Petitioners Reply Brief — Diamond Shamrock Chemicals Co. v. Ryan

- Supreme

PILED

No. 83-1174

ALEXANDER \ STEVAS

IN THE :; -

Supreme Court of the United States

OCTOBER TERM, 1983

DIAMOND SHAMROCK CHEMICALS

COMPANY, et al.,

Petitioners,

Vv.

MICHAEL F. RYAN, et al.,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE SECOND CIRCUIT

REPLY BRIEF FOR PETITIONERS

WENDELL B. ALCORN, JR.

GeorGE D. REYCRAFT

One Wall Street

New York, New York 10005

(212) 908-7000

Attorneys for Petitioners

Diamond Shamrock Chemicals

Company, The Dow Chemical

Company, Hercules Incorporated,

Monsanto Company,

T H Agriculture & Nutrition

Company, Inc.

Of Counsel:

CADWALADER, WICKERSHAM & TAFT

Attorneys for Diamond Shamrock Chemicals Company

One Wall Street

New York, New York 10005

RIVKIN, LEFF, SHERMAN & RADLER

Attorneys for The Dow Chemical Company

100 Garden City Plaza

Garden City, New York 11530

KELLEY DRYE & WARREN

Attorneys for Hercules Incorporated

101 Park Avenue

New York, New York 10178

TOWNLEY & UPDIKE

Attorneys for Monsanto Company

405 Lexington Avenue

New York, New York 10017

CLARK, GAGLIARDI & MILLER

Attorneys for T H Agriculture & Nutrition Company

The Inns of Court

99 Court Street

White Plains, New York 10601

TABLE OF CONTENTS

SR TES NP aa Ag Pr eC

ARGUMENT:

The Importance of the Questions Presented

and the Clear Usurpation of Power by the Dis-

trict Court Require Review at This Time .....

a ee a a

nee eee ee ee eee

TABLE OF AUTHORITIES

Cases

Beacon Theatres, Inc. v. Westover, 359 U.S. 500

ae hae oe ee thc kh booed ee ake

Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962)..

Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3

SS Ee Pe re ee eee ee ee

Eisen v. Carlisle & Jacqueline, 417 U.S. 156

TT cra Ak ae adn ogre ie wo Ae bo 6s. k eS

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)

Gasoline Products Co., v. Champlin Refining Co.,

RO) ae rere ree eee

Illinois v. City of Milwaukee, 406 U.S. 91 (1972)

In re Air Crash Disaster Near Saigon, South Viet-

nam on April 4, 1975, 476 F. Supp. 521 (D.D.C.

eae dee wh A wee kk SA a ae ak

In re Paris Air Crash of March 3, 1974, 399 F.

ge Bet Bo Ee, | rr re

PAGE

ARI

tN

~

Ivy Broadcasting Co., vy. American Telephone and

Telegraph Co., 391 F.2d 486 (2d Cir. 1968) ..

Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S.

S67 (C1961) . cwcccccecsdcuctenaeeesee

La Buy v. Howes Leather Co., 352 U.S. 249

CHGS) occ ccuncdéccauwneee ee aan

Los Angeles Brush Manufacturing Corp. v. James,

2i2 US. Tet CESS) .cevuses eee

McCullough v. Cosgrave, 309 U.S. 634 (1940) ..

Schlagenhauf v. Holder, 379 U.S. 104 (1964) ...

Snyder Vv. Harris, 394 U.S. 332 (1969) .........

Sony Corporation of America v. Universal City

Studios, Inc., US. , 52 U.S.L.W. 4090

(No. 81-1667, Jam. 17, EGGS) <4 cnceedes ros

Thermtron Products, Inc. v. Hermansdorfer, 423

U.S. 396 CIGTS) «. 0 cvs cueeeeeeeeeeee

World-Wide Volkswagen Corp. Vv. Woodson, 444

U.S. 206 (ISEB) oo. ccdenchaeen eee

Constitutional Provision

US. Const. Amend. Vil ..é<aneeeeeees uae

Statutes and Rules

28 U.S.C. (1976)

PAGE

IN THE

Supreme Court of the United States

October Term, 1983

DIAMOND SHAMROCK CHEMICALS COMPANY, ef al.,

Petitioners,

Vv.

MICHAEL F. RYAN, et al.,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE SECOND CIRCUIT

»

v

REPLY BRIEF FOR PETITIONERS

The district court’s ambitious, but legally unsupportable,

efforts to transform these actions into a single class adjudi-

cation will ultimately fail because of the clear impropriety

of its choice of controlling legal precepts. Indeed, the court

created new law and manipulated the Federal Rules in

order to conduct a trial never before countenanced in the

federal system. Review by this Court is necessary now. The

parties and the public should not be forced to endure years

of useless litigation, during which time claims will be with-

held and millions of dollars wasted each month by the

parties in the mistaken belief that Judge Weinstein’s ruling

is valid. The public will be ill-served when, several years

hence, the entire body of “Agent Orange” cases must be

retried to correct the glaring errors raised by this petition.

2

ARGUMENT

The Importance of the Questions Presented and

the Clear Usurpation of Power by the District Court

Require Review at This Time.

The importance of the questions presented has not been

denied. The basic argument advanced by respondents is

that review at this stage in the proceedings would be pre-

mature (Resp. Br. at 6-7).* That assertion, however, should

not deflect the Court’s attention from the important issues

presented by the petition concerning the illegality of the

unwarranted exercise of power by the district court. Review

after trial and appeal will be unable to correct the travesty

that is being worked not only on petitioners but also on

the thousands of absent Australian, New Zealand, and

American veterans (and their families) who may claim

personal injuries related to exposure to Agent Orange and

the other herbicides utilized by the United States Armed

Forces in Southeast Asia during the period 1961 to 1972.

This Court has not hesitated, under like circumstances,

to review denials of extraordinary writs. See, e.g., World-

Wide Volkswagen Corp. ¥. Woodson, 444 U.S. 286

(1980); Thermtron Products, Inc. vy. Hermansdorfer, 423

U.S. 336 (1976); Schlagenhauf v. Holder, 379 U.S. 104

(1964); Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962);

Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959);

La Buy v. Howes Leather Co., 352 U.S. 249 (1957).

It has not refrained from reviewing at a preliminary stage

the propriety of striking jury demands, Dairy Queen, supra;

Beacon Theatres, supra, or denying a motion to dismiss for

lack of personal jurisdiction, World-Wide Volkswagen

* References (“Resp. Br. at —”) are to the Brief in Opposition;

references (“A—”) are to the Appendix to the Petition for Writ of

Certiorari; references (“—a’) are to the Appendix to the Brief

in Opposition.

Corp., supra, or ordering a party to submit to a physical

and mental examination, Schlagenhauf, supra, or referring

a matter to a special master, Los Angeles Brush Manufac-

turing Corp. V. James, 272 U.S. 701 (1927), or remanding

a case to a state court for trial because of federal-court

congestion, Thermtron Products, supra. A special willing-

ness has been shown to correct misapplication of the Fed-

eral Rules before trial in precedent-setting situations. See,

e.g., Schlagenhauf, supra, 379 U.S. at 112; Los Angeles

Brush, supra, 272 U.S. at 706 (“where the subject concerns

the enforcement of the . . . Rules which by law it is the

duty of this Court to formulate and put in force .. . it may

... deal directly with the District Court... .”); McCullough

v. Cosgrave, 309 U.S. 634 (1940).

Respondents seem to urge that because of the size, com-

plexity and “particular needs of this litigation,” the district

judge has unlimited latitude in fashioning a class action

(Resp. Br. at 6, 9-10). To the contrary, however, the

district court has patently exceeded its lawful power by

attempting to resolve each of the cases transferred to it

under 28 U.S.C. § 1407 for pretrial supervision in a single,

international, personal injury class action. Common ques-

tion, which fall far short of the predominance required by

Rule 23(b)(3), are being fabricated by the court. The

district court candidly acknowledged that its two primary

purposes in certifying these proceedings as a single class

action were to encourage settlement and to try to involve

the Executive Branch and Congress in an attempted resolu-

tion of this complex controversy (A9-A10). The conclu-

sion of certification was first assumed without analysis.

From that assumption, every precondition—typicality com-

monality, notice, adequacy of representation, and choice

of law—was rationalized retrospectively. Judge Weinstein’s

zeal to create an unprecedented case control mechanism

by distorting Rule 23 beyond its intended limits violates

4

Federalism and constitutes a blatant usurpation of the power

of Congress and of this Court to formulate the guidelines

that govern federal procedure.

Respondents naively and incorrectly contend that the

contemplated trial will have a final and binding effect on

all class members (Resp. Br. at 13). With respect to those

persons who do not call or write to receive individual notice,

it is extremely unclear what effect, if any, a verdict would

have. Rather than attempting to rebut petitioners’ point

that proper notice will not be provided to all absent class

members, respondents’ Kavenagh Affidavit merely indicates

that individual notice would entail a measure of effort and

expense greater than respondents are willing to undertake

(Resp. Br. at 54a-62a). It does not support respondents’

contention that individual notice is unreasonable. Their

spurious argument fails utterly in light of this Court’s hold-

ing in Eisen v. Carlisle & Jacqueline, 417 U.S. 156 (1974),

where the individual claims amounted to only $70 and

where the preparation of notice to the class required ex-

amination of information contained in voluminous records

eight to twelve years old. The “unambiguous requirement

of Rule 23” of “individual notice to identifiable class mem-

bers,” id. at 176, unequivocally can not be suspended where

the individual claims of the veterans and their _amilies

are so substantial. The rights of the absent class members

are not protected, and thus the right of petitioners to a deter-

mination that satisfies due process requirements and is

binding is undeniably compromised.

Respondents would have this Court assume that all per-

sons in the defined class will ultimately receive individual

notice under the two-step media solicitation plan (Resp. Br.

at 20-21). At best, no more than a very small percentage

of putative class members (all Vietnam veterans and their

families) will ever receive written notice. For example,

no provision for any individual notice has been made for

putative Australian and New Zealand class members. How

can the district court, consistent with due process, then

purport to bind all absent class members? The readily ap-

parent answer is that it can not. Where, as here, there is

no assurance that even a bare majority of potential claim-

ants will receive actual notice, no legal rationale for certi-

fication exists.

The purported trial in these proceedings is unlikely to

be finally dispositive of the litigation, despite the apparent

wishes of Judge Weinstein to the contrary (A14-A16). It

is unrealistic to assume that, for example, a state court

would dismiss a complaint brought several years from now

by a veteran alleging personal injuries from exposure to

Agent Orange, who never received legally sufficient notice

of the instant proceedings. That state court, faced with

such a claim in the future, would in all probability allow

inquiry into such collateral matters as sufficiency of notice

and the correctness of the predictions of “national consensus

law” as compared to the reality of the substantive law of

the forum state. Furthermore, the lack of due process would

similarly render any settlement at this time incomplete

and, therefore, improbable (A10).

Turning to the preconditions set out in Rule 23, respond-

ents argue that the district court’s certification was justified

by certain issues which they deem common and predominat-

ing (Resp. Br. at 14-16). However, the questions of “gen-

eral causation,” duty to warn, negligence, the government

contract defense, and misuse are not in fact common to

the class. “General causation”, for example, simply can

not be common because a plethora of diseases and symp-

toms of multifarious origins are alleged by respondents.*

*In response to interrogatories propounded by petitioners, re-

spondents allege that they, individually or as a class, suffer from

146 disparate diseases and symptoms. See Appendix to this Brief,

infra.

In addition, Judge Weinstein’s proposed trial of “general

causation” would unconstitutionally shift the burden of

proof to defendants on an issue of liability. Respondents

attempt to disguise this effect by suggesting that defendants

should be anxious to prove lack of causation in order to

preclude further litigation (Resp. Br. at 13). But the

practical impossibility of proving a negative—that Agent

Orange could not have caused, under any circumstances, the

types of myriad ailments and symptoms of which respond-

ents complain—violates petitioners’ due process rights by,

in effect, making causation an affirmative defense.

The “general causation” trial advocated by respondents,

and adopted by Judge Weinstein, also raises serious concerns

relating to the impermissible bifurcation of issues. Trying

“general causation” separately will necessarily obstruct sub-

sequent triers of fact when they are asked to determine

proximate cause in a coherent and unbiased manner. Fur-

thermore, a verdict limited to “general causation” will not

answer the question of specific cause and, therefore, can not

dispose of the ultimate issue of liability. Causation is an

indivisible issue that may not be fragmented into hypotheti-

cals and specifics and presented to different juries. Judge

Weinstein’s attempt to do so is inconsistent with the effi-

cient allocation of judicial resources and is violative of the

Seventh Amendment. See Gasoline Products Co. v. Champ-

lin Refining Co., 283 U.S. 494, 500 (1931).

Moreover, each of the issues must properly be tried under

the substantive laws of the various states, and not under

the “national consensus” federal common law standard that

has been formulated below.* Judge Weinstein’s “national

consensus” determination directly conflicts with important

decisions of this Court involving the proper deference to

* Judge Weinstein’s opinion on “national consensus law” appears

in the Appendix to the Brief in Opposition at 9a-53a.

be afforded to the states by federal courts. Day & Zimmer-

man, Inc. v. Challoner, 423 U.S. 3 (1975). Jurisdiction

here is based on diversity of citizenship, which a fortiori

entails the adjudication of state-created rights and duties

(13a). Judge Weinstein is not permitted to misapply

Rule 23 opportunistically in order to modify the various

states’ laws, merely because he perceives these actions

as constituting a single, large and complex litigation. Where

state laws differ, class certification can not supply uniform-

ity. See 28 U.S.C. § 2072 (1976); Snyder v. Harris, 394

U.S. 332, 337-38 (1969). As this Court stated in Klaxon

Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496

(1941):

Whatever lack of uniformity this may produce be-

tween federal courts in different states is attributable

to our federal system, which leaves to a state, within

the limits permitted by the Constitution, the right

to pursue local policies diverging from those of its

neighbors. It is not for the federal courts to thwart

such local policies by enforcing an independent

“general law” .

See also Erie Railroad Co. v. Tompkins, 304 U.S. 64

(1938).

Only Congress or, interstitially, the federal courts when

interpreting the Constitution or a federal statute, can create

a substantive federal rule of decision. A single federal court

has no power to manipulate various choice of law rules to

create federal common law. It is one thing to say a federal

court’s function sitting in diversity is to predict how a state

court would rule if presented with certain facts. It is

another for Judge Weinstein to displace in one fell swoop

all existing state laws of manufacturers’ liability and an-

nounce a “national consensus” federal common law in order

to create “common” questions sufficient to permit class

certification.

Judge Weinstein must not be allowed to ignore with

impunity the principles underlying Erie and Klaxon by ap-

plying his federal rule of decision under the guise of state

law. Nor should his delusive distinction between federal

common law as applied under 28 U.S.C. § 1331 and 28

U.S.C. § 1332 be allowed to stand (22a-25a). If the dis-

positive issues of a claim require application of federal

common law, then the claim “arises under” Section 1331.

Illinois vy. City of Milwaukee, 406 U.S. 91, 99 (1972);

Ivy Broadcasting Co. v. American Telephone and Tele-

graph Co., 391 F.2d 486, 492 (2d Cir. 1968).

Judge Weinstein’s reliance on Jn re Air Crash Disaster

Near Saigon, South Vietnam on April 4, 1975, 476 F. Supp.

521 (D.D.C. 1979), and Jn re Paris Air Crash of March 3,

1974, 399 F. Supp. 732 (C.D. Cal. 1975), in applying

federal common law is misplaced and only highlights the

gross error of the class certification (47a-50a). Claims aris-

ing from an airplane crash—a single, discrete occurrence

—do not present the myriad individual causation issues in-

volved in determining the etiology of the broad spectrum of

diseases and symptoms allegedly caused by exposure to

Agent Orange or other herbicides more than a decade ago.

Even so, the air crash cases were not class actions, and in

In re Paris Air Crash, liability was not even in issue. Judge

Weinstein’s assertion concerning In re Air Crash Near

Saigon that “District of Columbia law was really only a

surrogate for a national substantive law of liability” is

simply unfounded (48a).

Just as class certification can not supply uniformity in

state law, neither may federal judicial fiat. The district court

purports to predict that the highest court of every state

would simultaneously adopt identical sustantive principles

in the context of this litigation. The district court states

flatly that “so far as can reasonably be predicted, . . . each

state would probably apply the same law, that is to say either

federal or national common law” (15a) (emphasis added).

That conclusion, respondents argue, is correct and ensures

that their list of “common issues” are fully common, be-

cause the laws of each of the states and territories are trans-

formed into one monolithic body of law (Resp. Br. at 16-

17).* Based on that incredibly oversimplified assumption,

Judge Weinstein attempts to enact for all jurisdictions

a uniform law of products liability (21a). It is not Judge

Weinstein’s prerogative to apply laws that have not yet

been written. Sony Corporation of America v. Universal

City Studios, Inc., US. , 52 U.S.L.W. 4090,

4100 (No. 81-1687, Jan. 17, 1984).

By casting aside such relevant considerations as plaintiffs’

residences and the states where defendants are incorporated

or do business, Judge Weinstein improperly concludes that

“national consensus law” must apply because “those [states’]

contacts are dwarfed by the national contacts ....” (46a-

47a). To the contrary, the state contacts in each individual

case are most significant. The court’s class certification

maneuver serves merely to mask the substantial state in-

terests present, and tends to camouflage the absence of

proper venue in the Eastern District of New York and the

lack of diversity jurisdiction in a number of the actions.

See World-Wide Volkswagen Corp., supra.

* Respondents concede that even application of “national con-

sensus law” may not eliminate all variations among state law, and

suggest that subclasses be used in those areas where “minor variations”

occur (Resp. Br. at 17). However, Judge Weinstein repeatedly has

stated that subclasses will not be employed. As his order clearly in-

dicates, Judge Weinstein is convinced that subclasses will not be

required because “all the transferor states would look to the same

substantive law for the rule of decision on the critical substantive

issues” (13a).

10

This Court should grant review. Never before has

any court of appeals permitted even a nationwide class

action to be brought under diversity jurisdiction. The

inherent differences in various states’ laws and the guiding

principle of Federalism have precluded such a result. Never

before has any court of appeals permitted certification

of a mass products liability class action. The non-existence

of legitimate common questions that predominate has been

uniformly viewed as conclusive. Yet here the district court

has certified an international, personal injury, products

liability class action under diversity jurisdiction.

The questions raised by this petition are ripe for review.

Conclusion

Petitioners respectfully pray that a writ of certiorari be

granted to review the judgment of the Court of Appeals for

the Second Circuit.

Dated: February 11, 1984

Respectfully submitted,

WENDELL B. ALCORN, Jr.

GEORGE D. REYCRAFT

One Wall Street

New York, New York 10005

(212) 908-7000

Attorneys for Petitioners

APPENDIX

The following lists the diseases and symptoms respond-

ents allege were caused by exposure to Agent Orange and

other herbicides:

Abdominal bleeding, Abdominal mass (excised),

Abdominal pain, Abnormal cell proliferation, Anemia,

Angiosarcoma, Anorexia, Asthenia, Atherosclerosis,

Basal cell carcinoma, Bladder sphincter dyssynergia,

Blepharoconjunctivitis, Bowel Incontinence, Carbo-

hydrate metabolism disorders, Cardiovascular disor-

ders, Cellular atrophy, Change in urine color, Chest

pains, Chloracne, Cholangiocarcinoma, Chronic lym-

phocytic leukemia, Cysts, Dark and bloody stools,

Decrease in IgM & IgD, Decrease in B-cell & T-cell

capabilities, Decreased cell proliferation, Diabetic

states, Diarrhea, Disanthenia, Dramatic change in

bowel habits, Elevated blood lipid levels, Elevated red

blood count, Elevation of eosinophil, Fat metabolism

disorders, Fatigue, Fibrosarcoma, Fibrosarcomatous

mesothelioma, Fibrosis of the lung, Fibrous histiocy-

toma, Gastrointestinal disorders, Genetic defects,

Glandular swelling, Headaches, Hearing Impairment,

Hepatoma, High blood pressure, Hirsutism, Hyper-

keratosis, Hyperpigmentation, Hypertension, Immune

system disturbances, Inability to swallow, Increased

cholestrol, Increased frequency of urination, Increased

white cell count, Insomnia, Internuclear ataxia, Inter-

nuclear opthalmoplegia, Intolerance to cold, Irritated

eyes, Ischemic heart disease, Itching, Leiomyosar-

coma, Leukemia, Liver damage, Loss of appetite, Loss

of libido, Loss of lymphoid tissue, Loss of sensory

feelings, Loss of strength, Loss of thymus tissue, Low

blood pressure, Lower back pain, Lymphoma, Marked

2a

Appendix

left lateral nystagmus, Marked sensory ataxia, Mis-

carriages, Multiple sclerosis, Muscle aches, Muscle

tightening, Myocardial infarction, Myofibrosarcoma,

Nausea, Needle-like pains, Neurasthenia, Neurofibro-

sarcoma, Neurological deficits, Night sweats, Organ

enlargements, Orthostatic hypotension, Pancreatic

dysfunction, Paraplegia, Peripheral neuropathy, Poly-

neuropathy, Porphyria, Porphyria cutanea tarda,

Pounding in chest, Prostate enlargement, Pulmonary

pathologies, Quadriplegia (low level), Rhabdomyo-

sarcoma, Rectal bleeding, Rectum prolapsement, Re-

current fever, Renal disorders, Respiratory disorder,

Retroperitoneal neurogenic sarcoma, Right foot drop,

Sacral decubiti, Scalp tumors, Seizures, Severe dip-

lopia, Shingles, Sight impairment, Sinus problems,

Skin infections, Skin rashes, Slowing of nerve impulses,

Smell impairment, Sore throat, Spastic colon, Speech

impediment, Stomach cramps, Taste impairment,

Tumors, Ulcer (left ischial), Unnatural aging of nails,

Urinary tract disorders, Various psychobehavioral dis-

orders, Vomiting, Weakness in extremities, Weight

loss, and the following other types of cancers: Bladder,

Brain, Colon, Gastrointestinal, Glandular, Hard pa-

late, Liver, Lung, Mouth, Stomach, Testicular, Thy-

roid, Tongue.