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SMITH v. BAYER CORP.
131 S.Ct. 2368 (2011)
180 L. Ed. 2d 341
Keith SMITH, et al., Petitioners,
v.
BAYER CORPORATION.
No. 09-1205.
Supreme Court of the United States.
Argued January 18, 2011.
Decided June 16, 2011.
Carter G. Phillips, Eric D. McArthur, Sidley Austin LLP, Washington, DC, Susan A. Weber, James R.M. Hemmings, Sidley Austin LLP, Chicago, IL, Philip S. Beck, Adam L. Hoeflich, Carolyn J. Frantz, Andrew C. Baak, Bartlit Beck Herman, Palencher & Scott LLP, Chicago, IL, Joshua J. Fougere, Sidley Austin LLP, for Respondent.
Mark A. Boling, Law Offices of Mark Boling, Lake Forest, CA, for Amicus Martin Murray.
Justice KAGAN delivered the opinion of the Court.*In this case, a Federal District Court enjoined a state court from considering a plaintiff's request to approve a class action. The District Court did so because it had earlier denied a motion to certify a class in a related case, brought by a different plaintiff against the same defendant alleging similar claims. The federal court thought its injunction appropriate to prevent relitigation of the issue it had decided. We hold to the contrary. In issuing this order to a state court, the federal court exceeded its authority under the "relitigation exception" to the Anti-Injunction Act. That statutory provision permits a federal court to enjoin a state proceeding only in rare cases, when necessary to "protect or effectuate [the federal court's] judgments." 28 U.S.C. § 2283. Here, that standard was not met for two reasons. First, the issue presented in the state court was not identical to the one decided in the federal tribunal. And second, the plaintiff in the state court did not have the requisite connection to the federal suit to be bound by the District Court's judgment. IBecause the question before us involves the effect of a former adjudication on this case, we begin our statement of the facts not with this lawsuit, but with another. In August 2001, George McCollins sued respondent Bayer Corporation in the Circuit Court of Cabell County, West Virginia, asserting various state-law claims arising from Bayer's sale of an allegedly hazardous prescription drug called Baycol (which Bayer withdrew from the market that same month). McCollins contended that Bayer had violated West Virginia's consumer-protection statute and the company's express and implied warranties by selling him a defective product. And pursuant to West Virginia Rule of Civil Procedure 23 (2011), McCollins asked the state court to certify a class of West Virginia residents who had also purchased Baycol, so that the case could proceed as a class action. Approximately one month later, the suit now before us began in a different part of West Virginia. Petitioners Keith Smith and Shirley Sperlazza (Smith for short) filed state-law claims against Bayer, similar to those raised in McCollins' suit, in the Circuit Court of Brooke County, West Virginia. And like McCollins, Smith asked the court to certify under West Virginia's Rule 23 a class of Baycol purchasers residing in the State. Neither Smith nor McCollins knew about the other's suit. In January 2002, Bayer removed McCollins' case to the United States District Court for the Southern District of West Virginia on the basis of diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441. The case was then transferred to the District of Minnesota pursuant to a preexisting order of the Judicial Panel on Multi-District Litigation, which had consolidated all federal suits involving Baycol (numbering in the tens of thousands) before a single District Court Judge. See § 1407. Bayer, however, could not remove Smith's case to federal court because Smith had sued several West Virginia defendants in addition to Bayer, and so the suit lacked complete diversity. See § 1441(b).1 Smith's suit
thus remained in the state courthouse in Brooke County.
* Justice THOMAS joins Parts I and II-A of this opinion.
1. The Class Action Fairness Act of 2005, 119 Stat. 4, which postdates and therefore does not govern this lawsuit, now enables a defendant to remove to federal court certain class actions involving nondiverse parties. See 28 U.S.C. §§ 1332(d), 1453(b); see also infra, at 2381-2382.
2. Although McCollins had originally sought certification under West Virginia Rule of Civil Procedure 23 (2011), federal procedural rules govern a case that has been removed to federal court. See Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. ___, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010).
3. Compare In re Baycol Prods. Litigation, 593 F.3d 716, 723 (C.A.8 2010) (case below) (holding that two cases involve the same issue when "[t]he state and federal [class] certification rules . . . are not significantly different"), with J.R. Clearwater Inc. v. Ashland Chemical Co., 93 F.3d 176, 180 (C.A.5 1996) (holding that two cases implicate different issues even when "[the state rule] is modeled on . . . the Federal Rules" because a "[state] court might well exercise [its] discretion in a different manner").
4. Compare 593 F.3d, at 724 ("[T]he denial of class certification is binding on unnamed [putative] class members" because they are "in privity to [the parties] in the prior action") and In re Bridgestone/Firestone, Inc., Tires Prods. Liability Litigation, 333 F.3d 763, 768-769 (C.A.7 2003) (same), with In re Ford Motor Co., 471 F.3d 1233, 1245 (C.A.11 2006) (holding that "[t]he denial of class certification" prevents a court from "binding" anyone other than "the parties appearing before it") and In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liability Litigation, 134 F.3d 133, 141 (C.A.3 1998) (holding that putative "class members are not parties" and so cannot be bound by a court's ruling when "there is no class pending").
5. That is especially so because an injunction is not the only way to correct a state trial court's erroneous refusal to give preclusive effect to a federal judgment. As we have noted before, "the state appellate courts and ultimately this Court" can review and reverse such a ruling. See Atlantic Coast Line R. Co. v. Locomotive Engineers, 398 U.S. 281, 287, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970).
6. We have held that federal common law governs the preclusive effect of a decision of a federal court sitting in diversity. See Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001). Smith assumes that federal common law should here incorporate West Virginia's preclusion law, see Brief for Petitioners 15-16, whereas Bayer favors looking only to federal rules of preclusion because of the federal interests at stake in this case, see Brief for Respondent 18. We do not think the question matters here. Neither party identifies any way in which federal and state principles of preclusion law differ in any relevant respect. Nor have we found any such divergence. Compare, e.g., Montana v. United States, 440 U.S. 147, 153-154, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (describing elements of issue preclusion), with State v. Miller, 194 W.Va. 3, 9, 459 S.E.2d 114, 120 (1995) (same). We therefore need not decide whether, in general, federal common law ought to incorporate state law in situations such as this.
7. Because we rest our decision on the Anti-Injunction Act and the principles of issue preclusion that inform it, we do not consider Smith's argument, based on Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985), that the District Court's action violated the Due Process Clause.
8. The District Court's approach to the predominance inquiry is consistent with the approach employed by the Eighth Circuit. See In re St. Jude Medical, Inc., 522 F.3d 836, 837-840 (2008) (holding that most commercial misrepresentation cases are "unsuitable for class treatment" because individual issues of reliance necessarily predominate). We express no opinion as to the correctness of this approach.
9. Bayer argues that In re Rezulin does not preclude an injunction in this case because the West Virginia court there decided that common issues predominated over individual issues of damages, not over individual issues of liability (as exist here). See Brief for Respondent 25-26. We think Bayer is right about this distinction, but wrong about its consequence. Our point is not that In re Rezulin dictates the answer to the class certification question here; the two cases are indeed too dissimilar for that to be true. The point instead is that In re Rezulin articulated a general approach to the predominance requirement that differs markedly from the one the federal court used. Minor variations in the application of what is in essence the same legal standard do not defeat preclusion; but where, as here, the State's courts "would apply a significantly different . . . analysis," Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 149, 108 S.Ct. 1684, 100 L.Ed.2d 127 (1988), the federal and state courts decide different issues.
10. In support of its claim that Smith counts as a party, Bayer cites two cases in which we held that a putative member of an uncertified class may wait until after the court rules on the certification motion to file an individual claim or move to intervene in the suit. See Brief for Respondent 32-33 (citing United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977); American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974)). But these cases, which were specifically grounded in policies of judicial administration, demonstrate only that a person not a party to a class suit may receive certain benefits (such as the tolling of a limitations period) related to that proceeding. See id., at 553, 94 S.Ct. 756; McDonald, 432 U.S., at 394, n. 15, 97 S.Ct. 2464. That result is consistent with a commonplace of preclusion law—that nonparties sometimes may benefit from, even though they cannot be bound by, former litigation. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326-333, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971).
11. The great weight of scholarly authority— from the Restatement of Judgments to the American Law Institute to Wright and Miller— agrees that an uncertified class action cannot bind proposed class members. See Restatement (Second) of Judgments § 41(1), p. 393 (1980) (A nonparty may be bound only when his interests are adequately represented by "[t]he representative of a class of persons similarly situated, designated as such with the approval of the court"); ALI, Principles of the Law Aggregate Litigation § 2.11, Reporters' Notes, cmt. b, p. 181 (2010) ("[N]one of [the exceptions to the rule against nonparty preclusion] extend generally to the situation of a would-be absent class member with respect to a denial of class certification"); 18A Wright & Miller § 4455, at 457-458 ("[A]bsent certification there is no basis for precluding a nonparty" under the class-action exception).
12. By the same token, nothing in our holding today forecloses legislation to modify established principles of preclusion should Congress decide that CAFA does not sufficiently prevent relitigation of class certification motions. Nor does this opinion at all address the permissibility of a change in the Federal Rules of Civil Procedure pertaining to this question. Cf. n. 7, supra (declining to reach Smith's due process claim).
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