Smith v. Bayer Corp.

• Decision Date: 16 June 2011
• Docket Number: No. 09–1205.,09–1205.
• Citation: 180 L.Ed.2d 341,564 U.S. 299,131 S.Ct. 2368
• Parties: Keith SMITH, et al., Petitioners, v. BAYER CORPORATION.
• Court: U.S. Supreme Court

564 U.S. 299

131 S.Ct. 2368

180 L.Ed.2d 341

Keith SMITH, et al., Petitioners,

v.BAYER CORPORATION.

No. 09–1205.

Supreme Court of the United States

Argued Jan. 18, 2011.

Decided June 16, 2011.

Richard A. Monahan, for Petitioners.

Philip S. Beck, Chicago, IL, for Respondent.

Carter G. Phillips, Eric D. McArthur, Sidley Austin LLP, Washington, DC, Susan A. Weber, James R.M. Hemmings, Sidley Austin LLP, Chicago, IL, Philip S. Beck, Adam L. Hoeflich, Carolyn J. Frantz, Andrew C. Baak, Bartlit Beck Herman, Palencher & Scott LLP, Chicago, IL, Joshua J. Fougere, Sidley Austin LLP, for Respondent.

Richard A. Monahan, Marvin W. Masters, Charles M. Love, IV, The Masters Law Firm, Charleston, WV, for Petitioners.

Clinton A. Krislov, Counsel of Record, Eve-Lynn J. Rapp, Robert P. DeWitte, Krislov & Associates, Ltd., Chicago, IL, for Amici Thorogood and Murray.

Mark A. Boling, Law Offices of Mark Boling, Lake Forest, CA, for Amicus Martin Murray.

Justice KAGAN delivered the opinion of the Court.^*

In this case, a Federal District Court enjoined a state court from considering a plaintiff's request to approve a class action. The District Court did so because it had earlier denied a motion to certify a class in a related case, brought by a different plaintiff against the same defendant alleging similar claims. The federal court thought its injunction appropriate to prevent relitigation of the issue it had decided.

We hold to the contrary. In issuing this order to a state court, the federal court exceeded its authority under the "relitigation exception" to the Anti–Injunction Act. That statutory provision permits a federal court to enjoin a state proceeding only in rare cases, when necessary to "protect or effectuate [the federal court's] judgments." 28 U.S.C. § 2283. Here, that standard was not met for two reasons. First, the issue presented in the state court was not identical to the one decided in the federal tribunal. And second, the plaintiff in the state court did not have the requisite connection to the federal suit to be bound by the District Court's judgment.

I

Because the question before us involves the effect of a former adjudication on this case, we begin our statement of the facts not with this lawsuit, but with another. In August 2001, George McCollins sued respondent Bayer Corporation in the Circuit Court of Cabell County, West Virginia, asserting various state-law claims arising from Bayer's sale of an allegedly hazardous prescription drug called Baycol

(which Bayer withdrew from the market that same month). McCollins contended that Bayer had violated West Virginia's consumer-protection statute and the company's express and impliedwarranties by selling him a defective product. And pursuant to West Virginia Rule of Civil Procedure 23 (2011), McCollins asked the state court to certify a class of West Virginia residents who had also purchased Baycol

, so that the case could proceed as a class action.

Approximately one month later, the suit now before us began in a different part of West Virginia. Petitioners Keith Smith and Shirley Sperlazza (Smith for short) filed state-law claims against Bayer, similar to those raised in McCollins' suit, in the Circuit Court of Brooke County, West Virginia. And like McCollins, Smith asked the court to certify under West Virginia's Rule 23 a class of Baycol purchasers residing in the State. Neither Smith nor McCollins knew about the other's suit.

In January 2002, Bayer removed McCollins' case to the United States District Court for the Southern District of West Virginia on the basis of diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441. The case was then transferred to the District of Minnesota pursuant to a preexisting order of the Judicial Panel on Multi–District Litigation, which had consolidated all federal suits involving Baycol

(numbering in the tens of thousands) before a single District Court Judge. See § 1407. Bayer, however, could not remove Smith's case to federal court because Smith had sued several West Virginia defendants in addition to Bayer, and so the suit lacked complete diversity. See § 1441(b).¹ Smith's suit thus remained in the state courthouse in Brooke County.

Over the next six years, the two cases proceeded along their separate pretrial paths at roughly the same pace. By 2008, both courts were preparing to turn to their respective plaintiffs' motions for class certification. The Federal District Court was the first to reach a decision.

Applying Federal Rule of Civil Procedure 23,² the District Court declined to certify McCollins' proposed class of West Virginia Baycol

purchasers. The District Court's reasoning proceeded in two steps. The court first ruled that, under West Virginia law, each plaintiff would have to prove "actual injury" from his use of Baycol to recover. App. to Pet. for Cert. 44a. The court then held that because the necessary showing of harm would vary from plaintiff to plaintiff, "individual issues of fact predominate [d]" over issues common to all members of the proposed class, and so the case was not suitable for class treatment. Id., at 45a. In the same order, the District Court also dismissed McCollins' claims on the merits in light of his failure to demonstrate physical injury from his use of Baycol. McCollins chose not to appeal.

Although McCollins' suit was now concluded, Bayer asked the District Court for another order based upon it, this one affecting Smith's case in West Virginia. In a motion—receipt of which first apprised Smith of McCollins' suit—Bayer explained that the proposed class in Smith's case was identical to the one the federal court had just rejected. Bayer therefore requested that the federal court enjoin the West Virginia state court from hearing Smith's motion to certify a class. According to Bayer, that order was appropriate to protect the District Court's judgment in McCollins' suit denying class certification. The District Court agreed and granted the injunction.

The Court of Appeals for the Eighth Circuit affirmed. In re Baycol Prods. Litigation, 593 F.3d 716 (2010). The court noted that the Anti–Injunction Act generally prohibits federal courts from enjoining state court proceedings. But the court held that the Act's relitigation exception authorized the injunction here because ordinary rules of issue preclusion barred Smith from seeking certification of his proposed class. According to the court, Smith was invoking a similar class action rule as McCollins had used to seek certification "of the same class" in a suit alleging "the same legal theories," id., at 724; the issue in the state court therefore was "sufficiently identical" to the one the federal court had decided to warrant preclusion, ibid . In addition, the court held, the parties in the two proceedings were sufficiently alike: Because Smith was an unnamed member of the class McCollins had proposed, and because their "interests were aligned," Smith was appropriately bound by the federal court's judgment. Ibid .

We granted certiorari, 561 U.S. ––––, 131 S.Ct. 61, 177 L.Ed.2d 1150 (2010), because the order issued here implicates two circuit splits arising from application of the Anti–Injunction Act's relitigation exception. The first involves the requirement of preclusion law that a subsequent suit raise the "same issue" as a previous case.³ The second concerns the scope of the rule that a court's judgment cannot bind nonparties.⁴ We think the District Court erred on both grounds when it granted the injunction, and we now reverse.

II

The Anti–Injunction Act, first enacted in 1793, 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 judgments." 28 U.S.C. § 2283.

The statute, we have recognized, "is a necessary concomitant of the Framers' decision to authorize, and Congress' decision to implement, a dual system of federal and state courts." Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146, 108 S.Ct. 1684, 100 L.Ed.2d 127 (1988). And the Act's core message is one of respect for state courts. The Act broadly commands that those tribunals "shall remain free from interference by federal courts." Atlantic Coast Line R. Co. v. Locomotive Engineers, 398 U.S. 281, 282, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970). That edict is subject to only "three specifically defined exceptions." Id., at 286, 90 S.Ct. 1739. And those exceptions, though designed for important purposes, "are narrow and are ‘not [to] be enlarged by loose statutory construction.’ " Chick Kam Choo, 486 U.S., at 146, 108 S.Ct. 1684 (quoting Atlantic Coast Line, 398 U.S., at 287, 90 S.Ct. 1739; alteration in original). Indeed, "[a]ny doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed." Id., at 297, 90 S.Ct. 1739.

This case involves the last of the Act's three exceptions, known as the relitigation exception. That exception is designed to implement "well-recognized concepts" of claim and issue preclusion. Chick Kam Choo, 486 U.S., at 147, 108 S.Ct. 1684. The provision authorizes an injunction to prevent state litigation of a claim or issue "that previously was presented to and decided by the federal court." Ibid. But in applying this exception, we have taken special care to keep it "strict and narrow." Id., at 148, 108 S.Ct. 1684. After all, a court does not usually "get to dictate to other courts the preclusion consequences of its own judgment." 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4405, p. 82 (2d ed.2002) (hereinafter Wright & Miller). Deciding whether and how prior litigation has preclusive effect is usually the bailiwick of the second court (here, the one in West Virginia). So issuing an injunction under the relitigation exception is resorting to heavy artillery.⁵ For that reason, every benefit of the...