This just in: The Eighth Circuit has affirmed the Baycol MDL judge’s authority to enjoin the plaintiffs, after losing a class certification motion in the MDL, from running to a (presumably) friendly state-court judge to get the same class certified. Here’s a link to the opinion.
What happened is that one West Virginia law based consumer fraud (that is, economic losses only) class action was removed to federal court and became part of the Baycol MDL. Class certification was denied. In re Baycol Products Litigation, 218 F.R.D. 197, 202 (D. Minn. 2003) (omnibus complaint); In re Baycol Products Litigation (McCollins), No. 02-0199, slip op. (D. Minn. Aug. 25, 2008) (West Virginia specific order).
While all this was going on, a second, substantively identical class remained in West Virginia state court because there was no diversity of citizenship. After none of the federal decisions, the West Virginia plaintiffs pressed for certification in the parallel state court suit. Slip op. at 4-5.
The defendant sought to enjoin prosecution of the West Virginia do-over in state court, and the MDL judge granted the injunction.
As the Eighth Circuit observed, these kinds of forum-shopping shenanigans by plaintiffs looking for a do-over can’t happen any more, thanks to CAFA. Slip op. at 3.
If the plaintiffs has wanted to challenge the MDL judge’s application of West Virginia law, they should have appealed. They didn’t. Plaintiffs could point to no substantive or procedural differences between the federal and West Virginia class action rules. Since class “certification determination “involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action,” it was a proper subject for application of collateral estoppel. Slip op. at 6-8. The Eight Circuit followed a similar decision by the Seventh Circuit:
Our holding today comports with the reasoning of Bridgestone/Firestone, in which the Seventh Circuit concluded that the relitigation exception permitted an injunction barring relitigation in state court of a federal court’s denial of class certification. 333 F.3d at 769. The Bridgestone/Firestone plaintiffs sought national class certification in various state courts after it had been denied in federal court. Relitigation in state court of whether to certify the same class rejected by a federal court presented an impermissible “heads-I-win, tails-you-lose situation.” Id. at 767. We agree.
Slip op. at 9. Since Bexis was involved in the original Bridgestone/Firestone win, he is much pleased to see it followed, especially since that case took some hits (as we discussed) in the ALI’s Principles of the Law of Aggregate Litigation project.
Thus, at least “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.” Slip op. at 10.
At last, a concrete benefit for defendants who have to suffer through MDL proceedings.
Then the hardest ruling – where Bridgestone/Firestone really broke new ground – the holding that mass tort plaintiffs in the same mass tort are in privity with one another for purposes of class certification. There was “adequacy of representation” (indeed, the plaintiffs seeking class certification affirmatively asserted it) because both plaintiffs made the same claims:
Rule 23(a)(4)’s adequacy requirement is met when the class representative is “part of the class and possess[es] the same interest and suffer[s] the same injury as the [absent] class members.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) (quotations omitted). Here, the McCollins class and respondents’ class are essentially the same. Both are West Virginians who purchased Baycol. Both classes rely on the same theory rejected by the district court: their ability to recover for economic loss despite the absence of a physical injury. Thus, respondents’ interests were aligned with McCollins’.
Slip op. at 11.
That’s what always bothered us the most about this kind of forum-shopping – that the plaintiffs tried it after affirmatively claiming that they were adequate representatives of the same class in federal court, and then tried to argue the opposite when addressing the privity requirement of collateral estoppel. The Eighth Circuit was having none of that hypocrisy. Once plaintiffs “vigorously argue” for adequacy, and don’t lose the point in class certification – they’re stuck with it for collateral estoppel/due process purposes. Id.
Finally, an interesting due process point – the state court class wasn’t entitled to separate notice, since they remain free to pursue their individual actions. Slip op. at 12. After all plaintiffs “have no absolute right to litigate their claims as a class.” Id. at 13.
The situation addressed in Bridgestone/Firestone and Baycol not something that’s likely to recur very often, given the enactment of CAFA. But it’s nice to know that, if anything ever happened to CAFA, playing “now you see it, now you don’t” with identical class actions in different jurisdictions, isn’t allowed under federal common law.