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Valenzuela v. Union Pacific Railroad Co.

United States District Court, D. Arizona

April 19, 2017

Alonzo Valenzuela, et al., Plaintiffs,
Union Pacific Railroad Company, et al., Defendants.


          David G. Campbell United States District Judge

         The Court previously entered an order denying Plaintiffs' motion for class certification under Rule 23(b)(2) and (3) of the Federal Rules of Civil Procedure. Doc. 260. Plaintiffs also argued in their motion that an issue class should be certified under Rule 23(c)(4). Doc. 208 at 8, 36-37.[1] The Court requested additional briefing on the proposed issue class (Doc. 260 at 34-35) and heard oral argument on March 22, 2017 (Docs. 273, 277). Because Plaintiffs have not met their burden of showing that an issue class is appropriate in this case, the Court will deny their request for issue class certification.

         I. Background.

         Plaintiffs own real property adjacent to a railroad right-of-way operated by Defendant Union Pacific Railroad Company. Doc. 75, ¶¶ 1-3, 71. For several decades, Defendants SFPP, L.P. (formerly known as Santa Fe Pacific Pipelines, Inc. and Southern Pacific Pipelines, Inc.), Kinder Morgan Operating L.P. “D, ” and Kinder Morgan G.P., Inc. (collectively, “Kinder Morgan”) paid Union Pacific rent to operate a pipeline carrying petroleum products under the right-of-way. Id. ¶¶ 4-6, 25-26, 29. Plaintiffs, claiming the land under the right-of-way was neither Union Pacific's to rent nor Kinder Morgan's to use, brought this trespass action on behalf of a putative class of “all landowners who . . . own or have owned land in fee adjoining and underlying the railroad easement granted under the General Right of Way Act of 1875 under which the pipeline is located within the State of Arizona.” Id. ¶¶ 29-30, 52, 70; Doc. 208 at 8.

         The Court denied the motion for Rule 23(b) class certification on February 21, 2017, concluding that “the property-specific issues in this case prevent the named Plaintiffs from being typical or adequate, and will result in individual issues predominating.” Doc. 260 at 35. The Court found the following issues to be common to all alleged class members: (1) whether the Railroad lacks sufficient property interests in the subsurface of its right-of-way under the 1875 Act to convey property rights in the subsurface to the Pipeline, (2) whether the commercial pipeline underneath the Railroad's right-of-way is a railroad purpose, and (3) whether Defendants knew or had reason to know that the Railroad did not possess a sufficient ownership interest in the subsurface underneath its right-of-way to grant easements or other property rights to the Pipeline. Id. at 34 (quoting Doc. 208 at 17). Although these issues were not sufficiently predominant to certify the class under Rule 23(b)(2) or (3), Plaintiffs argued that the Court should resolve these issues in an issue class under Rule 23(c)(4). Doc. 208 at 36-37. Because a possible issue class under Rule 23(c)(4) gave rise to matters the parties had not yet addressed, the Court requested additional briefing. Doc. 260 at 34-35.[2]

         II. Legal Standard.

         Plaintiffs bear the burden of establishing that the requirements of Rule 23(c)(4) have been met. See U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 408 (1980); Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1238 (9th Cir. 2001). Rule 23(c)(4) provides that, “[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues.” Fed.R.Civ.P. 23(c)(4); see also Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) (“Even if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)[] and proceed with class treatment of these particular issues.”). Neither the text of the rule nor the advisory committee notes offers guidance as to what makes an issue class appropriate.

         Some courts have held that certification of an issue class is warranted where it will “materially advance” the disposition of the litigation. See, e.g., Fulghum v. Embarq Corp., No. 07-2602, 2011 WL 13615, at *2 (D. Kan. Jan. 4, 2011); Benner v. Becton Dickinson & Co., 214 F.R.D. 157, 169 (S.D.N.Y. 2003); Emig v. Am. Tobacco Co., Inc., 184 F.R.D. 379, 395 (D. Kan. 1998) (quoting Harding v. Tambrands Inc., 165 F.R.D. 623, 632 (D. Kan. 1996)). This phrase, commonly associated with interlocutory appeals, see 42 U.S.C. § 1292(b), first appeared in the Rule 23(c)(4) context in In re Tetracycline Cases, 107 F.R.D. 719 (W.D. Mo. 1985), where the court declared without citation that the critical inquiry is whether the resolution of the common issues would “materially advance a disposition of the litigation as a whole.” Id. at 727, 732. Years later, the Second Circuit quoted this language in a footnote. See Robinson v. Metro-N. Commuter R.R. Co., 267 F.3d 147, 167 n.12 (2d Cir. 2001) (discussing circuit split on issue of whether an issue class presupposes Rule 23(b)(3) predominance). A few other courts, including district courts in this Circuit, have used the “materially advances” language over the years. See, e.g., Tasion Commc'ns, Inc. v. Ubiquiti Networks, Inc., 308 F.R.D. 630, 633 (N.D. Cal. 2015); Rahman v. Mott's LLP, No. 13-3482, 2014 WL 6815779, at *9 (N.D. Cal. Dec. 3, 2014) (citing Jacob v. Duane Reade, Inc., 293 F.R.D. 578, 589 (S.D.N.Y. 2013)); In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209 F.R.D. 323, 351 (S.D.N.Y. 2002); Harding, 165 F.R.D. at 632.

         Regardless of the provenance of the “materially advances” standard, its focus on whether issue class certification will move the litigation forward - saving money, time, and judicial resources in the process - is a sensible consideration. See Valentino, 97 F.3d at 1229 (evaluating “whether the adjudication of the certified issues would significantly advance the resolution of the underlying case, thereby achieving judicial economy and efficiency”). Even where courts have not used that specific language, the factors that have guided their decisions are consistent with the theme of moving the litigation forward efficiently. Some of these courts have considered whether the issue class will save time and reduce costs, see, e.g., id.; In re N. Dist. of Cal., Dalkon Shield IUD Prods. Liab. Litig., 693 F.2d 847, 856 (9th Cir. 1982), as well as conserve judicial resources, see, e.g., Fulghum, 2011 WL 13615, at *2; In re Activision Sec. Litig., 621 F.Supp. 415, 438 (N.D. Cal. 1985). Others have looked to the overall convenience of issue class certification. See, e.g., Soc'y for Individual Rights, Inc. v. Hampton, 528 F.2d 905, 906 (9th Cir. 1975) (per curiam) (citing Nix v. Grand Lodge, IAM, 479 F.2d 382, 385 (5th Cir. 1973)). Conversely, an issue class is “not appropriate if, despite the presence of a common issue, certification would not make the case more manageable.”[3] MTBE, 209 F.R.D. at 351 (quoting Hamilton v. Accu-Tek, 935 F.Supp. 1307, 1332 (E.D.N.Y. 1996)).

         These considerations are closely related to the significance of the issue to be certified: the more significant the common issue, the more likely class-wide adjudication of that issue will advance the litigation. See In re Copley Pharm., Inc., 158 F.R.D. 485, 491 (D. Wyo. 1994) (even where “significant issues” would “require individual determination, ” certification is appropriate if “equally significant common issues” could be resolved). A common issue is sufficiently significant if it relates to “important aspects of plaintiffs' claims” that form “the centerpiece” of the case, such that deciding the issue “will resolve the core of plaintiffs' claims for the classes as a whole.” See In re Motor Fuel Temperature Sales Practices Litig., 279 F.R.D. 598, 610-11 (D. Kan. 2012).

         III. Discussion.

         After considering the parties' arguments carefully, the Court cannot conclude that issue class certification would significantly advance this litigation, nor have Plaintiffs shown that an issue class will save time and resources. Even if the disputed common issues were to be litigated on a class-wide basis, significant complexity would remain.

         A. An Issue Class Will Not Materially Advance the Litigation.

         In its previous order denying certification under Rule 23(b)(2) and (3), the Court identified three common issues: (1) whether Union Pacific had title to the subsurface under the 1875 Act that could be conveyed to Kinder Morgan, (2) whether Kinder Morgan's pipeline under Union Pacific's right-of-way is a “railroad purpose, ” and (3) whether Defendants knew or should have known that Union Pacific did not have title to the property. Doc. 260 at 4-5. The Court will confine its analysis to these three issues, and will not consider undisputed common issues as suggested by Plaintiffs. Doc. 269 at 5. Precisely because those issues are undisputed, resolving them in an issue class would do nothing to move the litigation forward. See McDaniel v. Qwest Commc'ns Corp., 2006 WL 1476110, at *17 (N.D. Ill. May 23, 2006).

         Plaintiffs have failed to show that the three common issues are “the centerpiece of this case, ” and that their resolution would “materially advance the litigation.” Motor Fuel, 279 F.R.D. at 610-11. Issue classes are most often used to “accurately and efficiently resolve the question of liability, while leaving the potentially difficult issue of individualized damage assessments for a later day.” See Kamakahi v. Am. Soc'y for Reprod. Med., 305 F.R.D. 164, 176 (N.D. Cal. 2015) (quoting Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1164 (9th Cir. 2014) (affirming order certifying class on liability); see also In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 226 (2d Cir. 2006) (courts can use issue class certification to “separate the issue of liability from damages”)); Frlekin v. Apple Inc., 309 F.R.D. 518, 526 (N.D. Cal. 2015) (only fact of injury and damages remained to be determined individually); Campion v. Credit Bureau Servs., Inc., 206 ...

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