This action challenges the validity of a mandatory class certification order rendered by the United States District Court
Two objecting plaintiffs (objectors) now petition this court to vacate the order and disqualify the federal district judge asserting jurisdiction under 28 U.S.C. § 1292(a)(1), or alternatively, under mandamus.
On July 17, 1981, two skywalks in the central lobby of the Hyatt Regency Hotel in Kansas City, Missouri, collapsed killing 114 persons and injuring hundreds of others. Following the disaster numerous individual lawsuits were filed in both the Circuit Court for Jackson County, Missouri (state court), and the United States District Court for the Western District of Missouri (district court).
The state court cases were consolidated and assigned to Judge Timothy O'Leary. The federal cases were also consolidated and assigned to Judge Scott O. Wright. Shortly after the first cases were filed, the state and district court consolidated their respective cases for discovery. Each court appointed a Plaintiffs' Liaison Committee to aid in discovery and other matters. In addition, the two courts appointed a joint state-federal Plaintiffs' Liaison Committee to aid in the consolidated discovery.
Prior to the class certification, the Plaintiffs' Liaison Committee accomplished substantial discovery and trial preparation on behalf of all plaintiffs. The accomplishments included nearly completing the interrogatory phase of discovery and serving requests for production upon the defendants. In addition, the committee collected approximately 300,000 documents pertaining to the litigation and had arranged for a document depository available to all plaintiffs' counsel. The committee had also arranged for the testing of the skywalk materials
On October 27, 1981, Molly Riley, a district court plaintiff, filed a motion for class certification. The motion sought class certification under Fed.R.Civ.P. 23(b)(1)(B), or in the alternative under 23(b)(3), as to the issues of liability for compensatory and punitive damages and the amount of punitive damages.
Several federal and state court plaintiffs filed pleadings in opposition to Riley's motion. The objecting plaintiffs challenged Riley's and her attorney's qualifications to represent the class. They also challenged the need for and desirability of class action treatment arguing that there was no evidence of insufficient funds to satisfy all claims. A hearing was held before Judge Wright on December 10, 1981.
Prior to issuing the class certification order now on appeal, Judge Wright became aware that Riley could not serve as class representative because she was not of diverse citizenship from all defendants. Judge Wright then reviewed the complaints on file and determined that plaintiffs Stover, Johnson, Vrabel, Grigsby and Abernathy were diverse to all defendants.
Thereafter, Judge Wright placed two telephone calls to Robert Collins, Stover's attorney, and inquired whether Stover would serve as class representative if a class was certified.
On January 19, 1982, counsel for the objecting plaintiffs moved, pursuant to 28 U.S.C. § 455(a), to disqualify Judge Wright based on his communications with Collins.
On January 25, 1982, Judge Wright entered the order appealed from in which he (1) denied Riley's motion for class certification because her citizenship was not diverse from all defendants, (2) certified a class action under Rule 23(b)(1)(A) on the issues of liability for compensatory and punitive damages, (3) certified a class action under Rule 23(b)(1)(B) on the issues of liability for punitive damages and the amount of punitive damages, (4) selected plaintiffs Stover, Vrabel, Grigsby and Abernathy as class representatives,
In support of its order the district court found that the general prerequisites for class actions prescribed by Rule 23(a) were satisfied, id. at 420-22, and that the specific requirements of Rule 23(b)(1) were also satisfied. The court stressed that the "interests of all parties concerned" would best be served by "the avoidance of wasteful, repetitive litigation," and that such litigation could be avoided by "trying the issues of liability for compensatory damages, liability for punitive damages and amount of punitive damages only once." Id. at 423.
In support of the Rule 23(b)(1)(A) class the court found that individual suits on the issues of liability for compensatory and punitive damages would create a risk of inconsistent results. Id. at 424.
In support of the Rule 23(b)(1)(B) class the court relied on three considerations. First, the defendants held liable for punitive damages might lack the funds to pay the full amount of such damages. Id. at 424. Second, individual suits for punitive damages would create a risk of unfairness to the other claimants because "there is some uncertainty under Missouri law as to whether a single defendant can be liable for more than one award of punitive damages."
On February 9, 1982, the objectors filed their notice of appeal and petition for mandamus.
Our initial inquiry must be whether the order is appealable. Recognizing that the order is interlocutory, we would nevertheless have appellate jurisdiction under 28 U.S.C. § 1292(a)(1) (1976)
Brief on Behalf of the Representative Plaintiff and the Class at 4 (emphasis added). We do not agree with that characterization and conclude that we do have jurisdiction under 28 U.S.C. § 1292(a).
The determination of whether an order is an injunction depends upon the substantial effect of the order rather than its terminology. See Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942); In re Glenn W. Turner Enterprises Litigation, 521 F.2d 775 (3d Cir. 1975).
In the present case, contrary to the class's assertion, the district court expressly prohibited class members from settling their punitive damage claims:
In re Federal Skywalk Cases, at 428 (emphasis added). In addition, the substantial effect of the order also enjoined the state plaintiffs from pursuing their pending state court actions on the issues of liability for compensatory and punitive damages and the amount of punitive damages.
At oral argument counsel for the class argued that 28 U.S.C. § 1292(a)(1) should not be construed to apply to class certification because the inevitable effect of a mandatory class is an injunction against state court actions on class issues. We conclude that the argument is not persuasive on the facts before us.
It is true that parties to a mandatory class are not free to initiate actions in other courts to litigate class certified issues. See Reynolds v. National Football League, 584 F.2d 280, 283 (8th Cir. 1978). However, in the present case the objectors had commenced their state court actions before the motion for class certification had been filed in district court. The state court cases had been filed, consolidated, and discovery had begun.
Because we have jurisdiction over the appeal and because the injunction is inter-dependent with the remainder of the appealed order, we may review the entire order insofar as it has been appealed. See Deckert v. Independence Shares Corp., 311 U.S. 282, 287, 61 S.Ct. 229, 232, 85 L.Ed. 189 (1940) (jurisdiction reviewable); Adashunas v. Negley, 626 F.2d 600, 602 (7th Cir. 1980)
Our conclusion that the order enjoins pending state proceedings necessitates an inquiry as to the propriety of that order under the Anti-Injunction Act, 28 U.S.C. § 2283. The Act provides that "[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 judgment."
In Atlantic Coast Line R.R. v. Locomotive Engineers, 398 U.S. 281, 286-87, 90 S.Ct. 1739, 1742-43, 26 L.Ed.2d 234 (1970), the Supreme Court recognized that the Act imposes a flat and positive prohibition:
Recently a plurality of the Court in Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 630-31, 97 S.Ct. 2881, 2887, 53 L.Ed.2d 1009 (1977), emphasized the continuing force of Atlantic Coast Line:
Therefore, if the injunction is to be upheld, it must be on the basis that the district court's authority derives from one of the three exceptions. On appeal the class relies on the "necessary in aid of its jurisdiction" exception. In support it first draws an analogy between the order and a Rule 22 interpleader under which a federal court can enjoin claimants from prosecuting claims in state court. The class reasons that here, as in the interpleader situation, there is a limited fund and that the class action is necessary to protect all claimants. We disagree.
The analogy is based on the premise that the possibility of defendants being required to pay only one punitive damage award is comparable to the limited fund concept underlying federal interpleader. That premise is erroneous. "Federal interpleader jurisdiction depends on identifiable property or a limited fund or pecuniary obligation, and it is not proper to predicate jurisdiction on the mere potential to recover damages for pecuniary injury." Murphy v. Travelers Insurance Co., 534 F.2d 1155, 1159 (5th Cir. 1976), citing Wallach v. Cannon, 357 F.2d 557 (8th Cir. 1966).
In the present case the class has an uncertain claim for punitive damages against defendants who have not conceded liability. The claim does not qualify as a limited fund which is a jurisdictional prerequisite for federal interpleader. Without the limited fund there is no analogy to an interpleader and no reason to treat the class action as an interpleader for purposes of the Anti-Injunction Act.
The class proposes a second analogy between the order and several earlier decisions which allowed an injunction when an insurance company brought a federal suit for a declaratory judgment that a particular policy was invalid and the beneficiary subsequently sues in state court to recover under the policy. We conclude that the analogy is not persuasive.
Initially we note that the most recent case cited by class was decided in 1940, long before the enactment of the current Anti-Injunction Act.
1A Moore's Federal Practice ¶ 910.225 at 2621.
In addition, the cited cases are distinguishable on the basis that they involved situations in which identical parties were litigating mutually exclusive theories concerning their rights in the same policy in different forums. Such is not the case here. Furthermore, as conceded by the class, the cases involved injunctions against subsequent state actions. In contrast, the injunction in the present case was against pending state actions.
Next the class argues that allowing individual actions in state court will nullify the purpose of the class. The Supreme Court has narrowly interpreted the "necessary in aid of jurisdiction" exception, and a pending state suit must truly interfere with the federal court's jurisdiction. As the objectors
In the present case the federal and state actions are in personam claims for compensatory and punitive damages. Therefore, based on the foregoing principles, we are compelled to hold that despite Judge Wright's legitimate concern for the efficient management of mass tort litigation, the class certification order must be vacated. Mr. Justice Black's concluding words in Atlantic Coast Line are particularly apt here:
398 U.S. at 296-97, 90 S.Ct. at 1747-48.
The foregoing ruling does not dispose of the entire appeal because the objectors also seek the disqualification of Judge Wright under 28 U.S.C. § 455(a), which provides that a judge "... shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." The objectors argue that Judge Wright's ex parte communications with Collins raise reasonable questions as to whether Judge Wright is biased in favor of the obliging class members. We disagree.
28 U.S.C. § 455(a) requires a judge to disqualify himself if a reasonable person would have factual grounds to doubt the impartiality of the court. Blizard v. Frechette, 601 F.2d 1217, 1220 (1st Cir. 1979). The determination for the district judge to make is whether "his impartiality might reasonably be questioned." 28 U.S.C. § 455(a). Once that determination has been made, our role on review is limited to deciding whether the district court's evaluation of the claim of partiality or prejudice amounted to an abuse of discretion. Blizard v. Frechette, 601 F.2d at 1221.
A claim of bias must be evaluated in light of the full record, not simply in light of an isolated incident. See Walker v. Bishop, 408 F.2d 1378, 1382 (8th Cir. 1969). In the present case Judge Wright developed an extensive record before he made his decision to certify the class. By order dated November 17, 1981, Judge Wright directed the parties and invited all interested parties to submit briefs on any issues relevant to the certification of a class. On December 10, 1981, Judge Wright held a hearing on the motion at which time the parties had the opportunity to present their objections to the court. During the course of the hearing, Judge Wright decided that two additional issues needed briefing, namely (1) whether multiple punitive damage verdicts could be obtained by successive plaintiffs based on the same conduct and (2) whether Missouri law allows recovery of punitive damages in wrongful death actions. These issues were briefed and submitted to Judge Wright before he made his decision to certify the class.
The order itself is carefully reasoned and stresses Judge Wright's concern that "[i]f a defendant can only be punished once, then the first claimant to get an award [of punitive damages] is the first and only winner. The Court is not inclined to permit the sacrifice of one aggrieved party's claim for the sole benefit of another aggrieved party." In re Federal Skywalk Cases, slip op. at 424-25.
We conclude that Judge Wright certified the class based solely on his judgment that such action would best serve the interests of all parties involved. In addition, we note the complexity of the issues before Judge Wright and commend his creative efforts in attempting to achieve a fair, efficient and economical trial for the victims of the Hyatt Regency disaster.
The order of the district court is vacated.
HEANEY, Circuit Judge, dissenting.
The majority decision is very narrow, holding that the mandatory class action certified by the court below violates the Anti-Injunction Act. It is clear, as the majority recognizes, that the Act would not be contravened by an opt-out class action. On remand, the district court should consider whether such an opt-out class is appropriate.
I dissent, nonetheless, because I believe that the district court's mandatory class action, if slightly modified, would be proper. We should modify the district court's order by permitting punitive damage claims to be settled and by providing that the defendants will receive credit for any such settlements when and if there is a class-wide award of punitive damages. Such a modified class action would satisfy the requirements of Fed.R.Civ.P. 23 and would not violate the Anti-Injunction Act. Moreover, it would provide the fairest way for all plaintiffs to seek recovery in the manner in which they choose — either through settlement or prompt judicial resolution of their claims.
The crucial issue on this appeal is the effect of the district court's class certification
I share the majority's belief that those plaintiffs who wish to settle all their claims should be permitted to do so. The class action need not be decertified to achieve this result. This goal can be accomplished by modifying the district court's order: (1) to expressly permit the settlement of punitive damage claims, and (2) to provide that the defendants will receive credit for the punitive claims they settle when and if a class-wide punitive damage award is ordered. Both the class action plaintiffs and the defendants have suggested methods for providing credit to the defendants for any claims they settle.
THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY CERTIFYING A MANDATORY CLASS ACTION.
The district court's order cannot be vacated unless its certification of the class action constitutes an abuse of discretion. E.g., Rule v. International Association of Bridge, Structural & Ornamental Ironworkers, 568 F.2d 558, 563 (8th Cir. 1977). I believe that the district court did not abuse its discretion; its certification order is supported by several important considerations.
A. Justifications for Class Certification.
The plaintiffs who sustained serious injuries or seek to recover for the death of family members should not be denied the opportunity to be promptly compensated. Likewise, plaintiffs seeking less substantial actual damages and punitive damages should not be effectively deprived of their claims. A class suit provides a device by which these smaller claims can be aggregated and litigation costs prorated among numerous claimants, thereby making worthwhile claims that might otherwise not be pursued.
A class suit on the liability and punitive damage issues also provides an effective means to confine and manage the substantial litigation arising from this mass disaster. See, e.g., 7A Wright & Miller, Fed. Prac. & Proc.: Civil, § 1783 at 116-117 (1972); Note, Developments in the Law — Class Actions, supra, 89 Harv.L.Rev. at 1318-1322, 1354-1355; Note, Mass Accident Class Actions, 60 Cal.L.Rev. 1615 passim (1972). It conserves litigant and judicial resources by permitting the liability and punitive damage issues to be tried once, and only once; thereby avoiding a multiplicity of lawsuits on the same issues involving the same facts and the same defendants.
Moreover, a single class-wide adjudication of punitive damages ensures that every victim will receive his or her just share of any punitive damage award. Absent a class action, the distribution of punitive damages will be determined in a succession of individual lawsuits. In that event, the risk exists that individual juries will reach inconsistent results on the liability and damage issues. Moreover, even if the results are consistent, the risk arises that late-suing plaintiffs will have their punitive damage recoveries reduced or even eliminated by prior awards because there is certainly some limit on the amount of exemplary damages the defendants will be required to pay.
B. Objections to Class Certification.
Despite these justifications for a class action, the objectors argue that the district court's order constitutes an abuse of discretion.
Missouri law may preclude multiple punitive damage awards for a single wrongful act or omission. At oral argument, the objectors and the class representatives both conceded that the state law is uncertain and that there is a legitimate and reasonable argument that a defendant can be punished only once for conduct transcending ordinary negligence. The Missouri Court of Appeals recently dismissed as moot a case in which they might have resolved this question. Monsanto Co. v. Parker, 634 S.W.2d 506 (Mo.App.1982). Thus, an award of punitive damages to the first litigant may preclude all subsequent awards to later plaintiffs. The harshness and unfairness of this potential result justifies the district court's class certification.
Even if multiple punitive damage awards are permissible, the class certification was appropriate because the defendants held liable may not have the capacity to satisfy the judgments against them.
Apart from the defendants' capacity to pay punitive damages, there is surely some limit imposed by law on the amount for which they can be held liable for a single wrongful act or course of conduct. Unlimited multiple punishment for the same act determined in a succession of individual lawsuits and bearing no relation to the defendants' culpability or the actual injuries suffered by victims, would violate the sense of "fundamental fairness" that is essential to constitutional due process. See Roginsky v. Richardson-Merrell, Inc., supra, 378 F.2d at 838-841; In re Dalkon Litigation, supra, 526 F.Supp. at 900. See also Putz and Astiz, Punitive Damage Claims of Class Members Who Opt Out: Should They Survive?, supra, 16 U.San Fran.L.Rev. at 29-31; Note, Mass Liability and Punitive Damages Overkill, supra, 30 Hastings L.J. at 1797-1800. Moreover, the basic jurisprudential precepts that litigation must come to an end and that a party cannot be repeatedly sued on the same cause of action are violated by excessive multiple punishment. See Putz and Astiz, Punitive Damage Claims of Class Members Who Opt Out: Should They Survive?, supra, 16 U.San Fran.L.Rev. at 29-31; Note, Mass Liability and Punitive Damages Overkill, supra, 30 Hastings L.J. at 1797-1800.
Consequently, I believe that the district court did not err in finding a significant likelihood that the punitive damage awards may exhaust the culpable defendants' capacity to pay the judgments.
The objectors next contend that the named class representative, Shirly Stover, does not "fairly and adequately protect the interests of the class" as required by Rule 23(a)(4). They base their claim on the fact that she did not move for class certification. While a class representative's failure to move for certification has been found in some circumstances to be an indication that he or she will not adequately represent the class, such a failure is not dispositive of the issue. Indeed, a court may select as a class representative a class member who did not file for certification, see, e.g., United States Parole Commission v. Geraghty, 445 U.S. 388, 407, 100 S.Ct. 1202, 1214, 63 L.Ed.2d 479 (1980), or it may even elect to certify a class and select a class representative even if no party seeks a class action. See, e.g., Ford v. U. S. Steel Corp., 638 F.2d 753, 754 (5th Cir. 1981); In re Dalkon Litigation, supra, 526 F.Supp. at 894.
The objectors also argue that the counsel appointed for the class are inadequate because they are tainted with conflicts of interest. I find no support in the record for this contention.
The objectors next claim that class certification was improper because the various claims present individual issues and the individual claimants have a strong interest in controlling their litigation. In particular, they rely on the Advisory Committee Notes to the 1966 amendments to the Federal Rules of Civil Procedure which indicate that class actions under Rule 23(b)(3) generally are inappropriate in mass accident cases.
Second, to the extent that the interest in individual control is relevant to certifying a Rule 23(b)(1) class, that concern does not preclude a class suit in mass accident cases. If the drafters of the rule had intended to create such a per se rule, they would have simply said so. See Comment, The Use of Class Actions for Mass Accident Litigation, supra, 23 Loyola L.Rev. at 405. Instead, the drafters said:
Fed.R.Civ.P. 23(b)(3) advisory committee note.
It is apparent that the concerns that prompted the drafters to conclude that class suits are not generally appropriate in mass accident cases are not applicable here. In this case, the facts relevant to liability will not differ meaningfully from one claimant to another, and there is little or no likelihood of individual defenses being presented. The compensatory damage issues, of course, will involve differing factual questions, but these claims present no bar to class certification because the district court limited the class action to the liability and punitive damage issues as permitted by Rule 23(c)(4). Consequently, the concerns of individualization of issues and the claimants' interest in controlling their own case present no real obstacle to class suits in mass accident cases such as the instant one. E.g., 3B J. Moore, Fed.Prac., ¶ 23.45 at 811 & n.35 (2d ed. 1948); 7A Wright & Miller, supra, § 1783 at 117; Comment, The Use of Class Actions for Mass Accident Litigation, supra, 23 Loyola L.Rev. at 390; Note, Mass Accident Class Actions, supra, 60 Cal.L.Rev. at 1621.
Finally, the objectors contend that the district court's class certification deprives them of their constitutional rights. First, they argue that a class-wide award of damages to be divided among class members is a "fluid recovery"
The Constitution does not create an absolute bar to a class-wide assessment of punitive damages. The objectors' Seventh Amendment right will be satisfied by the opportunity to adjudicate the class-wide damage assessment before a jury.
In some circumstances courts have not permitted the class-wide calculation of damages. See, e.g., Eisen v. Carlisle & Jacquelin, 479 F.2d 1005, 1018 (1973), vacated and remanded on other grounds, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974); In re Hotel Telephone Charges, 500 F.2d 86, 92 (9th Cir. 1974). In other cases, however, the mechanism has been utilized. See, e.g., Bebchick v. Public Utilities Commission, 318 F.2d 187, 203-204 (D.C.Cir.), cert. denied, 373 U.S. 913, 83 S.Ct. 1304, 10 L.Ed.2d 414 (1963); West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710, 744 (S.D.N.Y.), aff'd, 440 F.2d 1079, 1089-1091 (2d Cir.), cert. denied, 404 U.S. 871, 92 S.Ct. 81, 30 L.Ed.2d 115 (1971). The propriety of class-wide damage assessment, with or without a fluid recovery mechanism, should depend on whether it is consistent with the policies of the underlying cause of action. Note, Developments in the Law — Class Actions, supra, 89 Harv.L.Rev. at 1526-1536.
The justifications for imposing punitive damages include expressing society's disapproval of outrageous conduct, deterring such conduct in the future, and providing incentives for private civil enforcement. Mallor & Roberts, Punitive Damages: Toward a Principled Approach, 31 Hastings L.J. 639, 647-650 (1980). Each of these purposes is advanced by the district court's class certification here. Thus, a class-wide calculation of punitive damages would be proper.
The objectors' second constitutional claim is that the district court denied them due process by not permitting them to be heard after its class certification order. Specifically, they object to the order providing:
In sum, the district court's class action satisfies all the requirements of Rule 23, and the state and federal constitutions. Moreover, certification of a class action would promote judicial economy in a complex case where such concerns are especially significant. It would protect the interests of defendants by avoiding endless relitigation and inconsistent determinations of their relative liability. And, it would protect the plaintiffs by ensuring prompt determination of liability (thereby promoting settlements) and by guaranteeing that any punitive damage award would be fairly allocated to all plaintiffs. Therefore, I believe that the district court did not abuse its discretion in certifying the class action.
THE DISTRICT COURT DID NOT VIOLATE THE ANTI-INJUNCTION ACT BY CERTIFYING A MANDATORY CLASS ACTION.
The majority recognizes that an opt-out class, which the district court remains free to certify, would not violate the Anti-Injunction Act. Because members of such a class would be free to withdraw and pursue their claims independently in state court, such a class action would not inherently restrict state court proceedings, nor would it afford any basis upon which the district court might enjoin state court proceedings. See In Re Glenn Turner Enterprises Litigation, 521 F.2d 775 (3d Cir. 1975).
The majority holds, however, that the mandatory class action violates the Anti-Injunction Act because some class members have already initiated state court proceedings and presumably will be enjoined from pursuing such independent actions. See, supra, at 1181, 1183. This is a sweeping rule that prohibits certification of an otherwise proper mandatory class whenever a class member has commenced a state court action. In my view, such a rule is not supported by the cases relied upon by the majority and, moreover, is simply the wrong rule in light of the necessary dictates of mandatory class actions.
A mandatory class action, of course, has a restrictive effect on related proceedings in any other court — state or federal. This is because, by definition, members of such a class cannot pursue independent litigation of class claims. See, e.g., Reynolds v. National Football League, 584 F.2d 280, 283 (8th Cir. 1978). The majority states that a mandatory class only prohibits members from initiating independent litigation, citing Reynolds v. National Football League, supra, for this proposition. Supra, at 1180. Neither Reynolds nor any other case cited to this Court supports such a narrow construction of mandatory class actions. Indeed, the implication of the majority's view is that mandatory classes are not truly mandatory — any member who has previously commenced independent litigation is somehow not subject to the ordinary rules of such class actions. In my view, the plain meaning of a mandatory class does not change merely because some members of the class have previously initiated independent actions. If certification of a mandatory class is proper, as here it clearly is, then the ordinary rules of such actions simply preclude independent litigation of class claims in state or federal courts.
I must emphasize that no plaintiff has, as yet, been enjoined from pursuing any state court action.
Here, the necessary restrictive effects of the mandatory class action are twofold. The first restrictive effect is that class members would not be able to pursue a punitive damage claim in an independent action. Such a restriction is absolutely necessary to the district court's jurisdiction over this class issue due to the applicable state law on punitive damages. Although the parties do not agree on the certainty of the state law rule, they do agree that there is a legitimate and reasonable claim that under Missouri law, only the first plaintiff to achieve a judgment would obtain a punitive award — all other plaintiffs would be frozen out. See, supra, at 1186. When a mandatory class is necessary to protect all plaintiffs on this claim, it seems obvious that an injunction against independent litigation of the issue is "necessary in aid of" the jurisdiction of the class.
The second restrictive effect of the mandatory class is to, in effect, stay state court proceedings on the issue of liability for compensatory damages. I emphasize that the plaintiffs are free to settle such claims or to pursue in state court a determination of the amount of such damages, once the class action determines relative liability among the defendants.
The majority essentially ignores that it is a mandatory class action we are considering under the Anti-Injunction Act. They cite,
The majority primarily relies on the general doctrine that individual in personam actions, conducted concurrently in state and federal courts, do not cause interference with either court's jurisdiction. Supra, at 1182-1183. Thus, under the Anti-Injunction Act, an individual in personam claim in federal court is not a basis for enjoining other plaintiffs from pursuing similar claims in state court because such an injunction is not "necessary in aid of" the federal court's jurisdiction. Id. This rule developed around and applies to independent, individual claims, not mandatory class actions. The majority cites to no case in which this general rule has been used to preempt the ordinary application of mandatory class action rules.
Admittedly, the relationship between mandatory class actions and the Anti-Injunction Act appears to present an open question. The approach adopted by the majority, however, broadly forecloses mandatory class actions whenever a class member has commenced state court proceedings. I would agree that class actions should not become a vehicle for circumventing the ordinary relations between state and federal courts. The requirements for a mandatory class action, however, are quite rigorous and, by their nature, will prevent any such trend from developing. Moreover, there are unusually strong reasons for certifying the mandatory class here, a procedure which the district court found was essential to fair adjudication of all claims. Such circumstances will not often arise; yet in face of them, the majority has adopted a rule which broadly defeats the purpose of mandatory class action jurisdiction. I do not agree that such a rule is required by the Anti-Injunction Act, nor by any sensible view of the relations between state and federal courts.
Class members in a 23(b)(3) class are free to "opt out" while, under the majority rule, class members in a 23(b)(1)(A) or 23(b)(1)(B) class cannot "opt out." See Reynolds v. Nat'l Football League, 584 F.2d 280 (8th Cir. 1978).
Prior to the class certification 123 cases had been settled. The settlement process slowed down considerably after the class certification because the plaintiffs were not able to release their punitive damage claims. In re Federal Skywalk Cases, at 428. The defendants were unwilling to pursue only compensatory damage settlements.
The defendants suggest that the plaintiffs who have settled not be permitted to participate in the punitive damage trial and that the defendants be permitted to introduce evidence of the settlements they have reached. The jury would then determine the amount of punitive damages, if any, to be divided among the non-settling plaintiffs at trial according to the approved formula.
Although the district court's reliance on Rule 23(b)(1)(A) was misplaced, its class certification was nonetheless appropriate. The issue of liability for compensatory damages could have been properly certified under Rule 23(b)(1)(B) along with the issues of liability for and amount of punitive damages. Under Missouri law, a defendant cannot be liable for punitive damages if he or she is not also liable for compensatory damages. Probst v. Probst, 595 S.W.2d 289, 292 (Mo.App.1979). Thus, the prospect of a limited fund is dependent on liability for compensatory, as well as punitive, damages. In addition, quite apart from any construction of Rule 23(b)(1)(A), the district court's concern for avoiding inconsistent results through individual determinations of the liability issues is a proper consideration in certifying any of the types of class action authorized by Rule 23.
It is the third characteristic that creates the fluid recovery because the unclaimed funds generally will be turned over to the government or distributed through the market — typically in the form of a reduced charge for an item that the defendant previously overpriced. Note, Developments in the Law — Class Actions, 89 Harv.L.Rev. 1318, 1525 (1976). See Eisen v. Carlisle & Jacquelin, 479 F.2d 1005, 1010-1011 (2d Cir. 1973), vacated and remanded on other grounds, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed. 2d 732 (1974); Bebchick v. Public Utilities Commission, 318 F.2d 187, 203-204 (D.C.Cir. 1963). Here, the entire punitive damage award would be distributed to individual class members; consequently, the objectors are incorrect in claiming that the district court's order provided for fluid recovery. However, class-wide assessments of damages, even without fluid recovery, have also been challenged as violative of the constitutional guarantees of due process and trial by jury. See Note, Developments in the Law — Class Actions, supra, 89 Harv.L.Rev. at 1525.