Sourovelis v. City of Philadelphia
96 Fed. R. Serv. 3d 1382, 320 F.R.D. 12, 2017 WL 714025 (2017)
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Rule of Law:
A Rule 23(b)(2) class action for injunctive or declaratory relief cannot include a claim for restitution requiring the return of property if that restitution amounts to "individualized monetary damages" that would bind absent class members without notice or an opportunity to opt out, particularly when other forms of compensatory damages might be foreclosed.
Facts:
- Christos Sourovelis, Doi-la Welch, Norys Hernandez, and Nassir Geiger owned real and personal property that was subject to civil forfeiture proceedings.
- The City of Philadelphia’s civil forfeiture program was one of the largest municipal programs in the country, forfeiting over $90 million worth of property from 1987 to 2012, averaging $5.6 million in revenue each year.
- The Philadelphia District Attorney’s Office and the Philadelphia Police Department had a written agreement to share proceeds obtained from civil forfeiture proceedings.
- Over $28.5 million of the forfeiture revenue from fiscal years 2002 through 2014 was spent on salaries, including those of the prosecutors who administered Philadelphia’s civil forfeiture program.
- Plaintiffs alleged that this financial arrangement created a conflict of interest, injected impermissible bias into the civil forfeiture process, and violated their rights to the fair and impartial administration of justice under the Due Process Clause of the Fourteenth Amendment.
- The property belonging to Plaintiffs Sourovelis, Welch, Hernandez, and Geiger was subject to civil forfeiture proceedings pursuant to the Controlled Substances Forfeiture Act (CSFA).
- Plaintiffs sought to certify a class of all persons who hold legal title to or otherwise have a legal interest in property against which a civil-forfeiture petition was filed by the Philadelphia District Attorney’s Office on or after August 11, 2012, or will in the future be filed.
Procedural Posture:
- Plaintiffs (Christos Sourovelis, Doi-la Welch, Norys Hernandez, and Nassir Geiger) initiated this action in the United States District Court for the Eastern District of Pennsylvania on August 11, 2014, against the City of Philadelphia and various city and district attorney officials.
- Plaintiffs filed an amended complaint on November 17, 2014.
- Plaintiffs filed their first motion for class certification under Rule 23(b)(2) for Counts One through Six on August 11, 2014.
- The district court denied the initial class certification motion without prejudice on June 17, 2016.
- Defendants filed a joint motion to dismiss Plaintiffs' claims on March 16, 2015.
- The district court denied Defendants' motion to dismiss on May 12, 2015.
- Defendants sought reconsideration of the motion to dismiss denial, which the district court denied on September 7, 2016.
- The parties settled Counts One and Two, and the district court approved the settlement on November 3, 2015.
- On August 1, 2016, Plaintiffs filed a motion seeking to join new defendants, file a Second Amended Complaint, and sever Count Five, which the district court granted on September 14, 2016.
- Plaintiffs filed the Second Amended Complaint on September 15, 2016, adding new defendants and Count Seven.
- The City Defendants filed a motion to dismiss Counts Four and Six of the Second Amended Complaint, and the First Judicial District Defendants moved to dismiss all claims against them.
- Plaintiffs filed the instant motion to certify a Rule 23(b)(2) class solely with respect to Count Five on May 17, 2016.
- The City Defendants and the D.A. Defendants each filed responses to the class certification motion, and Plaintiffs filed a reply.
- The City Defendants filed a motion to submit a sur-reply, which the court granted.
- The district court held a hearing on the motion for class certification.
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Issue:
Does Federal Rule of Civil Procedure 23(b)(2) permit certification of a class action seeking an injunction ordering the return of forfeited property (restitution) when such relief could involve individualized monetary damages and potentially preclude absent class members from pursuing other compensatory damages without notice or opt-out rights?
Opinions:
Majority - Eduardo C. Robreno, J.
No, Federal Rule of Civil Procedure 23(b)(2) does not permit certification of a class action seeking an injunction ordering the return of forfeited property (restitution) because such relief would entail individualized monetary damages and risk precluding absent class members from pursuing other compensatory damages without due process protections like notice and opt-out rights. The court found that the proposed class satisfied the Rule 23(a) requirements of numerosity, commonality, and adequacy of representation, but modified the class definition to ensure typicality, limiting it to persons whose property was subject to forfeiture under the Controlled Substances Forfeiture Act (CSFA). The court determined that requests for a declaratory judgment declaring the City and D.A. Defendants’ policy unconstitutional and an injunction enjoining that policy were appropriate for Rule 23(b)(2) certification, as these forms of relief apply generally to the class and would benefit the class as a whole. However, the request for an injunction ordering the return of forfeited property was not certifiable under Rule 23(b)(2). Citing Wal-Mart Stores, Inc. v. Dukes, the court explained that Rule 23(b)(2) does not authorize class certification when each class member would be entitled to an individualized award of monetary damages. While restitution claims are not entirely prohibited under Rule 23(b)(2), the “restitution” sought here, which included the return of various forms of property (cash, real property, etc.), could be considered a form of compensatory damages. Crucially, individual class members might also have other valid claims for compensatory and punitive damages (e.g., emotional harm, legal fees) under 42 U.S.C. § 1983, which would require individualized inquiries. Certifying the restitution claim under Rule 23(b)(2) without notice or opt-out rights (which are not ordinarily provided for (b)(2) classes) raises significant due process concerns, as absent class members could be collaterally estopped from later seeking these additional damages. This scenario also creates "perverse incentives" for class representatives to prioritize forms of relief that facilitate certification over those potentially more beneficial to individual class members. Since a simple return of property might be inadequate compensation for some class members (e.g., if property was sold, lost, or already returned without compensation for interim losses), this form of relief would not necessarily benefit "the class as a whole."
Analysis:
This case significantly clarifies the limitations of Rule 23(b)(2) class certification when monetary relief is intertwined with requests for injunctive or declaratory relief in civil rights actions. It reinforces the Supreme Court’s Wal-Mart v. Dukes precedent, emphasizing that claims for "individualized monetary damages," even when framed as restitution for property return, are generally inappropriate for Rule 23(b)(2) classes. The decision highlights the critical due process concerns related to the lack of notice and opt-out rights for absent class members in (b)(2) actions, who might otherwise be precluded from pursuing more extensive compensatory damages. This ruling encourages courts to rigorously scrutinize the nature of monetary relief sought in (b)(2) classes to ensure that class representatives do not inadvertently sacrifice broader individual claims for the sake of class certification ease, thereby impacting future cases involving governmental policies that result in both systemic harm and individualized monetary losses.
