Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

As many of you recall, I've written a considerable amount about the anticipated opinion in Wal-Mart Stores, Inc. v. Dukes, No. 10-277 (U.S.).  See, e.g., here, and here.  Indeed, in a roundtable discussion over at Point of Law, I even included a wish list of what I wanted the Supremes to bring me from Wal-Mart.

Today, Justice Scalia delivered the opinion.  And it's like an 8-year-old's Christmas morning in my office! 

Dukes was an employment discrimination case in which the Ninth Circuit had affirmed certification of a class of roughly 1.5 million women who worked or had worked for Wal-Mart (in positions from management to custodian) in any of its roughly 3,400 stores across the U.S.  The allegation was that despite Wal-Mart's written non-discrimination policy, its managers (including women) discriminated against women in the exercise of their roughly unfettered individual discretion of whom to promote, demote and fire, as well as how they were compensated.  The class sought injunctive relief, as well as back pay for all class members.  (It disclaimed consequential damages.)

The majority opinion was written by Justice Scalia.  The opinion has a five-justice majority for some parts, and is unanimous in other parts.  Here is what Scalia Claus brought me this morning:

1.  A Unanimous Conclusion That Rule 23 Cannot Eviscerate Individual Defenses:  All nine justices joined in the part of the opinion holding that certification under Rule 23(b)(2) was improper because it included individualized claims for back pay.  A unanimous Supreme Court rejected a common attempt to impose statistical proof to cure the problem of individual defenses:

The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula.  A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master.  The percentage of claims determined to be valid would then be applied to the remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery -- without further individualized proceedings.  We disapprove that novel project.  Because the Rules Enabling Act forbids interpreting Rule 23 to "abridge, enlarge, or modify any substantive right," a class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims.

Slip op. at 27 (emphasis added; citations omitted).  This means that third-party-payor claims and consumer fraud class actions will not be able to prove causation or reliance using statistical proof like that proposed and rejected in McLaughlin v. American Tobacco Co., 522 F.3d 215 (2d Cir. 2008) in order to facilitate class certification.  This is BIG NEWS!!!

2.  A Unanimous Conclusion that Individualized Monetary Damages Claims Cannot Be Included in a Rule 23(b)(2) Class:  The Supreme Court brushed aside the whole question of whether money damages are "incidental" to the claims or "predominate," instead instructing that if monetary damages require individualized determinations, they do not belong in a 23(b)(2) class, but instead require the opt-out and notice rights inherent in a Rule 23(b)(3) class.  Slip op. at 21-23.  It refused to decide "whether there are any forms of 'incidental' monetary relief that are consistent with the interpretation of Rule 23(b)(2) we have announced and that comply with the Due Process Clause."  Slip op. at 26.  But this holding will make it very difficult for plaintiffs to continue the practice of attempting to plead cases about money as cases for so-called "equitable relief" with incidental damages.  Indeed, the court made it plain that Rule 23(b)(2) talks about injunctions and declarations, not "equitable relief."  As such, attempts to couch "disgorgement" or other so-called equitable remedies involving money as 23(b)(2) classes should be rejected from this point forward.

3.  Unanimous Dicta on Claim Splitting and the Potential for Issue Preclusion:  In discussing why it was improper for individualized back pay claims to be included in a Rule 23(b)(2) class, the Court observed that doing so "created the possibility . . . that individual class members' compensatory-damage claims would be precluded by litigation they had no power to hold themselves apart from."  Slip op. at 24.  Such as if the class received a judgment that there was no discrimination.  This part of the Dukes opinion will provide strong support for attacking (b)(2) classes that may impact monetary claims as lacking due process protections, and should strengthen classic adequacy-of-representation arguments based on claim-splitting.

4.  A Reinvigorated Commonality Standard:  Many courts had pretty much read commonality out of the Rule 23(a) analysis, concluding that if any common questions existed, the commonality standard was met.  No more.  The Court adopted the late Professor Richard Nagareda's characterization of commonality as the capacity of the class proceeding to generate common answers.  Slip op. at 9.  The Court instructed:

Commonality requires the plaintiff to demonstrate that the class members 'have suffered the same injury.'  This does not mean merely that they have all suffered a violation of the same provision of law. . . .  Their claims must depend upon a common contention -- for example, the assertion of discriminatory bias on the part of the same supervisor.  That common contention, moreover, must be of such a nature that it is capable of classwide resolution -- which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

Id. (citation omitted).

5.  A Strong "Rigorous Analysis" Standard:  Stick a fork in Eisen v. Carlisle & Jacquelin.  It's done!  The majority once again declared that the class action proponent must actually prove each element of Rule 23, and embraced the Falcon "rigorous analysis" standard that courts must use to evaluate that proof.  Moreover, the Court explained:  "[f]requently that 'rigorous analysis' will entail some overlap with the merits of the plaintiff's underlying claim.  That cannot be helped."  Slip op. at 10.  Finally, the Court interred the long-dead (but often resurrected) canard that Eisen somehow precludes a look beyond the pleadings when deciding whether certification is proper.  Id. at n.6.

6.  A Strong Hint That Daubert Applies at the Class Certification Stage:  Plaintiffs had proffered testimony from a "corporate culture" expert who opined that there was a general policy of discrimination at Wal-Mart, although "he could not calculate whether 0.5 percent or 95 percent of [its] employment decisions . . . might be determined by stereotyped thinking."  Slip op.at 13.  As the Court observed, the "District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings."  Slip op. at 14.  The Court opined:  "We doubt that this is so."  But it did not need to reach the question because the testimony, even if fully credited, was "worlds away from 'significant proof' that Wal-Mart 'operated under a general policy of discrimination.'"  Id.  Below, the Ninth Circuit had refused to apply Daubert to expert testimony on class certification.  It seems unlikely that a court can ignore Daubert principles at class certification now.

So let's see what I had listed at Point of Law prior to the issuance of the Dukes opinion.  It looks like Scalia Claus brought me a majority of what was on my initial list.  Everything that is in Dukes from the original list is marked with an asterisk:

*1. District courts must give rigorous scrutiny to whether the class action prerequisites are met.

*2. Rule 23 is a procedural rule that cannot alter the substantive claims or defenses.

*3. You can’t use a mandatory class to elude the prerequisites for an opt-out class.

4. Money is not an available remedy under Rule 23(b)(2).

5. The canard that the need for individualized damages determinations cannot preclude class certification should be shot.

6. Intra-class conflicts fail the adequacy of representation requirement.

*7. Expert testimony merits particularly close scrutiny at the class certification stage. 

*8. Although courts should not reach to judge the merits at the class certification stage, they must decide merits issues where necessary to determine whether the class action prerequisites are met.

All in all, this was an extraordinarily useful opinion for class action defense counsel -- beyond even employment discrimination lawyers.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Where a defendant defeats certification of a class in an MDL proceeding, should it have to re-litigate the issue of class certification again and again in state courts around the country?  Most reasonable people would agree that it should not.  The devil, however, is in the details of how you get to that result.

Today the SCOTUS held that the Anti-Injunction Act prevents a federal court that has denied class certification -- even an MDL transferee -- from enjoining absent class members from pursuing class certification in state courts where the issues may differ.  See Smith v. Bayer Corp., No. 09-1205 (U.S. June 16, 2011). Justice Kagan wrote the opinion, which was unanimous except for certain parts that Justice Thomas did not join.

In Smith, two Baycol consumer fraud class actions were filed in West Virginia state court prior to adoption of the federal Class Action Fairness Act.  One was removed to federal court and transferred to the MDL; the other had non-diverse defendants and thus was forced to remain in state court.  The federal MDL court reached the issue of class certification first, concluding that because each absent class member would have to prove an "actual injury" that was caused by the challenged behavior, Rule 23(b)(3)'s predominance requirement was not met.

Bayer then asked the MDL transferee for an injunction against the pending state court action, reasoning that the state court action sought to certify the same class on the same legal theories, and the plaintiffs in the state suit were absent members of the class that had been denied by the MDL transferee, and thus their interests were aligned with the federal plaintiffs who had lost class certification.  The district court granted injunctive relief, and the 8th Circuit had affirmed.

Justice Kagan's opinion rejects this approach, holding that the injunctive relief was prevented by the Anti-Injunction Act, which provides that "[a] court of the United States may not grant an injunction to stay proceedings in a State court except . . . to protect or effectuate its judgments."  28 U.S.C. sec. 2283.  This is known as the "relitigation exception" and has its roots in issue preclusion.  The AIA is to be interpreted broadly to protect state courts, and doubts are to be resolved against the application of an exception to the AIA.  Slip op. at 6.

For the relitigation exception to apply, the issue presented in the federal decision must be the same as the one presented in the state court action, and the parties in both actions must be the same or must fall into one of the "few discrete exceptions to the general rule against binding non-parties."  Id. at 7.

The SCOTUS held that neither prong of the two-part analysis was met.  The issues were not the same because West Virginia requires a balancing of issues to determine predominance, while the federal court had not balanced issues, but summarily concluded that the need for individual proof on the causation and injury predominated.  Id. at 8-12.  And the parties to the state action were not parties in the federal action, and thus could not be bound.

As many commentators had predicted, the Court harkened back to Taylor v. Sturgell, 553 U.S. 880 (2008), in which it had held that a non-party to a FOIA request could not be bound to the result of a prior party's FOIA request using the doctrine of "virtual representation."  Rather, due process required notice and opt-out rights on the order of what is written into Rule 23.  The Court in Smith reiterated its rejection of any sort of common law class action:  "We could hardly have been more clear that a 'properly conducted class action,' with binding effect on nonparties, can come about in federal courts in just one way--through the procedure set out in Rule 23."  Slip op. at 15.

Justice Kagan wrote that "Bayer's strongest argument comes not from established principles of preclusion, but instead from policy concerns relating to the use of the class action device." Id. at 16.  But she concluded that it "flies in the face of the rule against nonparty preclusion."  Id.  Moreover, she explained, Congress effectively solved many relitigation problems by including in the Class Action Fairness Act an ability to remove state court class actions with minimal diversity.  Id. at 17.

Notably, the Court included a footnote indicating that the Smith opinion does not foreclose statutory adjustment of preclusion principles if Congress determines "that CAFA does not sufficiently prevent relitigation of class certification motions," nor does the opinion "address the permissibility of a change in the Federal Rules of Civil Procedure pertaining to this question."  Id. at n.12.

Notably, Smith addresses relitigation of the class certification issue in state court.  It does not address what remedies might be available to a federal court to enjoin the relitigation of class certification in federal court.

Moreover, Smith is expressly premised on the fact that the enjoined litigants were unaware of the pendency of the federal class action.  See id. at 2, 4.  As such, Smith does not address a problem more frequently complained of:  class counsel who seek a second (or third or fourth) bite at the apple where they lost on the certification issue the first time.  The issue of serial class action filings recently was raised in a certiorari petition in Thorogood v. Sears, Roebuck & Co., No. 10-1087 (U.S. pet. for cert. filed Mar. 2, 2011).  The tortured history of that case has been the subject of substantial commentary, including here, here, and here.

Interestingly, the losing plaintiff in Thorogood filed an amicus brief in Smith in support of the petitioners there.  But because Thorogood involved a subsequently-filed federal court class action filed by the same lawyer, it remains to be seen whether Smith -- which is premised on the federalism concerns of the Anti-Injunction Act -- will control the outcome of Thorogood.  And certainly Smith did not address a federal court's authority to enjoin a lawyer appearing before it from using other federal courts to serially relitigate an issue to the point of harassing a defendant.

More remains to be written on the subject of enjoining serial class action filings.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A recent decision denying class certification in two putative class actions brought over a coal ash spill reminds us that numerosity is not a throw-away element of class certification and it cannot be satisfied merely by spouting a number of claimants who "may" be affected by the challenged conduct.  The decision was first reported by Law 360 (subscription required).

In Mays v. Tennessee Valley Authority, No. 3:09-CV-06 (Varlan/Guyton) (E.D. Tenn. May 10, 2011), the plaintiffs asserted a number of causes of action against the defendants because the defendant's dike failed and allowed coal ash to spill into rivers and allegedly harm properties downstream.  The cases were consolidated before a single judge.  One of the classes was defined as all people who owned property on the adjoining the TVA's property or downstream from the plant on the Emory or Clinch rivers on Dec. 22, 2008.  It asserted a private nuisance claim only.  The other class actions originally had asserted claims for personal injury, medical monitoring and property damage, although the class certification motion only sought certification of property damage claims.  The motion originally had been heard by a magistrate judge who issued a report and recommendation against class certification.  The District Court adopted the report and recommendation.

Interestingly, the court stressed that it was required to give "rigorous analysis" to class certification motions and look beyond the pleadings to the merits of the case, if necessary.  Slip op. at 29-30.  Of course, the rigorous analysis standard -- which rejects the misreading of Eisen that some courts have used to justify turning a blind eye to anything related to the merits of the case -- came into play in the Wal-Mart v. Dukes case and may receive further explanation by the Supreme Court in the next six weeks.

The Mays court began its class certification analysis with the numerosity requirement.  As I have lamented in this space before, too many people (courts, lawyers, litigants) treat numerosity as a throw-away requirement.  If there are potentially more than some magic number of claimants (often 40 or 100), some treat numerosity as "established" and can get very upset if a defendant won't concede it.

A word of advice:  don't.

As the Mays court explained, numerosity requires much more than simply counting how many people might have claims.  Rather, the proponent of class certification has the burden of establishing the actual impracticability of joinder.  Slip op. at 11 (citation omitted).  Thus, the court can consider a number of factors, including the ease of identifying and locating class members, their geographical dispersion, and ease of service if they were joined.  As the court explained:

. . . The joinder inquiry, like that required for the entire class certification inquiry, requires a fact-specific analysis that turns on the unique circumstances of each case and not on a single factor, such as the number of potential claimants. . . .

Plaintiffs argue . . . that there are a number of properties within the proposed class definitions where coal ash may be present and that these property owners may want to bring claims against TVA.  However, beyond providing the Court with estimates of the number of potential claimants, plaintiffs have not shown what make joinder impracticable given the large number of individual cases that have been filed and are proceeding to trial, the relatively small geographic area in which potential claimants reside or are located, the publicity surrounding the coal ash spill and this litigation, the close proximity of this Court to the location of the potential claimants, the number of attorneys willing to take these cases, the Court's familiarity with this litigation, the Court's ability to resolve broad legal questions and pre-trial discovery issues, and the procedures put in place for moving these cases forward and toward trial.

Slip op. at 12-13 (citations omitted).  The court also rejected the plaintiffs' argument that some claimants may not be able to afford bringing suit, reasoning that such speculation "is not specific evidence showing or indicating that there are indeed barriers to filing suit that would weigh towards a finding of class certification."  Id. at 13.

The Mays court concluded that although plaintiffs had identified a large number of people who might have been affected by the coal ash spill, they had not met their burden to prove "that joinder of these potential claimants is impracticable, or that potential claimants could not bring suit on their own."  Id. at 14.

The court also found that the plaintiffs were inadequate class representatives because they did not seek certification of (and thus risked losing, through res judicata and issue preclusion) personal injury and medical monitoring claims like the ones they had asserted on behalf of many of the named plaintiffs in their complaints.  The Mays court concluded that claim-splitting matters:

. . . [T]he Court finds that it cannot conclusively determine the res judicata effect of a decision yet to be handed down by this Court.  Such a decision is for the forum presented with the issue if and when it arises.  The Court believes that it can, however, assess the risks of such a determination and weigh it in the Court's consideration of class certification.  Accordingly, given the potential effect of res judicata, the application of which may preclude subsequent litigation under certain conditions, along with the application of the single injury rule, which Tennessee courts appear to follow, the Court finds that whether putative class members could bring these claims in a subsequent suit is, at best, undeterminable. 

Id. at 16-17 (citations omitted).  Because claims that had once been asserted by the putative class representatives have now been abandoned without any indication that the absent class members have willingly abandoned those claims, the court concluded that plaintiffs failed to adequately represent the class under Rule 23(a)(4).

The Mays court also determined that the commonality and typicality requirements were not satisfied because "the ultimate determination of each plaintiff's claim will turn primarily on individualized inquiries into how the coal ash affected each plaintiff's specific property interest.  Given the unique location of each plaintiff's individual property, and the unique situation of each plaintiff and his or her use and enjoyment of the property, individualized inquiries will apply to both the property damage and nuisance claims."  Id. at 22-23.

For similar reasons, the court concluded that the proposed class failed the predominance inquiry of Rule 23(b)(3):

[T]he Court agrees with Judge Guyton that these individualized inquiries, such as whether coal ash is or was present on a specific property, the proximate causation inquiry as to whether nondiscretionary conduct for which TVA can be sued caused coal ash to be present on a specific property, how each plaintiff's property interest and use and enjoyment of property has been impacted by the coal ash, and the extent of each plaintiff's damages, will predominate.

Id. at 26.

The Mays opinion is a strong, workmanlike analysis of each element of the class certification inquiry and what issues will have to be tried.  It is notable because -- even though it arose out of a common incident (a coal ash spill) -- the court recognized that the individual issues involved in establishing liability and damages would make the case unmanageable to be tried as a class action.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

While a number of bloggers have been pondering this week the Eleventh Circuit's decision on the collateral estoppel (or issue preclusive) effect of the jury's findings in the Engle tobacco case years ago, I have been enjoying another collateral estoppel decision:  Murray v. Sears, Roebuck & Co., No. 09-05744 CW, Slip op. (N.D. Cal. July 21, 2010).

In Murray, plaintiff sought to represent a class of California purchasers of Kenmore clothes dryers that allegedly had been deceptively marketed to lead people to believe that the drums were 100% stainless steel, when in fact they were not.

The same lawyer had represented another plaintiff asserting the same claim in a putative nationwide class action.  In that action, which twice went to the Seventh Circuit Court of Appeals, the Seventh Circuit held that there could be no class action, finding that there were no common issues of fact or law.  See Thorogood v. Sears, Roebuck & Co., 547 F.3d 742, 747 (7th Cir. 2008). 

Plaintiffs' counsel then retreated to California, filing the Murray action.  The defendant moved in the Northern District of Illinois for an injunction against the Murray action, which was denied.  That ruling is presently on appeal to the Seventh Circuit.  But the defendant also moved before the Murray court either to stay discovery or strike the class allegations, citing the collateral estoppel effect of the Thorogood judgment.

The court in Murray granted the defendant's motion to strike class allegations.  Plaintiff Murray argued that he should not be bound because he was not a named plaintiff in Thorogood.  But the court noted that the Thorogood court had held that the plaintiff there met the adequacy of representation requirement, and the lawyers were the same in the two actions.  This made plaintiff's conduct appear to be an example of "'deliberate maneuvering to avoid the effects of' Thorogood.  Slip op. at 10 (citation omitted).  Accordingly, the court found sufficient identity of parties to apply collateral estoppel.

Moreover, there was no question that the judgment in Thorogood was a final judgment on the merits that could be given collateral estoppel effect.  The case had twice gone to the Seventh Circuit and plaintiffs even pursued rehearing en banc and certiorari.  The judgment on the issues there was as final as it could get.

Plaintiff Murray also argued that the issues were not sufficiently identical to apply collateral estoppel effect to the Thorogood judgment.  Primarily, he relied on the fact that Thorogood was a putative nationwide class involving the application of many states' laws, whereas the Murray action involved only the application of California law, which the plaintiff said required only an objective look at what the meaning of the marketing would be to an average consumer.

The district court rejected plaintiff's argument.  First, it set out the four factors that aid in evaluating the identity of issues for collateral estoppel:

(1) is there a substantial overlap between the evidence or argument to be advanced in the second proceeding and that advanced in the first?  (2) does the new evidence or argument involve the application of the same rule of law as that involved in the prior proceeding?  (3) could pretrial preparation and discovery related to the matter presented in the first action reasonably be expected to have embraced the matter sought to be presented in the second?  and (4) how closely related are the claims involved in the two proceedings?

Slip op. at 6 (quoting Resolution Trust Corp. v. Keating, 186 F.3d 1110, 1116 (9th Cir. 1999). 

Using these factors as a guide, the court looked to the Thorogood opinions, which described that plaintiff's allegations as being that labeling a dryer drum as "stainless steel" caused buyers to assume it was 100% stainless steel and thus allayed their fear that the drum might rust and cause rust stains to get on their clothes.  The Thorogood court had observed that rust getting on clothes is not a common problem with dryers, and thus the "assumption" that plaintiff was attributing to all class members was unlikely to be shared by very many (if any) class members at all.  Slip op. at 7.  Indeed, the Seventh Circuit had concluded that plaintiff's theory was "idiosyncratic" and that evaluation of each class member's claims thus would require individual hearings.  Id.  Indeed, the Seventh Circuit had concluded that the "deal breaker" was "the absence of any reason to believe that there is a single understanding of the significance of labeling or advertising clothes dryers as containing a 'stainless steel drum.'" Id. (quoting Thorogood).

Plaintiff Murray's theory was exactly the same; he just argued that because it would have to be adjudicated under only California law, his claim was somehow different.  The court held that it was not different, and that the same idiosyncratic nature of plaintiff's claim that made class certification improper in Thorogood applied here as well, making collateral estoppel appropriate.

The Murray decision is a good example of courts taking a skeptical eye to lawyers who forum shop the same claims around the country to avoid a prior denial of class certification.  Where the facts -- and not just the choice of law problems -- previously made the class uncertifiable, plaintiffs should not be allowed to escape an adverse decision merely by pleading a single, statewide class.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

It's the question a defense lawyer seldom actually confronts head-on, but one that is always at the front of his or her mind:  how can the judgment against my client in one case be used to bind it in other cases?

Or, for you law review types:  will the findings of fact and conclusions of law in this case subject the client to non-mutual collateral estoppel in a subsequent case?

Where there are multiple lawsuits, there is always a risk that someone may take the defendant's loss in one case and try to bar the defendant from presenting evidence on the issue in the next case, arguing that what was already found by a court once should hold true in the later action.  That is called "collateral estoppel" or, more simply, "issue preclusion."  The fact that the plaintiff in the second action is different from the plaintiff in the first action means that it is "non-mutual."  The plaintiffs are different, but the defendant remains the same.

Some people can make it sound awfully efficient and useful to have one court's judgment bind a defendant on certain issues in subsequent trials.  But the fact remains that -- particularly in mass tort litigation, where there are hundreds or thousands of such claims -- prematurely binding a defendant to one particular outcome deprives us of the benefit of a robust number of trials to see how patterns of liability or non-liability may develop.  It's the American way to allow juries in different states to hear evidence and apply their own law to the facts and reach a conclusion, rather than having one trial decide everything.  And it can seem downright un-American to prematurely cut-off a defendant's right to present a defense and hold it to a single jury's determination of an issue.

Recently, the question of issue preclusion was presented to a federal court in Maine that was presiding over a multidistrict litigation involving cases alleging fraud and unjust enrichment against Philip Morris and Altria for their allegedly fraudulent promotion of "light" cigarettes as being safer than ordinary cigarettes.  See In re:  Light Cigarettes Marketing Sales Practices Litigation, MDL Docket No. 1-09-MD-2068 (D. Me. Mar. 5, 2010).  

In 2006, a federal judge in the District of Columbia -- the Honorable Gladys Kessler -- had issued a mammoth final judgment in a civil RICO case that had been brought by the Department of Justice against the entire tobacco industry.  See United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1 (D.D.C. 2006), aff'd in part and vacated in part, 566 F.3d 1095 (D.C. Cir. 2009), petition for cert. filed (Feb. 19, 2010).  That landmark case had proceeded for more than 7 years.  It was tried to the judge; there was no jury.  Judge Kessler had issued some 4,088 separate factual findings, and found the industry liable for a variety of alleged schemes to defraud.

The plaintiffs in the MDL pending in Maine wanted to use more than a thousand of Judge Kessler's findings of fact to bind Philip Morris and its parent, Altria, in the subsequent civil class action cases brought by individual smokers under state consumer protection laws and for unjust enrichment.  Chief Judge John A. Woodcock, Jr., who is presiding over the Light Cigarettes MDL, thus was confronted with whether to impose non-mutual collateral estoppel on the defendants.

There are four basic requirements for issue preclusion generally:  (1) the issues in the earlier and later cases must be identical, (2) the issues must have been actually litigated in the prior action, (3) the prior judgment must be final, and (4) the issue must have been essential to the final judgment, not merely incidental or collateral to it.

Chief Judge Woodcock determined that there was no doubt that the issues plaintiffs sought preclusion on were actually litigated before Judge Kessler, so requirement 2 was definitely met.  And her judgment was properly considered final, even though a certiorari petition is pending before the United States Supreme Court, so requirement 4 was met, too.

But Chief Judge Woodcock had many doubts about whether the identity of issues requirement was met.  Many of Judge Kessler's findings referred to the "Defendants" and were not specific to Philip Morris or Altria.  He reasoned that it would be unfair to hold those two companies liable for the collective wrongful acts of all tobacco companies.  Moreover, the "light cigarette" scheme was only one of six that Judge Kessler had held the industry liable for in her opinion, and it was unclear how heavily if at all, her judgment relied on the specific actions of Philip Morris and Altria regarding light cigarettes. 

In addition, the period of time relevant to Judge Kessler had been fifty years.  In contrast, many of the suits pending in Maine had much shorter proposed class periods that began near the time of Judge Kessler's opinion.  Thus, the overlap of time may not be identical.

Chief Judge Woodcock acknowledged that there were some findings -- particularly relating to Philip Morris's knowledge about the health risks of light cigarettes -- that might be identical.  But Chief Judge Woodcock was concerned that "because of the small number of findings related to light cigarettes, the Court is not convinced that they were central to [Judge Kessler's] conclusion of light cigarette fraud on the part of the enterprise."  Slip op. at 15.

Indeed, the court concluded that the sheer volume of the findings plaintiffs wanted to use -- 1,083 -- proved that they could not possibly have been central to Judge Kessler's holding.  As the court explained:  "Judge Kessler included the lengthy findings so that readers could 'fully appreciate how massive the case is against the Defendants,' not necessarily because the facts were critical to her conclusion."  Slip op. at 14 (citation omitted).

Ultimately, Chief Judge Woodcock applied the Supreme Court's decision in Parklane Hosiery Co. v. Shore, 439 U.S. 329 (1979) to decide against giving Judge Kessler's findings issue-preclusive effect in the cases before him.  In Parklane Hosiery, the Supreme Court had counseled that where issue preclusion is being used by someone who was not a party to the prior suit, certain public policy and fairness factors also must be considered.  Slip op. at 3. 

Weighing those factors, Chief Judge Woodcock noted that the defendants had been deprived of a jury trial before Judge Kessler, whereas they would be entitled to one in the actions pending before him.  He also expressed the very practical concern about "the possibility for jury confusion and the lack of efficiency."  Id. at 15.  Indeed, given the sheer number of factual conclusions that plaintiffs wanted to use (more than 1,000), the court noted that they would likely confuse the jury without presenting some background and clarifying testimony -- but that would defeat the whole efficiency purpose being used to justify issue preclusion.  Id. at n.17.  Moreover, the Supreme Court recently has admonished that punitive damages may not be used to punish a defendant for injuries it inflicted on people other than the plaintiffs; but using findings of fact from a prior trial necessarily would run afoul of that rule and would require potentially confusing corrective instructions.  Id. at 15-16. In addition, the court concluded, little efficiency would be achieved because individual plaintiffs still would need to prove that they relied on the defendants' alleged misrepresentations and that they were actually deceived.  Id. at 16. 

Interestingly, Chief Judge Woodcock did not seem to take a position on one of the defendants' arguments that I found most logical and compelling:  namely, that applying issue preclusion would be unfair under Parklane Hosiery because the defendants routinely had won jury verdicts in cases involving light cigarettes, and thus Judge Kessler's findings did not stand uncontradicted and could not be given preclusive effect without arbitrarily favoring one judgment over another.  Id. at 7-8.

Ultimately, Chief Judge Woodcock's order is the third one that has refused to give issue-preclusive effect to Judge Kessler's behemoth 2006 order.  Its careful reasoning is instructive and should give any court faced with mass tort litigation pause before artificially depriving a defendant of its right to present evidence to contest a claim.

• Email This
• Print
• Comments
• Trackbacks
• Share Link