Interplay 131328-Appellee Brief

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No. 09-1069

IN THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

IN RE: BAYCOL PRODUCTS LITIGATION

PEGGY ANN MAYS, GEORGE F. MCCOLLINS,individually, and on behalf of all others similarly situated,

Plaintiffs,

KEITH SMITH, SHIRLEY SPERLAZZA,Respondents-Appellants,

v.

BAYER CORPORATION, a foreign corporation,authorized to do business in West Virginia as Bayer Corporation,

and also known as Bayer AG and Bayer Pharmaceutical,Defendant-Appellee,

BAYER AG, a foreign corporation,GLAXOSMITHKLINE, INC., a foreign corporation,

SMITHKLINE BEECHAM CORPORATION, GLAXOSMITHKLINE PLC,Defendants.

On Appeal From The United States District Court For The District Of Minnesota(The Hon. Michael J. Davis) Civil No. 02-199, MDL No. 1431

BRIEF OF DEFENDANT-APPELLEE BAYER CORPORATION

Philip S. BeckAdam L. Hoeflich

Katherine G. MinarikBARTLIT BECK HERMAN

PALENCHAR & SCOTT LLP54 West Hubbard St., Suite 300

Chicago, IL 60610Tel: (312) 494-4400

Susan A. WeberJames W. Mizgala

James R.M. HemmingsSIDLEY AUSTIN LLP1 South Dearborn Street

Chicago, IL 60603Tel: (312) 853-7000

Peter W. SipkinsDORSEY & WHITNEY LLP

50 S. Sixth St., Suite 1500Minneapolis, MN 55402

Tel: (612) 340-2600

Counsel for Defendant-Appellee Bayer Corporation

Case: 09-1069 Page: 1 Date Filed: 04/03/2009 Entry ID: 3533707


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SUMMARY AND STATEMENT REGARDING ORAL ARGUMENT

The issue in this appeal is whether adequately represented members of

a putative class may relitigate a final federal court judgment denying class

certification by seeking certification of an identical class in state court. The United

States District Court for the District of Minnesota (Davis, C.J.) denied certification

of a West Virginia economic loss class in the Baycol Products Liability Litigation

(MDL 1431) and entered summary judgment against the named plaintiff, George

McCollins. Appellants Keith Smith and Shirley Sperlazza, members of the

putativeMcCollins class, then sought certification of the same class in West

Virginia state court. The District Court granted appellee Bayer Corporations

motion to enjoin Mr. Smith and Ms. Sperlazza from relitigating class certification.

This Court should affirm that injunction. Appellants seek to relitigate

certification of the identical class that was denied certification inMcCollins. As

adequately represented members of the putativeMcCollins class, appellants are

subject to the jurisdiction of the District Court and bound by its final judgment

denying class certification. The District Court therefore had the authority under

the All Writs Act and the relitigation exception to the Anti-Injunction Act to enjoin

Mr. Smith and Ms. Sperlazza from seeking class certification.

Bayer respectfully suggests that oral argument of 15 minutes per side

is appropriate.

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TABLE OF CONTENTS

Summary and Statement Regarding Oral Argument .................................................i

Corporate Disclosure Statement ............................................................................... ii

Table of Contents ..................................................................................................... iii

Table of Authorities ...................................................................................................v

Introduction................................................................................................................1

Responsive Jurisdictional Statement .........................................................................5

Counter-Statement of the Issues ................................................................................6

Responsive Statement of the Case and of the Facts ..................................................7

I. Baycol.......................................................................................................7

II. The Baycol MDL .....................................................................................9

III. McCollins v. Bayer Corp. ......................................................................11

IV. Smith v. Bayer Corp. .............................................................................13

V. The Injunction........................................................................................15

Summary of the Argument.......................................................................................16

Standard of Review..................................................................................................18

Argument..................................................................................................................19

I. Contrary to Appellants Federalism Argument, theAnti-Injunction Act Explicitly Protects Federal CourtJudgments................................................................................................19

II. The District Court Had the Authority and Jurisdictionto Enjoin Mr. Smith and Ms. Sperlazza from RelitigatingClass Certification .................................................................................21

A. Mr. Smith and Ms. Sperlazza Seek to Relitigate theIdentical Issue Finally Decided inMcCollins ............................23

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B. The Denial of Class Certification inMcCollins Is aFinal Judgment Entitled to Collateral Estoppel Effect ..............30

C. Because Appellants Interests Were Fully and AdequatelyRepresented, They Are BoundIn Personam by theDenial of Class Certification inMcCollins ................................31

1. Mr. McCollins Adequately Represented theInterests of Mr. Smith and Ms. Sperlazza inSeeking Certification of a West VirginiaEconomic Loss Class ........................................................32

2. The Adequacy of Representation StandardFully Protects the Interests of Absent Class Members

in Class Certification.........................................................37

a. Appellants Cannot Evade theMcCollinsClass Certification Decision by DescribingThemselves as Nonparties ....................................38

b. Due Process Does Not Impose Notice andOpt-Out Requirements to Bind AbsentClass Members to a Judgment DenyingClass Certification.....................................................40

c. The Prohibition on Virtual RepresentationDoes Not Apply in the Context of ClassActions ......................................................................43

III. The District Court Did Not Abuse Its Discretion In Issuing aPermanent Injunction............................................................................44

Conclusion ...............................................................................................................49

Certificate of Compliance with Rule 32(a)..............................................................51

Certificate of Compliance with Rule 28A(d)(2)......................................................52

Certificate of Service ...............................................................................................53

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TABLE OF AUTHORITIES

Cases

Allen v. Stewart Title Guaranty Co., 06-cv-2426,

2007 WL 916859 (E.D. Pa. Mar. 20, 2007) ......................................................26

Alvarez v. May Dept. Stores Co., 143 Cal. App. 4th 1223(Cal. Ct. App. 2006) ...........................................................................................26

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) .....................4,7,32,35,42

American Pipe & Construction Co. v. Utah,414 U.S. 538 (1974) ...........................................................................................38

Axcan Scandipharm Inc. v. Ethex Corp., 585 F. Supp. 2d 1067(D. Minn. 2007) .................................................................................................39

Brown v. Ticor Title Ins., Co., 982 F.2d 386 (9th Cir. 1992) ............................37

Canady v. Allstate Ins. Co., 282 F.3d 1005(8th Cir. 2002) ............................................................................................passim

Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) .................27,47

Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988) ...............................20,36

DeBoer v. Mellon Mortgage Co., 64 F.3d 1171 (8th Cir. 1995) .......................33

Deposit Guaranty Natl Bank v. Roper, 445 U.S. 326 (1980) ...........................27

Dever v. Hentzen Coatings, Inc., 380 F.3d 1070 (8th Cir. 2004) ......................18

Devlin v. Scardelletti, 536 U.S. 1 (2002) ...........................................................38

Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) .........................................41

Goff v. Menke, 672 F.2d 702 (8th Cir. 1982) .....................................................28

In re BankAmerica Corp. Securities Litig., 263 F.3d 795(8th Cir. 2004) ....................................................................................................18

In re Baycol Prods. Liab. Litig., 532 F. Supp. 2d 1029(D. Minn. 2007) .................................................................................................10

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In re Baycol Prods. Liab. Litig., 321 F. Supp. 2d 1118(D. Minn. 2004) .................................................................................................10

In re Baycol Prods. Liab. Litig., 218 F.R.D. 197 (D. Minn. 2003) ............ 7-8,10

In re Baycol Prods. Liab. Litig., No. 1431, 2001 WL 34134820(J.P.M.L. Dec. 18, 2001) ......................................................................................9

In re Bayshore Trucks Sales, Inc., 471 F.3d 1233 (11th Cir. 2006) .............38,40

In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig.,333 F.3d 763 (7th Cir. 2003) .....................................................................passim

In re Dalkon Shield Punitive Damages Litig., 613 F. Supp. 1112(E.D. Va. 1985) ..................................................................................................26

In re General Motors Corp. Pick-Up Truck Fuel Tank Prod.

Liab. Litig., 134 F.3d 133 (3d Cir. 1998) ......................................26,27,28,38,40

In re Piper Aircraft Distrib. Sys. Antitrust Litig.,551 F.2d 213 (8th Cir. 1977) .....................................................................passim

In re Piper Funds, Inc., Institutional Govt Income Portfolio Litig.,71 F.3d 298 (8th Cir. 1995) ...............................................................................40

In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir.),

cert. denied516 U.S. 867 (1995) .......................................................................47

In re SDDS, Inc., 97 F.3d 1030 (8th Cir. 1996) .................................................46

In re U.S. Office Prods. Co. Sec. Litig., 251 F. Supp. 2d 58(D.D.C. 2003) ....................................................................................................39

In re W. Va. Rezulin Litig., 214 W. Va. 52, 585 S.E.2d 52(W. Va. 2003) ....................................................................................................29

John Morrell & Co. v. Local Union 304A of United Food &Commercial Workers, AFL-CIO, 913 F.2d 544 (8th Cir. 1990) .......................28

Johnson v. GlaxoSmithKline, Inc., 166 Cal. App. 4th 1497(Cal. Ct. App. 2008) ...........................................................................................26

Jones v. St. Paul Cos., Inc., 495 F.3d 888 (8th Cir. 2007) ................................18

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J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176(5th Cir. 1996) ..........................................................................................26,27,28

Liles v. Del Campo, 350 F.3d 742 (8th Cir. 2003) ...........................................19

Matthews v. Eldridge, 424 U.S. 319 (1976) ......................................................41

Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322 (1979) ...............................28

Paxton v. Union Natl Bank, 688 F.2d 552 (8th Cir. 1982) ........................ 32-33

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) .............................4,33,42

Putnam v. Keller, 332 F.3d 541 (8th Cir. 2003) ........................................4,40,41

Redmond v. Moodys Investor Service, 92 Civ. 9161,

1995 WL 276150 (S.D.N.Y. May 10, 1995) ............................................... 38-39

Rivet v. Regions Bank of Louisiana, 522 U.S. 470 (1998) ................................20

Rouse v. II-VI Inc., No. 2:06-cv-566, 2008 WL 2914796(W.D. Pa. Jul. 24, 2008) .............................................................................. 27-28

Sanneman v. Chrysler Corp., 191 F.R.D. 441 (E.D. Pa. 2000) .........................42

Semtek Intl Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) ....................22

Sensormatic Sec. Corp. v. Sensormatic Elec. Corp.,273 Fed. Appx. 256 (4th Cir. 2008) ...................................................................22

St. Jude Medical, Inc. v. Lifecare Intl, Inc., 250 F.3d 587(8th Cir. 2001) ....................................................................................................18

Starker v. U.S., 602 F.2d 1341 (9th Cir. 1979) ..................................................27

State v. Miller, 194 W. Va. 3, 459 S.E.2d 114 (W. Va. 1995) ..........................22

Taylor v. Sturgell, ___ U.S. ___, 128 S. Ct. 2161 (2008) ............................26,43

Rules and Statutes

28 U.S.C. 1332 ................................................................................................14

28 U.S.C. 1446 ................................................................................................14

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28 U.S.C. 1651 ..........................................................................................2,7,19

28 U.S.C. 2283 ..................................................................................2,6,7,20,45

Class Action Fairness Act of 2005,

Pub. L. No. 109-2, 119 Stat. 4 .................................................................14,21,47

Fed. R. Civ. P. 23 ...............................................................................................27

Other Authority

5 Newberg on Class Actions 16.01 (4th Ed.) .................................................39

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INTRODUCTION

This Court has long recognized that plaintiffs seeking class

certification ought not to have unlimited bites at the apple and that relitigation of

class certification is wasteful and runs counter to the sound administration of

multi-district cases. In re Piper Aircraft Distrib. Sys. Antitrust Litig., 551 F.2d

213, 219 (8th Cir. 1977). Nevertheless, appellants Keith Smith and Shirley

Sperlazza contend that plaintiffs have the right to relitigate class certification,

provided that different persons are named class representatives in each successive

case. Neither the Supreme Court nor this Court has so held, and this Court should

reject appellants arguments here.

This appeal arises from the Baycol Products Liability Litigation.

Baycol is a cholesterol-reducing medicine that Bayer Corporation withdrew from

the market in 2001. The ensuing federal cases (ultimately involving approximately

22,500 plaintiffs) have been coordinated through multidistrict litigation in the

District of Minnesota before Chief Judge Michael Davis.

In August of 2008, the District Court denied certification of an

economic loss class of West Virginia Baycol users asserting warranty and fraud

claims. The District Court held that individual issues predominated because class

members could not recover without proving individually that they were injured by

Baycol or did not benefit from the medicine. See Addendum to Brief of Appellants

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interests and appellants are completely aligned. See Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 625-26 (1997). Accordingly, Mr. Smith and Ms. Sperlazza

are bound by the District Courts denial of class certification.

A formal notice procedure is not required. Due process requirements

depend on context. SeePutnam v. Keller, 332 F.3d 541, 546-47 (8th Cir. 2003).

Formal notice is required to adjudicate the merits of an absent class members

claim for money damages. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797,

811-12 (1985). However, the merits of appellants claims are not at issue here

only their interest in securing class certification. That interest is protected through

adequate representation. In re Bridgestone/Firestone, 333 F.3d at 768-69.

Third, Mr. Smith and Ms. Sperlazza argue that no injunction should

have issued because in their view the equities favor plaintiffs, who can litigate low-

value claims only on a classwide basis. The District Court considered the value of

plaintiffs claims inMcCollins (see Smith Add. at A13), but nevertheless

concluded that individual issues of fact precluded certification of a West Virginia

economic loss class. The District Court did not abuse its discretion in holding that

Bayer, having fought and won the battle over class certification, should not be

required to fight that battle again. AccordCanady,282 F.3d at 1018.

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Class certification should not be a heads-I-win, tails-you-lose

proposition. In re Bridgestone/Firestone, 333 F.3d at 767. Where, as here, the

putative class has been adequately represented, the requirements of due process

and the relitigation exception are met and absent class members may be enjoined

from asking another court to certify the same class denied certification in a final

federal court judgment. Accordingly, this Court should affirm the order of the

District Court enjoining Mr. Smith and Ms. Sperlazza from relitigating

certification of a West Virginia economic loss class in the Baycol litigation.

RESPONSIVE JURISDICTIONAL STATEMENT

Bayer presents this statement to resolve any confusion about subject

matter jurisdiction arising from appellants brief. See Brief of Appellants (Smith

Br.) at 8 (first asserting that the United States District Court for the District of

Minnesota lacked subject-matter jurisdiction over them and the class they seek to

represent, but then stating that this factor is distinct from whether the District

Court had the authority to issue an order enjoining proceedings in a state court

action).

The District Court did not purport to assert jurisdiction over

appellants state court case, Smith v. Bayer Corp., No. 01-C-191 (Brooke Co.

W. Va.). Rather, the District Court issued its injunction inMcCollins v. Bayer

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2. Did the District Court correctly conclude that, as adequately

represented members of the putative West Virginia economic loss class in

McCollins, Mr. Smith and Ms. Sperlazza are subject to the personal jurisdiction of

the District Court and therefore bound by that denial of certification? See Amchem

Prods., Inc. v. Windsor, 521 U.S. 591 (1997);In re Bridgestone/Firestone, Inc.

Tires Prod. Liab. Litig., 333 F.3d 763 (7th Cir. 2003).

3. Having concluded that it had authority under the All Writs Act, 28

U.S.C. 1651, and the relitigation exception to the Anti-Injunction Act, 28 U.S.C.

2283, to enjoin Mr. Smith and Ms. Sperlazza from relitigating class certification

in state court, did the District Court properly exercise its discretion by issuing an

injunction? See 28 U.S.C. 1651; Canady v. Allstate Ins. Co., 282 F.3d 1005 (8th

Cir. 2002);In re Piper Aircraft Distrib. Sys. Antitrust Litig., 551 F.2d 213 (8th Cir.

1977);In re Bridgestone/Firestone, Inc. Tires Prod. Liab. Litig., 333 F.3d 763 (7th

Cir. 2003).

RESPONSIVE STATEMENT OF THE CASE AND OF THE FACTS

I. Baycol

Baycol (cerivastatin) is a prescription cholesterol-reducing medicine

that Bayer AG manufactured and Bayer Corporation distributed under the approval

of the United States Food and Drug Administration (FDA) from 1997 until

August 8, 2001. See In re Baycol Prods. Liab. Litig., 218 F.R.D. 197, 201 (D.

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Minn. 2003) (summarizing Baycol history). Baycol is a statin, a member of the

same family of medications as Lipitor, Zocor, and Crestor. See id.

Like all other statins, Baycol has been associated with muscle aches

and pains, as well as more serious side effects, such as rhabdomyolysis (a severe

breakdown of muscle tissue where the substances released into the bloodstream

may on occasion overwhelm the kidneys). See id. From Baycols first release,

every FDA-approved label and package insert contained a warning about these and

other side effects, and also warned about the risk of using another class of lipid-

lowering drugs (called fibrates) concurrently with Baycol. See, e.g., July 2000

Label, available athttp://www.fda.gov/cder/foi/nda/2000/20-

740S008_Baycol_prntlbl.pdf. Starting in December 1999, the FDA-approved label

warned that concurrent use of Baycol and gemfibrozil, one such fibrate, was

contraindicated due to a risk for rhabdomyolysis. See, e.g., id.

Despite this contraindication, Bayer continued to receive reports of

rhabdomyolysis in patients who were being co-prescribed Baycol and gemfibrozil.

See August 8, 2001 Dear Healthcare Professional Letter, available at

http://www.fda.gov/medwatch/SAFETY/2001/Baycol_deardoc2.pdf. In view of

these continued reports, on August 8, 2001, Bayer voluntarily decided, with the

approval of the FDA, to withdraw Baycol from the market. See id.

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II. The Baycol MDL

Due to the volume of lawsuits in federal court following the

withdrawal of Baycol, the Judicial Panel on Multidistrict Litigation established

MDL-1431 in the District of Minnesota to coordinate discovery and other pre-trial

proceedings. See In re Baycol Prods. Liab. Litig., No. 1431, 2001 WL 34134820,

at *1-2 (J.P.M.L. Dec. 18, 2001) (unpublished).

From the first year of this litigation, the District Court has supervised

a settlement program that has paid $1.17 billion to 3,135 claimants who suffered

rhabdomyolysis, the specific side effect that led to the withdrawal of Baycol from

the market. See Separate Appendix of Defendant-Appellee (Bayer App.) at

BA393-BA394 (In re Baycol Prods. Litig., Pretrial Order (PTO) 51); see also id.

at BA479-BA484. Consistent with its efforts to facilitate federal-state coordination

of the Baycol litigation,2 the District Court established an oversight mechanism, to

assure that federal and state court rhabdomyolysis cases were being settled fairly

and consistently. See PTO 53, available athttp://www.mnd.uscourts.gov/ MDL-

Baycol/pretrial_minutes/pretrial_order53.PDF. Bayer has vigorously litigated all

2 The District Court has worked actively and cooperatively with state courts tocoordinate federal and state Baycol litigation through a joint conference,correspondence with other judges, and creation of a coordinated federal/stateprogram for depositions of witnesses overseas. See, e.g., Bayer App. at BA395-BA401 (PTO 63).

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other claims, including cases alleging injuries other than rhabdomyolysis and cases

seeking economic recovery for plaintiffs who benefited from taking Baycol.

More than 22,500 plaintiffs have had Baycol cases pending in federal

court over the last eight years. See id. at BA428-BA434.3 The District Court has

supervised generic and case-specific fact and expert discovery. Thousands of

plaintiffs stipulated to dismissal of their claims rather than respond to written

discovery (see, e.g.,id. at BA340-BA392, BA406-BA424 (PTOs 4, 10, 12, 81 &

85)), or had their cases dismissed for failure to produce short-form expert reports

to support their claims that Baycol caused their alleged injuries (see, e.g., id. at

BA435-BA445, BA456-BA465 (PTOs 114 & 131);In re Baycol Prods. Litig., 321

F. Supp. 2d 1118, 1124 (D. Minn. 2004)). The District Court has ruled on

proposed nationwide and statewide classes, generic and case-specificDaubert

motions, and motions for summary judgment. See generally In re Baycol, 218

F.R.D. 197 (deciding petition for various nationwide classes);In re Baycol Prods.

Liab. Litig., 532 F. Supp. 2d 1029 (D. Minn. 2007) (deciding genericDaubert

motions); Smith Add. at A14-A19 (deciding summary judgment motion regarding

3 In addition, Bayer has defended the claims of approximately 17,500 formerBaycol users in state court. See, e.g., Bayer App. at BA428-BA434, BA479-BA484 (citing the volume of state court claims). The six Baycol cases tried to

juries in state court have produced defense verdicts. Today, the claims of 240plaintiffs remain pending in state court.

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McCollins was removed to federal court and transferred to the MDL.

See Bayer App. at BA1-BA20, BA77-BA81. Plaintiffs subsequently amended

their complaint twice, but continued to seek only alleged economic losses on

behalf of a putative class of West Virginia Baycol purchasers. See Smith App. at

SA060-SA076 (Amended Complaint); id. at SA078-SA095 (Second Amended

Complaint). One putative class representative, Peggy Ann Mays, was omitted

from the amended complaints and the claims of another, Michael Black, were

dismissed with prejudice, leaving George McCollins as the lone remaining putative

class representative. See id. (omitting Peggy Ann Mays); Bayer App. at BA116-

BA118 (order of voluntary dismissal of claims of Michael Black).

During discovery, Mr. McCollins doctor testified that he suffered no

injury from Baycol and that the medicine reduced his cholesterol. See Smith App.

at SA217-SA221 (testimony of Mr. McCollins prescribing physician). Mr.

McCollins moved the District Court to recommend remand of the case. See Bayer

App. at BA160-BA164. Bayer opposed remand and moved to (a) deny class

certification and (b) enter summary judgment against Mr. McCollins on his

individual claims. See id. at BA165-BA278.

After full briefing, on August 25, 2008 the District Court denied

remand, denied class certification, and granted summary judgment in favor of

Bayer on Mr. McCollins claims. See Smith Add. at A01-A20 (McCollins,

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Aug. 25, 2008 Memorandum of Law & Order). Specifically, the District Court

held that, in order to prove liability for economic loss claims under West Virginia

law, [i]ndividual evidence as to each putative class member would be necessary

to determine whether the individual person benefitted from or was injured by

Baycol. Id. at A12. Because each member of the putative class would have to

present individual evidence on his or her medical history, alleged injuries, and

medical causation, the District Court concluded that individual issues

predominated. See id. at A11-A12. With respect to Mr. McCollins individual

claims, the District Court concluded that no genuine issue of material fact

supported his claim that he had not received the benefit of his Baycol purchase,

and granted summary judgment in favor of Bayer. See id. at A14-A19.

Neither Mr. McCollins nor any class member appealed the judgment

of the District Court, which became final on September 25, 2008.

IV. Smith v. Bayer Corp.

Keith Smith, Shirley Sperlazza, and Nancy Gandee filed their class

action complaint in the Circuit Court of Brooke County, West Virginia, in

September 2001. See Smith App. at SA097-SA115 (Complaint, Smith v. Bayer

Corp., et al., No. 01-C-191 (Cir. Ct. Brooke County, W. Va.)). Bayer could not

remove the case because two local defendants were sued in connection with Ms.

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Gandees claim. Although the local defendants were dismissed when Ms.

Gandees claim was settled, the dismissals came too late to allow removal.4

The Smith plaintiffs sought certification of a class of all West

Virginia residents and others who have ingested Cerivastatin, sold under the trade

name Baycol in West Virginia. Id. at SA097 (Smith, Complaint, 3). They

asserted personal injury, medical monitoring, and economic loss claims on behalf

of the putative class. See id. at SA103-SA111. During class discovery, the doctor

who treated Mr. Smith and Ms. Sperlazza testified that they suffered no side effects

from Baycol and that the medicine reduced their cholesterol. See id. at SA223-

SA228 (testimony of Mr. Smiths prescribing physician); id. at SA230-SA234

(testimony of Ms. Sperlazzas prescribing physician).

On September 30, 2008, seven years after the Smith case was filed and

five days after the District Courts ruling inMcCollins became final, Mr. Smith

and Ms. Sperlazza filed a motion seeking certification of an economic loss class

only. See id. at SA117-SA145. Specifically, they sought certification of a class of

all West Virginia residents who purchased the drug Baycol in West Virginia . . .

with respect to their consumer protection act claims as set forth in the complaint.

4 The forum defendants were dismissed after Ms. Gandee settled her claims in July2003, well after the one-year period for removal. See 28 U.S.C. 1446. Bayerwas not able to remove the action under the Class Action Fairness Act of 2005,since the action was filed and the parties became diverse before the effective dateof the Act. See Pub. L. No. 109-2, 119 Stat. 4, at 9; see also 28 U.S.C. 1332,Notes (incorporating Section 9 of the Class Action Fairness Act).

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Id. at SA122. Counsel for Mr. Smith and Ms. Sperlazza explained that they would

pursue claims for breach of warranty, common law fraud, and violation of the

WVCCPA, seeking compensation for the improper charge [for purchases of

Baycol] perpetrated upon class members due to Bayers alleged misconduct, as

well as punitive damages. See id. at SA124.

V. The Injunction

Bayer then moved inMcCollinsin the District of Minnesota to enjoin

Mr. Smith and Ms. Sperlazza from relitigating certification of a West Virginia

economic loss class. See Smith App. at SA021-SA292. After a full briefing and

oral argument, the District Court concluded:

The issues presented for class certification inMcCollins were identical tothose Mr. Smith and Ms. Sperlazza sought to have certified in West

Virginia. See Smith Add. at A26-A27.

Appellants were absent members of the putativeMcCollins class. See id. atA35.

Appellants interests in seeking class certification in West Virginia wereadequately represented by Mr. McCollins in the District Court. See id.

TheMcCollins denial of class certification was final and conclusive. See id.at A28-A31.

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Appellants, as absent class members in theMcCollins class, were bound inpersonam to the denial of class certification in the District Court. See id. at

A32-A36.

Based on these conclusions, the District Court held that the relitigation exception

to the Anti-Injunction Act applied (id. at A24-A36) and the balance of equities

favored injunctive relief (id. at A36-A38). Pursuant to its authority under the All

Writs Act, the District Court issued a narrowly tailored injunction barring

appellants from seeking certification of an economic loss class of West Virginia

Baycol purchasers in the Smith case. Id. at A36-A38. Nothing in the District

Courts order prevents Mr. Smith and Ms. Sperlazza from pursuing their individual

claims in West Virginia state court. See id. at A21-A38.

Mr. Smith and Ms. Sperlazza filed a timely appeal.

SUMMARY OF THE ARGUMENT

At bottom, appellants position is that class certification is a heads-I-

win, tails-you-lose proposition. In re Bridgestone/Firestone, 333 F.3d at 767. If

a defendant loses a class certification motion, that defendant is faced with litigating

a high-stakes class action. But if a putative plaintiff class is denied certification,

plaintiffs can try their luck in another court; all that is required is a different named

plaintiff. The District Court properly held that plaintiffs are not entitled to game

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the system this way. None of appellants arguments provide a basis for vacating

the carefully-tailored injunction issued by the District Court.

I. Appellants preliminary policy argument is based on a lopsided view

of federalism. Congress specifically determined that, to effectuate a judgment, a

federal court may issue an injunction against relitigation in a state court. The

question for this appeal is whether the District Courts narrow injunction barring

appellants from relitigating certification of a West Virginia economic loss class

already denied certification by the federal MDL court falls within the scope of the

relitigation exception to the Anti-Injunction Act.

II. The relitigation exception applies here. Appellants seek certification

of the same West Virginia economic loss class, for the same relief, on the same

allegations of wrongdoing that the District Court denied certification inMcCollins.

Mr. Smith and Ms. Sperlazzas interests were adequately represented the first time

certification of that class was litigated. Accordingly, they are bound in personam

by the District Courts denial of class certification inMcCollins.

III. The District Court properly exercised its discretion in enjoining Mr.

Smith and Ms. Sperlazza from relitigating certification of a West Virginia

economic loss class. The fact that economic loss claims have limited value does

not give appellants the right to relitigate certification of those claims.

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The District Courts final judgment denying class certification in

McCollins is entitled to collateral estoppel effect, and the District Court correctly

determined that the relitigation exception to the Anti-Injunction Act and the

authority vested by the All Writs Act permitted the District Court to protect that

judgment. This Court should therefore affirm the District Courts order enjoining

Mr. Smith and Ms. Sperlazza from relitigating in state court the same West

Virginia economic loss class that the District Court denied certification in

McCollins.

STANDARD OF REVIEW

This Court reviews de novo the District Courts finding that it had

personal jurisdiction over appellants. See, e.g., Dever v. Hentzen Coatings, Inc.,

380 F.3d 1070, 1072 (8th Cir. 2004) (We review personal jurisdiction questions

de novo); St. Jude Medical, Inc. v. Lifecare Intl, Inc., 250 F.3d 587, 591 (8th Cir.

2001) (same). Also subject to de novo review is the District Courts determination

that the relitigation exception to the Anti-Injunction Act applies to this case. See,

e.g., Jones v. St. Paul Cos., Inc., 495 F.3d 888, 890 (8th Cir. 2007) (We review de

novo the issue whether the Anti-Injunction Acts relitigation exception applies);

In re BankAmerica Corp. Securities Litig., 263 F.3d 795, 800 (8th Cir. 2001).

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This Court reviews for abuse of discretion the order permanently

enjoining Mr. Smith and Ms. Sperlazza from seeking certification of a West

Virginia economic loss class. See, e.g., Liles v. Del Campo, 350 F.3d 742, 746

(8th Cir. 2003) (We review an order enjoining related litigation for an abuse of

discretion).

ARGUMENT

I. CONTRARY TO APPELLANTS FEDERALISM ARGUMENT,

THE ANTI-INJUNCTION ACT EXPLICITLY PROTECTS

FEDERAL COURT JUDGMENTS.

Appellants first argue that the District Courts injunction offends

principles of federalism and comity. Smith Br. at 16-20. To the contrary, an

injunction issued to protect a federal judgment in accordance with the relitigation

exception is wholly consistent with those principles.

Congress decided specifically how to balance competing interests of

federal and state courts, and that balance is codified through the interplay of the All

Writs and Anti-Injunction Acts. The All Writs Act empowers a federal court to

issue all writs necessary or appropriate in aid of [its] jurisdictio[n], 28 U.S.C.

1651(a). This grant of authority authorizes a court to issue writs necessary to

protect the collateral estoppel effects of the courts judgments. Canady, 283 F.3d

at 1018.

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The Anti-Injunction Act bars injunctions directed to state courts,

except in three specific circumstances. See 28 U.S.C. 2283. One of those

circumstances the relitigation exception explicitly permits issuance of an

injunction to effectuate [the] judgmen[t] of a District Court. Id. As the Supreme

Court explained: The relitigation exception was designed to permit a federal

court to prevent state litigation of an issue that previously was presented to and

decided by the federal court. It is founded in the well-recognized concepts ofres

judicata and collateral estoppel. See Chick Kam Choo v. Exxon Corp., 486 U.S.

140, 147 (1988);5see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 478

n.3 (1998) (We note also that under the relitigation exception to the Anti-

Injunction Act, 28 U.S.C. 2283, a federal court may enjoin state-court

proceedings where necessary . . . to protect or effectuate its judgments).

5 Appellants suggest that Chick Cam Choo restricted the scope of the relitigationexception to federal judgments on federal questions. See Smith Br. at 17-18.Chick Kam Choo stated only that the purpose of the Anti-Injunction Act exceptionsis to ensure the effectiveness and supremacy of federal law. 486 U.S. at 146.Nothing in the opinion nor in the language of the Anti-Injunction Act supportsa distinction between federal court judgments based on federal law and federalcourt judgments based on state law.

Appellants also assert that the mere existence of a parallel lawsuit in state courtdoes not support issuance of an injunction. Smith Br. at 19. Bayer agrees. Theinjunction here issued only after the District Court entered a final judgment andafter appellants filed a motion in state court to relitigate an issue presented to anddecided by the federal court. Chick Kam Choo, 486 U.S. at 147.

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Thus, Congress already has determined that principles of federalism

and comity support theprotection of federal court judgments. Indeed, more

recently, Congress confirmed the primacy of federal courts in class actions by

enacting the Class Action Fairness Act (CAFA), which allows removal of cases

like this one and thereby virtually eliminates the potential for plaintiffs to attempt

state court relitigation of federal decisions denying class certification. See Class

Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4.

Appellants state court lawsuit was filed before the effective date of

CAFA and could not be removed due to the presence of non-diverse defendants

(no longer parties to the case). See supra at 14 n.4. Given the enactment of

CAFA, no overarching, long-term policy question is presented in this appeal. The

question here is only whether the narrow injunction issued by the District Court

falls within the scope of the relitigation exception. As demonstrated below, the

District Court properly concluded that the injunction meets that test.

II. THE DISTRICT COURT HAD THE AUTHORITY AND

JURISDICTION TO ENJOIN MR. SMITH AND MS. SPERLAZZA

FROM RELITIGATING CLASS CERTIFICATION.

The relitigation exception to the Anti-Injunction Act applies because

collateral estoppel bars reconsideration of theMcCollinsclass certification

decision. See In re Bridgestone/Firestone, 333 F.3d at 767-68; accordCanady,

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282 F.3d at 1017-18;In re Piper Aircraft, 551 F.2d at 220-21. Collateral estoppel

bars relitigation if:

(1) the issue previously decided is identical to the one presented inthe action in question;

(2) there is a final adjudication on the merits of the prior action;

(3) the party against whom the doctrine is invoked was a party or inprivity with a party to a prior action; and

(4) the party against whom the doctrine is raised had a full and fairopportunity to litigate the issue in the prior action.

State v. Miller, 194 W. Va. 3, 9, 459 S.E.2d 114, 120 (W. Va. 1995).6 As the

District Court correctly determined, the denial of class certification inMcCollins

meets each of these conditions. See Smith Add. at A21-A38 (McCollins, Dec. 9,

2008 Memorandum of Law & Order).

6 [F]ederal common law governs the claim-preclusive effect of a dismissal by afederal court sitting in diversity. Semtek Intl Inc. v. Lockheed Martin Corp., 531U.S. 497, 508 (2001). [A]s the federally prescribed rule of decision, thepreclusion law of the relevant state applies unless that states law is incompatiblewith federal principles; in that case, federal collateral estoppel principles control.See idat 509. See alsoSensormatic Sec. Corp. v. Sensormatic Elec. Corp., 273Fed. Appx. 256, 261 (4th Cir. 2008).

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A. Mr. Smith and Ms. Sperlazza Seek To Relitigate the Identical

Issue Finally Decided inMcCollins.

The first requirement for application of the relitigation exception is

identity of issues. The issue that Mr. Smith and Ms. Sperlazza seek to relitigate in

West Virginia state court certification of a West Virginia economic loss class is

identical to that decided inMcCollins:

The putative classes are the same. The District Court inMcCollins declined to certify the following class: all persons in

West Virginia who purchased the drug cerivastatin under the brand

name Baycol between February 1998 and August 8, 2001, or their

estates, administrators or other legal representatives, heirs and

beneficiaries. Smith App. at SA087. Now, Mr. Smith and Ms.

Sperlazza have asked a West Virginia court to certify an action

seeking purported economic losses only on behalf of the same class:

all West Virginia residents and others who have ingested

Cerivastatin, sold under the trade name Baycol in West Virginia.

Id. at SA097. Mr. Smith and Ms. Sperlazza do not contest the identity

of classes.

The economic loss claims are the same. Mr. McCollinsasserted breach of warranty and statutory consumer fraud claims on

behalf of the putative class. Id. at SA089-SA094. Mr. Smith and Ms.

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Sperlazza have alleged the identical claims, plus common law fraud.

See Smith Br. at 12; Smith App. at SA122-SA123. Appellants

contend that the presence of the common law fraud claim destroys

identity of issues. See Smith Br. at 21-22. This Court already has

rejected that argument, holding in Canady that [t]he same cause of

action framed in terms of a new legal theory is still the same cause of

action. Canady, 282 F.3d at 1015. Here, the alleged factual

foundation for the claims in Smith is the same as that inMcCollins.

Mr. McCollins, Mr. Smith and Ms. Sperlazza all assert claims arising

from their purchase of Baycol and allege injury based on Bayers

purported misrepresentation of Baycol as a safe and effective

medication. Compare Smith App. at SA078-SA095 (McCollins,

Second Amended Complaint) with id. at SA097-SA115 (Smith,

Complaint).

The legal theory on which class certification turns is thesame. Appellants contend that it does not matter under West Virginia

law whether plaintiffs or absent class members benefited or were

harmed by Baycol; rather, they claim liability can be established

entirely on the basis of Bayers alleged misconduct. See id. at SA139-

SA140 (claiming All consumers . . . would have claims against the

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defendants because of these deceptive acts regardless of whether they

relied on the statements). Mr. McCollins advanced the same

arguments in the District Court. See id. at SA168-SA169 (arguing

Bayers alleged intent to induce purchase of Baycol is sufficient to

establish claims for economic loss damages).

In short, the class certification litigated inMcCollins is identical to that appellants

want to relitigate in Smith.

Mr. Smith and Ms. Sperlazza nevertheless argue that collateral

estoppel does not apply to a decision denying class certification because another

court might exercise its discretion differently. See Smith Br. at 22-28. This Court

already has ruled to the contrary. InIn re Piper Aircraft, the Court explicitly stated

that unfavorable class action determination [can] supply the basis for a collateral

estoppel bar. In re Piper Aircraft, 551 F.2d at 220-21. In Canady, this Court

applied collateral estoppel to bar subsequent efforts to certify a putative class for

which certification had been denied previously. See Canady, 282 F.3d at 1017.

Similarly, the Seventh Circuit applied collateral estoppel in multi-

district litigation, barring plaintiffs from seeking certification of a nationwide class

in state courts after certification of that class was denied in federal court. See In re

Bridgestone/Firestone, 333 F.3d at 768. In another MDL, the United States

District Court for the Eastern District of Virginia held that a defendant was

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estopped from seeking certification of a nationwide class of plaintiffs to adjudicate

punitive damages after certification of the same class was blocked by the Ninth

Circuit in related litigation. SeeIn re Dalkon Shield Punitive Damages Litig., 613

F. Supp. 1112, 1115-19 (E.D. Va. 1985); accordAlvarez v. May Dept. Stores Co.,

143 Cal. App. 4th 1223, 1240 (Cal. Ct. App. 2006) (also applying collateral

estoppel to bar relitigation).7

Appellants cite the ClearwaterandIn re General Motorsdecisions in

support of their argument. See Smith Br. at 22-25 (citingJ.R. Clearwater Inc. v.

Ashland Chem. Co., 93 F.3d 176 (5th Cir. 1996) (relitigation provision does not

apply because another court might decide class certification differently);In re

General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133

(3d Cir. 1998) (same, following Clearwater)).8 Those opinions are not persuasive

for three reasons.

7 California courts are divided on this issue. InJohnson v. GlaxoSmithKline, Inc.,166 Cal. App. 4th 1497 (Cal. Ct. App. 2008), a different division of the sameintermediate appellate court held that enjoining relitigation of class claims wouldbe inconsistent with the United States Supreme Courts decision in Taylor v.Sturgell, ___ U.S. ___, 128 S. Ct. 2161 (2008). TheJohnson decision is wrong,

because Taylorexplicitly carved out class actions from its ban on virtualrepresentation. See infra at pp. 43-44.

8 Appellants also citeAllen v. Stewart Title Guaranty Co., 06-cv-2426, 2007 WL916859 (E.D. Pa. Mar. 20, 2007) (unpublished), a District Court decision from theThird Circuit, which simply followsIn re General Motors and Clearwater.

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First, those opinions dismiss class certification as purely procedural.

Clearwater, 93 F.3d at 180;In re General Motors, 134 F.3d at 146. That ignores

the reality of class litigation, where [d]etermining the permissible scope of

litigation is as much substantive as it is procedural and certification decisions

dramatically change the stakes of litigation. In re Bridgestone/Firestone, 333 F.3d

at 768; Castano v. American Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996); see

alsoDeposit Guaranty Natl Bank v. Roper, 445 U.S. 326, 336 (1980) (denial of

class certification stands as an adjudication of one of the issues litigated). That is

why even interlocutory certification decisions are subject to special appeal

procedures. See Fed. R. Civ. P. 23(f).

Second, these decisions confuse identity of issues the relevant

inquiry under collateral estoppel law with identity of possible outcome. Issue

preclusion does not depend on how a prior judgment came out or whether

relitigation might produce a different outcome; it depends on whether a particular

issue has been fully litigated. SeeStarker v. U.S., 602 F.2d 1341, 1347 n.3 (9th

Cir. 1979) (The correctness of the ruling in [the prior action] is irrelevant for

collateral estoppel purposes. (A) judgment, not set aside on appeal or otherwise,

is equally effective as an estoppel upon the points decided, whether the decision be

right or wrong) (internal citations omitted);Rouse v. II-VI Inc., No. 2:06-cv-566,

2008 WL 2914796, *11 n.9 (W.D. Pa. Jul. 24, 2008) (unpublished) (The point is

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that the correctness (or incorrectness) of that [prior] decision is irrelevant to the

collateral estoppel inquiry).9

Third, if the role of discretion in class certification decisions barred

application of collateral estoppel, judgments in all class actions would be

unenforceable because discretion plays a role in decisions granting, as well as

denying, class certification. Absent class members who ordinarily are bound by a

final class judgment (Goff v. Menke, 672 F.2d 702, 704 (8th Cir. 1982)), would be

able to evade res judicataand collateral estoppel by asserting that the class would

never have been certified if it had been brought originally in a different forum.

The ClearwaterandIn re General Motorscases do not, in any event,

apply to the facts of this case because Mr. Smith and Ms. Sperlazza are not simply

seeking a different exercise of judicial discretion in a different court. They are

asking the West Virginia court to de facto overrule a decision of law inextricably

intertwined with the denial of class certification inMcCollins, the District Courts

holding that individual issues of fact predominate with respect to whether Baycol

benefitted or harmed any particular person. Smith Add. at A12. Appellants are

9See Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 327 n.5 (1979) (Underthe doctrine of collateral estoppel . . . the judgment in the prior suit precludesrelitigation ofissues actually litigated and necessary to the outcomeof the firstaction) (emphasis added);John Morrell & Co. v. Local Union 304A of UnitedFood & Commercial Workers, AFL-CIO, 913 F.2d 544, 562 n.14 (8th Cir. 1990)(same, quoting Parklane Hosiery).

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using Smith as a vehicle to collaterally attack that judgment, arguing in their state

court certification papers that, with respect to liability, there are no individual

issues. Smith App. at SA140. None of the cases cited by Mr. Smith and Ms.

Sperlazza stands for the proposition that appellants may shop a final judgment

premised on a conclusion of substantive law in a different forum hoping to achieve

a different result. To the contrary, this Court has held that litigants may not []

recycle the same claims and issues in different courts, hoping to achieve the result

they desire. Canady, 282 F.3d at 1018.

Appellants also cite the West VirginiaRezulin decision, apparently in

support of their view that a class would be certified by a West Virginia court. See

Smith Br. at 26-28 (citingIn re W. Va. Rezulin Litig., 214 W. Va. 52, 585 S.E.2d

52 (W. Va. 2003)).10 As Chief Judge Davis observed,Rezulin certified an

economic loss class on a finding that individual issues ofdamages did not

predominate over common issues of fact. See Smith Add. at A26-A27; accord In

re W. Va. Rezulin, 214 W. Va. at 74-75, 585 S.E.2d at 74-75. In contrast,

10 Mr. Smith and Ms. Sperlazza also citeRezulin for the proposition that a WestVirginia court applying West Virginia Rule 23 is not bound by decisions applyingFederal Rule 23. See Smith Br. at 27 (quotingRezulin statement that a federal case

may be persuasive but is not controlling). See also id. at 19 (Decisions of federalcourts applying state substantive law are not binding authority on any state courtapplying the same state law to the same or similar set of facts). However, theissue in this case is not whether the West Virginia state court is bound by theDistrict Courts decision inMcCollins, but rather whether appellants are bound bythat decision.

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McCollins held that individual issues ofmedical causation, dictated by the

elements of proof for economic loss claims under West Virginia law whether

the individual person benefitted from or was injured by Baycol (Smith Add. at

A12) predominated. See id. at A09-A12.11

In sum, appellants cannot avoid the fact that they are seeking

certification of the same class that was denied certification inMcCollins. Because

the issues presented are identical, the first requirement for application of the

relitigation exception has been met.

B. The Denial of Class Certification inMcCollins Is a Final

Judgment Entitled to Collateral Estoppel Effect.

Appellants do not contest the second requirement for application of

the relitigation exception: finality. As this Court has held, an order denying class

certification becomes final for the purposes of collateral estoppel when a final

judgment has issued. See Canady, 282 F.3d at 1016-17. TheMcCollins judgment

is final; the District Court entered summary judgment against the claims of the sole

remaining plaintiff and no appeal was taken. See Smith Add. at A01-A20.

11 Counsel for appellants claim that, because they were lead counsel inIn re W.Va. Rezulin Litigation the Court should trust that the trial court held in that case

that individual issues predominated over common issues on all questions ofliability, causation, and damages. Smith Br. at 27 n.6. Counsel cannot rewrite the

Rezulin decision of the West Virginia Supreme Court of Appeals through thistactic. The opinion supports only the conclusion that West Virginias highest courtrejected the claim that individual issues of damages predominated over commonissues of fact with respect to the economic loss claims asserted in that case.

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Accordingly, the second requirement for application of the relitigation exception

has been met here.12

C. Because Appellants Interests Were Fully and AdequatelyRepresented, They Are BoundIn Personam by the Denial of Class

Certification inMcCollins.

The final requirements for application of the relitigation exception are

that the estopped litigant must be a party or in privity with a party in the underlying

case and have had a full, fair opportunity to litigate the issue in question. See

supra at 22. Mr. Smith and Ms. Sperlazza contend that they are not parties, are not

bound by theMcCollinsjudgment, and therefore are not subject to the personal

jurisdiction of the District Court.

There is no argument here that, as unnamed class members, the

McCollins decision binds Mr. Smith and Ms. Sperlazza in any manner with respect

to their individual claims. Appellants are free to pursue those claims in their state

court action. See Canady, 282 F.3d at 1018. With regard to the question of class

certification, however, the result is different. A denial of class certification is

12 Appellants suggest that class certification decisions are not entitled to preclusiveeffect because they are not final judgments. See Smith Br. at 22 n.3 (Generallyspeaking, an order refusing to certify, or decertify, a class action is not a final

judgment on the merits sufficient to satisfy res judicata principles underlying therelitigation exception to the Anti-Injunction Act and may not be appealed assuch.). This case does not, however, present the question of whether or when aninterlocutory class certification judgment may have preclusive effect. Appellantsconcede that the District Court entered a final judgment inMcCollins. See id.(The District Courts decision denying class certification inMcCollins . . . becameappealable following the entry of final judgment).

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binding in personam with respect to unnamed class members when those class

members are adequately represented with respect to the certification decision. In

re Bridgestone/Firestone, 333 F.3d at 769. As demonstrated below, appellants

could not have asked for a named plaintiff to more closely represent their position

than Mr. McCollins. Further, appellants attack on the adequacy of

representation standard is without merit.

1. Mr. McCollins Adequately Represented the Interests of

Mr. Smith and Ms. Sperlazza in Seeking Certification of a

West Virginia Economic Loss Class.

InIn re Bridgestone/Firestone, plaintiffs argued that they were

entitled to relitigate class certification seriatim, because class members are not

bound by a decision denying class certification. 333 F.3d at 767. The Seventh

Circuit rejected plaintiffs claim that the legal system entitles them to the benefit

of this heads-I-win, tails-you-lose situation. Id. Instead, the court concluded that

absent class members are bound by a decision denying class certification where

their interests have been adequately represented in the class certification

proceedings. See id. at 768-69. An absent class member is adequately represented

when the putative class representative (a) is part of the class she or he seeks to

represent, (b) experienced the same alleged injury, and (c) has the same interests as

absent class members. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625-26

(1997); see also Paxton v. Union Natl Bank, 688 F.2d 552, 562-63 (8th Cir. 1982)

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(same).13 Here, the record fully supports the District Courts determination that

Mr. McCollins adequately represented the absent members of his putative class

in seeking class certification. See Smith Add. at A31-A36.

First, Mr. McCollins, Mr. Smith, and Ms. Sperlazza were members of

the putativeMcCollins class. The proposed economic loss class inMcCollins was

comprised of all persons in West Virginia who purchased the drug cerivastatin

under the brand name Baycol between February 1998 and August 8, 2001, or

their estates, administrators or other legal representatives, heirs and beneficiaries.

Smith App. at SA087. Mr. McCollins, Mr. Smith, and Ms. Sperlazza claim to have

been West Virginians who purchased Baycol within the period defined in the

McCollins class. Id. (Mr. McCollins); id. at SA111-SA114 (Mr. Smith and Ms.

Sperlazza). Indeed, Mr. Smith and Ms. Sperlazza seek to represent the same class

of Baycol purchasers in their putative class action in West Virginia state court.

Compare SA097 (Smith class definition) with SA087 (McCollins class definition);

see also supra at 23.

13See also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 808 (1985) (The absent

parties would be bound by the decree so long as the named parties adequatelyrepresented the absent class and the prosecution of the litigation was within thecommon interest.);DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1175 (8th Cir.1995) (adequacy of representation where named representative and class counselhad no conflicts with absent class members and vigorously pursued the issue indispute).

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Second, Mr. McCollins sought recovery for the same alleged injury

economic loss allegedly caused by Bayers misconduct for which Mr. Smith and

Ms. Sperlazza now seek recovery on behalf of West Virginia Baycol purchasers in

a West Virginia state court. See supra at 23-24. Moreover, fact discovery has

demonstrated that all three took the same dosage of Baycol (0.4mg), that all three

benefited from Baycol, and that none of the three has a claim for personal injury

supported by testimony from a treating physician. See Smith App. at SA217-

SA221 (testimony of Mr. McCollins prescribing physician); id. at SA223-SA228

(testimony of Mr. Smiths prescribing physician); id. at SA230-SA234 (testimony

of Ms. Sperlazzas prescribing physician). Accordingly, Mr. McCollins was

situated identically to Mr. Smith and Ms. Sperlazza.

Third, Mr. McCollins, Mr. Smith, and Ms. Sperlazzas interests are

perfectly aligned. The claims of all three rest on the singular premise that the

purchase of Baycol, without more, amounts to a compensable injury. See supra at

11-15, 24-25. Indeed, the arguments Mr. McCollins presented the District Court in

seeking class certification are echoed in those presented by Mr. Smith and Ms.

Sperlazza in West Virginia. See supra at 24-25. The foundation of Mr.

McCollins petition for class certification, like Mr. Smith and Ms. Sperlazzas

petition in West Virginia, was that plaintiffs need not individually prove injury and

causation in order to recover under West Virginia law, and therefore individual

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issues of causation and injury do not predominate over common issues regarding

Bayers alleged misconduct. See id.

Thus, Mr. McCollins met all of theAmchem requirements for

adequacy of representation. Further, the District Court found that counsel for the

McCollins plaintiffs vigorously argued in favor of class certification before this

Court. Smith Add. at A35. That protection adequate and vigorous

representation was sufficient to protect Mr. Smiths and Ms. Sperlazzas due

process rights and bind them to theMcCollinsdenial of class certification.

Appellants offer two objections to this finding of adequacy. They

complain that (a) the District Court did not make an express finding of adequacy in

the original opinion denying class certification inMcCollins, and (b) Mr.

McCollins did not move to reconsider or appeal the denial of class certification.

See Smith Br. at 33-35. Neither objection has merit.

InMcCollins, the adequacy of the putative class representative,

George McCollins, was litigated exhaustively. See Bayer App. at BA179-BA181,

BA292-BA298, BA313-BA315 (argument regarding the adequacy of Mr.

McCollins inMcCollins class certification briefing). The District Courts denial of

class certification assumed Mr. McCollins adequacy, and rested on a conclusion

of substantive law unrelated to the adequacy of the representation. See Smith Add.

at A07-A14. The adequacy of Mr. McCollins in seeking class certification was

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litigated in connection with Bayers motion for a permanent injunction. See Smith

App. at SA283-SA286, SA307, SA313-SA315 (argument regarding Mr.

McCollins adequacy in injunction briefing). The record fully supports the District

Courts conclusion that Mr. McCollins adequately represented absent class

members and that class counsel vigorously pursued certification of the class

claims. Smith Add. at A35; see also supra at Argument, Section II.A.

Appellants attempt to characterize the District Courts finding of

adequate representation as a post hocjudgment foreclosed by Chick Kam Choo,

486 U.S. at 148, but they mischaracterize the Supreme Courts decision. There,

the Court required that the claims or issues that the federal injunction insulates

from litigation in state court proceedings actually have been decided by the federal

court for the relitigation exception to apply. Here, the issue insulated by the

injunction the denial of certification of a West Virginia economic loss class

was decided in theMcCollins case. See Smith Add. at A01-A20. The District

Court did not engage in anypost hoc judgments as to the propriety of class

certification.

Moreover, the fact that Mr. McCollins did not move to reconsider or

appeal the District Courts denial of class certification did not render him

inadequate. A decision not to appeal this Courts previous order denying class

certification does not, in and of itself, render his representation inadequate. Smith

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Add. at A35 (citingBrown v. Ticor Title Ins., Co., 982 F.2d 386, 390-91 (9th Cir.

1992)). A putative representative is inadequate only where she or he has failed to

prosecute or defend the action with due diligence and reasonable prudence.

Brown, 982 F.2d at 390-91 (internal citation omitted). Appellants have not

identified any substantive deficiency in Mr. McCollins pursuit of class

certification, nor have they alleged that he failed to diligently prosecute the case.

Nor can appellants make any such allegations, since their recent motion for class

certification in Smith makes the same arguments Mr. McCollins pressed in his

case. See supra at Argument, Section II.A.

Because Mr. McCollins adequately represented the interests of Mr.

Smith and Ms. Sperlazza in seeking certification of a West Virginia economic loss

class, theMcCollins denial of class certification is binding in personam on

appellants. See In re Bridgestone/Firestone, 333 F.3d at 768-69.

2. The Adequacy of Representation Standard Fully Protects

The Interests of Absent Class Members in Class

Certification.

Appellants also contend that regardless of whether their interests

were adequately represented they cannot be bound by theMcCollinsdenial of

class certification. None of their arguments withstands examination.

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a. Appellants Cannot Evade theMcCollins Class

Certification Decision by Describing Themselves as

Nonparties.

Mr. Smith and Ms. Sperlazza assert that, as absent class members,

they are nonparties and strangers to theMcCollins class certification decision

and therefore cannot be bound by it. See Smith Br. at 28-33 (citingIn re Bayshore

Trucks Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006), andIn re General

Motors, 134 F.3d at 141, discussed above). However, the Supreme Court has

rejected this rigid approach. Most recently, inDevlin v. Scardelletti, 536 U.S. 1, 7-

10 (2002), the Supreme Court held that, because absent class members have an

interest in class-related decisions, they may appeal those decisions without first

intervening to obtain party status. The Supreme Court explained that context

determined the rights and obligations of absent class members:

Nonnamed class members, however, may be parties for some

reasons and not for others. The label party does not indicate anabsolute characteristic, but rather a conclusion about the applicabilityof various procedural rules that may differ based on context.

Id. at 9-10 (emphasis added). This pragmatic approach also allows absent class

members to benefit from the tolling of limitations periods during the pendency of

class actions, including the period before any ruling on class certification, even

though they are not nominal parties. See American Pipe & Construction Co. v.

Utah, 414 U.S. 538, 553-54 (1974); see alsoRedmond v. Moodys Investor

Service, 92 Civ. 9161, 1995 WL 276150, *2 (S.D.N.Y. May 10, 1995)

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(unpublished) (discovery of absent class members on class issues may be

permissible).14

TheIn re Bridgestone/Firestone courts conclusion that absent class

members can be bound by a decision denying class certification, when they have

been adequately represented, follows this well-established line of cases. 333 F.3d

at 768-69.15

Moreover, this reasoning is reflected in this Courts recognition that a

14See also 5 Newberg on Class Actions 16.01 (4th Ed.) (citing and cross-

referencing citations to cases, Absent class members are parties for purposes ofbeing bound by the judgment, receiving the benefit of the tolling of the statute oflimitations, meeting the venue requirements, and having standing to appeal fromdecisions and to object to and enforce settlements).

15 Appellants labor mightily to distinguishIn re Bridgestone/Firestone withouteffect. See Smith Br. at 29. First, as inIn re Bridgestone/Firestone, Mr.McCollins adequacy was litigated exhaustively. See supra at 35-36. Second, thefact that Mr. McCollins was represented by different counsel is not a material

difference betweenIn re Bridgestone/Firestone andMcCollins: the use of thesame counsel in itself is hardly dispositive of whether a close relationship exists.

Axcan Scandipharm Inc. v. Ethex Corp., 585 F. Supp. 2d 1067, 1080 n.16 (D.Minn. 2007) (internal citation omitted). Third, that the District Court inMcCollinswas a transferee court, as opposed to having original jurisdiction as inIn re

Bridgestone/Firestone, is a distinction without a difference. In a [multidistrictlitigation] action, the transferee judge has the same jurisdiction and power over thepretrial proceedings that the transferor judge would have in the absence of thetransfer. In re U.S. Office Prods. Co. Sec. Litig., 251 F. Supp. 2d 58, 64-65(D.D.C. 2003). Fourth, the pleading of a RICO claim inIn re

Bridgestone/Firestone did not control the holding in that case. The Seventh Circuitmade clear that its holding was not restricted to unnamed class members in RICOclaims. See In re Bridgestone/Firestone, 333 F.3d at 768 (identifying the broadlyapplicable right of an absent class member to seek review of a class certificationdecision as another way in which absent class members are treated as parties to aclass proceeding).

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district court . . . has the power, under Fed. R. Civ. P. 23 augmented by the All

Writs Act, to control conduct by absent class members that affects management or

disposition of the class action. In re Piper Funds, Inc., Institutional Govt Income

Portfolio Litig., 71 F.3d 298, 300 n.2 (8th Cir. 1995). These precedents all

support the conclusion that appellants cannot relitigate class certification simply

because they were not named parties inMcCollins.16

b. Due Process Does Not Impose Notice and Opt-Out

Requirements to Bind Absent Class Members to a

Judgment Denying Class Certification.

Appellants also argue that absent class members cannot be bound to a

class certification decision unless they first receive notice and the opportunity to

opt out. See Smith Br. at 37-40. Mr. Smith and Ms. Sperlazza are mistaken.

Myriad cases recognize that due process is flexible and depends on

context. See, e.g.,Putnam, 332 F.3d at 546-47. Procedural due process rights

depend not only on the nature of the right to be protected, but also on the burdens

16 In addition to applying an improper standard in determining the status of absentclass members,In re Bayshore andIn re General Motors are distinguishable from

McCollins. InIn re Bayshore, there was an express finding that the putative classrepresentative in the prior action did not adequately represent the class. 471 F.3dat 1245. InIn re General Motors, the Third Circuit remanded the prior action

because the district court had not adequately expressed the basis for classcertification. 134 F.3d at 139, 146. By contrast, inMcCollins, the District Courtassumed the adequacy of the putative representative in deciding the propriety ofclass certification (Smith Add. at A08), and made an express finding on Bayersmotion for an injunction that the putative representative had adequately andvigorously represented the interests of the absent class members for the purpose ofseeking class certification (Smith Add. at A35).

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that would come from providing greater levels of procedural protection. See

Matthews v. Eldridge, 424 U.S. 319, 334-35 (1976) (holding that due process

depends on a consideration of the right at issue, the risk of deprivation of that right,

and the burdens of extending greater protections).

Applying this reasoning, the Supreme Court held that notice and the

opportunity to opt-out is required to bind absent class members to a judgment that

adjudicates themerits of their claims. Shutts, 472 U.S. at 811-12. But the merits

of appellants claims are not at issue; the District Court enjoined Mr. Smith and

Ms. Sperlazza only from relitigating the preliminary question of class certification.

Appellants due process rights must be evaluated in this context. See Putnam, 332

F.3d at 546-47 (due process is contextual). Here, not only is a lesser interest at

issue than in Shutts, but as the Seventh Circuit observed a notice-and-opt-out

requirement would impose an unprecedented burden on the parties and on the

court. In re Bridgestone/Firestone, 333 F.3d at 769 (no statute or rule requires

notice, and an opportunity to opt out, before the certification decision is made; it is

a post-certification step). Such a burden would fall most heavily on putative class

representatives, who generally bear the costs of notice in a contested class action.

See, e.g., Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (The usual rule

is that a plaintiff must initially bear the cost of notice to the class).

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The adequacy of representation standard balances the competing

interests. It protects: the judicial systems interest in avoiding the burdens of

duplicative litigation; the defendants interest in not fighting again contests already

won; and plaintiffs interests by assuring that they will only be foreclosed from

relitigating class certification when as here their position has been fairly

represented by someone similarly situated. SeeAmchem, 521 U.S. at 625-26.

Accordingly, the adequacy of representation standard provides the process due in

this context.

Mr. Smith and Ms. Sperlazza assert that the full Shuttsrequirements

apply because denial of class certification is tantamount to dismissing low-value

claims on the merits. See Smith Br. at 40-42. However, the value of absent class

members claims is only one of many factors weighed in a class certification

decision; it does not trump all other competing interests. See, e.g., Sanneman v.

Chrysler Corp., 191 F.R.D. 441, 454-55 (E.D. Pa. 2000) (rejecting contention that

low value claims can supplant all other considerations in determining the propriety

of class certification). Moreover, appellants are not seriously suggesting that

notice and the opportunity to be heard be required before a court rules on class

certification. They did not provide notice before they sought class certification in

Smith.

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S. Ct. at 2178-80. Significantly, the Court explicitly carved out class actions,

stating, [r]epresentative suits with preclusive effect on nonparties include properly

conducted class actions. . . . Id. at 2172.

No virtual representation occurred here. Not only wasMcCollins

properly conducted as described above, appellants are enjoined only from

relitigating class certification and remain free to pursue their individual claims on

the merits. See Canady, 282 F.3d at 1018 (enjoining relitigation of class claims,

but noting the continuing viability of individual claims).

* * *

In sum, the District Court properly concluded, on the law and on the

facts, that the relitigation exception to the Anti-Injunction Act applied here and

permitted the Court to enjoin appellants from relitigating certification of a West

Virginia economic loss class. Because Mr. McCollins adequately represented

appellants interests when he argued for certification of the same class in the

District Court, Mr. Smith and Ms. Sperlazza are subject to the personal jurisdiction

of the District Court and are bound by theMcCollins certification decision.

III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN

ISSUING A PERMANENT INJUNCTION.

Finally,Mr. Smith and Ms. Sperlazza argue that the District Court

abused its discretion in enjoining them from relitigating class certification because

the claims of absent class members are small and can only be pursued through

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class litigation. Smith Br. at 40-42.17 In essence, appellants are claiming the right

to relitigate until they get a class certified.

Appellants have no such right. To the contrary, the relitigation

exception to the Anti-Injunction Act exists for the very purpose that appellants

now attempt to characterize as irreparable injury to prevent a party from

relitigating a federal judgment in another court, in the hope of getting a different

result. See 28 U.S.C. 2283. Mr. Smith and Ms. Sperlazza are making precisely

the heads-I-win, tails-you-lose argument that the Seventh Circuit rejected inIn

re Bridgestone/Firestone:

Section 2283 permits a federal court to issue an injunction that willstop [serial efforts to certify the same class] in its tracks and hold bothsides to a fully litigated outcome, rather than perpetuating anasymmetric system in which class counsel can win but never lose.

333 F.3d at 767. This Court adopted the same reasoning in Canady andIn re Piper

Aircraft. SeeCanady, 282 F.3d at 1018 (What appellants may not do is recycle

the same claims and issues in different courts, hoping to achieve the result they

desire);In re Piper Aircraft, 551 F.2d at 219 (plaintiffs ought not to have

unlimited bites at the apple seeking certification of a class).

17 As described above,McCollins rejected the argument that the small size ofeconomic loss claims supported certification of the putative class where the otherrequirements for class certification were missing. See Smith Add. at A13-A14; seealso supra at 4.

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The injunction issued here plainly fell within the scope of the District

Courts discretion. The District Court carefully considered all of the factors

necessary for issuance of an injunction and concluded that Bayer had established

each of those factors.

More specifically, the Court concluded that Bayer had established

success on the merits by demonstrating that theMcCollins order was entitled to

preclusive effect. See Smith Add. at A37. In finding that Bayer had demonstrated

irreparable injury, the District Court quoted this Courts holding in Canady that a

party suffers irreparable harm when it is required to relitigate . . . issues previously

decided in a federal court. See id. (quoting Canady, 282 F.3d at 1020). The

District Court also quoted Canady in concluding that the balance of harms favored

issuance of an injunction because [t]he deprivation of an opportunity to pursue the

same issues in [another] forum does not constitute a legitimate harm. Id. (quoting

Canady, 282 F.3d at 1020). Finally, the District Court determined that the public

interest favored issuance of an injunction to promote judicial economy and protect

against duplicative litigation. See id. at A38 (citingIn re SDDS, Inc., 97 F.3d

1030, 1041 (8th Cir. 1996)). The District Court then carefully tailored the

injunction, barring Mr. Smith and Ms. Sperlazza only from relitigating the West

Virginia economic loss class; neither they nor any other member of theMcCollins

putative class was enjoined from pursuing individual claims. See id. Thus,

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issuance of the injunction was a proper exercise of the District Courts discretion

and fully consistent with the precedents of this Court.

In enjoining Mr. Smith and Ms. Sperlazza, the District Court

recognized that issuance of such an injunction is an extraordinary remedy and that

such injunctions should be granted sparingly. See id. at A36-A37. The injunction

here arises from unusual circumstances unlikely to recur. Putative class actions

like Smithnow can be removed to federal court (see Class Action Fairness Act of

2005, Pub. L. No. 109-2, 119 Stat. 4), dramatically reducing the risk of duplicative

litigation. Moreover, state court plaintiffs generally do not wait until seven years

into litigation when the overwhelming majority of cases ha

Interplay 131328-Appellee Brief

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