Amicus Curiae Brief — Dow Chemical Co. v. Stephenson

ist ; FILED

_4

No. 02-271 | JAN 24 2003

[_cxztce on THE CLERK

In The ed

Supreme Court of the Gnited States

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DOW CHEMICAL COMPANY, ET AL.,

Petitioners,

v.

DANIEL RAYMOND STEPHENSON, ET AL.,

Respondents.

7

On Writ Of Certiorari To The

United States Court Of Appeals

For The Second Circuit

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BRIEF OF THE STATE OF LOUISIANA

JOINED AT THE CERT. STAGE: ARKANSAS,

MARYLAND, MINNESOTA, MISSOURI,

AND MONTANA AS AMICI CURIAE

IN SUPPORT OF RESPONDENTS

¢

RICHARD P. IEYOUB

Attorney General of

Louisiana

Post Office Box 94005-9005

Baton Rouge, LA 70804

(225) 342-7013

Counsel of Record

[Additional Counsel Listed On Inside Cover]

OOOO

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

OR CALL COLLECT (402) 342-2831

J

AY)

~

MIKE BEEBE

Attorney General of Arkansas

323 Center Street, Suite 1100

Little Rock, AR 72201

(501) 682-2007

J. JOSEPH CURRAN, JR.

Attorney General of Maryland

200 St. Paul Place

Baltimore, MD 21202

(410) 576-6300

MIKE HATCH

Attorney General of Minnesota

1400 NCL Tower

445 Minnesota Street

St. Paul, MN 55101

(651) 296-3353

JEREMIAH W. (JAY) NIXON

Attorney General of Missouri

Supreme Court Building

207 West High Street

Jefferson City, MO 65101

(573) 751-3321

MIKE MCGRATH

Attorney General of Montana

Justice Building

215 N. Sanders

P.O. Box 201401

Helena, MT 59620-1401

(406) 444-5856

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................ccecceeeseeeseeeees ili

ENT Ree 6 OF TEER AREICE .......cccccccccesccssccseessccsseess

INTRODUCTION AND SUMMARY OF ARGUMENT... 2

IIIT ncitentinictasiaeninaiinsmpnannnnapnauneneunenanneseneseeseets 5

I. CLASS ACTION ABUSE POSES A SIGNIFI-

CANT THREAT TO THE RIGHTS OF AMICTS

i txcnesesncnnsncesanenstenmnstsonsccseetecssescnnvenee 5

II. DUE PROCESS GUARANTEES THE RIGHT

OF COLLATERAL REVIEW OF ADEQUACY

OF REPRESENTATION ..............cccccceeeeeeeeeeees 9

A. ESTABLISHED PRINCIPLES OF RES

JUDICATA AND FULL FAITH AND

CREDIT PERMIT COLLATERAL RE-

VIEW OF ADEQUACY OF REPRESEN-

TE 10

B. THE PROTECTION AFFORDED AB-

SENT CLASS MEMBERS BY CONTINU-

ING TO AFFORD THE OPPORTUNITY

OF COLLATERAL REVIEW OF ADE-

QUACY OUTWEIGHS ANY CONTRA-

VENING INTEREST IN ELIMINATING

ae 14

1. THE INTERESTS AT STAKE ARE

SP UREEEINOES cnvencessenessceseseccescsscscenee 14

2. COLLATERAL REVIEW OF ADE-

QUACY OF REPRESENTATION SUB-

STANTIALLY REDUCES AN OTHER-

WISE SIGNIFICANT LIKELIHOOD

THAT ABSENT CLASS MEMBERS

WILL BE ERRONEOUSLY DEPRIVED

ee Ce GED cxqnaconcensecsccssscesseees 15

ii

TABLE OF CONTENTS - Continued

Page

3. THE STATES’ PUBLIC INTEREST

IN PRESERVING THEIR CITIZENS’

RIGHTS TO BRING CLAIMS WHEN

THEY ACCRUE FAVORS COLLAT-

SE SET ETED cocenmsdnecictmsmnmmemensqnenemn 18

4. ANY CONTRAVENING INTEREST IN

FINALITY DOES NOT OUTWEIGH

CLASS MEMBERS’ RIGHTS TO A

ES Bite CE eenenicccnsnnncmenennmnense 18

IED cnscessssssnsenmnninsseneemnenemnsmesummannnmens 19

a

iii

TABLE OF AUTHORITIES

Page

CASES

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)............ 7

Baldwin v. Iowa State Traveling Men’s Ass’n, 283

ee 12

Connecticut v. Doehr, 501 U.S. 1 (1991)...............ccccceeeeeeees 14

Davis v. Carl Cannon Chevrolet-Olds, Inc., 182 F3d

FOB CAB Cie, BIBI D nxccccccccscsceccsccesesssserersenssssesssesscssoscseses 8

Gonzales v. Cassidy, 474 F.2d 67 (5th Cir. 1973)............... 16

Hansberry v. Lee, 311 U.S. 32 (1940)....... cc eeeeeeeeeeneees 4,10

Kremer v. Chemical Constr. Corp., 456 U.S. 461 (1982)........ 10

Martin v. Wilks, 490 U.S. 755 (1989)..................... 11, 12, 13°

Mathews v. Eldridge, 424 U.S. 319 (1976) .................... 2,14

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) ..12, 16

Underwriters Nat’l Assurance Co. v. North Carolina

Life & Accident & Health Ins. Guar. Ass’n, 455

RE ea ee Ce” 4,10

STATUTES |

i yS passim

OTHER AUTHORITIES

Alon Klement, Who Should Guard The Guardians?

A New Approach For Monitoring Class Action

eee, Ts Ge. OT, Bi ecrcncreresscsssssenessenemeen 7,8

Barry Meier, Plaintiffs in Business Cases Challenge

Group Justice, N.Y. Times, Feb. 18, 1997....................... 8

iv

TABLE OF AUTHORITIES — Continued

Page

18 CHARLES A. WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 4455 (Supp.

18A CHARLES A. WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 4430 (2002) .......... 12

Joe Stephens, Coupons Create Case for Lawyers:

Class Action ‘Paper’ Settlements Mean Little to

Individual Plaintiffs, Wash. Post, Nov. 14, 1999

en 8

John J. Coffee, Class Wars: The Dilemma of the

Mass Tort Class Action, 95 Colum. L. Rev. 1343............ 8

MOORE’S FEDERAL PRACTICE § 130.07[3] (3d

AE, Tet centesssnbiatireenbenrmncendaieinnecieiita iiabenarninantaeniaiaaatain anna atiaatacacinniaeis i)

Pamela Sherrid, Class Action Crumbs, U.S. News

& World Rep., March 25, 2002 at 24..0000.......cccceceeeeeeeeee 8

Patrick Woolley, The Availability Of Collateral

Attack For Inadequate Representation In Class

OS Oe 7, 13, 16

Richard B. Schmitt, The Deal Makers: Some Firms

Embrace the Widely Dreaded Class-Action Law-

suit, Wall St. J., July 19, 1996 at A1...........cccccccccceeeeeeeees 7

Susan P. Koniak and George M. Cohen, Under

Cloak of Settlement, 82 VA. L. REV. 1051 ..............0:0000+. 8

1

INTEREST OF THE AMICI

This brief amici curiae is submitted by six States. Our

purpose is to highlight for this Court the enormous impor-

tance to our federalist system of permitting collateral

review of adequacy of representation determinations made

in multistate class actions. Amici believe that the position

urged by Petitioners here — that defendants’ interest in

finality outweighs absentees’ interest in adequate repre-

sentation — fundamentally misconstrues due process and

vitiates the only device through which amici can shield

their citizens from class action abuses in distant forums.

According to Petitioners, a court assessing the res judicata

effect of a class judgment must unquestioningly accept the

conclusion of the original certifying court that the entire

class received adequate representation, even if a more

dispassionate or more careful review reveals that the

certifying court was wrong. In other words, Petitioners

contend that class members should be bound to a class

judgment even under circumstances where they may

clearly have not received due process. This position flatly

contradicts this Court’s consistent jurisprudence in the

areas of res judicata, full faith and credit, personal juris-

diction, and due process.

In recent years, amici’s citizens have increasingly

been deprived of their rights to pursue redress in their

own states’ courts as a result of their inclusion as absent

members of sweeping nationwide and multistate class

action settlements. While in many instances absentees

have received adequate representation, unfortunately,

abuses have frequently also been documented. The very

structure of class actions as mass settlement vehicles can

create incentives to give short shrift to the interests of

absertees. These incentives and the potential for abuse

2

are greatly magnified in the context of cases, such as this

one, where the class action purports to resolve claims for

“future” injury.

Collateral review of adequacy of representation

provides the only available tool for amici to ensure that

their citizens will not be deprived of due process by a

foreign court adjudicating their rights in absentia. Amici

submit this brief in defense of their interest in retaining

this tool for protecting the constitutionally-protected

rights of their citizens.’

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INTRODUCTION AND SUMMARY OF ARGUMENT

This case raises the question of whether the due

process clause accords a right of collateral review of

adequacy of representation for absentee class mem-

bers in response to a motion for dismissal of their

claims on the basis of res judicata. Whether relying

upon settled principles of res judicata, the advisory com-

mittee’s comments to Federal Rule 23 supporting such a™

review, or even the due process balancing test established

in Mathews v. Eldridge, 424 U.S. 319 (1976), advocated by

Petitioners, this Court should answer that question with a

resounding affirmative. The threat that absent class

members will be erroneously deprived of their rights

always looms large in the class context, and that risk

overwhelms any countervailing interest in finality. This

balance is overwhelmingly skewed in favor of permitting

' Amici note that this brief was prepared with the assistance of

Steve Baughman Jensen, an attorney in Dallas, Texas.

Ne a

3

collateral review in cases, such as this one, where parties

invoke a class judgment that purported to resolve then-

unaccrued “future” claims.

The Agent Orange class action was settled in 1984

and purported to resolve all Agent Orange-related claims

of Vietnam veterans, including those who might suffer

injury in the future. At the time of the settlement, neither

Daniel Stephenson nor Joe Isaacson, the Respondents,

were eligible to receive any compensation from that

settlement, as neither manifested any injury at the time.

After all settlement funds were disbursed, in the late

1990’s Respondents were diagnosed with rare cancers

which have been associated with Agent Orange exposure

by the National Academy of Sciences. JA 319-325. Upon

learning of their cancers, Respondents sued Petitioners in

separate actions that were later consolidated. Petitioners

successfully moved to dismiss their claims on the ground

that they were precluded by the 1984 class action judg-

ment, even though neither Respondent was eligible at any

time for compensation from that settlement. The Court of

Appeals for the Second Circuit unanimously reversed,

holding that due process had been violated, as neither

Respondent had received adequate representation in the

class action proceedings, while also indicating that they

likely had not received adequate notice and a meaningful

opportunity to opt out. The Second Circuit ruled that the

class judgment was therefore not entitled to preclusive

effect on Respondents’ claims. Petitioners now assert that

the Second Circuit should be reversed even if Respondents’

due process rights have been violated, on the basis that no

challenge to a finding of adequate representation made by

a certifying court should ever be permitted in any other

court, regardless of its merit.

Amici disagree with Petitioners contention that would

remove any right of review by courts other than the

certifying court, and, instead, believe that this Court

should affirm the longstanding right of courts to conduct

such a collateral review of whether due process has been

denied to absent class plaintiffs. This Court has consis-

tently held that judgments will only be entitled to preclu-

sive effect when the court entering those judgments both

had proper jurisdiction and provided full due process

protection to the litigants. See, e.g., Hansberry v. Lee, 311

U.S. 32, 40 (1940); Underwriters Nat'l Assurance Co. v.

North Carolina Life & Accident & Health Ins. Guar. Ass’n,

455 U.S. 691, 705 (1982).

Adequate representation must have been afforded to

absentees before a court may extend full faith and credit to

a class judgment. Although federal Rule 23 and its state

counterparts require that courts find that a putative class

has been adequately represented as a prerequisite to

certification, the risk is unacceptably high that such an

initial finding of adequate representation may be wrong.

In the class context, courts have a powerful incentive to

conflate the issues of adequacy with the overall perceived

fairness of any settlement. By the time of settlement, class

counsel and the defendant often become aligned in their

desire for court approval, and no structure exists to ensure

full-blown adversarial presentation of the issue of ade-

quacy. Recent trends demonstrate that certain courts are

disturbingly likely to approve any proposed class action

settlement. Often, such settlements have nationwide or

multistate scope, so that many absent class members lack

contacts with the forum and can neither afford to hire

separate counsel nor travel to present their own objec-

tions. This is particularly true of “futures,” who may not

—_=-—_— ——

ee —_——_

5

have sufficient present damages to justify such expense. It

is these citizens of amici who deserve the protection that is

afforded by the ability to conduct a collateral attack in

their own state’s forum.

Indeed, the already unacceptable risk that a certifying

court will make an erroneous finding of adequacy is

magnified considerably in the future claimant context.

When class actions purport to resolve claims that do not

yet exist at the time of the settlement’s approval, any

initial adequacy review necessarily requires prediction of

unknown events that creates an inherently alarming risk

that many class members will unfairly be deprived of their

as yet unaccrued rights. The facts of Respondents’ cases

illustrate this dramatically. How could Messrs. Isaacson

and Stephenson have been adequately represented in a

class action that extinguished their causes of action before

they ever arose and without any compensation? They have

not received the adequate representation guaranteed them

by the Due Process Clause, and this Court should not

permit Petitioners’ illegitimate interests in premature

finality to outweigh Respondents’ right to a day in court.

¢

ARGUMENT

I. Class Action Abuse Poses a Significant Threat

to the Rights of Amici’s Citizens.

Amici urge this Court to recognize the reality that

class litigation has at times resulted in serious abuses of

class members’ rights. Petitioners seek to blind the Court

to that reality by pointing instead to the legal require-

ments for class certification. In theory, and when properly

administered, those requirements should result in class

6

members receiving due process. However, the ongoing

historical record demonstrates that class certification

requirements alone have sometimes proven insufficient to

protect absent class members, who, by the very nature of

the class procedure, are highly vulnerable to exploitation.

Class action abuses in recent years have generated a

frenzy of media attention, academic scholarship, and both

legislative and judicial proposals for reform. Amici take no

position here with respect to any proposed reform but

merely ask this Court to recognize the critical need to

maintain the check on abuse afforded by the availability of

collateral review of adequacy of representation.

Class action abuse may take a number of forms, but

the most notable are inadequate settlements and sweeping

class definitions that encompass absent members from

many states, without regard to differences in state law.

The two abuses can go hand-in-hand. Individual class

members with stronger legal claims almost invariably are

treated inequitably in overbroad classes. And, because of

the difficulty in analyzing several sets of competing state

laws, courts certifying multistate class actions often gloss

over state law differences in order to approve a settlement.

As former U.S. Solicitor General Walter E. Dellinger III

testified to Congress: “Many state courts faced with

interstate class actions, however, have undertaken to

dictate the substantive laws of other states by applying

their own laws to all other states, which results essentially

in a breach of federalism principles.”

The academic literature is flush with critiques of

judicial scrutiny of adequacy and fairness in the class

context. As Professor Wooley states, “The literature

indicates that courts all too often have had little

ability or incentive to insure that absent class mem-

bers are treated fairly.” Wooley, 79 TEx. L.R. at 412

(citing six law review articles in support). Professor

Klement has elaborated on the inadequacy of courts as

monitors of class action abuse:

Constrained by the institutional require-

ments of neutrality and passivity set by the

adversary system on the one hand, and lack-

ing sufficient adversity between the defen-

dant and the class attorney whenever

attorney fees and proposed settlements are

concerned on the other, courts have been

left, by and large, uninformed about the pa-

rameters necessary to effectively regulate

class attorneys. Taking into account their

constrained resources and overburdened

dockets, it is not surprising that courts have

failed to adequately monitor class actions.

Klement, supra, 21 REV. LITIG. at 45.

Indeed, in reviewing class settlements, Courts are

often presented with the sweetheart’s dance between the

united settlement proponents of class counsel and defen-

dant, see Amchem Prods., Inc. v. Windsor, 521 U.S. 591,

621 (1997) (noting that settlement proponents “may even

put one over on the court, in a staged performance’).

While Plaintiff’s counsel has the incentive of an immediate

payday, class action Defendants have an incentive to

embrace such settlements as a means to limit their liabil-

ity.”

* Richard B. Schmitt, The Deal Makers: Some Firms Embrace the

Widely Dreaded Class-Action Lawsuit, Wall St. J., July 18, 1996 at Al

(Continued on following page)

8

Both courts and academic scholars have sounded the

alarm with respect to these problems.’ Indeed, class action

abuse has become sufficiently recognized that certain

mainstream media have heralded the issue, including the

fact that judicial review has proven inadequate to stem the

tide.*

Amici have summarized the problem of class abuse for

a very significant reason: to remind the Court that direct

(noting an emerging trend for corporate defendants to embrace the

class action settlement as a means to limit its liability). Additionally, in

certain cases potential objectors have been bought out in order to avoid

an objection or an appeal.

* See, e.g., Davis v. Carl Cannon Chevrolet-Olds, Inc., 182 F.3d 792,

798 (11th Cir. 1999) (Nangle, J., concurring) (“Plaintiffs’ attorneys are

increasingly filing nationwide class actions in various state

courts.... [MJost of these cases in actuality will be disposed of

through “coupon” or “paper” settlements.”); Susan P. Koniak and

George M. Cohen, Under Cloak of Settlement, 82 VA. L. REV. 1051, 1056

(1996) (“We agree with those who argue that lawyer abuse in class

actions is rampant and that the current system, far from keeping this

abuse in check, is set up to shield lawyers from the consequences of their

misdeeds.”); Alon Klement, Who Should Guard the Guardians? A New

Approach for Monitoring Class Action Lawyers, 21 REV. LITIG. 25, 43-44

(2002); John C. Coffee, Class Wars: The Dilemma of the Mass Tort Class

Action, 95 Colum. L.R. 1343, 1348 (1995) (“If not actually collusive, non-

adversarial settlements have all too frequently advanced only the

interests of plaintiffs’ attorneys, not those of the class members”).

* See, e.g., Pamela Sherrid, Class Action Crumbs, U.S. News &

World Rep., Mar. 25, 2002, at 24 (“this tale illustrates the failings of the

nation’s legal system in protecting the interests of society’s most

vulnerable: the little guy”); Joe Stephens, Coupons Create Cash for

Lawyers; Class Action “Paper” Settlements Mean Little to Individual

Plaintiffs, Wash. Post, Nov. 14, 1999, at Al (noting many examples of

court approval of settlements that provided only coupon relief to class

members); Barry Meier, Plaintiffs in Business Cases Challenge Group

Justice, N.Y. Times, Feb. 18, 1997 (discussing class action in which one

class member paid $91 in legal fees for a recovery of $2).

9

review of adequacy of representation, as required by

Federal Rule 23 and its state counterparts, has all too

often failed to ensure that absent class members receive

due process. In light of these failures and the need to

preserve a mechanism by which amici’s citizenry will not

be unfairly bound by such settlements, amici now turn to

the legal reasons why this Court must preserve the right

of courts to review a rendering court’s assessment of

adequacy of representation.

II. Due Process Guarantees the Right of Collateral

Review of Adequacy of Representation.

The right of collateral review of adequate representa-

tion is essential to due process, and has historically been

considered a central aspect of the class action procedure.

See 18 Charles Alan Wright, et al., FEDERAL PRACTICE

AND PROCEDURE § 4455, at 452 (Supp. 2000) (“It has

long been the general understanding ... that only

adequate representation can justify preclusion

against nonparticipating class members.”); MOORE’S

FEDERAL PRACTICE § 130.07[3] (3d ed. 1997) (“If the

class did not receive adequate representation in the

court rendering the class action judgment, that issue

may be raised on collateral attack.”); Advisory

Committee Notes to Federal Rule 23 (1966) (“subdivi-

sion (c)(3) does not disturb the recognized principle that

the court conducting the action cannot predetermine the

res judicata effect of the judgment; this can be tested only

in a subsequent action.”) As discussed below, this

general view emerged both because of this Court’s

black-letter pronouncements regarding the constitu-

tional requirements for giving preclusive effect to

judgments, and because the conduct of a due process

10

balancing inquiry significantly weighs toward the

availability of collateral review.

A. Established principles of res judicata and

full faith and credit permit collateral re-

view of adequacy of representation.

In the context of applying the doctrines of full faith

and credit and res judicata, this Court has consistently

held that judgments will only be entitled to preclusive

effect when the court entering those judgments both had

proper jurisdiction and provided full due process to the

litigants. See, e.g., Hansberry v. Lee, 311 U.S. 32, 40 (1940)

(judgment entered by court lacking personal jurisdiction is

void); Underwriters Nat’l Assurance Co. v. North Carolina

Life & Accident & Health Ins. Guar. Ass’n, 455 U.S. 691,

705 (1982) (“If [the rendering] court did not have jurisdic-

tion over the subject matter or the relevant parties, full

faith and credit need not be given”); Kremer v. Chemical

Constr. Corp., 456 U.S. 461, 482 (1982) (noting that the

rendering court must have provided procedural due

process in order for judgment to have preclusive effect).

Petitioners respond to this due process requirement

by pointing both to the certifying court’s initial determina-

tion that the entire class was adequately represented, and

to Respondents’ (alleged) opportunity to object to adequate

representation at the time of that initial review.’ But this

* Amici observe here that the notice provided to Messrs. Stephen-

son and Isaacson in the Agent Orange class proceedings fell well short

of due process requirements, as the class was expanded after the close

of the opt out period from those who were “injured” by exposure to

Agent Orange to those, like Respondents, who “had not yet manifested

(Continued on following page)

11

response is unavailing, given that absentees collaterally

challenging adequacy have neither presented specific

objections at the time of class certification, nor were they

legally required to do so.

In Martin v. Wilks, 490 U.S. 755 (1989), this Court

reaffirmed that even individuals who have received notice

and a fair opportunity to be heard may collaterally attack

adequacy if they were not required to appear and lodge

their objections in the original proceeding. In Martin, a

group of white firefighters filed a reverse discrimination

lawsuit premised on the alleged illegality of hiring quotas

that were implemented under a consent decree in an

earlier case. Although the white firefighters were not

named parties in the first case, they had received notice of

the proceeding and had an opportunity to intervene to

contest the consent decrees. 490 U.S. at 759-60. The trial

court dismissed the claims as “impermissible collateral

attacks” on the consent decree, and the Eleventh Circuit

reversed. Jd. at 760-61. This Court affirmed the Eleventh

Circuit, holding that, because the white firefighters were

not legally required to intervene to contest the original

consent decree, they must be permitted an opportunity to

raise a collateral challenge to the effect of that decree.

“Joinder as a party, rather than knowledge of a

lawsuit and an opportunity to intervene, is the

method by which potential parties are subjected to

injury.” Thus, at the time of the original certification decision, no notice

had been sent that indicated that people, such as Respondents, were

included within the proposed class. Obviously, Respondents could not

have objected to adequacy at the time of certification without having

received constitutionally-adequate notice.

12

the jurisdiction of the court and bound by a judg-

ment or decree.” 490 U.S. at 765.

The holding in Martin v. Wilks is consistent with this

Court’s long-standing personal jurisdiction jurisprudence,

which permits defendant to attack default judgments

collaterally on the basis tat the rendering court lacked

jurisdiction over them, even when those defendants

received actual notice of the original suit but failed to

appear. See Baldwin v. Iowa State Traveling Men’s Ass’n,

283 U.S. 522, 525 (1931); Charles A. Wright & Arthur

Miller, 18A FEDERAL PRACTICE & PROCEDURE § 4430 at

*47222 (2002) (“The Baldwin opinion repeated the persist-

ing rule that a defendant who makes no appearance

whatever remains free to challenge a default judgment for

want of personal jurisdiction”).

Just as individuals are not required to intervene in

actions affecting their rights, even when they have notice

and an opportunity to do so, absent class members are not

required by Rule 23 to present their objections to adequate

representation before the certifying court. See Phillips

Petroleum Co. v. Shutts, 472 U.S. 797, 810 (1985) (“an

absent class action plaintiff is not required to do

anything. He may sit back and allow the litigation to

run its course, content in knowing that there are

safeguards provided for his protection”). Because

* The amicus Products Liability Advisory Council (“PLAC”) argues

that this language from the Shutts opinion cannot mean what it says.

See PLAC Br. at 13. Apart from the fact that the language leads to a

result PLAC does not support, PLAC’s brief offers no explanation as to

why the Court in Shutts did not mean that absent class members have

no obligation to appear at the class certification hearing.

13

absent class members are not required to assert their

objections to adequacy of representation before the origi-

nal certifying court, they must constitutionally be entitled

to do so in the context of an individual lawsuit in which

the defendant raises a res judicata defense. See Patrick

Wooley, The Availability of Collateral Attack for Inade-

quate Representation in Class Suits, 79 TEX. L.R. 383, 403

(2000) [hereinafter “Wooley”) (“Martin and Rule 23 to-

gether make clear that under federal law class members

cannot forfeit their rights to adequate representation by

failing to object to inadequate representation in the class

proceedings themselves”).

Petitioners will likely attempt to distinguish Martin

and cases involving defauit judgments on the basis that,

under Rule 23, courts have an obligation to assure that

absent class members have received adequate representa-

tion. See Pet. Br. at 27 (maintaining that adequacy is

assured by the certifying court’s Rule 23(a)(4) inquiry); see

also PLAC Br. at 13 (“the absent class members are

justified in relying on the certifying court, and the defen-

dant opposing class certification, to protect their inter-

ests”). However, this assumes that the certification

decision will always be correctly made and that absent

class members can uniformly rely upon class representa-

tives to evaluate their own adequacy when making their

presentation to the court. As the next section will demon-

strate, a certifying court’s review of adequacy, in the

absence of adversarial presentation by those affected, is

insufficient to justify elimination of an absent class mem-

bers’ right to a day in court.

14

B. The protection afforded absent class mem-

bers by continuing to afford the opportunity

of collateral review of adequacy outweighs

any contravening interest in eliminating

such a review.

Contrary to Petitioners’ contentions, when one bal-

ances the competing interests at stake with respect to

permitting collateral review of adequacy, the balance

strongly favors the availability of the procedure.

In Mathews v. Eldridge, 424 U.S. 319 (1976), this

Court established the basic test for determining how much

process is due to protect a property interest. The Court

must consider the nature and significance of the private

interests at stake, the risk of error and the probable value

of additional safeguards, and the competing interests of

the public and other affected parties. 424 U.S. at 334;

Connecticut v. Doehr, 501 U.S. 1, 10-11 (1991). Below,

amici explore each of these factors in the context of collat-

eral review of adequacy of representation if applied to

absentees in representative litigation.

1. The interests at stake are significant. Peti-

tioners acknowledge, as they must, that “Respondents’

interest in adequate class representation .. . is important.”

Pet. Br. at 34. However, unwilling to grant that any part of

a balancing test favors Respondents, Petitioners then go

on to conflate the magnitude of the interests at stake with

the risk of erroneous deprivation of that interest. See Pet.

Br. at 34-35 (arguing that Respondents’ interests were

adequately protected by the certifying court’s conclusion

regarding the fairness of the settlement, its review of

adequacy, and Rule 23’s provision of the right to opt out).

This will not wash.

15

Messrs. Stephenson and Isaacson both allege that

they developed rare, life-threatening cancers as a result of

Petitioners’ wrongful conduct. Obviously, the nature of

these plaintiffs’ property interests in their claims is highly

significant, whatever the protections allegedly afforded to

protect those interests. This Court should not permit

Petitioners to underplay the magnitude of the private

interest of adjudicating responsibility for life-threatening

cancers by pointing to procedures that Petitioners claim

were in place for class representatives to present those

interests. In any event, as described below, the procedures

that Petitioners ballyhoo are not in any way sufficient to

tip the scales their way.

2. Collateral review of adequacy of representa-

tion substantially reduces an otherwise significant

likelihood that absent class members will be erro-

neously deprived of their rights. The risk that absent

class members will be erroneously deprived of their rights

in a class proceeding is unacceptably high in the absence

of a double-check on the certifying court’s determination of

adequacy and willingness to thoroughly monitor that

adequacy throughout the course of the litigation.

As set forth in detail in Part I above, the ugly, docu-

mented facts demonstrate that existing class action

practice is subject to considerable abuses that manage to

survive judicial scrutiny under Rule 23 and its state law

counterparts. With their repeated invocations of Rule 23’s

certification requirements as the be-all-and-end-al! of due

process, Petitioners pound their fists on reality in the

hopes that it might break. As starkly illustrated by the

specific facts in Messrs. Stephenson’s and Isaacson’s cases,

an initial Rule 23 inquiry, even if conducted in utmost

good faith by a court assessing certification, may be

16

insufficient to protect absentees’ rights. This is especially

so because the certifying court expressly considers ade-

quacy only at the certification stage, and, in many in-

stances, inadequacy in representation occurs much later.

See, e.g., Gonzales v. Cassidy, 474 F.2d 67, 75 (5th Cir.

1973) (“A court must view the representative’s conduct of

the entire litigation with this [adequacy of representation]

criterion as its guidepost.”).

Contrary to Petitioners’ position that “there is [no]

reason to believe that allowing relitigation of the issue

would add much value in protecting against error,” Pet. Br.

at 36, a court reviewing adequacy on a collateral basis has

a significant institutional advantage over the original

certifying court. First, a court conducting a collateral

review has the benefit of knowing how subsequent events

have impacted the class representation, consistent with

Shutts’ requirement that adequacy be provided “at all

times,” 472 U.S. at 812 (emphasis added). Second, as

Professor Wooley explains, relying on a judicial officer to

assess the truth in the absence of adversarial presentation

is altogether inconsistent with our Anglo-American tradi-

tion of due process:

Reliance on the special role of the court for

this purpose [of binding absentees] would be

inconsistent with foundational norms of

American jurisprudence. Put another way,

the principle that issues in a case are best

resolved by reliance on adversarial presen-

tation to a judge - rather than reliance on

investigation by the judge — is embedded in

the American conception of due process.

Wooley, 79 Tex. L.R. at 411.

17

Perhaps the most outrageous risk of erroneous depri-

vation in the class action context occurs when, as in this

case, the original court purports to resolve the “future”

claims of individuals. By definition, at the time of such

certification a court cannot know most of the relevant facts

that dictate whether a class settlement is fair and whether

an absentee has received adequate representation if that

absent class member’s claim has not yet arisen. No one

knows what factual and legal circumstances might exist at

the time such a future claim eventually accrues. Thus,

courts assessing adequacy and fairness in the context of

settlements purporting to resolve future claims must,

implicitly or explicitly, make predictions about an un-

known future. They must estimate the rate of future

incidence of injury among class members, the likely period

of time that such injuries will continue to occur, and the

future value of any claims once the class members become

ill. The uncertainties inherent in such predictions render

any assessment of adequacy at the time of certification

incredibly suspect.

In this case, of course, at the time of certification

Judge Weinstein had little evidence to support class

members’ claims that Agent Orange causes disease, and

that absence of evidence strongly colored his views of

adequacy of representation. Now, subsequent to the

conclusions of the National Academy of Sciences, which

has related Agent Orange to certain cancers, including

those of Respondents, the scientific evidence in support of

causation is much stronger. JA 319-325. Moreover, absent

class members, including Stephenson and Isaacson them-

selves, continue to assert credible claims of Agent Orange-

related injuries years after the class settlement funds have

been exhausted. Thus, the Agent Orange settlement

18

provides a harsh example of the risk of erroneous depriva-

tion coming to fruition.

3. The States’ public interest in preserving

their citizens’ rights to bring claims when they

accrue favors collateral review. Virtually every state

law provides that a claim for specific disease does not

accrue until that disease becomes manifest. These laws

delay consideration of future claims precisely because the

uncertainties surrounding such claims make them impos-

sible to adjudicate before their accrual. Only in a class (or

bankruptcy) setting have there been attempts to abridge the

state substantive right of individual iitigants to have their

injury claims adjudicated after they accrue. Allowing

unripe claims to be released by representatives, and espe-

cially when those representatives are present claimants

with different motivations to settle, enhances the need for

protection of those rights. Only the continued availability of

collateral review of due process for such absent class

members, including a review of notice and adequacy of

representation, in many instances will allow future claim-

ants to be heard at all. Preservation of the right to have due

process reviewed collaterally will protect amici’s citizens

from those who attempt to abuse the class action device by

settling claims which our states have intentionally pre-

served for another day. This federalism interest, although

ignored by Petitioners, is of great significance.

4. Any contravening interest in finality does

not outweigh class members’ rights to a day in

court. This Court has never valued efficiency over justice,

and it should not do so in this context. Class action prac-

tice has proceeded apace in a world where collateral

attacks have traditionally been permitted, and this case

provides no reason to believe that a reaffirmation of that

19

tradition by this Court will upset that ongoing practice.

Whether collateral challenges are brought by a few class

members, or by a few thousand, the administrative bur-

dens on the courts and altered expectations of defendants

are a small price to pay to ensure that litigants are not

stripped of their rights without representation.

S

CONCLUSION

For all the foregoing reasons, amici respectfully pray

this Court affirm the judgment of the Court of Appeals for

the Second Circuit.

Respectfully submitted,

RICHARD P. IEYOUB

Attorney General of Louisiana

Post Office Box 94005-9005

Baton Rouge, LA 70804

(225) 342-7013