Opposition Brief — Banks v. New York Life Insurance

4

ast

No. 99-1026

In The

Supreme Court of the United States

¢

MAJOR BANKS, ET AL.,

Petitioners,

VERSUS

NEW YORK LIFE INSURANCE COMPANY,

Respondent.

+

On Petition For A Writ Of Certiorari

To The Supreme Court, State Of Louisiana

¢

OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

¢

Puitur A. WittTMANN

Counsel of Record

STEPHEN H. KuprPpERMAN

STONE, PIGMAN, WALTHER,

WITTMANN & HuTCHINSON, L.L.P.

546 Carondelet Street

New Orleans, Louisiana 70130

Telephone: (504) 581-3200

Attorneys for New York Life

Insurance Company

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

OR CALL COLLECT (402) 342-2831

“a

QUESTIONS PRESENTED

A. Petitioners did not make any argument based on

the federal Full Faith and Credit Clause before the Louisi-

ana trial court, in their briefs to the Louisiana First Cir-

cuit Court of Appeals, or in their original application or

briefs to the Louisiana Supreme Court. It was not until an

application for a second rehearing before the Louisiana

Supreme Court that petitioners raised a federal full faith

and credit issue. None of the state courts addressed or

mentioned any purported full faith and credit argument.

In these circumstances, was the federal full faith and

credit issue sufficiently raised in or addressed by the

state courts to support this Court’s jurisdiction pursuant

to 28 U.S.C. § 1257(a)?

B. In 1995, a New York state court, in light of the

terms of a settlement between the parties and applying

New York procedural law as it was then construed, certi-

fied a nationwide settlement class in a proceeding

brought against New York Life Insurance Company. As a

provision of the settlement, New York Life Insurance

Company did not contest certification. Petitioners here

opted out of the New York state court proceeding, and

filed a separate suit against New York Life Insurance

Company in Louisiana state court seeking certification

pursuant to Louisiana procedural law of a class of Louisi-

ana residents. Does the Full Faith and Credit Clause of

the United States Constitution require the Louisiana

Supreme Court to accord the New York state court’s

certification of a settlement class, made pursuant to New

York procedural law and without actually being litigated,

ii

QUESTIONS PRESENTED - Continued

with the effect of precluding a different certification

result in this Louisiana state court case involving differ-

ent plaintiffs and applying Louisiana procedural law to a

contested non-settlement class?

TABLE OF CONTENTS

Page

CP PPE ED oo ccc ccc tewciacaaadcnyat i

RI IE St EE Dio is os vn snes nonce saeu cds ees iii

SPEER PART REE Eo 5 ocd Cb A eee de's's bap iv

WRPEREUNEISIME UE ERED GABE i 6 occ ec iccccrcceccesda 1

ie 7 ee PI Ie ys oc noise US Neck areca as 1

i ee ROI a Ssh ‘neki ka cas dead Mande 3

Sng ee ee Rs oh sits hcownee deus sa cewans 4

REASONS FOR DENYING THE PETITION......... 7

I. This Court Does Not Have Jurisdiction To Enter-

ma PEACE FU O iy oss 5 6 os Kh Berens hose, 7

If. Plaintiffs’ Purported Full Faith and Credit Challenge

Is Without Merit and Unworthy of Review....... 12

A. Willson Certification Is Not Res Judicata

Because Identity of Parties Is Absent ...... 12

B. Certification in Willson Has No Collateral

ce | Fee AP en per em ae» 13

1. Identity of Issues Is Absent Because Cer-

tification in Willson Was Not Actually

SAO G5 pa 3 oT ee, 14

2. Identity Of Issues Is Absent Because Will-

son, Unlike Here, Addressed Application

of New York Procedural Law To A Settle-

GE SOON Fos 5459-35 68s Keue Seek eee. 15

CATING RANSON Wis cheesey eee iue euee ees wees 21

iv

TABLE OF AUTHORITIES

Page

Cases

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

CHOGT Yas oF 0s re OTe sae Se aha eee eee 19, 20

Balcerak v. County of Nassau, 1999 N.Y. LEXIS 3927

te. rere merrier rest 15, 17

Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71

to Pe Seer er oS Er rie rah Wet aer oe 9, 10

Board of Directors of Rotary Int'l v. Rotary Club of

Darte, GRA UES... ar See cae kca skins cs iaueweks 9, 10

Brady v. Brown, 51 F.3d 810 (9th Cir. 1995)........... 8

Cardinale v. Louisiana, 394 U.S. 437 (1969) ............ 9

CitiCorp Person-to-Person Financial Center, Inc., 409

So. 24 391 (ia. App. Sh Cae BOGE) ovis epee ss a's 16

Cullen v. Margiotta, 811 F.2d 698 (2d Cir.), cert. den.,

GED US. TOE CUS a ooo cds ns chkew x tana ewses 18

Exxon Corp. v. Eagerton, 462 U.S. 176 (1983) ....... 9, 10

Halyalkar v. Board of Regents, 72 N.Y. 2d 261, 527 N.E.

2d 1222, 532 N.YS. 2d 85 (NY. 1986). ....... 13, 14, 15

In re Michael Lebner, 197 B.R. 180 (D. Mass. 1996) .... 19

].R. Clearwater, Inc. v. Ashland Chemical Co., 93 F.3d

476 (OUR Cle. TOG isis ee as 18

Kaufman v. Eli Lilly and Co., 65 N.Y. 2d 449, 482

N.E.2d 63, 492 N.Y.S. 2d 584 (N.Y. 1985)...13, 14, 15

Livingston Parish Policy Jury v. Illinois Cont. Gulf R.

Co., 432 So. 2d 1027 (La. App. Ist Cir. 1983)...... 16

Vv

TABLE OF AUTHORITIES - Continued

Page

Matsushita Elec. Industrial Co. v. Epstein, 516 U.S.

TU SENN hh skp 645 Hand ede We ate Se ees 12

Melion ». O'Neil, 275: US. 212 QU) 2.25 oe 9

Morgan v. Deere Credit, Inc., 889 S.W.2d 360 (Tex.

CE App. 1996) sak ee eee 18, 19

New York State Dormitory Authority v. Board of

Trustees of Hyde Park Fire and Water Dist., 239

A.D. 2d 502, 657 N.Y.S. 2d 444 (N.Y. App. 1997) .... 12

Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322

$2 I PEON ay Hey N MeEt RAE S DAG sak Gee. 13

Speaks v. New York Life Insurance Co., No. 95-12441

iA. SOMNs Se, Gas ts Ca or ee 3, 4, 20

Sun Oil Co. v. Wortman, 486 U.S. 717 (1988)......... 17

Twin Parish Port Comm'n v. Berry Bros., Inc.,

94-2594 (La. 2/20/95), 650 So. 2d 748, writ

denied, 95-2665 (La. 1/5/96), 666 So. 2d 288....... 11

Webb v. Webb, 451 U.S. 493 (1981)............. 9, 10, 11

Wells v. Simonds Abrasive Co., 345 U.S. 514 (1953) ..... 8

Willson v. New York Life Ins. Co., 228 A.D. 2d 368,

644 N.Y.S. 2d 617 (N.Y. App. 1996) ................ 3

Willson v. New York Life Ins. Co., (Sup. Ct., N.Y.

Index No. 947127006). 20 5s PCE passim

STATUTES

48. USA. § TROPA os xing sce desanaunc eens 8, 21

Louisiana Code of Civil Procedure article 591....... 16

NCY, CPLR. 6 90P 525. tio ee a ee an 15

vi

TABLE OF AUTHORITIES —- Continued

Page

MISCELLANEOUS

3 Weinstein, Korn, & Miller, New York Civil Practice

-~ CPLR F SOLE (ON oi ce diai Giessen 16

16B Wright, Miller & Cooper, Federal Practice and

Procedure § 4022 (2G O06. 1996) «0 o0ccukd deevncwee dex 9

Federal Rule of Civil Procedure 23........... 16, 18, 20

Restatement of Judgments Second § 34(3)........ 12, 13

Rule 10 of the Rules of the United States Supreme

CORME . . kn di vives cube bre beh aa aun eee a ho ae 1

Texas Rules of Civil Procedure 42................... 18

STATEMENT OF THE CASE

This class action against New York Life Insurance

Company (“New York Life”) was brought by petitioners

on the heels of previously filed and consolidated nation-

wide class actions against New York Life pending in New

York state court, sub nomine Willson v. New York Life Ins.

Co. (Sup. Ct. N.Y. Co., Index No. 94/127804) (hereinafter

“Willson”). Plaintiffs’ assertion that the Willson court’s

certification of a settlement class under New York pro-

cedural law, from which these plaintiffs opted out, is res

judicata and commands certification of a contested non-

settlement class under Louisiana procedural law is not

worthy of the exercise of this Court’s discretionary

review, and does not satisfy any of the considerations

enunciated in Rule 10 of the Rules of this Court.

A. The Willson Case

Willson was a consolidation of four separate nation-

wide class actions against New York Life filed in New

York state court in 1994 and 1995. [Petition Appendix E2

at { 1].1 On July 28, 1995, the parties in Willson executed a

stipulation of settlement which provided various forms of

relief for class members, depending on the type of policy

owned, with an estimated value exceeding $250 million.

In addition, New York Life waived certain defenses, such

as statutes of limitations defenses, and agreed to provide

certain relief to class members without a showing of fault,

injury or damage, all of which would likely have

1 “Petition Appendix ___” refers to the appendices attached

to and filed with plaintiffs’ Petition for Writ of Certiorari.

destroyed the predominance of common issues had the

case proceeded to trial. [Petition Appendix E16-17 at

{ 26]. Furthermore, an alternative dispute resolution

component of the settlement, by which claims of misrep-

resentation and fraud would be decided on an individual

basis for each class member rather than on a classwide

basis, enabled such claims to be “resolved by means of a

fast, efficient, fair and cost-free mechanism that avoids

the time and expense of both individual litigation and the

individual mini-trials on causation, reliance and damages

that would likely be required were this action to proceed

in litigation.” [Petition Appendix E49-50 at { 61).

After due notice and a fairness hearing, the Willson

trial court entered “Findings of Fact, Conclusions of Law,

and Final Order and Judgment,” [Petition Appendix E],

in which it concluded that the New York procedural

requirements for class certification had been met as a

result of the settlement terms. In the words of the court,

“common issues of law and fact predominate in light of

the ADR Process included in the settlement ....” [Petition

Appendix E19-20 at ¥ 29 (b)(ii) (emphasis supplied)].

Adequacy of the Willson class representatives was satis-

fied by “the combination of the individualized ADR Pro-

cess and the no-fault Class Relief benefits [which]

accommodates much better than class actions are usually

able to any variations between Class Members.” [Id., E23

at J 29(d)(iii)]. Even superiority was satisfied because of

the settlement: “The Court finds that, given the proposed

settlement, a class action is clearly superior to other

methods for the fair and efficient adjudication of this

controversy.” [Id. at | 29(e) (emphasis. supplied)]. In

short: “Given the settlement, and specifically its Alternative

Dispute Resolution component, the Court finds that the

requirements of CPLR 901 and 902 are satisfied by this

settlement Class and therefore finally certifies the settle-

ment Class.” [Petition Appendix E24 at | 31 (emphasis

supplied)]. The judgment was affirmed on appeal. Willson

v. New York Life Ins. Co., 228 A.D. 2d 368, 644 N.Y.S. 2d 617

(N.Y. App. 1996). Significantly, New York Life did not

oppose certification in the context of the settlement.2

B. The Speaks Case

After notification of the proposed Willson settlement

and during the period afforded putative class members to

opt out, a purported class action suit was filed in a

Louisiana state court on behalf of Louisiana policy-

holders, in the matter entitled Speaks v. New York Life

Insurance Co., No. 95-12441 in the Civil District Court for

the Parish of Orleans. Because all plaintiffs in Speaks had

not opted out of Willson, however, New York Life sought

a stay of Speaks in deference to Willson. The Speaks court

granted the stay as to those Speaks plaintiffs who had not

opted out of Willson, but permitted Willson opt-outs to

proceed. [Speaks Stay Order, Petition Appendix F4].

? Plaintiffs indicate that New York Life has taken contrary

positions, opposing certification in Louisiana while arguing in

favor of certification in New York. See Petition for Writ of

Certiorari at 6, 19, 24. In fact, New York Life has advanced no

contrary positions. It did not argue in favor of or take any

position as to certification of a settlement class under New York

law, and it has contested certification of a non-settlement class

under Louisiana law.

Speaks, which did not involve any of the named plaintiffs

here, later was voluntarily dismissed.

C. The Banks Case

Shortly after the granting of a partial stay in Speaks,

plaintiffs filed the instant action on behalf of only Louisi-

ana residents who had opted out of Willson. The putative

class consisted of Louisiana residents who purchased

approximately 1849 life insurance policies from among

1000 New York Life agents in different transactions over a

thirteen-year period between January 1, 1982 and Decem-

ber 31, 1994. Petitioners contended that New York Life,

through independent agents, misrepresented the nature

of life insurance products to each class member and

improperly encouraged some class members to replace

pre-existing coverage. Petitioners claimed that New York

Life was liable to each class member for fraud, negligent

misrepresentation, negligence, breach of the duty of good

faith and fair dealing, and breach of contract.

In the trial court, petitioners and New York Life

vigorously contested the propriety of class treatment

under Louisiana law. At the certification hearing, New

York Life offered deposition transcripts from each of the

class representatives, testimony from New York Life rep-

resentatives, and substantial documentary evidence. This

evidence demonstrated that petitioners’ claims rested

upon highly individualized alleged oral and written mis-

representations and were susceptible to a wide range of

individual affirmative defenses, including several depen-

dent upon a variety of circumstances unique to each class

member. Petitioners in turn sought to minimize the myr-

iad individualized issues, arguing that the “common

thread” of New York Life’s alleged conduct created suffi-

cient “common character” to support certification under

Louisiana law.

Plaintiffs did not use the words “full faith and credit”

in their pleadings or briefs before the Louisiana trial

court, nor did they raise any purported federal constitu-

tional issue. The trial court addressed no such issue in its

order certifying a class. Instead, the court concluded that

the requisite “common character” existed based upon the

alleged conduct of New York Life, but it failed to take

into account all of the individualized issues unique to

each class member, or to address how such issues could

be managed on a classwide basis. New York Life

appealed.

Before the appellate court, petitioners raised the Will-

son certification, but only in their brief in support of

rehearing. [Plaintiffs’/Appellees’ Brief in Support of

Motion for Rehearing en banc at 9-11]. Even then, they

made no federal full faith and credit argument, instead

merely tossing out the phrase “full faith and credit” in

their argument regarding comity. Id. Plaintiffs did not cite

to the United States Constitution or to any other federal

authority in support of that argument. The Louisiana

First Circuit Court of Appeals, like the trial court, did not

address any purported federal full faith and credit argu-

ment in its decision. [Petition Appendix C]. The appellate

court focused solely on the propriety of class certification

under Louisiana law, and reversed. Id.

Petitioners applied for review by the Louisiana

Supreme Court. In their application and original briefs,

petitioners again raised the Willson certification as a mat-

ter of comity, and used the phrase “full faith and credit”

only in the context of the comity argument. [Plaintiffs’ /

Applicants’ Original Application and Memorandum for

Writ of Review at 15-17, and Brief Submitted On Behalf of

Plaintiffs/Applicants at 5-7]. The Louisiana Supreme

Court did not address any purported full faith and credit

argument, but rather addressed the procedural issue of

class certification pursuant to Louisiana law. [Petition

Appendix B]. The Court concluded that the trial court

had properly exercised its discretion in certifying a class.

On application by New York Life, the Louisiana

Supreme Court granted rehearing and reversed its pre-

vious decision. The Court explained that class treatment

was inappropriate pursuant to Louisiana procedural law

because the number of individualized issues requiring

individual adjudication demonstrated both an absence of

“common character” and that class treatment was not the

superior method of fair and efficient adjudication. [Peti-

tion Appendix A12]. Again, petitioners did not advance a

federal full faith and credit argument, and the Louisiana

Supreme Court did not address the issue. [See Opposition

to Application of Respondent New York Life Insurance

Company for Rehearing, Supplemental Brief of Plaintiffs /

Applicants, and Petition Appendix A].

Petitioners then filed an application for a second

rehearing in which for the very first time they raised

whether, pursuant to the federal Full Faith and Credit

Clause, the decision in Willson regarding:an uncontested

settlement class under New York procedural law bound

the Louisiana courts’ determination regarding certification

of a contested non-settlement class under Louisiana pro-

cedural law. [Application of Major Banks, et al. For Rehear-

ing at 19]. In its summary denial of petitioners’

application, the Louisiana Supreme Court did not address

this belatedly raised federal full faith and credit argument.

4

REASONS FOR DENYING THE PETITION

I. This Court Does Not Have Jurisdiction To Entertain

Plaintiffs’ Petition

Plaintiffs concede that the jurisdiction of this Court

for review of a purported federal question can only be

invoked where that question was “clearly raised and

articulated” in the courts below. [Petition for Writ of

Certiorari at 9]. Here, review of plaintiffs’ various submis-

sions to and the decisions of the state courts, reveals that

plaintiffs’ full faith and credit argument (the sole basis of

plaintiffs’ petition to this Court) was neither adequately

presented in the state system nor addressed in any man-

ner by the state courts. Instead, throughout the proceed-

ings and until a second application for rehearing to the

Louisiana Supreme Court, plaintiffs did not invoke the

Full Faith and Credit Clause of the United States Consti-

tution. Indeed, it was only in the application for a second

rehearing that plaintiffs referred to the United States

Constitution itself, rather than merely to principles of

comity? or judicial admissions, and only on that

3 While full faith and credit sets forth the “minimum

requirements which each state must observe when asked to

application did plaintiffs arguably raise a “full faith and

credit” federal constitutional challenge to the decisions of

the state courts.4

The proper exercise by this Court of jurisdiction over

a state court judgment requires that the judgment involve

a federal question that was properly pressed or passed

upon by the state court. 28 U.S.C. § 1257(a).° “Ordinarily

the federal issue is presented too late if it is first raised in

a motion for new trial, is raised for the first time on

appeal, is not presented with the clarity required by state

appellate procedure, or is not advanced until a petition

for rehearing addressed to the decision of the highest

apply the law [or enforce judgments] of a sister state,” Wells v.

Simonds Abrasive Co., 345 U.S. 514, 516 (1953), the forum state’s

principles of comity may require deference beyond that

minimum. See Brady v. Brown, 51 F.3d 810, 816 (9th Cir. 1995)

(“[t]he doctrine of comity is based on ‘respect for the

sovereignty of other states or countries,’ and under it ‘the forum

state will generally apply the substantive law of a foreign

sovereign to causes of action that arise there’ ”).

4 This fact is amply demonstrated by the plaintiffs’ own

Petition to this Court, and New York Life urges careful review of

the quotations appearing on pages 4-6 of the Petition. For

example, petitioners quote from their original brief to the

Louisiana Supreme Court: “Likewise principles of comity require

that the findings of the New York Court regarding class

certification be given full faith and credit.” [Petition for Writ of

Certiorari at 6 (emphasis supplied)].

> Final decisions by highest state courts may be reviewed

by certiorari when the validity of a federal treaty or statute, or of

a state statute seen as repugnant to federal law, is “drawn in

question,” or when any title, right, privilege or immunity is

“specially set up or claimed” under federal law. 28 U.S.C.

§ 1257(a).

state appellate court.” 16B Wright, Miller, & Cooper,

FEDERAL PRACTICE AND PROcEDURE § 4022 (2d ed. 1996); see

also Webb v. Webb, 451 U.S. 493, 497 (1981).

This Court lacks jurisdiction to review the final judg-

ment of a state court unless “the record as a whole shows

either expressly or by clear implication that the federal

claim was adequately presented in the state system.” Webb

v. Webb, 451 U.S. 493, 496-97 (1981). Generalized attacks

upon the validity of a holding or vague references to the

Constitution are insufficient to warrant review. Bankers

Life & Casualty Co. v. Crenshaw, 486 U.S. 71, 77-78 (1988).

When the highest state court does not discuss a federal

issue, that omission is deemed to be due to lack of proper

presentation. Exxon Corp. v. Eagerton, 462 U.S. 176, 181 n.3

(1983). This Court will not decide issues that were

advanced for the first time on a petition for rehearing in

the court below, Board of Directors of Rotary International v.

Rotary Club of Duarte, 481 U.S. 537, 549-50 (1987), nor will

it consider state court decisions involving federal consti-

tutional issues raised for the first time on review. Cardi-

nale v. Louisiana, 394 U.S. 437, 438 (1969); see also Mellon v.

O'Neil, 275 U.S. 212 (1927). Instead, “ ‘[a]t the mini-

mum... there should be no doubt from the record that a

claim under a federal statute or the Federal Constitution

was presented in the state courts and that those courts

were apprised of the nature or substance of the federal

claim at the time and in the manner required by the state

law.’ ” Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71,

77-78 (1988) (citing Webb v. Webb, 451 U.S. 493, 501 (1981)).

Where a petitioner fails to raise a federal question

until applying for rehearing to a state supreme court, as

here, the federal question has not been raised sufficiently

10

to support review by this Court. It was for this very

reason that the Court in Exxon Corp v. Eagerton, 462 U.S.

176 (1983), held that it had no jurisdiction to consider the

preemption argument there advanced by petitioners. The

Exxon Court noted that the record was devoid of any

indication that the petitioners had raised the issue in the

trial court. Id. at 181 n.3. Although the allegedly preempt-

ing federal statute at issue was discussed on rehearing

before the state supreme court, that court did not pass on

the issue. Id. Thus, this Court concluded, “[u]nder these

circumstances we have no jurisdiction to consider

whether the [federal statute] . . . preempted the applica-

tion of the [state statute], . . . for it does not affirmatively

appear that that issue was decided below.” Id. Likewise,

in Board of Directors of Rotary International v. Rotary Club of

Duarte, 481 U.S. 537, 549-550 (1987), this Court concluded

it had no jurisdiction because the “[a]ppellants did not

present the [federal question] squarely to the state courts

until they filed their petition for rehearing with the Court

of Appeal,” id., and because the state courts did not

address the federal question.

Petitioners may argue that their use of the words

“full faith and credit” in briefs to the state courts suffi-

ciently raised a federal question. Such an argument is

without merit, however, as demonstrated by this Court’s

decision in Webb v. Webb, 451 U.S. 493, 495-496 (1981). See

also Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71

(1988) (constitutional challenge to excessiveness of puni-

tive damage award not sufficiently raised to support

jurisdiction). There, the Court observed that “the peti-

tioner did use the phrase ‘full faith and credit’ at several

points in the proceedings below, [but] nowhere did she

11

cite to the Federal Constitution or to any cases relying on

the Full Faith and Credit Clause of the Federal Constitu-

tion.” Webb, 451 U.S. at 495-496. Moreover, the state

courts did not address any federal question, prompting

this Court to explain: “when ‘the highest state court has

failed to pass upon a federal question, it will be assumed

that the omission was due to want of proper presentation

in the state courts, unless the aggrieved party in this

Court can affirmatively show the contrary.’ ” Id.

Here, as in Webb, the state courts did not address the

purported federal full faith and credit issue and, as in

Webb, petitioners merely made vague references to “full

faith and credit” in the context of their comity arguments.

In addition, prior to their application for a second rehear-

ing before the third court to consider certification, peti-

tioners did not cite to the Constitution or to any cases

relying on the Constitution. Thus, as in Webb, the federal

full faith and credit issue was not sufficiently raised

before the state courts.

While petitioners here did invoke the federal Full

Faith and Credit Clause in the application for a second

rehearing, the Louisiana Supreme Court did not pass on

the issue. Indeed, there would have been no basis for the

Louisiana Supreme Court to address this newly asserted

argument since that issue had never been presented suffi-

ciently in or addressed by the lower state courts: The

Louisiana Supreme Court itself has no appellate jurisdic-

tion to address and decide issues raised before it but not

ruled upon by the trial court. Twin Parish Port Comm'n v.

Berry Bros., Inc., 94-2594 (La. 2/20/95), 650 So. 2d 748,

writ denied, 95-2665 (La. 1/5/96), 666 So. 2d 288. As a result,

this Court lacks jurisdiction to entertain petitioners’

12

full faith and credit challenge, and the Petition for Writ of

Certiorari should be denied.

II. Plaintiffs’ Purported Full Faith and Credit Chal-

lenge Is Without Merit and Unworthy of Review

A full faith and credit determination involves a two-

step inquiry. First, a court must determine whether the

type of judgment in question would have preclusive

effect under the law of the state that rendered the initial

judgment. Matsushita Elec. Industrial Co. v. Epstein, 516

U.S. 367, 375 (1996). If the answer to that inquiry is in the

affirmative, a court must next consider if there exists a

valid basis for collateral attack of that decision. The full

faith and credit argument advanced by plaintiffs fails the

first prong of this test, obviating the need to consider the

second.

A. Willson Certification Is Not Res Judicata

Because Identity of Parties Is Absent

Contrary to plaintiffs’ argument, it is clear that New

York courts would find that the Willson judgment does

not render class certification in this case res judicata. For

res judicata to apply under New York law, there must be

an identity of parties in both proceedings. New York State

Dormitory Authority v. Board of Trustees of Hyde Park Fire

and Water Dist., 239 A.D. 2d 502, 657 N.Y.S. 2d 444, 445

(N.Y. App. 1997); Restatement of Judgments Second

§ 34(3). Indeed, petitioners themselves declare that

“{uJnder New York law, ‘The doctrine of res judicata pre-

cludes litigation of matters that could or should have

13

been raised in a prior proceeding between the parties.’ ”

[Petition for Writ of Certiorari at 19 (emphasis added;

citations omitted)]. The New York court in Willson, how-

ever, specifically afforded petitioners the right to opt out

of its proceedings so that they might avoid the applica-

tion of res judicata and pursue their claims elsewhere.

Petitioners availed themselves of that right and opted

out. Thus, they were not parties to the Willson proceeding

and res judicata (or claim preclusion) does not apply. See

Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326 n.5

(1979); Restatement of Judgments Second § 34(3).

B. Certification in Willson Has No Collateral

Estoppel Effect Here

Presuming that plaintiffs’ Petition can be read to

advance an argument based on issue preclusion or collat-

eral estoppel, such an argument is likewise untenable.

The first of two requisites under New York law for appli-

cation of collateral estoppel does not exist: there is no

identity of issues. Kaufman v. Eli Lilly and Co., 65 N.Y. 2d

- 449, 482 N.E.2d 63, 492 N.Y.S. 2d 584 (N.Y. 1985). Identity

is lacking because (1) class certification was not actually

litigated and adjudicated in Willson, and (2) class certi-

fication here and in Willson rest on the application of

distinct procedural rules in markedly different situations.

Halyalkar v. Board of Regents, 72 N.Y. 2d 261, 527 N.E. 2d

1222, 532 N.Y.S. 2d 85 (N.Y. 1988).

14

1. Identity of Issues Is Absent Because Certi-

fication in Willson Was Not Actually Liti-

gated

Under the New York law of collateral estoppel, there

is no identity of issues if, as here, the matter sought to be

precluded was not contested in the prior proceeding.

Kaufman v. Eli Lilly and Co., 65 N.Y. 2d 449, 456, 482 N.E.

2d 63, 67, 492 N.Y.S. 2d 584, 589 (N.Y. 1985); Halyalkar v.

Board of Regents, 72 N.Y. 2d 261, 267, 527 N.E.2d 1222,

1225-26, 532 N.Y.S. 2d 85, 89-90 (N.Y. 1988). In Kaufman,

for example, the New York Court of Appeals found that,

although the legal and factual issues in two matters were

essentially the same, there was no identity for collateral

estoppel purposes because the defendant had not chal-

lenged application of the legal theory in the first proceed-

ing. As the Court explained, “[a]n issue is not actually

litigated if, for example, there has been a default, a con-

fession of liability, a failure to place a matter in issue by

proper pleading or even because of a stipulation.” Kauf-

man v. Eli Lilly and Co., 65 N.Y. 2d 449, 456-57, 482 N.Ed.

2d 63, 67, 492 N.Y.S. 2d 584, 589 (N.Y. 1985).

Likewise, in Halyalkar, the New York Court of

Appeals held that “the first [collateral estoppel] require-

ment — identicality of the issue - was not satisfied,”

Halyalkar v. Board of Regents, 72 N.Y. 2d 261, 266, 527 N.E.

2d 1222, 1224-25, 532 N.Y.S. 2d 85, 88 (N.Y. 1988), and

refused to accord collateral estoppel effect to a prior

administrative order because that order had not been

contested and the issues therefore had not actually been

litigated or determined. Id., 72 N.Y. 2d at 267, 532 N.E. 2d

at 1225, 532 N.Y.S. 2d at 88-89. As the Court noted, the

15

rule against according collateral estoppel effect to uncon-

tested matters “is founded on considerations of fairness

and recognizes that if preclusive effect were given to

issues not truly adjudicated the result would be to dis-

courage compromises and to accord them consequences

which the parties neither intended or foresaw.” Id., 72

N.Y. 2d at 267, 527 N.E. 2d at 1226, 532 N.Y.S. 2d at 89.

The reasoning of Halyalkar and Kaufman informs the

result here. The Willson ruling was based upon a stipu-

lated settlement between New York Life and the Willson

class representatives, pursuant to which New York Life

did not contest certification. Class certification in Willson

was not actually litigated or adjudicated, and therefore

Willson can have no preclusive effect here.

2. Identity Of Issues Is Absent Because Will-

son, Unlike Here, Addressed Application of

New York Procedural Law To A Settlement

Class

Collateral estoppel also cannot apply because the

class certification issues before the Willson court were

substantially different from those presented here. Balcerak

v. County of Nassau, 1999 N.Y. LEXIS 3927 (N.Y. Dec. 16,

1999). Not only do the two proceedings involve the appli-

cation of the distinct procedural laws of two different

states, but the underlying factual issues are markedly

different since Willson’s findings rested heavily upon the

terms of the class settlement before it.

A simple comparison of the New York and Louisiana

class certification statutes shows that their provisions are

not identical. Compare N.Y. C.P.L.R. § 901 with former La.

16

Code Civ. Pro. art. 591.6 The New York rule “is a syn-

thesis of the provisions of Rule 23(a)(1) and (b)(3) of the

Federal Rules of Civil Procedure.” 3 Weinstein, Korn, &

Miller, New York Civil Practice - CPLR { 901.11 (1999). In

contrast, former Louisiana Code of Civil Procedure article

591 required a showing of “ ‘common character’ among

the rights of the representatives of the class and the

absent members of the class.” Thus, while Louisiana

courts may accord persuasive authority to Federal Rule of

Civil Procedure 23 and interpretive federal case law, they

have not hesitated to diverge from it. See, e.g., CitiCorp

Person-to-Person Financial Center, Inc., 409 So. 2d 391, 393

(La. App. 4th Cir. 1982) (refusing certification, noting that

“[t]lo this extent, the criteria of revised Federal Rule 23

has been rejected by our legislature”). As explained by

one court, the Louisiana class action rules are “not as

explicit or inflexible as the federal rules,” and have been

developed in “an evolutionary case-by-case [manner]

wherein guidelines have been suggested without the

imposition of a concretized procedure.” Livingston Parish

Policy Jury v. Illinois Cont. Gulf R. Co., 432 So. 2d 1027,

1029 (La. App. 1st Cir. 1983). Petitioners’ effort to mini-

mize the distinctions between New York law and the

applicable Louisiana law by arguing that both are identi-

cal to Federal Rule of Civil Procedure 23 is of no avail.

Such distinctions between the law applied in the

prior proceeding and the law applicable to the present

proceeding demonstrate a lack of identity of issues and

6 Louisiana Code of Civil Procedure article 591 was revised

in 1997, after this proceeding commenced. Former article 591

applies in this case. Petition Appendix A8 at n.8.

17

prevent application of collateral estoppel under New

York law. Balcerak v. County of Nassau, 1999 N.Y. LEXIS

3927, *5 (N.Y. Dec. 16, 1999). In Balcerak, for example, an

injured corrections officer obtained a favorable judgment

from the New York Workers Compensation Board based

on its finding that his injury was work-related. In a

subsequent proceeding for additional benefits pursuant

to another statute, he advanced the earlier judgment as

conclusive proof that he was “injured in the performance

of his duties.” Id. The Court of Appeals, however, noted

that although the statutes used similar “operational

phrases,” the language was not necessarily “ ‘inter-

changeable’ .” Id. The Court therefore rejected applica-

tion of collateral estoppel, finding that eJigibility for

benefits under the two statutes “should . . . stand and be

resolved essentially on their own merits.” Id. at *8. Like-

wise, class certification determinations pursuant to the

distinct procedural laws of two different states “should

. stand and be resolved essentially on their own

merits.”

Acceptance of petitioners’ argument essentially

would require Louisiana courts to apply the procedural

rules of another state. See Sun Oil Co. v. Wortman, 486 U.S.

717, 722 (1988) (“[s]ince the procedural rules of its courts

are surely matters on which a State is competent to legis-

late, it follows that a State may apply its own procedural

rules to actions litigated in its courts”). Such a result

would deny Louisiana the “legislative jurisdiction to

which [it is] entitled.” Id. at 727. In the context of pro-

cedural matters, including class certification, the decision

of a court in one state should have no preclusive effect in

18

a different jurisdiction, which is free to impose different

procedural standards.

Thus, courts have refused to accord preclusive effect

to class certification orders made pursuant to the laws of

other jurisdictions. For example, in Cullen v. Margiotta,

811 F.2d 698, 732-33 (2d Cir.), cert. den., 483 U.S. 1021

(1987), the federal court refused to give preclusive effect

to the prior denial of class certification by a New York

state court. In rejecting the defendants’ assertion that

collateral estoppel precluded maintenance of a class

action, the court in Cullen explained that there is no

identity of issues “when the standards governing [the

issues] are significantly different.” Id. at 732. Similarly, in

refusing to enjoin class certification in a subsequent and

virtually identical proceeding brought in Texas state

court, the federal court in J.R. Clearwater, Inc. v. Ashland

Chemical Co., 93 F.3d 176, 180 (5th Cir. 1996), noted that

the discretionary nature of class certification “dictates

that each court - or at least each jurisdiction — be free to

make its own determination in this regard.”

Likewise, in Morgan v. Deere Credit, Inc., 889 S.W.2d

360, 367-69 (Tex. Ct. App. 1994), the Texas court rejected

the argument that a previous federal district court deci-

sion certifying a permissive class under Federal Rule of

Civil Procedure 23(b)(3) rather than a mandatory class

under Federal Rule 23(b)(1) required that it also reject a

mandatory class and certify a permissive class under the

Texas Rules of Civil Procedure. Even though Texas Rules

of Civil Procedure 42(b)(1) and (2) and Federal Rules of

Civil Procedure 23(b)(1) and (2) are identical in terminol-

ogy, the court found no identity of issues, explaining that

“[nJot only is there a difference in some of the rules, those

19

rules that are identical sometimes have been applied dif-

ferently by Texas courts.” Id. at 367-68; see also In re

Michael Lebner, 197 B.R. 180, 188 (D. Mass. 1996) (refusing

to accord preclusive effect to prior class certification by

Massachusetts state court). Louisiana state courts should

likewise be free to construe and apply their own pro-

cedural rules without being bound to New York pro-

cedural rules as construed by a New York state court.

Moreover, the context in which the Willson certifica-

tion was decided is markedly different than the situation

presented here. The Willson court's certification rested

heavily on the existence of the settlement and its alterna-

tive dispute resolution provisions;” here, in contrast,

there is neither a settlement nor alternative dispute reso-

lution procedures for the adjudication of the many indi-

vidualized issues that formed the basis of the Louisiana

Supreme Court's denial of certification. Instead, there is a

full evidentiary record, arising from a hotly contested

certification hearing, which demonstrates great disparity

among plaintiffs and a myriad of highly individualized

issues.

Plaintiffs erroneously rely on this Court’s decision in

Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), in an

attempt to equate this case with the settlement class

certified in Willson. Amchem Products, however, does not

affect the crucial distinctions between Willson and this

case. First, Willson was decided in 1995, prior to the

ruling in Amchem Products, and it would be improper to

7 As demonstrated on pages 1-3, supra, the Willson court

expressly relied on the settlement and its terms in certifying a

class.

20

measure its ruling by a standard that did not exist in New

York at the time. Indeed, Amchem Products expressly rec-

ognized that many courts had long held “that settlement

obviates or reduces the need to measure a proposed class

against the enumerated Rule 23 requirements.” Id. at 618.

Further, Amchem Products addressed the findings neces-

sary for certification of a settlement class under federal

procedure, not under state rules such as those applied in

Willson.

Additionally, even in clarifying that a settlement

class must meet the legal requirements for certification,

Amchem Products did not entirely eliminate consideration

of a settlement from class certification analysis. “[S]ettle-

ment is relevant to a class certification. . . . Confronted

with a request for settlement-only class certification, a

district court need not inquire whether the case, if tried,

would present intractable management problems, for the

proposal is that there be no trial.” Id. Here, unlike Will-

son, no settlement eliminates the “intractable manage-

ment problems” presented by petitioners’ proposed

class.§

Finally, petitioners’ effort to use the Speaks proceed-

ing to support their full faith and credit argument is

unavailing. The Speaks court merely stayed its proceeding

as a matter of comity as to those members of the Speaks

§ Interestingly, plaintiffs seek to use the Willson order

certifying a class while simultaneously rejecting the findings

underlying that same order. For example, plaintiffs ignore the

Willson holding that class certification was only appropriate

“[g]iven the settlement, and specifically its Alternative Dispute

Resolution component.” [Petition Appendix E24 at { 31).

21

purported class who had not opted out of Willson, which

at that time was still pending final determination. Noth-

ing about that court’s decision demonstrates any error in

the Louisiana Supreme Court’s subsequent decision

against certifying a class of Willson opt-outs in this case.

¢

CONCLUSION

As a preliminary matter, this Court need not consider

the merits of plaintiffs’ Petition: the purported federal

principle that forms the sole basis for that Petition was

not adequately raised in or addressed by the'state courts

below. This Court therefore has no jurisdiction to enter-

tain this Petition pursuant to 28 U.S.C. § 1257(a).

Should this Court nonetheless determine jurisdiction

is present, the issues raised by plaintiffs do not merit

consideration. The Louisiana Supreme Court properly

applied Louisiana procedural class certification rules, and

the Full Faith and Credit Clause of the United States

Constitution requires no different result. Moreover, the

New York courts would not accord to the Willson certi-

fication the preclusive effect advocated by plaintiffs. Cer-

tification in Willson was uncontested and therefore was

not “actually litigated and determined,” and the identity

of issues between Willson and this case, required for

22

application of collateral estoppel, does not exist. Plain-

tiffs’ Petition should be denied.

Respectfully submitted,

Puitur A. WITTMANN

Counsel of Record

STEPHEN H. KuprpERMAN

STONE, PIGMAN, WALTHER,

WITTMANN & HUuTCHINSON, L.L.P.

546 Carondelet Street

New Orleans, Louisiana 70130

Telephone: (504) 581-3200

Attorneys for New York Life

Insurance Company