IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-40605

DAVID CRUSON; JOHN DENMAN,

Plaintiffs - Appellees

JACKSON NATIONAL LIFE INSURANCE COMPANY,

Defendant - Appellant

Appeal from the United States District Court

for the Eastern District of Texas

Before CLEMENT, DUNCAN, and OLDHAM, Circuit Judges.

STUART KYLE DUNCAN, Circuit Judge:

David Cruson and other Texas residents brought a putative class action

lawsuit against Jackson, a life insurance company that sells annuities,

claiming Jackson overcharged them by miscalculating early-withdrawal fees

in breach of the annuities contracts. The district court certified a nationwide

class of similarly-situated investors and determined that Jackson had waived

its personal jurisdiction defense as to any non-Texas class members. On

interlocutory appeal, we conclude that the district court’s order is flawed in the

following respects. First, we conclude that Jackson did not waive its personal

jurisdiction defense as to non-Texas class members. Second, we conclude that

the district court erred in its predominance analysis—specifically, by failing to

United States Court of Appeals

Fifth Circuit

FILED

March 25, 2020

Lyle W. Cayce

Clerk

No. 18-40605

assess how state-law variations may impact adjudication of the breach

question and also by failing to consider the individualized evidence relevant to

Jackson’s affirmative defenses of waiver and ratification. Third, we conclude

that the plaintiffs failed to offer a damages model adequate to support class

treatment, an issue they virtually conceded at oral argument. We therefore

vacate the class certification order and remand for further proceedings.

Jackson National Life Insurance Company, a Michigan corporation, sells

variable annuities to customers nationwide through a network of brokers and

other intermediaries. Because the annuities are structured as long-term

investments, a customer who withdraws money early incurs charges meant to

compensate Jackson for up-front costs, such as commissions paid to brokers

and enhancements added to the annuities. Different charges, collectively called

“surrender charges,” are calculated according to a schedule of percentages that

decrease with the annuity’s age.

In other words, the longer a customer has

held an annuity, the lower the surrender charge.

In November 2016, fourteen Texas residents sued Jackson in federal

district court for breach of contract, breach of fiduciary duty, and negligent

misrepresentation. The plaintiffs—who had all bought Jackson annuities

through a Texas broker, Tim Hightower—alleged Jackson had miscalculated

their surrender charges in violation of the annuity contracts, resulting in lost

income for them and a windfall for Jackson. The plaintiffs also alleged their

living and death benefits under the annuities had been improperly reduced due

to the inflated surrender charges. They sought compensatory and punitive

Surrender charges include “withdrawal charges” and “recapture charges,” each

calculated according to a different percentage scale. Withdrawal charges reimburse for costs

like brokers’ commissions, whereas recapture charges reimburse for “contract enhancements”

Jackson adds to each premium paid.

No. 18-40605

damages, as well as injunctive relief. They also sought to bring claims on behalf

of a nationwide class, consisting of all Jackson customers who had incurred

surrender charges.

A complex procedural history followed. Jackson moved to dismiss the

complaint under Rules 12(b)(1) and 12(b)(6) for lack of standing and failure to

state a claim. Plaintiffs then filed an amended complaint, and Jackson again

moved to dismiss under Rules 12(b)(1) and 12(b)(6). The district court denied

Jackson’s motion in large part but did dismiss the claims of three plaintiffs on

standing grounds because they had admittedly never incurred surrender

charges.

In neither of Jackson’s Rule 12 motions did it raise lack of personal

jurisdiction as a defense. In its subsequent answer, however, Jackson stated

that, “[t]o the extent that a class outside of Texas is certified, [it was] denied

that [the district court] has personal jurisdiction over Jackson for the

remaining two-thirds of the putative class members residing outside of Texas.”

Plaintiffs then moved to certify a nationwide class under Rule 23(b)(3),

alleging Jackson’s inflated surrender charges had harmed roughly 150,000

people. In support, plaintiffs introduced an expert report which proposed a

damages calculation for inflated surrender charges but not for damages

associated with living and death benefits.

Jackson opposed class certification,

arguing inter alia that contract formation issues, affirmative defenses, and

damages calculations would require individual determinations that would

predominate over common issues. Moreover, Jackson again raised lack of

personal jurisdiction, arguing that specific jurisdiction over Jackson as to

claims by non-Texas residents was foreclosed by the Supreme Court’s recent

Additionally, plaintiffs did not oppose dismissal of their negligent misrepresentation

claim.

The report stated the expert had not received the necessary information from

Jackson with respect to living and death benefits.

No. 18-40605

decision in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct.

1773 (2017).

On the same day that Jackson filed its response opposing class

certification, Jackson also moved for summary judgment. The district court

subsequently held a class certification hearing in March 2018.

After the hearing, but before any certification ruling, all but one of the

original plaintiffs moved to voluntarily dismiss their claims, stating they would

seek relief in state court. While that motion was pending, plaintiffs moved to

amend their complaint to add an additional plaintiff, John Denman, as a

potential class representative, to join David Cruson (the one original plaintiff

not moving to dismiss his claims). While all initial plaintiffs had been clients

of Tim Hightower, Denman had bought annuities through a different broker.

Bristol-Myers held that, in a mass tort action, a California court could not exercise

specific jurisdiction over a non-California corporation with respect to claims by nonresidents

based on conduct and injuries outside California. See 137 S. Ct. at 1781–82. The decision left

open how it would apply to federal courts or class actions. See id. at 1784 (leaving “open the

question whether the Fifth Amendment imposes the same restrictions on the exercise of

personal jurisdiction by a federal court”); id. at 1789 n.4 (Sotomayor, J., dissenting) (noting

decision does not address whether it “would also apply to a class action in which a plaintiff

injured in the forum State seeks to represent a nationwide class of plaintiffs, not all of whom

were injured there”). One commentator has predicted that, while “[n]ationwide class actions

filed against large national corporations in states that are not their homes have not raised

significant personal jurisdiction challenges,” “[t]his is likely to change in wake of Bristol-

Myers Squibb.” 2 W

ILLIAM B. RUBENSTEIN, NEWBERG ON CLASS ACTIONS § 6:26 (5th ed. 2012)

[hereinafter N

EWBERG]. To date, courts have split on how Bristol-Myers applies to class

actions brought in federal court. Compare DeBernardis v. NBTY, Inc., No. 17 C 6125, 2018

WL 461228, at *2 (N.D. Ill. Jan. 18, 2018) (concluding it “more likely than not” that “courts

will apply [Bristol-Myers] to outlaw nationwide class actions . . . where there is no general

jurisdiction over the Defendants”), and Molock v. Whole Foods Mkt. Grp., Inc., No. 18-7162,

2020 WL 1146733, at *9–12 (D.C. Cir. Mar. 10, 2020) (Silberman, J., dissenting) (concluding

Bristol-Myers applies to class actions in federal court), with Casso’s Wellness Store & Gym,

L.L.C. v. Spectrum Lab. Prods., Inc., No. 17-2161, 2018 WL 1377608, at *5 (E.D. La. Mar. 19,

2018) (agreeing with courts that “have declined to extend the holding in Bristol-Myers to class

actions” given “the material differences between mass tort actions and class actions”), and

Mussat v. IQVIA, Inc., No. 19-1204, 2020 WL 1161166, at *2–4 (7th Cir. Mar. 11, 2020)

(Bristol-Myers does not apply to class actions because only named class representatives, not

unnamed class members, must demonstrate personal jurisdiction). See also, e.g., 2 N

EWBERG

§ 6:26 (noting “district court[ ] decisions have advanced divergent interpretations of Bristol-

Myers Squibb’s effect on class action practice”) (and collecting cases).

No. 18-40605

Jackson opposed this addition, claiming it was too late to add a named party

and that doing so would prejudice Jackson.

On May 9, 2018, the district court issued an order addressing three

issues. First, the court granted plaintiffs’ motion to add Denman. Second, the

court held that Jackson had waived any personal jurisdiction defense by failing

to raise it in its Rule 12 motions and, alternatively, by litigating on the merits

of plaintiffs’ claims. Third, the district court certified a nationwide class

composed of “[a]ll persons who, within the applicable statute of limitations,

purchased [various] variable annuity products from [Jackson] or its affiliates,

and incurred a Surrender Charge during their ownership of such product.”

The court found that determining the correct calculation of surrender charges

under Jackson’s contracts, an issue common to all plaintiffs, would

“predominate over any questions affecting only individual members.” See F

ED.

R. CIV. P. 23(b)(3). The court further held that predominance was not defeated

by issues pertaining to affirmative defenses or damages calculations.

We granted Jackson permission to appeal the district court’s class

certification order under Federal Rule of Civil Procedure 23(f). On appeal,

Jackson challenges the certification order on three fronts. First, Jackson

reasserts its claim that the district court lacks personal jurisdiction over it with

respect to the claims of potential class members outside Texas, and argues that

the court erred in holding that Jackson waived its personal jurisdiction

defense. Second, Jackson contends that the district court erred in concluding

that issues common to the class predominated over individualized issues.

The certified class excludes Jackson investors whose contracts were issued in

Louisiana or Tennessee.

No. 18-40605

Finally, Jackson argues that the district court erred in certifying a class when

plaintiffs failed to provide a damages model.

II.

Our court has not settled the standard for reviewing a district court’s

finding of waiver of personal jurisdiction. See In re Depuy Orthopaedics, Inc.,

870 F.3d 345, 351 n.43 (5th Cir. 2017) (stating “[w]e need not decide th[e]

standard-of-review question” for personal jurisdiction waiver); id. at 359

(Jones, J., concurring in part and dissenting in part) (noting majority “takes

no firm position on . . . [whether] waiver of personal jurisdiction should be

reviewed for abuse of discretion”). Several circuits review waiver for abuse of

discretion, reasoning that the finding pertains to the “[district court’s] broad

duties in managing the conduct of cases pending before it.” Lechoslaw v. Bank

of Am., N.A., 618 F.3d 49, 55–56 (1st Cir. 2010) (quoting United States v.

Ziegler Bolt & Parts Co., 111 F.3d 878, 882 (Fed. Cir. 1997)); see also, e.g.,

InfoSpan, Inc. v. Emirates NBD Bank PJSC, 903 F.3d 896, 900 (9th Cir. 2018);

Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 60 (2d Cir. 1999). By contrast, the

Tenth Circuit treats the issue as a mixed question of law and fact, reviewing

pertinent factual findings for clear error but legal conclusions de novo. Am.

Fid. Assurance Co. v. Bank of N.Y. Mellon, 810 F.3d 1234, 1237 (10th Cir.

2016). Much recommends the Tenth Circuit’s nuanced approach, given the

presence of personal jurisdiction is itself a legal question reviewed de novo. See

Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 652 (5th Cir. 2002)

(“Whether in personam jurisdiction can be exercised over a defendant is a

question of law subject to de novo review by this court.”); see also, e.g.,

Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522,

The district court stayed proceedings pending appeal, except for Jackson’s pending

summary judgment motion. The court subsequently granted summary judgment for Jackson

on the breach of fiduciary duty claims but denied summary judgment on all other claims.

No. 18-40605

539 (5th Cir. 2019) (reviewing de novo “a district court’s decision to grant a

motion to dismiss for lack of personal jurisdiction”). We need not choose sides

in this debate, however. As explained below, even under an abuse of discretion

standard we conclude the district court committed reversible error in finding

Jackson waived the defense of personal jurisdiction.

We review the district court’s class certification order for abuse of

discretion. Crutchfield v. Sewerage & Water Bd. of New Orleans, 829 F.3d 370,

375 (5th Cir. 2016); Union Asset Mgmt. Holding A.G. v. Dell, Inc., 669 F.3d 632,

638 (5th Cir. 2012). We review the legal conclusions in the order de novo,

“[b]ecause . . . a court by definition abuses its discretion when it applies an

incorrect legal standard.” Steering Comm. v. Exxon Mobil Corp., 461 F.3d 598,

601 (5th Cir. 2006). While retaining broad discretion to certify a class, “[a]

district court must rigorously analyze Rule 23’s prerequisites before certifying

a class.” Spence v. Glock, Ges.m.b.H., 227 F.3d 308, 310 (5th Cir. 2000) (citing

Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982); Castano v. Am. Tobacco Co.,

84 F.3d 734, 740 (5th Cir. 1996)). Finally, “if the district court has committed

legal error in the predominance inquiry, reversal is required.” Id. at 311.

III.

We first consider whether Jackson waived its defense of personal

jurisdiction, either by failing to raise the defense in its Rule 12 motions or else

by litigating the merits. Jackson denies both conclusions. It argues that the

personal jurisdiction defense was not “available” as to the putative class of non-

Texas residents (and so could not be waived) when it filed its Rule 12 motions.

Jackson also argues that its litigation conduct was consistent with preserving

its objection to personal jurisdiction, which it raised in both its answer and

No. 18-40605

opposition to class certification. We agree with Jackson that it did not waive

its personal jurisdiction defense.

Federal Rule of Civil Procedure 12(h)(1) relevantly provides that a party

waives the defense of lack of personal jurisdiction by “omitting it from a motion

in the circumstances described in Rule 12(g)(2).” F

ED. R. CIV. P. 12(h)(1)(A).

Rule 12(g)(2) prohibits a party from a raising a defense “that was available to

the party but omitted from its earlier [Rule 12] motion.” F

ED. R. CIV. P. 12(g)(2).

Thus, lack of personal jurisdiction is waived if a party omits the defense from

a Rule 12 motion and the defense was “available.” See Jackson v. FIE Corp.,

302 F.3d 515, 523 (5th Cir. 2002); Cactus Pipe & Supply Co. v. M/V

Montmartre, 756 F.2d 1103, 1107–08 (5th Cir. 1985). See generally 5C C

HARLES

ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE

§ 1391 (3d ed. 2004) [hereinafter W

RIGHT & MILLER] (discussing waiver under

Rule 12(h)(1)). A defense is not “available” under Rule 12(g)(2), for instance, if

“its legal basis did not [then] exist,” Gilmore v. Palestinian Interim Self-Gov’t

Auth., 843 F.3d 958, 964 (D.C. Cir. 2016), or if the defense would have been

“futile” in the sense it was precluded by controlling precedent, In re Micron

Tech., Inc., 875 F.3d 1091, 1097–98 (Fed. Cir. 2017) (collecting decisions). See

generally 5C W

RIGHT & MILLER § 1388 (discussing “available” factor under

Rule 12(g)).

The issue, then, is whether the personal jurisdiction defense was

“available” under Rule 12(g)(2) when Jackson filed its Rule 12 motions. We

We decline Jackson’s request to address the merits of its personal jurisdiction

defense for the first time on appeal. “[A]s we have repeatedly observed, we are a court of

review, not first view.” Lopez v. Pompeo, 923 F.3d 444, 450 (5th Cir. 2019) (Ho, J., concurring).

Because we find that Jackson did not waive the defense, and because we vacate the district

court’s certification order and remand for further proceedings, Jackson is free to raise the

defense again should plaintiffs seek to re-certify a class. We express no opinion on the merits

of the personal jurisdiction issue, should it be raised again on remand.

No. 18-40605

conclude it was not. Jackson’s objection to personal jurisdiction concerned only

class members who were non-residents of Texas. Those members, however,

were not yet before the court when Jackson filed its Rule 12 motions. What

brings putative class members before the court is certification: “Certification

of a class is the critical act which reifies the unnamed class members and,

critically, renders them subject to the court’s power.” In re Checking Account

Overdraft Litig., 780 F.3d 1031, 1037 (11th Cir. 2015); accord Molock, 2020 WL

1146733, at *3 (“Putative class members become parties to an action—and thus

subject to dismissal—only after class certification.” (citing In re Bayshore Ford

Trucks Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006))).

When Jackson filed

its pre-certification Rule 12 motions, however, the only live claims belonged to

the named plaintiffs, all Texas residents as to whom Jackson conceded

personal jurisdiction. See, e.g., Police & Fire Ret. Sys. of Detroit v. IndyMac

MBS, Inc., 721 F.3d 95, 112 n.22 (2d Cir. 2013) (noting “until certification there

is no class action but merely the prospect of one; the only action is the suit by

the named plaintiffs” (quoting Morlan v. Universal Guar. Life Ins. Co., 298

F.3d 609, 616 (7th Cir. 2002))).

Thus, at that time, a personal jurisdiction

See also, e.g., Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 75 (2013) (observing

“a putative class acquires an independent legal status once it is certified under Rule 23”);

Smith v. Bayer Corp., 564 U.S. 299, 313 (2011) (disapproving “the novel and surely erroneous

argument that a nonnamed class member is a party to the class-action litigation before the

class is certified” (quoting Devlin v. Scardelletti, 536 U.S. 1, 16 n.1 (2002) (Scalia, J.,

dissenting))); Sosna v. Iowa, 419 U.S. 393, 399 (1975) (upon certification, “the class of

unnamed persons . . . acquired a legal status separate from the [named plaintiff]”); Zeidman

v. J. Ray McDermott & Co., 651 F.2d 1030, 1045 (5th Cir. Unit A July 1981) (explaining “the

act of certification brought the unnamed members of the class before the court for Article III

purposes”) (discussing Sosna).

See also, e.g., Gibson v. Chrysler Corp., 261 F.3d 927, 940 (9th Cir. 2001) (observing

that “a class action, when filed, includes only the claims of the named plaintiff or plaintiffs”

and that “[t]he claims of unnamed class members are added to the action later, when the

action is certified as a class under Rule 23”); Biscone v. JetBlue Airways Corp., 681 F. Supp.

2d 383, 386 (E.D.N.Y. 2010) (“As a general rule, until a class action is certified pursuant to

Rule 23 of the Federal Rules of Civil Procedure, the claims of potential class members cannot

be considered.”). See generally 2 N

EWBERG § 7:12 (explaining that, before certification,

No. 18-40605

objection respecting merely putative class members was not “available,” as

Rule 12(g)(2) requires for waiver.

We find additional support for this conclusion in an analogous Eleventh

Circuit decision, In re Checking Account Overdraft Litigation. That case

addressed whether a defendant, who had waived arbitration against named

plaintiffs prior to class certification, should also be “preclude[d] . . . from

compelling arbitration of the unnamed putative class members’ claims.” 780

F.3d at 1034. The district court had extended the waiver to the putative class

members, id. at 1036, but the Eleventh Circuit reversed. It explained that,

“[a]bsent class certification, there is no justiciable controversy between [the

defendant] and the unnamed putative class members,” who “[were] not yet

before the court.” Id. at 1037. Consequently, any ruling by the district court

purporting to foreclose arbitration of “hypothetical” claims by “future” class

members was, the court concluded, “an impermissible ‘advisory opinion on an

abstract proposition of law.’” Id. (quoting Hall v. Beals, 396 U.S. 45, 48 (1969)

(per curiam)) (cleaned up).

Applying the Eleventh Circuit’s reasoning here, it is evident why a

personal jurisdiction objection was not “available” with respect to the putative

claims of unnamed Texas non-residents. Prior to certification, those non-

residents were “not yet before the [district] court,” their possible “future”

claims against Jackson were “hypothetical,” and so there was no “justiciable

controversy between [Jackson] and [them].” Id. To rule that Jackson was

required, on pain of waiver, to raise a personal jurisdiction objection against

those putative class members would validate “the novel and surely erroneous

argument that a nonnamed class member is a party to the class-action

“putative absent class members . . . remained complete nonparties” and so could not be bound

by a dispositive motion granted to defendants).

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litigation before the class is certified.” Bayer Corp., 564 U.S. at 313 (quoting

Devlin, 536 U.S. at 16 n.1 (Scalia, J., dissenting)). That we decline to do.

Alternatively, the district court ruled that Jackson waived the defense

“by delaying in challenging personal jurisdiction and substantially litigating

on the merits.” In particular, the district court faulted Jackson for “waiting

exactly seven months after Bristol-Myers” to raise a personal jurisdiction

objection. This reasoning is flawed. Jackson did not “delay” in raising an

objection to personal jurisdiction—it raised the defense in its answer and in its

opposition to class certification. Prior to class certification, we have already

explained, a personal jurisdiction defense as to putative non-resident class

members was not “available” under Rule 12. Although Bristol-Myers provided

new legal support for Jackson’s objection, the Supreme Court’s decision did not

make the objection “available.” Certification did.

Furthermore, nothing in Jackson’s subsequent litigation conduct was

inconsistent with maintaining an objection to personal jurisdiction. We have

“long held that a non-resident defendant may participate in litigation without

submitting to the court’s jurisdiction so long as it maintains its objection to

personal jurisdiction.” Halliburton, 921 F.3d at 540. The district court focused

on Jackson’s summary judgment motion, but the same day that was filed

Instead of addressing Jackson’s Rule 12 argument, the district court suggested

Jackson waived the argument by raising it in a sur-reply. We disagree. Jackson raised the

personal jurisdiction defense in opposing the motion for class certification. In reply, plaintiffs

argued for the first time that Jackson had waived the defense. Thus, the sur-reply was

Jackson’s first opportunity to contest waiver, and by briefing the issue there Jackson

preserved its argument. See, e.g., Hanson Pipe & Prods., Inc. v. Bridge Techs., LLC, 351 F.

Supp. 2d 603, 614 (E.D. Tex. 2004) (if a reply brief raised a new argument, the “sur-reply

would have been the appropriate time to counter [that] argument”), aff’d, 160 F. App’x 380

(5th Cir. 2005). Nor did Jackson concede personal jurisdiction as to non-Texas putative class

members in the parties’ Rule 26(f) Joint Conference Report. That report merely restated the

plaintiffs’ jurisdictional assertions—it did not reflect Jackson’s acquiescence to those

assertions.

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Jackson also filed its opposition to class certification, which raised lack of

personal jurisdiction as to “non-Texas putative class members.” In other words,

Jackson’s summary judgment motion did not waive its personal jurisdiction

defense because its contemporaneous litigation conduct “reflect[ed] a

continuing objection to the power of the court to act over the defendant’s

person.” PaineWebber Inc. v. Chase Manhattan Private Bank (Switz.), 260 F.3d

453, 460 (5th Cir. 2001) (quoting Alger v. Hayes, 452 F.2d 841, 844 (8th Cir.

1972)); see also Halliburton, 921 F.3d at 540 (explaining a non-resident

defendant may “simultaneously protest personal jurisdiction while vigorously

advocating the merits of his case” (quoting Toshiba Int’l Corp. v. Fritz 993 F.

Supp. 571, 573–74 (S.D. Tex. 1998))).

In sum, we conclude the district court legally erred, and thus abused its

discretion, in finding Jackson waived its personal jurisdiction defense.

We next consider the propriety of the district court’s order certifying a

nationwide class of Jackson customers who have incurred surrender charges.

Jackson argues that the district court erred in its Rule 23(b)(3) analysis by

concluding that common issues would predominate. According to Jackson,

individual issues predominate both in determining breach and in evaluating

affirmative defenses. Although we recognize that cases involving form

contracts are often prime candidates for class certification because of the

common interpretive questions at stake, we agree with Jackson that the

district court’s predominance analysis was deficient.

“To obtain class certification, parties must satisfy [Federal Rule of Civil

Procedure] 23(a)’s four threshold requirements, as well as the requirements of

Rule 23(b)(1), (2), or (3).” Ludlow v. BP, P.L.C., 800 F.3d 674, 682 (5th Cir.

2015) (alteration in original) (quoting Funeral Consumers All., Inc. v. Serv.

Corp. Int'l, 695 F.3d 330, 345 (5th Cir. 2012)). See generally Amchem Prods.,

No. 18-40605

Inc. v. Windsor, 521 U.S. 591, 613–14 (1997). After finding Rule 23(a)

satisfied,

the district court certified the nationwide class under Rule 23(b)(3),

which embodies two requirements: (1) “[c]ommon questions must ‘predominate

over any questions affecting only individual members’”; and (2) “class

resolution must be ‘superior to other available methods for the fair and efficient

adjudication of the controversy.’” Amchem, 521 U.S. at 615 (quoting F

ED. R.

CIV. P. 23(b)(3)).

Jackson’s arguments on appeal address only the district’s court’s

findings on the “predominance” prong, which Jackson contends are flawed in

two ways. First, Jackson argues the court failed to recognize that individual

issues would predominate over common issues of contract interpretation.

Second, Jackson argues the court misconstrued the law applicable to Jackson’s

affirmative defenses and thus failed to appreciate the individual issues that

would be raised by those defenses.

Before addressing those issues, we summarize the standards that guide

our analysis. “Where the plaintiff seeks to certify a class under Rule 23(b)(3),

the Rules demand ‘a close look at the case before it is accepted as a class

action.’” Madison v. Chalmette Refining, L.L.C., 637 F.3d 551, 554 (5th Cir.

2011) (quoting Amchem, 521 U.S. at 615). We have long cautioned that “[a]

district court must conduct a rigorous analysis of the rule 23 prerequisites

before certifying a class.” Castano, 84 F.3d at 740. Furthermore, “[t]he plain

text of Rule 23 requires the court to ‘find,’ not merely assume, the facts favoring

The Rule 23(a) prerequisites are (1) numerosity, (2) commonality, (3) typicality, and

(4) adequacy of representation. See Amchem, 521 U.S. at 613. Jackson does not directly

challenge the district court’s findings that the class satisfies those prerequisites. While

Jackson obliquely contests the commonality finding as to contract interpretation issues, its

arguments on that point are subsumed into its predominance argument. We therefore do not

consider any of the district court’s Rule 23(a) findings and focus only on the Rule 23(b)(3)

predominance findings.

No. 18-40605

class certification.” Unger v. Amedisys Inc., 401 F.3d 316, 321 (5th Cir. 2005)

(quoting F

ED. R. CIV. P. 23(b)(3)). “[I]t is the party seeking certification who

bears the burden of establishing that the requirements of Rule 23 have been

met.” Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 301 (5th Cir. 2003).

Our focus here is the Rule 23(b)(3) predominance requirement, which

“tests whether proposed classes are sufficiently cohesive to warrant

adjudication by representation.” Torres v. S.G.E. Mgmt., L.L.C., 838 F.3d 629,

636 (5th Cir. 2016) (en banc) (quoting Amchem, 521 U.S. at 623). Predominance

is a “far more demanding” hurdle than Rule 23(a)’s commonality requirement.

Amchem, 521 U.S. at 623–24; see also, e.g., Maldonado v. Ochsner Clinic

Found., 493 F.3d 521, 525 (5th Cir. 2007) (predominance is “more demanding

than the commonality requirement of Rule 23(a)” (quoting Bell Atl., 339 F.3d

at 301)). Assessing predominance “calls upon courts to give careful scrutiny to

the relation between common and individual questions in a case.” Tyson Foods,

Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016). The Supreme Court has

distinguished common and individual questions this way:

An individual question is one where “members of a proposed class

will need to present evidence that varies from member to member,”

while a common question is one where “the same evidence will

suffice for each member to make a prima facie showing [or] the

issue is susceptible to generalized, class-wide proof.”

Id. (alteration in original) (quoting 2 N

EWBERG § 4:50); see also, e.g.,

Crutchfield, 829 F.3d at 376–78 (discussing individual versus common

questions).

See also, e.g., Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1029 (8th Cir. 2010)

(explaining that “[a]t the core of Rule 23(b)(3)’s predominance requirement is the issue of

whether the defendant’s liability to all plaintiffs may be established with common evidence,”

or, conversely, whether “the members of a proposed class will need to present evidence that

varies from member to member” (quoting Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir.

2005))); In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 136 (2d Cir. 2001)

(predominance requires showing that issues “subject to generalized proof” predominate over

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When “one or more of the central issues in the action are common

to the class and can be said to predominate, the action may be

considered proper under Rule 23(b)(3) even though other

important matters will have to be tried separately, such as

damages or some affirmative defenses peculiar to some individual

class members.”

Tyson Foods, 136 S. Ct. at 1045 (quoting 7AA W

RIGHT & MILLER § 1778).

“At bottom, the [predominance] inquiry requires the trial court to weigh

common issues against individual ones and determine which category is likely

to be the focus of a trial.” Crutchfield, 829 F.3d at 376; see also, e.g., Sandwich

Chef of Tex., Inc. v. Reliance Nat’l Indem. Ins. Co., 319 F.3d 205, 218 (5th Cir.

2003) (court considers “how a trial on the merits would be conducted if a class

were certified”). The court must “go[ ] beyond the pleadings” to “understand

the claims, defenses, relevant facts, and applicable substantive law.” Madison,

637 F.3d at 555 (quoting Unger, 401 F.3d at 321). “This, in turn, ‘entails

identifying the substantive issues that will control the outcome, assessing

which issues will predominate, and then determining whether the issues are

common to the class,’ a process that ultimately ‘prevents the class from

degenerating into a series of individual trials.’” Id. (quoting O’Sullivan v.

Countrywide Home Loans, Inc., 319 F.3d 732, 738 (5th Cir. 2003)).

Having set out the governing standards, we turn to Jackson’s arguments.

Jackson first argues that, contrary to the district court’s ruling,

individual issues will predominate over common issues in determining

whether Jackson breached the annuity contracts by miscalculating surrender

charges. The court relied on Jackson’s stipulations that there are “no material

issues “subject only to individualized proof” (quoting Rutstein v. Avis Rent–A–Car Sys., Inc.,

211 F.3d 1228, 1233 (11th Cir. 2000))), overruled on other grounds by In re Initial Pub.

Offerings Sec. Litig., 471 F.3d 24 (2d Cir. 2006); Beatty v. CenturyTel, Inc., 511 F.3d 554, 564

(6th Cir. 2007) (same).

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differences” in the pertinent contract language and that Jackson calculates

surrender charges “uniformly”; it also noted that “neither party asserts that

the contract is ambiguous.” The court thus reasoned that the only evidence

necessary to prove breach is “whether class members purchased an annuity

policy with Jackson and whether they suffered a surrender charge.” The only

disputed issue, the court continued, was whether “Jackson’s method of

calculating surrender charges is permitted by Jackson’s contracts” and that

could be done on a class-wide basis: “For every class member, the answer will

uniformly be either ‘yes’ or ‘no.’” Jackson argued that, to the contrary,

determining breach would involve consideration of extrinsic evidence—for

example, prospectuses accompanying the annuity contracts and individual

brokers’ advice illustrating the surrender charge calculations—that must be

assessed on a case-by-case basis according to varying state-law standards. The

court rejected Jackson’s argument, reasoning that courts “routinely” certify

class actions involving “form contracts” like Jackson’s, and that it was “hard to

see what extrinsic evidence would be relevant to interpreting [such]

unambiguous form contract[s].” Jackson renews its arguments on appeal. We

agree with Jackson that the district court’s predominance inquiry failed to

rigorously analyze the potential impact of state-law variations on the question

of breach, as our precedents require.

Where a proposed class stretches across multiple jurisdictions, we have

underscored that a Rule 23(b)(3) analysis must carefully consider variations in

pertinent state laws:

[I]n a class action governed by the laws of multiple

states, . . . “variations in state law may swamp any common issues

and defeat predominance.” The party seeking certification of a

nationwide class must therefore “provide an ‘extensive analysis’ of

state law variations to reveal whether these pose ‘insuperable

obstacles.’” And the district court must then “consider how

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[variations in state law] affect predominance.” Failure to engage in

an analysis of state law variations is grounds for decertification.

Cole v. Gen. Motors Corp., 484 F.3d 717, 724 (5th Cir. 2007) (citations omitted)

(first quoting Castano, 84 F.3d at 741; then quoting Spence, 227 F.3d at 313;

and then quoting Castano, 84 F.3d at 740). Here, the district court provided

only a cursory analysis on this key point. That is reversible error. See, e.g.,

Castano, 84 F.3d at 742 (vacating predominance finding because court

“conducted a cursory review of state law variations and gave short shrift to the

defendants’ arguments concerning [state-law] variations”).

As noted, the district court’s decision not to delve into state-law

variations rested on its conclusion that the central interpretive issue in the

case could be resolved by parsing the contract language alone. The court

thought it unlikely that extrinsic evidence was “relevant to interpreting

unambiguous form contract terms.” Even if that is right, the court needed to

conduct an “extensive analysis” of whether any state-law variations existed

and, if they did, determine whether those variations defeated predominance.

Cole, 484 F.3d at 724. Whether the district court’s conclusion is ultimately

correct or not, its failure to conduct a thorough analysis was reversible error.

We recognize that suits involving form contracts often lend themselves

to class treatment. See, e.g., Sacred Heart Health Sys., Inc. v. Humana Military

Healthcare Servs., Inc., 601 F.3d 1159, 1171 (11th Cir. 2010) (observing “[i]t is

the form contract, executed under like conditions by all class members, that

best facilitates class treatment”); Kolbe v. BAC Home Loans Servicing, LP, 738

F.3d 432, 441 (1st Cir. 2013) (explaining that class certification is generally

This may have been due, in part, to the plaintiffs’ failure to satisfy their burden of

providing the district court with an “extensive analysis” of pertinent state-law variations.

Cole, 484 F.3d at 724. While plaintiffs did submit a chart addressing state laws on certain

interpretation issues, they provided no analysis of state-law variations on the use of extrinsic

evidence.

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proper where the outcome will not depend on extrinsic evidence “that would be

different for each putative class member”); 2 N

EWBERG § 3.24 (explaining that

claims arising out of “form contracts” are often “particularly appropriate for

class action treatment”). But this is not always so. Predominance in form

contract cases may be defeated, for instance, “if individualized extrinsic

evidence bears heavily on the interpretation of the class members’

agreements,” or if “there may be considerable variation in the state law under

which any extrinsic evidence would have to be scrutinized.” Sacred Heart

Health Sys., 601 F.3d at 1176–77, 1180. Because of this possibility, it is

incumbent on the district court to undertake a “rigorous analysis” of the

predominance requirements, “including the question of whether variations in

state law will destroy predominance.” Id. at 1180; see also, e.g., Spence, 227

F.3d at 313 (noting “the court’s duty to determine whether the plaintiffs have

borne their burden where a class will involve multiple jurisdictions and

variations in state law”); cf., e.g., McKeage v. TMBC, LLC, 847 F.3d 992, 999

(8th Cir. 2017) (predominance requirement met in nationwide form contract

class where, inter alia, all claims were governed by Missouri law). One such

rigorous predominance analysis appears in Steinberg v. Nationwide Mutual

Insurance Co., involving a 46-state putative class claiming breach of standard-

form car insurance contracts. 224 F.R.D. 67, 76 (E.D.N.Y. 2004). Assisted by

the plaintiffs’ extensive “50-state breach of contract analysis,” the district court

concluded that states could be grouped into four categories based on their

varying contract interpretation laws. Id. at 77–78. The court found that these

state-law differences would be manageable in the class context or,

alternatively, that sub-classes could be created based on the four categories.

Id. at 78. This is the kind of “extensive analysis,” Cole, 484 F.3d at 724, of the

potential impact of state-law variations on predominance that the district court

should conduct on remand.

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Jackson next argues that predominance is also defeated by its

affirmative defenses of waiver and ratification. Those defenses, Jackson urges,

depend on individual class members’ knowledge of the facts surrounding

formation of the annuity contracts, thus privileging individual issues over

common ones. The district court disagreed, rejecting the salience of Jackson’s

affirmative defenses to predominance. We agree with Jackson that the district

court erred in assessing the impact of Jackson’s affirmative defenses on

predominance.

“We have noted that the ‘predominance of individual issues necessary to

decide an affirmative defense may preclude class certification.’” Gene & Gene

LLC v. BioPay LLC, 541 F.3d 318, 327 (5th Cir. 2008) (quoting In re

Monumental Life Ins. Co., 365 F.3d 408, 420 (5th Cir. 2004)). Even in form

contract cases, “[t]he risk of voluminous and individualized extrinsic proof

[defeating predominance] runs particularly high where a defendant raises

substantial affirmative defenses to breach.” Sacred Heart Health Sys., 601 F.3d

at 1177. Here the pertinent defenses are waiver and ratification. The

gravamen of Jackson’s waiver defense is that individual class members waived

any objection to the calculation of surrender charges by knowingly accepting

charges calculated according to Jackson’s formula. See, e.g., Jernigan v.

Langley, 111 S.W.3d 153, 156 (Tex. 2003) (under Texas law, waiver is “an

intentional relinquishment of a known right or intentional conduct

inconsistent with claiming that right” (quoting Sun Expl. & Prod. Co. v.

Benton, 728 S.W.2d 35, 37 (Tex. 1987))). Similarly, the gravamen of Jackson’s

ratification defense is that individual class members ratified Jackson’s

calculation of surrender charges by accepting those charges with full

knowledge of the surrounding facts. See, e.g., Fortune Prod. Co. v. Conoco, Inc.,

52 S.W.3d 671, 678 (Tex. 2000) (“Ratification is the adoption or confirmation

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by a person with knowledge of all material facts of a prior act which did not

then legally bind him and which he had the right to repudiate.” (quoting

Spellman v. Am. Universal Inv. Co., 687 S.W.2d 27, 29 (Tex. App.—Corpus

Christi 1984, writ ref’d n.r.e.))). Jackson argues that assessing the validity of

these affirmative defenses “will require individual inquiries into the

knowledge and actions of each class member, overwhelming predominance.”

The district court rejected this argument. It reasoned that these

affirmative defenses would require class members to know not only the facts

informing contract formation, such as the advice given by brokers or the

contents of prospectuses annexed to the contracts, but also the “proper

interpretation” of the surrender charge provisions and the “unlawfulness” of

Jackson’s conduct. Because customers could not have been aware of this

knowledge “until either liability is established or Jackson admits that its

actions were unlawful,” the district court held that Jackson’s affirmative

defenses could not defeat predominance. Jackson argues that the district court

legally erred in requiring this kind of legal knowledge to trigger waiver or

ratification. We agree.

Generally speaking, the knowledge contemplated in the defenses of

waiver or ratification is knowledge of the essential facts of a transaction, not

the legal effects of those facts. See, e.g., R

ESTATEMENT (SECOND) OF CONTRACTS

§ 93 (1981) (making various promises non-binding unless promisor “knew or

had reason to know the essential facts . . . but his knowledge of the legal effects

of the facts is immaterial”); id. § 84 cmt. b (rejecting for waiver purposes “the

incorrect inference that the promisor must know his legal rights,” while

explaining “it is sufficient if he has reason to know the essential facts”);

ILLISTON ON CONTRACTS § 39:22 (4th ed. 1999) (explaining “a waiver made

with knowledge of facts which would put an ordinary person on inquiry is

sufficient” but “it is not necessary that the party charged with a waiver be

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aware of the exact legal nature or scope of the right being relinquished or of

the legal effect of the right at issue”). Based on these authorities, one well-

reasoned Texas decision explains that “[p]roof regarding a party’s actual

understanding of the legal consequences of those [essential] facts is not

required” to establish waiver, because “parties are presumed to know and

understand the legal effect of their contracts and waivers.” Trelltex, Inc. v.

Intecx, LLC, 494 S.W.3d 781, 792 & n.10 (Tex. App.—Houston [14th Dist.]

2016, no pet.) (and collecting decisions). Taking this proper view of the

knowledge requirement, a defense of waiver or ratification would be based on

customers’ knowledge of facts, not their knowledge of the legal effect of those

facts, such as the proper interpretation of the surrender charge provisions or

the unlawfulness of Jackson’s conduct.

The district court cited no authority supporting its view that Jackson’s

affirmative defenses require class members’ knowledge of legal conclusions.

The court cited In re Checking Account Overdraft Litigation, 307 F.R.D. 630,

650 (S.D. Fla. 2015), but that decision simply states the general rule that

affirmative defenses like ratification and waiver “require a party to have had

full knowledge of the circumstances in order for the defense to prevail.” In that

case predominance was not defeated by those defenses, however, because the

defendant had allegedly engaged in widespread concealment of its illegal

scheme—meaning that plaintiffs could “undercut [its] defenses through the

use of common evidence.” Id. at 651. No such allegations are present here. The

court also cited Allen v. Holiday Universal, 249 F.R.D. 166, 174 (E.D. Pa. 2008),

but that decision again recites the general rule that a “party charged with

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ratification must have acted . . . with full knowledge of all material facts,” while

saying nothing to support the district court’s view about legal consequences.

In sum, the district court legally erred, and therefore abused its

discretion, in assessing the potential impact of Jackson’s affirmative defenses

on the predominance inquiry.

Finally, Jackson argues that plaintiffs failed to offer a damages model

adequate to support class treatment. Because plaintiffs only put forth a model

for calculating one aspect of the damages alleged, we agree with Jackson.

Even where plaintiffs seeking class certification show that common

issues predominate on questions of liability, they must also present a damages

model “establishing that damages are capable of measurement on a classwide

basis.” Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013). The issue of damages

may defeat predominance “where the calculation of damages is not susceptible

to a mathematical or formulaic calculation.” Bell Atl., 339 F.3d at 307.

Here, plaintiffs seek two kinds of damages linked to Jackson’s allegedly

inflated surrender charges: (1) the excessive charges themselves and (2) the

effect of those charges on living and death benefits paid under the annuity

contracts. At the certification stage, plaintiffs offered an expert opinion that

excessive charges could be uniformly calculated through “relevant

mathematical calculations appropriately applied” to Jackson’s own records.

But the report offered no formula for calculating damages related to living and

death benefits. Instead, it asserted that “[t]he precise details of how the

calculation of these additional damages will be performed will depend on what

information Jackson makes available.” Without separately addressing living

Furthermore, the ratification defense did not defeat predominance in Allen because

the defense was “irrelevant to liability”—it was relevant “only with respect to damages”

under the consumer protection law at issue there. Id.

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and death benefits, the district court concluded that damages could be

uniformly calculated based on Jackson’s records and, therefore, would not

defeat predominance.

We do not question the district court’s conclusion regarding excessive

charges. The record persuades us that those damages can be reckoned by fairly

straightforward math from Jackson’s files. The fact that this will require

individualized calculations does not defeat predominance. See, e.g., Ibe v.

Jones, 836 F.3d 516, 529 (5th Cir. 2016) (“Generally, individualized damages

calculations will not preclude a finding of predominance.” (citing Tyson Foods,

136 S. Ct. at 1045)). The more complex damages related to living and death

benefits are another matter, however. The expert report plaintiffs relied on

offered no indication how those damages would be calculated and, indeed,

candidly admitted that it lacked any basis for an opinion. This was inadequate

to meet plaintiffs’ burden to show that these kinds of damages are appropriate

for class treatment. To be sure, proposed damages “[c]alculations need not be

exact.” Comcast Corp., 569 U.S. at 35. But here plaintiffs offered barely a

“preliminary overview of how [these] damages might be calculated.” Piggly

Wiggly Clarksville, Inc. v. Interstate Brands Corp., 100 F. App’x 296, 299 (5th

Cir. 2004). On remand, the district court should reassess whether the

calculation of damages related to living and death benefits would defeat

predominance.

We suspect this issue may disappear on remand, however. At oral

argument, plaintiffs’ counsel announced that plaintiffs would no longer seek

damages based on living and death benefits, because calculating those

damages turned out to be “complicated.” OA Audio 40:40–41:10. We decline to

speculate on the effect of counsel’s concession, which is better left to the district

court on remand. See, e.g., Slade v. Progressive Sec. Ins. Co., 856 F.3d 408, 412–

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15 (5th Cir. 2017) (remanding for consideration of how class representative’s

waiver of claims impacts the adequacy requirement of Rule 23(a)(4)).

IV.

In sum, we VACATE the district court’s order certifying the class and

REMAND for further proceedings consistent with this opinion.

No. 18-40605

EDITH BROWN CLEMENT, Circuit Judge, concurring:

I concur in the opinion and write separately to explain why our

resolution of the personal-jurisdiction issue is appropriate even though

Jackson does not directly address one of the district court’s rulings: that

Jackson waived its personal-jurisdiction defense by substantially litigating on

the merits. The appellate rules require an appellant to state in his brief his

“contentions and the reasons for them, with citations to the authorities and

parts of the record on which the appellant relies.” F

ED. R. APP. P. 28(a)(8)(A).

Failure to argue an issue often means that the appellant has abandoned that

issue. E.g., United States v. Scroggins, 599 F.3d 433, 446–47 (5th Cir. 2010).

But not always. Our rule of deeming unargued issues abandoned is “a

prudential construct that requires the exercise of discretion.” United States v.

Miranda, 248 F.3d 434, 443 (5th Cir. 2001). I would reach the personal-

jurisdiction issue through the exercise of our discretion.

The district court held that Jackson waived its personal-jurisdiction

defense “[b]y waiting exactly seven months after Bristol-Myers to informally

raise the personal[-]jurisdiction objection in its response to class

certification . . . and then proceed[ing] to substantially litigate on the merits,

including filing its motion for summary judgment.” The district court cited two

motions that Jackson filed. Those motions, plus Jackson’s summary-judgment

motion, were what the district court apparently thought constituted

substantial litigation on the merits. Jackson does not directly state why this

was wrong, but it was plainly wrong.

Jackson likely thought that the district court’s error was so obvious that

it needn’t be explained—if class certification, rather than Bristol-Myers, is

what made available Jackson’s personal-jurisdiction defense as to the putative

class members, Jackson could not be faulted for filing motions after Bristol-

Myers came down but before certification. That is true, but only to the extent

No. 18-40605

that filing motions could itself constitute substantial litigation on the merits.

Yet Jackson might have forfeited the defense if, in those motions, it had

substantially litigated issues involving the putative class members. Jackson

does not address that possibility, and it obviously did not litigate any such

issues. In those motions, Jackson neither concedes personal jurisdiction as to

the putative class members nor argues the merits of issues involving them.

Thus, the district court clearly erred in holding that Jackson forfeited its

personal-jurisdiction defense through its litigation conduct. Because this error

was clear and obvious, I would exercise our discretion to reach this issue

despite Jackson’s failure to address it head-on. With that caveat, I concur.