cases and desegregation suits squarely in mind.
Like (b)(1) classes, (b)(2) classes are mandatory—members cannot opt out, and individual notice is not required as a matter of right under Rule 23(c)(2). The rationale is that the defendant's uniform conduct makes individual adjudications unnecessary; a single injunction resolves the class-wide harm.
When 23(b)(2) Cannot Carry Monetary Relief: Wal-Mart v. Dukes
The most significant modern limitation on (b)(2) classes comes from Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). The Supreme Court held, 5–4, that Rule 23(b)(2) "does not authorize class certification when each class member would be entitled to an individualized award of monetary damages." Id. at 360–61. Where back-pay or compensatory damages would require individualized hearings to determine each class member's entitlement, those claims cannot be shoehorned into a (b)(2) class, because the class would deny absent members their due-process right to be heard on their individual damages.
The Dukes Court drew a distinction between:
- Incidental monetary relief: damages flowing directly and automatically from the injunction itself, calculable by formula without individual adjudication (e.g., restoration of uniform benefits). Such relief is permissible in a (b)(2) class.
- Non-incidental monetary relief: back pay, compensatory damages, or any award requiring individualized proof of harm. These claims require either a (b)(3) class with its attendant opt-out rights or severance from the (b)(2) class.
This principle has broad application. A (b)(2) class seeking both an injunction against a discriminatory policy and individual compensatory damages for each affected employee cannot be certified as a unitary class. Dukes forces counsel to make a choice: seek only structural relief under (b)(2), or seek damages through a separate (b)(3) class with notice and opt-out.
Rule 23(b)(3): Predominance, Superiority, and Opt-Out Rights
Rule 23(b)(3) is the workhorse of damages class litigation. It requires that "questions of law or fact common to class members predominate over any questions affecting only individual members" and that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Certification requires the best practicable notice to all identifiable class members and an opportunity to opt out. Fed. R. Civ. P. 23(c)(2)(B).
Predominance is the most frequently litigated certification requirement. It is more demanding than the commonality requirement of Rule 23(a)(2), which merely asks whether there is any common question. Predominance asks whether the common questions will drive the resolution of the litigation—or whether individual issues will overwhelm the trial. Courts examine the elements of the underlying claim, identifying which elements can be established with class-wide evidence and which require individualized proof. A claim with a single common question (e.g., whether a product was defectively labeled) may satisfy predominance even if damages vary by class member.
Superiority asks whether a class action is preferable to individual suits, FLSA collective actions, consolidated proceedings, or other mechanisms. Factors include the size of individual claims relative to litigation costs, whether the class members have already initiated individual suits, and the manageability of the proposed class.
The opt-out right is a constitutional minimum in (b)(3) classes: due process requires that absent members receive notice and an opportunity to opt out before a judgment on individual claims binds them. Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). Class members who do not receive adequate notice may collaterally attack the judgment years later.
Notice Requirements
- (b)(1) and (b)(2): The court "may direct appropriate notice" under Rule 23(c)(2)(A), but notice is discretionary, not required. Courts rarely order individual notice in mandatory classes, relying instead on publication or consolidated notice.
- (b)(3): The court "must direct to class members the best notice that is practicable under the circumstances." Rule 23(c)(2)(B). The Rule specifies minimum content: the nature of the action, the class definition, the class claims, the right to opt out, the binding effect of a class judgment, and the identity of class counsel.
In practice, best practicable notice in (b)(3) classes involving identifiable members requires individual mailed notice when addresses are ascertainable. Digital notice—email, website, and social media—is increasingly accepted as supplementing or replacing mailed notice in cases involving large tech-focused classes.
Hybrid Certification Strategies
Many complex cases resist clean categorization into a single 23(b) subdivision. Two hybrid strategies warrant attention:
Bifurcated certification. Courts sometimes certify a (b)(2) class limited to liability and injunctive relief, while simultaneously certifying a (b)(3) class for monetary damages—with separate notice, opt-out, and damages proceedings. This structure permits a structural injunction against unlawful conduct while preserving the due-process rights of class members seeking individual monetary recovery.
Issue certification under Rule 23(c)(4). Rule 23(c)(4) permits certification of particular issues for class treatment even if the action as a whole does not satisfy Rule 23(b). Courts have certified common liability issues (e.g., whether a defendant's conduct violated a statute) under (b)(3) while leaving damages to individual proceedings. The utility of issue certification has expanded after In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014), which endorsed the approach in mass-tort litigation.
Settlement classes. A class that cannot be certified for trial may nonetheless be certifiable for settlement purposes, because the manageability concerns of Rule 23(b)(3) do not apply to a settlement that does not require trial. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 619–20 (1997). Courts still apply the remaining Rule 23 requirements rigorously: predominance, adequacy, and cohesiveness must be demonstrated even in the settlement-class context.
Practice Notes
Choosing the right subdivision. The decision should be driven by the relief sought, not strategic preferences. A (b)(2) class that includes substantial individual damages claims will be reversed or decertified after Dukes. Conversely, a (b)(3) class for structural injunctive relief may fail superiority because individual plaintiffs lack financial incentive to opt out.
Settlement notice. Even in mandatory classes certified for settlement, courts increasingly order comprehensive notice to absent members. The failure to do so has led to successful collateral attacks on class judgments. See, e.g., Hansberry v. Lee, 311 U.S. 32 (1940) (due-process requirement of adequate representation).
Opt-out administration. For large (b)(3) settlement classes, counsel should retain experienced claims administrators and build opt-out tracking systems before filing for preliminary approval. Courts scrutinize opt-out rates as a proxy for class member satisfaction; a high opt-out rate signals that the settlement may not be in the class's best interest.
Open Questions
The boundary between incidental and non-incidental monetary relief under Dukes remains contested in the circuits. Some courts have permitted (b)(2) certification for employment classes where back pay can be calculated formulaically from employment records, reasoning that no individualized inquiry is needed. Others require (b)(3) certification for any award that differs among class members. The Supreme Court has not revisited the Dukes monetary-relief limitation directly, and the doctrinal fault line continues to generate splits.
Closing
The choice among Rule 23(b) subdivisions is not a formality. It determines the procedural rights of absent class members, the permissible scope of relief, and the likelihood that a final judgment will survive challenge. Class counsel should approach that choice with the same rigor brought to merits analysis—and should structure relief to match the subdivision rather than forcing the subdivision to accommodate relief the class seeks.
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