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Posts Tagged ‘federalism’

Earlier today, the U.S. Supreme Court held oral argument in  Smith v. Bayer, which raises the question of a federal court’s power to enjoin a state court from considering class certification after the federal court had previously denied certification.  A copy of the argument transcript is available for download at the Supreme Court’s website.  Some of the key lines of inquiry from the Court can be summarized as follows:

  • Are there differences between FRCP 23 and West Virginia Rule 23 that should have prevented the application of issue preclusion?
  • Even if the elements of the two rules are substantially the same, does the fact that the West Virginia courts take a more favorable “tone” toward class certification mean that they are different for the purposes of an issue preclusion analysis?
  • Does an individual have a protected due process right to be heard on a procedural issue, such as the appropriateness of class certification, as opposed to a substantive right or cause of action?
  • Does it matter whether the plaintiff in the second case could have intervened in the first one?
  • Why isn’t it sufficient that the state court in a subsequent case can decide to apply issue preclusion, as opposed to the federal court enjoining the state court from even considering the question?
  • Does the absense of a formal judgment mean that the relitigation exception of the Anti-injunction Act cannot apply to class certification orders at all?
  • Can the plaintiff and his or her counsel who unsuccessfully sought class certification in one case be considered sufficiently representative of other absent class members and their counsel to satisfy the identity of interest requirement of issue preclusion?

Although most of the questions involved how the case should be decided under express statutory language and established legal principles, it seems reasonable to expect that the Justices’ views on federalism, and the proper balance between federal and state power, will flavor the Court’s decision.  The federalism theme is one that counsel for the plaintiffs, Richard A. Monohan, fell back to on several occasions during the argument.  Perhaps not coincidently, two of the members of the Court’s conservative bloc, Justice Scalia and Chief Justice Roberts, asked some of the more biting questions implicating the fairness of precluding a new party from re-litigating an unsuccessful attempt at class certification by a different party.

To this point, the Roberts Court’s direction on issues of federalism has been less than clear (see this September 2010 National Law Journal article by Marcia Coyle).  This case offers the opportunity to start charting a more specific course.  At the same time, this is the kind of case that can foster unpredictable alliances within the Court.  For example, the states’ rights supporters may find themselves joining forces with one or more Justices who see unfairness in preventing absent class members from having their day in court on the issue of class certification. 

On the other hand, predicting the outcome or rationale of Supreme Court cases is a lot like predicting the NFL playoffs.

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I’m embarrassingly late in posting a link to the Supreme Court’s recent decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., No. 08-1008, slip op. (S. Ct., March 31, 2010) in which the Court held that a New York state rule prohibiting class actions to recover statutory penalties did not apply in a case filed in federal court exercising diversity jurisdiction under the Class Action Fairness Act (CAFA). 

Anyone who thinks that class action jurisprudence can be predicted based on perceived political leanings of  the Justices should take a look at the composition of the various factions of the Court that agreed to different parts of the plurality opinion:

SCALIA, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II–A, in which ROB-ERTS, C. J., and STEVENS, THOMAS, and SOTOMAYOR, JJ., joined, an opin-ion with respect to Parts II–B and II–D, in which ROBERTS, C. J., and THOMAS, and SOTOMAYOR, JJ., joined, and an opinion with respect to Part II–C, in which ROBERTS, C. J., and, THOMAS, J., joined. STEVENS, J., filed an opinion concurring in part and concurring in the judgment. GINSBURG, J., filed a dissenting opinion, in which KENNEDY, BREYER, and ALITO, JJ., joined.

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Last week, I posted a short note about the Eighth Circuit’s decision in In re Baycol Products Litigation.  Here is a more in-depth synopsis, thanks to fellow Baker & Hostetler partner Joe Ezzi:

The Eighth Circuit Court of Appeals recently affirmed a district court order enjoining state court plaintiffs from pursuing a class action because the district court had already denied certification of an identical class in federal court.  In re Baycol Products Litig., ___ F.3d ___ (8th Cir. January 5, 2010).

A state court putative class action was filed by George McCollins in West Virginia in 2001.  Bayer removed the case and it became part of a multidistrict action consolidated before the district court in Minneapolis.  Class certification was denied in the McCollins MDL class action, with the district court making certain legal conclusions concerning economic loss requirements under West Virginia law related to predominance.  At the same time, a similar West Virginia state court class action was pending against Bayer, albeit with different putative class representatives.  Following the district court’s denial of class certification, Bayer moved the district court to enjoin the plaintiffs in the West Virginia state court action from pursuing a class action because, as absent putative class members of the McCollins lawsuit, they could not relitigate the previous federal court decision denying certification of a West Virginia economic loss class.  The district court granted Bayer’s request for an injunction under the All Writs Act. 

The Eighth Circuit, in affirming the district court order enjoining the West Virginia state court class action, found that the West Virginia state court plaintiffs sought “certification on the same legal basis of the same class already denied in this case.”  In re Baycol Products Litig., ___ F.3d ___ (8th Cir. January 5, 2010), slip op. at 6.  Thus, “in the context of MDL proceedings, certification in a state court of the same class under the same legal theories previously rejected by the federal district court presents an issue sufficiently identical to warrant preclusion under federal common law.”  Id. at 10.  Further, relying on the Seventh Circuit decision in In re Bridgestone/Firestone, 333 F.3d 763 (2003), the Eighth Circuit noted that the putative class representative in the federal action was in privity with the state court class representatives for purposes of collateral estoppel based on allegations of adequacy of representation and because both putative class representatives asserted the same claims.

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A colleague tipped me off today to a recent Eighth Circuit Court of Appeals decision upholding a Minnesota federal district court’s order enjoining class certification proceedings in a West Virginia state court, following the federal court’s earlier denial of class certification in an action filed against the same defendant.  Here’s a link to the slip opinion: In re Baycol Products Litigation, No. 09-1069 (8th Cir., Jan. 5 2010).  The decision is in accord with a 2003 Seventh Circuit decision, In re Bridgestone/Firestone, 333 F.3d 763, 767-68 (7th Cir. 2003), which also held that the relitigation exception to the federal Anti-Injunction Act “permitted an injunction barring relitigation in state court of a federal court’s denial of class certification.”  In re Baycol Prods. Lit., No. 09-1069, slip op. at 9 (citing In re Bridgestone/Firestone, 333 F.3d at 769).

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Daniel Wise of the New York Law Journal has an interesting article out today on a recent New York state court decision involving a complex dispute over assets of former Philippines dictator, Ferdinand Marcos, being held by Merrill Lynch in New York.  The court ordered that the funds be paid to satisfy part of a $2 billion judgment awarded to class members in a successful class action filed in federal court in Hawaii under the Alien Tort Claims Act, on behalf of individuals injured by human rights abuses committed by the Marcos regime.  The current government of the Philippines claims entitlement of the funds, claiming that it has a sovereign interest. 

The same funds were the subject of a federal interpleader action filed by the brokerage to resolve issues over various competing claims to the funds.  The United States Supreme Court dismissed that action in 2007 after concluding that the Philippine government and a Philippine commission, who had sovereign immunity from having to participate in the interpleader proceeding, were indispensible parties.  The state court faced a similar issue, but interpreting the state joinder rule, it found that the two entities were necessary, but not indispensible parties, which meant that the case could go forward without them.

The cases reflect an intriguing and complicated interplay between a variety of private and governmental interests.  The individual class members claim entitlement to a personal remedy for injuries caused by human rights violations of the former Philippine government.  The current Philippine government has a sovereign interest in being free from having its rights determined by foreign courts, and it wants to use the assets to fund public programs.  The State of New York has an interest in making decisions about disputed funds held within its borders, but one of its courts disagrees with the analysis of the nation’s highest court about the importance of the sovereign interests of a foreign nation over those same funds.  In the middle of it all is a bank who probably just doesn’t want to get sued again for giving the money to the wrong party.

Something tells me that there will be much more to this story…

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The U.S. Supreme Court heard oral argument Monday in a Horne v. Flores, a case that originated as a class action against the State of Arizona for insufficient funding of education for non-native-English speaking students.  For a report on the oral argument, see this AP article

The case is interesting from a variety of perspectives, but perhaps most interesting is that it pits different officials from the same state against each other.  The petitioners include the Superintendent of Public Instruction and the Speaker of the state’s House of Representatives.  Along with the original class representatives, the respondents include the State of Arizona and the Arizona State Board of Education.

The appeal arises from the denial of a Rule 60(b) motion for relief from a series of previous orders from a federal court following a finding that the state’s programs for educating students who do not speak English proficiently violated the Equal Educational Opportunity Act (EEOA). 

The appeal raises complex questions of federalism, standing, and separation of powers.  Petitioners argue, among other things, that the federal court’s continued supervision and attempts to require compliance with previous orders must be reconsidered in light of the existence of the No Child Left Behind Act (NCLB) and a recent state enactment that increased funding for English language programs.  The Speaker of the House and President of the Senate intervened “as presiding officers of their respective legislative bodies,” which had enacted the state English language funding law found by the federal district court to be inadequate to comply with its earlier judgments. For links to the briefs filed by the various parties, see the ABA’s website:

http://www.abanet.org/publiced/preview/briefs/april09.shtml#08294

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