# Opposition Brief — Sikes v. American Telephone & Telegraph Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2002
- **Citation:** 537 U.S. 884

## Text

—

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No. 02-124

IN THE

Supreme Court of the United States

JAMES W. SIKES and FELIX KEMP,

Petitioners,

v,
AT&T CORP.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT FOR THE ELEVENTH CIRCUIT

“BRIEF IN OPPOSITION

Wyck A. Knox, JR. WILLIAM N. WItHRow, JR.
TeD H. CLARKSON Counsel of Record
KILPATRICK STOCKTON LLP C. LEEANN McCurry

Post Office Box 2043 TROUTMAN SANDERS LLP

Augusta, GA 30903 5200 NationsBank Plaza

(706) 724-2622 600 Peachtree Street
Laura A. KASTER Atlanta, GA 30308-2216
AT&T Corp. (404) 885-3000

295 North Maple Avenue

Room 1138L2
Basking Ridge, NJ 07920
(908) 221-4838

Attorneys for AT&T Corp.

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COUNSEL PRESS -—_
(800) 274-3321 + (800) 359-6859 _

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1

STATEMENT PURSUANT TO RULE 29.6

Respondent, AT&T Corp. (formerly known as American
Telephone & Telegraph Company), has no parent corporation
and no publicly held company owns 10% or more of its stock.

il

TABLE OF CONTENTS

Statement Pursuant to Rule 29.6 ...............

Te OE Co o.v ic Soka haw os ob askance

Table of Cited Authorities .....................

DOI Bk. bok Khe ee

Counterstatment of the Case ...................

Reasons for Denying the Writ..................

‘

II.

Il.

There Is No Conflict Among The Circuits
Regarding The Appropriate Standard Of
Review For District Court Certification
2 errr er ere rr yy re errr

The Eleventh Circuit’s Refusal To Allow
Elements Of A Claim To Be Presumed In
Order To Facilitate Class Certification
Recognized A Well-Settled Rule Of Law And
Presents No Issue For Review By This
CE, is viv sanaeeeeiees eee

There Is No Conflict Among The Circuits
Regarding The Standard For Certifying A
Nationwide Class That Will Require The
Application Of The Laws Of All Fifty
WD. . vkddcains (0045s b els eee

re en Sree

Page

12

17

22

26

lil

TABLE OF CITED AUTHORITIES

Page
Cases:
Alabama vy. Blue Bird Body Co.; Inc., 573 F.3d 309

MN ose sda Who ee bk Kee ek oa Ow Oe 20
Amaco Enters., Inc. v. Smolen, 1995 U.S. App.

LEXIS 20486 (9th Cir. 1995) ..............4. 19
Amchem Prods. Inc. v. Windsor, 521 U.S. 591

EE EEEEM, oar peat nae er Pane naen eae ere 13,19
Andrews v. AT&T, 95 F.3d 1014, reh’g denied

en banc, 104 F.3d 373 (11th Cir. 1996) ....... passim
Appletree Square I Ltd. Pshp. v. W.R. Grace & Co.,

29 F.3d 1283 (8th Cir. 1994) ................ 18
AT&T v. Central Office Tel. Inc., 524 U.S. 214

ts Lette s eyesore eRe ea eA 4
Barney v. Holzer Clinic, 110 F.3d 1207 (6th Cir.

REE CEST ga RR cre, ny ar ere 14
Basic Inc. v. Levinson, 485 U.S. 224 (1988) ...... 22
Berger v. Compaq Computer Corp., 257 F.3d 475

as or eh ek ky bake oe Raw Os 15
Bill Heard Chevrolet Co. v. Dixon, 2001 Ala. LEXIS

re yr rr a 24

Boughton v. Cotter Corp., 65 F.3d 823 (10th Cir.
ee ee hash eh kw kin cK SS 14

iv

Cited Authorities

Page

Brandenburg v. Seidel, 859 F.2d 1179 (4th Cir.
PE SKS eek brea aeeraatans 18

Broussard v. Meineke Discount Muffler Shops, Inc.,
155 F.3d 331 (4th Cir. 1998) ................ 15, 22

Carroll v. Cellco Pshp., 713 A.2d 509 (N.J. Super.
SOU 46 bx Ub ean w Cegbaken eee a ean meee 20

Castano v. American Tobacco Co., 84 F.3d 734
a ere ee ee a eee passim

Chin v. Chrysler Corp., 182 F.R.D. 448 (D.N.J.
i Ee Py ey ne me re mre 19, 23, 24

~ Cichonski v. American Inventors Corp., 1995 U.S.
Dist. LEXIS 16563 (E.D. Pa. 1995) ........... 22

Coleman v. GMAC, 2002 U.S. App. LEXIS 14644
Gee eee ee 65u 1 Swe har backe lee eres 12

County of Suffolk v. Long Island Lighting Co.,
907 F.2d 1295 (2d Cir. 1990) .............00. 18

Delta Air Lines, Inc. v. Air Line Pilots Ass’n Int'l,
238 F.3d 1300 (11th Cir. 2001) .............. 13
Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) .. 10

Ex parte Green Tree Fin. Corp., 723 So.2d 6 (Ala.
FON So n0ks SS aS pac Ce ee

Freedman vy. Arista Records, Inc., 137 F.R.D. 225
Ce as RE Ads bs aNaeS Roe e eee ee 22

Cited Authorities
Page
General Tel. Co. of Southwest v. Falcon, 457 U.S.

SOT CUTER obi cde ven is cans news ceweneweres 3, 43
Georgine v. Amchem Prods., 83 F.3d 610 (3d Cir.

1996), aff’d, 521 U.S. 591 (1997) ............ 23
Glick v. MTV Networks, 796 F. Supp. 743 (S.D.N.Y.

ORD nb 5 GR RAGAS reee ee ree 24
Grantham & Mann v. American Safety Prods.,

831 F.2d 596 (6th Cir. 1987) ..............-. 18
Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) ...... 12
Harper v. AT&T, 54 F. Supp.2d 1371 (S.D. Ga.

i eT ee eo re Peer on ee ee 21
Hawkins v. Comparet-Cassani, 251 F.3d 1230

Le we | errrrrerrrrer eT eer ror 14
Holmes v. Securities Investor Protection Corp.,

SOS US. 250 CIGGE) 6s ewes ecvievensaveens 17
Horton v. Merrill Lynch, Pierce, Fenner & Smith,

855 F. Supp. 825 (E.D.N.C. 1994) ............ 15

Hudson v. Delta Airlines, 90 F.3d 451, 457 (11th Cir.
1996), cert. denied, 117 S. Ct. 1082 (1997) ....19, 20

Ideal Dairy Farms v. John Labatt, Ltd., 90 F.3d 737
CRECAE: TOTP oie GAs ores ese oe 18

In re Ford Motor Co. Vehicle Paint Litig., 182 F.R.D.
APOGEE. LA. TAGE) vines dk cde kind va ieee 19, 22

vi

Cited Authorities
Page
In re: LifeUSA Holding, 242 F.3d 136 (3d Cir.

DORE ssvdicuskihcenceessnteeese 13, 14
In re Stucco Litig., 175 F.R.D. 210 (E.D.N.C.

SOUR vchvanaded bake ee ee ceeeehee oa 25
In the Matter of Detariffing of Billing and Collection

Services, 102 F.C.C.2d 1150 (1986), recon.

Gontad, | FALA, GaSe CUPOe 00 bid cincceuss >.
James v. City of Dallas, 254 F.3d 551 (Sth Cir. 2001),

cert. denied, 122 S. Ct. 919 (2002) ........... 14
Johnson v. Penrod Drilling Co., 469 F.2d 897

Coie Gh WP os oh veh cunws eden waneeereees 25
Lienhart v. Dryvit Sys., Inc., 255 F.3d 138 (4th Cir.

DUE. v vé.gukdise0hsedesbuee eee 12, 14
Mack v. GMAC, 169 F.R.D. 671 (M.D. Ala. 1996)... = 22
Martin v. Dahlberg, Inc., 156 F.R.D. 207 (N.D. Cal.

ey ere pr re Mm 19, 22
Martinez v. Weyerhaeuser Mortg. Co., 1997 U.S.

Dist. LEXIS 22172 (S.D. Fla. 1997) .......... 24
MGIC Indem. Corp. v. Weisman, 803 F.2d 500

ek | rr eres err ry ya et 18

Mulligan v. Choice Mortg. Corp. USA, 1998 U.S.
Dist. LEXIS 13248 (D.N.H. 1998) ........... 22

vil

Cited Authorities
Page
Murphy v. Sofamor Danek Group, 123 F.3d 394
(6th Cir. 1997), cert. denied, 523 U.S. 1106
ee ere er re es ee 18, 20
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340
ON ved e wb es che hieenekasecnssesenees 10
Pelletier v. Zweifel, 921 F.2d 1465 (11th Cir.), cert.
GOntaE, FSS UB. SSP CUFSA) vcccvccssveseces 18
Perrone v. GMAC, 232 F.3d 433 (Sth Cir. 2000),
cert. denied, 532 U.S. 971 (2001) ............ 18, 20
Reynolds v. East Dyer Dev. Co., 882 F.2d 1249
eS Br re erry err 18
Robinson v. Metro-North Commuter R.R., 267 F.3d
147 (2d Cir. 2001), cert. denied, 122 S. Ct. 1349
ET wis Fecha cake ae ba tanta weak eneak okie 14
Rosentstein v. CPC Int'l, Inc., 1991 U.S. Dist. LEXIS
SP ee EEO bb uSbdendnbhe bh cKarene 19, 22
Securities Investor Protection Corp. v. BDO
Seidman, LLP, 222 F.3d 63 (2d Cir. 2000) ...... 18
Sikes v. Teleline, 281 F.3d 1350, reh’g denied
en banc, 2002 U.S. App. LEXIS 10585 (11th Cir.
WEEE Actacedsisviakiactsetaweneeeesaans passim

Simon v. GD. Searle & Co., 816 F.2d 397 (8th Cir.
Re i.e eee Ce 16

vill

Cited Authorities
Page

Southwestern Refining Co. v. Bernal, 22 S.W.3d 425
Ce Sk avabecwkeseekGerenesdanenens 24

Spence v. Glock, GES. m.b.H, 227 F.3d 308 (Sth Cir.
BOOED vavenscesevewbercesceeeensavesenyes 12, 24

State v. Schubert Theatre Players Co., 281 N.W. 369
Ge: SHOE Sess cneeeesstverbeateveuseees 24

Stirman v. Exxon Corp., 280 F.3d 554 (Sth Cir.
BOUND Sa cs saecueceeeadessweskeanaveriess 24

Strain v. Nutri/System, Inc., 1990 U.S. Dist. LEXIS
17031 (E.D. Pa. 1990) ........ GeVesbeter 19, 21, 22

Summit Props., Inc. v. Hoechst Celanese Corp.,
214 F.3d 556, reh’g denied en banc, 228 F.3d 411
(Sth Cir. 2000), cert. denied, 531 U.S. 1132
GEE as.d50yaeees$in¥dsesessesioen ee 3, 18, 20

Turner v. Beneficial Corp., 242 F.3d 1023 (11th Cir.),
cert. denied, 122 S. Ct. 51 (2001) ............ 13

Walsh v. Ford Motor Co., 807 F.2d 1000 (D.C. Cir.
1986), cert. denied, 482 U.S. 915 (1987) ...15, 23, 25

Washburn v. Kansas City Life Ins. Co., 831 F.2d
ed rr Peer Te TET Tere Ty 21

Washington Mutual Bank v. Superior Court, 15 P.3d
SEU S GO OED Baebes essswetescentereres 24

Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d
Be LUNs NEE 6b 6 cevsakekevesieresesies 13

ix

Cited Authorities
Page
Wilkes v. Ford Motor Co. (In re Ford Motor Co.
Ignition Switch Prods. Liab. Litig.), 174 F.R.D.
CUED Okc bee Rs bac ee weneeen ieee) 24, 25
Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180
oe Be ere ree rr re 24
Statutes:
og et fe ee eee 6
Be a a SEE IL bes ere bedeviceweeeves 2
og fa | ye rey err e Perr ee ey ere 17
BO UA NBME sc iccvcctenccescevecsenceses 16
PE Eo > ee ab ee ahi ag 19
ee ery eee 2
de ee fee er ee 6

se of ee rere 2

x

Cited Authorities
Page
Rules:
oe YS er rrr 25
Pe i Eo ha Oks Se eeceebeeRREN baa ne passim
EE kein 6040-4 0a ks nena ane aees 25
Other Authority:

ee Re er ere 6

]

RESPONDENT’S BRIEF IN OPPOSITION

The Petition for a Writ of Certiorari should be denied
because the decision below represents a routine application of
settled law and does not present any issue of general importance.
The Eleventh Circuit decertified the class in this case because
the district court’s certification ruling disregarded binding
Eleventh Circuit law rendered in a related case that the district
court could not eliminate elements of each plaintiff’s claim by
entertaining class-wide presumptions of reliance and injury in
order to justify class treatment. The district court also ignored
any impediment to class certification presented by its own
determination that the case required the application of all fifty
states’. gambling laws. Instead, the district court improperly
entertained the legal fiction that all states’ gambling laws
were similar. The Petition should be denied because the Eleventh
Circuit’s decision neither conflicts with the decisions of any
other Circuit nor raises any issue that implicate the supervisory
power of this Court as Petitioners erroneously assert.

INTRODUCTION

This is the third of three related putative class actions
that have met the identical fate — decertification by the Eleventh
Circuit Court of Appeals. Each case asserted a nationwide
class to challenge the legality of certain 900-number
telephone programs. Andrews v. AT&T challenged all 900-
number programs that offered a chance to win a prize, while
Harper v. AT&T attacked all 900-number programs involving
credit cards or credit services.' In this case, Petitioners James
W. Sikes and Felix Kemp (“Petitioners”) challenged a particular
900-number program encompassed within the Andrews class
definition, the “Let’s Make A Deal” (““LMAD”) program.

1. The Andrews and Harper actions were effectively consolidated
for class certification purposes and are hereafter collectively referred to
as “Andrews.”

2

Each of these actions claimed that AT&T Corp.’s (“AT&T”)
provision of billing and collection services for the described
900-number programs constituted, among other things, mail and
wire fraud and/or illegal gambling.” In each case, the district ~
court certified nationwide classes and, because otherwise the
litigation would have been unmanageable, adopted various
“presumptions” to eliminate the need for the individual proofs
required to establish each class member’s claim. Thus, the
district court adopted a presumption that each and every class
member had justifiably relied on a misrepresentation in deciding
to call the 900-number programs. Similarly, despite the fact
that there were extensive refunds and credits made to those billed
for calls to the 900-number programs at issue, to permit class
certification, the district court was willing to presume that each
and every class member had suffered a compensable injury.
Further, although the district court recognized the necessity of
applying the gambling laws of all fifty states, it assumed that
these various states’ laws would be sufficiently similar to allow
the cases to be effectively managed. (R13-291-Ex.2-28-30;
R5-142-8, 10-11).

The Eleventh Circuit reversed the district court’s
certifications, first in Andrews v. AT&T, 95 F.3d 1014, reh'g
denied en banc, 104 F.3d 373 (11th Cir. 1996), which the
representative plaintiffs did not pursue before this Court. Then,
five years later, the Eleventh Circuit followed the Andrews ruling
and reversed the district court’s certification in this case. Sikes
v. Teleline, 281 F.3d 1350, reh’g denied en banc, 2002 U.S.
App. LEXIS 10585 (11th Cir. 2002).

2. The complaints in each case asserted claims under the Federal
Racketeering Influenced and Corrupt Organizations Act (“RICO”),
18 U.S.C. § 1961, et seg.; the Federal Communications Act (“FCA”),
47 U.S.C. § 201, et seq.; and the Georgia RICO Act, O.C.GA. § 16-14-
1, et seq. Also named as defendants in this action were Teleline,
Inc. (“Teleline”), the sponsor of the LMAD program, and U.S.A.
Networks (“U.S.A.”), which broadcast certain LMAD advertising.
(R1-1-4 6-9; R5-142-1, 4, 7).

3

Despite the articulation of the questions presented, the
Petition is simply a challenge to the ordinary application of the
proper standard of review for class certification decisions.
Indeed, Petitioners concede that the Eleventh Circuit properly
articulated that standard but complain that in practice it applies
an “essentially plenary de novo review” to class certification
orders. (Petition at 10). However, the review standard and its
application were patently correct because, as even the district
court itself recognized, the fundamental issues underlying its
certification orders were questions of law — whether it could
adopt the substantive law presumptions it found were needed
to justify class treatment and to facilitate certification under
Rule 23. (R13-287-3). The Eleventh Circuit’s recognition that
“*(a] district court abuses its discretion if. . . it applies the wrong
legal standard ...,’” is consistent with the review standards
applied by all of the Circuit Courts of Appeals. Sikes, 281 F.3d
at 1359 (citation omitted); see p. 12, infra. Further, Petitioners’
suggestion that there should be a presumption in favor of
certification (Petition at 11, 15-16) is contrary to this Court’s
instruction that “actual, not presumed” compliance with the
requirements of Rule 23 is “indispensable.” General Tel. Co. of
Southwest v. Falcon, 457 U.S. 147, 160 (1982).

Second, Petitioners are flatly wrong when they contend
that the Eleventh Circuit’s refusal to allow reliance to be
presumed on a class-wide basis conflicts with established law.
(Petition at 16). The overwhelming weight of authority has
unequivocally rejected the notion that it is appropriate to
presume reliance outside the context of securities fraud.
See, e.g., Summit Props., Inc. v. Hoechst Celanese Corp.,
214 F.3d 556, 561, reh’g denied en banc, 228 F.3d 411 (Sth Cir.
2000), cert. denied, 531 U.S. 1132 (2001) (“No court has
accepted the use of [the fraud on the market] theory outside of
the context of securities fraud .. .” and rejecting the use of a
presumption of reliance in a RICO claim predicated on fraud);
see p. 17, infra. Petitioners’ contention that the consequence
of the Eleventh Circuit’s decision is to deny the use of

4

circumstantial evidence to establish fraud claims is directly
refuted by the decision itself, which states that its ruling does
not mean that only direct evidence, and not circumstantial
evidence, may be used to establish reliance. Sikes, 281 F.3d at
1363 n.32.

Petitioners’ final question articulates an issue that is simply
not presented by the Eleventh Circuit’s decision, and is based
on the erroneous assumption that the Eleventh Circuit adopted
a per se rule that any case requiring the district court to
apply the laws of all fifty states precludes class certification.
(Petition at 24). However, the Eleventh Circuit did not adopt
any such per se rule. Nor did Petitioners contend before the
Eleventh Circuit that if all fifty states’ gambling laws applied,
the case nevertheless would be manageable. Instead, Petitioners
argued that the district court had erred by finding that all
fifty states’ gambling laws applied, when it should have
applied, at most, the gambling laws of four states. As the
Eleventh Circuit recognized, however, because Petitioners failed
to file a cross-appeal on this choice of law issue, it had not been
preserved for review. Sikes, 281 F.3d at 1367 n.44.

Because the Eleventh Circuit properly applied well-
’ established legal principles in reversing the district court’s class
certification order, the Petition presents no issue warranting this
Court’s review or consideration.

COUNTERSTATMENT OF THE CASE?’

AT&T provided early 900-number services as a common
carrier. * (R19-143-48-49). Pay-per-call, or “900-number,”

3. Because the Statement of Facts set forth in the Petition seriously
misrepresents portions of the record, AT&T provides this
Counterstatement, setting forth the facts pertinent to the district court’s
class certification decision.

4. The tariffs filed with the FCC that govern AT&T’s provision of
such services carry the force of law. See, e.g., AT&T v. Central Office
Tel. Inc., 524 U.S. 214 (1998).

5

telephone services were introduced in the early 1980s to measure
caller reaction to particular events or issues (such as presidential
debates) and to “broadcast” recorded, non-interactive messages
to callers. These services rapidly expanded to include a wide
range of “interactive” programs offering information on sports,
weather, medicine, news, entertainment, and finance. (R19-
143-39-40). Eventually, some message providers or sponsors
unfortunately offered programs that were of questionable value
or offensive to some people (e.g., “Dial-A-Porn” programs)
(R19-143-94); however, as a common carrier, AT&T was
prohibited from denying transport service on the basis of
message content.

Concerned that dissatisfaction with objectionable 900-
number programs would undermine consumer confidence in
regular long distance service, and in reliance on FCC decisions
holding that billing and collection services need not be offered
pursuant to tariff,» AT&T amended its 900-number tariff to
separate the common carrier transport function from the billing
and collection function. (R19-143-38-39, 93-94). Under these
new arrangements, AT&T charged the program sponsor for the
calls on a tariffed basis, and the sponsor in turn charged
the callers for the information service. That sponsor-set,
untariffed charge was then included by AT&T on the callers’
telephone bills. (R19-143-43, 45). AT&T provided this billing
service to the sponsor under a separate contract, generally for a
minimal fee of between five and ten percent of the sponsor’s
charge. (R19-143-41-44, 49). AT&T only provided untarriffed
billing and collection services to sponsors who agreed to comply
with AT&T’s 900-number program guidelines. (R19-143-51-
52, 95; R5-140-tab 27).

5. See, e.g., In the Matter of Detariffing of Billing and Collection

Services, 102 F.C.C.2d 1150 (1986), recon. denied, 1 F.C.C.R. 445
(1986).

6. The 900-number guidelines AT&T created have served as a

model for later efforts by federal and state lawmakers to control 900-
(Cont’d)

6

The Let’s Make A Deal (“LMAD”) program operated from
early 1990 until December 1992. AT&T terminated billing and
collection services for LMAD in December 1992 when it
discovered that Teleline had failed to submit the majority of its
LMAD advertising and message scripts for review as required
by AT&T’s guidelines. (R19-143-53, 61). Teleline then
sued AT&T for terminating its billing and collection services.
(R19-143-61, 112, 116-17).

LMAD was generally modeled on the television show of
the same name and involved players answering questions and
choosing “doors” in an effort to win a prize. After a win, players
could stop playing or could continue the game and try for the
top prize. Anew game began every calendar month, and updated
rules regarding the program were issued when necessary.
(R19-143-148-49).’ Teleline created the advertising and audio
message heard by callers to the programs, identified possible
markets and placed the advertising, developed the computer
programming necessary for running the programs, and managed
and operated the programs. (R19-143-137-46, 155).

Teleline submitted for AT&T review its initial advertising,
the text of the initial message script to be used, and written
legal opinions that that the LMAD game complied with all
applicable federal and state laws. (R19-143-56, 148; R5-140-
tab 27). However, the LMAD advertising was changed over

(Cont'd)

number program content and advertising. See, e.g.,47 C.F. R. § 64.1501,
et seq. (regulations governing 900-number programs promulgated by
the FTC and FCC pursuant to the Telephone Disclosure and Dispute
Resolution Act of 1992, 47 U.S.C. § 228; 15 U.S.C. § 5701).

7. Petitioners notably fail to inform the Court that individuals were
not required to call a 900-number in order to play the LMAD game and
that Teleline provided a toll-free number for individuals to call with
questions about the game. Indeed, in the last six months of operation,
some 20,200 individuals used the free mail-in alternative to play, and
some 102,900 persons called the LMAD 800-number. (R19-143-152).

7

time, and the LMAD game was advertised through multiple
media outlets* using multiple messages. Further, the game’s
structure varied significantly over time. (R19-143-138-39, 143,
151; R5-140-tabs 3, 7).

AT&T provided three services in connection with LMAD.
(See R19-143-91, 137-40, 143-45, 164-65). AT&T carried calls
to LMAD’s 900-numbers for a tariffed charge and supplied
Teleline with call termination services, which in effect
constituted the “answering machine” for LMAD. (R19-143-
55, 57-58, 91).? The recorded messages, however, were devised
by Teleline. (R19-143-155-56). AT&T also provided billing
and collection services pursuant to contract for a fee of six
percent of Teleline’s charges to callers. (R19-143-49). As part
of this service, AT&T provided “billing inquiry” that enabled
individual callers with billing questions or complaints about
the program or its charges to contact an AT&T service
representative at an 800-number and, if dissatisfied, to obtain a
refund or credit. (R19-143-98).

AT&T was not, however, as Petitioners assert, the only
entity to handle consumer complaints or requests for refunds.
(Petition at 5). Consumers could, and did, procure refunds and
adjustments for 900-number calls to LMAD from local exchange
carriers and Teleline. (R19-143-101-02, 150-51). Because local
exchange carriers tracked 900-number refunds only on a
collective basis, and not by the individual caller receiving a
credit or refund of charges, the district court acknowledged that

8. Although Petitioners imply that the LMAD game was advertised
exclusively through television commercials on U.S.A. network, the
evidence is undisputed that, in addition to 30 second commercials, two
minute commercials, and 30 minute infomercials on U.S.A., the LMAD
game was also advertised through print media (such as the National
Enquirer and newspapers), and direct mail solicitations. (R19-143-131,
138-46, 151, 160-61, 165-68; RS-140-tab 30).

9. Teleline also obtained call termination service from other
vendors. (R5-149-143).

8

there is no way to determine which class members actually paid
for calls to LMAD or received refunds from the local exchange
carriers. (See R19-143-67-68, 98-100, 103, 106-07).'°

Although Mr. Sikes and Mr. Kemp seek to represent a
class of all individuals who have been billed for calls made to
LMAD (R3-89-14), neither actually called LMAD or played
the LMAD game. (R19-143-9, 22). Instead, their charges were
generated by children — Mr. Sikes’ son and Mr. Kemp’s
grandson. (R19-143-9-10, 19). Prior to receiving their telephone
bills, Mr. Sikes and Mr. Kemp had never seen any advertisements
for LMAD. (R19-143-14, 22). Neither can identify what
advertisement, if any, the children saw, whether the children
called LMAD in response to an advertisement or even what
might have been false, deceptive or misleading in any such
advertisement. (R19-143-15, 23). Additionally, Mr. Sikes has
never paid for any calls his son made to LMAD. (R19-143-14,
22-23).

The district court certified a nationwide class in this case
consisting of all persons who had been billed for calls made in
connection with LMAD and who had not received cash prizes
exceeding the charges incurred for such calls. (R5-142-12).

‘In certifying the classes, the district court rejected AT&T’s claim
that individual issues of reliance, injury and damages, and the
need to apply the gambling laws of all fifty states, precluded
certification. Rather, the district court:

(1) expressly recognized that detrimental reliance
was an essential element of Petitioners’ RICO
claims predicated on mail and wire fraud, but
concluded that the necessity of proving
individual reliance did not preclude class
treatment because such reliance could be

_ “virtually presumed;”

10. In this case, over $2 million in refunds and uncollectible
debt for LMAD was booked by AT&T but never repaid by Teleline.
(R19-143-105-06).

9

(2) dispensed with any requirement that class
members prove that they had suffered a RICO
injury by paying for a call to LMAD and,
although it recognized that presuming injury
and damage would permit individuals who had
never paid for calls to LMAD to recover
damages, concluded that such a “double
recovery” was permissible because it would
“not significantly harm” AT&T; and"

(3) held that applying the varying gambling laws

of all fifty states would not predominate over

- common issues because the application of such

varying states’ laws “would share many
common questions.”

(R5-142-8, 10-11; R13-287-3). The district court denied
AT&T’s request for permission to pursue an interlocutory appeal
of the certification decision.'? (R5-142-14).

11. In their most egregious misrepresentation of the record,
Petitioners suggest that AT&T affirmatively conceded that “individual
caller data was not needed ‘to assess or calculate damages in this case,’”
in order to avoid having to convert to computer format certain of
its LMAD call detail records stored on microfiche. (Petition at 8).
The record, however, is patently clear that AT&T consistently asserted
that the LMAD call detail report could not be used to establish damages
because it did “nothing other than identify an amount billed to a particular
telephone number. It does not establish that any class member in fact
paid for a call, how much a class member paid for a call, or whether the
class member received a refund.” (Petition App. 118). Because the call
detail data, at most, could be used to establish the gross revenues for the
LMAD program, a number to which AT&T was willing to stipulate, it
argued that there was no need to incur the tremendous expense of
converting this data to a computer format. (/d.).

12. Because the order also improperly required AT&T to pay one-
half of the costs ($225,000.00) associated with providing the class with

notice by publication, AT&T directly appealed the paneeene ores)
ont’

10

Thereafter, the district court entered a virtually identical
order certifying nationwide classes in Andrews. (R13-291-Ex.2-
28-30). However, recognizing that its certification order was
of “nationwide significance” and that there could be “a
substantial ground for difference of opinion,” the district court
authorized the defendants in Andrews to seek interlocutory
review of its decision. (R13-291-Ex. 2-34-35).

The Eleventh Circuit granted the interlocutory petition in
Andrews and reversed the district court’s certification of the
plaintiff classes. Andrews v. AT&T, 95 F.3d 1014, reh’g denied
en banc, 104 F.3d 373 (11th Cir. 1996). In particular, recognizing
that class treatment could not be used to alter the substantive
proof required to succeed on a claim for relief, the Eleventh
Circuit rejected the district court’s attempt to satisfy the
predominance requirement of Rule 23(b)(3) and render the
litigation manageable by presuming that each class member
justifiably relied on a misrepresentation, and suffered a
compensable injury as a result. /d. at 1025. Similarly, the
Eleventh Circuit rejected the district court’s unfounded
assumption that the gambling laws of all fifty states were
sufficiently similar to justify class treatment. Jd. at 1024.
' The representative parties in Andrews did not seek this Court’s
review of the Eleventh Circuit’s decision.

Following the Eleventh Circuit’s decision in Andrews,
AT&T moved to decertify the instant action. The district court
denied AT&T’s motion, concluding that Andrews did not
preclude continued class treatment in this case or the use of
presumptions to establish the essential elemenis of reliance,
injury and damage. Sikes v. AT&T, 179 F.R.D. 342, 346-47

(Cont'd)

under the collateral order doctrine. (R5-144-1). See Eisen v. Carlisle &
Jacquelin, 417 U.S. 156 (1974); Oppenheimer Fund, Inc. v. Sanders,
437 U.S. 340 (1978). This appeal was subsequently dismissed as moot
after the district court vacated that portion of its order imposing notice
costs on AT&T. (R5-165-1; R6-172-1).

11

(S.D. Ga. 1998). Instead, it distinguished Andrews on the basis
that it involved a number of different 900-number programs,
while this case involved only one 900-number program. Jd.
Moreover, although the district court explicitly recognized that
the majority in Andrews “‘ex:pressed reservations concerning the
manageability of undertaking inquiries into the laws of all
fifty states absent a thorough analysis of the various state
laws by the class proponents,” it again concluded that such a
pre-certification analysis of all fifty states’ gambling laws was
unnecessary in this case. Jd. at 348.

The district court subsequently certified its decision for
interlocutory appeal, and the Eleventh Circuit again reversed,
rejecting the district court’s attempts to distinguish Andrews
and holding that because Andrews “rejected the propriety of
allowing a presumption that would relieve plaintiffs of their
burden of having to prove every element of a claim . . . we must
do the same in this case.” 281 F.3d at 1362. The Court also
concluded that the district court’s bases for employing the
various presumptions were erroneous. /d. at 1362-64.
Specifically, the Eleventh Circuit held that because class
members, and not AT&T, controlled any evidence as to whether
they relied on a misrepresentation or suffered an injury as a
result of such reliance, there was no basis for presuming the
elements of reliance, injury or damage, and further, because not
all of the LMAD advertising was available and Petitioners’
expert testified that the available advertisements varied
“in terms of their potential to deceive,’” no presumption that
all LMAD advertising was misleading could be employed.
Id. at 1362-65.

Petitioners seek review by this Court claiming that the
Eleventh Circuit (1) fails to accord sufficient deference to district
court certification decisions and, in particular, district court
findings regarding the superiority and/or manageability of class
actions (Petition at 10-11); (2) broke with common law
principles when it refused to permit the essential element of

12

reliance to be presumed in a civil RICO action predicated on
fraud (Petition at 16); and (3) improperly adopted a per se rule
that the necessity of applying the laws of all fifty states
necessarily precludes a finding of superiority under Rule 23.
(Petition at 24). Points 1 and 2 reflect incorrect statements of
accepted law, and point 3 misstates the Eleventh Circuit’s ruling.

Because the Eleventh Circuit’s decision in this action
presents no novel issue, but applied settled law to unique facts;
does not implicate any issue on which there is a conflict in the
Circuits; and reflects no issue of national importance, Petitioners
have presented no issue that warrants review by this Court.

REASONS FOR DENYING THE WRIT

I. There Is No Conflict Among The Circuits Regarding
The Appropriate Standard Of Review For District Court
Certification Orders.

As this Court has recognized:

[b]ecause of the potential for abuse, a district court
has both the duty and the broad authority to exercise
control over a class action and to enter appropriate
orders governing the conduct of counsel and parties.
But this discretion is not unlimited, and indeed is
bounded by the relevant provisions of the Federal
Rules.

Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981). Thus, in
reviewing district court certification orders, the Circuit Courts
agree that while the decision to certify a class rests in the
sound discretion of the district court, that discretion must be
exercised within the confines of Rule 23. Sikes, 281 F.3d
at 1359; Castano v. American Tobacco Co., 84 F.3d 734, 740
(Sth Cir. 1996); Lienhart v. Dryvit Sys., Inc., 255 F.3d 138,
146 (4th Cir. 2001); Coleman v. GMAC, 2002 U.S. App. LEXIS
14644, *4-5 (6th Cir. 2002); Spence v. Glock, GES. m.b.H, 227
F.3d 308, 310 (Sth Cir. 2000). Because “actual, not presumed”

13

compliance with the requirements of Rule 23 is “indispensable,”
Falcon, 457 U.S. at 160, there cannot be, as Petitioners claim, a
presumption in favor of class certification. (Petition at 5).
Rather, district courts are required to undertake a “rigorous
analysis” of the factual and legal issues comprising a plaintiff’s
causes of action in order to ensure that the requirements of Rule
23 are actually met. Falcon, 457 U.S. at 160-61; see also
Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 623-24 (1997)
(Rule 23’s predominance inquiry focuses on “the legal or factual
questions that qualify each class member’s case as a genuine
controversy”). Appellate review of a certification decision
therefore appropriately focuses — as the Eleventh Circuit did
here — on whether the class as certified meets all of the
applicable Rule 23 requirements. Jn re: LifeUSA Holding, 242
F.3d 136, 144 (3d Cir. 2001).

The Eleventh Circuit properly recognized that it must defer
to a district court’s certification decision when it has “properly
exercised its discretion within the parameters of Rule 23”
in certifying aclass. Sikes, 281 F.3d at 1359; see also Andrews,
95 F.3d at 1022. However, the Eleventh Circuit also has
recognized its obligation to review de novo district court
determinations regarding purely legal issues that underlie a
discretionary certification decision. Turner v. Beneficial Corp.,
242 F.3d 1023, 1025 (11th Cir.), cert. denied, 122 S. Ct.
51 (2001) (“conclusions of law that informed” district court’s
certification decision reviewed de novo). And where a district
court “applies the wrong legal standard” in certifying a class,
the Eleventh Circuit recognizes that it has necessarily abused
its discretion. Delta Air Lines, Inc. v. Air Line Pilots Ass'n
Int'l, 238 F.3d 1300, 1308 (11th Cir. 2001).

The review standard, as articulated and applied by the
Eleventh Circuit, is entirely consistent with the standard of
review utilized by all other Circuit Courts of Appeals to address
the issue. See Waste Mgmt. Holdings, Inc. v. Mowbray, 208
F.3d 288, 295 (1st Cir. 2000) (district court abuses discretion in

14

certifying class if it “adopts an incorrect legal rule”); Robinson
v. Metro-North Commuter R.R., 267 F.3d 147, 162 (2d Cir. 2001),
cert. denied, 122 S. Ct. 1349 (2002) (“‘the failure to follow the
proper legal standards in certifying a class . . . is an abuse of
discretion’) (citation omitted); Jn re: LifeUSA Holding,
242 F.3d 136, 143-44 (3d Cir. 2001) (district court’s certification
decision premised on “an errant conclusion of law or an improper
application of law to fact” is an abuse of discretion); Lienhart v.
Dryvit Sys., Inc., 255 F.3d 138, 146 (4th Cir. 2001) (district
court’s discretion to certify class “must be exercised within the
framework of Rule 23”’); James v. City of Dallas, 254 F.3d 551,
562 (Sth Cir. 2001), cert. denied, 122 S. Ct. 919 (2002)
- (certification will be reversed if district court abuses its discretion
or applied an incorrect legal standard in reaching its decision);
Barney v. Holzer Clinic, 110 F.3d 1207, 1213 n.9 (6th Cir. 1997)
(“A district court that either uses the wrong legal standard or
misapplies the correct legal standard abuses its discretion’);
Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1237 (9th Cir.
2001) (“A court abuses its discretion if its certification order is
premised on legal error”); Boughton v. Cotter Corp., 65 F.3d
823, 826 (10th Cir..1995) (“If the lower court did not apply an
improper standard, the court’s decision is reviewed for an abuse
' of discretion”).

This case represents a routine application of this accepted
standard to the facts of this case. The Eleventh Circuit
recognized that the district court’s certification turned on certain
conclusions of law — that the court could (1) employ certain
evidentiary presumptions in evaluating Rule 23’s requirements
of predominance and superiority; and (2) assume that the
gambling laws of all fifty states could be manageably applied,
even though neither Petitioners nor the district court had ever
analyzed the differences among the states’ laws. Sikes, 281 F.3d
at 1359-60 (“While we do not dispute that manageability is
generally an issue of fact and practicality and not one of law,
we cannot overlook the fact that the district court reached its
conclusions on manageability based upon a faulty legal

15

premise”). The Eleventh Circuit appropriately reviewed these
legal issues de novo. See Horton v. Merrill Lynch, Pierce, Fenner
& Smith, 855 F. Supp. 825, 833 (E.D.N.C. 1994) (whether
presumption of reliance would have applied had securities fraud
claim been litigated was a contested question of law); Berger v.
Compaq Computer Corp., 257 F.3d 475, 481 (Sth Cir. 2001)
(district court “unquestionably adopted an incorrect legal
standard” when it presumed compliance with adequacy
requirement in the absence of proof to the contrary); Castano,
84 F.3d at 741 (district court cannot accept “on faith” plaintiff’s
assertion that state laws do not vary); Walsh v. Ford Motor Co.,
807 F.2d 1000, 1017 (D.C. Cir. 1986), cert. denied, 482 U.S.
915 (1987) (proponent of class certification is required to provide
an “extensive analysis” of state law variations regarding all
pertinent state law issues, and establish that the application of
each state’s law would not pose “insuperable obstacles” to class
certification); Broussard v. Meineke Discount Muffler Shops,
Inc., 155 F.3d 331, 343 (4th Cir. 1998) (reversing certification
following trial on the merits in part because district court
impermissibly determined damages on a classwide basis in order
to facilitate class treatment, when applicable state law required
individualized proof of damages)."*

13. Although Petitioners contend that stating “reliance can be
virtually presumed” was a mere “factual observation” and not a ruling
of law by the district court and that it did not presume damages (Petition
at 13-14), the plain language of the district court’s order belies these
assertions:

I disagree with AT&T’s contentions regarding the necessity
of conducting individual inquiries on [the] element [of
reliance]... . if a caller played the game and was charged
more than he or she won in prizes, then the person was
injured by reason of the game. The 900-numbers are not
listed in any public telephone directory and are not
otherwise in general circulation, so it may be reasonably
assumed that the caller learned of the game and decided to

play, at least in part, from the game’s promotional materials
(Contd)

16

Indeed, the district court itself expressly recognized in
authorizing an appeal under 28 U.S.C. § 1292 that there were
controlling questions as to whether it had applied the appropriate
legal standard in certifying the class, particularly regarding its
use of a presumption of reliance. (R13-287-3). See, e.g., Simon
v. GD. Searle & Co., 816 F.2d 397, 400 (8th Cir. 1987) (court
reviews de novo questions of law certified by the district court
pursuant to 28 U.S.C. § 1292).

Finally, the Eleventh Circuit’s decision does not, as
Petitioners claim, resolve disputed issues of fact or
overturn factual findings made by the district court. (See Petition
at 13-14). In particular, Petitioners claim that the Eleventh
Circuit overruled the district court’s factual determination that
all of the LMAD advertising was “substantially similar enough
for class certification.” (Petition at 14). But the Eleventh Circuit
made no such finding. Rather, the Eleventh Circuit properly
concluded that the district court erred in assuming “that LMAD
and its promotions were ‘without material variation” when it
was undisputed that most of the advertising is no longer available
for review'* and Petitioners’ own expert conceded that the

advertisements that were available “‘vary in terms of their

(Cont’d)
or from another person who learned of the game through
those promotional materials.

(R-142-8-9); see also (R5-142-11-12) (district court certified class to
include anyone who had “been billed” for calls to LMAD, without regard
to whether they had paid for such calls, finding AT&T would not be
“significantly” harmed to the extent some class members received “a
double recovery”).

14. Most of the advertising used for the LMAD game no
longer exists. For instance, of the 119 different commercials broadcast
on U.S.A., Teleline was only able to locate twelve. (R19-143-131;
R5-140-tab 30). Even fewer of the print ads have been located.
However, the advertising that is available definitively refutes the district
court’s presumption that all of the LMAD advertising was the same.
(Compare R5-140-tabs 13, 14, 15, 29).

17

potential to deceive.’” Sikes, 281 F.3d at 1364. Thus, the
Eleventh Circuit concluded: ee

[t]he upshot of this is that each individual
plaintiff is the only person with information about
the content of the advertisement upon which he
relied. Of course, a factfinder cannot determine
whether an advertisement was misleading or
fraudulent without knowing its content, and so each
plaintiff will have to provide evidence of the
particular advertisement(s) that he heard or saw.
The court may not employ a presumption that all of
the LMAD advertisements were misleading . . .

Id.

The review conducted by the Eleventh Circuit of district
court certification decisions in general, and of the certification
decision in this case in particular, is entirely consistent with the
review standard applied by other Circuit Courts. The Eleventh
Circuit’s routine application of this well-established review
standard presents no issue that warrants this Court’s attention.

II. The Eleventh Circuit’s Refusal To Allow Elements Of A
Claim To Be Presumed In Order To Facilitate Class
Certification Recognized A Well-Settled Rule Of Law
And Presents No Issue For Review By This Court.

In Holmes v. Securities Investor Protection Corp., 503 U.S.
258, 265-68 (1992), this Court confirmed that the “by reason
of” language in 18 U.S.C. § 1964 requires that civil RICO
plaintiffs prove a causal connection that includes both “but for”
and “proximate” causation between a predicate act of mail or
wire fraud and the claimed injury in order to recover. Consistent
with this Court’s decision in Holmes, the Circuit Courts
uniformly have concluded that a civil RICO plaintiff alleging
mail or wire fraud must prove that he was the target of a
scheme to defraud and that he “relied to his detriment on

18

misrepresentations made in furtherance of that scheme.”
Pelletier v. Zweifel, 921 F.2d 1465, 1499-1500 (11th Cir.), cert.
denied, 502 U.S. 855 (1991); County of Suffolk v. Long Island
Lighting Co., 907 F.2d 1295, 1311 (2d Cir. 1990); Ideal Dairy
Farms v. John Labatt, Ltd., 90 F.3d 737, 746-57 (3d Cir. 1996);
Reynolds v. East Dyer Dev. Co., 882 F.2d 1249, 1253 (7th Cir.
1989); Brandenburg v. Seidel, 859 F.2d 1179, 1188 n.10
(4th Cir. 1988); Grantham & Mann v. American Safety Prods.,
831 F.2d 596, 606 (6th Cir. 1987); Appletree Square I Ltd. Pshp.
v. WR. Grace & Co., 29 F.3d 1283, 1286 (8th Cir. 1994); MGIC
Indem. Corp. v. Weisman, 803 F.2d 500, 504-05 (9th Cir. 1986);
Summit Props., Inc. v. Hoechst Celanese Corp., 214 F.3d 556,
562 (Sth Cir. 2000).

Petitioners’ contention that the Eleventh Circuit’s refusal
to presume reliance is outside the norm or precludes the use of
circumstantial evidence in establishing class claims cannot be
supported. Indeed, the Eleventh Circuit’s position is consistent
with the great weight of authority that has rejected the device of
presuming the element of reliance outside of the context of
securities fraud claims. See Securities Investor Protection Corp.
_v. BDO Seidman, LLP, 222 F.3d 63, 73 (2d Cir. 2000)

(recognizing that “federal courts repeatedly have refused to apply
the fraud on the market theory to state common law cases despite
its wide acceptance in the federal securities fraud context”);
Summit Props., Inc., 214 F.3d at 561 (“No court has accepted
the use of the [fraud on the market] theory outside of the context
of securities fraud ...” and rejecting its use in RICO claim
predicated on fraud); Perrone v. GMAC, 232 F.3d 433, 439-50
(Sth Cir. 2000), cert. denied, 532 U.S. 971 (2001) (refusing to
apply Affiliated Ute’s presumption of reliance in TILA action);
Murphy v. Sofamor Danek Group, 123 F.3d 394, 403 (6th Cir.
1997), cert. denied, 523 U.S. 1106 (1998) (“Neither the courts
of Tennessee nor federal courts applying Tennessee law have
held that the fraud-on-the-market theory is enough to satisfy
the reliance requirement for common law purposes”); Appletree
Square I, 29 F.3d at 1287 (refusing to presume reliance via fraud-

19

on-the-market theory in RICO action involving real estate;
unlike the stock market, real estate market was not a
“well-developed” market in which the price reflected all publicly
available information); Amaco Enters., Inc. v. Smolen, 1995 U.S.
App. LEXIS 20486, *4 (9th Cir. 1995) (finding that California
Supreme Court has specifically declined to incorporate the
Affiliated Ute presumption of reliance into California tort law,
Ninth Circuit held that element of reliance could not be presumed
in common law fraud claim); Hudson v. Delta Airlines, 90 F.3d
451, 457 (11th Cir. 1996), cert. denied, 117 S. Ct. 1082 (1997)
(class certification properly denied for breach of fiduciary duty
claim under ERISA; even ifa uniformly false message had been
used, class members still would have to prove that they “would
have deferred their retirement in the hope that they would be
eligible for the Special Retirement Plan to be offered in the
future. [footnote omitted] This sort of decision would
necessarily have been highly individualized for each potential
retiree.”); Rosentstein v. CPC Int’l, Inc., 1991 U.S. Dist. LEXIS
200 (E.D. Pa. 1991) (presumption of reliance cannot be made
in “non-perfect” markets, such as consumer market); Martin v.
Dahlberg,. Inc., 156 F.R.D. 207 (N.D. Cal. 1994) (even if
representations regarding effectiveness of product were
misleading, plaintiff's RICO claims predicated on fraud could
not be certified as reliance could not be established simply by
showing defendant’s course of conduct; reliance was an
individual, fact-specific inquiry based on a myriad of factors);
In re Ford Motor Co. Vehicle Paint Litig., 182 F.R.D. 214 (E.D.
La. 1998); Strain v. Nutri/System, Inc., 1990 U.S. Dist. LEXIS
17031 (E.D. Pa. 1990); Chin v. Chrysler Corp., 182 F.R.D. 448
(D.N.J. 1998).'° And this Court has previously declined to review

15. Indeed, by employing presumptions of reliance, injury and
damage in order to justify certification of the class, the district court
effectively used the Federal Rules of Civil Procedure to alter substantive
rights, a result forbidden by the Rules Enabling Act, 28 U.S.C. § 2072.
See Amchem Prods., 521 U.S. at 612 (courts must be “mindful that

Rule 23’s requirements must be interpreted in keeping with Article III
(Cont’d)

20

Circuit Court decisions refusing to presume the element of
reliance in non-securities fraud cases. See Hudson, supra,
Summit Props., Inc., supra, Perrone, supra, and Murphy, supra.

Each class member in this case would have had radically
different experiences, knowledge and reactions regarding
the 900-number advertising and the LMAD game. It is
undisputed that neither named Petitioner ever actually called a
LMAD 900-number or played the LMAD game; rather, both
Mr. Sikes and Mr. Kemp seek to recover damages for calls made
by children in their households. Neither Mr. Sikes nor Mr. Kemp
ever saw any LMAD advertisements prior to receiving
their phone bills, and they are unable to identify which
advertisement, if any, their children saw, whether the children
called LMAD in response to that ad, or even what might have
been false, deceptive or misleading in any such advertisement.
(R19-143-9-10, 14-15, 19, 22-23).

Additionally, a significant percentage of LMAD callers were
repeat callers, and Petitioners’ expert conceded that an individual
who continued to call LMAD time after time, after receiving
bills for his calls, could not show that he continued to be deceived
. or relied on the advertising in calling. (R19-143-81, 150, 171,
189; R14-285-Ex. A-75-77, 79-81, 129). See, e.g., Carroll v.
Cellco Pshp., 713 A.2d 509, 518 (N.J. Super. 1998) (fraud claims
premised on similar contracts required individual proof of
reliance; “a plaintiff who claimed to be defrauded but who
renewed the contract for the next year would have a serious
credibility problem”). Petitioners’ expert also admitted that
because the reasons motivating someone to call LMAD
would vary from person to person, and individual consumers
received different information regarding LMAD, it was
impossible to determine which customers actually were

(Cont'd)

constraints and with the Rules Enabling Act ...”); Alabama v. Blue
Bird Body Co., Inc., 573 F.3d 309, 318 (Sth Cir. 1978) (proof required
to establish a claim can in no way hinge on whether the action is brought
on behalf of a class under Rule 23).

21

deceived. (R14-285-Ex. A-54, 56-58, 69-72, 75-77, 79-81, 90,
94-95, 118-19, 124).'° Thus, Petitioners’ own evidence
demonstrated that there was no factual basis upon which any
presumption of reliance could possibly be predicated. Strain,
1990 U.S. Dist. LEXIS 17031, *22 (presumption of reliance
inappropriate where alleged misrepresentations in
advertisements for weight loss center did not occur “in a single
place, at the same time, or under identical conditions’”’).'’

Petitioners also are incorrect in asserting that the Eleventh
Circuit’s decision effectively precludes the use of circumstantial
evidence in establishing the element of reliance. Presuming
the element of reliance is simply not the same as proving that
element using circumstantial evidence. See Washburn v. Kansas
City Life Ins. Co., 831 F.2d 1404, 1411 (8th Cir. 1987) (while
fraud may be established by circumstantial evidence, “it may
not be presumed”). And the Eleventh Circuit explicitly stated
that its decision did not mean that only direct evidence, and not
circumstantial evidence, could be used to establish the element
of reliance in a class action, only that this element could not be
presumed. 281 F.3d at 1363 n.32.

In the absence of a presumption, whether class members
reasonably relied will be dependent upon what each of them
read, heard and understood, and what actions, if any, each of
them took based upon such representations. Such proof would
require “each class member to narrate a story which includes
individualized proof of which advertisements he saw and
whether they indeed [called] in reliance of those advertisements.

16. The district court similarly acknowledged that different reasons
or motivations, entirely unrelated to the advertising used, could have
influenced consumers’ decisions to play LMAD. (R19-143-223).

17. The impropriety of presuming reliance is further evidenced by
the fact that in Andrews, the district court ultimately granted summary
judgment to AT&T on all of the individual plaintiffs’ RICO claims
predicated on fraud, finding that none of them could establish the
essential element of reliance. See Harper v. AT&T, 54 F. Supp.2d 1371,
1382-85 (S.D. Ga. 1999).

22

[footnote omitted] There are no short-cuts.” Strain, 1990 US.
Dist. LEXIS 17031, *22.

The Eleventh Circuit’s conclusion that reliance could not
be presumed, and that conducting individual reliance inquiries
would overwhelm any common issues, raises no new or novel
issue of any importance; it is a straightforward application of
settled law. See Basic Inc. v. Levinson, 485 U.S. 224, 242 (1988)
(“Requiring proof of individualized reliance from each member
of the proposed plaintiff class effectively would have prevented
respondents from proceeding with a class action, since individual
issues then would have overwhelmed the common ones.”);
Castano, 84 F.3d at 745 (“fraud class action cannot be certified
when individual reliance will be an issue”); Broussard, 155 F.3d
at 342 (because reliance is an individual issue which ““must be
applied with factual precision,” fraud claims do not provide a
“suitable basis for classwide relief’”) (citation omitted);
Mulligan v. Choice Mortg. Corp. USA, 1998 U.S. Dist. LEXIS
13248 (D.N.H. 1998) (majority view is that certification is
inappropriate when individual reliance is an issue, denying
certification of RICO claims predicated on fraud); Rosentstein,
1991 U.S. Dist. LEXIS 200; Martin, 156 F.R.D. 207;
' Strain, 1990 U.S. Dist. LEXIS 17031; Jn re Ford Motor Co.
Vehicle Paint Litig., 182 F.R.D. 214 (E.D. La. 1998); Cichonski
v. American Inventors Corp., 1995 U.S. Dist. LEXIS 16563
(E.D. Pa. 1995); Mack v. GMAC, 169 F.R.D. 671 (M.D. Ala.
1996); Freedman v. Arista Records, Inc., 137 F.R.D. 225, 229
(E.D. Pa. 1991).

Ill. There Is No Conflict Among The Circuits Regarding
The Standard For Certifying A Nationwide Class That
Will Require The Application Of The Laws Of All Fifty
States.

In addition to fraud, Petitioners’ RICO claims also are
predicated on allegations of illegal gambling. In certifying the
class, the district court recognized that it would be required to
apply the gambling laws of all fifty states, but nonetheless

23

concluded that because the required inquiries into the various
state laws “would share many common questions,” these
individual inquiries would not predominate. (R13-287-3; R5-
142-10). Petitioners, however, never provided an analysis of
the various states’ gambling laws; instead, the district
court simply assumed that those laws would raise common
questions and could be manageably applied in a class action.
Sikes, 179 F.R.D. at 348.

The Eleventh Circuit properly rejected this unfounded
ass!imption as a matter of law. Courts uniformly recognize the
potentially overwhelming manageability problems associated
with applying the laws of all fifty states. See Castano, 84 F.3d
at 741-43 and n.15 (“We find it difficult to fathom how common
issues could predominate in this case when variations in
state law are thoroughly considered.”); Georgine v. Amchem
Prods., 83 F.3d 610, 627 (3d Cir. 1996) (necessity of
applying individualized choice of law analysis “compounded
exponentially” individual issues in class action because
states had “different rules governing the whole range of issues
raised by the plaintiff’s claims”), aff'd, 521 U.S. 591 (1997);
Ex parte Green Tree Fin. Corp., 723 So.2d 6 (Ala. 1998)
(“we have grave concerns as to whether any national class of
plaintiffs in an action involving the application of the differing
laws of numerous states can satisfy” the requirements of
predominance and superiority); Chin, 182 F.R.D. at 461
(declining to certify class which would require the application
of the laws of all fifty states; “it remains true that no federal
court has attempted to try a case under the laws of every state”’).

The Eleventh Circuit applied mainstream law when it
refused to sustain a certification order that was premised on an
unfounded assumption that the gambling laws of all fifty states
were similar. See Walsh, 807 F.2d at 1017 (class proponent
must provide an “extensive analysis” of state law variations
regarding all pertinent state law issues, and establish that the
application of each state’s law would not pose “insuperable

24

obstacles” to class certification); Castano, 84 F.3d at 741-43
(finding district court did not properly consider how variations
in state laws might affect predominance inquiry); Stirman v.
Exxon Corp., 280 F.3d 554, 564 (Sth Cir. 2002) (“A cursory
review of state law variations is not sufficient” to establish
predominance); Zinser v. Accufix Research Inst., Inc., 253 F.3d
1180, 1188 (9th Cir. 2001); Spence, 227 F.3d at 313; Chin, 182
F.R.D. at 461; Martinez v. Weyerhaeuser Mortg. Co., 1997 U.S.
Dist. LEXIS 22172, *11-12 (S.D. Fla. 1997); Wilkes v. Ford
Motor Co. (In re Ford Motor Co. Ignition Switch Prods. Liab.
Litig.), 174 F.R.D. 332, 350 (D.N.J. 1997) (plaintiff has the
burden of “designing a workable plan for trial embracing all
claims and defenses prior to class certification”). See also Bill
Heard Chevrolet Co. v. Dixon, 2001 Ala. LEXIS 383, *18 (Ala.
2001); Washington Mutual Bank v. Superior Court, 15 P.3d
1071, 1085 (Cal. 2001); Southwestern Refining Co. v. Bernal,
22 S.W.3d 425, 435 (Tex. 2000).

The Eleventh Circuit’s decision represents a straight-
forward application of this well-established legal standard.
Because Petitioners made no attempt in the district court to
- demonstrate affirmatively that the gambling laws of all fifty
states could be manageably applied, it was legal error for the
district court to assume that this Rule 23 requirement was met.'®
See Andrews, 95 F.3d at 1024 (“‘class action proponents must

18. Petitioner’s failure is understandable since even a cursory
review of gambling statutes and related laws reveals that states vary
considerably as to whether, and under what circumstances, recovery for
a gambling debt may be had, the level of scienter which must be proven,
and how the elements of prize, chance and consideration are interpreted.
Compare Glick v. MTV Networks, 796 F. Supp. 743, 748 (S.D.N.Y. 1992)
(alternative free method of entry removed 900-number promotion from
ambit of New Jersey’s gambling or lottery laws) with State v. Schubert
Theatre Players Co., 281 N.W. 369 (Minn. 1938) (drawing was illegal
despite free method of entry). Indeed, in rendering judgment on the
individual claims in Andrews, the district court concluded that the 900-
number programs at issue violated Georgia’s and Nebraska’s gambling
laws, but not the gambling laws of California.

25

do more than merely assert that variations in state law are
insignificant or ‘academic’; court cannot take class proponents’
interpretations of law ‘on faith.”””’) (citation omitted); Walsh,
807 F.2d at 1016 (to justify class treatment, class action
proponent must show that no variations in applicable states’
laws exist); Wilkes, 174 F.R.D. at 342 (denying certification
where Petitioners failed to demonstrate realistic plan for
trying class claims that arose under differing states’ laws);
In re Stucco Litig., 175 F.R.D. 210, 216 (E.D.N.C. 1997)
(although plaintiff suggested that state law differences were
minor, “(t]he devil . . . is in the details”)."

Indeed, Petitioners made no attempt before the Eleventh
Circuit to support the district court’s conclusion that it could
manageably apply the gambling laws of all fifty states. Instead,
Petitioners argued that the district court’s choice of law analysis
was erroneous and that, at most, the gambling laws of four states
would be applicable, a task Petitioners claimed would be
manageable.”° As the Eleventh Circuit recognized, however,
Petitioners failed to preserve this choice of law issue on
appeal due to their failure to file a cross-appeal as required by
Fed. R. App. P. 5(b)(2). Sikes, 281 F.3d at 1367 n.44. Having

19. In an effort to bolster their claim that this case can be effectively
managed, Petitioners erroneously suggest that the parties jointly agreed
to have this case tried by the district court. (Petition at 8). In fact,
having demanded a jury trial in their initial pleadings, Petitioners sought
to withdraw that demand after the Eleventh Circuit rendered its decision
in Andrews by filing amended responses to the Southern District’s
mandatory interrogatories stating that they desired a non-jury trial.
(See Petition App. at 103, 108 (Plaintiffs’ 3/10/97 Supplemental
Responses to Rule 8.6 Interrogatories)). This unilateral attempt to avoid
a trial by jury, more than four years after having demanded a jury trial
and after the district court certified the class based on that demand,
contravenes Fed. R. Civ. P. 39(a) and is ineffectual. See, e.g., Johnson
v. Penrod Drilling Co., 469 F.2d 897, 903-04 (Sth Cir. 1972).

20. Before this Court, Petitioners contend that the gambling laws
of only two states, Missouri and Illinois, need to be applied to the claims
of class members nationwide. (Petition at 27).

26

failed to argue before the Eleventh Circuit that the district court
correctly concluded that the gambling laws of all fifty states
could be manageably applied, this issue presents no basis for
review by this Court.

CONCLUSION

This case presents no issue that merits this Court’s
attention or review. The Eleventh Circuit’s decision involves
the application of well-established legal principles and is
consistent with other Circuit Court decisions.

Respectfully submitted,

Wyck A. Knox, JR.
Tep H. CLARKSON

WILLIAM N. Wirurow, Jr.
Counsel of Record

KILPATRICK STOCKTON LLP

C. LEEANN McCurry

Post Office Box 2043 TROUTMAN SANDERS LLP

Augusta, GA 30903 5200 NationsBank Plaza

(706) 724-2622 600 Peachtree Street
Atlanta, GA 30308-2216

LaurRA A. KASTER

.AT&T Corp. ta dant

295 North Maple Avenue

Room 1138L2

Basking Ridge, NJ 07920

(908) 221-4838

Attorneys for AT&T Corp.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0146%3A2. Public record. Not legal advice.