## Facts

- Fibreboard faced thousands of asbestos personal-injury claims annually and disputed insurance coverage with Continental Casualty and Pacific Indemnity.
- Fibreboard, insurers, and plaintiffs’ counsel negotiated a global settlement valuing asbestos liability at $1.535 billion, largely funded by the insurers, with Fibreboard contributing $10 million.
- The parties also executed a backup agreement under which insurers would provide $2 billion for defense and payment of judgments if the global settlement failed.
- Named plaintiffs filed a federal action seeking certification, for settlement purposes only, of a mandatory class under Rule 23(b)(1)(B) based on a “limited fund” theory, with no opt-out.
- The proposed class included certain present and future claimants but excluded (among others) claimants with pending suits against Fibreboard and some previously settled claimants who retained rights to sue for later-developing malignancies.
- The district court certified the class and approved the settlement as fair under Rule 23(e); the Fifth Circuit affirmed.

## Issues

1. Whether the Court could decide the propriety of class certification (as a logically antecedent threshold issue) before resolving disputed Article III standing questions.
2. Whether a mandatory settlement class in asbestos personal-injury litigation was properly certifiable under Rule 23(b)(1)(B) as a limited-fund class when the fund’s limits were substantially defined by agreement and the class structure presented material intra-class conflicts.

## Decision

- The Court addressed the class-certification question before definitively resolving Article III standing, treating certification as logically antecedent.
- The Court reversed approval of the mandatory Rule 23(b)(1)(B) settlement class and remanded.
- The Court held the record did not support the premises of a historically grounded limited-fund class action.
- The Court found the asserted “limited fund” was not shown to be independently limited, the class did not include all competing claimants, and the settlement failed to provide adequate structural protection for conflicting claimant groups.

## Legal Principles

- In limited-fund cases, a court may resolve class-certification requirements that are logically antecedent to contested Article III standing issues.
- Rule 23(b)(1)(B) “limited fund” certification is constrained by the historical model and requires, at minimum:
  - A fund with a definite, independently determined maximum that is inadequate to satisfy all claims;
  - Inclusion of all persons with claims that could compete for and deplete the fund; and
  - Equitable allocation of the fund among claimants, with representation structured to address conflicting interests within the class.
- A settlement-only posture does not relax Rule 23 requirements; mandatory, no-opt-out classes require especially rigorous scrutiny of adequacy of representation and internal conflicts.
- Parties may not create a cognizable limited fund primarily through their negotiated settlement terms, particularly where alternative agreements suggest additional resources or a nonfixed ceiling.

## Conclusion

The Court rejected use of Rule 23(b)(1)(B) to impose a mandatory asbestos settlement class where the alleged limited fund was not independently demonstrated, the class was not inclusive of all competing claimants, and intra-class conflicts were not cured through adequate structural representation, requiring reversal of certification and settlement approval.


Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999)