Thursday, October 7, 2010
The Supreme Court granted cert in yet another class action case (Smith v. Bayer Corp., No. 09-1205) to determine whether a federal judge can enjoin plaintiffs from bringing an economic injury class action in a state court after a federal court declined to certify the class. The Anti-Injunction Act, 28 U.S.C. 2283, provides that, subject to three important exceptions, a federal court may not grant an injunction to stay proceedings in state courts. Those exceptions include where Congress expressly authorizes the injunction, where it's in necessary aid of the federal courts jurisdiction, or to protect and effectuate federal judgements. Should one of the exceptions apply, the All Writs Act provides the positive authority for federal courts to enjoin state court proceedings.
Some of the most famous class action injunction cases to date include:
(1) the Third Circuit's In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, a 1998 case in which the Third Circuit refused to enjoin a Louisiana state court from certifying and settling a class where the Third Circuit had previously reversed the finding that the settlement was fair;
(2) the Fifth Circuit's decision in In re Corrugated Container Antitrust Litigation, where the Fifth Circuit approved the use of two exceptions in the Anti-Injunction Act to prevent a group of South Carolina plaintiffs from certifying similar antitrust claims in South Carolina because they attempted to escape the preclusive effect of a federal-court judgment approving the class settlement; and
(3) Judge Weinstein's opinion in In re Joint Eastern and Southern District Asbestos Litigation in which he invoked the exceptions to effectuate a limited fund class action settlement under Rule 23(b)(1)(B).
In Smith v. Bayer Corp., the Eighth Circuit affirmed the trial court's ruling that prevented Baycol plaintiffs from bringing another economic injury class action in West Virginia state court after the federal judge overseeing the MDL proceedings already denied class certification on similar issues. Keith Smith and Shirley Sperlazza, the petitioners, argued that they weren't parties to the federal case and didn't know about the lawsuit. They also argued that they were asserting a common-law fraud claim under West Virginia law, which the federal plaintiffs did not assert.
The BNA Class Action Litigation Report (subscription required) has a nice write-up of the issues in the case, including the injunction and personal jurisdiction issues. Here are links to the Petition for Certiorari, the Brief in Opposition, and the Petitioner's Reply (courtesy of SCOTUSblog).