Reply Briefmm — United Hospital Center v. Guida

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| NOV 12 2062

No. 02-512

IN THE Sc

Supreme Court of the Cited States

UNITED HOSPITAL CENTER et al.,

Petitioners,

DANIEL GUIDA,

Respondent.

On Petition for a Writ of Certiorari

to the Supreme Court of West Virginia

REPLY BRIEF OF PETITIONERS

CARTER G. PHILLIPS*

JOSEPH R. GUERRA

MICHAEL D. HATCHER

SIDLEY AUSTIN BROWN &

WOOD LLP

1501 K Street, N.W.

Washington, D.C. 20005

(202) 736-8000

Counsel for Petitioners

November 12, 2002 * Counsel of Record

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WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

TABLE OF CONTENTS

Page

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REPLY BRIEF OF PETITIONERS. ................0.0......26. ]

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APPENDIX: SUPPLEMENTAL RULE 29.6 STATE-

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TABLE OF AUTHORITIES

CASES Page

ASARCO, Inc. v. Kadish, 490 U.S. 605 (19839)...... 6

Amchen Prods., Inc. v. Windsor, 521 U.S. 591

CHODT) .....0inissasciésvnrventtonnedentene naa 4

Angel Music, Inc. v. ABC Sports, Inc., 112 F.R.D.

MO GDN.Y. 19GB ...1.00nidmamuaiaeneres 8

Board of Educ. v. Superior Court, 448 U.S. 1343

{. nenecre 3

City of Los Angeles v. Lyons, 461 US. 95

(19BD) .........:::<cessnvenupedecenbperpeel aan 5, 6

Doremus v. Board of Educ., 342 US. 429

(19SZ) .....-..020.s0«0:seniententonseeeliaga ens 6

Fisher v. District Court, 424 U.S. 382 (1976)....... 3

Insurance Corp. of Ireland, Ltd. v. Compagnie

des Bauxites de Guinee, 456 U.S. 694 (1982)... 7

Landgraf v. USI Film Prods., 511 US. 244

(EDDA) ........000:siccesscensiivie saeeegeageeaee 5

Lujan v. Defenders of Wildlife, 504 U.S. 555

(29DZ) ....:....csveisnenasevesseltianteieneeaty aan aannae 5

Pennell v. City of San Jose, 485 U.S. 1 (1988)...... 6

Raley v. Ohio, 360 U.S. 423 (1959) ............. 4

Secretary v. J.H. — Co., 467 U.S. 947

(BGG)... ....vesscenccsidcenesieeeubsaiainat aaa ae 6

Streich v. American Family Mut. Ins. Co., 399

N.W.2d 210 (Minn. Ct. App. 1987) ............0...... 8

Warth v. Seldin, 422 U.S. 490 (1975)...............08. 5

Weld v. Glaxo Wellcome Inc., 746 N.E.2d 522

(Dllnes. DOES... .cc vcscsccvsienaatneeie ae 9

World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 206 (1G. asin nieeee ee

STATUTE

28 U.S.C. § 12990 oc 2

111

TABLE OF AUTHORITIES - continued

RULE Page

Okla. Sup. Ct. R. 1.191 .000000... er aa OE 3

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SCHOLARLY AUTHORITY

R. Berger, Standing to Sue in Public Actions: Is it

a Constitutional Requirement, 78 Yale L.J. 816

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REPLY BRIEF OF PETITIONERS

In their opening brief, petitioners demonstrated that it

violates a deeply rooted and fundamental principle of Anglo-

American jurisprudence to permit a private plaintiff to

maintain a class action against 68 private defendants despite

his failure to allege that he has ever had any dealings with, or

suffered any injury at the hands of, 67 of these defendants.

Respondent offers no response to this showing. Indeed, he

confirms the fundamental unfairness of such an action by

urging the Court to ignore the plight of one petitioner on the

grounds that its conduct is not similar to that of the only

defendant with whom respondent actually dealt.

Unable to defend the propriety of this extraordinary action,

respondent suggests that this Court lacks jurisdiction because

the order on review is not final and rests on independent and

adequate state law grounds. These claims are foreclosed by

controlling authority. Because a Petition for a Writ of

Prohibition is not an interlocutory appeal but a separate and

original action in the West Virginia Supreme Court, the order

disposing of that action is final and reviewable. And the state

court’s determination that respondent was entitled to maintain

this action under state class action law was not an

independent basis for the decision, instead, that state law

ruling compelled the court to confront and decide petitioners’

federal claim. Because petitioners squarely presented a due

process challenge below, the order denying a writ of

prohibition necessarily rests, in part, on the court's disposition

of petitioners’ federal law claim.

Respondent relies upon similar diversionary tactics in its

arguments on the merits. Most notably, he mischaracterizes

petitioners’ due process claim as an attempt to mandate

application of Article III to state courts. Petitioners, however,

advocate no such principle. Indeed, they acknowledged that

Article III does not apply to the state courts, which are free to

issue advisory opinions or adjudicate many types of claims

that would not be justiciable in federal courts. Rather,

petitioners seek recognition of the fundamental, and narrow,

constitutional principle that a private defendant cannot be

haled into court at the behest of a private plaintiff who alleges

no injury caused by that defendant. None of the decisions of

this Court that respondent cites even suggests, let alone holds,

that state courts may entertain such suits.

Nor can respondent rebut petitioner’s showing that, by

dispensing with the “private injury” requirement, the state

courts have caused the same fundamental unfairness that led

to adoption of the “minimum contacts” test under the Due

Process Clause. Respondent offers a lengthy recitation of the

typicality and juridical links arguments that it advanced in the

state courts. But none of these arguments demonstrates that

petitioners had any reason to anticipate being sued by

respondent, or that they were on notice that they should

structure their primary conduct in order to protect themselves

from such a suit. Indeed, respondent’s opposition confirms

that he has not alleged, and cannot allege, any “conspiracy”

by petitioners, and that he seeks to predicate a suit against

every health care provider in the state on nothing more than

the existence of common practices among them.

1. Respondent’s jurisdictional arguments are utterly

baseless. A Petition for a Writ of Prohibition is not an

interlocutory appeal from a lower court ruling, but a separate

proceeding over which the West Virginia Supreme Court has

original jurisdiction. W. Va. R. App. P. 14. Thus, when the

West Virginia Supreme Court denied the Petition for a Writ

of Prohibition, it rendered a final decision as to all issues

raised in that proceeding, including petitioners’ federal due

process claim. The separate original proceeding before the

West Virginia Supreme Court is therefore at an end, and that

court’s decision denying petitioners’ due process claim is a

“final judgment[]” from the “highest court” of West Virginia,

as required by Section 1257(a). 28 U.S.C. § 1257(a).

The ongoing class action before the Circuit Court is

separate and distinct from the now-concluded prohibition

proceeding before the West Virginia Supreme Court, and

does not affect the finality of the West Virginia Supreme

Court’s judgment. See World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 289-90 (1980); see also Board of

Educ. v. Superior Court, 448 U.S. 1343, 1346 (1980)

(Rehnquist, J., in chambers) (“[T]he Baard’s petition for a

writ of mandamus and/or prohibition was a distinct lawsuit

which was fully and finally determined by the California

Supreme Court’s judgment... .”); Fisher v. District Court,

424 U.S. 382, 385 n.7 (1976) (per curiam) (“A judgment that

terminates original proceedings in a state appellate court, in

which the only issue decided concerns the jurisdiction of a

lower state court, is final, even if further proceedings are to be

had in the lower court.”). Indeed, World-Wide Volkswagen is

directly on point. There, this Court reviewed the denial of a

writ of prohibition by the Oklahoma Supreme Court in which

the petitioner had argued that federal due process concerns

prevented an Oklahoma court from exercising personal

jurisdiction over the petitioners. This Court reviewed the

denial of the writ of prohibition — a ruling in a proceeding

separate from the proceeding before the trial court, see Okla.

Sup. Ct. R..1.191 (noting that petition for writ of prohibition

may be filed under original jurisdiction of Oklahoma

Supreme Court) — despite the fact that the proceeding before

the Oklahoma trial court was ongoing. World-Wide

Volkswagen, 444 U.S. at 289-90.

Nor is it true that the West Virginia Supreme Court’s

decision rested on adequate and independent state grounds.

As petitioners have explained, and respondent nowhere

disputes, petitioners argued below that permitting a class

' Accordingly, the fact that some of the petitioners filed a motion to

decertify the class in the Circuit Court could not have affected the finality

of the order under review. In all events, since the filing of respondent’s

opposition, the Circuit Court denied that motion.

—S eee

action plaintiff to sue private parties that are not alleged to

have caused the plaintiff any injury violates the federal Due

Process Clause. See Pet. for Writ of Prohibition at 9-10, 15-

16. The West Virginia Supreme Court’s determination that

this action satisfies state law class action standards -

including state law standards for determining typicality, class i

standing, or “juridical links” — did not resolve petitioners’ j

federal claim. Rather, that determination required the West

Virginia Supreme Court to confront petitioners’ claim that,

even if state law permits a suit such as this one, federal due

process forbids state courts from entertaining such a suit.”

In order to deny the Petition for Writ of Prohibition,

therefore, the West Virginia Supreme Court necessarily had

to reject petitioners’ federal due process claim. The fact that

the court did not explicitly state that it was doing so, or

explain its reasoning, is irrelevant. See Raley v. Ohio, 360

U.S. 423, 436-37 (1959). Because the federal claim was

fairly presented and necessarily decided, this Court has

jurisdiction to review the state court’s order. See id

2. Respondent’s substantive arguments fare no better.

Contrary to respondent’s claim, petitioners do not seek a

ruling that Article III applies to state court proceedings. Br.

at 14-16. In fact, petitioners expressly acknowledged that

state courts can and do entertain a variety of claims that

would not be justiciable under Article III. See Pet. at 14-15.

Rather, what petitioners seek is a ruling that state courts

violate due process by allowing a private defendant to be

* For these same reasons, respondent’s reliance on this Court’s decision

in Amchen Prods. Inc. vy. Windsor, 521 U.S. 591 (1997), is wholly

misplaced. See Br. at 19. Petitioners agree that resolution of state law

class action issues was “logically antecedent” to resolution of their due {

process claim; indeed, they urged the state court to resolve this case in

their favor on state law grounds. In Amchen, of course, this Court

concluded that the case could not be maintained as a class action and thus

did not need to address the constitutional question. 521 U.S. at 622.

Here, the opposite is true.

haled into court at the behest of a private plaintiff who alleges

no injury caused by that defendant. As petitioners have

shown (Pet. at 11-16), and respondent nowhere disputes, the

requirement that a private plaintiff allege injury at the hands

of a private defendant is a fundamental and deeply rooted

principle of Anglo-American jurisprudence that long predates

adoption of the federal constitution and has, until recently,

been consistently respected by state as well as federal courts.

Because this “private injury” requirement is essential to the

““orderly administration of the laws,’” and gives our legal

system the “degree of predictability” necessary to ensure

“*fair play and substantial justice,” World-Wide Volkswagen

Corp., 444 U.S. at 292, 297, the Due Process Clause requires

state courts to adhere to this fundamental requirement.

To be sure, this same requirement is incorporated into

Article III’s “case” or “controversy” requirement, just as

several other fundamental due process principles are

incorporated into other express provisions of the Constitution.

Cf. Landgraf v. USI Film Prods., 511 U.S. 244, 266 (1994)

(noting that the Takings, Contracts and Ex Post Facto Clauses

all embody fundamental due process principles). But Article

III encompasses a number of other limitations on the judicial

power, derived from separation of powers principles and

“founded in concern about the proper — and properly limited —

role of the courts in a democratic society,” Warth v. Seldin,

422 U.S. 490, 498 (1975). These include the requirements of

injury in suits involving public defendants, Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992), a threat

of real and immediate injury in suits seeking injunctive relief,

City of Los Angeles v. Lyons, 461 U.S. 95, 101-02 (1983), and

a showing that the plaintiff will benefit from any relief

sought. Warth, 422 U.S. at 508. Petitioners do not contend

that any of these limitations are fundamental components of

due process, and thus do not seek to subject state courts to the

restrictions of Article III per se.

Given the more than 800-year pedigree of the “private

injury” requirement, it is unsurprising that respondent

identifies no case in which this Court has ever suggested, let

alone ruled, that state courts may permit a private defendant

to. be haled into court at the behest of a private plaintiff who

alleges no cognizable injury caused by that defendant. In the

cases respondent cites, this Court noted that state courts can

hear challenges to laws of general application, ASARCO, Inc.

v. Kadish, 490 U.S. 605, 617 (1989), render advisory

opinions on the constitutionality of state laws, Pennell v. City

of San Jose, 485 U.S. 1, 8 (1988); Secretary v. J.H. Munson

Co., 467 U.S. 947, 971 (1984) (Stevens, J., concurring),

entertain challenges to state laws brought by taxpayers,

Doremus v. Board of Education, 342 U.S. 429, 433-34

(1952), and “use injunctions to oversee the conduct of law

enforcement authorities” despite the lack of a real and

immediate threat of future injury, Lyons, 461 U.S. at 113.°

None of these cases involved claims brought by a private

plaintiff against a private defendant who was not alleged to

have caused the plaintiff any injury. Accordingly, there is no

“well-settled (and well grounded) precedent” of this Court

establishing that States may dispense with the fundamental

requirement of an allegation of injury at the hands of a private

defendant.

Nor does respondent rebut petitioners’ showing that

dispensing with this requirement is profoundly unfair. He

asks the Court to ignore the plight of petitioner Webster

Memorial Hospital on the grounds that its billing practices

“are not representative.” Br. at 4. But it is precisely because

the state courts dispensed with the requirement of actual

injury at the hands of a private defendant that respondent is

> These cases involved well-recognized non-Article III types of state

court adjudications (see Pet. at 14-15), all of which have_ historical

antecedents that predate the federal constitution itself. See R. Berger,

Standing to Sue in Public Actions: Is it a Constitutional Requirement, 78

Yale L.J. 816 (1969).

able to maintain suit against an entity whose practices are

unlike those of the hospital with whom he actually dealt.

Indeed, by allowing him to maintain suit against literally

dozens of entities with whom he has never dealt, the state

courts have afforded respondent enormous, and entirely

‘improper, leverage that he can use to extract a settlement

without ever alleging, let alone proving, injury at the hands of

petitioners.

Respondent’s contention that this unfairness does not

implicate the due process concerns that led to this sgn

adoption of the “minimum contacts” test, Br. at 14-15,

simply wrong. In World-Wide Volkswagen Corp., this con

stressed that what is “critical to the due process analysis . . . is

that the defendant’s conduct and connection with the forum

State are such that he should reasonably anticipate being

haled into court there.” 444 U.S. at 297.4 The Court noted,

moreover, that predictable legal rules governing amenability

to suit “allow[] potential defendants to structure their primary

conduct with some minimum assurance as to where that

conduct will and will not render them liable to suit.” /d.

Here, permitting plaintiff to sue Webster Memorial and all of

the other petitioners with whom he has never dealt is unfair

precisely because these petitioners could not reasonably have

anticipated being sued by him, and they had no reason to

structure their primary conduct in order to protect themselves

against such a suit.

3. Respondent’s reliance on the “juridical links” doctrine

serves only to underscore the impropriety of the decision

* In light of the Court’s emphasis on due process and the requirements

of “‘fair play and substantial justice,” 444 U.S. at 292, respondeni’s

suggestion that the “minimum contacts” test involves “issues of

federalism,” not due process, Br. at 14, is baseless. Indeed, in /nsurance

Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694

(1982), the Court explained that jurisdictional restrictions based on state

sovereign power “must be seen as ultimately a function of the individual

liberty interest preserved by the Due Process Clause.” /d. at 702 n.10.

below. Respondent quotes at length from the lower court,

which found that petitioners are juridically linked because of

their “‘unique duty,” as “‘licensed, certified, or registered

health care providers in West Virginia,’” to “‘furnish medical

records,’” and because the statutory scheme “‘gives rise to a

cohesiveness, connective link, or interrelationship between”

the defendants and the claims asserted.’” Br. at 28. But these

“findings” in no way demonstrate that it is fair or proper to

dispense with the fundamental requirement that a private

plaintiff allege harm at the hands of the private defendants he

has sued. West Virginia’s medical records statute gave

petitioners no reason to anticipate being sued by persons with

whom they have never dealt, nor any reason to structure their

primary conduct in order to protect themselves against such

suits. Indeed, the circumstances of petitioner Webster

Memorial Hospital more than refute any suggestion that

common regulation obviates the due process problems that

arise when a private plaintiff is permitted to sue a private

defendant with whom the plaintiff has never dealt. The lower

courts’ contrary conclusion conflicts with decisions of state

and federal courts that have rejected just this argument.

Streich v. American Family Mut. Ins. Co., 399 N.W.2d 210,

216 (Minn. Ct. App. 1987); Angel Music, Inc. v. ABC Sports,

Inc., 112 F.R.D. 70, 72 (S.D.N.Y. 1986).

Nor does respondent’s bald — and economically non-

sensical — allegation of a conspiracy obviate the due process

violation that maintenance of this suit entails. In fact,

respondent admits that, after roughly a year of discovery, he

has adduced no evidence of any conspiracy to fix prices, and

instead relies on testimony concerning a “‘general

consensus” to charge 75 cents per page. Br. at 25-26. A

* Respondent’s statement that the financial services director for one

petitioner “made it clear that the hospitals throughout the state have

agreed to charge this maximum allowable rate,” Br. at 25, is plainly false.

This person stated that “[t]hat’s sort of a common practice,” but

acknowledged that “I have not seen other hospitals’ policies and

consensus is simply not a conspiracy, particularly where, as

here, the alleged “conspirators” do not compete with one

another in the provision of patient medical records, and thus

have absolutely no reason to fix the prices they charge for

those records. Indeed, it is because there is no competition

that prices are regulated by the state statute.

4. Finally, there is no reason to defer plenary consideration

of the important issue that this case raises. The West Virginia

Supreme Court has become the second state supreme court to

dispense with the “private injury” requirement and to permit a

plaintiff to sue a private defendant with whom the plaintiff

has never dealt. See Weld v. Glaxo Wellcome Inc., 746

N.E.2d 522, 530-31 (Mass. 2001) (permitting plaintiff to sue,

under “juridical links” doctrine, companies with whom he had

never dealt). As petitioners have explained, class counsel

have aggressively pursued similar actions against entire

industries based on the same flawed theory of common

regulation that the lower courts accepted in this case. Pet. at

22. The decision in this case and the reasoning in Weld

provide a green light for future actions against private

defendants unfairly haled into court by plaintiffs who can

allege no injury at the hands of the defendants.

procedures here in West Virginia.” (McFadden Dep. at 93, in App. to

Resp’t, Danial J. Guida’s Resp. to Hospital’s Pet. for Writ of Prohibition.)

CONCLUSION

This Court should grant the petition for a writ of certiorari.

Respectfully submitted,