Class action denial not binding on other claimants

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A denial of class certification in one case is not binding on others seeking certification of the same class.

In so holding, the U.S. Supreme Court overruled 7th Circuit precedent borne out of concern that the same attorney can keep proposing the same class action, but with different plaintiffs named in the caption.

The law in the 7th Circuit has long been that unnamed putative class members are in privity with the parties in the prior action, and thus, the denial of class certification in the first action bars the second suit. In re Bridgestone/Firestone, Inc. Tires Prods. Liability Litigation, 333 F.3d 763 (7th Cir. 2003).

The 7th Circuit most recently invoked Bridgestone in a proposed class action alleging that Sears engaged in misrepresentation by advertising a clothes dryer as “stainless steel,” when the drum was not entirely made of stainless steel.

After the 7th Circuit had decertified the class, 547 F.3d 742 (7th Cir. 2008), the plaintiffs’ attorney filed a suit in California federal court making the same claims, but with a different named plaintiff.

Sears then sought an injunction against the California lawsuit in the Illinois district court in which the first case was filed. The district court denied the injunction, but the 7th Circuit reversed, citing Bridgestone, and ordered that it be issued. Thorogood v. Sears, 624 F.3d 842 (7th Cir. 2010).

A month later, it denied the plaintiff’s petition for rehearing, but acknowledged, “Our opinion notes … the possibility that the merits decision in Smith v. Bayer, when it is issued, may warrant modification of the injunction that we have ordered.” Thorogood v. Sears, 627 F.3d 289, 290 (7th Cir. 2010).

On June 16, that came to pass, as the Supreme Court issued its decision, rejecting the 7th Circuit’s approach.

In the Supreme Court case, a West Virginia resident named George McCollins had sued Bayer Corp., alleging that a drug it manufactured called Baycol was hazardous. A month later, another West Virginia resident named Keith Smith filed a similar claim. Neither plaintiff knew the other.

The suit by McCollins was removed to federal court, while Smith’s remained in state court.

After the federal court denied certification of McCollins’ proposed class, it enjoined Smith from seeking class certification in his case. The 8th Circuit affirmed. In re Baycol Prods. Litigation, 593 F.3d 716 (8th Cir. 2010).

The U.S. Supreme Court reversed in an opinion by Justice Elena Kagan.

The court held, “The definition of the term ‘party’ can on no account be stretched so far as to cover a person like Smith, whom the plaintiff in a lawsuit was denied leave to represent.”

The court acknowledged the 7th Circuit’s concerns in Bridgestone and Thorogood: that class counsel can repeatedly try to certify the same class merely by changing the named plaintiff in the caption.

But the court found this concern insufficient to overcome the rule prohibiting the invocation of issue preclusion against nonparties. Reversing, the court concluded, “the mere proposal of a class in the federal action could not bind persons who were not parties there.”

David Ziemer can be reached at [email protected].

What the court held

Case: Smith v. Bayer Corp., No. 09-1205

Issues: Does a denial of class certification in one case permit an injunction against certification in another case?

Holdings: No, nonparties cannot be bound by the denial of class certification.