Amicus Curiae Brief — Free v. Abbott Laboratories, Inc.

Jan 13 Qeve

~

No. 99-391

In The

Supreme Court of the United States

+

ROBIN FREE AND RENEE FREE,

Petitioners,

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB

COMPANY AND MEAD-JOHNSON & COMPANY,

Respondents.

e

On Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

S

BRIEF OF THE STATE OF LOUISIANA

AS AMICUS CURIAE

IN SUPPORT OF PETITIONERS

*

JANE BisHoP JOHNSON

Counsel of Record

Louisiana Department of Justice

301 Main Street, Suite 1250

Baton Rouge, LA 70801

(225) 342-2754

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 42-2831

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

See Gr GOs 6. 005 cee whee Vins éavcccicees i

STATEMENT OF AMICUS INTEREST.............. 1

SUMMARY OF ARGUMENT..................0005- 3

PEE 86s donk zncnsdivesvexdutedé ecdsarinss ws 3

BACKGROUND PROBLEMS WHICH PERVADE

Be EE bcv os cow ekcuseeoopenseusceuunesesces 4

A. No federal original jurisdiction exists in this mat-

ter; therefore no supplementary jurisdiction

GED. nok cin cavic deed octntsepensuvesesssouesies 5

1. Failure to certify a class before removal, Art.

III considerations and before reaching the

merits are fatal to these decisions.......... 5

2. This case could not have been filed originally

in federal court under federal principles of

DF nc kwsbdnetecbsncseeckstntdercth cécptesss 7

B. 28 USCA 1367 does not overrule Zahn or any

other principle of federal law. Indeed, to find

federal jurisdiction in the case, the court was

required to overrule many more principles of law

than just those found in Zahn ................. 14

1. Interpreting a Congressional statute contrary to

Congressional intent is an ultra vires act ..... 14

2. Principles of comity and federalism should

have prevented the lower federal courts from

seizing jurisdiction and collaterally overrul-

Roe LAER BOE. occ cvcccnvescivesvssenes 17

C. The Fifth Circuit’s Determination of State Law

was Erroneous on Federal as Well as State

NN ik. Can caeckb obs aetibcewasecbeueibess 19

ii

TABLE OF CONTENTS - Continued

Page

1. Erroneousness based on federal grounds... 19

2. Erroneousness based on state grounds ..... 21

CONCLUSION .....--scccccceccccceccccccsccceeees 26

APPENDIX .......---ccccccccccccccsccccececeeenees la

iii

TABLE OF AUTHORITIES

Page

Cases:

Albernaz v. U.S., 450 U.S. 333, 101 S.Ct. 1137, 67

SE EP MEE che daccodesbedddspesicsocoesecs 15

Alyeska Pipeline Service Co. v. Wilderness Society,

421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975)..... 8

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 117

S.Ct. 2231, 138 L.Ed.2d 689 (1997) .......... 6, 13, 15

Arizonans for Official English v. Arizona, 520 U.S.

43, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997)......... 12

Bernhardt v. Polygraphic Co. of America, Inc., 350

U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199 (1956) ..... 2, 21

— Co. v. Van Gemert, 444 U.S. 472, 100 S.Ct.

745,

Ge Re GD Cc cre ccc ccctscccccccccccs 8

California v. ARC America Corp., 409 U.S. 93, 109

S.Ct. 1661, 104 L.Ed.2d 86 (1989)........ 1, 19, 20, 21

Cannon v. University of Chicago, 441 U.S. 677, 99

S.Ct. 1946, 60 L.Ed.2d 560 (1979)...........000005. 15

Carden v. Arkoma Assocs., 494 U.S. 185, 110 S.Ct.

BOER, B68 L.BGOe UST (ISTE)... ccccccccccccccces 7, 16

Caterpillar v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 136

RY SEES cehiccdseccbocdccdhcvevcecccnce 6, 8

City of Chicago v. International College of Su '

22 U.S. 156, 118 S.Ct. 523, 139 L.Ed.2d 525

cadanabdedehe beneddscébeccccacsddcccesccs 8, 18

Comm-Care Corp. v Bishop, 696 So.2d 969 (La. 1997) ..... 9

ey Lighting, Inc. v. State of Missouri, 342 U.S.

1, 72 S.Ct. 405, 98 L.Ed. 469 (1952) .......... 14, 20

iv

TABLE OF AUTHORITIES - Continued

Page

Dumas v. Angus, 635 So.2d 446 (La. App. 2nd Cir.

BIDR. cccccccdvccccccesscccccesscpocéscvcsesscssense 4

Erie v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed.

BORD Gece cccccccesecncececceces 1, 2, 4, 11, 14, 21

Ford v. Murphy Oil USA, Inc., 703 So.2d 542 (La.

BO oc cckccdescdcccccevedocsdancessecusenscscocens 4

Gasperini v. Center for Humanities, Inc., 518 U.S.

415, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996)........ 13

Georgia v. Penn. R. Co., 324 U.S. 439, 65 S.Ct. 716,

OD LG. BEBE (IDG ac cccccccccesesessencsccescccss 2

Griswold v. State of Connecticut, 381 U.S. 479, 85

S.Ct. 1678, 14 L.Ed.2d 510 (1965)............... 14, 20

Guaranty Trust Co. of New York v. York, 326 U.S. 99,

65 S.Ct. 1464, 89 L.Ed. 2079 (1945).............. 2, 21

Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14

LIGDS © CUBED... ccccccccccccccesesévcsocccess 11, 12

Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 78 L.Ed.

BSED CIGBE) .. cn cccccceccevscsccccccccccesccesscvess 11

Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 81

S.Ct. 1570, 6 L.Ed.2d 890 (1961)...............545. 11

In re Gas Water Heater Prods. Liab. Litig., 711 So.2d

SEE GLa. BGGED ow ccccccccccccccccescvesevccesens 24, 25

Jenkins v. Waste Management of Louisiana, Inc., 709

So.2d 848 (La. App. 3rd Cir. 1998), writ denied,

Dian 2B, BBB... ccccccccccccccccccccesctsewevccees 24

Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494

U.S. 827, 110 S.Ct. 1570, 108 L.Ed.2d 842 (1990) .... 11

Keith v. United States Fidelity & Guaranty Co., 694

Sadd 169 Ga. BGG) oc iscedccdcccccsvsccovcteseses 10

Vv

TABLE OF AUTHORITIES - Continued

Page

Kellis v. Foster, 523 So.2d 846 (La. 1988).............. y

Landgraf v. USI Film Products, 511 U.S. 244, 114

S.Ct. 1483, 128 L.Ed.2d 229 (1994) ................ 10

LP&L v. United Gas Pipe Line Co., 493 So.2d 1149

Caeh, TR anus caddncéavacubbadddsecacevewas 2, 22, 23

Martin v. Hadix, 119 S.Ct. 1998, 144 L.Ed.2d 347

NP n opccsessecegisscidudcckesivheoastheceteseone 10

Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7,

SD Cee BH GU 0 0s desccdduccbstdnecadesibctotense 9

Mt. Healthy City School District Board of Education

v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d

GDS Ges ds svenchosvescccddesctoscsudbatdane sess 13

New Orleans v. Duke, 427 U.S. 297, 96 S.Ct. 2513, 49

es ED GUN She cocendcumieusetnstdsdsecctes 14

Ortiz v. Fibreboard Corp., 119 S.Ct. 2295, 144

Se FO GUE 6 hac cb ncbevedesscosbesdecceceps 6

Quackenbush v. Allstate Ins. Co., 517 U.S. 707, 116

S.Ct. 1712, 135 L.Ed.2d 1 (1996). ............0c00e: 18

Ruhrgas Ag v. Marathon Oil Company, 526 U.S. 574,

119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ..... 12, 15, 22

Salve Regina College v. Russell, 499 U.S. 225, 111

S.Ct. 1217, 113 L.Ed.2d 190 (1991) ................. 9

Segura v. Frank, 630 So.2d 714 (La. 1994)............ 10

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61

S.Ct. 868, 85 L.Ed. 1214 (1941)............ 0.0 eees 11

Shelton v. Chrysler First Financial Services Corp., 676

SODE SEE CHIGEP so vc ccccascosdsavescdcocedvbetsecsts 9

vi

TABLE OF AUTHORITIES - Continued

Page

Snapp v. Puerto Rico, 486 U.S. 592, 102 S.Ct. 3260,

7S LB DS GES CHGERD. «cc ccccscscccccccesccccces 2, 20

State v. American Sugar Refining Co., 138 La. 1005,

ae Se £2 POP eee 2, 24

State v. Bordens, Inc., 684 So.2d 1024 (La. App. 4th

Ge BODE ccccccccccescccccsscceescsedescoseseesss 18

State, ex rel. leyoub v. Brunswick Bowling and Bil-

liards Dover, Inc., 665 So.2d 520 (La. App. 5th

Cir. 1995) writ denied, 667 So.2d 1053 (1996)..... 2, 23

State v. Classic SoftTrim Inc., 663 So.2d 835 (La.

App. 5th Cir. 1995), writ denied, Jan. 26, 1996 ..... 24

State of Connecticut, et al., v. Mylan Laboratories, et

al., Cv. No. 98-3115 (TFH), in the United States

District Court for the District of Columbia...... 3, 18

Steel Co. v. Citizens for a Better Environment, 523 U.S.

83, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)........ passim

Supreme Tribe of Ben Hur v. Cauble, 225 U.S. 356, 41

S.Ct. 338, 65 L.Ed. 673 (1921)............2- eee eeee 16

U.S. Railroad Ret. Board v. Fritz, 449 U.S. 166, 101

S.Ct. 453, 66 L.Ed.2d 368 (1980). ...............55. 15

Wisconsin Department of Corrections v. Schacht, 524

U.S. 381, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998) .... 13

STATUTES AND LEGISLATIVE MATERIALS:

Article III, United States Constitution ..... 6, 10, 15, 22

BB UTA BBG cc cccccctscpocccesescoccovesesess passim

WB UBEA, BOGRERD 20 cc coccccccccncccscesscsestvccesees 6

BB UGCA Bac oc cccccccccccccvccccvccvesoseecenes 4,14

Vii

TABLE OF AUTHORITIES - Continued

Page

PT MEE Mv kuocancedhasbuve cauceakes chcxiolioe 5

PT TEE sibs kctcdabdccetcetbeual oie o ee passim

Art. 4 Louisiana Code of Civil Procedure (La.

GSM s URE EdA Mere ndaieendusoubedee ccvaccculls 9, 10

Ge Bs Mae Fb. ddd ans dacdictanavteecctnnas 10

CUDA Tae Be Ss 0 6besk codecs cccshktc cen 9

in sntacecroecccesssdaksielen ue 5

Cs Ger ls es ne cv nckdccdcusnadiccaa cam 5, 9, 11

SM, GER. GR 00 GOD évuindsccdsicdusscendopeakans 18, 23

SR Gas Tee 00 Ro cc pcciisavdascuscbennenren 18, 23

INTEREST OF THE AMICUS CURIAE

The Louisiana Attorney General is statutorily and

constitutionally charged with the duty of enforcing Loui-

siana laws. Thus, ire State of Louisiana, through its

Attorney General, has an important interest in preserving

for Louisiana courts matters of Louisiana law which pro-

foundly affect the economic welfare of its citizens as well

as the Attorney General’s ability to enforce that law in the

manner intended by the Louisiana Legislature and its

courts.

The Free courts’ erroneous interpretations of that law

stand as a significant impediment to that enforcement,

particularly when a rule of substantive law has been

declared operative in Louisiana by federal courts with no

authority to do so. Such an ultra vires act offends princi-

ples of comity and federalism and robs both the Louisi-

ana Legislature and its courts of their sovereign

authorities. In addition, it tends to encourage anticom-

petitive behavior in a state with only limited resources to

fight it.

The matters of whether federal antitrust law pre-

empts state antitrust statutes and whether the federal

policies of Illinois Brick may be used to declare rules of

state law have been litigated previously and decided in

the states’ favor in California v. ARC America. While Loui-

siana does not have an “Illinois Brick repealer” as did the

plaintiff states in that case, according to Erie principles,

Louisiana had no duty to enact one, although antitrust

defendants appear to have been successful in convincing

federal lower courts, but not state courts, otherwise.

The 5th Circuit’s decisions stand in contravention of

other federal and state principles of law as well. No

transcendental body of law outside of any particular state

exists which is obligatory within it unless and until

changed by statute. Erie at 79, 823. (A federal court may

not substantially affect the enforcement of the right as

given by the State. Bernhardt v. Polygraphic Co. of America,

Inc., 350 U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199 (1956);

Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108, 65

S.Ct. 1464, 1469, 89 L.Ed. 2079)); (Federal antitrust law

does not control Louisiana antitrust law. LP&L v. United

Gas Pipe Line Co., 493 So.2d 1149, 1158 (La. 1986)); (The

public policy of a state is to be found in its statutes, and,

when they have not directly spoken, then in the decisions

of the court. In Louisiana, the only authentic and admissi-

ble evidence of public policy of a state on any given

subject is its Constitution, laws, and judicial decisions.

Where the state has spoken through its legislators, there

is no room for speculation as to what the policy of the

state is. State v. American Sugar Refining Co., 138 La. 1005,

1021, 71 So0.137, 142-143 (La. 1916)). (Legislatively enacted

statutes trump policy considerations. State, ex rel. leyoub

v. Brunswick Bowling and Billiards Dover, Inc., 665 So.2d

520, 522 (La. App. 5th Cir. 1995), writ denied).

In addition, the Free decision(s), have caused the

people of Louisiana to be placed in an inferior economic

position among their sister states, a harm frowned upon

by this Court in [Snapp v. Puerto Rico, 486 U.S. 592,

605-606, 102 S.Ct. 3260, 3268, 73 L.Ed.2d 995 (1982); and

in Georgia v. Penn. R. Co., 324 U.S. 439, 65 S.Ct. 716, 89

L.Ed. 1051 (1945)], in this case and in a case now in

litigation by the Attorney General, by placing limits on

Louisiana statutes, not intended by the Louisiana Legisla-

ture or its courts, and by affecting the state’s ability to

obtain full legal redress for serious antitrust violations

perpetrated upon its citizens in The State of Connecticut, et

al., v. Mylan Laboratories, et al., Cv. No. 98-3115 (TFH), in

the United States District Court for the District of Colum-

bia. A copy of that court’s order is presented in the

Appendix.

The Free court expressly sought to teach the Louisi-

ana Legislature and its courts a legally impermissible

lesson in antitrust enforcement by collaterally overruling

Louisiana jurisprudence.

For these reasons, the State of Louisiana, through its

Attorney General, has an important legal stake in this

matter.

S

SUMMARY OF ARGUMENT

No federal original jurisdiction exists in this matter;

therefore, no supplementary jurisdiction exists. The fail-

ure to certify a class in these error-riddled decisions

before removal, before considering Art. III standing and

before reaching the merits, are factors fatal to these deci-

sions. The 5th Circuit failed to realize that a critical

standard for judging if removal is proper is whether the

case could have been filed originally in federal court. 28

USCA 1367 does not overrule Zahn or any other federal

principle of law. The lower courts erred in applying a

Louisiana procedural class action statute to hypothesize

jurisdiction over a technically non-existent class and

thereby, bootstrapping this case into federal court, to

reach its merits. And, once the federal courts seized juris-

diction by overruling principles of federal law, they failed

to apply Louisiana law as intended by its legislature and

courts; they chose, instead, to collaterally overrule Louisi-

ana jurisprudence as well.

e

ARGUMENT

BACKGROUND PROBLEMS WHICH

PERVADE THIS CASE

To find diversity jurisdiction and thus, removal juris-

diction in this matter by using a Louisiana procedural

class action statute (so classified by Louisiana Courts in

Dumas v. Angus, 635 So.2d 446, 451 (La. App. 2nd Cir.

1994) and Ford v. Murphy Oil USA, Inc., 703 So.2d 542, 544

(La. 1997), the 5th Circuit overruled sub-silentio princi-

ples of law contained in the Erie doctrine and its progeny,

now codified at 28 U.S.C. § 1652, as well as numerous

other federal principles of law found in numerous cases

of this Court, and federal statutory law. Similarly, in

reaching its decision that 28 USCA 1367 overruled Zahn,

the 5th Circuit also overlooked cardinal principles of

statutory interpretation and principles of law found in

other pertinent decisions of this Court.

Even if no other statutory law or stare decisis jurispru-

dence were involved, common sense and the plain mean-

ing of words dictate that because supplementary

jurisdiction means jurisdiction in addition to original juris-

diction, supplemental jurisdiction does not and cannot

exist without original jurisdiction.

In addition, the 5th Circuit failed at every try to

grasp the fundamental principles of Louisiana law. And,

to compound its error further, using hypothetical jurisdic-

tion to reach the merits of this state law case, the 5th

Circuit forced the lower court to seize jurisdiction of this

matter, seemingly to collaterally overrule Louisiana cases

adjudicating principles of Louisiana antitrust law. By all

of these acts, the 5th Circuit overstepped its constitu-

tional authority and ruled contrary to its controlling prec-

edent, thus committing what this Honorable Court has

previously termed ultra vires acts.

A. No federal original jurisdiction exists in this mat-

ter; therefore no supplementary jurisdiction exists.

No federal original jurisdiction exists in this matter;

therefore no supplementary jurisdiction exists.

1. Failure to certify a class before removal, before

Art. III considerations and before reaching the

merits are fatal to these decisions

At the outset, it must be noted that at the time of

removal in this matter, no class had been certified, under

either state law or federal law. (Case filed in state court

on 10/14/93, removed on 11/26/93, no class certified as

of 6/21/94, Opinion: Ruling on Motion for Reconsidera-

tion, Plaintiffs’ App. K, at p. 93a). Both State and Federal

Procedural Rules demand class certification before fur-

ther proceedings can begin. [Court certification is prereq-

uisite to further proceedings or dismissal, Art. 593.1 of

the La. C.C.P.) (FRCP Rule 23(a) and (b) require court

certification before further proceedings)]. Without such

court certification, the lower federal courts embarked

upon issuing advisory opinions, which are fatal to the

case at bar. (The federal district court also refused to

certify a settlement class in its attempt to remand this

matter to state court where it properly belongs).

Moreover, because class certification was lacking, no

class existed at the time of removal. Thus, on removal,

amounts in controversy for diversity jurisdiction could

not be based upon a technically non-existent class,

whether under state or federal law.

This Court has already made clear in at least three

cases that class certification issues are logically anteced-

ent to the existence of any Art. III issues, much less

merits issues, and it is appropriate to reach them first.

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 117 S.Ct.

2231, 138 L.Ed.2d 689 (1997); Caterpillar v. Lewis, 519 U.S.

61, 73, 117 S.Ct. 467, 475, 136 L.Ed.2d 437 (1996) (28 USCA

1441(a) requires that the case be fit for federal adjudica-

tion at the time the removal petition is filed); and in Ortiz

v. Fibreboard Corp., 119 S.Ct. 2295, 2397, 144 L.Ed.2d 715

(1999), the propriety of class certification would be

addressed before the issue of Art. III standing).

Thus, it appears that the 5th Circuit circumvented the

controlling precedent in the case at bar by incorrectly

reaching Art. III standing and the merits of the case

without even looking at the propriety of the Louisiana

class. This issue, alone, warrants vacating the lower

courts’ judgments in this matter and remanding the case

to Louisiana state court.

“Hypothetical jurisdiction produces nothing more

than a hypothetical judgment - which comes to the same

—

thing as an advisory opinion, disapproved by this Court

from the beginning.” Steel Co. v. Citizens for a Better Envi-

ronment, 523 U.S. 83, 118 S.Ct. 1003, 1016, 140 L.Ed.2d 210

(1998), citing Muskrat v. U.S., 219 U.S. 346, 362, 31 S.Ct.

250, 256, 55 L.Ed. 246 (1911) and Hayburn’s Case, 2 Dall.

409 (1792).

2. This case could not have been filed originally

in federal court under federal principles of law

Although the issue of original federal jurisdiction

was not presented to this Court by petitioners, the issue

of supplementary jurisdiction cannot be reached properly

without considering it, because it is the foundation of the

latter. It is conferred and invoked by constitutional

authority supported by statutes. No court can proceed

without it.

The failure of parties to urge objections [to diversity

of citizenship] cannot relieve this court from the duty of

ascertaining from the record whether the Circuit Court

could properly take jurisdiction of this suit... The rule

is inflexible and without exception, which requires this

court, of its own motion, to deny its own jurisdiction,

and, in the exercise of its appellate power, that of all

other courts of the United States, in all cases where such

jurisdiction does not affirmatively appear in the record

on which, in the exercise of that power, it is called to act.

Carden v. Arkoma Assocs., 494 U.S. 185, 110 S.Ct. 1015, 108

L.Ed.2d 157 (1990), quoting Mansfield, C. & L.M.R.

Longstanding decisions of this Court make clear that

in a removal case, the issue in subsequent proceedings on

appeal is whether the federal district court would have

had original jurisdiction of the case had it been filed in

that court. City of Chicago v. International College of Sur-

geons, 522 U.S. 156, 118 S.Ct. 523, 529, 139 L.Ed.2d 525

(1997); Caterpillar v. Lewis, 519 U.S. 61, 72, 117 S.Ct. 467,

474-475, 136 L.Ed.2d 437 (1996).

The case at bar could not have been filed originally in

federal court because no plaintiff would have met the

$50,000 (then) jurisdictional amount. This statement is

true because the federal court could not have resorted,

then, to Louisiana procedural law, but would have been

forced to rely entirely on La. R.S. 51:137, pursuant to

Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S.

240, 260 FN 31, 95 S.Ct. 1612, 1623, FN 31, 44 L.Ed.2d 141

(1975), and federal law to determine the amounts in con-

troversy. (In diversity action where the state law is not

counter to a valid federal statute, state law giving a right

to attorneys’ fees should be followed). While the cited

Louisiana substantive law statute awards attorneys’ fees

to successful plaintiffs, it is silent on the method of distri-

bution of those attorneys’ fees in class actions, in this case

technically a non-existent class, thus, a hypothetical one.

On the other hand, the federal principles of the com-

mon fund doctrine as set forth in Boeing Co. v. Van Gemert,

444 U.S. 472, 478, 100 S.Ct. 745, 749, 62 L.Ed.2d 676 (1980),

make clear that in federal court, attorneys fees are

assessed against the entire fund recovered in class

actions, and are spread proportionately among those ben-

efited by the suit. Thus, not even the representative plain-

tiffs could have met the jurisdictional amount and the

suit could not have been filed originally in federal court.

The Free courts erroneously relied on a Louisiana

procedural statute, Art. 595 of the Louisiana Code of Civil

Procedure, to bootstrap the action into the federal courts,

particularly obvious because only a hypothetical class

existed. As noted above, Louisiana courts classify this

statute as procedural, rather than substantive. In so

doing, not only did the courts fail to interpret Louisiana

law properly, they also overlooked or overruled sub-

silentio, principles of federal law as well.

Louisiana law requires that its statutes be applied in

pari materia, a principle of law based on Art. 13 of the

Louisiana Civil Code, which is always followed by Loui-

siana courts. Comm-Care Corp. v. Bishop, 696 So.2d 969 (La.

1997); Shelton v. Chrysler First Financial Services Corp., 676

So.2d 591, 592 (1996); Kellis v. Foster, 523 So.2d 846 (La.

1988).

The 5th Circuit should have examined La. Code of

Civ. Proc. Art. 4 regarding subject matter jurisdiction in

pari materia with Art. 595, because a federal court inter-

preting state law must determine state law “with the aid

of such light is afforded by the materials for decision at

hand, and in accordance with the applicable principles

for determining state law.” Salve Regina College v. Russell,

499 U.S. 225, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991);

Meredith v. Winter Haven, 320 U.S. 228, 238, 64 S.Ct. 7, 13,

88 L.Ed. 9 (1934).

At the time that the first appeal was decided in this

matter, 1995, Art. 4 provided that except as otherwise pro-

vided by law, the amount in dispute includes attorney’s

fees, for subject matter jurisdiction purposes. This provi-

sion should have waved a red flag because federal law

10

provided the otherwise. FRCP 82 provides that the rules

cannot be interpreted to expand jurisdiction and the fed-

eral rules, in this case, diversity and removal jurisdiction,

must be interpreted with Art. 3 of the United States

Constitution in mind.

Another red flag should have been apparent to the

5th Circuit in its determination that federal original juris-

diction existed. In 1995, Art. 4 of the La. C.C.P. was

amended to now provide that attorney’s fees could not be

used to determine the amount in dispute for subject

matter jurisdiction. This amendment would have been

pending in the Legislature at the time of the 5th Circuit's

first decision and was in effect at the time of both the

second and third. Where the law has changed during the

pendency of a suit and retroactive application of the new

law is permissible, the new law applies on appeal even

though it requires a reversal of a trial court judgment

which was correct under the law in effect at the time it

was rendered. Segura v. Frank, 630 So.2d 714, 725 (La.

1994). Thus, reliance on a Louisiana procedural statute is

a precarious undertaking in Louisiana because, contrary to

federal law, Louisiana law holds that procedural laws

apply both retrospectively and prospectively based upon

Art. 6 of the Civil Code. Keith v. United States Fidelity &

Guaranty Co., 694 So.2d 180, 183 (La. 1997); Segura v.

Frank, 630 So.2d 714, 720-721, (La. 1994).

Federal law holds, on the other hand, that a pre-

sumption exists against retrospective effect and Congres-

sional statutes, i.e., including procedural ones, are given

prospective effect only. Martin v. Hadix, 119 S.Ct. 1998,

2003, 2006, 2008, 144 L.Ed.2d 347 (1999); Landgraf v. USI

Film Products, 511 U.S. 244, 265, 114 S.Ct. 1483, 1497, 128

11

L.Ed.2d 229 (1994); Kaiser Aluminum & Chem. Corp. v.

Bonjorno, 494 U.S. 827, 842-844, 855-856, 110 S.Ct. 1570,

1579-1581, 1586-1587, 108 L.Ed.2d 842 (1990).

The diversity jurisdictional statute, is narrowly con-

strued. Healy v. Ratta, 292 U.S. 263, 270, 54 S.Ct. 700, 703,

78 L.Ed. 1248 (1934). The jurisdictional statute, which is

nationwide in its operation, was intended to be uniform

in its application, unaffected by local law definition or

characterization of the subject matter to which it is to be

applied. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,

104, 61 S.Ct. 868, 870, 85 L.Ed. 1214 (1941); Horton v.

Liberty Mutual Ins. Co., 367 U.S. 348, 357, 81 S.Ct. 1570,

1575, 6 L.Ed.2d 890 (1961). The Act of Congress must be

construed as setting up its own criteria, irrespective of

local law, for determining in what instances suits are to

be removed from state to federal courts. Shamrock. Hence,

these cases, like the Erie line of cases, prohibit the use of a

local law, like Art. 595 of the La. C.C.P., to determine

federal jurisdiction, particularly, when the class was

merely hypothetical vis-a-vis, lack of certification.

The 5th Circuit should have been further cautioned

against using a state procedural law to determine federal

jurisdiction by the principles of law contained in Hanna v.

Plumer, 380 U.S. 460, 474-475, 85 S.Ct. 1136, 1145, 14

L.Ed.2d 8 (1965), which held directly on point that “to

hold that a Federal Rule of Civil Procedure must cease to

function whenever it alters the mode of enforcing state-

created rights would be to disembowel either the Consti-

tution’s grant of power over federal procedure or Con-

gress’ attempt to exercise that power in the Enabling

Act.” And further, “Erie recognized that there should not

be two conflicting systems of law controlling the primary

12

activity of citizens ...” Id. The foregoing were reasons

given why federal courts sitting in diversity apply federal

procedural rules and state substantive law. Id. at 465,

1141.

“The requirement that jurisdiction be established as

a threshold matter . . . is ‘inflexible and without excep-

tion.’ ” Ruhrgas Ag v. Marathon Oil Company, 526 U.S. 574,

119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (quoting Steel Co. v.

Citizens for Better Environment, 523 U.S. 83, 119 S.Ct. 1003,

140 L.Ed.2d 210 (1998) and Mansfield, C. & L.M.R. Co. v.

Swan, 111 US. 379, 383, 4 S.Ct. 510, 28 L.Ed. 462 (1884));

for “ ‘jurisdiction is power to declare the law,’” and

“ ‘without jurisdiction the court cannot proceed at all in

any cause.’ ” Id. (quoting Steel Co. and Ex parte McCardle,

7 Wall. 506, 514, 19 L.Ed. 264 (1868)).

Every federal appellate court has a special obligation

to ‘satisfy itself not only of its own jurisdiction, but also

that of the lower courts in a cause under review, even

though the parties are prepared to concede it. Steel Co., at

1003, quoting Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct.

162, 165, 70 L.Ed. 338 (1934). When the lower federal

court lacks jurisdiction, we have jurisdiction on appeal,

not of the merits but merely for the purpose of correcting

the error of the lower court in entertaining the suit.’ Id.,

quoting United States v. Corrick, 298 U.S. 435, 440, 56 S.Ct.

829, 831, 80 L.Ed. 1263 (1936) and Arizonans for Official

English v. Arizona, 520 U.S. 43, 117 S.Ct. 1055, 1071, 137

L.Ed.2d 170 (1997), quoting from Bender v. Williamsport

Area School Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89

L.Ed.2d 501 (1986).

13

For removals that are defective because of lack of

subject matter jurisdiction, remand may take place

without such a motion (to remand) and at any time.

Wisconsin Department of Corrections v. Schacht, 524 U.S.

381, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998).

Were it in truth a contention that the District Court

lacked jurisdiction, we would be obliged to consider it,

even as we are obliged to inquire sua sponte whenever a

doubt arises as to the existence of federal jurisdiction.

Steel Co. v. Citizens for a Better Environment, 523 U.S. 83,

118 S.Ct. 1003, 140 L.Ed.2d 210 (1998); Mt. Healthy City

School District Board of Education v. Doyle, 429 U.S. 274, 97

S.Ct. 568, 50 L.Ed.2d 471 (1997), quoting Liberty Mutual

Ins. Co. v. Wetzel, 424 U.S. 737, 740, 96 S.Ct. 1202, 1204, 47

L.Ed.2d 435 (1976), and Louisville & Nashville R.Co. v.

Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126

(1908).

The federal system is an independent system for

administering justice to litigants who properly invoke its

jurisdiction. Gasperini v. Center for Humanities, Inc., 518

U.S. 415, 432, 116 S.Ct. 2211, 2222, 135 L.Ed.2d 659 (1996).

Fed. Rule Civ. Proc. 82 provides that the rules shall

not be construed to extend . . . the [subject matter] juris-

diction of the United States district courts. Amchem Prod-

ucts, Inc. v. Windsor, 521 U.S. 591, 613, 117 S.Ct. 2231, 2244,

138 L.Ed.2d 689 (1997).

Yet, despite this plethora of long standing Supreme

Court precedent, the federal 5th Cir. Court of Appeal

chose to overrule all of these decisions sub silentio, by

holding instead, in Free v. Abbott Laboratories, 264 F.3d 270,

272 (1999), that “(a)lthough appellants’ argument bears

14

on federal courts’ jurisdiction, this is not an issue that we

will reconsider.”

B. 28 USCA 1367 does not overrule Zahn or any other

principle of federal law. Indeed, to find federal

jurisdiction in the case, the court was required to

overrule many more principles of law than just

those found in Zahn

Using machiavellian analysis, the 5th Circuit in its

first decision, erroneously held that 28 USCA 1367 over-

rules Zahn by interpreting a Congressional statute con-

trary to Congressional intent; that Colorado River

abstention did not apply and reached a bizarre crescendo

in holding that because the representative parties in Free

would be compelled to remain in federal court with the

same claims adjudicated, the interests of comity would

not be served. This forced analysis springs from the fed-

eral courts’ initial errors, inter alia, applying a Louisiana

procedural class action statute to a hypothetical class,

thereby overruling sub-silentio the Erie doctrine, 28

USCA 1652, and FRCP 82.

1. Interpreting a Congressional statute contrary to

Congressional intent is an ultra vires act

In a long litany of cases, this Honorable Court has

made crystal clear that the federal courts do not sit as a

super-legislature to determine the wisdom of legislation

or to decide policy, Day-Brite Lighting, Inc. v. State of

Missouri, 342 U.S. 421, 423, 72 S.Ct. 405, 407, 98 L.Ed. 469

(1952); Griswold v. State of Connecticut, 381 U.S. 479, 482,

85 S.Ct. 1678, 1680, 14 L.Ed.2d 510 (1965); New Orleans v.

15

Duke, 427 U.S. 297, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511

(1976). Further, courts cannot assume that Congress did

not know what it was doing, as the 5th Circuit expressly

assumed, when it interpreted 28 USCA 1367 as overruling

Zahn. Cannon v. University of Chicago, 441 U.S. 677,

696-697, 99 S.Ct. 1946, 1957-1958, 60 L.Ed.2d 560 (1979);

U.S. Railroad Ret. Board v. Fritz, 449 U.S. 166, 179, 101 S.Ct.

453, 461, FN2, 66 L.Ed.2d 368 (1980); Albernaz v. U.S., 450

U.S. 333, 340, 101 S.Ct. 1137, 1143, 67 L.Ed.2d 275 (1981).

To so interpret a statute expressly against the intent

of Congress, is in itself tantamount to an ultra vires act.

The 5th Circuit noted its awareness that Congress did not

intend to change the jurisdictional requirements of 28

U.S.C.A. 1367 in the 1995 Free decision. Thus, to interpret

it as overruling Zahn, is also tantamount to an ultra vires

act.

Such an act offends fundamental principles of sep-

aration of powers, as does pronouncing upon the mean-

ing of a state statute without jurisdiction, an act

condemned as an act ultra vires in Steel Co. v. Citizens for

a Better Environment, 523 U.S. 83, 118 S.Ct. 1003, 1012,

1016, 140 L.Ed.2d 210 (1998) and Ruhrgas v. Marathon Oil

Co., 526 U.S. 574, 119 S.Ct. 1563, 1569, 143 L.Ed.2d 760

(1999). Further, as held in Amchem Products, Inc. v. Wind-

sor, 521 U.S. 591, 117 S.Ct. 2236, 138 L.Ed.2d 689 (1997),

the federal rules of civil procedure must be interpreted in

keeping with Art. III (Constitution) constraints, with the

Rules Enabling Act, which instructs that the rules of

procedure “shall not abridge, enlarge or modify and sub-

stantive right”, and with FRCP 82 which provides that

the rules shall not be constructed to extend the subject

matter jurisdiction of the United States federal district

16

courts. The 5th Circuit’s interpretation of 28 USCA 1367

extends the jurisdiction of the federal district courts, in

direct contravention of that rule.

Moreover, the 5th Circuit’s ruling means that the

court believes it proper to aggregate claims in the pro-

cedural class action device to determine jurisdiction.

However, in Carden v. Arkoma, 494 U.S. 185, 192, 110 S.Ct.

1015, 1020, 108 L.Ed.2d 157 (1990), this Court held that

“looking to the citizenship of only some of the members

of an artificial entity finds even less in our precedent than

looking to the State of organization” when interpreting

the federal diversity statute. “We have never held that an

artificial entity, sued or being sued in its own name, can

invoke the diversity jurisdiction of the federal courts

based upon the citizenship of some but not all of its

members.”

Similarly, not the plain language of 28 USCA 1367,

Congressional intent, nor this Court’s precedent, allow

the invocation of the diversity jurisdiction of the federal

courts based upon jurisdictional amount being met by

some plaintiffs, but not all, using a state procedural stan-

dard. Consistency requires that the jurisdictional amount

of the matter in controversy be interpreted in the same

manner. Even though a class entity exists, each individual

member should be required to meet the jurisdictional

amount like each must meet the diversity requirement, to

invoke federal diversity jurisdiction.

Defendants’ reliance on Supreme Tribe of Ben Hur v.

Cauble, 225 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921) is

misplaced because Ben Hur was filed originally in federal

court, unlike the case at bar which was prematurely

17

removed from state court, and the case contained princi-

ples of federal law, giving the federal courts in that

matter a strong federal interest, again, dissimilar to the

case at bar.

Thus, the 5th Circuit engaged in “hypothetical juris-

diction” to reach the merits of the case. As held in Steel

Company, cited supra at page 1016, the statutory and

(especially) constitutional elements of jurisdiction are an

essential ingredient of separation and equilibration of

powers, restraining the courts from acting at certain

times, and even restraining them from acting perma-

nently regarding certain subjects. For a court to pro-

nounce upon the meaning or the constitutionality of a

state or federal law when it has no jurisdiction to do so is,

by very definition, for a court to act ultra vires.

2. Principles of comity and federalism should have

prevented the lower federal courts from seizing

jurisdiction and collaterally overruling Louisi-

ana

In truth, the federal court for the Middle District of

Louisiana tried to avoid adjudicating this matter. It was

forced to do so by the 5th Circuit’s first appellate deci-

sion. The 5th Circuit erroneously found jurisdiction on

the representative plaintiffs and refused to allow the

lower court to abstain, based again, on faulty use of

authority. The Fifth Circuit held that Colorado River

abstention did not apply because “only exceptional cir-

cumstances, the ‘clearest of justifications’ can suffice

under Colorado River to justify the surrender of federal

jurisdiction,” quoting Moses Cone, 460 U.S. at 25-26, 103

18

S.Ct. at 942. However, unlike the case at bar, in the Cone

case, federal issues of law were present, as this Court

made clear in Quackenbush v. Allstate Ins. Co., 517 U.S. 707,

729, 116 S.Ct. 1712, 1727, 135 L.Ed.2d 1 (1996). Here, there

are none.

This Court has also made crystal clear that 28 USCA

1367(c) discretion is independent from any abstention

doctrine theory which requires district court to abstain or

stay, in City of Chicago, cited supra, at page 534. The case

at bar presented issues of state law in which the impor-

tant state interest could be undermined by inconsistent

rulings from the federal and state courts and those inter-

ests have importance beyond the case. Inconsistent rul-

ings have indeed already occurred. In State v. Bordens,

Inc., 684 So.2d 1024, 1025 (La. App. 4th Cir. 1996), the

facts as stated by the Court reveal that the State filed a

treble damages action based upon a federal criminal

judgment of antitrust bid-rigging, on behalf of school

systems (direct purchasers) and Louisiana school children

(indirect purchasers). The lower court held that the Loui-

siana Monopolies Act allowed such actions. The defen-

dants chose not to appeal this issue.

In State of Connecticut v. Mylan, a multistate antitrust

case in litigation in federal courts, referenced above and -

found in the State’s Appendix, the federal district court

held that La. R.S. 51:128 authorizes Louisiana, through its

Attorney General, to sue for violations of the Monopolies

Act and found that provision to be unlimited in equitable

relief, totally ignoring La. R.S. 51:138 which mandates

that the Attorney General file all actions under the Act

and La. R.S. 51:1414, which grants to the Attorney Gen-

eral the right to pursue any action under any statute

19

available to any other party. The Court found itself

unable, vis-a-vis the Free decision, to follow Louisiana

law and Louisiana jurisprudence. Such a holding, similar

to that of the 5th Circuit, defies logic, reason and common

sense and has no place in a country purporting to follow

the rule of law.

Principles of comity and federalism should have

ruled the day, as well as 28 USCA 1367(c) authorized

discretion.

C. The Fifth Circuit’s Determination of State Law was

Erroneous on Federal as Well as State Law Grounds

The Fifth’s Circuit’s determination of Louisiana law

was erroneous on federal as well as state law grounds.

1. Erroneousness based on federal law grounds

Obviously, the 5th Circuit did not feel competent to

rule on issues of state law as expressed by their

attempted certification of certain issues to the Louisiana

Supreme Court. When that failed, the court decided the

Louisiana indirect purchaser issue along federal grounds,

expressly forbidden by this Court in California v. ARC

America Corp., 409 U.S. 93, 109 S.Ct. 1661, 104 L.Ed.2d 86

(1989). (It is improper to consider Congressional policies

as defining what federal law allows states to do under

their own antitrust law. Nothing in Illinois Brick suggests

it would be contrary to congressional purposes for states

to allow indirect purchasers to recover under their own

laws, at pgs. 102, 1666).

20

Sadly, the 5th Circuit in Free espoused the losing

positions of the California v. Arc America defendants

rather than follow its precedent; thus, overruling it sub-

silentio. The 5th Circuit erred in holding that California

does not advocate increasing penalties on antitrust defen-

dants or maximizing Louisiana plaintiffs’ recovery as

compared wiih federal law remedies. California, in fact

held that based upon the Silkwood v. Kerr-McGee case

neither Congress nor the courts frown upon additional

liability, over and above that authorized by federal law.

(California, at pgs. 105, 1667).

The 5th Circuit further erred by holding that the

Illinois Brick scheme of recovery is preferable to Louisiana

law. A court cannot sit as a super-legislature. Day-Brite

Lighting, Inc. and Griswold, cited supra. Further, as Jus-

tices Brennan, Marshall, Blackmun and Stevens have so

eloquently stated previously in concurrence with the

decision Snapp, cited supra at page 3271, a state is a

sovereign entity, entitled to assess its needs, and decide

which concerns of its citizens warrant its protection and

intervention. I know of nothing - except the Constitution

or overriding federal law — that might lead a federal court

to superimpose its judgment for that of a State with

respect to the substantiality or legitimacy of a State’s

assertion of sovereign interest. Yet, superimposing its

judgment for that of Louisiana was exactly the forbidden

action taken by the Free court.

The 5th Circuit’s clear alternative to avoid such was

discretional refusal to hear the case, a position expressly

advocated in California. Instead, it chose to embark on

issuing advisory opinions through ultra vires acts and

sub-silentio overruling its clear precedent.

21

While Louisiana law does not contain what is popu-

larly known as an Illinois Brick repealer as did the plain-

tiff states in California, because it is not obliged to follow

federal law, the principles of California apply equally to

this matter, pursuant to the principles of Erie. Under Erie

v. Tompkins, 304 U.S. 64, 79, 58 S.Ct. 817, 923, 82 L.Ed.

1188 (1938), no transcendental body of law outside of any

particular State exists which is obligatory within it unless

and until changed by statute. Thus, the 5th Circuit’s focus

should have been on whether the Louisiana Legislature

was obligated to amend its already unlimited antitrust

law. Similarly, a federal court may not substantially affect

the enforcement of a right as given by the state. Bernhardt

v. Polygraphic Co. of America, Inc., 350 U.S. 198, 76 S.Ct.

273, 100 L.Ed. 199 (1956); Guaranty Trust Co. of New York v.

York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079

(1945).

Thus, the 5th Circuit’s holdings overruled sub-silen-

tio this Court’s controlling precedent.

2. Erroneousness based on state grounds

The concept of granting a dispensation from liability

to a class of defendants based upon the level of market

participation by plaintiffs is as foreign to Louisiana law

as is granting a dispensation based upon a per se rule of

non-liability. Louisiana tort law speaks of absolute and

strict liabilities. To hold that such a concept rules Louisi-

ana law is to overrule collaterally Louisiana’s Civil Code,

its statutory law and its jurisprudence, and to deny its

very existence as a sovereign entity. Our courts have held

that the plain language of the Louisiana Monopolies Act

22

and its Unfair Trade and Consumer Protection Act must

be given effect by the Courts of this State.

Ultra vires acts of judgment undermine the sovereign

authority of the State of Louisiana as held by its Supreme

Court in Louisiana Power & Light, cited and discussed

infra, and have been disruptive of state efforts to estab-

lish a coherent policy with respect to a matter of substan-

tial public concern. Further, these ultra vires acts are

forbidden by Art. III concerns as noted by this Court in

Steel and Ruhrgas, cited infra. The 5th Circuit failed to

analyze state law according to state principles.

The 5th Circuit erroneously held that Louisiana Power

& Light v. United Gas Pipeline Co, 493 So.2d 1149 (La. 1986)

was distinguishable from its case at bar. The situation is

exactly the same in Free as in LP&L, the existence of

controlling Louisiana court precedent, which keeps the

particular principle of federal antitrust law from applying

in Louisiana. To reach the conclusion that indirect pur-

chasers cannot recover under Louisiana law, in the face of

LP&L, no other explanation seems justified, except that,

the 5th Circuit collaterally and sub-silentio overruled

important principles of Louisiana law and its jurispru-

dence.

The 5th Circuit court erroneously held that LP&L

held only that the federal interpretation of federal anti-

trust law has a persuasive effect on Louisiana law. To stop

at this juncture was to overrule the case sub-silentio and

collaterally. The LP&L Louisiana Supreme Court, in fact,

held at pages 1157, 1160 that while persuasive, the federal

law is not controlling and refused to apply to Louisiana

antitrust law, a then recent decision of the United States

23

Supreme Court in Copperweld Corp. v. Independence Tube

Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984).

A significant and fatal gap exists in the 5th Circuit's

version.

The 5th Circuit further erroneously held that the

issue of the plain meaning of the remedy statute while

“superficially formidable,” can be overcome with federal

policy considerations. However, the Louisiana Supreme

Court held in LP&L, at page 1154, that appropriate statu-

tory analysis begins with an examination of the language

of the statute and that La. R.S. 51:122 is sweeping in its

breadth. Words and phrases shall be read with their con-

text and shall be construed according to the common

usage. And at page 1159, this Court does not choose,

... an inflexible approach which adopts a per se rule of

noniiability . . . Such a choice would run counter to the

Legislature’s intent in enacting the antitrust legislation

and divest our courts of the authority which reposes in

them by virtue of this legislation.

An indirect purchaser exclusion from the broad

sweep of the Louisiana antitrust law would be a per se

rule of nonliabilty exactly like the kind the Court has

been so eloquent in condemning and refusing to apply in

Louisiana. Thus, either the 5th Circuit overruled LP&L

collaterally and sub-silentio, or its principles were simply

beyond the court’s perception. Either way, the 5th Cir-

cuit’s error-riddled decisions should be vacated.

The in pari materia rule of legislative construction

further requires that Louisiana’s Unfair Trade and Con-

sumer Protection Act, which is a statute having the same

purpose as the Louisiana Monopolies Act, be read in

24

conjunction with the latter, because it forbids unfair com-

petition as well. The former act expressly allows con-

sumers, or indirect purchasers, to recover for unfair

methods of competition. Thus, the plain language of both

statutes expressly allow indirect purchaser actions, and

must be given effect by the Courts of this State. State v.

Classic Soft Trim, Inc., 663 So.2d 835 (La. App. 5th Cir.

1995), writ denied, Jan. 26, 1996.

Besides superimposing its judgment over Louisiana’s

LP&L decision, the 5th Circuit also overruled other deci-

sions of Louisiana courts to reach its erroneous conclu-

sions regarding Louisiana law. In State, ex rel. leyoub v.

Brunswick Bowling Dover, Inc., 665 So.2d 520, 522 (La. App.

5th Cir. 1995), writ denied, 667 So.2d 1053 (1996), the

Louisiana appellate court held that Louisiana statutes

trump policy considerations. In State v. American Sugar

Refinery, Inc, 238 La. 1005, 1021, 71 So. 137, 142-143 (La.

1916), the Louisiana Supreme Court held that the only

authentic and admissible evidence of the public policy of

a state on any given subject are its Constitution, laws, and

judicial decisions. In Jenkins v. Waste Management of Loui-

siana, Inc., 709 So.2d 848 (La. App. 3rd Cir, 1998), writ

denied, May 15, 1998, the Louisiana appellate court held

that Louisiana jurisprudence leaves no question but that

restraints to free trade shall not be tolerated under any

guise. And see analysis of State v. Bordens, Inc., discussed

supra at page 18., regarding indirect purchaser status of

Louisiana school children as indirect purchasers allowed

right to recovery.

Thus, to hold that Louisiana indirect purchasers have

no right to recovery in the face of this jurisprudence, is to

overrule the cases both collaterally and sub-silentio.

25

In addition, in the second Free ruling to justify the

first, the 5th Circuit held that the law of the case doctrine

granted it a dispensation from redetermining original

jurisdiction. The 5th Circuit, then, attempted to use, a

Louisiana decision, In re Gas Water Heater Prods. Liab.

Litig., 711 So.2d 264 (La. 1998), ignoring federal jurispru-

dence, to justify its seizure of jurisdiction. The problem,

however, is that even if federal law would allow such,

which it does not, it appears that the 5th Circuit com-

pletely misunderstood the text of the cases and principles

of law involved.

The 5th Circuit held, that Gas Water Heater “rein-

forced” its position that it could exercise subject matter

jurisdiction, because the Louisiana Appellate Court dis-

tinguished the Free case in making its ruling. The Louisi-

ana appellate position held that in a class action, claims

could not be aggregated for jurisdictional purposes, fol-

lowing the federal rule of Zahn, and (failing to follow the

5th Circuit’s). The case further noted that the federal

court for the Eastern District of Louisiana limited the

holding in Free. (This jurisprudence does not support the

5th Circuit’s position).

The Louisiana Supreme Court rejected this position

and held the opposite, that, contrary to federal law, such

class action claims could be aggregated for jurisdictional

purposes, to keep the matter out of a court of limited

jurisdiction peculiar to the Jefferson Parish Louisiana

court system. The court reasoned that a class action is nct

a series of individual claims, but rather is merely the

claim of one entity, the class. This position also fails to

support the 5th Circuit’s because the controlling federal

decisions hold that subject matter jurisdiction must be

26

decided on federal grounds, regardless of state law. Loui-

siana law has never held that individual claims could not

be aggregated for jurisdictional purposes. Thus, another

conflict exists between state and federal laws.

Finally, alluding to HMC Management Corp. v. New

Orleans Basketball Club, 375 So.2d 700, 706-07 (La.App. 4th

Cir. 1979), was improper as well, because that decision

was influenced by Flood v. Kuhn, 407 U.S. 258, 92 S.Ct.

2099, 32 L.Ed.2d 728 (1972), which adjudicated the “base-

ball exemption to the antitrust laws.”

CONCLUSION

For all of the foregoing reasons, the judgment of the

5th Circuit should be reversed in its entirety.

Respectfully submitted,

Ricwarp P. Ievous

Attorney General of Louisiana

*JANE BisHop JOHNSON

Assistant Attorney General

Louisiana Department of Justice

301 Main Street, Suite 1250

Baton Rouge, LA 70801

(225) 342-2754

Counsel! for Amicus

State of Louisiana

* Counsel of Record

January 13, 2000

APPENDIX

la

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

FEDERAL TRADE

COMMISSION,

Plaintiff,

v.

MYLAN

LABORATORIES, INC.,

CAMBREX CORP.,

PROFARMACO S.R.L.,

and GYMA

LABORATORIES OF

AMERICA, INC.,

Defendants.

Cv. No. 98-3114 (TFH)

THE STATE OF

CONNECTICUT, et al.,

Plaintiffs,

v.

MYLAN

LABORATORIES, INC.,

CAMBREX CORP.,

PROFARMACO S.R.L.,

GYMA LABORATORIES

OF AMERICA, INC.,

and SST CORP.,

Defendants.

Cv. No. 98-3115 (TFH)

(Filed Dec. 14, 1999)

me mee ee ee meee eee See” eee Se” See” ee” eee” See eee” eee” eee” eee ee”

2a

OPINION

The above-captioned cases are actions by the Federal

Trade Commission (FTC) and thirty-three States against

Mylan Laboratories and other drug companies for var-

ious federal and state law antitrust violations. On July 7,

1999, this Court issued a Memorandum Opinion granting

in part and denying in part defendants’ motions to dis-

miss. The Opinion addressed issues of federal law and

the various antitrust and consumer protection laws of the

plaintiff states. Sixteen of the plaintiff states have moved

for reconsideration of the Court’s ruling in respect to

various issues decided under their state laws.! Two of the

states seeking reconsideration - Ohio and Kentucky -

have also asked this Court to certify the questions of state

law to their highest state courts. After careful consider-

ation of plaintiffs’ motion and the opposition thereto, the

motion will be granted in part and denied in part.

I. BACKGROUND

The plaintiff states request that this Court reconsider

a number of its rulings in respect to the states’ antitrust

and consumer protection laws. The states seeking recon-

sideration argue that: (1) the interpretation of the

Supreme Court’s decision in Illinois Brick Co. v. Illinois,

431 U.S. 720 (1977), relied on in the July 7, 1999 Mem-

orandum Opinion, conflicts with the Supreme Court’s

' The states moving for reconsideration are Alaska,

Arkansas, Connecticut, Florida, Kentucky, Louisiana, Maine,

North Carolina, Ohio, Oklahoma, South Carolina, Tennessee,

Texas, Utah, Vermont and West Virginia. The remaining Plaintiff

states support this motion.

3a

subsequent ruling in California v. ARC America Corp., 490

U.S. 93 (1989); (2) the Court mistakenly dismissed various

state claims for equitable monetary relief in light of the

Court’s ruling on Idaho’s claims under the Idaho Con-

sumer Protection Act (ICPA); and (3) the Court mis-

takenly dismissed various state damages claims on behalf

of both direct and indirect purchasers. The Court will

address these arguments generally, and then apply that

discussion to the individual state statutes.

Il. DISCUSSION

A. Standard of Review

Under Federal Rule of Civil Procedure 54(b), a party

may seek to revise an order or other form of decision “at

any time before the entry of judgment adjudicating all of

the claims and the rights and liabilities of all of the

parties.” Fed. R. Civ. P, 54(b). “Because federal courts

have a strong interest in the finality of judgments,

motions for reconsideration should be granted spar-

ingly.” Continental Casualty Co. v. Diversified Indus., Inc.,

884 F. Supp. 937, 943 (E.D. Pa.1995). Nevertheless, “[i]t is

clear . . . that there are circumstances when a motion to

reconsider may perform a valuable function.” Above the

Belt v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D.

Va. 1983). In such circumstances, a Rule 54(b) motion can

operate as the proper mechanism “for correcting errors

and preventing injustice.” United States ex rel. Houck v.

Folding Carton Admin. Committee, 121 F.R.D. 69, 70 (N.D.

Ill. 1988).

4a

B. Substantive Arguments

1. Illinois Brick and ARC America

The plaintiff state seeking reconsideration argue that

this Court adopted an overly expansive interpretation of

the Supreme Court's decision in Illinois Brick. The states

argue that this Court held that Illinois Brick in effect

preempted state laws addressing the rights of indirect

purchasers, in violation of the principles set forth by the

Supreme Court in California v. ARC America Corp.

The states’ argument is based on a misunderstanding

of both ARC America and this Court’s Memorandum

Opinion. ARC America addressed the preemptive effect of

Illinois Brick’s decision to deny standing to indirect pur-

chasers under the Clayton Act. The issue was whether

those states that had passed statutes expressly granting

standing to indirect purchasers (so-called “Illinois Brick

repealer statutes”) could enforce those statutes in light of

the federal adoption of the indirect purchaser doctrine.

See ARC America, 490 U.S. at 100. The Supreme Court held

that they could, as the decision in Illinois Brick was not

intended to have a preemptive effect on the state’s ability

to craft and enforce their own antitrust laws. Id. at 105-06.

Contrary to plaintiff's argument, the ARC America

Court did not hold that state courts were forbidden from

relying on Illinois Brick as persuasive authority for how a

state should interpret its antitrust regime. As noted by

the Florida Court of Appeals:

[ARC America] is not to say that the con-

cerns raised in Hanover Shoe and Illinois Brick —

the difficulties of tracing overcharges through a

distribution chain, the possibility of multiple

5a

liability for defendants, and the prospects of

inconsistent or duplicate federal and state judg-

ments — are not valid policy considerations

under state antitrust or deceptive trade practice

statutes. ARC America simply declines to impose

on each state the federal legislative antitrust

policy of deterring violations by simplifying

antitrust litigation.

Mack v. Bristol-Squibb, 673 So.2d 100, 107-08 (Fla. 1st Dist.

Ct. App. 1996) review dism’d, 689 So.2d 1068 (Fla. Jan. 31,

i997). Indeed, a number of courts have looked to Illinois

Brick to determine the scope and structure of state anti-

trust laws. See, e.g., Boos v. Abbott Labs., 925 F. Supp. 49 (D.

Mass. 1996); Stifflear v. Bristol-Myers Squibb Co., 931 P.2d

471 (Colo. Ct. App. 1996); Abbott Labs v. Segura, 907

S.W.2d 503 (Tex. 1995). The fact that this Court similarly

sought guidance from Illinois Brick’s discussion of anti-

trust policy does not conflict with the Supreme Court's

ruling in ARC America. Thus, insofar as the states have

asserted that this Court’s interpretation of Illinois Brick

was improper, their motion is denied.

2. State Restitution Claims

A number of states ask this Court to reconsider its

rulings disallowing state restitution claims. This Court

dismissed a number of state restitution claims on the

basis that the law of those states prompts courts to look

to federal law in interpreting their unfair competition and

consumer protection statutes, and the Clayton Act does

not authorize restitution. See FTC v. Mylan Laboratories, 62

F. Supp.2d 25, 41 (D.D.C. 1998). The Court allowed

Idaho’s claim under the Idaho Consumer Protection Act

6a

(ICPA) to stand, however, on the basis that Idaho law

prompts courts to consider decisions interpreting

§ 5(a)(1) of the FTC Act, rather than the Clayton Act. See

Idaho Code § 48-604(a). As this Court had already held

that the FTC could pursue equitable remedies such as

disgorgement, the Court reasoned that Idaho should be

permitted to pursue similar kinds of equitable relief

under the ICPA.? Alaska, Connecticut, Florida, South Car-

olina, Vermont and West Virginia have asked this Court

to reconsider its rulings under the laws of those states in

light of the fact that they too prompt courts to consider

the FTC Act when interpreting the state statutes. Other

states have moved for reconsideration on the ground

that, although their state statutes do not explicitly refer-

ence the FTC Act, the structure and purpose of the state

statutes suggest that they should be interpreted in a

similar manner.

2 It should be noted that no court, including this one, has

held that the FTC may pursue restitution claims on behalf of

indirect purchasers. Although this Court did authorize the FTC

to seek disgorgement under § 13(b) of the Act, see Mem. Op. at

12-13, and at least one other court has permitted the FTC to

pursue restitution, see FTC v. Security Rare Coin, 931 F.2d 1312

(8th Cir. 1991), no court has addressed the specific issue of

restitution on behalf of indirect purchasers. The only guidance

in this area, then, are the principles for interpreting the remedial

powers of a district court set forth in the Porter v. Warner line of

cases. See Porter, 328 U.S. 395 (1946); Mitchell v. DeMario Jewelry,

Inc., 361 U.S. 288, 291-92 (1960); see also Mem. Op. at 11-12. In

light of the expansive view of a court’s equitable jurisdiction

espoused in the Porter cases, the Court will assume that the FTC

does have the authority to seek such relief.

7a

The states are correct that there is an internal incon-

sistency between the Court’s ruling on Idaho law and its

rulings in respect [sic] Alaska, Connecticut, Florida,

South Carolina and Vermont. The Court also finds that

this inconsistency extends to other states whose statutes,

though not explicitly referencing the FTC Act, permit the

state to proceed in equity. Thus, the Court will reassess its

rulings in respect to state statutes that explicitly refer-

ence, or are modeled after, the FTC Act, or that otherwise

permit the state to pursue equitable remedies.

. * *

Louisiana

Louisiana moves this Court to reconsider the dis-

missal of its claims under the Louisiana Monopolies Act,

La. Rev. Stat. Ann §§ 51:121 et seq. The July 7, 1999 Order

in this case contained a scrivener’s error dismissing Loui-

siana’s claim for damages on behalf of direct purchasers

under the Monopolies Act. That claim is reinstated.

Upon the benefit of further briefing, the Court will

also reinstate Louisiana’s claims for equitable monetary

relief under La. Rev. Stat. Ann § 51:128. That section

authorizes Louisiana, through its Attorney General, to

sue for violations of the the [sic] Monopolies Act. See

State v. Classic Soft Trim, Inc., 663 So.2d 835, 835 (La. App.

5th Cir. 1995). Section 128 does not limit the state’s ability

to pursue the full range of equitable relief. The Court will

therefore grant Louisiana’s motion and permit the state to

pursue claims for restitution on behalf of both direct and

indirect purchasers.

8a

The Court will not reinstate Louisiana’s claim for

damages as an indirect purchaser, or on behalf of indirect

purchasers, under § 137 of the Monopolies Act. Section

137 grants standing to “any person” who suffers an anti-

trust injury. See La. Rev. Stat. Ann § 51:137. In Free v.

Abbott Laboratories, 176 F.3d 298, 299 (5th Cir. 1999), the

Fifth Circuit looked to the policy considerations underly-

ing Illinois Brick and found that indirect purchasers do

not have standing under § 137. Although Louisiana urges

this Court to disregard the Fifth Circuit’s conclusion, this

Court will not ignore the holding of a federal appellate

court in a case directly on point. The Court will therefore

deny Louisiana’s motion to reconsider its ruling on indi-

rect purchaser standing under § 137.

Louisiana also moves this Court to reconsider its

rulings under the state’s Unfair Trade and Consumer

Protection Act. Louisiana’s claims for restitution on

behalf of direct and indirect purchasers are reinstated,

pursuant to La. Rev. Stat. Ann §§ 51:1407-1408, and the

decision in Classic, 663 So.2d at 835. Louisiana’s claim for

damages on behalf of direct purchasers under the Act

will also be reinstated, as the Louisiana Attorney General

has parens patriae authority to bring antitrust actions on

behalf of state citizens. See State v. Bordens, 684 So.2d

1024, 1026 (La. App. 4th Cir. 1996). The state’s claim for

damages on behalf of indirect purchasers under the Act

will not be reinstated, however, as to do so would pro-

vide an end run around the Fifth Circuit’s decision in

Free. As stated by the Fifth Circuit in a similar context, a

court should not interpret a state’s antitrust laws “in a

manner that rewards creative pleading at the expense of

consistent application of legal principles.” Segura, 907

9a

S.W.2d at 506. Thus, Louisiana’s motion to reinstate its

damages claim on behalf of indirect purchasers under the

Unfair Trade and Consumer Protection Act will be

denied.