Federal Court Refuses To Give Collateral Estoppel Effect To State Court Class Certification Order
A recent decision from a federal district court in Massachusetts raises interesting issues regarding the effect of rulings in competing class actions. In Gintis v. Bouchard Transportation Co., 2009 WL 95661 (D. Mass. Jan. 15, 2009), a tugboat and barge had strayed off course while navigating a shipping canal. They collided with a reef, resulting in up to 98,000 gallons of oil being spilled into Buzzards Bay, contaminating real property all along the bay and requiring cleanup.
Buzzards Bay property owners had sued the defendants in both state and federal court in Massachusetts. The state court had declined to certify a class of propertyowners from across the bay, finding that the named representatives from the town of Mattapoisett could not adequately represent the interests of a baywide class. The state court ultimately did, however, certify a class of Mattapoisett residents.
In federal court, both the plaintiffs and defendants sought to use the state court decision offensively, urging that the order merited collateral estoppel effect. The defendants sought to hold plaintiffs to the state court's determination that a baywide class was not certifiable. The plaintiffs sought to hold defendants to the state court's determinations on the individual elements of Rule 23.
The court in Gintis rejected both assertions of collateral estoppel. The court acknowledged that the Seventh Circuit has held that a court's denial of certification can be conclusive against absent proposed class members. Id. at *2 (citing In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 333 F.3d 763, 768 (7th Cir. 2003)). But that can only be the case where the absent class members were adequately represented by class counsel. Because the state court had held that the named plaintiffs there could not adequately represent other bay propertyowners, the state court's decision denying certification of a baywide class could not have collateral estoppel effect.
The court in Gintis similarly rejected the plaintiffs' attempt to give nonmutual offensive collateral estoppel effect to the state court's conclusions about predominance, superiority, and other elements of Rule 23. It reasoned that plaintiffs could not easily have joined the earlier state court action, and further it would be fundamentally unfair to apply collateral estsoppel to defendants because the state court's determinations on the elements of Rule 23 were made based on assumptions about a much smaller and manageable Mattapoisett-only class.
Having dispensed with the collateral estoppel arguments, the district court proceeded to analyze whether the proposed class of more than 1,000 property owners from around the bay should be certified. The plaintiffs argued that there were good grounds to certify the class for at least liability and causation determinations, leaving the calculation of damages to be determined subsequently on an individual basis.
The court ultimately held that the predominance and superiority requirements were not satisfied because determining liability and causation on the public nuisance theory would require the same kind of individualized inquiry that a damages determination would require:
[T]he proposed class members would have to show that there has been an "unreasonable interference with a right common to the general public" and some "special injury of a direct and substantial character." A showing of "unreasonable" interference and "special," "direct," and "substantial" injury would require an examination into the individual characteristics of the proposed class members' properties and the extent of contamination.
Id. at *5. In reaching this conclusion, the court relied heavily on the decision in Church v. General Electric Co., 138 F. Supp. 2d 169 (D. Mass. 2001), in which a court refused to certify a class to determine whether PCB contamination constituted public nuisance and trespass for riparian landowners.
