Chan Healthcare Grp. PS, Prof'l Servs. Corp. v. Liberty Mut. Fire Ins. Co.
| Decision Date | 13 December 2018 |
| Docket Number | No. 95416-0,95416-0 |
| Citation | 431 P.3d 484 |
| Court | Washington Supreme Court |
| Parties | CHAN HEALTHCARE GROUP PS, a Washington Professional Services Corporation, Petitioner, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY AND LIBERTY MUTUAL INSURANCE COMPANY, Foreign Insurance Companies, Respondents. |
David Elliot Breskin, Cynthia J. Heidelberg, Breskin Johnson & Townsend PLLC, 1000 Second Avenue, Suite 3670, Seattle, WA 98104, for Petitioner.
Philip Albert Talmadge, Talmadge/Fitzpatrick/Tribe, 2775 Harbor Avenue SW, Third Floor, Suite C, Seattle, WA 98126-2138, Manuel Berrelez, Vinson & Elkins, LLP, 2001 Ross Avenue, Suite 3700, Dallas, TX 75201-2975, John Michael Silk, Wilson Smith Cochran Dickerson, 901 5th Avenue, Suite 1700, Seattle, WA 98164-2050, for Respondents.
Alan D. Copsey, Office of the Attorney General, P.O. Box 40100, 1125 Washington Street SE, Olympia, WA 98504-0100, for Amicus Curiae (Attorney General of the State of Washington).
Hyland Hunt, Attorney at Law, 300 New Jersey Avenue NW, Suite 900, Washington DC 20001-2271, for Amicus Curiae (Chamber of Commerce of the United States of America).
¶ 1 We are asked to determine if the full faith and credit clause requires Washington courts to enforce an Illinois class action judgment by dismissing a subsequent local action based on the same facts. Lebanon Chiropractic Clinic, an Illinois medical provider, brought a nationwide consumer protection class action against Liberty Mutual Insurance in Illinois. This suit was resolved in a settlement that was approved by an Illinois trial court and entered as a judgment. Chan Healthcare Group, a Washington medical provider, received reasonable notice of the suit and neither opted out of the class nor objected to the entry of judgment. Chan now seeks to collaterally challenge the Illinois judgment in our courts, arguing the interests of the Washington class members were not adequately represented in the Illinois action. Chan fails to show its due process rights were violated. Thus, the full faith and credit clause requires us to enforce our sister court’s judgment.
¶ 2 Chan sued Liberty for failing to pay its reasonable bills as required by our casualty insurance statutes, RCW 48.22.095, .005(7), and engaging in an unfair practice under Washington’s Consumer Protection Act, chapter 19.86 RCW. Liberty moved for summary judgment based on an Illinois trial court’s previous approval of a nationwide class action settlement of all claims against Liberty and the other defendants arising from the same bad acts Chan now alleges here. See Lebanon Chiropractic Clinic Prof’l Corp. v. Liberty Mut. Ins. Co., 2016 IL App (5th) 150111-U, 2016 WL 546909 (unpublished). Chan argued that its claims were not released by the Illinois settlement of Lebanon’s nationwide class action on the theory that the interests of Washington class members were not adequately represented in the Illinois action and thus the settlement was unenforceable against them.
¶ 3 The Illinois court dismissed all objections to the settlement. The very issue of adequate class representation for Washington class members was raised in the Illinois class action by Dr. David Kerbs, a Washington chiropractor.1 Dr. Kerbs argued that the class representative, Lebanon, could not adequately represent the Washington class in light of Washington’s more protective consumer protection laws. Following a fairness hearing, the Illinois trial court rejected Dr. Kerbs’ inadequacy of representation argument and approved the nationwide settlement. The Illinois trial court found that Lebanon "will fairly and adequately protect the interests of the Settlement Class." Clerk’s Papers (CP) at 4154. Dr. Kerbs unsuccessfully appealed and did not seek review by the Illinois Supreme Court.
¶ 4 In Chan’s new case, the King County Superior Court ruled that the Illinois trial court did not address adequate representation with any specificity—it made only a "passing rubber stamp reference" in the final order approving settlement. Verbatim Report of Proceedings (June 24, 2016) at 196 (citing Hesse v. Sprint Corp., 598 F.3d 581 (9th Cir. 2010) ). The superior court also contrasted Illinois and Washington law and stated that "it looks to be more difficult to make out a [consumer protection] claim in Illinois than in Washington." Id. at 198. Finally, the superior court disagreed with the lack of appointment of anybody to represent a Washington subclass on its CPA claims. Id. at 200.2
¶ 5 The Court of Appeals commissioner granted Liberty’s motion for interlocutory discretionary review3 and the Court of Appeals reversed, concluding the Illinois settlement was owed full faith and credit. The Court of Appeals adopted a three-part test: "(1) whether the specific due process objection was before the sister state court, (2) whether the parties presented briefing on the objection, and (3) whether the sister state court ruled on the objection." Chan Healthcare Grp. PS v. Liberty Mut. Fire Ins. Co., 1 Wash. App. 2d 529, 536-37, 406 P.3d 700 (2017).
¶ 6 Chan appealed, alleging the commissioner improperly granted review and the Court of Appeals applied too narrow a standard to collateral challenges. We granted review and affirm.
¶ 7 Chan argues the Court of Appeals "lacked jurisdiction" to consider the King County Superior Court’s ruling and did not rely on RAP 2.3. Pet. for Review at 9. We disagree. Read as a whole, the commissioner’s ruling granting interlocutory discretionary review suggests that the King County Superior Court committed probable error by declining to give full faith and credit to the Illinois trial court’s ruling. The scope of review under the full faith and credit clause is a threshold question and the commissioner sustainably concluded that the King County Superior Court’s ruling conflicted with Nobl Park, L.L.C. of Vancouver v. Shell Oil Co., 122 Wash. App. 838, 95 P.3d 1265 (2004). More importantly, even if the commissioner erred, such error would not have deprived the court of jurisdiction. It would simply be an error subject to modification and review, and Chan did not seek our review of that decision at that time. See Geoffrey Crooks, Discretionary Review of Trial Court Decisions under the Washington Rules of Appellate Procedure, 61 WASH L. REV. 1541, 1547 n.28 (1986) (citing RAP 6.2(a) ).
¶ 8 The King County Superior Court determined that Chan’s release of claims in the Illinois settlement was not entitled to full faith and credit in Washington courts. We review the trial court’s orders and the legal question under the full faith and credit clause de novo. OneWest Bank, FSB v. Erickson, 185 Wash.2d 43, 56, 367 P.3d 1063 (2016) (citing In re Parentage of Infant Child F., 178 Wash. App. 1, 8, 313 P.3d 451 (2013) ).
¶ 9 The United States Constitution requires that "[f]ull faith and credit shall be given in each state to the ... judicial proceedings of every other state." U.S. CONST . art. IV, § 1 ; 28 U.S.C. § 1738 ; RCW 6.36.025. The purpose of the full faith and credit clause is to mitigate the "risk that two or more States will exercise their power over the same case or controversy" and to avoid "the uncertainty, confusion, and delay that necessarily accompany relitigation of the same issue." Underwriters Nat’l Assur. Co. v. N.C. Life & Accident & Health Ins. Guar. Ass’n, 455 U.S. 691, 704, 102 S.Ct. 1357, 71 L.Ed.2d 558 (1982).
¶ 10 Judgments in class action lawsuits are entitled to full faith and credit absent a due process violation or jurisdictional defect. State v. Berry, 141 Wash.2d 121, 128, 5 P.3d 658 (2000) (); see also Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482-83, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). Chan was an absent class member, and "due process requires at a minimum that an absent plaintiff be provided with an opportunity to remove [it]self from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the court." Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 812, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). Chan does not dispute it received notice of the sister court’s proceedings and was given a fair opportunity to be heard. Due process also requires that absent class members be adequately represented by the named plaintiff. Id. (citing Hansberry v. Lee, 311 U.S. 32, 42-43, 45, 61 S.Ct. 115, 85 L.Ed. 22 (1940) ); see also E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977) ; Nobl Park, 122 Wash. App. at 847-48, 95 P.3d 1265 (citing Valley Drug Co. v. Geneva Pharm., Inc., 350 F.3d 1181, 1189 (11th Cir. 2003) ).
¶ 11 We afford a sister court’s judgment the same respect we desire nationwide class actions brought in Washington to receive. See Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 373, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996). We presume a sister court’s ruling, made following extensive evidence and argument, is not a "rubber stamp." The full faith and credit clause requires this presumption. Nobl Park, 122 Wash. App. at 844, 95 P.3d 1265 (citing Matsushita, 516 U.S. at 374, 116 S.Ct. 873 ). The majority of jurisdictions follow a similar approach. See, e.g., In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Prods. Liab. Litig., 431 F.3d 141, 146 (3d Cir. 2005) (); accord Hosp. Mgmt. Assocs. v. Shell Oil Co., 356 S.C. 644, 659-60, 665-66, 591 S.E.2d 611 (2004). However, "[a] State may not grant preclusive effect in its own courts to a constitutionally infirm judgment, and other state and federal courts are not required to accord full faith and credit to such a judgment." Kremer, 456 U.S. at 482, 102 S.Ct. 1883 (footnote omitted). Thus, if...
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