Opposition Brief — Vaught v. Showa Denko K. K.

Supreme Court brief1997

Ask Donna

What actually matters in this document.

Text

—————

—_,_

No. 96-1951 VC / Supreme Court, U.S.

E D

IN THE

Supreme Court of the United Siytes,. CLERK |

OCTOBER TERM, 1996 —

JANET L. VAUGHT, ALAN VAUGHT,

and MITCHELL VAUGHT,

. Petitioners,

SHOWA DENKO, K.K.; SHOWA DENKO AMERICA, INC.;

LEINER HEALTH PRODUCTS, INC.; PHAXMATIVE CORP.;

GENERAL NUTRITION, INC.; GENERAL NUTRITION CORP.;

GENERAL NUTRITION Props., INC.;

WALGREEN Co.; and ECKERD HoLpInGs II, INc.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

RESPONDENTS SHOWA DENKO, K.K.

AND SHOWA DENKO AMERICA, INC.’S

BRIEF IN OPPOSITION

SARA D. SCHOTLAND ROWLAND FOSTER

Counsel of Record STRASBURGER & PRICE, L.L.P.

CLEARY, GOTTLIEB, STEEN 901 Main Street, Suite 4300

& HAMILTON Dallas, Texas 75202

1752 N Street, N.W. (214) 651-4300

Washington, D.C. 20036

(202) 728-2700

Attorneys for Respondents

Showa Denko K.K. and Showa Denko America, Inc.

sine

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether the court of appeals correctly applied state

law to hold that the statute of limitations applicable to a

personal injury claim was not tolled by the filing of a

nationwide class action in federal court.

RULE 29.6 STATEMENT

Respondent Showa Denko K.K. has no parent corpora-

tion and directly or indirectly controls the following non-

wholly owned subsidiaries: Fuyo Perlight K.K., Hitool

(S) Pte Ltd., Hokkaido Industrial Gases Co., Ltd., Hy-

mold (Pte) Ltd., Hymold (Thailand) Ltd., Japan Polyole-

fins Co., Ltd., Japan Polypropylene Co., Ltd., K.K.

Toyama Air Supply, Kosai Auto Gas K.K., Kyodo Light

Metal Trading Co., Ltd., Nagoya Kenmazai Kogyo K.K.,

Niigata Showa, Pacific Hydrogen Co., Ltd., P.T. Hymold

(Indonesia), SD Gas Sales Kabushiki Kaisha, Shotic Cor-

poration, Shotic (Singapore) Pte Ltd., Shotic America

Corporation, Showa Aluminum Corp., Showa Aluminum

Corporation of America, Showa Aluminum Powder K.K..,

Showa Denko Air Products Co., Ltd., Showa Denko Car-

bon, Inc., Showa Distribution K.K., Showa Engineering

Co., Ltd., Showa Financing K.K., Shunan Denko K.K..,

Sunny Homes K.K., Taiwan Chao Yang Chemical Co.,

Ltd., and Tokuyama Petrochemical Co., Ltd.

Respondent Showa Denko America, Inc.’s parent cor-

poration is Showa Denko K.K. It has no subsidiaries.

LIST OF OTHER INTERESTED PARTIES

In addition to Respondents Showa Denko K.K. and

Showa Denko America, Inc., on whose behalf this brief

is filed, other interested parties include the Petitioners

(Janet, Alan and Mitchell Vaught) and the additional

Respondents in this case, who are correctly identified in

the caption. Sara D. Schotland of Cleary, Gottlieb, Steen

& Hamilton, and Rowland Foster of Strasburger & Price,

L.L.P. are counsel of record for Showa Denko K.K. and

Showa Denko America, Inc., and Mr. Foster is counsel

of record as well for the additional Respondents.

TABLE OF CONTENTS

Page

i 5 8) Be spy |) al i

Be BN EE nce voccnnsecscosapoccocencesessscccncesconsees ii

LIST OF OTHER INTERESTED PARTIES ............. ii

ep) FM by 8 6 yy gee iv

RE ST EE AI IN EN a 1

EEE A ee ee eee ee 2

fe Se ps ie | oo): i cea 2

A. Statement of Facts and Proceedings .................... 2

B. The American Pipe Doctrine ................................ 4

C. The Court of Appeals’ Decision .......................... 5

REASONS FOR DENYING THE WRIT ...........-...0...0... 6

I. THE FIFTH CIRCUIT’S OPINION DOES

NOT CONFLICT WITH OTHER COURTS OF

APPEALS DECISIONS, NOR IS IT CON-

TRARY TO THIS COURT’S DECISION IN

SI oes sacs acandnsneeccenecennes 6

A. There Is No Conflict Among The Circuits...... 6

B. The Fifth Circuit’s Decision Does Not Conflict

os lidcibanmens 7

Il. THE COURT OF APPEALS’ DECISION IS

i a auinieeh asinine 10

A. Under Erie, Federal Courts Sitting In Diver-

sity Must Apply State Statutes Of Limita-

tions, Including Tolling Rules ............00000000... 10

B. Other L-Tryptophan Cases Support The

8 SSE en ee 14

a sed auiohidinnidenanndiconse 16

(iii)

TABLE OF AUTHORITIES

Cases: Page

Adams Pub. Sch. Dist. v. Asbestos Corp., Ltd., 7

Pea FET. CBR Cie, TODD ccnaissicccbccdaicastedctcte 6, 7

American Pipe & Constr. Co. v. Utah, 414 U.S. 538

CTPEGD nvsschinicithycjainictlosslaihatiscbesdhes babies tuihledenpniticadedataicaahhe passim

Barela v. Showa Denko K.K., No. Civ. 938-1469,

1996 U.S. Dist. LEXIS 7830 (D.N.M. Feb. 28,

RRS se CES MERE CAC ORT Me Rania ON ea aa 15

Becker v. McMillin Constr. Co., Inc., 277 Cal. Rptr.

GBA CORR. GAR, BR RED Seidereectcesiceccsssctreecostatrenn< 18, 14

Bell v. Showa Denko K.K., 899 S.W.2d 749 (Tex.

App.—Amarillo 1995, writ denied) ...................... passim

Board of Regents v. Tomanio, 446 U.S. 478 (1980) .. 10, 11,

Carter v. Washington Metro. Area Transit Auth.,

yi 7 OSE | Fei kee Re: 5 Ree 15

Chardon v. Fumero Soto, 462 U.S. 650 (1983) ........ 4

Cook v. G.D. Searle & Co., Inc., 759 F.2d 800 (10th

Ci - Wiicnchocason cette erenaeee eee cdisdiceons 12

Crown, Cork & Seal v. Porter, 462 U.S. 345

CRD siiiesi aici bi ae ibid bias acs 4,12

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) ........ 7

Ganousis v. E.IJ. du Pont de Nemours & Co., 803

F. Supp. 140 (NLD. Tih 26GB) city-based) 9

Grant v. Austin Bridge Constr. Co., 725 S.W.2d 366

(Tex. App.—Houston 1987, no writ) .......... Ahmet 5,12

Guaranty Trust Co. v. York, 326 U.S. 99 (1945).... 11

Hanna v. Plumer, 380 U.S. 460 (1965) -.................. 11

In re “Agent Orange” Prod. Liab. Litig., 818 F.2d

210 (2nd Cir. 1987), cert. denied, 484 U.S. 1004

SY iaiieincticai et 11, 15

In re School Asbestos Litig., 789 F.2d 996 (3d

Cir.), cert. denied, 479 U.S. 852 (1986) ...-........... 12

In re Three Mile Island Litig., 87 F.R.D. 433 (M.D.

E.R PS Fone TL 12

Jolly v. Eli Lilly & Co., 751 P.2d 923 (1988) -_....... passim

Kennedy v. Showa Denko K.K., No. Civ. 94-312 (M)

eh 8 a gg RRR CRC eres ener 14

Rapoport v. Showa Denko America Inc., No. JH-

90-518 (D. Md. filed Feb. 18, 1990) .................... 3,9

TABLE OF AUTHORITIES—Continued

Page

Sarnoff v. American Home Prods. Corp., 798 F.2d

1075 (7th Cir. 1986) ...... a 13

Sawtell v. E.I. du Pont de Nemours & Co., Inc., 22

F.3d 248 (10th Cir.), cert. denied, 513 U.S. 917

0) BRAEMAR erat iii Sviabin EAST IAD pene 6, 7

United Airlines, Inc. v. McDonald, 482 U.S. 385

EN A slices icine tipinaaeieiecal be cia daniuaiaabaniieeiaanes 5

Vaught v. Showa Denko K.K., 107 F. 8d 1187 (5th

tN BUT SERGE ALES 0 h8 A Me oe: oS) EE ION 1, 5

Walker v. Armco Steel Corp., 446 U.S. 740

i —___RRNSUER SE OIE ese rea rOetu hawstscidey emer AT HE NON ern ea 8, 10, 11

Whall v. Showa Denko K.K., No. 635307 (Cal.

ne: EOE, GHAR TID. RED ccincivevecticinietnsicinscinintncnnsie 14

Wilson v. Garcia, 471 U.S. 261 (1985) -..............2... 10

Statutes:

N.D. Cert. Code $28.01 (1906) ..2...2.......0c..ccsccceseeees 7

Rules:

I od 2 sae ciateleadiaeapliombinden 8,8

MISCELLANEOUS:

Mitchell A. Lowenthal & Norman M. Feder, The

Impropriety of Class Action Tolling for Mass

Tort Statutes of Limitations, 64 Geo. Wash. L.

ee IE eck peckeses dicaeinhieiacbatedheatistcklidetescoinns 11

Charles A. Wright, Arthur R. Miller, & Mary K.

Kane, Federal Practice and Procedure (2d ed.

MUNI Soiics, 2052s cderctnoepidosseo ce dausdete tie aintongs aveaamaenialedeaen 9

i A A tA A OO I OS OOO

In THE

Supreme Court of the United Staten

OCTOBER TERM, 1996

No. 96-1951

JANET L. VAUGHT, ALAN VAUGHT,

and MITCHELL VAUGHT,

: Petitioners,

SHOWA DENKO, K.K.; SHowa DENKO AMERICA, INC.;

LEINER HEALTH PRODUCTS, INC.; PHARMATIVE Corp.;

GENERAL NUTRITION, INC.; GENERAL NUTRITION CorP.;

GENERAL NUTRITION Props., INC.;

WALGREEN Co.; and EcCKERD Ho.pinGs II, Inc.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

RESPONDENTS SHOWA DENKO, K.K.

AND SHOWA DENKO AMERICA, INC’S

BRIEF IN OPPOSITION

Respondents Showa Denko K.K. and Showa Denko

America, Inc. hereby oppose the writ of certiorari filed by

Petitioners Janet L. Vaught, et al.

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-33)

is reported at 107 F.3d 1137 (Sth Cir. 1997). The

opinion of the district court (Pet. App. 41-60) is not

reported or available on Westlaw or LEXIS.

JURISDICTION

The judgment of the court of appeals was entered on

March 10, 1997. A petition for rehearing was denied on

April 8, 1997. (Pet. App. at 34-35.) The petition for

writ of certiorari was filed on June 9, 1997. The juris-

diction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATEMENT OF THE CASE

Petitioners seek review of the court of appeals’ decision

which, in applying Texas law, determined that the Texas

statute of limitations applicable to personal injury claims

is not tolled by the filing of a nationwide class action in

federal court in another state.

A. Statement of Facts and Proceedings.

Petitioners filed suit in Texas state court on April 28,

1993. Respondents removed the action to the United

States District Court for the Southern District of Texas,

Houston Division. (Pet. App. at 6.) In June 1994, the

Panel on Multidistrict Litigation ordered the transfer of

the case to the United States District Court for the District

of South Carolina, for pre-trial consolidation with the

nationwide L-Tryptophan litigation pending there (MDL

No. 865). (/d.) In September 1995, the case was re-

manded from the South Carolina court to the District

Court for the Southern District of Texas for further pro-

ceedings and trial. (/d.) The respondents later moved for

summary judgment on limitations grounds. (/d.) The dis-

trict court granted respondents’ motion for summary judg-

ment on limitations grounds and that decision was af-

firmed by a panel of the United States Court of Appeals

for the Fifth Circuit on March 10, 1997.

On appeal, the Fifth Circuit was called upon to address

two state law issues involving the interpretation of Texas’

statute of limitations: a question related to application

of the discovery rules (not presented in the instant peti-

tion for certiorari) and the question of whether under

Texas law, the filing of a putative class action by a Mary-

land resident tolled the statute of limitations for Petition-

ers’ state court personal injury claim.

In an L-Tryptophan case filed in Maryland, see Rapo-

port v. Showa Denko America Inc., No. JH-90-518 (D.

Md. filed Feb. 13, 1990), a motion was made for certifi-

cation of a class. Certification of that class was denied by

the MDL Judge to whom the case was transferred—the

Honorable Matthew Perry, D.S.C. Columbia Division—

on January 6, 1992. (Pet. at 5.) Petitioners rely on

American Pipe & Constr. Co. v. Utah, 414 U.S. 538

(1947), a federal antitrust action, to argue that the limi-

tations period was tolled during the time period during

which the motion for class certication was pending in the

Rapoport case. Federal courts sitting in diversity are

obliged to apply state law to limitations questions. See

Walker v. Armco Steel Corp., 446 U.S. 740, 753 (1980).

The Fifth Circuit declined to apply American Pipe tolling

to Petitioners’ claims. The Fifth Circuit observed that the

Texas Court of Appeals had specifically rejected class

action tolling in another L-Tryptophan case. (Pet. App.

at 12-13); see Bell v. Showa Denko K.K., 899 S.W.2d

749, 757 (Tex. App.—Amarillo 1995, writ denied).

1 Petitioners’ statement of facts is inaccurate in several respects.

First, Rapoport was filed by a2 Maryland resident in federal court in

Maryland, see Rapoport v. Showa Denko America, Inc., No. JH-90-

518 (D. Md. filed Feb. 18, 1990); the putative class action was

then transferred to South Carolina, the transferee court for

MDL-865, Jn Re L-Tryptophan. Second, there is no record support

for the statement that Petitioner Janet Vaught refrained from filing

a redundant lawsuit by virtue of “the text and spirt of Rule 23” as

asserted in the Petition at p. 20. Nor is there record support for

the proposition that as a result of Vaught, “thousands... of class

claimants’ cases are . . . prescribed.” (Pet. at 10 (sic).) Nor do

Respondents concede that Petitioners’ action filed in April 1993 was

timely under Texas’ two-year statute if the filing of Rapoport

B. The American Pipe Doctrine.

In American Pipe, this Court held that “at least where

class action status has been denied solely because of failure

to demonstrate that ‘the class is so numerous that joinder

of all members is impracticable,’ ” the commencement of a

class action tolls “the applicable statute of limitations as

to all asserted members of the class who would have been

parties had the suit been permitted to continue as a class

action.” 414 U.S. at 552-553, 554. The tolling doctrine

thus encourages putative class members to rely on class

actions and to refrain from individual actions; tolling pre-

serves the timeliness of claims unless and until the action

is denied.” This Court cautioned that class action tolling

would apply only when the filing of a class action provided

proper notice to defendants of the claims and claimants

asserting them:

[t]he policies of ensuring essential fairness to defend-

ants and of barring a plaintiff who “has slept on his

rights,” are satisfied when, as here, a named plaintiff

who is found to be representative of a class com-

mences a suit and thereby notifies the defendant not

only of the substantive claims being brought against

them, but also of the number and generic identities

of the potential plaintiffs who may participate in the

judgment. Within the period set by the statute of

tolled her claim. To the contrary, she still had time to file her suit

after denial of class certification in Rapoport in January 1992, even

assuming arguendo that tolling applied.

2 American Pipe applied class action tolling to motions to inter-

vene filed after the statute of limitations would otherwise have

expired. In Crown, Cork & Seal v. Porter, 462 U.S. 345, 350-51

(1983), the rule was extended to the filing of separate individual

actions in a “Title VII” litigation. In a third case, Chardon v.

Fumero Soto, 462 U.S. 650, 662 (1983), also involving a federal

cause of action (a civil rights claim where the federal statute pro-

vided no limitations period), this Court held that after class certifi-

cation is denied, the time period for the individual plaintiff to bring

suit was determined by state law (i.e., state saving statutes).

limitations, the defendants have the essential infor-

mation necessary to determine both the subject matter

and size of the prospective litigation.

414 U.S. at 554-555 (citation omitted). A trilogy of

this Court’s decisions has established that federal courts

can toll statutes of limitations on federal law claims but

these decisions do not require (or address) tolling of state

causes of action such as personal injury claims.

C. The Court of Appeals’ Decision.

In this case, the court of appeals observed that:

diversity actions, such as the one at hand for product

liability, involve state causes of action, where state

law, of course, provides the rules of decision even in

federal court. In fact, the Supreme Court has stated

that generally, for diversity actions, a federal court

should apply not only state statutes of limitation but

also any accompanying tolling rules.

(Pet. App. at 27 (citation omitted).) Citing Bell, the

court of appeals correctly determined that under Texas

law, class action tolling applies only to property damage

claims, not personal injury actions.* The Bell court had

concluded:

The basic premise of the American Pipe ruling is

that a statute of limitations can be tolled while class

allegations are pending, provided the defendant has

notice of the type and potential number of the claims

against it. See United Airlines, Inc. v. McDonald,

432 U.S. 385, 393-94 n.14 (1977). In Grant [v.

Austin Bridge Constr. Co., 725 S.W.2d 366 (Tex.

App.—Houston 1987, no writ)], the suit involved

8 Petitioners misleadingly cite Bell without observing that a writ

was denied by the Texas Supreme Court, although they are aware

the writ was denied; indeed, this fact was noted by Respondents in

their brief before the Fifth Circuit. See Brief for Appellees at 4

n.2, Vaught v. Showa Denko K.K., 107 F.3d 1137 (5th Cir. 1977).

was filed in a Texas state court by plaintiffs who

were a readily discernible group of people claiming

injury to certain property rather than personal injury.

That distinction is important in determining whether

the defendants have received fair notice of the exist-

ence of a claim by the filing of a class suit. For us

to hold that the filing of a mass personal injury suit,

in a federal court, in another state, with the variety

of claims necessarily involved in such a case, entitled

a plaintiff to a tolling of the limitations period such

as in American Pipe, would be an extension not

warranted by the Grant decision and we refuse to

do so.

899 S.W.2d at 758.

REASONS FOR DENYING THE WRIT

The petition should be denied. Sitting in diversity,

federal courts apply state law to determine statute of limi-

tations rules, including tolling rules. There is no conflict

among the federal circuits as none of the other courts of

appeals which have considered the question of whether

to apply class action tolling have applied Texas law. Fur-

ther, contrary to Petitioners’ claims, the Fifth Circuit’s de-

cision does not conflict with American Pipe which applied

class action tolling in the context of a federal cause of

action (antitrust litigation).

I. THE FIFTH CIRCUITS OPINION DOES NOT CON-

FLICT WITH OTHER COURTS OF APPEALS

DECISIONS, NOR IS IT CONTRARY TO THIS

COURT’S DECISION IN AMERICAN PIPE.

A. There Is No Conflict Among The Circuits.

Petitioners urge as their primary argument in support

of review that the Fifth Circuit’s decision conflicts with

Sawtell v. E.l. du Pont de Nemours & Co., Inc., 22 F.3d

248 (10th Cir.), cert. denied, 513 U.S. 917 (1994), and

Adams Pub. Sch. Dist. v. Asbestos Corp., Ltd., 7 F.3d

717 (8th Cir. 1993). There is no direct conflict. In

Sawtell, the Tenth Circuit found that it “need not resolve”

whether class action tolling applied in a personal injury

action because (1) Mrs. Sawtell was a New Mexico resi-

dent, (2) the Rule 23 class action was brought only on

behalf of Minnesota residents, and (3) “Mrs. Sawtell was

not a putative member of the Minnesota class action.”

22 F.3d at 253. Thus, the Sawtell court did not apply

American Pipe tolling, nor did the case involve Texas law.

In Adams, a North Dakota statute expressly authorized

extension of time for suits related to removal of asbestos

from public buildings notwithstanding otherwise applicable

limitations periods.* This statute provided evidence of the

North Dakota legislature’s intent to avoid time barring of

asbestos property damage claims. Adams is in fact con-

sistent with Vaught: the Eighth Circuit ruled that, sitting

in diversity, it was obliged to apply North Dakota law, see

7 F.3d at 719, just as the Vaught court applied Texas

law. Moreover, Adams concerned the issue of whether

North Dakota law avoided tolling a property damage

claim; thus the case did not concern tolling in mass per-

sonal injury litigation such as the L-Tryptophan litigation.

Accordingly, there is no direct conflict among the cir-

cuits with respect to the Vaught decision and the decision

of any other circuit court on a matter of federal law.

B. The Fifth Circuit’s Decision Does Not Conflict With

American Pipe.

American Pipe concerned the tolling of statutes of limi-

tations where a class action is filed with respect to federal

law claims. American Pipe does not address the tolling

of state limitations periods on state law claims. As dis-

cussed further below, nothing in American Pipe overrides

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

requires federal courts to apply state law on statute of

limitations questions when sitting in diversity. As the

Texas Court of Appeals observed in Bell, a case involving

* See N.D. Cert. Code 28.01 (1993).

class action tolling of personal injury claims, state law

governs class action tolling of state law claims:

We do not agree that American Pipe operates to toll

our state statute of limitations. That case involved

an interpretation of Rule 23 of the Federal Rules of

Civil Procedure and concerned the question of

whether a federal statute of limitations was tolled

for the purpose of filing a federal claim. Under the

doctrine of the hoary case of Erie Railroad Co.

and its progeny, where a claim is derived from state

law, as is appellant’s suit, state law governs the tolling

of the statute of limitations.

Bell, 899 S.W.2d at 757 (citations omitted).

Moreover, the “fair notice” requirement of American

Pipe counsels against class action tolling in mass personal

injury litigation. American Pipe states that for class ac-

tion tolling to apply, the class action must give the de-

fendant notice sufficient to identify the evidence necessary

to defend its claims. See 414 U.S. at 554-55. Absent the

fair notice requirement, defendants would be prejudiced

by class action tolling. In a concurring opinion, Justice

Blackmun emphasized the central role that notice plays

in American Pipe tolling. After warning that American

Pipe must not be read as encouragement to file class ac-

tions solely to protect dilatory plaintiffs who are late to

file suit, Justice Blackmun admonished that only plaintiffs

whose claims “concern the same evidence, memories, and

witnesses as the subject matter of the original class suit”

should benefit from class action tolling. 414 U.S. at 562

(Blackmun., J., concurring). This way “the defendant

will not be prejudiced by later intervention, should class

relief be denied.” 7d.

In mass personal injury actions, the notice requirement

is not satisfied and class action tolling is inappropriate.

As the California Supreme Court has observed:

[Because personal-injury mass-tort class-action claims

can rarely meet the community of interest require-

ment in that each member’s right to recover depends

on facts peculiar to each particular case, such claims

may be presumptively incapable of apprising de-

fendants of the “substantive claims being brought

against them” . . . a prerequisite, in our view, to the

application of American Pipe.

Jolly v. Eli Lilly & Co., 751 P.2d 923, 937-938 (1988).

The key facts underlying personal injury mass tort claims

are unique to each plaintiff:

The major elements in tort actions for personal

injury—liability, causation, and damages—may vary

widely from claim to claim, creating a wide disparity

in claimants’ damages and issues of defendant liabil-

ity, proximate cause, liability of skilled intermedi-

aries, comparative fault, informed consent, assump-

tion of the risk and periods of limitation.

Jolly, 751 P.2d at 936 (citations omitted) .°

Because personal injury claims turn on plaintiff-specific

facts, the MDL Court ruled in Rapoport that a class

action was not appropriate for L-Tryptophan. Far from

being compelled by American Pipe, class action tolling

would not comport with its fair notice requirement as the

filing of Rapoport did not give Showa Denko the identity

of potential plaintiffs or enable Showa Denko to identify

and preserve relevant evidence (medical providers, medi-

cal records, damages witnesses, etc.).

Accordingly, certiorari is not warranted on the basis

that the court of appeals’ decision conflicts with Supreme

Court precedent.

5 See also Ganousis v. E.1. du Pont de Nemours & Co., 803 F. Supp.

149, 155 (N.D. Ill. 1992) (noting that argument that American Pipe

does not apply in mass tort personal injury action because defend-

ants do not have the “requisite information about the prospective

claims .. . appear[s] to have some force and [is] buttressed by some

respectable authority”); 7B Charles A. Wright, Arthur R. Miller,

& Mary K. Kane, Federal Practice and Procedure § 1783 (2d ed.

1986) (“[A]llowing a class action to be brought in a mass tort

situation is clearly contrary to the intent of the draftsmen of the

rule’).

Il. THE COURT OF APPEALS’ DECISION IS

CORRECT.

The Fifth Circuit’s decision is also correct. The court

properly applied state law to determine whether Texas

would toll class actions in a mass personal injury lawsuit

and concluded, based on Bell, that the filing of Rapoport,

a putative class action in Maryland,* did not toll the

Texas statute of limitations.

A. Under Erie, Federal Courts Sitting In Diversity

Must Apply State Statutes Of Limitations, Includ-

ing Tolling Rules.

American Pipe was an antitrust case in which the claim

arose under federal law. Post-Erie, federal courts may

not displace state law on statutes of limitations applicable

to state law claims. In Armco Steel, this Court held that

federal courts must apply state tolling rules because they

are an “integral part . . . of the state law cause of action.” ”

446 US. at 746. This Court observed:

There is simply no reason why, in the absence of a

controlling federal rule, an action based on state law

which concededly would be barred in the state courts

by the state statute of limitations should proceed

through litigation to judgment in federal court solely

because of the fortuity that there is diversity of

citizenship between the litigants. The policies under-

lying diversity jurisdiction do not support such a dis-

tinction between state and federal plaintiffs, and Erie

and its progeny do not permit it.

446 U.S. at 753. The rule that federal courts sitting in

diversity must borrow state limitations policies compares

with the Erie doctrine:

If, even in areas of choice, federal courts unwaver-

ingly apply state tolling rules to borrowed limitations

6 Rapoport was transferred to the MDL court in South Carolina.

7 See also Wilson v. Garcia, 471 U.S. 261, 269 (1985); Board of

Regents v. Tomanio, 446 U.S. 478, 484 (1980).

periods, the existence of an obligation to do so when

the state periods apply of their own force is com-

pelling. Otherwise, the fortuity of diversity of citizen-

ship would enable parties to alter, radically, the limi-

tations periods applicable to stz:* law claims. When

a plaintiff of citizenship diverse to the defendant can-

not be found, the otherwise applicable state limita-

tions period would govern. Nonetheless, if one can

be found (and since mass torts often affect many

people across state lines, a search for a suitable

plaintiff is often not fruitless), the state’s law will be

displaced by a federal tolling rule. This divergent

outcome, turning solely on the availability of fed-

eral diversity jurisdiction, is intolerable under our

federalism.

Mitchell A. Lowenthal & Norman M. Feder, The Im-

propriety of Class Action Tolling for Mass Tort Statutes

of Limitations, 64 Geo. Wash. L. Rev. 532, 565 (1996)

(footnote omitted);* see Guaranty Trust Co. v. York,

326 U.S. 99, 111-12 (1945) (federal court cannot use its

equity jurisdiction to hear a diversity suit that would be

barred by the state’s statute of limitations if brought in

State court). In York, Justice Frankfurter found that state

limitations periods are for state law claims a significant

part of the “legal rules [which] determine the outcome of

litigation.”° 326 U.S. at 109; see also In re “Agent

8 Mr. Lowenthal is counsel for Showa Denko in this action.

® The cases cited by Petitioners do not support their position that

federal courts sitting in diversity may disregard state tolling rules.

In Tomanio, 446 U.S. at 485, this Court held that other courts should

ordinarily borrow state limitation periods including tolling rules to

supply the limitation period for federal action when there is no

specifically stated federal statute of limitations. A fortiori, state

limitations periods should be borrowed for state class actions.

See Lowenthal & Feder, supra, at 565. In Hanna v. Plumer, 380

U.S. 460 (1965) this Court held that the Federal Rules of Civil

Procedure, rather than state law, governed the manner in which

process was served. In Armco Steel, this Court distinguished Hanna

and ruled clearly that “[t]here is simply no reason why, in the

Orange” Prod. Liab. Litig., 818 F.2d 210, 213 (2nd Cir.

1987) (“The limitation periods of American Pipe and

Crown, Cork were derived from federal statutes. Here

we are dealing with Hawaii's limitation statutes. . . . [I]t

is doubtful that either American Pipe or Crown, Cork

can be treated as applicable precedent.”), cert. denied,

484 U.S. 1004 (1988). Tolling rules are an integral part

of state statutes of limitations. See Cook v. G.D. Searle

& Co., Inc., 759 F.2d 800, 803 (10th Cir. 1985) (fed-

eral court sitting in diversity must apply state limitations

period and related ‘olling rules (citing Tomanio, 446 US.

at 485-86) ).

Here, the court of appeals appropriately followed Texas

law, namely, Bell v. Showa Denko K.K., 899 S.W.2d at

757-58. The Bell court contrasted the applicability of

American Pipe in property damage litigation following

Grant v. Austin Bridge Constr. Co., 725 S.W. 366 (Tex.

App.—Houston 1987, no writ). See Bell, 899 S.W.2d

at 758. As the Bell court noted, Grant involved a discerni-

ble group of people claiming property damage, not per-

sonal injury, a distinction of central importance in deter-

mining whether defendants receive fair notice by the filing

of a class suit. In Grant, by marked contrast to L-Tryp-

tophan litigation, the putative class was readily identifiable

and the damages sought were clearly defined. See Grant,

725 S.W.2d at 367. Bell’s distinction between personal

absence of a controlling federal rule, an action based on state law

which concededly would be barred in the state courts by the state

statute of limitations should proceed through litigation to judgment

in federal court solely because of the fortuity that there is diversity

of citizenship between the litigants.” 446 U.S. at 753.

10 Bell is consistent with a line of decisions which recognize that

while property damages cases are appropriate for class certification,

personal injury actions generally are not, due to myriad plaintiff-

specific distinctions in medical condition, illness, exposure, personal

facts including age and lifestyle, and damages. See In re School

Asbestos Litig., 789 F.2d 996 (83d Cir.), cert. denied, 479 U.S. 852

(1986); In re Three Mile Island Litig., 87 F.R.D. 483 (M.D. Pa.

injury and property damages tolling is well-grounded and

supported by California precedent.”

Petitioners cannot avoid the on-point Bell holding by

dismissing it as “pure dicta.” Dictum is “a statement in

a judicial opinion that could have been deleted without

seriously impairing the analytical foundation of the hold-

ing, that, being peripheral, may not have received the

full and careful consideration of the court that uttered

it.” Sarnoff v. American Home Prods. Corp., 798 F.2d

1075, 1084 (7th Cir. 1986). In fact, the Bell court’s

decision that a Texas court would not apply class action

tolling was an alternative holding. See 899 S.W.2d at 757.

The tolling issue was thoroughly considered and had the

benefit of full briefing.”

1980); Becker v. McMillin Constr. Co., Inc., 277 Cal. Rptr. 491

(Cal. Ct. App. 1991).

11 While property damages claims may appropriately be subject to

class action tolling, mass tort personal injury claims are not—due

to differences in the notice afforded to defendants when a class

action is filed as to individual plaintiffs’ particularized claims. See

Becker, 277 Cal. Rptr. at 496. The Becker court distinguished

personal injury claims and explained why, for those claims, a tolling

argument could not be sustained:

As to the personal injury claim, it is clear that Jolly controls:

the same causation and damages variables as to various plain-

tiffs’ medical histories and injuries make a finding of ‘common

questions of law and fact’ impossible, and the giving of any

meaningful notice of the substantive claims to defendants doubt-

ful. Similarly, it would be difficult for the defendant to identify

the ‘number and generic identities’ of potential plaintiffs.

277 Cal. Rptr. at 496 (citation omitted).

12 See Brief for Appellants, Bell v. Showa Denko K.K., 899 S.W.2d

749 (Tex. App.—Amarillo 1995, writ denied). Indeed, the American

Pipe issue was argued by Bell in her futile writ for certiorari to

the Texas Supreme Court. The Vaughts cannot complain about the

adequacy of the briefing as their co-counsel at the trial court level,

Kathleen Robbins, Esq., was one of Bell’s co-counsel.

B. Other L-Tryptophan Cases Support The Vaught

Result.

In Whall v. Showa Denko K.K., No. 635307 (Cal.

Super. Ct. Oct. 20, 1993), the court rejected plaintiffs’

argument that American Pipe tolling should apply to an

L-Tryptophan case. Citing Jolly, the court ruled that in

mass personal injury tort actions, including the L-Tryp-

tophan cases, given concerns of fairness of notice to de-

fendants, “the tolling principles of American Pipe .. .

will not apply.” Whall, slip op. at 1-2.

Petitioners rely, as below, on an L-Tryptophan case in

New Mexico Federal District Court, Kennedy v. Showa

Denko K.K., which applied equitable tolling based on an

“Erie guess” as to the applicability of American Pipe

under New Mexico law. (See Pet. App. at 41-60.) Peti-

tioners’ reliance on Kennedy is misplaced. First, Kennedy

recognizes that “[a] federal court sitting in diversity must

apply the law of the state in which it sits.” (Pet. App. at

52 (citations omitted).) In his decision to apply American

Pipe, Judge Mechem seems to have been unaware of rele-

vant precedent. Judge Mechem did not discuss Whall and

Bell. He ignored the notice requirement that was central

to the Supreme Court’s analysis in American Pipe.”

Kennedy does not support Petitioners’ position because it

recognizes that a federal court must apply state statute of

limitations law including tolling. In Texas, unlike New

Mexico, the state court of appeals has addressed the issue

18 This decision has not been reported and it is not available via

Westlaw or LEXIS. Copies have been lodged with the Clerk of this

Court.

14 Judge Mechem mistakenly relied on Becker as extending class

action tolling to mass tort actions, although as noted above the

Becker court followed Jolly recognizing that mass personal injury

actions are not suitable for class action tolling. The Becker court

distinguished property damage claims from personal injury mass

tort claims because “the identity and number of potential claimants

were sufficiently ascertainable [in Becker] to notify defendant of all

potential claims within the limitations period.” Becker, 277 Cal.

Rptr. at 496.

of class action tolling and does not allow tolling in mass

personal injury actions.

In another L-Tryptophan case, not cited by petitioners,

Barela v. Showa Denko K.K., No. Civ. 93-1469, 1996

U.S. Dist. LEXIS 7830 (D.N.M. Feb. 28, 1996), the

court held American Pipe did not apply. First, New

Mexico (like Texas) has no compelling interest in further-

ing the economy and efficiency of a federal court sitting

in another state that would override the local statute of

limitations and the forum state’s interest in protecting

against stale claims. Barela, 1996 U.S. Dist. LEXIS

7830 at *14-*16. It would be novel and erroneous for

a court sitting in New Mexico (or Texas) to adopt Ameri-

can Pipe to toll its own statute of limitations based on a

class action filed in a foreign jurisdiction. See Barela, 1996

U.S. Dist. LEXIS 7830 at *16. Judge Hansen held that

American Pipe tolling should not apply to mass personal

injury tort cases such as the L-Tryptophan cases where

the class action did not give defendants adequate notice

of individual claims. See Barela, 1996 U.S. Dist. LEXIS

7830 at *16-*17 (citing Bell and Jolly).

As the district court observed in Barela, “the federal

interests encountered in American Pipe are not as strong

when a federal court sits in diversity.” 1996 U.S. Dist.

LEXIS 7830 at *15 (citing In re “Agent Orange” Prod.

Liab. Litig., 818 F.2d at 213). The court followed

Carter v. Washington Metro. Area Transit Auth., 764

F.2d 854, 857 (D.C. Cir. 1985), in determining that there

is “no remotely compelling federal interest in overriding

the local statute of limitations” in personal injury suit

between private parties. Barela, 1996 U.S. Dist. LEXIS

7830 at *15-*16. The Barela court concluded: “This

Court does not believe that any overriding federal interest

in class actions mandates application of American Pipe

in diversity cases in the absence of applicable state tolling

law.” Barela, 1996 U.S. Dist. LEXIS 7830 at *16.

The underlying rationale of American Pipe—the fed-

eral interest in the federal class action statute and pre-

vention of a multiplicity of actions in federal court—

does not apply to a personal injury suit filed in state

court by a Texas resident. There is no reason why the

pendency of a petition for class certification filed by a

Maryland resident in Maryland should outweigh Texas’

strong interest in preventing the assertion of stale claims.

Otherwise Texas’ statute of limitations would be disre-

garded and subject to indefinite extension whenever a class

action in an arguably related matter was filed anywhere

in the country, without regard to whether or not the class

action was filed in good faith or actively pursued.

CONCLUSION

The petition for certiorari should be denied.

Respectfully submitted,