# Opposition Brief — DaimlerChrysler Corp. v. Ysbrand

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2004
- **Citation:** 542 U.S. 937

## Text

No. 03-1342 es

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Jn The a
Supreme Court of the Anited 7

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‘

DAIMLERCHRYSLER CORPORATION,

Petitioner,

V.

SHERYL YSBRAND AND MARY COONEY,
INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED,

Respondents.

ra
b

On Petition For A Writ Of Certiorari
To The Supreme Court Of Oklahoma

,
v

OPPOSITION TO PETITION
FOR WRIT OF CERTIORARI
‘7
ANTHONY J. MAJESTRO Harry G. SCOUFOS
POWELL & MAJESTRO, PLLC Counsel of Record
405 Capitol Street, THOMAS W. CONDIT
Suite P-1200 LAW OFFICES OF HARRY
P. O. Box 3081 ScouFOs, P.C.
Charleston, West Virginia P. O. Box 787
25331 Sallisaw, Oklahoma 74955
(304) 346-2889 (918) 775-5546
PATRICK W. PENDLEY
THE PENDLEY LAW FIRM
P. O. Drawer 71
Plaquemine, Louisiana 70765
(225) 687-8396
[Counsel Continued Inside Cover]
Counsel for Respondents |
@ BEST AVA SRY RS

STEVEN E. VAN GAASBECK
Attorney at Law

1227 Southwest Military Drive
San Antonio, Texas 78221
(210) 924-9294

MARVIN W. MASTERS

MASTERS & TAYLOR, L.C.

181 Summers Street
Charleston, West Virgina 25301
(304) 342-3106

JAMES MINGE

JAMES MINGE & ASSOCIATES
2600 Energy Centre

1100 Poydras Street

New Orleans, Louisiana 70163
(504) 525-5555

JOSEPH J. MCKERNAN
MCKERNAN LAW FIRM

8710 Jefferson Highway
Baton Rouge, Louisiana 70809
(225) 926-1234

DARLEEN JACOBS

Law OFFICES OF DARLEEN JACOBS
823 St. Louis Street

New Orleans, Louisiana 70122
(504) 522-0155

ROBERT E. REEVES

Attorney at Law

First National Building

167 West Main Street, Suite 1310
Lexington, Kentucky 40507

(859) 526-0711

Additional Counsel for Respondents

as ae

QUESTIONS PRESENTED

Under this Court’s established precedent, a state is
free to adopt and apply choice of law rules so long as there
exists a significant aggregation of contacts, creating state
interests, such that the resulting choice of law is neither
arbitrary nor fundamentally unfair. In this case involving
identical defective minivan airbags so dangerous that the
petitioner refuses to even use them as replacement parts
in these very vehicles, petitioner’s own evidence estab-
lished that the claims in this case are so related to Michi-
gan that virtually all the evidence offered by either party
in this case emanates from conduct occurring in Michigan.
Faced with this evidence, the Oklahoma Supreme Court
applied its preexisting choice of law rules (those set forth
in the Restatement (Second) of Conflict of Laws) and
determined that Michigan law applied to respondents’
warranty claims and laws of the state of p»*rzhase applied
to respondents’ fraud claims. The questions sresented are:

1. Does the application of the law of the st: ‘« with
contacts so significant that “virtually all of the e: dence
offered by either side” emanates from conduct occurring
there comport with due process and this Court’s decisions
in Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)
and Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981)?

2. Does the application of the law of the state with
contacts so significant that “virtually all of the evidence
offered by either side” emanates from conduct occurring
there constitute unconstitutional extraterritorial regula-
tion in violation of the commerce clause?

TABLE OF CONTENTS

Page
QUESTIONS PRESENTED .................cccsccccssscsrcceeceees i
Se Se CE Shirt tnaniiiaveiniameneniatens ii
Ee EE CARE EEE UTE REID 5 sasesespniesesnntesecyeisesndcneneneninns iv
ET einer cetnkcsniccecanttanenctiennianiebeaentions
STAT EMEROe 2 CE SEE CA icc cccnssesesscscssvscsescosesonrensnees 6
REASONS FOR DENYING THE WRIT.................... 9

I.

THE APPLICATION OF THE LAW OF THE
STATE WITH CONTACTS SO SIGNIFICANT
THAT “VIRTUALLY ALL OF THE EVIDENCE
OFFERED BY EITHER SIDE” EMANATES
FROM CONDUCT OCCURRING THERE
COMPORTS WITH DUE PROCESS AND THIS
COURTS DECISIONS IN SHUTTS AND
BLATT its ntahixcntnsininvinnintiintianemianmiaeinanss

A. The Decision Below Represents a Straight-
forward Application of this Court’s Opin-
ions in Shutts and Allstate ................:008

B. Whatever Conflict Exists Between the Deci-
sion of the Oklahoma Supreme Court and the
Opinions of other State Supreme Courts and
U.S. Courts of Appeals is Based Upon the Ap-
plication of this Court’s Opinions in Shutts
and Allstate to the Facts of those Cases not
Differences in Interpretation of Shutts and

iil

TABLE OF CONTENTS -— Continued
Page

II. THE APPLICATION OF THE LAW OF THE
STATE WITH CONTACTS SO SIGNIFICANT
THAT “VIRTUALLY ALL OF THE EVIDENCE
OFFERED BY EITHER SIDE” EMANATES
FROM CONDUCT OCCURRING THERE DOES
NOT CONSTITUTE UNCONSTITUTIONAL
EXTRATERRITORIAL REGULATION .............. 18

RIE IO os kissiscenninnaainntinanpennicantmnnsesintibeeieiaouiles 23

TABLE OF AUTHORITIES
Page
CASES
A. S. Goldmen & Co. v. New Jersey Bureau of

Securities, 163 F.3d 780 (3d Cir. 1999)... eee 20
Adams v. Robertson, 520 U.S. 83 (1997).............cccceeeeeeeeeees 6
Blessing v. Freestone, 520 U.S. 329 (1997)........ececeeeseeeeee 6
Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981)......... passim
Avery uv. State Farm Mut. Auto. Ins. Co., 201 Ill.2d

i Fe UD PS CREE vicaseiosristsshscnsicndelaeiibenvesansien 5
Avery uv. State Farm Mut. Auto. Ins. Co., 746 N.E.2d

ee Se TD sess nincinbuascicenmseneenbntciemaniaiatamiidadeadants 16
BMW of North America, Inc. v. Gore, 517 U.S. 559

UT iigtsnnsnsannnionnnnneracticiuineieiindueippuieninadidaiaiaan 6, 18, 19
Clark v. TAP Pharmaceutical Products, Inc., 798

eae Be CA Fee icenssncespithicadsitnanlacinamunddasaiente 16
Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978)........... 3
Cox Broad. Corp. v. Cohn, 420 U.S. 469 (1975).............. 1,2
Debbs v. Chrysler Corp., 810 A.2d 137 (Pa.Super.

FEED coscassnrsncnnntexanvneiilissadsncasmbienanangadabsagienmianignaen mabe 17
Florida v. Thomas, 532 U.S. 774 (2001) 20... cece eeeeeeeeee 5
Franchise Tax Board of California v. Hyatt, __

US. __, 123 S. Ct. 1683 (2003)..................sesscrrrssees 21, 22
Goodyear Atomic Corp. v. Miller, 486 U.S. 174

ITE vicnr0scssnsniencnsnnnsscnesdnnsesnsansevedibeslsbainainedindenisbbianauaienaaic 2
Gravquick A/S v. Trimble Navigation Intl Ltd.,

SEO EG ASLO COE CA, BOG) vecnessnisecscvisncssecssssosossesssoces 20

Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir.
NED os sxcerscansnnsaneevsnnss tenpiasniiidcmmceiuisianbaedabaadaiduaansenanaie 22

v

TABLE OF AUTHORITIES - Continued
Page
Healey v. Beer Institute, Inc., 491 U.S. 324 (1989)... 6, 18, 19
Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675

Cabs SII cieiiniteiinledateinbinate cuca ee ieee ache te 16
Home Ins. Co. v. Dick, 281 U.S. 397 (1930) .....ccccc0000-. 14, 15
Instructional Systems, Inc. v. Computer Curriculum

Corporation, 35 F.3d 813 (3d Cir. 1994).......cccccccccceccee. 20
In re Bridgestone/Firestone, Inc., Tires Products

Liability Litigation, 333 F.3d 763 (7th Cir. 2003)........... 4
Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718

IN it cath A e ca eae ee 16
Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S.

SUT TIED scrdeshavassiddevioniatenradbcunnncaiphintaude ei kane 21
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) ...passim
Southland Corp. v. Keating, 465 U.S. 1 (1984).........cccccecee. 2
State Farm Mut. Auto. Ins. Co. v. Campbell, ___

5 See ty 18, 19
Tracker Marine, L.P. v. Ogle, 108 S.W3d 349

SEE ROR ASO Am Ne ROR On ET 17
Walsh v. Ford Motor Co., 807 F.2d 1000 (D.C. Cir.

PT sabiiiiatieuikirhateiiubhdd siaadenicalaatadsuads coitus tk iia los 17
Zinser v. Accufix Research Institute, Inc., 253 F.3d

SRR AER Tet rn ONE San 16
STATUTES
Okla. Stat. tit. 12, § 2023(e)(1)...............cccccccccosscoscceseoeee, 1,3
Bee OR Oe MN bis cans cehctcsisuncridaconcsieiislcddecsaniadidianasandoctecacd: 1

ae ay Se TINIE cheniccticheuciitinesh icudelaadaasupsonmlanmeadamemausarsecanes 3

TABLE OF AUTHORITIES -— Continued

Page

RULES
Sap. Ct. Ragle 14.10) ..........csrrccccscsccsoseccvssssccssnvnsesseesncossvenes 6
85, SEAR Cn CE Panera enn RR RRA ID er rs 3
Clete, Baap. CE. BR. L.TEGRAD) ccccessccscsvsrsesssscsssssessnerncssssnsasonvons 6
AGENCY DECISIONS
Denial of Motor Vehicle Defect Petition, 62 FR

Ty Ce Bi, TI a iknssersvnitacenesencssnrrnisieninnccinanenianentintis 7
OTHER AUTHORITIES

Deborah R. Hensler, Revisiting the Monster: New
Myths and Realities of Class Action and Other
Large Scale Litigation, 11 Duke J. Comp. & Intl
Bi Fae RD avitcicin sentiisnricesaua Neeieaebciasidanguibesananicinananeensteinta 17

Steven S. Gensler, Civil Procedure: Class Certifica-
tion and the Predominance Requirement Under
Oklahoma Section 2023(B)(3), 56 Okla. L. Rev.

STR RINE Re neers Men Nein ON RN 10
Restatement (Second) Conflict of Laws § 6................ 12,13
Restatement (Second) Conflict of Laws § 188(2).............. 12

Restatement (Second) Conflict of Laws § 191................... 12

OPPOSITION TO PETITION
FOR WRIT OF CERTIORARI

For the reasons noted herein, respondents, Sheryl
Ysbrand and Mary Cooney, respectfully pray that this
Court deny the petition filed by petitioner, DaimlerChrys-
ler Corporation (“DCC”) seeking review of the interlocu-
tory rulings of the Oklahoma Supreme Court.

é
-

JURISDICTION

The ruling below represents an interlocutory appeal of
the state trial court’s decision to certify a class — a ruling
that the Oklahoma Supreme Court recognized “remains
subject to modification and ‘may be altered or amended
before the decision on the merits.’” As the jurisdiction of
this Court to review state court decisions extends only to
“[flinal judgments or decrees rendered by the highest court
of a State,” no jurisdiction exists for this Court to grant
review.’ |

Recognizing the problem, DCC argues for the applica-
tion of the fourth exception to finality recognized by this
Court in Cox Broad. Corp. v. Cohn, which permits review
when:

the federal issue has been finally decided in the
state courts with further proceedings pending in
which the party seeking review here might pre-
vail on the merits on nonfederal grounds, thus
rendering unnecessary review of the federal issue

‘ Pet. App. at 20a, n.8 (quoting Okla. Stat. tit. 12, § 2023(c)1)).
? 28 U.S.C. § 1257(a) (emphasis added).

2

by this Court, and where reversal of the state court
on the federal issue would be preclusive of any fur-
ther litigation on the relevant cause of action
rather than merely controlling the nature and
character of, or determining the admissibility of
evidence in, the state proceedings still to come.’

The Cox exceptions generally apply when “additional
proceedings anticipated in the lower state courts ... would
not require the decision of other federal questions that
might also require review by the Court at a later date,”
and the fourth exception is further limited by the require-
ment that “refusal [to] immediately to review the state-
court decision might seriously erode federal policy.” For
the reasons noted below, the fourth Cox exception is
simply not applicable in this case.

As a preliminary matter, it is important to note that
the jurisdictional arguments proffered by DCC provide no
support for reviewing its extraterritorial regulation claim
in this Court now. As will be noted herein,” DCC waived
this claim by not raising it in its initial appellate brief
below. As such, the Oklahoma Supreme Court did not
address the claim. The fourth Cox exception is designed to
prevent interlocutory holdings on important federal claims
from becoming unreviewable precedent.’ With respect to
the extraterritorial regulation claim, however, there
simply is no state court holding to become unreviewed

* 420 U.S. 469, 482-83 (1975).
* 420 US. at 477, 483.
* See, infra, pp. 5-6.

* Cox Broadcasting, 420 U.S. at 485; see also Southland Corp. v.
Keating, 465 U.S. 1, 7 (1984); Goodyear Atomic Corp. v. Miller, 486 U.S.
174, 179-180 (1988).

3

precedent. In any event, with respect to both the extrater-
ritorial regulation claim and the alleged improper applica-
tion of Phillips Petroleum Co. v. Shutts,’ the fourth Cox
exception is simply not applicable in this case.

First, the federal issue has not been finally decided by
the state court. The nature of the ruling is a class certifi-
cation order which, as noted above, may be altered or
amended before the decision on the merits. Class certifica-
tion orders remain interlocutory because they are decided
as “soon as practicable after the commencement of an
action” brought as a class action.* In this case only mini-
mal discovery was undertaken prior to the certification
order. For this reason, this Court has held that appellate
review of district court orders granting or denying class
certification do not fall within the collateral order excep-
tion to the finality requirement of 28 U.S.C. § 1291.

Second, review now is inappropriate as it is clear that
this case presents other federal questions that might also
require review by this Court at a later date. Regardless of
which state’s law applies to the underlying claims, DCC

” 472 U.S. 797 (1985).
* Okla. Stat. tit. 12, § 2023(c)(1).

* Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978) (revers-
ing court of appeals decision to review opinion denying certification
noting: “An order passing on a request for class certification does not
fall in that category. First, such an order is subject to revision in the
District Court. Second, the class determination generally involves
considerations that are enmeshed in the factual and legal issues
comprising the plaintiff’s cause of action. ... For these reasons, as the
Courts of Appeals have consistently recognized, the collateral-order
doctrine is not applicable to the kind of order involved in this case.”
(citations and footnotes omitted)); cf. Fed. R. Civ. P. 23(f) (1998 amend-
ment legislatively overruling Coopers & Lybrand in federal court class
actions).

4

contends that the claims of the named plaintiffs and the
entire class are preempted by federal law. The motion to
dismiss on this basis was denied by the trial court and
might require review by this Court.” Moreover, class
actions often raise a number of federal due process claims
arising out of both the notice and opt-out process and the
trial plan ultimately used.”

Application of this limitation of Cox is especially
‘ appropriate in this case. These other possible federal
questions will remain even if this Court reverses the state
courts’ rulings on the federal issues raised herein as the
holding below approving treatment of this case as a class
action will still support class certification of narrower
classes.” Even a complete reversal of the class certification
would not preclude litigation (of these allegedly preempted
claims) by the individual named plaintiffs. Because these
federal questions (and any number of other federal issues)
may require review by this Court after final judgment, it
would be inappropriate to review this case under the
fourth Cox exception at this early stage.

Reversal of the choice of law ruling on the federal
issue would not be preclusive of any further litigation on
the relevant cause of action. Rather, a choice of law deci-
sion would merely be “controlling [of] the nature and

Coe District Court Order Denying Motion to Dismiss, Ysbrand v.
DaimlerChrysler Corp. (Feb. 14, 2002).

" See, e.g., Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 800-01
(1985) (addressing due process with respect to class notice).

™ See, e.g. In re Bridgestone/ Firestone, Inc., Tires Products
Liability Litigation, 333 F.3d 763, 766 (7th Cir. 2003) (previous decision
reversing choice of law ruling and denying national class certification
“contemplated that states would certify narrower classes ... ”).

5

character of the claim” in the state proceedings still to
come. The underlying UCC warranty claims exist whether
the court applies Delaware, Oklahoma, or Michigan law. A
ruling on choice of law is a “run-of-the-mine decision” that
can await final judgment for review.” If these class certifi-
cation decisions occur with the frequency that petitioner
suggests, this Court will soon have the opportunity to
review these issues upon review of a final judgment.“

Finally, DCC seeks certiorari based upon the claim
that the state courts’ decisions to apply Michigan law
violate both due process under Shutts and the commerce
clause’s bar on regulation of conduct occurring wholly
outside the boundaries of the state. This Court has no
jurisdiction to review the alleged extraterritorial regula-
tion claim as DCC failed to preserve this argument for
review. The commerce clause argument was not raised in
the trial court in opposition to certification.” Nor was
improper extraterritorial regulation raised as a defense in
petitioner’s answer which was filed by DCC after it initi-
ated its state court appeal.” While the argument was
noted in its statement docketing the state court appeal,”
DCC did not brief the argument that the application of
Michigan law violated the commerce clause or otherwise
constituted unconstitutional extraterritorial regulation.

Florida v. Thomas, 532 U.S. 774, 781 (2001).

“ See, e.g., Avery v. State Farm Mutual Automobile Insurance Co.,
201 Ill.2d 560, 786 N.E.2d 180 (2002) (granting appeal to consider final
judgment in favor of national class tried under single state’s law).

% See Pet. App. 68a-73a (petitioner’s trial court Opposition to Class
Certification).

© See Pet. App. 74a-76a (petitioner’s Answer filed March 26, 2002).
7 See Pet. App. 88a-89a (Petition in Error filed March 15, 2002).

6

Petitioner’s sole reference to the issue appeared as part of
a policy argument that regulation by the National High-
way Traffic Safety Administration was superior to class
adjudication.” Because petitioner waived the constitu-
tional extraterritorial regulation claim by not specifically
raising it in its brief in chief, the Oklahoma Supreme
Court did not address the claim in its opinion.” As such,
this claim cannot be raised here.”

ry
v

STATEMENT OF THE CASE

In 1996 and 1997, one hundred percent of all child
airbag minivan deaths occurred in minivans manufactured
by DCC. (TR 258, Exh. B at pp. 41-42) In addition, a
significant number of adults, primarily of smaller stature,
have also been killed or seriously injured by airbags in
DCC minivans. (Jd.) Respondents are the representatives
of a class of the purchasers of 1996-1997 model minivans
manufactured by DCC who seek remedies for the breach of

* See Pet. App. 88a-89a (petitioner’s Brief in Chief noting “allowing
one state to apply its laws in a manner which regulates automotive
safety policy within the purview of NHTSA threatens basic principles of
federalism — recognized in Healey v. Beer Institute, Inc., 491 U.S. 324,
336 (1989) and BMW of North America, Inc. v. Gore, 517 U.S. 559, 571
(1996)”).

See Okla. Sup. Ct. R. 1.11(k)(1) (“Issues raised in the Petition in
Error but omitted from the brief may be deemed waived. Argument
without supporting authority will not be considered.”).

® See Adams v. Robertson, 520 U.S. 83 (1997) (with very rare
exceptions, Supreme Court reviewing state court judgments will not
consider petitioner’s federal claim unless it was either addressed by or
properly presented to state court; citation of relevant case in brief for |
entirely different argument is insufficient); Sup. Ct. Rule 14.1(a);
Blessing v. Freestone, 520 U.S. 329, 340, n.3 (1997).

warranty committed by DCC in manufacturing, market-
ing, and selling these vehicles.

DCC manufactured and sold over one million of the
subject minivans as family vehicles, each containing a
passenger airbag that is defective and dangerous to
humans (both children and smaller statured adults) who
are not the 160 pound males for which the bag was de-
signed. (TR 258, at p. 5 & Exh. A) This airbag is so dan-
gerous that even DCC is unwilling to continue to use the
components in these airbags as replacement parts in the
very 1996-1997 vehicles that are the subject of this litiga-
tion. Instead, it uses a lower powered airbag as its official
replacement part. (TR 258 at 6; see also Plaintiffs’ Re-
sponse to Defendants’ Motion for Stay, p. 5 & Exh. B) Nor
does DCC use this dangerous airbag as original equipment
in its post-1997 minivans. (Jd.) Like the replacement part,
DCC started using depowered airbags as original equip-
ment beginning in its 1998 minivans. (Jd.) As DCC’s
current conduct establishes, neither technology nor gov-
ernmental regulation required it to use the defective,
overpowered airbag it chose.

Those seeking a solution to this problem from the
National Highway Traffic Safety Administration (“NHTSA”)
were turned away based on “the need to allocate and priori-
tize NHTSA’s limited resources.” Consequently, respon-
dents turned to the courts and initiated the instant class
action. Following the setting of an agreed schedule for the
consideration of class certification, the trial court below
certified this case as a class action. (Pet. App. at 3a-4a)

7" Denial of Motor Vehicle Defect Petition, 62 FR 41477, 41481
(Aug. 1, 1997).

8

In determining whether to certify this case as a class
action, the courts below addressed the issue of what law
applied to the fraud and warranty claims brought by
respondents on behalf of the class. In making that deter-
mination, the Oklahoma courts applied Oklahoma’s
existing choice of law rules. With respect to both the
warranty and fraud claims, the Oklahoma courts applied
the tests set forth in the Restatement (Second) of Conflict
of Laws. (See Pet. App. 1la, 14a) With respect to the fraud
claims, the Oklahoma Supreme Court determined that
Oklahoma’s choice of law rules mandated the application
of the laws of the purchaser’s state. (Jd. at 16a) With
respect to the contract based warranty claims, the Okla-
homa Supreme Court determined that Michigan law
applied to the warranty claims of all of the purchasers. (Id.
at 13a-14a)

The decision that Oklahoma’s previous adoption of the
Second Restatement’s “most significant relationship test”
required the application of Michigan law to the warranty
claims of each of the class members was based on a sub-
stantial record provided by petitioner regarding Michigan’s
relationship to each class member. While it is true that
DCC is a Delaware corporation with its headquarters and
principal place of business in Auburn Hills, Michigan,
(Def. Class Cert. Ex. I, Van Der Wiele Affid., J 1), the
contacts between each class members’ claim in this case
and Michigan are even more substantial. For example,
petitioner contended below that “[vJirtually all DCC
personnel who may be called to testify in this matter are
located in the State of Michigan.” (Jd. at { 6) Similarly,
DCC admitted that its personnel track the owners of the
subject vehicles in Michigan, manage warranty work on
the subject vehicles in Michigan, make design decisions

9

regarding the subject vehicles and the subject airbags in
Michigan, and review and approve the marketing plans for
the subject vehicles in Michigan. (Jd. at {J 3, 6) Moreover,
according to petitioner, virtually all of the millions of
pages of documents requested by respondents in discovery
are located in Michigan. (Id. at J 4) Petitioner summed it
up best when it argued below that this action is “based on
the design of airbags manufactured ... by personnel
located in Michigan,” and “(t)hus, virtually all the evidence
offered by either side will relate to Chrysler’s airbags and
the adequacy of design decisions made in Michigan by
Chrysler employees and third parties.” (Chrysler Corpora-
tion’s Reply to Plaintiff’s Response to Motion To Dismiss,
pp. 1, 6 (emphasis added)) Based upon this record the
Oklahoma Supreme Court concluded that Michigan has
the most significant relationship to the transaction and
the parties with respect to each class members’ claim
because “Michigan is where the decisions concerning the
design, manufacture, and distribution of the minivans
were made.” (Pet. App. 13a, J 15) Finally, the Court tested
its application of the Oklahoma rule against this Court’s
constitutional limitations and found the determination
“constitutionally permissible” under Phillips Petroleum
Co. v. Shutts, 472 U.S. 797 (1985) and Allstate Ins. Co. v.
Hague, 449 U.S. 302 (1981). Ud. at 14a, J 16). Following
the denial of DCC’s petition for rehearing below, DCC now
seeks review in this Court.

+

REASONS FOR DENYING THE WRIT

The 51 state courts in our federal system are each
expressly permitted to choose their own choice of law rule
so long as the rule and its application do not violate

10

certain minimum standards. While petitioner offers a
number of policy reasons why the rule chosen in this case
was supposedly wrong, “Ysbrand is, by definition, a correct
articulation and application of Oklahoma conflicts princi-
ples.’ The question here is not whether this Court (or
even the Michigan Supreme Court) would adopt the same
rule — the question is whether the United States Constitu-
tion is offended by a state court applying the law of the
state which is the source of “virtually all of the evidence
offered by either side” in the case. The Oklahoma Supreme
Court’s decision to answer this question in the negative
(especially in the context of an interlocutory ruling) is not
one that is worthy of a grant of certiorari by this Court.

I. THEAPPLICATION OF THE LAW OF THE STATE
WITH CONTACTS SO SIGNIFICANT THAT “VIR-
TUALLY ALL OF THE EVIDENCE OFFERED BY
EITHER SIDE” EMANATES FROM CONDUCT
OCCURRING THERE COMPORTS WITH DUE
PROCESS AND THIS COURT'S DECISIONS IN
SHUTTS AND ALLSTATE.

A. The Decision Below Represents a Straight-
forward Application of this Court’s Opin-
ions in Shutts and Alistate.

In the decision below the court applied the Second
Restatement test and found that Michigan had the most
significant relationship to the transaction and the parties.
The court then turned to the one constitutional challenge
made by petitioners below. In addressing the issue, the

2 Steven S. Gensler, Civil Procedure: Class Certification and the
Predominance Requirement Under Oklahoma Section 2023(B)(3), 56
Okla. L. Rev. 289, 301 (2003).

11

Oklahoma Supreme Court correctly noted this Court’s
precedent regarding the constitutional limitations on
choice of law decisions: “for a state’s substantive law to be
selected in a constitutionally permissible manner, that
state must have a significant aggregation of contacts,
creating state interests, such that choice of its law is
neither arbitrary nor fundamentally unfair.” The court
then found that the same factors that led to the conclusion
that Michigan had the most significant state interest were
sufficient to create a “significant aggregation of contacts”
under Shutts. That these contacts exist and are sufficient
in this case when “virtually all the evidence offered by
either side” will emanate from Michigan cannot be seri-
ously disputed.

The suggestion that the substantial contacts with
Michigan in this case are insignificant is clearly frivolous.
Thus, with respect to every class member, as “virtually all
the evidence offered by either side will relate to ... deci-
sions made in Michigan,” aggregation of the contacts is not
necessary to comply with Shutts These identical contacts
with Michigan (that are held by every class member) are
clearly sufficient to distinguish this case from Shutts and
the other cases cited by petitioner in which there were no
significant contacts with state whose law was applied.

Because Petitioner cannot challenge the results of the
application of the Oklahoma choice of law rule in this case,
it seeks to distort the holding of both the court below and
Shutts. Petitioner’s argument is that by allegedly adopting

> Pet. App. at 14a, J 16 (quoting and citing Phillips Petroleum Co.
v. Shutts, 472 U.S. 797, 818 (1985) and Allstate Ins. Co. v. Hague, 449
U.S. 302, 312-313 (1981)).

ee

12

a special choice of law rule for class actions, the Oklahoma
Supreme Court opinion violated Shutts regardless of the
results of the rule. Both the premise and the conclusion
are false.

First, the court below did not hold that the fact that
this case was a class action allowed it to apply a different
choice of law rule. What the court did do was apply sec-
tions 188(2) and 191 of the Second Restatement (the
provisions dealing with contracts) and evaluate the rele-
vant “contacts ... according to their relative importance
with respect to the particular issue[s]” involved in this
case.“ The court then checked its analysis by reviewing
the general choice of law factors contained in section 6 of
the Second Restatement and found that the general
policies set forth in section 6 were not offended by the
application of the result obtained under sections 181(2)
and 191.” This analysis represents a straightforward
application of the Second Restatement to this case, not an
adoption of a special rule applying to class actions.

If there is any doubt, one need look no further than
the court’s analysis of the choice of law regarding the
fraud claim. If the court was altering its ordinary choice of
law rules to accommodate class action policies, the same
alleged accommodation would have been applied to the
choice of law determination on the fraud claims. Instead,
the Court found that the Second Restatement test resulted
in the application of the laws of 51 jurisdictions.”

* Td. at 12a-13a, JJ 13-15.
* Id. at 13a-14a, J 16.
* Id. at 14a-16a, JJ 17-18.

ene

13

Contrary to the suggestion by petitioner, the due
process clause analysis under Shutts does not require an
examination and weighing of every contact with every class
member — instead, it only requires that the law ultimately
chosen be supported by “a significant aggregation of con-
tacts, creating state interests, such that choice of its law is
neither arbitrary nor fundamentally unfair.” Thus, as long
as the law ultimately chosen complies with the Shutts, due
process did not require the courts below to individually
examine all the contacts for each class member.

To the extent that Shutts imposes any constitutional
requirement that there be an “individualized” choice of law
analysis undertaken apart from assuring that significant
contacts exist for each class members’ claim, this require-
ment was met by the Oklahoma Supreme Court’s consid-
eration of the record submitted by the parties that allowed
it to make conclusions regarding the relative interests of
“each buyer’s home state.”” Moreover, as the nature of the
dispute for every class member centers on the design and
manufacture of the identical defective airbags in Michigan,
the conclusion that the Michigan contacts are significant
applies equally to every individual purchaser. Thus, as the
record establishes that significant contacts with Michigan
exist for every class member, “individual” analysis results in
the same conclusion.

While the premise of DCC’s argument (that the court
below applied a different rule in a class action) is incor-
rect, so is the conclusion that due process would be of-
fended if the status of this case as a class action influenced
the outcome of the analysis. It should be noted that Second

* Td. at 13a, J 15.

14

Restatement § 6(g) allows consideration of the ease in the
determination of the law to be applied. That due process
does not require every Court to reach the same conclusion
regarding choice of law is both obvious from the fact that
each state has its own choice of law rules and an idea that
was clearly and specifically rejected by this Court in
Shutts.” Since due process does not mandate one national
choice of law rule, due process does not prohibit choice of
law rules that are applied differently when a case is
brought as a class action based on considerations such as

~Sase of application. While Shutts held that the status of a
case as a class action could not be used to make a constitu-
tionally impermissible choice of law permissible, this
Court provided no restrictions on how a state decides
between several constitutionally permissible choices of
law. Under Shutts, due process merely requires a signifi-
cant aggregation of contacts — a test easily met in this case
regardless of whether the case is a class action.

Finally, petitioner argues that this Court’s opinion in
Home Ins. Co. v. Dick,” would preclude respondents from
bring an individual suit in Oklahoma arguing that Michi-
gan law applies. This is indeed a strange argument coming
from petitioner who, with others in the automotive indus-
try, commonly seek the application of Michigan law and its
ban on punitive damages to non-Michigan purchasers

* Shutts, 472 U.S. at 823 (subject to limitation that choice of law
be based on significant contact or significant aggregation of contacts,
“we reaffirm our observation in Allstate that in many situations a state
court may be free to apply one of several choices of law.”).

* 281 U.S. 397 (1930).

15

when one of their defective products injure someone.” In
any event, Dick is distinguishable from this case for the
same reason as Shutts. Unlike this case, in Dick and
Shutts the law to be applied bore no relationship to the
parties or the transaction. On this record, Ms. Cooney, or
any of the other class members, could have convinced an
Oklahoma court to apply Michigan law to her individual
dispute without running afoul of the due process clause
because “virtually all of the evidence offered by either
side” relating to the issues in dispute in the case would
come from Michigan.

B. Whatever Conflict Exists Between the
Decision of the Oklahoma Supreme Court
and the Opinions of other State Supreme
Courts and U.S. Courts of Appeals is Based
Upon the Application of this Court’s Opin-
ions in Shutts and Allstate to the Facts of
those Cases not Differences in Interpreta-
tion of Shutts and Allstate.

Petitioner has identified a number of decisions which
apply different choice of law tests and reach cifferent
choice of law conclusions.- The conclusions are different

ss because the courts used different choice of law rules which
were applied to different facts. With respect to the ques-

) tion here, whether the choice of law rule comports with

Shutts, an analysis of these cases reveals consistent
interpretation of the decision.

* See Appellee’s Combined Response to Briefs of Amicus Curiae, p.

9 & nn.27-29 and exhibits (citing examples of automotive manufactur-

ers (including DCC) arguing for the application of Michigan law and its

} ban on punitive damages in non-class product liability suits brought
outside of Michigan by non-Michigan purchasers).

ey

16

One factor in reconciling the various decisions is
the presence of choice of law rules that are different than
the one applied by the court below — either in name” or
application.” Another factor is the differing factual record
in the cases rather the acceptance of a single state’s law in
the absence of contacts that would satisfy Shutts.” A third
factor distinguishing the cases denying the application of a
single state’s law is an incomplete choice of law analysis
by the court or the parties.”

** Compare, Ysbrand, supra (applying Second Restatement test)
with Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1187-88
(9th Cir. 2001) (applying California’s impairment of interests test);
Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718, 725 n.6 (11th Cir
1987) (applying Georgia’s modified lex loci delecti rule); cf Clark v. TAP
Pharmaceutical Products, Inc., 798 N.E.2d 123, 129-130 (Ill.App. 2003)
(allowing Illinois consumer protection act to govern non-Illinois sales).

* Compare Ysbrand, supra (applying Second Restatement test
resulting in application of single state’s law) with Henry Schein, Inc. v.
Stromboe, 102 S.W.3d 675, 697-698 (Tex. 2002) (refusing to find that
state where products were manufactured and designed was state with
most significant relationship under Second Restatement test).

* Compare Ysbrand, supra (“Michigan is where the decisions
concerning the design, manufacture, and distribution of the minivans
were made.”); Clark, supra (practices regarding “Lupron were designed,
established, and initiated from the defendants’ marketing and sales
agents located at the defendants’ corporate headquarters in Illinois”);
Avery v. State Farm Mut. Auto. Ins. Co., 746 N.E.2d 1242, 1254-1255 /
(Ill.App. 2001) (“There is substantial evidence the deceptive claims
practices were designed, established, and initiated from State Farm’s
corporate headquarters in Bloomington, Illinois”) with Zinser, 253 F.3d
at 1187 n.5 (“Although ARI is now headquartered in Colorado, Zinser
has not demonstrated that it was headquartered there when the 854
leads were designed, manufactured, and distributed.”)

“ Zinser, 253 F.3d at 1188 (“Zinser does not explain how each non-

forum state’s law differs from California law, whether each non-forum

state has an interest in having its law applied, or whether each non-forum
state has an interest outweighing California’s interest.”); Kirkpatrick, j
supra (“although the law of Georgia might eventually be applied on some
(Continued on following page)

17

What is absent from the petitioner’s review of these
decisions is any meaningful analysis of how these deci-
sions represent inconsistent interpretations of Shutts
rather than the adoption and application of different state
choice of law rules to different facts. As noted above, the
appellate decisions accepting the argument that a single
state law applies to a dispute all do so in the context of a
record that supports compliance with Shutts. Similarly,
the decisions rejecting the application of a single state’s
law do so based on non-constitutional grounds in spite of
citations to Shutts.” The petitioner’s premise — that when
courts accept (or reject) application of a single state’s law
they have interpreted Shutts differently — is simply wrong.

Finally, petitioner makes many policy arguments
against allowing courts to certify national class actions
after finding a single state’s law should apply. The reason
behind the increase in class actions are new socioeconomic
trends not “greedy iawyers” as even the author of the
RAND study cited by petitioner recognizes.” In any event,

claims involving purchases made in other states, that could be determined
only after the district court had fully surveyed the law of the states of
purchase.”); Walsh v. Ford Motor Co., 807 F.2d 1000, 1016, n.90 (D.C. Cir.
1986) (“The judge did not say whether she had in mind applying the law of
one particular state to all members of the nationwide class.”); Debbs v.
Chrysler Corp., 810 A.2d 137, 159 (Pa.Super. 2002) (“The record fails to
reflect an analysis of the choice-of-law issue.”).

* See, e.g., Tracker Marine, L.P. v. Ogle, 108 S.W.3d 349, 355
(Tex.App. 2003) (noting due process limits exist but deciding choice of
law issue on state-law grounds).

* Deborah R. Hensler, Revisiting the Monster: New Myths and
Realities of Class Action and other Larg« Scale Litigation, 11 Duke J.
Comp. & Int L. 179, 212 (2001) (rejecting argument that class litigation
is a “monster” and positing that large-scale litigation is consequence of
socio-economic trends such as rise of multi-national corporations that
bring with them potential for large-scale injuries and information science

(Continued on following page)

18

the choice between different constitutional policy decisions
regarding the existence and venue for class claims is one
for the state legislatures, state courts and Congress — not
for this Court to review interlocutory class certification
opinions from state courts.

Il. THE APPLICATION OF THE LAW OF THE
STATE WITH CONTACTS SO SIGNIFICANT
THAT “VIRTUALLY ALL OF THE EVIDENCE
OFFERED BY EITHER SIDE” EMANATES
FROM CONDUCT OCCURRING THERE DOES
NOT CONSTITUTE UNCONSTITUTIONAL EX-
TRATERRITORIAL REGULATION.

Petitioner’s final constitutional argument is that the
Oklahoma Supreme Court’s choice of Michigan law vio-
lates the prohibition on the extraterritorial application of
one state’s law to conduct in another state. This argument
is based on the unstated premise that there is no relation-
ship between Michigan and this dispute. This premise and
the legal conclusions drawn from it are false. Indeed, if
this Court adopts DCC’s argument, no state would be
permitted to ever apply another state’s law — a result that
would ultimately conflict with this Court's holdings in
Shutts.

Petitioner relies on Healey v. Beer Institute, Inc.,”
BMW v. Gore,” State Farm Mut. Auto. Ins. Co. v. Camp-
bell®® and other similar opinions. The prohibitions in these

revolution including development of the Internet, which have provided
means for people to become informed of potential claims).

* 491 U.S. 324 (1989).
* 517 U.S. 559 (1996).
2° _ US. __, 123 S. Ct. 1513 (2003).

19

opinions are not as broad as petitioner seeks to make
them.

First, it is important to note that none of these opin-
ions prohibit a state from applying another state’s law so
long as the dictates of Shutts are met. Healey merely
prohibits the application of one state’s law to conduct
wholly occurring outside that state. Similarly, Gore prohib-
its a state from applying its law to punish wholly out-of-
state conduct that was legal where it occurred, and Camp-
bell holds that a state cannot apply its law to “punish a
defendant for unlawful acts committed outside of the
state’s jurisdiction.” In this case, Michigan law applies
because the conduct being regulated occurred there. For
these reasons, the prohibitions in Healy, Gore and Camp-
bell simply do not apply.

The argument being advanced based on these cases
would lead to the conclusion that no state may ever apply
another state’s law to a dispute — a conclusion directly
contrary to the holdings of Shutts and Allstate noted
above. None of these cases bar a class action where a
court determines that the law of one state applies nation-
ally to the dispute. Indeed, petitioner’s citation to Camp-
bell on this point is particularly inappropriate as
Campbell explicitly distinguished the case where all
persons harmed by the conduct occurring outside the
state were parties and the conduct was judged under a
choice of law rule that complies with Shutts.“ Thus,
under Campbell a choice of law decision joining all the

” 123 S. Ct. at 1522.
“ Campbell, 123 S. Ct. at 1622 (citing Shutts, 472 U.S. at 821-822).

20

class members as parties and complying with Shutts does
not constitute unconstitutional extraterritorial regulation.

There is nothing unconstitutional in this result. In
any case involving contracts between citizens of different
states, a court must choose which state’s law to apply.
Choosing to apply the law of the state where the seller
resides is, from the standpoint of the commerce clause, no
more suspect than choosing to apply the laws of the
buyers’ states. “The ... modern approach is to recognize
that contracts formed between citizens in different states
implicate the regulatory interests of both states. Thus,
when an offer is made in one state and accepted in an-
other, we now recognize that elements of the transaction
have occurred in each state, and that both states have an
interest in regulating the terms and performance of the
contract.™* The choice of law decision simply involves
balancing those interests, and “Iw]hile a contract which
covers multiple states may raise a difficult choice-of-law
question, once that question is resolved there is nothing
untoward about applying one state’s law to the entire
contract, even if it requires applying that state’s law to
activities outside the state.””

Acontrary rule would not be workable as the resulting
rule would be contrary to the holding in Shutts. In Shutts,
the Court required the application of the foreign state’s
laws when the forum had no significant contacts with the
parties or the dispute. Take the individual case of Ms.

® 4S. Goldmen & Co. v. New Jersey Bureau of Securities, 163 F.3d
780, 787 (3d Cir. 1999).

*? Instructional Systems, Inc. v. Computer Curriculum Corporation,
35 F.3d 813, 825 (3d Cir. 1994); accord, Gravquick A/S v. Trimble
Navigation Int'l Ltd., 323 F.3d 1219, 1225 (9th Cir. 2003).

ad Rita Ta

21

Cooney, a Delaware resident. Under petitioner’s Shutts’
argument, the Oklahoma Court must apply Delaware law.
Under the commerce clause argument advanced by peti-
tioner, however, the application of Delaware law would
constitute unconstitutional extraterritorial regulation by
the Oklahoma court. To accept petitioner’s argument
would make choice of law determinations in many cases
unworkable.

Petitioner also argues that both the commerce clause
and the due process clause are violated by the holding of
the opinion below because the courts of Oklahoma alleg-
edly have insufficient contacts with the dispute of the non-
Oklahoma class members. Petitioner cites no direct
authority for either of these propositions. Petitioner’s
suggestion that the concurrence in Allstate requires more
than that the law that the court ultimately applies be
based on a significant contact or significant aggregation of
contacts is directly contrary to Shutts.“ This Court has
never required the forum court to establish significant
contacts in order to apply its choice of law rule. The
presence of the case in the forum is sufficient to allow the
court to pick the choice of law rule as long as the result of
the application of the rule does not violate the due process
test set forth in Shutts.”

This Court has traditionally refused to graft constitu-
tional requirements beyond compliance with Shutts to
choice of law decisions. For example, in Franchise Tax

“ Shutts, 472 U.S. at 823: see also Klaxon Co. v. Stentor Electric
Mfg. Co., 313 U.S. 487 (1941) (rejecting federal conflict of law rule in
diversity cases).

“© Cf Klaxon Co., supra (requiring federal courts in diversity cases
to uniformly apply the conflict of law rule of forum state).

22

Board of California v. Hyatt, this Court rejected a claim
that the choice of law violated the full faith and credit
clause holding that any choice of law that satisfies Shutts
cannot, by definition, violate the clause.“

Moreover, the supposed “substantive conflict” between
the different laws is largely illusory. Indeed, in a decision
of the Ninth Circuit when petitioner supported class
adjudication through a national settlement of automobile
warranty claims, the court noted that the laws of the
various states are “generally homogenous” and the “jdio-
syncratic differences” between the laws of the states are
not “sufficiently substantive” to create significant differ-
ences in the claims of the class members.”

Implicit in petitioner’s argument is the assumption
that the national class certification in this case is signifi-
cant. One wonders if the court below had merely ruled
that the contract claims of Cheryl Ysbrand of Oklahoma
and Mary Cooney of Delaware were governed by Michigan
law when “virtually all the evidence offered by either side”
will emanate from Michigan would have triggered this
objection. Of course the answer is no, and, indeed, the
suggestion that class certification changes the constitu-
tionality of the choice of law analysis is contrary to peti-
tioner’s argument that class certification should be
ignored in conducting choice of law analysis.

2
Vv

“ US. __, 123 S. Ct. 1683 (2003).

“ Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022-1023 (9th Cir.
1998).

23

CONCLUSION

The arguments raised by petitioner are both proce-
durally inappropriate and substantively without merit.
Consequently, this Court should deny the petition.

Respectfully submitted,

Harry G. SCOUFOS

Counsel of Record

THOMAS W. CONDIT

LAW OFFICES OF HARRY SCOUFOS, P.C.
P. O. Box 787

Sallisaw, Oklahoma 74955

(918) 775-5546

(918) 775-4990 fax

ANTHONY J. MAJESTRO

POWELL & MAJESTRO, PLLC

405 Capitol Street, Suite P-1200
P. O. Box 3081

Charleston, West Virginia 25331
(304) 346-2889

(304) 346-2895 fax

PATRICK W. PENDLEY

THE PENDLEY LAW FIRM

P. O. Drawer 71

Plaquemine, Louisiana 70765
(225) 687-8396

(225) 687-6398 fax

STEVEN E. VAN GAASBECK
Attorney at Law

1227 Southwest Military Drive
San Antonio, Texas 78221
(210) 924-9294

(210) 921-1973 fax

24

MARVIN W. MASTERS

MASTERS & TAYLOR, L.C.

181 Summers Street
Charleston, West Virginia 25301
(304) 342-3106

(304) 342-3189 fax

JAMES MINGE

JAMES MINGE & ASSOCIATES
2600 Energy Centre

1100 Poydras Street

New Orleans, Louisiana 70163
(504) 525-5555 ;
(504) 585-7733 fax

JOSEPH J. MCKERNAN
McKERNAN LAW FIRM

8710 Jefferson Highway
Baton Rouge, Louisiana 70809
(225) 926-1234

(225) 926-1202 fax

DARLEEN JACOBS

LAW OFFICES OF DARLEEN JACOBS
823 St. Louis Street

New Orleans, Louisiana 70122
(504) 522-0155

(504) 522-3819 fax

ROBERT E. REEVES

Attorney at Law

First National Building

167 West Main Street, Suite 1310
Lexington, Kentucky 40507

(859) 526-0711

(859) 526-0700 fax

Counsel for Respondents
May 24, 2004

No. 03-1342
IN THE

Supreme Court of the United States

DAIMLERCHRYSLER CORPORATION,

Petitioner,
Vv.

SHERYL YSBRAND AND MARY COONEY,
INDIVIDUALLY AND ON BEHALF OF ALL OTHERS
SIMILARLY SITUATED,

Respondents.

~_

On Petition For A Writ Of Certiorari
To The Supreme Court Of Oklahoma

REPLY BRIEF FOR PETITIONER

PETER W. HERZOG MIGUEL A. ESTRADA

JAMES F, BENNETT Counsel of Record

BRYAN CAVE LLP THEODORE J. BOUTROUS, JR.

One Metropolitan Square PAUL DECAMP

211 North Broadway Cory J. SKOLNICK

Suite 3600 WILLIAM M. JAY

St. Louis, MO 63102 GIBSON, DUNN & CRUTCHER LLP

(314) 259-2000 1050 Connecticut Avenue, N.W.
Washington, D.C. 20036

ROBERT E. NORTON (202) 955-8500

MARY E. WALDRUP

DAIMLERCHRYSLER CORP.

1000 Chrysler Drive

Auburn Hills, MI 48326

(248) 512-4120

Counsel for Petitioner

1

RULE 29.6 STATEMENT

The corporate disclosure statement included in the peti-
tion for a writ of certiorari remains accurate.

ii

TABLE OF CONTENTS

Page
RULE 29.6 STATEMENT.........ssssssssssssssrsersesescensnsenenensnsenonness i
TABLE OF AUTHORITLEG........:+:s:ssssessssreesersnrensesensnenensens ili

I. The Conflict Among Federal And State Courts
Has Widened Since The Petition Was FiO ....csececcercesess 1

II. The Judgment Below Is Final For Purposes Of
This Court’s Review .......s:csssssesssseressnsnsessensssnnensnsensnenens 6
Ill. The Constitutional Issues Are Preserved ........scccceeceseseees 9

CONCLUSION ....0-0ssssecsssscesssseseconsvessnenonsnsnenencassscorensononeoeenes 10

ill

TABLE OF AUTHORITIES
Page(s)
Cases
Barclays Bank PLC v. Franchise Tax Board, 512
TE cdissahuslsniincideosdeeitiopsevenvninappinbonianemionennietieniinien 10
Blair v. Equifax Check Services, 181 F.3d 832 (7th
STITT sill ttenasuekoseniskatiesanineniiepeinnneneathubennedscinonneeinitivees 8
BMW of North America, Inc. v. Gore, 517 U.S. 559
IIL Isaiah tanidniaasepieddteemenselenesanidundanibvebnenmicennrnnies 10
Boynton v. Virginia, 364 U.S. 454 (1960)... .cceeeeeeseeeeeees 10
Compag Computer Corp. v. Lapray, No. 02-0705, __
S.W.3d ___, 2004 Tex. LEXIS 435 (May 7, 2004)......... r
Container Corp. of America v. Franchise Tax Board,
I si ssediosenecsinarnasiceniianisstipeinendnetebennreeninstn 10
Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978)........7, 8
Cox Broadcasting Corp. v. Cohn, 420 US. 469
TENTS SE OE eC 8
CTS Corp. v. Dynamics Corp. of America, 481 U.S.
Thalia acrceamiinteiesnientrmeseniniiiihessanbnesdeniadimennne 5
Florida v. Thomas, 532 U.S. 774 (2001).........cssccsssssreeesseees 7

Georgine v. Amchem Products, 83 F.3d 610 (3d Cir.
1996), aff'd sub nom. Amchem Prods. v. Windsor,

I RE I cis asin Ahinienntinnsninornstinnvbeideetsammianinennenenues 3
Healy v. Beer Institute, 491 U.S. 324 (1989)............... 5, 9, 10
Home Insurance Co. v. Dick, 281 U.S. 397 (1930)............06. 6
In re Air Bag Products Liability Litigation, 7 F. Supp.

Se I, ER CT incchcnshgiisettinbesisbeisinenvenvotebasnconsentenedees 3
In re Bridgestone/Firestone, Inc., Tires Products

Liability Litigation, 333 F.3d 763 (7th Cir. 2003) ............. l

iV

Mercantile Nat’l Bank v. Langdeau, 371 U.S. 555

CFB ennssricnsnessnreconseanenesensanansnniincnnivannonstonenveemntensneuiuesinions 7
Phillips Petroleum Co. v. Shutts, 472 US. 797
CEES) inncencnsssnssoransinacessrensnevesesenibesisensnseneguiseuacenseenanes passim
Richardson-Merrell Inc. v. Koller, 472 U.S. 424
CRD) vsarncsrvenssecesnenssnctnessontoscscsnersitntncesieensnstensensesecsnsanbesesinns 7
State Farm Mutual Automobile Insurance Co. v.
Campbell, 538 U.S. 408 (2003).......scsseseeeeeees eusicianeasaaaued 6
Statutes
FETE. 6 RGF vissssssevvsinrscssssniscisnseversersmsemomvenenesinsaunnseneintes 8
FE UBC. © UDA cressvcicscsesersessersnsinccconecsmpesnseneovensssvessasvonssesees 7
Rules
PED. BR. CIV. PP. ZIT) a vssesevsescrossserssconsassecsonneessscsvasssvanesennensevion 8
BI, CF Te, I iesissinsesncensicasensnasasneseminneannccsvernssnbsniacnsenssannnts 4
Other Authorities
CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE
& PROCEDURE (2d ed. 1996) ..........ccccccccccscsccscccsesscssssseseeees 8

REPLY BRIEF FOR PETITIONER

The sum of respondents’ argument in opposition to cer-
tiorari is that the petition is premature: that this Court’s re-
view will not be warranted until more lower courts endorse
the Supreme Court of Oklahoma’s errant analysis, and until
after some nationwide class action is litigated to verdict and
appealed through the state judiciary. But the willingness of
even a single jurisdiction to certify nationwide class actions
in violation of the Constitution threatens to hold the entire
American economy hostage to parochial whim. See Jn re
Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 333
F.3d 763, 766-67 (7th Cir. 2003) (Easterbrook, J.). Okla-
homa and the minority of jurisdictions that have departed
from this Court’s holdings in such cases as Phillips Petro-
leum Co. v. Shutts, 472 U.S. 797 (1985), have created mag-
nets for nationwide class litigation. Those jurisdictions will
continue to set policy for the entire country unless and until
this Court resolves the conflict. This case presents an appro-
priate vehicle for this Court to do precisely that.

I. The Conflict Among Federal And State Courts Has
Widened Since The Petition Was Filed

Respondents barely address the divide among federal
and state courts concerning constitutional restraints on na-
tionwide-class certification; respondents focus instead on the
merits of the constitutional issue. But they do not refute the
need for this Court to resolve the conflict, which was already
developed when the petition was filed: Oklahoma and Illinois
take a position diametrically opposed to most other jurisdic-
tions’ (and California takes an intermediate stance). See Pet.
13-20. The divide has only widened since that time: ex-
pressly relying on the federal Due Process Clause, the Su-
preme Court of Texas recently de-certified a nationwide class
of plaintiffs asserting precisely the same type of Uniform
Commercial Code warranty claim as in this case.

2

1. In Compaq Computer Corp. v. Lapray, No. 02-0705,
__ §.W.3d __, 2004 Tex. LEXIS 435 (May 7, 2004), the
plaintiffs sought certification of a nationwide class based on
the UCC’s warranty provisions as adopted in Texas, where
Compaq was headquartered. As in this case, the warranty
claims were based on “unmanifested defects.” And, as Okla-
homa does, Texas applies the Restatement’s “most significant
relationship” test for choice of law. Nonetheless, after the
trial court certified a nationwide class, the Supreme Court of
Texas unanimously reversed, holding that the Restatement’s
test could not constitutionally be applied as urged by the

plaintiffs. Id. at *62-*66.

The Texas Supreme Court began from the proposition
that “[t]he Due Process Clause limits the extent to which one
state’s law can be applied to claims that arise in many states.”
2004 Tex. LEXIS 435, at *62-*63 (citing Shutts, 472 US. at
821-22). Examining the contacts between Texas and the in-
dividual claims against Compaq, the court then held that the
mere presence of Compaq’s headquarters in Texas was insuf-
ficient to warrant classwide application of Texas law. All of
the plaintiffs’ home States “are likely to be interested in en-
suring that their consumers are adequately compensated for a
breach of warranty”; indeed, some may conclude that “Texas
law may not provide sufficient consumer protection.” Jd. at
*64-*65. The court therefore concluded that “the class repre-
sentatives ha[d] failed to demonstrate [Texas law] will apply
to the claims of out-of-state class members,” and held that
each plaintiff's claim would be governed by the law of that
plaintiff's home State. Jd. at *64-*66.

Significantly, the Texas court also determined that the
fifty States have adopted substantively different interpreta-
tions of the UCC’s warranty provision—and specifically that
many States do not recognize the type of “no-injury” claims
based on unmanifested alleged defects that are at issue in
Compaq and in this case. 2004 Tex. LEXIS 435, at *60-*62.

3

Compag thus is directly contrary to the decision below,
and to respondents’ position, in two key respects. First, it
directly contradicts their attempt to explain the divide in the
lower courts as “courts us[ing] different choice of law rules
which were applied to different facts.” Opp. 15. Compaq
considered a warranty claim just like the respondents’ and
applied the Restatement just as the opinion below purported
to do, but—invoking federal constitutional limits on those
choice of law principles—reached the opposite result.

Second, Compaq compellingly refutes respondents’ as-
sertion that “the supposed ‘substantive conflict’ between the
different laws is largely illusory.” Opp. 22. The Texas court
showed in detail that the laws of the fifty States are in con-
flict concerning the availability of “no-injury” warranty
claims. “Some states may recognize such claims, but we
cannot say that all fifty-one jurisdictions would.” 2004 Tex.
LEXIS 435, at *61; see also Pet. 22; In re Air Bag Prods.
Liab. Litig., 7 F. Supp. 2d 792, 803-04 (E.D. La. 1998) (cit-
ing cases). Compaq therefore confirms that the Oklahoma
court’s failure to undertake a choice of law analysis consis-
tent with due process principles was not a harmless error, be-
cause the selection of Michigan law would be outcome-
determinative for many plaintiffs. See, e.g., Shutts, 472 U.S.
at 816. Indeed, while in Compag the court declined to hold
that Texas permits recovery for unmanifested defects (see
2004 Tex. LEXIS 435, at *61 & n.15), across the Red River
to the north, the courts of Oklahoma will allow Texas plain-
tiffs to recover on just such claims, so long as they sue as part
of a nationwide class.'

Respondents also ignore the conflict among the federal
courts of appeals and state courts of last resort that existed even
before Compaq. Pet. 10-18. These courts are divided over
whether the Constitution requires “an individualized choice of law
analysis” with respect to “each plaintiff's claims.” Georgine v.

4

2. Respondents also resist certiorari on the ground that
the Oklahoma Supreme Court did not adopt “a special
[choice of law] rule applying to class actions.” Opp. 12.
That assertion is demonstrably false. While the Oklahoma
court did note that “Michigan is the only state where conduct
relevant to all class members occurred” (Pet. App. 13a), as
respondents observe, the only “relevant” conduct under that
analysis was the presence of DCC’s headquarters in Michi-
gan, and the concomitant management decisions typically
made in any company’s headquarters. The key to the choice
of law rule adopted below, as the court stressed, is that by
design it selects a body of substantive law that overrides con-
flicting laws in other States: the rule “require[s] that the issue
of product defect be determined in one forum with one result
rather than in 51 jurisdictions with the very real possibility of
conflicting decisions.” Jd. at 13a-14a. This analysis specifi-
cally subordinates the regulatory interests of each plaintiff's

home State to the goal of a single, nationwide adjudication.”

3. When respondents at last acknowledge the special
class-friendly choice of law rule adopted in the decision be-
low, they simply contend that such a rule comports with the
Constitution. Opp. 13. That contention, even if correct,
would be irrelevant for purposes of certiorari: this Court's
review would be warranted to resolve the conflict that re-
spondents ignore, even if the decision below were ultimately
to be affirmed on the merits. See Sup. CT. R. 10(b).

In fact, however, the Oklahoma Supreme Court’s deci-
sion also conflicts with this Court’s constitutional holdings.

Amchem Prods., 83 F.3d 610, 627 (3d Cir. 1996) (citing Shutts),
aff'd sub nom. Amchem Prods. v. Windsor, 521 U.S. 591 (1997).

2 Respondents derive no benefit from the fact that the court
below did not apply its special class-friendly rule to respondents’
fraud claims. Opp. 12. The Oklahoma court’s holding is not justi-
fied by the mere fact that its error was not compounded.

5

Respondents attempt to square the decision below with
Shutts; Healy v. Beer Institute, 491 U.S. 324 (1989); and
other cases by focusing on the fact that DCC is headquartered
in Michigan. On respondents’ reasoning, the Constitution
always permits any court to apply Michigan law to any
Michigan company, irrespective of the identity of the other
parties or the interests of other States—and despite Michi-
gan’s objections, presented below and renewed in this Court.?

Under Shutts, Oklahoma plainly could not apply its own
law to the plaintiff class, overriding the law of the other
States with interests at stake. The same constitutional con-
siderations preclude it from selecting another State’s law to
apply to the entire plaintiff class without an individualized
analysis of the various interests at stake. If none of the States
with conceivable interests in the regulated transaction—
including Michigan, see Br. for Michigan 2—would apply
Michigan law to outrof-state plaintiffs’ claims, then Okla-

* Respondents repeatedly emphasize that much of the evi-

dence that would be adduced at trial would come from Michigan.
But that shows only that the Oklahoma courts are an inconvenient
forum, not that Michigan has sufficient contacts with the transac-
tions at issue here (minivan sales occurring at dealerships through-
out our Nation) to justify applying Michigan law. And to say that
DCC has contacts with Michigan is not to say that any State in the
Union would apply Michigan law to a Delaware plaintiff's war-
ranty claim against DCC. Indeed, contrary to respondents’ theory
that any State can apply its law to transactions occurring elsewhere
between companies headquartered in that State and citizens of
other States, this Court’s Commerce Clause cases carefully delimit
individual States’ authority to regulate corporate affairs: the state
of incorporation (not of headquarters) can regulate purely internal
corporate affairs such as the fiduciary duties of board members or
the legal requirements for mergers. CTS Corp. v. Dynamics Corp.
of Am., 481 U.S. 69, 89 (1987); see id. at 93 (a State “has no inter-
est” in applying its law to corporations incorporated elsewhere).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_1255%3A2. Public record. Not legal advice.