## Facts

- Multiple public school districts sued numerous asbestos-related companies to recover costs of testing, monitoring, and removing asbestos-containing materials from school buildings.
- Plaintiffs sought compensatory damages (abatement-related costs) and punitive damages, citing widespread asbestos presence in schools and regulatory pressures to address hazards.
- The district court conditionally certified:
  - A non-opt-out nationwide class for punitive damages under Federal Rule of Civil Procedure 23(b)(1)(B).
  - An opt-out nationwide class for compensatory damages under Rule 23(b)(3).
- The district court denied certification under Rule 23(b)(2) for injunctive or declaratory relief.
- Defendants and some school districts appealed the certifications and related injunctions tied to the mandatory punitive-damages class.

## Issues

1. Whether a nationwide mandatory punitive-damages class was proper under Rule 23(b)(1)(B) based on a “limited fund” theory.
2. Whether conditional certification of an opt-out compensatory-damages class was proper under Rule 23(b)(3), including predominance, superiority, and manageability.
3. Whether certification under Rule 23(b)(2) was appropriate where monetary relief predominated.
4. Whether injunctions enforcing the mandatory punitive-damages class were permissible, including in light of the Anti-Injunction Act.

## Decision

- The court reversed certification of the Rule 23(b)(1)(B) mandatory punitive-damages class.
- The court affirmed denial of Rule 23(b)(2) certification.
- The court affirmed (despite manageability concerns) the district court’s conditional certification of the Rule 23(b)(3) opt-out compensatory-damages class.
- Because the mandatory punitive-damages class was rejected, injunctions predicated on that class lacked a valid foundation.

## Legal Principles

- A Rule 23(b)(1)(B) mandatory class requires rigorous, specific findings establishing a true limited fund; assumptions about defendants’ overall exposure or capacity to pay are insufficient.
- A purported limited-fund mandatory class may be improper if it is materially under-inclusive—i.e., it excludes large categories of competing claimants who could draw on the same alleged fund.
- Rule 23(b)(3) certification may be conditionally permitted in complex litigation where common issues can be tried collectively, even if significant manageability problems may later require subclassing, issue structuring, modification, or decertification.
- Rule 23(b)(2) is generally inappropriate when the primary relief sought is monetary damages rather than classwide injunctive or declaratory relief.
- Efforts to control parallel proceedings through nationwide aggregation and related injunctions raise serious limits under the Anti-Injunction Act and require careful justification.

## Conclusion

The Third Circuit limited use of Rule 23(b)(1)(B) in mass-tort punitive-damages aggregation by requiring concrete limited-fund findings and rejecting under-inclusive mandatory classes, while allowing a cautiously managed, conditional Rule 23(b)(3) compensatory-damages class to proceed and affirming that predominantly monetary claims do not fit Rule 23(b)(2).


In re School Asbestos Litigation, 789 F.2d 996 (3d Cir. 1986)