Amicus Curiae Brief — Ford Motor Co. v. McCauley

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No. 01-896

In the Supreme Court of the Gites States ——

FORD MOTOR COMPANY AND

CITIBANK (SOUTH DAKOTA), N.A., PETITIONERS

l’.

JOHN B. MCCAULEY, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

THEODORE B. OLSON

Solicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

PAUL D. CLEMENT

Deputy Solicitor General

BARBARA MCDOWELL

Assistant to the Solicitor

General

BARBARA C. BIDDLE

THOMAS M. BONDY

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-221 7

QUESTION PRESENTED

Whether the cost to the defendant of complying with

an injunction sought by a plaintiffs’ class may satisfy

the amount-in-controversy requirements of the diver-

sity jurisdiction statute, where such compliance would

cost the defendant more than the $75,000 jurisdictional

amount whether it covered the entire class or any

single member of the class.

(I)

rr cena

TABLE OF CONTENTS

Page

IS acer sntnarecnesessnnecemecncsncasusnces 1

oT 2

I ants ceereeerencenennmnprennnensescssnenensennssassseses 6

Argument:

The amount-in-controversy requirement of 28 U.S.C.

1332 is satisfied in a class action seeking injunctive re-

lief if the cost to the defendant of providing relief to any

class member would exceed $75,000 .0...........cccccceceeeeseeeeeenes 10

I. Ina conventional lawsuit, the amount in controversy

is correctly measured by either the value of an injunc-

tion to the plaintiff or the cost of an injunction to the

Le 10

A. The text of the diversity jurisdiction statute does

not confine the amount-in-controversy analysis to

the plaintiff’s perspective ...........ccscscscsessessseseseesesees 10

B. The purposes of the diversity jurisdiction statute

are advanced by measuring the amount in con-

troversy from either party’s perspective ............... 13

C. This Court has measured the amount in contro-

versy from either party’s perspective, and the

trend among lower courts and commentators

BINNIE eccrensssnnssecorscssesnssesessccsscsasscscssnsate 17

Il. There is no basis for adopting a different rule in the

ee 19

A. Measuring the amount in controversy by the

benefit or cost of an injunction running to one

class member assures that aggregation neither

expands nor contracts the jurisdiction of the

ee 20

(IIT)

TABLE OF CONTENTS—Continued:

Page

B. Measuring the amount in controversy in a class

action by the cost of an injunction to the defend-

ant promotes fairness and judicial economy .......... 26

SEED scnnsssctcinsincnnshicictiitianitienstnitaaiinnsieaniiaaiiiiiat a aan 29

TABLE OF AUTHORITIES

Cases: ‘

Bank of the United States v. Deveaux, 9 U.S.

IT ciiictrrrnsieieiliiieintinrieaeentaciiatiaa iii 13, 26

Berman v. Narragansett Racing Ass'n, 414 F.2d 311

(1st Cir. 1969) .. 19

Brand Name Preserigtion Dregs ‘Antitrust Litig., In re,

123 F.3d 599 (7th Cir. 1997), cert. denied, 522 U.S. 1153

ee 8, 12, 20, 22, 25

Burford v. Sun Oil Co., 319 U.S. 315 (1943) 26

Carson v. Dunham, 121 U.S. 421 (1887) 16

Devlin v. Scardelletti, No. 01-417 (Mar. 26, 2002) ........... 2

Ericsson GE Mobile Communications, Inc. v. Motorola

Communications & Elec., Inc., 120 F.3d 216 (11th Cir.

ee 19

Gilman v. BHC Sec., Inc., 104 F.3d 1418 (2d Cir

a 6

Glenwood Light & Water Co. v. Mutual Light, Heat

& Power Co., 239 U.S. 121 (1915) 17

Government Buglegees Ins. Co. v. Lally, 327 F.2d 568

8 Ee 19

Horton v. Liberty Mut. Ins., 367 U.S. 348 (1961) -ecc........ 13

Hunt v. New York Cotton Exch., 205 US. 322

(1907) 18

Hunt v. Washington State Apple Adver. Comm'n, 432

FF Se 18

Lexecon Inc. v. Milberg Weiss Bershad Hynes &

Lerach, 523 U.S. 26 (1998)...... 28

Market Co. v. Hoffman, 101 U.S. 112 (1880) .......cccccses- 17, 25

2 ~aw ~_—

Cases—Continued: Page

Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304 ”

(1816) ....ccessessecsnecsessnscssscsssssnsenssnssnsensssnennssnnssnenneenssnssnnsnnenseas se

McCarty v. Amoco Pipeline Co., 595 F.2d 389 (7th Cir.

eS (an 12, 19

McNutt v. General Motors Acceptance Corp., 298 US.

178 (1986) ........cecnesnecsecnsccescesescsssnssenesnsensnnsensnssnsnnsnnssesnsonscnssness

Mississippi & Missouri R.R. v. Ward, 67 U.S. 485 a

(1862) .....ccsccecsveccesesvsecssecsssssnssneessesasennecnssennsansssneenscsnscnscenscanonsss

Oklahoma Retail Grocers Ass’n v. Wal-Mart Stores,

Inc., 605 F.2d 1155 (10th Cir. 1979) .....--sssssssssseereeeerereren 19

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

cert. denied, 516 U.S. 867 (1995) " 27

Ridder Bros. v. Blethen, 142 F.2d 395 (9th Cir. 1944) .... 19

Ronzio v. Denver & Rio Grande Western R.R., 116

F.2d 604 (10th Cir. 1940) ' 18-19

Rosmer v. Pfizer Inc., 263 F.3d 110 (4th Cir. 2001),

petition for cert. pending, No. 01-1390 . -_ . 21

Saint Paul Mercury Indem. Co. v. Red Cab Co., 303 :

U.S. 283 (1938) " 1

Sanchez v. Monumental Life fae. Co, 102 F.3d 398

(9th Cir. 1996) -

Smith v. Adams, 130 U.S. 167 (1889) ses :

Smith v. Washington, 593 F.2d 1097 (D.C. Cir. ‘9

1978) ;

Snow v. Ford Motor Co., 561 F.2d 787 (9th Cir. 1977) .... 5

Snyder v. Harris, 394 U.S. 332 (1969) ...... 6, 8,19-20, 21, 23, 25

Zahn v. International Paper Co., 414 U.S. 291

(1973) .........- 6, 8, 20, 21, 22, 25

Constitution, statutes and rules:

U.S. Const. Art. III .

Act of Feb. 25, 1879, ch. 99, § 4, 20 Stat. 321 .....-.----sesseeessves 1

Judiciary Act of 1789, ch. 20, § 11, 1 Stat. 78 af ,

28 U.S.C. 1291

28 U.S.C. 1331 11

Statutes and rules—Continued: Page

28 U.S.C. 1332 (1994 & Supp. V 1999) .... 1, 2, 3, 5,8, 10, 11, 24

28 U.S.C. 1332(a) (1994 & Supp. V 1999) .0...........cccececeeseeeees 7

eee ras SII cseceiernnctsiensctncisnnsnenssnmnsenincicestnmemnmminacssiiicsataias 21

a 21

ey SUI TIE sacctastncenseclechaticebineteeaiaieamaiaiabitai atta 28

Be a 3, 28

a ee UID cenarcnecncenssrninssnsosnnsinenannsinenseminssniatapicitdinnecinenianeaen 15

SP eat MUTT crasciitceicastenniessabeiinehcitiacesen ictal 16

Se STII SUTTTIIIIED eierinineneiternerieishachiriinttiichitmettintealinaiaiiae 4

Fed. R. Civ. P.:

ee eo von 27

Rule 23 .. . 2, 23, 27

Rule 23(b)(2) 3, 23, 25

Rule 23(b)(3) . . 32

ED cesessscssscmsnmsininntecenstncnsimenensicentnaniees 27

Miscellaneous:

ALI, Complex Litigation: Statutory Recommen-

dations and Analysis (1994) ..., 29

Thomas E. Baker, The History and Tradition of the

Amount in Controversy Requirement: A Proposal to

“Up the Ante” in Diversity Jurisdiction, 102 F.R.D.

299 (1985) 14

Erwin Chemerinsky, Federal Jurisdiction (2d ed.

1994) 12,19

Henry J. Friendly, Federal Jurisdiction: A General

View (1973) 27

Deborah R. Hensler et al., Class Action Dilemmas:

Pursuing Public Goals for Private Gain (2000) .............. 27

Brittain S. McInnis, The $75,000.01 Question: What Is the

Value of Injunctive Relief ?,6 Geo. Mason L. Rev. 1013

(1998) 11, 16, 27

15 Moore’s Federal Practice (3d ed. 1998) ............0-0+- 14, 15, 19

Thomas D. Rowe, Jr. & Kenneth D. Sibley, Beyond

Diversity: Federal Multiparty, Multiforum Juris-

diction, 135 U. Pa. L. Rev. 7 (1986) 29

Vil

Miscellaneous—Continued:

S. Rep. No. 1830, 85th Cong., 2d Sess. Pt. 1 (1958) ............

S. Rep. No. 366, 104th Cong., 2d Sess. (1996) seseeernennneneeees

The Federal Courts Improvement Act: Hearing on

S. 1101 Before the Subcomm. on Administrative Over-

sight and the Courts of the Senate Comm. on the

Judiciary), 104th Cong., Ist Sess. (1995)...

Charles A. Wright et al., Federal Practice and

Procedure:

Vool. TA (19BG) ......c.c-0e-e202ecesesesesosecssscsscnscsesessorssossenessnsonssoess

Vol. 14B (1998) ........00:ccecececesessssssesenesereesnensssesnsssnesessnenenees

In the Supreme Court of the Gnited States

No. 01-896

FORD MOTOR COMPANY AND

CITIBANK (SOUTH DAKOTA), N.A., PETITIONERS

Vv.

JOHN B. MCCAULEY, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The diversity jurisdiction statute, 28 U.S.C. 1332,

confers upon the federal district courts jurisdiction over

cases in which “the matter in controversy exceeds the

sum or value of $75,000, exclusive of interest and costs,”

and the parties are citizens of different States or citi-

zens of a State and citizens of a foreign country. Con-

gress established the amount-in-controversy require-

ment in the Judiciary Act of 1789, and adjusted the

amount on several subsequent occasions, to confine

diversity jurisdiction to relatively significant cases.

Congress has not, however, directed that the amount in

controversy be assessed only from the perspective of

the plaintiff. To the contrary, the general statutory

(1)

text focuses on the “value” of “the matter in contro-

versy,” and allows that value to be considered from the

perspective of either party.

. The United States has a significant interest in an

interpretation of the amount-in-controversy require-

ment that, in cases seeking equitable relief, measures

that amount either by the benefit to the plaintiff or the

cost to the defendant, whichever is greater. In class

actions, such as this one, the requirement is satisfied if

the defendant’s cost of providing injunctive relief to any

class member exceeds $75,000. Such an understanding

of the amount-in-controversy requirement serves Con-

gress’s purpose of assuring a neutral national forum for

the adjudication of all substantial disputes between

persons of diverse citizenship. In addition, such an

interpretation avoids creating incent’ ves to file pre-

emptive suits in federal court and tens ‘s between 28

U.S.C. 1332 and Federal Rule of Civi ‘rocedure 23.

More broadly, the rules governing cla actions have

enormous consequences for the fede 4l courts and

interstate commerce, and the United ‘ates has pre-

viously participated as an amicus curiae in such cases.

See, e.g., Devlin v. Scardelletti, No. 01-417 (argued Mar.

26, 2002).

STATEMENT

1. In early 1993, petitioners Ford Motor Company

(Ford) and Citibank (South Dakota), N.A. (Citibank),

issued a credit card that offered cardholders the

opportunity to save on the purchase or lease of a new

Ford vehicle. Under the program, cardholders earned a

5% rebate on each purchase made using the credit card,

redeemable on the purchase or lease of certain Ford

vehicles. Cardholders could accrue a maximum of $700

in rebates per year (representing $14,000 in purchases)

over a five-year period, for a maximum possible rebate

of $3500. On December 31, 1997, less than five years

after the program’s inception, Ford and Citibank termi-

nated the rebate accrual feature of the credit card. Pet.

App. 3a.

2. After the termination of the rebate program,

cardholders filed suits against Ford, and in some in-

stances also against Citibank, in state courts in

Washington, Oregon, California, Illinois, Alabama, and

New York. They alleged that Ford and Citibank mis-

represented or withheld information about the np .ure

and duration of the program and wrongful! dis-

continued it. Ford and Citibank removed the cases to

federal district court on the basis of diversity juris-

diction. Pursuant to 28 U.S.C. 1407, the Judicial Panel

on Multidistrict Litigation transferred the cases to the

United States District Court for the Western District

of Washington for coordinated pretrial proceedings.

Pet. App. 3a.

The district court consolidated the cases. The

plaintiffs (respondents here) filed a consolidated com-

plaint in that court on behalf of a nationwide class of

nearly six million Ford/Citibank cardholders. The

consolidated complaint asserted state-law causes of

action for breach of contract, unjust enrichment, and

violation of state consumer protection statutes. Con-

solidated Complaint 8-13. As relief, the complaint

sought compensatory damages, punitive damages, and

an injunction ordering “specific performance of the

Rebate Program.” Jd. at 13. The complaint pleaded

diversity jurisdiction under 28 U.S.C. 1332. Consoli-

dated Complaint 3; see Pet. App. 3a-4a.

The plaintiffs moved for class certification under

Rule 23(b)(2) and (3) of the Federal Rules of Civil

Procedure. The district court, however, did not rule on

that request. Instead, acting on its own motion, the

court held that it lacked subject-matter jurisdiction

over the case, reasoning that the $75,000 amount-in-

controversy requirement of the diversity jurisdiction

statute was not satisfied. The court dismissed the

peer complaint and remanded the underiying

cases to their state cou igi

pa hag rts of origin. Pet. App. 4a-5a,

3. The United States Court of Appeals for the Ninth

Circuit affirmed in part and dismissed in part. The

court dismissed as unappealable petitioners’ challenge

to the district court’s remand order, see 28 U.S.C.

1447(d), but upheld the district court’s conclusion that

diversity jurisdiction did not exist with respect to

respondents’ consolidated complaint. P :

_— p et. “oe. 13a

' The court of appeals held that it had appellate jurisdicti

under 28 U.S.C. 1291 to review the Gada cuts ay

missing the consolidated complaint, apparently on the ground that

the dismissal of the complaint, without leave to amend, was tanta-

mount to a “dismissal of the action.” Pet. App. 6a. If, however, the

consolidated complaint is viewed as being in the same “action” as

the removed state-court complaints, the district court did not

dismiss the action, but instead remanded it, which is not an

appealable decision. 28 U.S.C. 1447(d). It would be questionable in

that circumstance whether the court of appeals had jurisdiction to

review the dismissal order. If, however, the consolidated com-

plaint is viewed as being in a separate “action” from the removed

state-court complaints, the district court could have dismissed that

action, while remanding the separate actions commenced by the

state court complaints. The court of appeals’ exercise of appellate

jurisdiction would seem permissible in that circumstance, although

it is less clear that petitioners would be the property parties to

appeal the dismissal of the consolidated complaint filed against

them. Respondents did not dispute appellate jurisdiction in their

brief in opposition in this Court.

In examining the question of diversity jurisdiction

under Section 1332, the court of appeals observed that

“the sole jurisdictional question is whether the mini-

mum amount in controversy required to maintain a

diversity suit in federal court is present.” The court

noted that the diverse citizenship of the parties was not

contested. Pet. App. 6a.

First, the court of appeals concluded that the plain-

tiffs’ claim for compensatory damages did not satisfy

the amount-in-controversy requirement of Section 1332.

The court noted that “Ford and Citibank do not contend

that any plaintiff has an individual damages claim

exceeding $75,000.” Nor did Ford and Citibank contend

that the plaintiffs were asserting “a common and un-

divided interest in a claim for damages” that could

satisfy the amount-in-controversy requirement. Pet.

App. 6a-7a.

Second, the court of appeals held that the plaintiffs’

claim for an injunction could not satisfy the amount-in-

controversy requirement. The court noted that the

lower courts have taken different approaches to mea-

suring the amount in controversy with respect to claims

for injunctive relief: some courts apply a “plaintiff-

viewpoint” approach, which considers only the value of

the requested injunction to the plaintiff, while other

courts apply an “either viewpoint” approach, which also

considers the defendant’s cost of complying with the

requested injunction. Pet. App. 7a-8a.

The court of appeals noted that, although the Ninth

Circuit had applied the “either viewpoint” approach in

earlier cases, it had not done so in a class action. See

Pet. App. 8a (citing Snow v. Ford Motor Co., 561 F.2d

787, 790 (9th Cir. 1977)). The court reasoned that ap-

plying the “either viewpoint” approach in a class action

would violate the rule against aggregation of claims

articulated in Snyder v. Harris, 394 U.S. 332 (1969), and

Zahn v. International Paper Co., 414 U.S. 291 (1973),

because “plaintiffs with minimal damages could dodge

the non-aggregation rule by praying for an injunction.”

Pet. App. 9a. Accordingly, although Ford and Citibank

maintained that compliance with the requested injunc-

t..a would cost them more than $75,000, the court

concluded that the amount-in-controversy requirement

was not satisfied. /d. at 10a.

The court of appeals recognized that the rule against

aggregation is not violated when plaintiffs have “a com-

mon and undivided interest” in their claim for relief.

The court concluded, however, that the plaintiffs, who

“charged purchases and accrued rebates individually,

not as a group,” did not have a “common and undivided

interest in accruing rebates under the program.” Pet.

App. 10a.

Finally, the court of appeals held that the plaintiffs’

claim for punitive damages did not satisfy the amount-

in-controversy requirement. The court reasoned that

“punitive damages asserted on behalf of a [putative]

class may not be aggregated for jurisdictional purposes

where, as here, the underlying cause of action asserted

on behalf of the class is not based upon a title or right in

which the plaintiffs share, and as to which they claim, a

common interest.” Pet. App. 17a (quoting Gilman v.

BHC Sec., Inc., 104 F.3d 1418, 1431 (2d Cir. 1997))2

SUMMARY OF ARGUMENT

I. Congress has authorized federal district courts to

exercise jurisdiction over “all civil actions” between

. This Court granted the writ of certiorari only with respect to

Question 1 in the petition, which concerns the claim for injunctive

relief, and not with respect to Question 2, which concerns the claim

for punitive damages.

parties of diverse citizenship “where the matter in

controversy exceeds the sum or value of $75,000,

exclusive of interest and costs.” 28 U.S.C. 1332(a) (1994

& Supp. V (1999). The text of the diversity jurisdiction

statute focuses on the “value” of “the matter in

controversy.” Nothing in the statute confines the

analysis of that value to the plaintiff’s perspective when

a case seeks injunctive or other equitable relief that the

plaintiff and defendant value differently. To the con-

trary, the text is most naturally understood as allowing

the amount in controversy to be measured from either

party’s perspective in such cases. It is thus sufficient

that either the benefit of an injunction to the plaintiff or

the cost of an injunction to the defendant exceeds

$75,000.

Such a rule advances Congress’s purpose of providing

a neutral national forum for the resolution of all sub-

stantial disputes involving diverse parties. A case is

equally substantial whether the potential benefit to the

plaintiff exceeds $75,000 or the potential cost to the

defendant exceeds $75,000. Such a rule also accords

with Congress’s purpose, expressed in the removal

statute, of assuring out-of-state plaintiffs and out-oi-

state defendants comparable access to federal court. Ii

enables either party to seek a federal forum when its

own stake in the case exceeds the jurisdictional amount.

For such reasons, a number of lower courts and com-

mentators agree that the amount in controversy should

be valued from either party’s perspective.

II. Nothing in the procedural rules permitting class

actions requires abandoning the “either perspective”

rule in such actions. Although the court below has long

applied the “either perspective” rule in single-plaintiff,

single-defendant suits, it concluded that precedents of

this Court precluded application of the rule in class

suits. That view is mistaken.

In class actions seeking injunctive relief, the amount

in controversy is appropriately measured by the benefit

or cost of an injunction running from one plaintiff to one

defendant. See Jn re Brand Name Prescription Drugs

Antitrust Litig., 128 F.8d 599, 610 (7th Cir. 1997)

(Posner, C.J.), cert. denied, 522 U.S. 1153 (1998). Such

an analysis, by separately considering the value of each

plaintiff's claim against each defendant, assures that

the procedural class action device neither expands

nor contracts the scope of the diversity jurisdiction

authorized in 28 U.S.C. 1332. A court may exercise

diversity jurisdiction over a class action if, but only if, it

could have exercised diversity jurisdiction over in-

dividual actions by each class member.

The court below concluded that assessing the amount

in controversy from the defendant’s perspective some-

how ran afoul of the non-aggregation principle of

Snyder v. Harris, 394 U.S. 332 (1969), and Zahn v.

International Paper Co., 414 U.S. 291, 294 (1973). But

the “either perspective” rule is consistent with Snyder

and Zahn. Those cases hold that plaintiffs cannot

create diversity jurisdiction by using the class action

device to aggregate claims that would not independ-

ently satisfy the amount-in-controversy requirement.

Whether a federal court may exercise diversity juris-

diction over a class action thus turns on whether a

federal court could exercise diversity jurisdiction over a

traditional single-plaintiff, single-defendant action

asserting the same claims. The appropriate application

of the “either perspective” rule in the class action

context is to ask whether the value of the requested

injunction would be worth more than $75,000 to either

the plaintiff or defendant in a single-plaintiff, single-

dant action. By refusing to apply the “either per-

seater rule in pe actions, the court below allows

plaintiffs, by bringing their claims in a class action, to

divest federal jurisdiction that would exist in an

individual action. That result is inconsistent with the

spirit of Snyder and Zahn and the principle that the

Federal Rules should not alter the reach of juris-

dictional statutes. . —

Allowing class actions involving diverse parties to be

| adjudicated in federal court when the amount-in-

controversy requirement is satisfied from either side’s

perspective offers several practical advantages. As in

individual actions, diversity jurisdiction assuages con-

cerns about state court bias against out-of-state parties

and provides a nationally uniform set of procedural

rules to assure the fair, speedy, and inexpensive re-

solution of cases. In class actions, moreover, parties

may benefit from the federal courts’ greater resources

and expertise with regard to complex litigation, the

availability of a mechanism for the transfer of related

cases to a single district court for coordinated or

consolidated pretrial proceedings, and other incentives

for efficient adjudication.

ARGUMENT

THE AMOUNT-IN-CONTROVERSY REQUIREMENT OF

28 U.S.C. 1332 IS SATISFIED IN A CLASS ACTION

SEEKING INJUNCTIVE RELIEF IF THE COST TO THE

DEFENDANT OF PROVIDING RELIEF TO ANY CLASS

MEMBER WOULD EXCEED $75,000

I. IN A CONVENTIONAL LAWSUIT, THE AMOUNT

IN CONTROVERSY IS CORRECTLY MEASURED

BY EITHER THE VALUE OF AN INJUNCTION TO

THE PLAINTIFF OR THE COST OF AN INJUNC-

TION TO THE DEFENDANT

In assessing whether the amount-in-controversy re-

quirement of 28 U.S.C. 1332 is satisfied in a case seek-

ing injunctive relief, a federal court should consider not

only the value of the relief to the plaintiff, but also the

cost of the relief to the defendant. If the amount

exceeds $75,000 from either the plaintiff's or the defen-

dant S perspective, the amount-in-controversy require-

ment is satisfied. That “either perspective” approach is

consistent with the statutory text, advances the statu-

tory purposes of providing a neutral national forum for

all significant disputes involving diverse parties,

promotes fairness between plaintiffs and defendants

with respect to access to the federal courts, and avoids

artificial incentives to file declaratory judgment actions

in order to secure a federal forum.

A. The Text of the Diversity Jurisdiction Statute Does

Not Confine the Amount-in-Controversy Analysis to

the Plaintiff's Perspective

The diversity jurisdiction statute, 28 U.S.C. 1332,

provides that “(t}he district courts shall have original

jurisdiction of all civil actions where the matter in con-

troversy exceeds the sum or value of $75,000, exclusive

of interest and costs,” and the parties are of diverse

citizenship. Since the establishment of the lower

federal courts in the Judiciary Act of 1789, their divers-

ity jurisdiction has been conditioned on satisfaction of

an amount-in-controversy requirement. Although that

amount has increased over time from $500 in 1798 to

$75,000 today, the text of requirement has otherwise

remained essentially unchanged. See Judiciary Act

of 1789, ch. 20, § 11, 1 Stat. 78 (“the circuit courts shall

have original cognizance, concurrent with the courts of

the several States, of all suits of a civil nature at com-

mon law or in equity, where the matter in dispute ex-

ceeds, exclusive of costs, the sum or value of five

hundred dollars”).’

Nothing in the text of Section 1332 or its statutory

predecessors states, or even suggests, that “the sum or

value” of “the matter in controversy” is to be measured

only from the perspective of the plaintiff. The general

statutory language directs attention to the “value” of

“the matter in controversy,” rather than to the per-

spective of one party or the other. The text is most

naturally understood as authorizing the exercise of

diversity jurisdiction whenever the “matter in contro-

versy” exceeds $75,000 from either the plaintiffs or the

defendant’s perspective. See Brittain S. McInnis, The

$75,000.01 Question: What Is the Value of Injunctive

Relief?, 6 Geo. Mason L. Rev. 1013, 1031 (1998) (observ-

ing that “the either viewpoint rule mirrors the flexi-

bility inherent in the statute’s language”).

3 For many years, 28 U.S.C. 1331, the general federal-question

jurisdiction statute, contained a similar amount-in-controversy

requirement. Some of the cases cited in the text involve that

requirement.

It would seem artificial to place the “value” of “the

matter in controversy” at anything less than the

amount at stake for either the plaintiff or the defen-

dant, whichever is greater. Suppose, for example, that

a homeowner sues to enjoin an energy company from

running a pipeline across a portion of the homeowner’s

property. The benefit to the homeowner of excluding

the pipeline might not approach $75,000, although the

expense to the energy company of rerouting the pipe-

line might easily exceed $75,000. In such a case, the

amount in controversy for purposes of Section 1332 is

most sensibly measured from the perspective of either

party, “because the amount in controversy in a lawsuit

exceeds [the jurisdictional amount] if either the plaintiff

or defendant will have to pay that amount.” Erwin

Chemerinsky, Federal Jurisdiction § 5.3, at 292 (2d ed.

1994); see McCarty v. Amoco Pipeline Co., 595 F.2d 389

(7th Cir. 1979) (applying “either perspective” approach

on similar facts).‘

In some cases, either party to a dispute could have

initiated the suit, especially in light of the Declaratory

Judgment Act. Such cases underscore the arbitrariness

of valuing the dispute only from the perspective of

whichever party actually did so. As the Court has

observed in a related context, “[n]o matter which party

brings it into court, the controversy remains the same;

it involves the same amount of money and is to be

‘ The “either perspective” rule makes particular sense because,

as a practical matter, the value of the injunction to the plaintiff will

reflect the cost of compliance to the defendant. If liability is

established, a rational plaintiff would agree to settle the matter for

“a shade less than the cost that the injunction would impose on the

defendant.” Jn re Brand Name Prescription Drugs Antitrust

— 123 F.3d 599, 609 (7th Cir. 1997), cert. denied, 522 U.S. 1153

1998).

adjudicated and determined under the same rules.”

Horton v. Liberty Mutual Ins., 367 U.S. 348, 354 (1961).

A rule valuing the matter in controversy solely from

the perspective of the plaintiff would create an artificial

incentive to sue for potential defendants who favor a

federal forum, and could even prompt a race to the

courthouse. In the pipeline example, the defendant

could guarantee a federal forum only by promptly filing

a declaratory judgment action in district court. A rule

that values the matter in controversy from the per-

spective of either party maintains the parity between a

party’s right to initiate a lawsuit in federal court and its

right to remove, and so eliminates the incentive to sue

first.

B. The Purposes of the Diversity Jurisdiction Statute

Are Advanced by Measuring the Amount in Con-

troversy from Either Party’s Perspective

Congress enacted the diversity jurisdiction statute to

provide citizens of different States, or citizens of a State

and citizens of a foreign country, an alternative national

forum to resolve their disputes. The statute, like

Article III of the Constitution, reflects the Framers’

concerns about the actual or perceived partiality of

state courts to local interests. See, e.g., Martin v.

Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 347 (1816) (ob-

serving that diversity jurisdiction rests on the pre-

sumption that “state attachments, state prejudices,

state jealousies, and state interests, might sometimes

obstruct, or control, or be supposed to obstruct or

control, the reguiar administration of justice”); Bank of

the United States v. Deveaux, 9 U.S. (5 Cranch) 61, 87

(1809).

Congress included the amount-in-controversy re-

quirement in the original diversity jurisdiction statute,

and subsequently adjusted the amount, in order to

reserve the federal courts’ diversity jurisdiction for

relatively substantial cases in monetary terms. See 15

Moore’s Federal Practice § 102.109[3], at 102-199 (3d

ed. 1998) (“{T]he jurisdictional-amount requirement re-

flects a congressional judgment that federal judicial

resources should be devoted only to those diversity

cases in which the financial stakes rise to a pre-

determined level.”).° Thus, when Congress raised the

jurisdictional amount in 1958 from $3000 to $10,000, the

Senate Judiciary Committee explained that “the

amount should be fixed at a sum of money that will

make jurisdiction available in all substantial con-

troversies where other elements of Federal jurisdiction

are present.” S. Rep. No. 1830, 85th Cong., 2d Sess. 3-4

(1958) (emphasis added). The Committee added that

“(t]he jurisdictional amount should not be so high as to

convert the Federal courts into courts of big business

nor so low as to fritter away their time in the trial of

petty controversies.” Jd. at 4. Similarly, when

Congress increased the jurisdictional amount in 1996

from $50,000 to $75,000, the Senate Judiciary Com-

mittee, after noting “the importance of balancing the

need to assist the Federal judiciary in reducing its

increasing caseload with the needs of those making use

of our Federal courts,” concluded that “(t]he adjust-

ment of the jurisdictional amount provides claims with

substantial amounts at issue access to a Federal

5 Congress has understood the requirement as serving both to

preserve the role of the state courts and, in the modern era, to

avoid overburdening the federal courts. See, e.g., Thomas E.

Baker, The History and Tradition of the Amount in Controversy

Requirement: A Proposal to “Up the Ante” in Diversity Juris-

diction, 102 F.R.D. 299, 302-318 (1985).

forum.” S. Rep. No. 366, 104th Cong., 2d Sess. 29-30

(1996).

The purpose of the diversity jurisdiction statute,

including its amount-in-controversy requirement, is

thus to provide a neutral national forum for the adjudi-

cation of substantial controversies involving diverse

parties. That purpose is fully served only when the

federal courts are open to cases satisfying the juris-

dictionai amount from the perspective of either party.

After all, “the matter in controversy” is equally

“substantial” whether the potential benefit to the

plaintiff is more than $75,000 or the potential cost to the

defendant is more than $75,000. As a leading treatise

has observed, “the purpose of a jurisdictional amount in

controversy requirement—to keep trivial cases away

from the federal court system—is satisfied when the

case is worth a large sum of money to either party.”

14B Charles A. Wright et al., Federal Practice and

Procedure § 3703, at 124 (1998); accord 15 Moore’s

Federal Practice, supra, § 102.109[3], at 102-199.

In addition, measuring the amount in controversy

from the perspective of either party promotes the

symmetry that Congress has sought to achieve be-

tween out-of-state plaintiffs and out-of-state defendants

with respect to access to federal court in diversity

cases. Congress could have left it solely to the plaintiff,

as the master of its complaint, to decide whether a

substantial dispute between diverse parties would be

adjudicated in state or federal court. Instead, begin-

ning with the Judiciary Act of 1789, Congress gave out-

of-state defendants (and sometimes all defendants) the

right to remove such cases to federal court. See 28

U.S.C. 1441; Saint Paul Mercury Indem. Co. v. Red

Cab Co., 303 U.S. 283, 286-287 (1938) (discussing histery

of removal statute). The removal statute clearly indi-

cates concern for the out-of-state defendant, who

otherwise would have no control over the forum. Yet, if

the amount in controversy were measured only from

the plaintiff's perspective, a defendant could not re-

move the case to federal court, even though the defen-

dant stood to lose more than the jurisdictional amount

from an adverse state court judgment. That would be

so even in those cases where either party might have

initiated a suit, so that it is merely fortuitous which

party is the plaintiff and which is the defendant.

The “either perspective” rule also has practical ad-

vantages. Under a “plaintiff only” rule, plaintiffs could

demonstrate the value of the case from their own per-

spective, and thus based on information available to

them; defendants, however, could demonstrate the

value of the case only from their adversary’s per-

spective, and thus based on information that might not

be available to them early in the case when removal

must occur. See 28 U.S.C. 1446(b) (time limits for

removal); see also McInnis, supra, 6 Geo. Mason L. Rev

at 1023 (suggesting that valuing the amount in con-

troversy from either party’s perspective avoids “forcing

courts to accept a one-sided, and hence distorted,

assessment of the value of a claim”). Forcing defen-

dants to rely on information outside their possession is

particularly problematic in the removal context, in

which the removing defendant bears the burden of

establishing jurisdiction. Carson v. Dunham, 121 U.S.

421, 425 (1887). In addition, it may be easier in some

cases to value the injunction from the defendant’s per-

spective. While the value of the injunction from a

plaintiff's perspective may involve difficult. valuation

problems (e.g., what is the value of not having a pipeline

under your land?), the defendant’s costs of compliance

may be relatively concrete.

C. This Court Has Measured the Amount in Controversy

from Either Party’s Perspective, and the Trend

Among Lower Courts and Commentators Favors That

Approach

This Court has recognized that, in cases seeking

injunctive or other equitable relief, “the matter in con-

troversy” may have a different value to the plaintiff and

the defendant. In Glenwood Light & Water Co. v.

Mutual Light, Heat & Power Co., 239 U.S. 121, 124-125

(1915), for example, the plaintiff sought an injunction

that would have required the defendant to relocate its

utility poles and wires—relief that would have

produced a benefit to the plaintiff exceeding the $3000

jurisdictional amount, but which would have cost the

defendant no more than $500. Although the Court held

in that case that the amount-in-controversy require-

ment was satisfied based on the value to the plaintiff of

obtaining the requested injunction, see id. at 124, the

Court has not held that the requirement cannot also be

satisfied based on the value to the defendant of de-

feating the injunction.

Indeed, in Market Co. v. Hoffman, 101 U.S. 112

(1879), this Court considered the amount in controversy

from the defendant’s perspective in applying an 1879

statute that, in terms similar to those of the diversity

jurisdiction statute, authorized appeals to this Court

from the Supreme Court of the District of Columbia “in

any case where the matter in dispute, exclusive of

costs, exceeds the value of twenty-five hundred

dollars.” Act of Feb. 25, 1879, ch. 99, § 4, 20 Stat. 321.

In that case, 206 persons who occupied stalls in the

defendant’s market successfully sued to enjoin the

defendant from selling the stalls to a third party. The

Court concluded that the $2500 amount-in-controversy

requirement was satisfied because “the sale which the

company proposed to make, and the court below

enjoined, would have realized to the company more

than $60,000.” 101 U.S. at 113.

In many subsequent cases, the Court has described

the amount-in-controversy inquiry for federal jurisdic-

tion in terms that would permit consideration of the

value of the case from either party’s perspective. Thus,

in Hunt v. Washington State Apple Advertising Com-

mission, 432 U.S. 333 (1977), the Court observed that,

“{iJn actions seeking declaratory or injunctive relief, it

is well established that the amount in controversy is

measured by the value of the object of the litigation,”

id. at 347, without suggesting that only the value to the

plaintiff is to be considered. See, eg., McNutt v.

General Motors Acceptance Corp., 298 U.S. 178, 181

(1936) (“jurisdiction is to be tested by the value of the

object or right to be protected against interference”);

Hunt v. New York Cotton Exch., 205 U.S. 322, 336

(1907) (“jurisdiction is determinable by the object

sought to be accomplished”); Mississippi & Missouri

R.R. v. Ward, 67 U.S. (2 Black) 485, 492 (1862) (“the

removal of the obstruction [a bridge] is the matter of

controversy, and the value of the object must govern”).

The Court has gone so far as to observe, albeit in dicta,

that “the pecuniary value of the matter in dispute may

be determined * * * by the pecuniary result to one of

the parties immediately from the judgment.” Smith v.

Adams, 130 U.S. 167, 175 (1889).

A number of lower courts have recognized that, in

cases seeking injunctive or other equitable relief, “the

test for determining the amount in controversy is the

pecuniary result to either party which the judgment

would directly produce.” Ronzio v. Denver & Rio

Grande Western R.R., 116 F.2d 604, 606 (10th Cir.

1940); see, e.g., Sanchez v. Monumental Life Ins. Co.,

102 F.3d 398, 405 (9th Cir. 1996); Oklahoma Retail

Grocers Ass’n v. Wal-Mart Stores, Inc., 605 F.2d 1155,

1159-1160 (10th Cir. 1979); McCarty, 595 F.2d at 393-

395; Smith v. Washington, 593 F.2d 1097, 1100 & n.6

(D.C. Cir. 1978); Berman v. Narragansett Racing

Ass’n, 414 F.2d 311, 314 (1st Cir. 1969); Government

Employees Ins. Co., v. Lally, 327 F.2d 568, 569 (4th Cir.

1964); Ridder Bros. v. Blethen, 142 F.2d 395, 398-399

(9th Cir. 1944); ef. Ericsson GE Mobile Communi-

cations, Inc. v. Motorola Communications & Elec.,

Inc., 120 F.3d 216, 220 & n.15 (11th Cir. 1997) (recogniz-

ing that “there are persuasive arguments to support

the adoption of the either-viewpoint rule” but adhering

to contrary circuit precedent). The leading commenta-

tors, as well, have suggested that the amount in

controversy is more appropriately measured from the

perspective of either party in cases seeking injunctive

relief. See, e.g., 14B Wright et al., supra, § 3703, at 125

(observing that the “either perspective” rule “seems to

be the appropriate one”); 15 Moore’s Federal Practice,

supra, § 102.109[3], at 102-199; Chemerinsky, supra,

§ 5.3, at 292 (observing that “the trend seems to be” in

the direction of the “either perspective” rule).

Il. THERE IS NO BASIS FOR ADOPTING A DIF-

FERENT RULE IN THE CLASS ACTION CON-

TEXT

The court below has applied the “either perspective”

rule in conventional single-plaintiff, single-defendant

cases for decades. See, e.g., Ridder Bros., 142 F.2d at

399. Nonetheless, the court concluded that application

of the “either perspective” rule was foreclosed in the

class action context by this Court’s decisions in Snyder

v. Harris, 394 U.S. 331 (1969), and Zahn v. Inter-

national Paper Co, 414 U.S. 291 (1973). On the

contrary, the “either perspective” rule, properly ap-

plied, is more consistent with Snyder and Zahn than

the court’s own approach.

A. Measuring the Amount in Controversy by the Benefit or

Cost of an Injunction Running to One Class Member

Assures that Aggregation Neither Expands nor

Contracts the Jurisdiction of the Federal Courts

In a case seeking injunctive or other equitable relief

with respect to the class as a whole, the amount-in-

controversy analysis should turn on whether, in a

hypothetical suit between one plaintiff and one defen-

dant, the cost to the plaintiff of obtaining the relief or

the cost to the defendant of providing it would exceed

the jurisdictional amount. See Jn re Brand Name

Prescription Drugs Antitrust Litig., 123 F.3d 599, 610

(7th Cir. 1997) (Posner, C.J.) (to measure the amount in

controversy from the defendant’s perspective in a class

action seeking injunctive relief, “[t]he test * * * isthe

cost to each defendant of an injunction running in favor

of one plaintiff’), cert. denied, 522 U.S. 1153 (1998).

That analysis assures that aggregation of claims

through the procedural device of a class action does not

deprive parties of the access to federal court to which

they would be entitled if the claims were brought

individually. It likewise assures that aggregation of

claims does not provide parties with access to federal

court to which they would otherwise not be entitled.

1. Applying the “either perspective” rule to class

actions by considering the value of an injunction run-

ning from one plaintiff to one defendant in a hypotheti-

cal individual suit comports with the “nonaggregation

rule” of Snyder and Zahn. In those cases, the Court

ea, a, ia, a --- —

held that class members could not aggregate their

“separate and distinct claims” for damages in order to

satisfy the jurisdictional amount. Thus, the class action

in Snyder could not proceed in federal court at all,

because no class member’s individual claim exceeded

the jurisdictional amount, whereas the class action in

Zahn ¢ould proceed only as to those class members

whose individual claims exceeded that amount. The

Court explained that allowing aggregation of claims

that could not have been brought in federal court

separately would “seriously undercut the purpose of

the jurisdictional amount requirement.” Snyder, 394

U.S. at 340; accord Zahn, 414 USS. at 301.

As the Seventh Circuit explained, the “nonaggrega-

tion rule” is not violated when the amount-in-con-

troversy analysis focuses on the benefit or cost of an

injunction running from one defendant to plaintiff, be-

cause “each plaintiff's claim [is] held separate from each

6 The lower courts are divided over whether Zahn’s require-

ment of dismissal of class members’ claims that do not satisfy the

jurisdictional amount survives Congress’s subsequent enactment

of the supplemental jurisdiction statute, 28 U.S.C. 1367. See

Rosmer v. Pfizer Inc., 263 F.3d 110, 114 (4th Cir. 2001) (noting

controversy), petition for cert. pending, No. 01-1390 (filed Mar. 14,

2002). Section 1367(a) provides, subject to specified exceptions,

that

{Ijn any civil action of which the district courts have original

jurisdiction, the district courts shall have supplemental juris-

diction over all other claims that are so related to claims in the

action within such original jurisdiction that they form part of

the same case or controversy under Article III of the United

States Constitution. Such supplemental jurisdiction shall in-

clude claims that involve the joinder or intervention of ad-

ditional parties.

28 U.S.C. 1367(a).

other plaintiffs claim from both the plaintiffs and the

defendant’s standpoint.” Brand Name, 123 F.3d at 610.

Each such claim must satisfy the jurisdictional amount,

either from the plaintiff's perspective or the defen-

dant’s perspective, in order to come within the federal

courts’ diversity jurisdiction. Thus, no plaintiff and no

defendant would be entering federal court by “rid[ing]

on another’s coattails.” Zahn, 414 U.S. at 301.

2. Such an application of the “either perspective”

rule not only ensures, consistent with Snyder and

Zahn, that the class action device does not create juris-

diction by allowing claims that could not be adjudicated

individually in federal court to be adjudicated collec-

tively. It also avoids the converse problem by ensuring

that plaintiffs cannot defeat jurisdiction by aggregat-

ing, through the class action device, claims that could be

brought individually in federal court.

If, for example, a plaintiff brought an individual suit

seeking injunctive relief, which would 1 zsult in a benefit

of $25,000 to the plaintiff but a cost of $100,000 to the

defendant, the amount-in-controversy requirement

would be satisfied. In the Ninth Circuit, however, if

that same plaintiff sought the same relief on behalf of a

class of 100 similarly situated individuals, federal jur-

isdiction would be lacking, because the “either per-

spective” rule could not be applied in a class action and

each plaintiff stood to gain only $25,000. There is no

plausible reason why the decision to file a class suit

rather than an individual suit (or 100 separate in-

dividual suits) should defeat federal jurisdiction.’

7 The logic of the Ninth Circuit’s approach would suggest that

the consolidation of 100 separately filed actions, each one properly

in federal court, would require the dismissal of the action for lack

Such a result is incompatible with the reasoning of

Snyder and Zahn, as well as with the broader principle

that federal procedural rules should not trump statu-

tory provisions. Just as the class action device should

not be understood to expand Congress’s grant of di-

versity jurisdiction, as the Court recognized in Snyder

and Zahn, the class action device should not be under-

stood to contract Congress’s grant of diversity jurisdic-

tion. Indeed, the Court in Snyder expressly rejected

the notion that anything in Rule 23 could have altered

“the scope of the congressionally enacted grant of

jurisdiction to the district courts.” 394 U.S. at 336. The

Court noted that any contrary understanding of Rule

23 “would clearly conflict with the command of Rule 82

that ‘[t]hese rules shall not be construed to extend or

limit the jurisdiction of United States district courts.’”

Id. at 337 (quoting Fed. R. Civ. P. 82) (emphasis added).

Indeed, Rule 23(b)(2), one of the provisions on which

respondents relied in seeking class certification in this

case, specifically provides for class actions when a

defendant “has acted or refused to act on grounds

generally applicable to the class, thereby making appro-

priate final injunctive relief or corresponding declara-

tory relief with respect to the class as a whole.” In

Rule 23(b)(2) class actions, in contrast to Rule 23(b)(3)

class actions based only on a common question of law

and fact, the court is not required to find that “a class

action is superior to other available methods for the fair

and efficient adjudication of the controversy.” The

absence of such a requirement under Rule 23(b)(2)

indicates that the drafters of the Rules understood that

a class action ordinarily would be the optimal means of

of jurisdiction. See Pet. App. 8a (“logic would dictate that [the rule

for class actions] should apply to all multi-party complaints”).

adjudicating claims for injunctive and declaratory relief

with respect to a class as a whole. See 7A Charles A.

Wright et al., Federal Practice and Procedure § 1775,

at 447 (1986) (observing that “[c]lass action treatment is

particularly useful in this situation because it will

determine the propriety of the behavior of the party

opposing the class in a single action”). It would be

contrary to that understanding to construe the amount-

in-controversy requirement in a manner that could

allow such claims in federal court when they are

pursued individually, but not in a class action.

Here, for example, suppose that one respondent filed

suit against petitioners, seeking the same relief that

was sought in the consolidated complaint, including an

injunction requiring petitioners to reestablish the

rebate program. See Consolidated Complaint 13 (re-

questing “specific performance of the Rebate Program

to plaintiffs and class members”). Such a suit would

satisfy the amount-in-controversy of Section 1332, pro-

vided that the cost to each petitioner of complying with

the injunction exceeded $75,000, and thus could be filed

in or removed to federal court. The mere fact that

respondents chose to sue collectively, rather than in-

dividually, should not operate to defeat federal juris-

diction.

3. It will often be appropriate in a class action to

consider the defendant’s cost of compliance with the

requested injunction for an additional reason. In

Snyder and Zahn, the Court contrasted the plaintiffs’

claims for individual damages in those cases with

plaintiffs’ claims in other cases for the establishment of

a common fund. The Court observed that, “when sev-

eral plaintiffs unite to enforce a single title or right, in

which they have a common and undivided interest, it is

enough if their interests collectively equal the juris-

dictional amount.” Zahn, 414 U.S. at 294; accord

Snyder, 394 U.S. at 335.

The distinction articulated in Snyder and Zahn is

also applicable to many claims for injunctive and other

equitable relief. As the Seventh Circuit explained, in

analyzing a class claim for injunctive relief, as in analyz-

ing a class claim for damages, a court must determine

“whether each plaintiff is asserting an individual right

or, rather a right to an undivided interest in some-

thing.” Brand Name, 123 F.3d at 610. Thus, if the class

would have “a common and undivided interest,” Zahn,

414 U.S. at 294, in the injunction, the amount-in-con-

troversy inquiry turns on the defendant’s total costs of

compliance. See Market Co., 101 U.S. at 113 (con-

sidering defendant’s total cost of compliance with in-

junction providing common relief to multiple plaintiffs),

Because Rule 23(b)(2) authorizes class actions seeking

injunctive relief against a defendant who “has acted to

refused to act on grounds generally applicable to the

class,” much of the injunctive relief sought in class

actions may be of the “common and undivided” variety.

Of course, because of the “common and undivided”

nature of such an injunction, the cost to the defendant

of an injunction running to the class would be the same

in many (but not all) cases as the cost of an identical

injunction running to one plaintiff.

Arguably, the injunction sought in this case, which

would require petitioners to reestablish the rebate

program so that all class members could resume

accruing rebates, would enforce a common and undi-

vided interest. In any event, however, because the cost

of providing the requested relief to any one plaintiff

exceeds the $75,000 jurisdictional amount, the Court

need not definitively characterize the relief sought

here.

B. Measuring the Amount in Controversy in a Class

Action by the Cost of an Injunction to the Defendant

Promotes Fairness and Judicial Economy

A rule that enables class actions to be filed in, or

removed to, federal court based on the amount in con-

troversy to either side provides several practical

advantages.

First, in class actions, as in other cases, diversity

jurisdiction assures the parties of a neutral national

forum. To be sure, some have questioned whether state

court bias against out-of-state parties continues to exist

in the modern era. See, e.g., Burford v. Sun Oil Co., 319

U.S. 315, 336 (1943) (Frankfurter, J., dissenting). Con-

cerns about such bias nonetheless persist among out-of-

state parties, especially defendants, with experience

litigating in state courts. See, e.g., The Federal Courts

Improvement Act: Hearing on S. 1101 Before the Sub-

comm. on Administrative Oversight and the Courts of

the Senate Comm. on the Judiciary, 104th Cong., Ist

Sess. 48 (1995) (Senate Judiciary Hearing) (spokes-

person for American Bar Association observes that,

“while it has been suggested that there are no more

prejudices” against out-of-state litigants, “trial lawyers

know different”); id. at 56 (spokesperson for Defense

Research Institute observes that “[oJur members, who

often represent controversial or unpopular defendants,

can confirm from personal experience that bias still

exists” against out-of-state parties). The Constitution

and diversity jurisdiction statute view with “indulgence

the possible fears and apprehensions of suitors” without

regard to the actual extent of local bias. Bank of the

United States v. Deveaux, 9 U.S. (5 Cranch) at 87.

Those concerns may be exacerbated in the context of

a class action. In that context, a defendant may face the

Oe eee ee see . o

aggregation of literally thousands of actions as well as

unique pressures to settle before a final determination

on the merits. See Jn re Rhone-Poulenc Rorer Inc., 51

F.3d 1293, 1298 (7th Cir.), cert. denied, 516 U.S. 867

(1995); Henry J. Friendly, Federal Jurisdiction: A

General View 120 (1973).

Second, aside from any question of bias against out-

of-state parties, a state court may not have the same

expertise or the same resources as a federal court for

handing class actions and other complex cases. See

Deborah R. Hensler et al., Class Action Dilemmas:

Pursuing Public Goals for Private Gain 481-482 (2000)

(noting arguments that “state court judges, who histori-

cally have had far fewer resources at their commend,

are ill-equipped to provide the kind of close attention

that class actions require”); McInnis, supra, 6 Geo.

Mason L. Rev. at 1027 (noting the perception that

“federal courts, with more experienced judges and less

crowded dockets, are better positioned to decide

complex cases”).

In federal court, moreover, the parties have the

benefit of the federal Judicial Code, the Federal Rules

of Civil Procedure, and the Federal Rules of Evidence,

which provide uniform national rules for the “just,

speedy, and inexpensive determination of every

action.” Fed. R. Civ. P. 1. See Senate Judiciary Hear-

ing 57 (spokesperson for Defense Research Institute

notes that “multi-state litigation relating to similar

claims” benefits from “the procedural consistency

provided by the Federal Rules of Evidence and Federal

Rules of Civil Procedure”). For example, under recent

amendments to Federal Rule of Civil Procedure 23,

federal court litigants enjoy relatively liberal rules

permitting interlocutory appeals of orders granting or

denying class certification. See Fed. R. Civ. P. 23(f).

As a result of the perceived advantages of a federal

forum, the trend in recent legislative proposals has

been to expand access to the federal courts in class

actions that involve significant financial risk for the

defendant. See Br. in Opp. App. la-24a, 25a-45a.

Third, federal jurisdiction provides particular effi-

ciencies where, as here, several similar suits are

pending against the same defendant. If such cases can

be filed in or removed to federal court, they can also be

transferred to a single district court for consolidated or

coordinated pretrial proceedings. See 28 U.S.C. 1407;

see also 28 U.S.C. 1404(a) (allowing a case to be trans-

ferred, “(flor the convenience of the parties and wit-

nesses, in the interest of justice” to any other district

“where it might have been brought”); cf. Lexecon Inc.

v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26

(1998) (court to which related case is transferred under

28 U.S.C. 1407 cannot invoke 28 U.S.C. 1404(a) to

assign case to itself for trial). Such transfers reduce the

costs and other burdens of overlapping litigation. For

example, when a single federal court is overseeing

discovery, parties will not be subject to multiple, and

potentially conflicting, discovery schedules, rulings, and

obligations. The opportunities for a comprehensive

settlement of the dispute are also enhanced when all

interested parties are before one court.

Finally, although 28 U.S.C. 1407 does not provide for

a consolidated or coordinated trial, parties may have an

incentive, once related cases have been transferred to a

single district court for pretrial proceedings, to con-

solidate the case for trial. Here, for example, respon-

dents elected, after the transfer to the Western District

of Washington, to file a single consolidated complaint.

As commentators have observed, “[bleyond the sheer

economy of not having to litigate the same matters

——

twice, consolidation of related proceedings can reduce

such problems as inconsistent outcomes, whipsawing

(from the ability of defendants in separate litigations to

point to a nonparty as the one truly liable), and

uncoordinated scrambles for the assets of a limited

fund.” Thomas D. Rowe Jr. & Kenneth D. Sibley,

Beyond Diversity: Federal Multiparty, Multiforum

Jurisdiction, 135 U. Pa. L. Rev. 7, 14-15 (1986) (quoted

in ALI, Complex Litigation: Statutory Recommenda-

tions and Analysis 16 (1994)).

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.