MEMORANDUM OF OPINION AND ORDER CONDITIONALLY CERTIFYING CLASS ACTIONS
SPENCER WILLIAMS, District Judge.
The latter half of the twentieth century has witnessed a virtual explosion in the frequency and number of lawsuits filed to redress injuries caused by a single product manufactured for use on a national level. Indeed, certain products have achieved such national notoriety due to their tremendous impact on the consuming public, that the mere mention of their names — Agent Orange, Asbestos, DES, MER/29, Dalkon Shield — conjure images of massive litigation, corporate stonewalling, and infrequent yet prevalent, "big money" punitive damage awards.
In a complex society such as ours, the phenomenon of numerous persons suffering the same or similar injuries as a result of a single pattern of misconduct on the part of a defendant is becoming increasingly frequent.
The judicial system's response to such repetitive litigation has often been blind adherence to the common law's traditional notion of civil litigation as necessarily private dispute resolution.
This action involves the claims of thousands of women across the United States that they have been injured by an allegedly defective intrauterine device called the Dalkon Shield.
The Dalkon Shield was invented in 1968. It was clinically tested from September 1968 to November 1969, at which time it was commercially introduced to the medical profession by the Dalkon Corporation. On June 12, 1970, the A. H. Robins Co., Inc. (Robins), a manufacturer and distributor of pharmaceuticals and other products, acquired all rights to the Dalkon Shield. Robins then initiated its own program to test the product and simultaneously began to market it. Between June 12, 1970, and
A Dalkon Shield could be inserted only by a physician, who normally obtained the device from a surgical supply house. Each Dalkon Shield package contained labeling instructions and materials that described its advantages and disadvantages. It was the physician's responsibility to explain to the prospective wearer these advantages and disadvantages and, if the decision was made to have the Dalkon Shield inserted, to perform certain preliminary fitting procedures outlined in the labeling instructions.
During the years in which the Dalkon Shield has been utilized, a large number of women have had adverse reactions to the device. The plaintiffs in these actions allege that they have sustained various injuries from their use of the Dalkon Shield including uterine perforations, infections, pregnancy, spontaneous abortion, fetal injuries and hysterectomies. The plaintiffs predicate their right to recover against various defendants on theories of negligence, strict products liability, breach of warranty, conspiracy and fraud. In the vast majority of these actions, the plaintiffs seek substantial sums in punitive damages.
At the present time, some 1,573 suits involving claims for compensatory damages well over $500 million and claimed punitive damages in excess of $2.3 billion, are pending against A. H. Robins.
The problem raised by this litigation is that the cases filed against the defendant, including the 165 pending in this district, involve nearly identical complaints, nearly identical legal claims, and a nearly identical factual background as to all issues of liability. As this court knows from its own experience in trying one nine-week case in 1980, any attempts to try all these cases would bankrupt the district court's calendar and result in a tedium of repetition lasting well into the next century.
Due to the national importance of the issues involved in this litigation, the court has not acted precipitously with respect to class certification, opting instead for a more deliberate approach. The court conducted a series of status conferences to discuss various methods for achieving economies of time and expense in the trial of these actions.
On February 9, 1981, the court ordered briefing from all parties on the class certification issue. After careful consideration of these briefs and the arguments of all counsel at several subsequent hearings, the court issued its order conditionally certifying this class action.
CERTIFICATION OF A CLASS ACTION
The power of a trial court to limit re-examination of legal disputes by the use of representative suits has its genesis in the old court of equity's recognition of the "bill of peace." Developed as a procedural device to prevent a multiplicity of actions at common law, the bill of peace permitted consolidation of numerous actions involving common issues in a single suit in equity.
The class action was a logical extension of the court's equitable jurisdiction over bills of peace and was accepted early on by American courts.
In recognition of the large measure of discretion vested in the trial court to balance conflicting interests,
The fact that no plaintiff in this district sought class relief is not dispositive of the power of this court to certify a class action for two reasons.
First, it is now recognized that a federal district court has broad and inherent power to regulate litigation before it.
Exercise of the court's power to control litigation is particularly appropriate in cases where a class action could reduce a multiplicity of identical suits.
Nothing in Rule 23 prohibits a court from certifying a class action when to do so would result in both a major savings of judicial time in avoiding repetitive litigation and the preservation of the collective interests of all class members.
It is well-established that courts tried representative suits, in the interest of judicial efficiency, long before the adoption of Rule 23.
The inherent powers of the trial court in conducting a class action lawsuit clearly vest it with the authority to certify a class when such a decision is in the collective best interest of the plaintiffs.
In light of this factual finding, and the observed need to prevent an unnecessary race to the courthouse door, the most equitable solution is certification of a class designed to insure equal access to a recovery fund.
There is a second reason supporting this court's decision to certify this class. On June 26, 1981, the defendant filed a Motion for Class Certification of a Rule 23(b)(1)(B) class of all persons who have claims against it for punitive damages.
It is axiomatic that either a plaintiff or a defendant may move for class certification.
Accordingly, the court hereby grants the defendant's motion.
The class action certified in this case, however, is limited to two basic issues.
Second, with regard to plaintiffs who have chosen to file in federal courts located in California, this court is exercising its broad discretion to eliminate repetitious litigation by certifying an issues-only class action on the question of the drug company's liability arising from the manufacture and sale of the Dalkon Shield. Not only will these plaintiffs have the right to opt out of this statewide class action on the liability issue, but each plaintiff will, if the class is successful, return to her own court for a determination of individual issues such as damages, causation and other affirmative defenses.
The following constitutes a discussion of the court's reasons for certifying these two class actions.
CERTIFICATION OF CLASS ON PUNITIVE DAMAGES
Rule 23(b)(1) allows class actions to avoid creating a risk of incompatible standards of conduct for the party opposing the class, or of judgments for some class members that threaten the interests of others, if separate actions are prosecuted.
Rule 23(b)(1)(A) takes as its focal point the possible adverse effects individual actions may have on the party opposing the class.
Class certification under Rule 23(b)(1)(B) generally is designed to accomplish equitable distribution of a limited fund to all members of a proposed class who have a claim and whose interest may otherwise be impaired by damage awards in individual actions that deplete or diminish the fund.
The Advisory Committee Notes state that (b)(1)(B) applies to "situations where the judgment in a nonclass action by or against an individual member of the class, while not technically concluding the other members, might do so as a practical matter."
Neither the Rule nor the Advisory Committee Notes requires proof that claims "will", as a certainty, exhaust the fund. Certification is appropriate if individual actions "may" affect the claims of parties not before the court.
The instant matter is properly maintained as a Rule 23(b)(1)(B) action. At issue here is a limited common fund potentially exhaustible by some of the prospective claimants. Claims in excess of $3 billion have been filed thus far, and A. H. Robins' assets currently equal $280 million.
The situation presented here is identical to that in Coburn v. 4-R Corp., 77 F.R.D. 43 (E.D.Ky.1977). In Coburn, claims in excess of $1.5 billion were filed, and the assets of the defendant were approximately $3 million. The court held the matter maintainable as a Rule 23(b)(1)(B) class action and stated:
The threat of constructive bankruptcy pervades this matter, and as in Coburn, this court views Rule 23(b)(1)(B) as the most practical method of avoiding the "race to the courthouse" syndrome.
This situation is distinguishable from that of In re "Agent Orange" Product Liability Litigation, 506 F.Supp. 762 (E.D.N.Y.1980). In Agent Orange there were five named defendants who suffered no threat of real or constructive bankruptcy. The court noted the unlikelihood of insolvency and rejected the idea of a Rule 23(b)(1)(B) class action on the ground that it was not a situation of multiple claimants who may deplete the fund and leave nothing for the late-comers Id.
We have here the situation noted in Green v. Occidental Petroleum Corp., 541 F.2d 1335 (9th Cir. 1976), an instance where mass tort litigation is appropriately handled as a class action. In a footnote, the Green
A limited fund exists in this case for another compelling reason. It is clear that successive trials of individual claims may "as a practical matter be dispositive" of the rights of other members of the class because there certainly is an implied in law ceiling on the amount of punitive damages that may be assessed against the defendant company.
It is almost certain that an award of punitive damages to a plaintiff in one case will alter the potential recovery of a plaintiff in a later filed suit. In theory, when a plaintiff recovers punitive damages against a defendant that represents a finding by the jury that the defendant was sufficiently punished for the wrongful conduct. If the jury's verdict constitutes excessive punishment, the trial judge is empowered to use remittitur to reduce the award to the proper amount.
If plaintiff No. 1 recovers one million dollars in punitive damages, plaintiff No. 2 runs a serious risk of being told that the amount awarded in the first suit represented an implied finding of the maximum amount the defendant should be punished. Obviously, the greater the number of plaintiffs, the more serious the risk becomes that the late plaintiff will find her demand for punitive damages dismissed.
Finally, in light of the fact that no plaintiff has a right to punitive damages, courts are likely to solve the inherent practical and constitutional problems with multiple punishment for the same conduct by creating doctrines severely limiting the right to recover punitive damages in the mass tort situation. The United States Supreme Court has often recognized that limitations, up to and including elimination, may be placed on the power to award punitive damages if there exists a strong countervailing interest.
THEORY OF PUNITIVE DAMAGES
Punitive damages in product liability litigation have the potential not only to punish a defendant but to severely damage its finances. In mass tort liability situations the inequity and harmful effect of civil punitive damages are multiplied many times over.
There is no "right" to punitive damages, and the awarding of punitive
Punitive damages are, to a large degree, a windfall to a plaintiff. The compensatory damage award serves the function of fully compensating the plaintiff for the injuries suffered. Punitive damages are exacted for the benefit of society with the intended effect of deterring defendant from similar conduct in the future. These awards are measured with an eye more to the total net worth of the defendant than to the actual damage suffered by the individual plaintiff. Since each jury in a mass tort litigation situation will award punitive damages for wrongful conduct that affected an entire class of injured parties, a series of separate actions may result in windfall awards to individual plaintiffs at the expense of a disproportionately punished defendant.
Punitive damage awards by juries can reach staggering amounts.
The purpose of punitive damages is to sting, not kill, a defendant. Punitive damages should not be permitted to bankrupt a defendant.
The potential for abuse implicit in repeated awards of punitive damages based on the same conduct is presently ameliorated only by the tendency of trial and appellate judges to reduce the jury awards.
In Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832 (2d Cir. 1967), Judge Friendly discussed the implications of the potential for punitive damage "overkill." The court noted that it knew of no principle "whereby the first punitive damage award exhausts all claims for punitive damages and would preclude future judgments ...."
A Rule 23(b)(1)(B) nationwide class action for punitive damages obviates many of the abuses inherent in multiple punitive damage awards.
A defendant has a due process right to be protected against unlimited multiple punishment for the same act. A defendant in a civil action has a right to be protected against double recoveries not because they violate "double jeopardy" but simply because overlapping damage awards violate that sense of "fundamental fairness" which lies at the heart of constitutional due process. Certainly the principle of res judicata, the notion that litigation must come to an end, that a party cannot sue or be sued repeatedly on the same cause of action, is a part of the process that is due under our constitutional system.
Without a Rule 23(b)(1)(B) class action, the individual and cumulative awards of punitive damages may reach astounding amounts. How often is the defendant to be punished? Under the doctrine of punitive damages there is no limiting rule in such a situation. There is no fair way to guide the juries. There is no basis for priority to punitive damages among the claimants, or for awarding such damages to one or more and not to others. In light of the obvious application of punitive damages in the products liability context,
STATEWIDE CLASS ACTION UNDER B(3)
In order to bring and maintain a class action, a potential litigant must satisfy all of the conditions of Rule 23(a) and must also establish that such action is appropriate under one of the subdivisions of 23(b).
a. Numerosity. Rule 23(a)(1) states that a prerequisite to certification is that "the class is so numerous that joinder of all members is impracticable,..." In this case, defendants have made a showing in their factual affidavits that there are at least several hundred potential class members. Moreover, this court alone has more than 160 prospective individual suits pending before it. The court finds that the numerosity requirement is satisfied.
b. Commonality. A second requirement for class certification is that "there are questions of law or fact common to the class, ..." Fed.R.Civ.P. 23(a)(2). Each of the cases filed in California federal courts contain common issues of fact and law with respect to issues of design, testing, manufacturing, labeling and inspection of the Dalkon Shields and with respect to issues of negligence, strict products liability, adequacy of warnings at relevant time periods, breach of warranty, fraud and conspiracy.
c. Typicality. Rule 23(a)(3) further requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class,..."
If the representatives' claims or defenses, and the claims or defenses of the class members "stem from a single event or are based on the same legal or remedial theory," Rule 23(a)(3) is satisfied.
The more serious difficulty arises from the fact that, where different plaintiffs sue different defendants, "typicality is lacking when the representative plaintiffs' cause of action is against a defendant unrelated to the defendants against whom the cause of action of the members of the class lies."
This case falls within the exceptions recognized by La Mar in that plaintiffs have alleged a concerted scheme or conspiracy between defendants in the marketing, design, testing, and production of Dalkon Shields.
Moreover, there exists a juridical relationship between defendants which enables a single resolution of this action and precludes a multiplicity of similar actions.
The court in In re Itel went on to find a juridical link to permit class action treatment in that case, although the "specific kind of juridical link discussed in La Mar is not present in this case."
This court, like the court in In re Itel, gives much consideration to the "great judicial convenience and economy which class certification would serve" in this case.
d. Adequacy of Representation. The last requirement of Rule 23(a) is that "the representative parties will fairly and adequately protect the interests of the class." This rule has been interpreted to require (1) that the representative party be a forceful advocate and his chosen attorney must be an experienced advocate, and (2) the representative party must have interests which are compatible with the members of the class.
The representative parties represent a wide spectrum of injuries and circumstances. Additionally, the court has no reason to suspect any antagonism between any of the absentees and the named plaintiffs. In fact, the interests of named plaintiffs are indistinguishable from those of the absentees. The many firms currently involved in this certification of the class have been involved in approximately 700 other Dalkon Shield cases. From its many interactions to date with the firms in this case, this court determines that whichever firm is chosen to represent named plaintiffs will vigorously and competently litigate the action.
In addition to the requirements of Rule 23(a), certification depends on a demonstration that this action meets one of the alternative requirements of Rule 23(b) as well.
Rule 23(b)(3) states that if
then the class action may be maintained.
a. Mass Tort vs. Mass Products Liability. Mass marketing of contraceptives such as the intrauterine device was the beginning of a modern phenomenon, and for several reasons does not fit in the category of "mass accident" torts. This situation more closely resembles that of personal injury suits alleging misfeasance or negligence by defendants over a long period of time.
The framework originally implemented for the traditional litigation of tort injuries (one plaintiff versus one defendant) was not intended to and cannot effectively accommodate numerous individuals with grievances derived, in part or in whole, from mass marketing of medical devices or drugs. If such traditional structures are mechanically used merely for the convenience and familiarity of adhering to traditional practices, then a great many persons will be without effective and practical means of redress. This court's certification of a statewide federal district court litigants' class is properly within the scope of the historical function of courts and of Rule 23(b)(3).
b. Predominance. The first of two mandatory characteristics of a 23(b)(3) action is that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members."
In mass product liability cases such as these cases now before the court, the foremost difficulty lies in whether or not innumerable individual issues or complaints will subsume the common issues. There is the possibility that significant questions of individual injury, causation, and medical history would effect individual cases differently and the action then "would degenerate in practice into multiple lawsuits separately tried."
This court does not maintain that this one class action suit disposes of the individual questions that inevitably would mandate separate trials. In the Order of Class Certification,
More importantly, this class is brought together "more by a mutual interest in the settlement of common questions than it is divided by the individual members' interest in the matters peculiar to them."
In this case, the common nucleus of operative facts that lends itself to class adjudication is whether and when defendants knew or should have known of the dangers of the Dalkon Shield to its users. Most evidently, if any one plaintiff is to recover any measure of damages, she must establish defendants' liability on this issue. As previously stated, the facts surrounding defendants' design, production, etc. of the Dalkon Shield are the primary focus of this class
c. Superiority. The other major requirement of Rule 23(b)(3) is that class adjudication must be "superior to other available methods."
In examining the interests of the class members, the importance of each member having her own day in court should be balanced against the great cost and technical difficulties of discovery and independent litigation in general.
There currently are more than 160 individual cases involving Dalkon Shields pending before this court. Pretrial proceedings have been delayed so that the class action could be pursued. If these individual cases are forced to be litigated one by one, the congestion ensuing for this court and the other district courts would produce an unnecessary and unprecedented burden on California's federal judicial system. The class action is the method of handling these cases so that disruption to the court system will be minimized.
The Northern District is the appropriate forum in which to concentrate the class action due to the number of cases filed in this district and based on this court's familiarity with the issues and procedures peculiar to this type of case. This court recently has concluded a trial involving a Dalkon Shield injury. The law firms of counsel involved in the many cases to be certified as a class are already in the vicinity of the Bay Area, or are in close contact with law firms in this area.
Although the class is so large that joinder is impracticable, it is not so great that management is impracticable. Bifurcation of the limited common issues, carefully designed procedures for discovery, deposition and introduction of evidence, and other additional court orders tailored to fit this action insure that manageability problems will be minimal.
In summary, the certification of all plaintiffs who file Dalkon Shield cases in the federal courts of California up to and including the commencement of the trial in this action meets the prerequisites of Rule 23(a) and additionally satisfies the balancing factors of Rule 23(b)(3).
MOTION TO VACATE CERTIFICATION ORDER
On August 31, 1981, the court heard lengthy argument on a motion brought by one plaintiff's counsel
The plaintiff's counsel begins by raising an important and fundamental question which strikes at the very heart of our jurisprudential system. The issue presented is whether a court may exercise in personam jurisdiction over a plaintiff's class action suit where some of the unnamed class members neither reside in nor have contacts with the forum state. Resolution of this question requires accommodation of the conflicting principles underlying representative adjudication and those supporting traditional restrictions on the exercise of personal jurisdiction.
In Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), the United States Supreme Court held that a state's sovereign power, and hence the jurisdiction of its courts, was confined by the territorial boundaries of the state.
In an opinion by Mr. Justice Field, the Court declared as a "principal of general, if not universal, law" that "in an action for money or damages where a defendant does not appear in the court, and is not found within the State, and is not a resident thereof but has property therein, the jurisdiction of the court extends only over such property...."
After Pennoyer, the expansion of multistate enterprise and the development of the automobile posed problems for strict application of a territorial power theory.
The wooden rule of Pennoyer was made more flexible in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The Supreme Court established a jurisdictional theory based on due process and fundamental fairness when it declared:
While there are no precise yardsticks by which to measure the necessary minimum contacts under the International Shoe standard, courts have stressed certain factors in reaching jurisdiction decisions.
In World-Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the high court's most recent pronouncement on jurisdictional standards, the Supreme Court affirmed the "minimum contacts" formula and stressed its dual functions — to protect a defendant from the burdens of "litigating in a distant or inconvenient
The "minimum contacts" test outlined above is a standard that has been applied exclusively to cases in which a forum sought to exercise jurisdiction over non-resident defendants. The notions of residence and territoriality, which gave rise to the minimum contacts test to protect absent defendants, have no application to absent plaintiffs who already are protected by notice of a right to be heard and adequate representation.
The strict rules of personal jurisdiction governing most civil actions necessarily must yield when a lawsuit is brought that is representative in nature, particularly when such an action involves alleged misconduct that takes place in more than one state.
It has long been recognized that class actions may proceed, in fact often must proceed, in the absence of personal jurisdiction over all class members. In Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921), the United States Supreme Court allowed a class action brought in federal court on behalf of persons who "resided in many different states of the Union," and held that the judgment rendered therein was binding on all members."
In Hansberry v. Lee, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22 (1940) the court was even more explicit in its recognition of the special jurisdictional nature of the class suit:
The deviation from the jurisprudential maxim that "everyone is entitled to his day in court" has been recognized in the language and case law interpretation of Federal Rule 23. Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable." The impracticability
Similarly, the jus tertii nature of a class suit is exemplified in a 23(b)(1) or 23(b)(2) class action. In light of the fact that the (b)(1) or (b)(2) class is most cohesive in interest and that the issues determined in the class suit essentially are the same as to all class members, courts have held that due process does not require that unnamed plaintiffs be given a chance to opt out or receive notice of the action.
Finally, in the analogous area of subject matter jurisdiction, it is well-recognized that a class suit brought in federal court upon diversity of citizenship, only requires that the citizenship of the named parties be considered.
If in every case unnamed class members were lurking in the background waiting to challenge the action due to lack of jurisdiction, courts would rarely, if ever, certify classes involving large numbers of plaintiffs.
The tension between the jurisdictional rules identified above and rules governing class actions is resolved, at least with respect to plaintiffs' classes,
Assertion of jurisdiction in this case is premised on an even more fundamental foundation. The sine qua non of all exercises of personal jurisdiction is that the court's assertion of power be reasonable and fair.
In evaluating the assertion of jurisdiction in a case involving multiple plaintiffs injured by the identical conduct of defendants, the primary concern is whether the exercise of such power is fair and reasonable to the parties before the court. Courts have identified several factors that should be considered in assessing the reasonableness of subjecting an unwilling defendant to jurisdiction.
1. The extent of the party's purposeful integration into the forum state.
In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) the Supreme Court, speaking in the context of an unwilling defendant, stated that the exercise of jurisdiction requires "that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."
As previously discussed, this factor, which is only one of many for the court to consider, does not apply to exercise of jurisdiction
2. The burden of defending in the forum state.
In the present class action suit, there is virtually no burden placed on out-of-state class members in the prosecution of this suit. Local class representatives will appear as witnesses and local class counsel will bear the initial expense of litigation. Any requirement that non-resident class members file affidavits in their home-state for use in the class suit in California presents a minimal burden in light of the substantial savings of time and expense afforded all parties.
3. Conflicts with sovereignty of other states.
It is now well-recognized that "the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment."
In the present case, there is a limited incursion into the sovereignty of other states with respect to the determination of the amount in which the corporate defendant should be punished. This court does not purport to deprive other states of the power to try causes in their own courts. In fact, the single determination of the punitive damages issues may well protect the interests of non-resident class members who might otherwise be deprived of the opportunity to collect additional sums as part of an award of exemplary damages.
In acknowledging the viability of multi-state class actions and the special due process rules applicable thereto, the United States Supreme Court has recognized that the sovereignty aspect of our federal system yields, to some extent, to the practical necessities of the representative suit. Therefore, the interests underlying our constitutional federalism do not apply with equal force to a federal class action.
4. The forum state's interest in adjudicating the dispute.
The interest of the forum state in this case is significant. A significant percentage of the parties allegedly injured by the defendant's product are California residents.
5. The parties' interest in convenient and effective relief.
In analyzing the power of a court to assert jurisdiction, an important, though by no means determinative, factor to consider is the parties' interest in obtaining convenient and effective relief, particularly when these interests are not adequately preserved by the plaintiff's personal choice of forum.
6. The interstate judicial system's interest in obtaining the most efficient resolution of controversies.
In World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 556, 564, 62 L.Ed.2d 490 (1980), the Supreme Court recognized that the exercise of jurisdiction may turn in some cases on the need for interstate cooperation in resolving controversies and the "shared interests of the several States in furthering fundamental substantive social policies."
In the present case, there is certainly a need for rational coordination of an otherwise unmanageable group of cases involving an identical issue, i. e., the amount of punitive damages the defendant should be required to pay for its alleged misconduct. All states in which punitive damages are allowed have a shared interest in seeing that the alleged misconduct is punished.
The "minimum contacts" test was never intended to be a rigid formulation demanding blind conformity. Rather, it varies with the measure of values affected, the costs inflicted by failure to exercise jurisdiction and the facts of each case before the court.
Subject Matter Jurisdiction
Jurisdiction over the subject matter is critical in the federal court system because all federal courts are courts of limited jurisdiction.
A class action must have an independent basis of jurisdiction as Rule 23 cannot be interpreted to extend in any way the subject matter jurisdiction of the federal courts.
This court has examined two possible objections to the exercise of subject matter jurisdiction in this action. First, it might be argued that this case does not satisfy the so-called "complete diversity" requirement
In the present case all named plaintiffs, while representing the gamut of injuries and claims, are residents of states diverse from that of the defendant. Accordingly, this court has jurisdiction on the basis of diversity.
Second, the jurisdiction of this court might be attacked on the argument that each plaintiff in the class does not state a claim in excess of the $10,000 jurisdictional amount.
In determining whether or not all the plaintiffs satisfy the jurisdictional amount requirement, this court is guided by the rule that the "sum claimed by the plaintiff controls if the claim is apparently made in good faith."
In the face of plaintiffs' allegations concerning punitive damages,
The claims before this court for an award of punitive damages also satisfy the jurisdictional amount requirement under an exception to the rule against aggregation of claims by multiple parties. The settled rule is that "when several plaintiffs unite to enforce a single title or right in which they have a common and undivided interest, it is
The present plaintiffs are seeking to vindicate a common integrated interest in a punitive damage award against the A. H. Robins Company. In Berman v. Narragansett Racing Association, 414 F.2d 311 (1st Cir. 1969), cert. denied, 396 U.S. 1037, 90 S.Ct. 682, 24 L.Ed.2d 681, the court confronted a virtually identical set of facts. In Berman, the plaintiffs, as representatives of fellow race horse owners, brought a class action against the owners of a racetrack for their alleged failure to pay money alleged to be due plaintiffs under annual purse agreements. The object of the class action was to determine the validity of a fund for later distribution to individual horse owners based on an as yet undetermined recovery formula.
The district court in Berman dismissed the action for lack of subject matter jurisdiction and the First Circuit reversed. The court stated that the interest of the group of pursewinners in the asserted right was common and undivided, and as such, the amount of the fund, and not each plaintiff's individual interest therein, would constitute the "amount in controversy."
Similarly, the plaintiffs in the present case have a common and undivided interest in the recovery of punitive damages against the corporate defendant. While no individual plaintiff has a "right to an award of exemplary damages,
M.D.L. — Jurisdiction Issue
The plaintiff's counsel argues that this court is without jurisdiction to certify a class in these actions because a small number of cases still are pending in the District of Kansas, where they had been transferred by the Judicial Panel on Multidistrict Litigation ("M.D.L.").
The resolution of the jurisdictional question raised by the plaintiff's liaison counsel at M.D.L. requires a brief review of the relevant proceedings before the Judicial Panel on Multidistrict Litigation ("Panel"). In 1975, the Panel, acting pursuant to 28 U.S.C. § 1407,
The parties to the consolidated litigation conducted extensive pretrial discovery which was made available nationally to all counsel. During the time pretrial discovery was conducted, the litigation before Judge Theis involved approximately one thousand actions.
After almost four years of consolidated discovery, Judge Theis reported to the Panel that all pretrial proceedings of a general nature had been concluded and that the objectives of centralized pretrial proceedings under Section 1407 had been accomplished.
Despite the fact that all common discovery was completed in the transferee district,
Finally, in January of this year, the Panel vacated several more orders transferring actions for multidistrict treatment and stated that transfer "would not serve the conveniences of the parties and witnesses or promote the just and efficient conduct of the Dalkon Shield litigation."
At the time of this court's order conditionally certifying a class action,
Plaintiff's counsel argues that this court has no jurisdiction to certify a nationwide class action in cases previously transferred for multidistrict litigation. The plaintiff relies exclusively on In re Plumbing Fixture Cases, 298 F.Supp. 484 (Jud.Pan.Mult.Lit. 1968).
In the Plumbing Fixture case, the Panel transferred nine antitrust actions involving plumbing fixtures to the Eastern District of Pennsylvania. In answer to a request by the parties to one of the actions filed as a class suit, the Panel rejected the argument that it could transfer the cases before it but reserve the class action issues for determination by the transferor court. The Panel reasoned that it had neither the power nor the disposition to limit the transferee judge's authority to rule on pretrial motions.
The court in Plumbing Fixture premised its result on two legal grounds. First, the Panel noted that the purpose of Section 1407 was to eliminate the potential for conflicting pretrial rulings, and therefore its clear intent was to "invest the transferee court with the exclusive power, after transfer, to make the pretrial determination of the class questions."
Second, the Panel in its Plumbing Fixture opinion recognized the jurisprudential maxim that "[t]wo courts of exclusive different jurisdictions, or venues, cannot exercise control over the same single claim for relief at the same time."
Plainly, the Plumbing Fixture rule does not deprive this court of jurisdiction to issue a class action ruling. This court fully was aware of the necessary comity required by Section 1407 and waited until the remand of cases before certifying a class action. The Plumbing Fixture case itself made it crystal clear that the transferor court reacquires the power to make a class
This court properly exercised its jurisdiction to certify a class based on cases pending before it. At the time of this court's initial certification order, more than 150 cases were pending in the Northern District of California and this court had exclusive jurisdiction over these cases. In fact, when these cases were remanded, the Panel stated that it was neither empowered nor inclined to direct, or suggest to, a transferor judge how he or she should conduct further proceedings.
Application of the Plumbing Fixture holding to the facts of this case would stand the rule on its head. In that case, the court acknowledged the usefulness of a single multidistrict class action ruling in order to eliminate conflicting orders and provide for economical coordination of pretrial proceedings.
The fact that some fifty-four cases remained before Judge Theis when this court certified a nationwide class action does not change the result in this case.
Choice of Law as to Punitive Damages
Plaintiff's counsel argues that the issue of punitive damages is not appropriate for nationwide treatment because the standards governing their award vary from state to state.
Courts have recognized that a choice of law problem may involve the application of so many states' laws that a class action is impossible.
Since the jurisdiction of this court is based on diversity of citizenship, the court is bound to apply California law, including its choice of law rules.
A "true" or "real" conflict, as opposed to an "apparent" conflict, exists only when more than one state has a legitimate interest in applying its policy, which differs from that of the forum state.
While many states have adopted varying standards governing the proper amount of the punitive award and different procedures by which such an amount is determined, the policies underlying such awards do not vary from state to state.
Punitive damages, especially as awarded in the class context, are not compensation for injuries. "Instead they are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence."
This case does not involve the classic conflicts issue where one state allows recovery and the other does not.
Assuming the briefs filed before the court on the choice of law issue reflect some conflicting interests in the method by which punitive damages should be awarded in this litigation, the application of California's choice of law rule does not point to the application of another state's law.
California no longer applies a mechanical test, but rather employs the "governmental interest analysis."
Assuming, arguendo, a conflict in governmental interests in assessing punitive damages, a California court would determine "which state's interests would be more impaired if its policy were subordinated to the policy of the other state."
California has a strong interest in allowing punitive damages as evidenced by its "expansive" and liberal rules governing the award of punitive damages.
To this point, the court has not located any other state with as strong an interest in awarding punitive damages in the product liability context. Therefore, at this time, it appears that California's liberal punitive damages law would be the most impaired by application of another state's law.
If it later appears that there is a conflict between various states' interests in applying formulae for calculating the amount of
Notwithstanding the various theories advanced above, any manageability problems posed by the existence of various states' laws does not rise to the level of a bona fide reason to deny certification at this time.
Discovery Regarding Basis of Class Action
Plaintiff's counsel disputes the existence of a limited fund in these actions and argues that extensive discovery should be conducted as to the existence of a Rule 23(b)(1)(B) class. Counsel contends, therefore, that this court's certification opinion is premature.
It is now well-recognized that discovery may be utilized to ascertain evidence relating to the presence or absence of the class action requirements.
A prolonged period of discovery regarding class issues is unnecessary in this litigation. In the instant case, the plaintiffs and defendants have conducted extensive and wide-ranging discovery over a period of years while these cases were at multi-district litigation.
The argument that the court's certification is premature is flawed for two reasons. First, the plaintiff's counsel offers no suggestion as to what facts justify delaying this court's determination. Plaintiff's counsel himself presents an array of presently
Assuming, arguendo, that the record does not fully demonstrate facts pointing to threatened bankruptcy of the corporate defendants, the existence of conflicting interests among plaintiffs as to a limited punitive damage "fund" is a conceptual certainty. With over 1800 claims filed nationally, it requires no clairvoyant power to conclude that judges in subsequently filed lawsuits will rule as a matter of law that the defendants have been punished enough and dismiss a plaintiff's claim for exemplary damages. The facts as to this possibility of "legal roulette" on the punitive damages issue is well-established at this point in the litigation.
Second, it is well-recognized that early determinations of class status should govern as a general rule.
Admittedly, early certification decisions pose the danger that courts will misjudge the viability of the class. However, in most cases, including the present one, the prejudice resulting from an early determination is minimal in light of the court's ability to revise or reverse its order if post-certification discovery reveals the impropriety of a class suit.
The undesirability of a lengthy class action discovery period is underscored by the posture of this litigation. Thousands of cases remain pending nationally in both state and federal courts concerning injuries allegedly caused by the defendants' product. Further delay in deciding the important issues raised herein necessarily impedes the progress of those lawsuits. The policy behind "early" certification applies with special force to these cases as further delay threatens continuing deprivation of the plaintiffs' and the defendant's constitutional
CERTIFICATION FOR INTERLOCUTORY APPEAL
This case presents important issues of national significance. As such, this court's certification order is an ideal candidate for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
The court is of the opinion that its order involves a controlling question of law as to the certification of a national class action on punitive damages and a statewide class on all issues of liability. It is plain that there is substantial ground for difference of opinion as to these questions.
The court is of the further opinion that an immediate appeal of this order may materially advance the ultimate termination of this litigation as to all parties, inasmuch as an immediate resolution of these issues undoubtedly will lead to increased settlements and save thousands of hours of court time.
Swift resolution of the questions raised in this court's class order on an expedited basis is of prime importance. The trials of hundreds of actions across the country await the determination of the questions raised herein. Thousands of individual plaintiffs independently are seeking punitive damages against the defendant for essentially the same conduct. The plaintiffs and the defendants as well as courts nationwide stand to gain from an immediate decision of these questions.
The court will not certify its previously announced decision to consolidate the cases before it.
TRIAL OF THE CLASS ACTION
Since this court's June 25, 1981 order certifying these cases as a class action, counsel for both sides commendably have met and established a coordinated approach to the pretrial of this action. Representative parties have been selected who cover the broadest possible gamut of types of injuries and background necessary for a jury to understand the depth and breadth of this litigation. Schedules were made for the orderly exchange of trial information and some attempts were made to correlate the discovery necessary for trial.
The trial of this action firmly is set to begin on May 10, 1982, and this court will clear its calendar for the requisite length of trial.
As presently envisioned, the trial of this lawsuit will proceed as follows:
First, the named representatives will present their case on their various liability theories and the parties will present evidence relating to the different warning periods relevant to the "defective" product issue.
Second, some, if not all, of the named representatives will continue on with the individual aspects of their lawsuits including
Third, the lawsuit will continue with the punitive damages phase of the trial. The same named parties, now representing a cohesive national class, will be allowed to present evidence to the jury regarding all issues relevant to a determination of the punitive damages question, including but not limited to, evidence of the defendant's wealth, the nature and number of the injuries allegedly caused by the defendant's product, and the extent to which the defendant's conduct was malicious, wilful, and oppressive.
Fourth, the jury will be given several interrogatories on the various issues and it also will be asked to award a sum as punitive damages to punish the defendant once, and for all potential claimants if liability is found to exist.
Sixth, if the jury renders a verdict in favor of the nationwide class and awards punitive damages, the amount will be established as a fund from which all successful claimants will be entitled to a pro-rata share
The trial of this class action poses some exciting possibilities for a most effective presentation of this case to a jury. Many witnesses, particularly those otherwise unavailable to other jurisdictions, could be videotaped professionally for both replacement testimony in later trials as well as part of a "preview" presentation to give future juries on the individual issues a "flavor" of the class findings on liability.
Within the parameters of the due process clause, judges should not hesitate in devising methods to avoid the relitigation of identical disputes. This admonition does not contravene the historical role of the judiciary since the power to affect judicial economy over a swelling caseload is of ancient origin. The exercise of this power is compelling when the traditional mode of litigating cases on a piecemeal basis deprive large numbers of plaintiffs of a practical means of redress.
This class action is not the proverbial "Frankenstein monster"
Imaginative judicial management of massive litigation is essential in controlling and expediting cases so that individual plaintiffs will not be overwhelmed by litigation costs and litigation-wise corporate defendants. Similarly, judicial control of these lawsuits permits a defendant to avoid potential "punitive damages overkill" which is in direct contravention to the purpose of such awards.
The prophylactic potential of the class action device is obvious in cases where consolidated treatment of the punitive damages question provides plaintiffs an equal incentive to punish a defendant for its alleged conduct. By its very nature, a large class action suit produces incidental benefits such as added publicity to potentially unknowing class members, top-flight presentation of evidence and necessary cooperation between the parties. Therefore, the class action in these cases serves to achieve the greatest benefit for the greatest number of parties.
Accordingly, IT IS ORDERED that this action be maintained as a class action. The class shall be composed of the following:
IT IS FURTHER ORDERED that this order shall be subject to alteration or amendment before the decision on the merits as authorized by Rule 23(c)(1) of the Federal Rules of Civil Procedure. Any proposed alteration or amendment desired by a party shall be brought before the court as soon as practicable following discovery of the facts believed to warrant it.
IT IS FURTHER ORDERED that this court's order certifying class actions in this lawsuit is certified for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
IT IS FURTHER ORDERED that by November 25, 1981, counsel for the parties prepare and submit to the court a proposed form of notice to be sent by the defendant to members of the class.
IT IS FURTHER ORDERED that all parties prepare for the trial of this action scheduled to begin on May 10, 1982.
IT IS FURTHER ORDERED that the parties submit briefs to this court by February 8, 1982, on the choice of law issues applicable to the punitive damage issue.
IT IS SO ORDERED.
Yaffe v. Powers, 454 F.2d 1362, 1367 (1st Cir. 1972); 3B J. Moore, Federal Practice, ¶ 23.50 (2d ed. 1980); 7 Wright, Miller & Kane, Federal Practice and Procedure, § 1785 (1980 ed.).
(b) Class Actions Maintainable.
An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(1) the prosecution of separate actions by or against individual members of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; ...
See La Mar v. H & B Novelty & Loan Co., 489 F.2d 461 (9th Cir. 1973).
This court recognizes that these cases involved representative plaintiffs who were seeking certification rather than resisting it, such that the issues were never raised. However, these nationwide class actions have been certified most often in 23(b)(1) and (b)(2) class suits where the unnamed class members would not have been entitled to opt-out or receive notice. As such, the mere recognition of the viability of class suits in these contexts seems to imply that adequate representation, and not presence, is the foundation of due process in the class suit.
After Zahn, it is uncertain whether the rules stated above apply with equal force to Rule 23(b)(1) and 23(b)(2) class actions. Prior to the 1966 Amendment to Rule 23, the aggregation of claims always was permitted in the "true" class suit because like a 23(b)(1)(B) class, the plaintiffs' rights were joint, common and derivative. See e. g., Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111 (1939); Brotherhood of R.R. Trainmen v. Templeton, 181 F.2d 527 (8th Cir.) cert. denied, 340 U.S. 823, 71 S.Ct. 57, 95 L.Ed. 605 (1950). However, in light of the jurisdictional amount in this case, this court need not address that issue at this time.
Certainly if the former is true, a publicized class action for the express purpose of permitting jury review of all pending cases and alleged misconduct would inure to the benefit of all plaintiffs and society as difficulties in proving punitive damages present in individual suits would be greatly reduced in the class action.
If, on the other hand, the latter argument is true, individual plaintiffs present conflicting demands on a limited fund. See notes 33 to 40 supra.