Interplay 131328-appellant Brief

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Docket No. 09-1069

In the

United States Court of Appeals for the Eighth Circuit IN RE: BAYCOL PRODUCTS LITIGATION PEGGY ANN MAYS, GEORGE F. MCCOLLINS, individually, and on behalf of all others similarly situated, Plaintiffs, KEITH SMITH, SHIRLEY SPERLAZZA, Respondents-Appellants, v. BAYER CORPORATION, a foreign corporation, authorized to do business in West Virginia as Bayer Corporation, and also known as Bayer AG and Bayer Pharmaceutical, Defendants-Appellees, BAYER AG, a foreign corporation, GLAXOSMITHKLINE, INC., a foreign corporation, SMITHKLINE BEECHAM CORPORATION, GLAXOSMITHKLINE PLC, Defendants. _______________________________________

Appeal from a decision of the United States District Court of Minnesota, Civil No. 02-199, MDL No. 1431 Honorable Michael J. Davis, Chief Judge BRIEF OF APPELLANTS RICHARD A. MONAHAN MARVIN W. MASTERS CHARLES M. LOVE, IV THE MASTERS LAW FIRM lc 181 Summers Street Charleston, WV 25301 (304) 342-3106 Attorneys for Appellants

COUNSEL PRESS · (866) 703-9373

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I. SUMMARY OF THE CASE Appellants Keith Smith and Shirley Sperlazza are class representatives in Smith, et al. v. Bayer Corp., et al., No. 01-C-191 (1-3) JPM, a civil suit filed in the Circuit Court of Brooke County, West Virginia on September 20, 2001, seeking class certification of a West Virginia-only class concerning claims regarding the manufacture, sale, advertisement, warnings, and use of Baycol.

A class-

certification hearing was scheduled in Smith for December 10, 2008. However, on October 31, 2008, Appellee Bayer Corporation filed an expedited motion for a permanent injunction, seeking to enjoin the class-certification hearing on the basis that on August 25, 2008, the United States District Court for the District of Minnesota in McCollins v. Bayer Corp., et al., No. 02-0199, had denied certification of a proposed West Virginia class concerning economic loss claims arising from the sale and use of Baycol. By Order entered on December 9, 2008, the District Court granted Bayer Corporation’s expedited motion for a permanent injunction. Pursuant to 28 U.S.C. § 1292(a)(1), Appellants now appeal such Order. Due to the complexity of the issues, the irreparable harm caused Appellants, and the far-reaching effects of the injunction, Appellants submit that oral argument is justified and that 30 minutes per party should be sufficient time to complete such oral argument.

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CORPORATE DISCLOSURE STATEMENT

Inasmuch as Appellants, Keith Smith and Shirley Sperlazza, are individual persons rather than corporations, they have no relevant information to report. In this regard, Appellants expressly note that—other than the corporate defendants (and any corporations sufficiently related to the corporate defendants)—Appellants have no knowledge of any corporation which has a direct financial interest in their claims.

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III. TABLE OF CONTENTS I.

SUMMARY OF CASE .................................................................................... 1

II.

CORPORATE DISCLOSURE STATEMENT ............................................ 2

III.

TABLE OF CONTENTS ................................................................................ 3

IV.

TABLE OF AUTHORITIES .......................................................................... 5

V.

JURISDICTIONAL STATEMENT .............................................................. 8

VI.

STATEMENT OF ISSUES ............................................................................. 9

VII. STATEMENT OF CASE ................................................................................ 10 VIII. STATEMENT OF FACTS ............................................................................. 12 IX.

SUMMARY OF ARGUMENT....................................................................... 14

X.

ARGUMENT.................................................................................................... 16 A. The Permanent Injunction Violates the AntiInjunction Act, 28 U.S.C. § 2283, And Principles Of Federalism And Comity .............................................................. 16 B. The Permanent Injunction Is Not Supported By The Relitigation Exception To The Anti-Injunction Act, 28 U.S.C. § 2283, The All-Writs Act, 28 U.S.C. § 1651(a), Or The Doctrine Of Collateral Estoppel. .................. 20 C. The District Court’s Unwarranted Exercise Of Personal Jurisdiction Over State-Court Litigants and Grants Of A Permanent Injunction Over A StateAction Seeking Class Certification Pursuant To W.Va.R.Civ.P. 23 On The Basis Of An Order Denying Class Certification Pursuant To Fed.R.Civ.P. 23 3

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Violates Due Process, As Well As The Beneficial And Salutary Purposes Of The Class-Action Device, And Causes Irreparable Damage To Appellants And The Class They Seek To Represent .................................................... 35

XI.

1.

The District Court Lacks Personal Jurisdiction Over Appellants And The Class They Seek To Represent. .............................................. 36

2.

Granting The Permanent Injunction Has Caused The Appellants And The Class They Seek To Represent Extreme And Irreparable Harm And Prejudice ...................................................... 40

CONCLUSION ................................................................................................ 43

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IV. TABLE OF AUTHORITIES A. CASES Allen v. Stewart Title Guaranty Co., 06-cv-2426, 2007 WL 916859 (E.D. Pa., March 20, 2007) ..................................................................................................9, 25 Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997) ................................10, 41 Atlantic Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. 281 (1970) ...... 9, 17, 18, 19, 34 Bailey v. State Farm Fire and Casualty Co., 414 F.3d 1187 (10th Cir. 2005) ......... 21 Black, et al. v. Bayer Corp., et al., 02-0199 (D. Minn.) ........................................... 8 Canady v. Allstate Ins. Co., 282 F.3d 1005 (8th Cir. 2002). ............21, 22, 26, 28, 37 Caperton v. A.T. Massey Coal Co., Inc., ___ S.E.2d ____, 2008 WL 918444 (W.Va. April 3, 2008) .............................................................................................. 19 Carlough v. Admiral Ins. Co., 10 F.3d 189 (3d Cir. 1993)................................37, 38 Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988) .............9, 18, 20, 25, 26, 34 Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) ....................................................................................................................... 22 DeBoer v. Mellon Mortgage Co., 64 F.3d 1171 (8th Cir. 1995) ........................10, 41 In re Bayshore Ford Trucks Sales, Inc., 471 F.3d 1233 (11th Cir. 2006) .........10, 30, 39 In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d 763 (7th Cir. 2003) ....................................................................... 10, 28, 29, 30, 32, 33, 34, 40, 41 In re Diet Drugs Products Liability Litigation, 369 F.3d 293 (3d Cir. 2004) ........ 16, 20, 36

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In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133 (3d Cir. 1998) ...................................................... 9, 10, 20-21, 22, 24, 25, 30, 39 In re Rezulin Products Liability Litigation, 210 F.R.D. 61 (S.D.N.Y 2002) .......... 26 In re West Virginia Rezulin Litigation, 585 S.E.2d 52 (W.Va. 2003) ...…20, 27, 28, 42 Johnson v. GlaxoSmithKline, Inc., 166 Cal.App.4th 1497, 83 Cal.Rptr.3d 607 (Ct.App.2nd Dist. 2008) .....................................................................................32, 33 Johnson v. Fankell, 520 U.S. 911 (1997)...........................................................19, 20 J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176 (5th Cir. 1996) ...........9, 22, 23, 24 Kent v. United of Omaha Life Ins. Co., 484 F.3d 988 (8th Cir. 2007) .................... 20 Kline v. Burke Construction Co., 260 U.S. 226 (1922).......................................9, 17 Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir. 1997) ................................... 10 McCollins v. Bayer Corp., et al., No. 02-0199 (D.Minn.)..................1, 8, 11, 13, 14, 15, 21, 22, 26, 28, 33, 34, 35 Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518 (1986) ................................... 19 Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), 105 S.Ct. 2965 ..........10, 32, 37, 38 Randolph v. Rodgers, 170 F.3d 850 (8th Cir. 1999) .........................................16, 36 Robinette v. Jones, 476 F.3d 585 (8th Cir. 2007) ..................................................... 20 Smith, et al. v. Bayer Corp., et al., No. 01-C-191 (1-3) JPM (Cir. Ct. Brooke Co., W.Va. Sept. 20, 2001) .......................................................................1, 10, 11, 12, 13 Stanton v. St. Jude Medical, Inc., 340 F.3d 690 (8th Cir. 2003) .............................. 35 State ex rel. Johnson & Johnson Corp. v. Karl, 647 S.E.2d 899 (W.Va. 2007) ...... 19 6

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Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28 (2002) ....................8, 36, 37 Taylor v. Sturgell, ___ U.S. ___, 128 S.Ct. 2161 (2008) ......................10, 30, 31, 32 Underwriters Nat’l Assurance Co. v. North Carolina Life & Accident & Health Ins. Guar. Ass’n, 455 U.S. 691 (1982) ........................................................................... 17 U.S. v. Buckner, 894 F.2d 975 (8th Cir. 1990) ......................................................... 36 Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623 (1977).......................................... 19 Younger v. Harris, 401 U.S. 37 (1971) .................................................................... 17 B.

STATUTES

18 U.S.C. § 1965...................................................................................................... 29 28 U.S.C. § 1292..............................................................................................1, 9, 11 28 U.S.C. § 1332........................................................................................................ 8 28 U.S.C. § 1407..................................................................................................9, 29 28 U.S.C. § 1651 (1988) ............................................................................8, 9, 20, 21 28 U.S.C. § 2283 (1970) ......................................................................8, 9, 16, 18, 20 W.Va. Code § 46A-6-101 ........................................................................................ 12 C.

OTHER AUTHORITIES

Fed. R. Civ. P. 23 .............................................................................10, 15, 22, 26, 35 Fed. R. App. P. 4 ........................................................................................................ 9 W. Va. R. Civ. P. 23.................................................................. 10, 19, 22, 26, 27, 35

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V. JURISDICTIONAL STATEMENT A.

District Court’s Jurisdiction:

Appellants submit that the United

States District Court for the District of Minnesota lacked subject-matter jurisdiction over them and the class they seek to represent. Appellants have only filed claims under the substantive law of the State of West Virginia. Because complete diversity of citizenship did not exist at the time of the filing of their complaint, Appellants’ case was never removed to federal court pursuant to 28 U.S.C. § 1332.

Neither the All-Writs Act, 28 U.S.C. § 1651(a), nor the

Relitigation Exception to the Anti-Injunction Act, 28 U.S.C. § 2283, provide an independent basis for federal subject-matter jurisdiction over appellants’ civil action. Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 31-34 (2002). However, Appellants recognize that this factor is distinct from whether the District Court had the authority to issue an Order enjoining proceedings in a state-court action. Provided the injunction was otherwise appropriate, the All-Writs Act, 28 U.S.C. § 1651(a), and the Relitigation Exception to the Anti-Injunction Act, 28 U.S.C. § 2283, would authorize the District Court to issue the injunction in this case because it had subject-matter jurisdiction over McCollins, the predecessor of which, Black, et al. v. Bayer Corp., et al., had been removed to federal court pursuant to 28 U.S.C. § 1332 and then transferred by the Judicial Panel for

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Multidistrict Litigation to the United States District Court for the District of Minnesota for consolidated, pretrial proceedings under 28 U.S.C. § 1407. B.

Appellate Jurisdiction: This Court has the jurisdiction to hear appeals

of interlocutory orders of a district court granting injunctions under 28 U.S.C. § 1292(a)(1). C.

Timeliness: The District Court’s Memorandum of Law and Order

granting Bayer Corporation’s expedited motion for a permanent injunction was entered on December 9, 2008. Appellants’ Notice of Appeal was timely filed on January 6, 2009, in accordance with Fed.R.App.P. 4(a)(1)(A). D.

This Court has the jurisdiction to hear the appeal of the District

Court’s Memorandum of Law and Order granting Bayer Corporation’s expedited motion for a permanent injunction under 28 U.S.C. § 1292(a)(1). VI. STATEMENT OF ISSUES A. The permanent injunction violates the Anti-Injunction Act, 28 U.S.C. § 2283, and principles of federalism and comity. See Kline v. Burke Construction Co., 260 U.S. 226, 229-30 (1922); Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. 281, 286 (1970); Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146-50 (1988). B. The permanent injunction is not supported by the relitigation exception to the Anti-Injunction Act, 28 U.S.C. § 2283, the AllWrits Act, 28 U.S.C. § 1651(a), or the doctrine of collateral estoppel. See In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133, 146 (3d Cir. 1998); J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176, 180 (5th Cir. 1996); Allen v. Stewart Title Guaranty Co., No. 06-cv9

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2426, 2007 WL 916859, at **1-2 (E.D.Pa. March 20, 2007). See also Taylor v. Sturgell, ___ U.S. ____, 128 S.Ct. 2161, 2171-73 & 1276 (2008). C. The District Court’s unwarranted exercise of personal jurisdiction over state-court litigants and grant of a permanent injunction over a state action seeking class certification pursuant to W.Va.R.Civ.P. 23 on the basis of an Order denying class certification pursuant to Fed.R.Civ.P. 23 violates due process, as well as the beneficial and salutary purposes of the class-action device, and causes irreparable damage to Appellants and the class they seek to represent. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12 (1985); In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133, 141 (3d Cir. 1998); Taylor v. Sturgell, ___ U.S. ____, 128 S.Ct. 2161, 2171-73 & 1276 (2008); Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997). 1. The District Court lacks personal jurisdiction over appellants and the class they seek to represent. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12 (1985); In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133, 141 (3d Cir. 1998); In re Bayshore Ford Trucks Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006). But see In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d 763, 768 (7th Cir. 2003). 2. Granting the permanent injunction has caused the appellants and the class they seek to represent extreme and irreparable harm and prejudice. See Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997); Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997); DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1175 (8th Cir. 1995). VII. STATEMENT OF CASE Appellants Keith Smith and Shirley Sperlazza are class representatives in Smith, et al. v. Bayer Corp., et al., No. 01-C-191 (1-3) JPM, a civil suit filed in the

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Circuit Court of Brooke County, West Virginia on September 20, 2001, seeking class certification of a West Virginia-only class concerning claims regarding the manufacture, sale, advertisement, warnings, and use of Baycol.

A class-

certification hearing was scheduled in Smith for December 10, 2008. However, on October 31, 2008, Appellee Bayer Corporation filed an expedited motion for a permanent injunction, seeking to enjoin the class-certification hearing on the basis that on August 25, 2008, the United States District Court for the District of Minnesota in McCollins v. Bayer Corp., et al., No. 02-0199, had denied certification of a proposed West Virginia class concerning economic loss claims arising from the sale and use of Baycol. Appellants--who neither were class representatives in McCollins nor had received notice of McCollins and the motions regarding class certification filed therein--opposed Bayer Corporation’s expedited motion for a permanent injunction. Appellants appeared specially to contest personal jurisdiction as well as to argue the merits as to why the injunction should not be issued under the AllWrits Act and the Relitigation Exception of the Anti-Injunction Act. By Order entered on December 9, 2008, the District Court granted Bayer Corporation’s expedited motion for a permanent injunction. Pursuant to 28 U.S.C. § 1292(a)(1), Appellants now appeal such Order.

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VIII. STATEMENT OF FACTS On September 20, 2001, Appellants Keith Smith and Shirley Sperlazza, together with Nancy Gandee,1 filed a civil action, Smith, et al. v. Bayer Corp., et al., No. 01-C-191 (1-3) JPM (Cir.Ct. Brooke County, W.Va. Sept. 20, 2001), in the Circuit Court of Brooke County, West Virginia, seeking class certification of a West Virginia-only class concerning claims regarding the manufacture, sale, advertisement, warnings, and use of Baycol. See Appendix, at pp. SA 96-115, Smith Complaint, attached as Exhibit E to Bayer Corporation’s Expedited Motion for Permanent Injunction. The Smith plaintiffs sought certification of a class of “all West Virginia residents and others who have ingested Cerivastatin, sold under the trade name `Baycol’ in West Virginia” and requested damages for personal injury, medical monitoring, and economic loss. Id. On September 30, 2008, Appellants filed a motion seeking certification of only an economic-loss class based upon their claims of common-law fraud, breach of warranties, and violations of the West Virginia Consumer Credit and Protection Act (“WVCCPA”), W.Va.Code § 46A-6-101, et seq. See Appendix, at pp. SA 116117, Smith Plaintiffs’ Motion for Certification of Class Action attached as Exhibit

1

Plaintiff Nancy Gandee settled her claims against Bayer in July 2003 and is no longer a representative or member of the putative class in Smith. The plaintiffs had also originally sued two, non-diverse West Virginia citizens who subsequently were dismissed at or about the time that Nancy Gandee settled her claims. 12

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F to Bayer Corporation’s Expedited Motion for Permanent Injunction. A classcertification hearing was scheduled in Smith for December 10, 2008. However, on October 31, 2008, Appellee Bayer Corporation filed an expedited motion for a permanent injunction, see Appendix, at pp. 21-24, seeking to enjoin the class-certification hearing on the basis that on August 25, 2008, the United States District Court for the District of Minnesota in McCollins v. Bayer Corp., et al., No. 02-0199, had denied certification of a proposed West Virginia class concerning economic-loss claims arising from the sale and use of Baycol. See Appendix, at pp. SA 1-20, Addendum, at pp. A 1-20. Appellants--who neither were class representatives in McCollins nor had received notice of McCollins and the motions regarding class certification filed therein--opposed Bayer Corporation’s expedited motion for a permanent injunction. See Appendix, at pp. SA 293-311, Response in Opposition to Bayer Corporation’s

Expedited

Motion

for

a

Permanent

Injunction.

Appellants/respondents appeared specially to contest personal jurisdiction as well as to argue the merits as to why the injunction should not be issued under the AllWrits Act and the Relitigation Exception of the Anti-Injunction Act. By Order entered on December 9, 2008, the District Court granted Bayer Corporation’s expedited motion for a permanent injunction. See Appendix, at pp. SA 383-400;

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Addendum, at pp. A 21-38.

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Appellants now appeal such Order and seek

dissolution of the injunction. IX. SUMMARY OF ARGUMENT The principles of federalism and comity upon which our Nation was founded recognize and allow for the fact that litigation involving the same or similar parties, issues, and claims may proceed concurrently in federal and state courts. With only three narrowly-drawn exceptions, the Anti-Injunction Act prohibits federal courts from interfering with proceedings in state courts. The exceptions were designed to ensure the effectiveness and supremacy of federal law. Because the effectiveness and supremacy of federal law is not at issue in this case, the injunction issued by the District Court violates the Anti-Injunction Act as well as the principles of federalism and comity upon which they are based. The All-Writs Act only allows a federal court to issue an injunction if one of the narrowly-drawn exceptions to the Anti-Injunction Act is applicable.

The

relitigation exception to the Anti-Injunction Act, advanced by Bayer Corporation, does not apply in this case. The doctrine of collateral estoppel may not be imposed because (1) the issues being litigated were not identical, (2) the appellants were not parties to or in privity with the plaintiffs in McCollins, and (3) a finding of adequate representation was neither made by the District Court in its Order

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denying class certification in McCollins nor under the facts of such case should have been made. Furthermore, under the circumstances of this case, an injunction could not be issued by the District Court because it lacked personal jurisdiction over the Appellants and members of their putative class. The general rule is that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process. While absent members of a class action may sometimes be treated as parties for preclusion purposes, they should only be so treated when they have been afforded the dueprocess protections of notice and the right to opt out afforded by Rule 23 of the Federal Rules of Civil Procedure or a corollary state rule governing class actions. Because such due-process protections are only afforded once a class action is certified, absent class members should not be treated as parties in cases where class certification is denied rather than granted. One of the primary purposes of the class-action mechanism is that of vindicating the rights of claimants with small damage claims who could not feasibly as a matter of economics achieve justice through independent litigation. However, based upon the District Court’s injunction, independent litigation is the only alternative which Appellants and members of their putative class now possess. Accordingly, the District Court’s issuance of an injunction based upon an

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order denying class certification has not only violated due process of law but has also defeated this salutary purpose of class actions. Faced with this harsh reality, Appellants and the members of their putative class have suffered irreparable harm which far outweighs any harm caused Bayer Corporation by the possibility of repetitious litigation. X. ARGUMENT A. The permanent injunction violates the Anti-Injunction Act, 28 U.S.C. § 2283, and principles of federalism and comity. Standard of Review: “`The standard of review for the authority to issue an injunction under the Anti-Injunction Act and the All-Writs Act is de novo.’ . . . `We review the terms of an injunction for an abuse of discretion, underlying questions of law receive de novo review, and factual determinations are reviewed for clear error.’” In re Diet Drugs Products Liability Litigation, 369 F.3d 293, 304 (3d Cir. 2004) (quoting In re Prudential Ins. Co. of Am. Sales Practices Litig., 261 F.3d 355, 363 (3d Cir. 2001)). See also Randolph v. Rodgers, 170 F.3d 850, 856 (8th Cir. 1999) (noting that district court’s issuance of a permanent injunction is reviewed for an abuse of discretion and that “`[a]buse of discretion occurs if the district court reaches its conclusion by applying erroneous legal principles or relying on clearly erroneous factual findings’” (internal citations omitted)). The United States Supreme Court has long recognized that parallel state and federal litigation do not cause jurisdictional interference requiring action.2 As the

2

The doctrines of federalism and comity are well entrenched in our jurisprudence. During the inception of our country--through its early years which witnessed the adoption of the Articles of Confederation and, after long debate and compromise, its subsequent replacement by our Constitution and Bill of Rights--our founding forefathers wisely declined to have the new federal government usurp the entirety 16

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Supreme Court explained in Atlantic Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. 281, 286 (1970): Thus from the beginning we have had in this country two essentially separate legal systems. Each system proceeds independently of the other with ultimate review in this Court of the federal questions raised in either system. Understandably this dual court system was bound to lead to conflicts and frictions. Litigants who foresaw the possibility of more favorable treatment in one or the other system would predictably hasten to invoke the powers of whichever court it was believed would present the best chance of success. Obviously this dual system could not function if state and federal courts were free to fight each other for control of a particular case. Thus, in order to make the dual system work and “to prevent needless friction between state and federal courts,” Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 309 U.S. 4, 9, 60 S.Ct. 215, 218, 84 L.Ed. 537 (1940), it was necessary to work out lines of demarcation between the two systems. Some of these limits were spelled out in the [Judiciary Act of 1789, 1 Stat. 73]. Others have been added by later statutes as well as judicial decisions. The 1793 anti-injunction Act was at least in part a response to these pressures. Accord Kline v. Burke Construction Co., 260 U.S. 226, 229-30 (1922). Accordingly, the Anti-Injunction Act generally prohibits federal courts from interfering with proceedings in the state courts. The present version of the AntiInjunction Act provides: A court of the United States may not grant an injunction to stay proceedings in a State Court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.

of the new nation’s governmental functions. See Younger v. Harris, 401 U.S. 37, 44 (1971); Underwriters Nat'l Assurance Co. v. North Carolina Life & Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 703-04 (1982). 17

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28 U.S.C. § 2283 (1970). On its face the present Act is an absolute prohibition against enjoining state court proceedings, unless the injunction falls within one of three specifically defined exceptions. . . . Moreover since the statutory prohibition against such injunctions in part rests on the fundamental constitutional independence of the States and their courts, the exceptions should not be enlarged by loose statutory construction. Proceedings in state courts should normally be allowed to continue unimpaired by intervention of the lower federal courts, with relief from error, if any, through the state appellate courts and ultimately [the United States Supreme] Court. Atlantic Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. at 286-87. Accord Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146-50 (1988). The exceptions to the Act’s prohibition of injunctions were created to ensure the effectiveness and supremacy of federal law. As explained by the Court: Congress, however, has permitted injunctions in certain, specific circumstances, namely, when expressly authorized by statute, necessary in aid of the court’s jurisdiction, or necessary to protect or effectuate the court’s judgment. These exceptions are designed to ensure the effectiveness and supremacy of federal law. But as the Court has recognized, the exceptions are narrow and are “not [to] be enlarged by loose statutory construction.” . . . Chick Kam Choo v. Exxon Corp., 486 U.S. at 146 (quoting Atlantic Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. at 287). Indeed, the Supreme Court has cautioned: Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy. The explicit wording of § 2283 itself implies as much,

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and the fundamental principle of a dual system of courts leads inevitably to that conclusion. Atlantic Coast Line R. Co. v. Brotherhood of Loc. Eng., 398 U.S. at 297. Accordingly, the mere existence of a parallel lawsuit in state court that seeks to litigate the same in personam action is not in itself sufficient grounds for the federal court to stay the state proceedings. Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 642 (1977). “[I]nefficient simultaneous litigation in state and federal courts on the same issue” is “one of the costs of our dual court system.” Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518, 524-25 (1986). It must be emphasized that in the relevant state-court proceeding, no issue of federal law exists, the effectiveness or supremacy of which must be protected by an injunction. Appellants have not pled any claim based on federal common or statutory law.

Accordingly, any class certification hearing held by the West

Virginia Circuit Court would involve only issues of the substantive law of the State of West Virginia and its procedural law as set forth in Rule 23 of the West Virginia Rules of Civil Procedure. Decisions of federal courts applying state substantive law are not binding authority on any state court applying the same state law to the same or similar set of facts. Johnson v. Fankell, 520 U.S. 911, 916-17 (1997); State ex rel. Johnson & Johnson Corp. v. Karl, 647 S.E.2d 899, 913 n. 18 (W.Va. 2007); Caperton v. A.T. Massey Coal Co., Inc., ___ S.E.2d ____, 2008 WL 918444, at 24 (W.Va. April 3, 2008). Furthermore, it is clear that decisions of a 19

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federal court applying or interpreting the Federal Rules of Civil Procedure are not binding on a state court applying or interpreting its own Rules of Civil Procedure even if they are modeled on the Federal Rules. Johnson v. Fankell, 520 U.S. at 916; In re West Virignia Rezulin Litigation, 585 S.E.2d 52, 61 (W.Va. 2003). Accordingly, the reason for which the exceptions to the Anti-Injunction Act’s prohibition of injunctions were designed, i.e., to ensure the effectiveness and supremacy of federal law, simply do not exist in this case. See Chick Kam Choo v. Exxon Corp., 486 U.S. at 146. B. The permanent injunction is not supported by the relitigation exception to the Anti-Injunction Act, 28 U.S.C. § 2283, the All-Writs Act, 28 U.S.C. § 1651(a), or the doctrine of collateral estoppel. Standard of Review: “`The standard of review for the authority to issue an injunction under the Anti-Injunction Act and the All-Writs Act is de novo.’” In re Diet Drugs Products Liability Litigation, 369 F.3d 293, 304 (3d Cir. 2004) (quoting In re Prudential Ins. Co. of Am. Sales Practices Litig., 261 F.3d 355, 363 (3d Cir. 2001)). “The application of collateral estoppel is a question of law that we also review de novo.” Robinette v. Jones, 476 F.3d 585, 588 (8th Cir. 2007). Accord Kent v. United of Omaha Life Ins. Co., 484 F.3d 988, 994 (8th Cir. 2007). This Court has acknowledged: While the relitigation exception to the Anti-Injunction Act provides a justification for disregarding the Anti-Injunction Act, a federal court must also possess positive authority to issue an injunction against state court proceedings. The All Writs Act provides this authority, and empowers a federal court to protect the res judicata and collateral estoppel effects of its prior judgments by enabling it to “issue all writs necessary or appropriate in aid of their respective jurisdictions.” 28 U.S.C. § 1651. See In re General 20

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Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133, 143 (3d Cir. 1998) (“If an injunction falls within one of [the exceptions to the Anti-Injunction Act], the All-Writs Act provides the positive authority for federal courts to issue injunctions of state court proceedings.”). Canady v. Allstate Ins. Co., 282 F.3d 1005, 1019-20 (8th Cir. 2002). The All-Writs Act provides, in relevant part, that “[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a) (1988). The plain language of the All Writs Act establishes the permissive, non-mandatory, nature of the court’s power to issue an injunction. See 28 U.S.C. § 1651(a) (stating that “courts . . . may issue all writs”) (emphasis added). So too is the relitigation exception to the Anti-Injunction Act. See Brooks[ v. Barbour Energy Corp., 804 F.2d 1144, 1146 (10th Cir. 1986)] (explaining that the AntiInjunction act allows courts to issue injunctions in certain circumstances). . . . Bailey v. State Farm Fire and Casualty Co., 414 F.3d 1187, 1189 (10th Cir. 2005). In the present case, contrary to the assertion of Bayer Corporation, the injunction issued by the District Court was not justified under the relitigation exception to the Anti-Injunction Act and the doctrine of collateral estoppel because (1) the issues being litigated were not identical, (2) the appellants were not parties to or in privity with the plaintiffs in McCollins, and (3) a finding of adequate

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representation was neither made by the District Court in its Order denying class certification in McCollins nor under the facts of such case should have been made.3 More specifically, as to the first factor, the issues which would be decided by the West Virginia Circuit Court are not sufficiently identical to those issues which were decided by the District Court in McCollins. Not only have appellants asserted a common-law claim of fraud which was not asserted by the plaintiffs in McCollins, but more importantly, the West Virginia Circuit Court would be determining class certification issues under Rule 23 of the West Virginia Rules of Civil Procedure rather than under Rule 23 of the Federal Rules of Civil Procedure which was utilized by the District Court in McCollins. Two of the cases favorably cited by this Court in Canady, 282 F.3d at 1019 n. 9, are of particular relevance to this issue. In J.R. Clearwater Inc. v. Ashland Chem. Co., supra, after noting that “[a]n order denying class certification is not a final judgment, and therefore is not appealable as a matter of right until conclusion Generally speaking, an order refusing to certify, or decertify, a class action is not a final judgment on the merits sufficient to satisfy the res judicata principles underlying the relitigation exception to the Anti-Injunction Act and may not be appealed as such. Coopers & Lybrand v. Livesay, 437 U.S. 463, 467-68 (1978); Canady, 282 F.3d at 1019 n. 9; In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d at 146; J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176, 179 (5th Cir. 1996). The District Court’s decision denying class certification in McCollins v. Bayer Corp., et al., No. 02-0199, became appealable following the entry of final judgment on Bayer Corporation’s motion for summary judgment. Nonetheless, counsel representing the class representatives in McCollins did not seek reconsideration from the District Court, an appeal to this Court, or a Writ of Certiorari to the United States Supreme Court. 3

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of the litigation in the district court[,]” id., 93 F.3d at 179, the United States Circuit Court of Appeals for the Fifth Circuit held: While we are given to understand by correspondence from counsel that a final judgment was subsequently entered by the district court one month after this case was argued before this panel, that does not change our disposition of the present appeal, given the discretionary nature of the class certification determination generally. The denial of class certification is “a procedural ruling, collateral to the merits of a litigation. . . . ,” Deposit Guaranty Nat. Bank v. Roper, 445 U.S. 326, 336, 100 S.Ct. 1166, 1173, 63 L.Ed.2d 427 (1980), and the decision as to whether to certify a class lies within the “wide discretion” of the trial court. Shipes v. Trinity Ind., 987 F.2d 311, 316 (5th Cir.), cert. denied, 510 U.S. 991, 114 S.Ct. 548, 126 L.Ed.2d 450 (1993); see also, 7B Charles Alan Wright, Arthur R. Miller and Mary Kay Kane, [Federal Practice and Procedure] § 1785 at 119 (court has “broad discretion”). While Texas Rule of Civil Procedure 42 is modeled on Rule 23 of the Federal Rules, and federal decisions are viewed as persuasive authority regarding the construction of the Texas class action rule, see American Exp. Travel Related Services Co. v. Walton, 883 S.W.2d 703, 708 (Tex.App.-Dallas 1994, no writ); Ventura v. Banales, 905 S.W.2d 423, 425 (Tex.app.-Corpus Christi 1995, no writ), a Texas court might well exercise this discretion in a different manner. It is our considered view that the wide discretion inherent in the decision as to whether or not to certify a class dictates that each court-or at least each jurisdiction-be free to make its own determination in this regard. See 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, § 4434 at 327 (“If preclusion is to be denied, it should be on the ground that many procedural matters may be so far discretionary that a second court should be free to make its own determination.”). This reasoning is particularly applicable when matters of state-federal relations are involved as in the present case in which an injunction would impinge upon the state court's ability to exercise discretion in the administration of its own docket contrary to the policies underlying the Anti-Injunction Act.

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The element of discretion that inheres in this class certification determination must be emphasized. Indeed, one Texas court applying the federal collateral estoppel rules concluded that collateral estoppel did not bar relitigation of the class certification issue in part because even those aspects of the state class action rule which are identical to the federal rule have sometimes been applied differently by the state courts. Morgan v. Deere Credit, Inc., 889 S.W.2d 360, 368 (Tex.App.-Houston (14th Dist.) 1994, no writ). Therefore, the Texas court concluded that the identity of issues necessary to collateral estoppel was lacking. For the foregoing reasons, we conclude that the district court did not err in denying Ashland’s motion to enjoin relitigation of the class certification in state court. . . . J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d at 180 (emphases added; footnote omitted). Similarly, in In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., supra, after stating that “denial of class certification is not a `judgment’ for the purposes of the Anti-Injunction Act while the underlying litigation remains pending[,]” id. at 146, the United States Circuit Court of Appeals for the Third Circuit also held: [T]he decision by this Court to reject the provisional settlement class is not a “judgment” with respect to the Louisiana settlement agreement, and our interpretation of Rule 23 is not binding on the Louisiana court. . . . [O]ur construction of Rule 23 and application to the provisional settlement class is not controlling on the Louisiana court, because it is not bound by our interpretation of Rule 23. Rather, the Louisiana court properly applied La.Code Civ. Proc. Ann. Arts. 591 and 592, the parallel Louisiana class certification rule.

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Since appellants have failed to show that an exception to the Anti-Injunction Act under these circumstances was either expressly authorized by Congress, necessary in the aid of the MDL court’s jurisdiction, or necessary to protect or effectuate a final judgment of the MDL court, neither this Court nor the district court has the authority to enjoin the Louisiana proceedings. In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d at 146 (emphases added; footnote omitted). Relying upon the above precedent, the United States District Court for the Eastern District of Pennsylvania held in Allen v. Stewart Title Guaranty Co., No. 06-cv-2426, 2007 WL 916859, at **1-2 (E.D.Pa. March 20, 2007): In the instant action, the issues before the Court of Common Pleas for Philadelphia County are not identical to the issues before this court, because the rules regarding class certification are different. . . . The rules regarding class action are substantially similar under Pennsylvania Rule of Civil Procedure 1702 and Federal Rule of Civil Procedure 23, however, as in Texas, a Pennsylvania court may exercise its discretion regarding class certification in a different manner than a federal court. Since the discretion that is inherent in class certification decisions permits a state court to consider a motion for class certification despite a federal court's decision denying class certification, the reverse is also true, and a federal court is permitted to consider such a motion. Therefore, the court concludes that the matters are not identical, and the doctrine of collateral estoppel does not apply. (Emphases added; footnote omitted)). The United States Supreme Court’s decision in Chick Kam Choo v. Exxon Corp., supra, also offers support on this issue. Addressing a similar distinction between federal and state procedural rules, the Court explained:

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[T]he only issue decided by the District Court was that petitioner’s claims should be dismissed under the federal forum non conveniens doctrine. Federal forum non conveniens principles simply cannot determine whether Texas courts, which operate under a broad “open-courts” mandate, would consider themselves an appropriate forum for petitioner’s lawsuit. . . . Respondents’ arguments to the District Court in 1980 reflected this distinction, citing federal cases almost exclusively and discussing only federal forum non conveniens principles. . . . Moreover, the Court of Appeals expressly recognized that the Texas courts would apply a significantly different forum non conveniens analysis. . . . Thus, whether the Texas state courts are an appropriate forum for petitioner’s Singapore law claims has not yet been litigated, and an injunction to foreclose consideration of that issue is not within the relitigation exception. Chick Kam Choo v. Exxon Corp., 486 U.S. at 148-49 (emphases added).4 Bayer Corporation’s contention to the District Court that any differences between Rule 23 of the Federal Rules of Civil Procedure and Rule 23 of the West Virginia Rules of Civil Procedure are illusory5 is, itself, fiction. It’s falsity is readily revealed by merely contrasting the decisions in In re Rezulin Products Liability Litigation, 210 F.R.D. 61 (S.D.N.Y. 2002), as well as the District Court’s own decision in McCollins, both applying Fed.R.Civ.P. 23 to deny class

Appellants note that this Court’s decision in Canady, supra, does not detract from this point. In Canady, the civil action sought to be enjoined had been removed to federal court and, because it was believed that subject-matter jurisdiction existed for the removal, this Court believed that the district court did not need to be concerned about any distinction between federal and state procedural rules because under Erie principles and Fed.R.Civ.P. 81(c) the district court was to apply its own procedural rules. Canady, 282 F.3d at 1016-17 & 1019. 5 See Appendix, at pp. SA-280, Memorandum in Support of Bayer Corporation’s Expedited Motion for a Permanent Injunction, at p. 10 & n. 5. 4

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certification of an economic-loss claim based on breach of express and implied warranties and violation of the West Virginia Consumer Credit and Protection Act involving pharmaceutical products, with the West Virginia Supreme Court of Appeals’ decision in In re West Virignia Rezulin Litigation, 585 S.E.2d 52 (W.Va. 2003), reversing a trial court’s denial of such a class certification under W.Va.R.Civ.P. 23.6 Indeed, before beginning its analysis in In re West Virignia Rezulin Litigation, the West Virginia Supreme Court of Appeals cautioned: The circuit court, in its order denying class certification, appears to have relied almost exclusively on federal cases interpreting Rule 23 of the Federal Rules of Civil Procedure-and denying class certification-in drug or medical device actions. As we made clear in Syllabus Point 3 of Brooks v. Isinghood, 213 W.Va. 675, 584 S.E.2d 531 (2003), “[a] federal case interpreting a federal counterpart to a West Virginia rule of procedure may be persuasive, but it is not binding or controlling.” Our reasoning for this rule is to avoid having our legal analysis of our Rules “amount to nothing more than Pavlovian responses to federal decisional law.” 213 W.Va. at 675, 584 S.E.2d at 531, (quoting Stone v. St. Joseph’s Hosp. of Parkersburg, 208 W.Va. 91, 112, 538 S.E.2d 6

In its Memorandum of Law and Order, entered on December 9, 2008, the District Court asserted that appellants’ reliance on In re West Virignia Rezulin Litigation is misplaced because “[i]n In re Rezulin, the court rejected the argument that individual issues of damages predominated over common issues. In re Rezulin, 585 S.E.2d at 74-75. In this case, however, this Court held that individual issues of causation, not damages, predominated over common issues.” Appendix, at pp. SA-389; Addendum, at pp. A-27. Appellants’ counsel were lead counsel in In re West Virginia Rezulin Litigation and as officers of the Court can assure this Court that the defendants argued and the trial court held in that case that individual issues predominated over common issues on all questions of liability, causation, and damages. A thorough review of the West Virginia Supreme Court of Appeals’ decision in In re West Virginia Rezulin Litigation will support this fact. 27

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389, 410 (2000) (McGraw, J., concurring, in part, and dissenting, in part) (holding that West Virginia disability discrimination law “is not mechanically tied to federal disability discrimination jurisprudence.”)). In re West Virginia Rezulin Litigation, 585 S.E.2d at 61. As to the second factor, Appellants were neither parties nor in privity with parties in McCollins. Because Bayer Corporation is seeking to apply collateral estoppel, it has the burden of proving all of the factors required for its application. In its attempt to meet this factor, it has relied principally upon the Seventh Circuit’s decision in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., supra, and this Court’s decision in Canady, supra. As to this particular issue, this Court’s decision in Canady is easily distinguishable because, unlike the present appeal, the class representatives in the subsequent civil actions filed in state court had also been class representatives in the original federal action.

Canady, 282 F.3d at 1012 (“ten of the original

plaintiffs from Canady I filed two new class actions in Missouri state court”). In regard to the Seventh Circuit’s opinion in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., Appellants submit that such decision is not well-reasoned and, in fact, as will be discussed in greater detail below, violates due process of law. Additionally, such decision is also distinguishable in several important aspects. More specifically, it is true that the Seventh Circuit held in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d at 767-69, that in 28

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addition to named-class representatives, members of the putative class may also be treated as parties to the litigation for purposes of a collateral estoppel analysis. However, in reaching this conclusion the Seventh Circuit noted several factors it found relevant to a determination that its judgment denying certification of a nationwide class action was “sufficiently firm” to be accorded conclusive effect for collateral estoppel purposes and which are distinguishable from the present case. Such factors include that (1) “[i]t was the result of focused attention by counsel in both the district court and [the Seventh Circuit]; both courts addressed the issue exhaustively in published opinions and brought the debate to a conclusion; [and] certiorari was sought and denied[;]” (2) class counsel who was trying to start anew by treating the judgment as irrelevant was the same class counsel who in the original action had filed a master complaint seeking to resolve pretrial matters in a manner so that a single disposition could be reached that would cover all suits no matter where they had originally been filed; (3) the district court had original jurisdiction and was not acting merely as a transferee court under 28 U.S.C. § 1407; (4)

one of the claims in the master complaint rested on RICO which

authorizes nationwide service of process, see 18 U.S.C. §

1965(b).

In re

Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d at 767-68. None of the above factors found relevant by the Seventh Circuit exist in the present case.

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In addition to the above factors, the Seventh Circuit did state that “unnamed class members have the status of parties for many purposes and are bound by the decision whether or not the court otherwise would have had personal jurisdiction over them.” Id., 333 F.3d at 768. The validity of this statement at least as to decisions denying certification which occur before any of the due process protections afforded by Rule 23 are extended to putative class members would appear to rest on a very weak foundation. First, as will be discussed in greater detail in another section of this brief, other courts have refused to recognize the existence of personal jurisdiction in such a situation. See, e.g., In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d at 141; In re Bayshore Ford Trucks Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006). Second, the United States Supreme Court’s recent decision in Taylor v. Sturgell, ___ U.S. ____, 128 S.Ct. 2161, 2171-73 & 1276 (2008), casts further doubt upon the Seventh Circuit’s reasoning. In Taylor, the United States Supreme Court rejected the theory of virtual representation which had been adopted in several jurisdictions, including this Circuit, in cases involving questions of claim and issue preclusion. In reaching its decision, the Court initially noted: A person who was not a party to a suit generally has not had a “full and fair opportunity to litigate” the claims and issues settled in that suit. The application of claim and issue preclusion to nonparties thus runs up against the “deep-rooted historic tradition that everyone 30

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should have his own day in court.” Richards [v. Jefferson County, 517 U.S. 793, 798, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996)] (internal quotation marks omitted). Indicating the strength of that tradition, we have often repeated the general rule that “one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.” Hansberry [v. Lee, 311 U.S. 32, 40, 61 S.Ct. 115, 85 L.Ed.2d 22 (1940)]. See also, e.g., Richards, 517 U.S., at 798, 116 S.Ct. 1761; Martin v. Wilks, 490 U.S. 755, 761, 109 S.Ct. 2180, 104 L.Ed.2d 835 (1989) . . . . Taylor, 128 S.Ct. at 2171. The Court noted that “the rule against nonparty preclusion is subject to exceptions” and that “[r]epresentative suits with preclusive effect on non parties include properly conducted class actions . . . .” Id., 128 S.Ct. at 2172 (citing Martin, 490 U.S. at 762 n. 2; Fed.R.Civ.P.23) (emphasis added).

The Court

distinguished the broad doctrine of virtual representation from the recognized exceptions to the rule against nonparty preclusion based upon the requirements or limitations imposed on nonparty preclusion based on adequate representation, specifying that “[i]n the class-action context, these limitations are implemented by the procedural safeguards contained in Federal Rule of Civil Procedure 23.” Id., 128 S.Ct. at 2176 (emphasis added). Obviously, the primary procedural safeguards provided to absent class members under Rule 23 are notice and the right

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to opt out—safeguards which are only afforded when class certification is granted.7 See Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). After recognizing the above facets of the Supreme Court’s holding in Taylor, the Court of Appeal for the Second District of California similarly opined in Johnson v. GlaxoSmithKline, Inc., 166 Cal.App.4th 1497, 83 Cal.Rptr.3d 607 (Ct.App.2ndDist. 2008): Emphasizing its rejection of a notion of virtual representation that authorizes preclusion based on identity of interests and some kind of relationship between parties and non-parties “shorn of the procedural protections prescribed” in the class action rules, the Court noted those protections are “grounded in due process.” (Ibid.) The protections for absent class members prescribed by rule 23, of course, are afforded after a motion for class certification has been granted, not by the filing of a motion for certification that is denied. Similarly, the concept of a “properly conducted class action” suggests a class action that has been certified, following a hearing in which the named representatives have established they satisfy the requirements of rule 23, and then litigated to judgment or settled, not a individual lawsuit in which a motion for class certification was denied. Literally (and narrowly) read, therefore, Taylor v. Sturgell, supra, ___ U.S. ____, 128 S.Ct. 2161 would appear to preclude the use of collateral estoppel to bar absent putative class members from seeking class certification following the denial of a certification motion in an earlier lawsuit . ...

7

Interestingly, the Seventh Circuit had rejected the doctrine of virtual representation and in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d at 769, had attempted to distinguish such doctrine from its holding at issue herein. However, in light of the above discussion of the United States Supreme Court in Taylor, it appears that the Seventh Circuit’s attempted distinction is without merit. 32

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Johnson, 166 Cal.App.4th at 1511 n. 8, 83 Cal.Rptr.3d at 618 n. 8 (emphases added).8 As to the third reason noted above as to why the doctrine of collateral estoppel cannot be applied in this case, Appellants reiterate that a finding of adequate representation was neither made by the District Court in its Order denying class certification in McCollins nor under the facts of such case should have been made. One of the requirements for imposing collateral estoppel is that the party had a full and fair opportunity to litigate the issue. This factor requires both adequate representation by the named litigants and class counsel and a finding of such adequate representation. As noted by the Seventh Circuit in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d at 768, “[a] decision with respect to the class is conclusive only if the absent members were adequately represented by the named litigants and class counsel.” The court noted that the district court had found that both the named plaintiffs and their lawyers had furnished adequate representation to the other members of the putative classes and that such decision had never been challenged in the original appeal or the subsequent appeal. Id., 333 F.3d at 768-69. Additionally, the court had earlier noted that that the representation had involved 8

Appellants recognize that the above discussion of the court in Johnson is dicta since the court did not rely upon it in reaching its holding. Appellants believe that its discussion is nonetheless well-reasoned and cite and quote it with the hope that this Court might too find it persuasive. 33

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the focused attention by counsel in both the district court and on appeal in the circuit court with the result of the issue of class certification being addressed exhaustively in two published opinions and a writ of certiorari to the United States Supreme Court being sought and denied. Id., 333 F.3d at 767. Appellants submit that such holdings further distinguish this case from In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig. First, the District Court in this case did not make an actual finding of adequate representation in its Order of August 25, 2008, in McCollins. Rather, for purposes of its analysis, the District Court merely assumed adequate representation without deciding the issue. See Appendix, at pp. SA-008; Addendum, at p. A-08. In Chick Kam Choo v. Exxon Corp., supra, the United States Supreme Court, relying upon its earlier holding in Atlantic Coast Line, supra, stressed that in order for the relitigation exception to be applied relevant issues must be actually decided by the federal court and that an assessment of the precise state of the record and what the earlier federal order actually said must be conducted. Chick Kam Choo v. Exxon Corp., 486 U.S. at 148. The Court further cautioned that a district court is not permitted to render a post hoc judgment as to what the order was intended to say.

Id.

Accordingly, the District Court’s post hoc judgment that adequate

representation was provided in McCollins in its Order of December 9, 2008, is insufficient to cure this defect. See Appendix, at pp. SA-396-397; Addendum, at p.

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A-34-35. See also Appendix, at p. SA-373, Transcript of 12/05/08 Hearing, at p. 51. Second, as an alternative matter, Appellants submit that adequate representation should not and cannot be reasonably found in the McCollins case. Class counsel in McCollins did not seek reconsideration by the District Court, appeal its decision to this Court, or seek a writ of certiorari with the United States Supreme Court.

If a court is going to hold that a decision denying class

certification is going to forever bar any of the putative class members from ever filing a class action, such court should be convinced that every possible, reasonable step was taken to have such decision reviewed for error. Justice and due process should demand nothing less. Accordingly, for all of the above reasons, the relitigation exception to the Anti-Injunction Act and the doctrine of collateral estoppel do not support Bayer’s request for an injunction. C.

The District Court’s unwarranted exercise of personal jurisdiction over state-court litigants and grant of a permanent injunction over a state action seeking class certification pursuant to W.Va.R.Civ.P. 23 on the basis of an Order denying class certification pursuant to Fed.R.Civ.P. 23 violates due process, as well as the beneficial and salutary purposes of the class-action device, and causes irreparable damage to Appellants and the class they seek to represent.

Standards of Review: The issue of whether a party has established personal jurisdiction is reviewed de novo. Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th Cir. 2003). “Our review of 35

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federal constitutional questions is, of course, de novo.” U.S. v. Buckner, 894 F.2d 975, 978 (8th Cir. 1990). “`We review the terms of an injunction for an abuse of discretion, underlying questions of law receive de novo review, and factual determinations are reviewed for clear error.’” In re Diet Drugs Products Liability Litigation, 369 F.3d 293, 304 (3d Cir. 2004) (quoting In re Prudential Ins. Co. of Am. Sales Practices Litig., 261 F.3d 355, 363 (3d Cir. 2001)). See also Randolph v. Rodgers, 170 F.3d 850, 856 (8th Cir. 1999) (noting that district court’s issuance of a permanent injunction is reviewed for an abuse of discretion and that “`[a]buse of discretion occurs if the district court reaches its conclusion by applying erroneous legal principles or relying on clearly erroneous factual findings’” (internal citations omitted)).

1. The District Court lacks personal jurisdiction over appellants and the class they seek to represent. As a preliminary matter, it is important to recognize that neither the AntiInjunction Act nor the All-Writs Act satisfy the jurisdictional prerequisites of subject-matter jurisdiction and personal jurisdiction. In Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 31-34 (2002), the United States Supreme Court held that the All-Writs Act did not give a federal court authority to remove a state-court case in order to prevent frustration of orders a federal court had previously issued, and that removal was only proper if the federal court independently would have had original subject-matter jurisdiction over the state-court case. “Section 1441 requires that a federal court have original jurisdiction over an action in order for it to be removed from a state court. The All Writs Act, alone or in combination with the existence of ancillary jurisdiction in a federal court, is not a substitute for that

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requirement.” Id., at 34.9 As to personal jurisdiction, the Third Circuit Court of Appeals in Carlough v. Admiral Ins. Co., 10 F.3d 189, 198 (3d Cir. 1993), explained: We note that neither the Anti-Injunction Act, 28 U.S.C. § 2283 (1970), nor the All-Writs Act, 28 U.S.C. § 1651 (1988), dispels the federal court's jurisdictional requisite or divests the West Virginia court of its jurisdiction to adjudicate the Gore action, but rather the judicial authority extended by the Acts is wholly derivative in nature. Thus the application of the Anti-Injunction and All-Writs Acts should have been preceded by the satisfaction of jurisdictional prerequisites. See Atlantic Coast Line R. R. Co. v. Brotherhood of Locomotive. Engineers, 398 U.S. 281, 287, 90 S.Ct. 1739, 1743, 26 L.Ed.2d 234 (1970) (exceptions to § 2283 should not be enlarged by liberal statutory construction). In Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), the United States Supreme Court acknowledged that “a judgment issued without proper personal jurisdiction over an absent party is not entitled to full faith and credit elsewhere and thus has no res judicata effect as to that party.” Phillips Petroleum Co. v. Shutts, 472 U.S. at 805, 105 S. Ct. at 2971. The Court further agreed that “a chose in action is a constitutionally recognized property interest possessed by each of the [absent class-action] plaintiffs.”

Id., 472 U.S. at 807, 105 S.Ct. at 2972.

Addressing what due process rights must be afforded an absent class-action 9

Accordingly, this Court’s belief in Canady, 282 F.3d at 1012-13, that subjectmatter jurisdiction existed for removal pursuant to the All-Writs Act was incorrect, and the district court should have been required to consider any relevant differences between federal and state procedural rules before determining whether an injunction was appropriate under the relitigation exception to the AntiInjunction Act. See id., 282 F.3d at 1016-17 & 1019. See footnote 4 supra. 37

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plaintiff, the Court held: Because States place fewer burdens upon absent class plaintiffs than they do upon absent defendants in nonclass suits, the Due Process Clause need not and does not afford the former as much protection from state-court jurisdiction as it does the latter. The Fourteenth Amendment does protect “persons,” not “defendants,” however, so absent plaintiffs as well as absent defendants are entitled to some protection from the jurisdiction of a forum State which seeks to adjudicate their claims. In this case we hold that a forum State may exercise jurisdiction over the claim of an absent class-action plaintiff, even though that plaintiff may not possess the minimum contacts with the forum which would support personal jurisdiction over a defendant. If the forum State wishes to bind an absent plaintiff concerning a claim for money damages or similar relief at law, it must provide minimal procedural due process protection. The plaintiff must receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel. The notice must be the best practicable, “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane, 339 U.S., at 314-315, 70 S.Ct., at 657; cf. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 174-175, 94 S.Ct. 2140, 2151, 40 L.Ed.2d 732 (1974). The notice should describe the action and the plaintiffs' rights in it. Additionally, we hold that due process requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an “opt out” or “request for exclusion” form to the court. Finally, the Due Process Clause of course requires that the named plaintiff at all times adequately represent the interests of the absent class members. Hansberry, 311 U.S., at 42-43, at 61 S.Ct., at 118-119, 120. Id., at 811-12, at 2974.

See Carlough, 10 F.3d at 199-200 (explaining the

analysis). These West Virginia respondents know of no basis for the District Court to assert personal jurisdiction over them under the facts and circumstances of this

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case. If the above requirements exist for absent class-action plaintiffs in a case where class certification is granted, how in all fairness can there be no due process requirements for absent class-action plaintiffs where class-action certification has been denied in a prior action? Appellants note that other courts have refused to recognize the existence of personal jurisdiction in such a situation. See, e.g., In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d at 141 (“But here, in the wake of our judgment in GM I, there is no class pending before the MDL court, and thus, virtually none of the 5.7 million class members in Louisiana are before this Court in any respect, and there is no basis upon which we can infer their consent. . . . To be more precise, the Louisiana class members are not parties before us; they have not constructively or affirmatively consented to personal jurisdiction; and they do not, as far as has been demonstrated, have minimum contacts with Pennsylvania. Therefore, due process deprives us of personal jurisdiction and prevents us from issuing the injunction prayed for by appellants.” (footnote omitted)); In re Bayshore Ford Trucks Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006) (“Here, the district court refused to grant class certification in the Bayshore Action . . . Once this decision was made, Westgate became a stranger to the Bayshore Action. . . . The denial of class certification limited the court's in personam jurisdiction solely to the parties appearing before it,

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namely the Bayshore Dealers and Ford. Consequently, the denial could not have been binding on Westgate.” (citation and footnote omitted)). To the extent that Bayer Corporation and the District Court relies upon In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., supra, to support the injunction in this case, appellants submit for all of the reasons previously discussed in this brief that such decision is either unpersuasive, incorrect, or distinguishable. Accordingly, for all of the foreging reasons, there is no legitimate and valid basis for the assertion of personal jurisdiction over Appellants in this matter. 2. Granting the permanent injunction has caused the appellants and the class they seek to represent extreme and irreparable harm and prejudice. Bayer Corporation and apparently10 the District Court believe that no significant harm, let alone irreparable harm, will befall the Appellants and the class they seek to represent by the injunction issued in this case, because Appellants and any potential class members can simply bring their own independent actions against Bayer Corporation. Indeed, being of like mind, the Seventh Circuit in In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., reached this same conclusion, stating:

Appellants say “apparently” because the District Court failed to address their argument concerning the harm caused them by an injunction in its Order of December 9, 2008. See Appendix, at pp. SA-399-400; Addendum, at p. A-37-38. See also Appendix, at pp. SA-371-372, Transcript of 12/05/08 Hearing, at pp. 4950.

10

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Every person included in the district court’s class definition still has the right to proceed on his own. What such person now lacks is the right to represent a national class of others similarly situated; that’s the upshot of a fully contested litigation in which every potential class member was adequately represented on this issue. Id., 333 F.3d at 769. While a nice thought in theory, such conclusion ignores the reality of the situation—the very reality which led to the creation of the class-action device. As acknowledged by the United States Supreme Court in Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), While the text of Rule 23(b)(3) does not exclude from certification cases in which individual damages run high, the Advisory Committee had dominantly in mind vindication of “the rights of groups of people who individually would be without effective strength to bring their opponents into court at all.” Kaplan, Prefatory Note 497. . . : “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.” Amchem Products, Inc., 521 U.S. at 617 (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). Accord DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1175 (8th Cir. 1995) (quoting Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 249 (3d Cir. 1975)) (acknowledging that one of “`the purposes behind class actions’“ is “`providing small claimants with a means of obtaining redress for

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claims too small to justify individual litigation.’”); In re West Virginia Rezulin Litigation, 585 S.E.2d at 62 (“A primary function of the class action is to provide a mechanism to litigate small damage claims which could not otherwise be economically litigated.”). Could any individual who had an economic loss of perhaps $500.00 or less as a result of purchasing a defective drug afford to file a lawsuit against the drug manufacturer? Could any attorney afford to represent such a client? Obviously, the answer to these questions is a resounding “No!”. And, just as obviously, Bayer Corporation knows this reality or else it would rather entertain Appellants’ class action as opposed to facing perhaps thousands of individual lawsuits, as well as the risk of possible inconsistent judgments on the merits as to their liability. Unfortunately, this is the reality that the Appellants, as well as any potential members of their proposed class action, now faces. Should the injunction stand, the damage to them is not only severe but irreparable. Appellants submit that the irreparable damage caused them and members of their proposed class outweighs the damage caused Bayer Corporation by the possibility of potential, repetitious lawsuits.

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XI. CONCLUSION For all of the foregoing reason, Appellants pray that Your Honorable Court reverse the District Court’s Order of December 9, 2008, and dissolve the injunction imposed therein. KEITH SMITH and SHIRLEY SPERLAZZA By Counsel

Marvin W. Masters, Esquire Richard A. Monahan, Esquire Charles M. Love, IV, Esquire The Masters Law Firm lc 181 Summers Street Charleston, West Virginia 25301 (304) 342-3106 Counsel for Keith Smith and Shirley Sperlazza F:\4\126\B004.doc

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CIRCUIT RULE 28A(d) CERTIFICATION The undersigned hereby certifies that I have filed electronically, pursuant to Circuit Rule 28A(d), a version of the brief in non-scanned PDF format. I hereby certify that the file copied to the CD-ROM has been scanned for viruses and that it is virus-free.

Dated:

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CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS, AND TYPE STYLE REQUIREMENTS This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 9,804 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2000 in 14 point Times New Roman font.

Dated:

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NOTICE OF FILING and PROOF OF SERVICE

The undersigned, being first duly sworn, deposes and states that he sent for filing to the United States Court of Appeals for the Eighth Circuit via Federal Express overnight delivery 1 original, 9 copies, 1 pdf on CD of the Brief of Appellants and 3 copies of the Separate Appendix on the 3rd day of March, 2009. Two copies and 1 pdf on CD of the Brief of Appellants and 1 copy of the Separate Appendix were served upon the below-listed counsel of record by first-class mail, proper postage prepaid by depositing the same in the United States Mail at Chicago, Illinois on the 3rd day of March, 2009: SEE ATTACHED SERVICE LIST

Subscribed and sworn to before me this 3rd day of March, 2009.

Notary Public

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SERVICE LIST Elizabeth S. Wright, Esq. Peter W. Sipkins, Esq. Dorsey & Whitney LLP 50 South 6th Street, Suite 1500 Minneapolis, Minnesota 55402-1498

Catherine Valerio Barrad, Esq. Sidley & Austin 555 Fifth Street, West Suite 4000 Los Angeles, California 90013-1010

Scott A. Smith, Esq. Tracy Joan Van Steenburgh, Esq. Halleland Lewis Nilan & Johnson PA 220 South 6th Street, Suite 600 Minneapolis, Minnesota 55402-4501

Richard K. Dandrea Eckert & Seamans 600 Grant Street 44th Floor Pittsburgh, Pennsylvania 15219

Fred T. Magaziner, Esq. Dechert Price & Rhoads 1717 Arch Street, 40th Floor Philadelphia, Pennsylvania 19103-2793

Douglas R. Marvin, Esq. Williams & Connolly 725 12th Street, Northwest Washington, DC 20005

Philip S. Beck, Esq. Adam Hoeflich, Esq. Bartlit Beck Herman Palenchar & Scott LLP 54 West Hubbard Street, Suite 300 Chicago, Illinois 60610

Michael J. Farrell, Esq. Eric W. Legg, Esq. Tamela J. White, Esq. Farrell & Farrell Post Office Box 6457 Huntington, West Virginia 25772-6457

Susan A. Weber, Esq. Sidley & Austin 1 South Dearborn Suite 2800 Chicago, Illinois 60603

Robert A. Limbacher, Esq. Hope S. Freiwald, Esq. Dechert Law Firm 2929 Arch Street Cira Centre Philadelphia, Pennsylvania 19104-2808

Paul John Zidlicky, Esq. Sidley & Austin 1501 K Street, Northwest Washington, DC 20005

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