## Facts

- Current and former smokers with smoking-related diseases sued major cigarette manufacturers, alleging a long-running scheme to mislead the public about smoking’s health risks.
- Plaintiffs sought punitive damages only, under multiple states’ laws, on behalf of a nationwide class.
- The district court certified a nationwide, non-opt-out class under Rule 23(b)(1)(B).
- Certification rested on a “limited punishment” theory: due process allegedly imposes a constitutional ceiling on total punitive damages for the challenged conduct, creating a “limited fund” that should be allocated through a mandatory class action.
- Defendants obtained interlocutory review under Rule 23(f).

## Issues

1. Whether a nationwide, non-opt-out punitive-damages-only class may be certified under Rule 23(b)(1)(B) on the theory that due process creates a constitutionally limited “fund” for punitive damages.
2. Whether the record satisfied the requirements for limited-fund certification described in Supreme Court precedent, including proof of a definite, inadequate fund and a basis for equitable allocation.

## Decision

- The Second Circuit vacated the class certification order and remanded.
- The court held plaintiffs failed to meet the requirements for Rule 23(b)(1)(B) limited-fund treatment because the record did not permit determination of the fund’s limits or the aggregate value of punitive claims against it.
- The court stated its holding rested on incompatibility with the limited-fund framework, while noting additional due-process concerns with a punitive-only class approach.

## Legal Principles

- Rule 23(b)(1)(B) limited-fund certification requires a preexisting, definitely ascertained fund, proof the fund is inadequate to satisfy all claims, and a method for equitable distribution among similarly situated claimants.
- A speculative, judicially inferred constitutional ceiling on aggregate punitive damages is not an “objectively limited fund” suitable for mandatory class treatment.
- Without evidence establishing both the fund’s size and the total competing claims, a court cannot find the fund inadequate, a necessary predicate for limited-fund certification.
- Due process constraints on punitive damages require a sufficient connection between punitive awards and the harm to the plaintiffs, and reasonableness and proportionality in relation to compensatory harm; a punitive-damages-only class raises serious difficulties in satisfying those constraints.

## Conclusion

The Second Circuit rejected using an asserted constitutional aggregate cap on punitive damages as a Rule 23(b)(1)(B) limited fund, vacated certification of a nationwide mandatory punitive-damages-only class, and remanded for further proceedings.


In re Simon II Litigation, 407 F.3d 125 (2d Cir. 2005)