Opposition Brief — Gustafson v. Bridgestone/Firestone, Inc.

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Supcome One, U8.

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Nos. 02-530 DEC 6 20

IN THE OFFICE OF THE CLER: |

Supreme Court of the United States ~~

GARY L. GUSTAFSON, et al.,

Petitioners,

Ve

BRIDGESTONE/FIRESTONE, INC.,

BRIDGESTONE CORPORATION

AND FORD MOTOR COMPANY, et ai.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

Of Counsel: HUGH R. WHITING

JONES, DAY, REAVIS & POGUE

JP Morgan Chase Tower

600 Travis Street, Suite 6500

Houston, Texas 77002

MARK J.R. MERKLE

KRIEG DEVAULT, LLP

One Indiana Square

Suite 2800

Indianapolis, Indiana 46204 is edalatata

(317) 636-4341 EDWARD K.M. BILICH

Counsel of Record

MARK C. CAWLEY

JONES, DAY, REAVIS & POGUE

51 Louisiana Avenue, N.W.

Washington, D.C. 20001

(202) 879-3939

Counsei for Respondent Bridgestone/Firestone North

American Tire, L.L.C. (successor to Bridgestone/

Firestone, Inc.)

{Additional Counsel Listed On Inside Cover]

Of Counsel: THOMAS S. KILBANE

ROBIN G. WEAVER

JOSEPH C. WEINSTEIN

SQUIRE, SANDERS & DEMPSEY,

BE

4900 Key Tower

127 Public Square

Cleveland, Ohio 44114

(216) 479-8500

THOMAS G. STAYTON

ELLEN E. BOSHKOFF

BAKER & DANIELS

300 North Meridian Street

Suite 2700

Indianapolis, Indiana 46204

(317) 237-0300

Counsel for Respondent Bridgestone Corporation

i

QUESTIONS PRESENTED

1. Petitioners are plaintiffs who brought a proposed

nationwide class action involving purchasers of about 60

million different Firestone tires involved in a safety

investigation conducted by the National Highway Traffic

Safety Administration (“NHTSA”), arguing that they were

entitled to compensation because the tires had some undefined

“propensity” to fail. The district court granted nationwide

class certification of plaintiffs’ warranty, unjust enrichment,

and consumer fraud claims, ruling that Tennessee law applied

to all of these claims. The Seventh Circuit reversed the

district court’s choice-of-law ruling, found that the laws of 51

different jurisdictions would apply to the millions of claims at

issue, and ruled that because the laws of different jurisdictions

varied materially, class treatment would be unmanageable.

Under these circumstances, did the Seventh Circuit err in

reaching that conclusion?

2. The Seventh Circuit further ruled that the NHTSA

administrative process was superior to class treatment of

plaintiffs’ claims. Plaintiffs’ second, third, and fourth

questions presented each distort this superiority holding. The

core question is, did the Seventh Circuit err in ruling that class

treatment was not superior where the case raised

individualized legal and factual issues that would make it

unmanageable as a class action, plaintiffs seek to pursue a

novel “propensity-to-fail” theory that should be developed (if

at all) through individual litigation, and the NHTSA

administrative process had already provided relief to those

members of the proposed class who owned the specific sizes

and types of tires ‘that NHTSA determined should be replaced

through a product recall?

il

PARTIES TO THE PROCEEDINGS

Petitioners are 229 alleged individual purchasers or lessees

of certain Ford Explorers or Firestone tires. See Pet. App.

82a-85a.

Respondents are (1) Bridgestone/Firestone North American

Tire, L.L.C., as successor to Bridgestone/Firestone, Inc.; (2)

Bridgestone Corporation; and (3) Ford Motor Company.

Bridgestone/Firestone North American Tire, L.L.C. is wholly

owned by its parent corporation, Bridgestone/Firestone

Americas Holding, Inc., which in turn is wholly owned by its

parent corporation, Bridgestone Corporation. Bridgestone

Corporation has no parent corporation, and no publicly-held

company owns ten percent or more of its stock. This brief is

filed on behalf of Bridgestone/Firestone North American Tire,

L.L.C. (as the successor to Bridgestone/Firestone, Inc.) and

Bridgestone Corporation.

ili

TABLE OF CONTENTS

QUESTIONS PRESENTED ...................0-0-.

PARTIES TO THE PROCEEDINGS ................ ii

TABLE OF AUTHORITIES ...............-0.0005. V

OTRO sn 65s vadcexncus boneknd aceon I

COUNTER-STATEMENT OF THE CASE ....,...... 2

REASONS FOR DENYING THE WRIT ....... Reta 7

I. THE SEVENTH CIRCUIT’S CHOICE-OF-LAW

RULING DOES NOT CONFLICT WITH THE LAW

CAE CORR CO 66 6 5a viens ee eaecevedeks 7

A. The Seventh Circuit Properly Determined That

Because The Laws Of The Jurisdictions At Issue

Would Vary Concerning Plaintiffs’ Claims,

Nationwide Class Certification Would Be

RIED 6 63 dwades saunas cides 7

B. The “Conflicts” Cited By Plaintiffs Are Illusory .. 9

C. The Seventh Circuit’s Choice-Of-Law Ruling

Is Consistent With The Overwhelming Trend

In Contemporary Federal Class-Action

Fn OTe a eee 14

II. PLAINTIFFS’ CHALLENGES TO THE SEVENTH

CIRCUIT’S SUPERIORITY ANALYSIS ARE

BASED UPON DISTORTIONS OF THE SEVENTH

CRRA MY oon ka kde bne vce eneeennn 17

A. The Seventh Circuit Did Not “Usurp” State Law-

making Power In Violation Of Erie v. Tompkins

Or Settled Principles Of Federalism ........... 17

iV

TABLE OF CONTENTS

(Continued)

B. The Seventh Circuit’s Treatment Of Plaintiffs’

Allegedly “Negative-Value” Claims Does Not

Conflict With The Law Of This Court Or Any

PPT EO Ee een See ee ee 22

C. The Seventh Circuit’s Assessment Of The District

Court’s Misguided View Of Litigation

“Efficiency” Does Not Conflict With The Law

COE Fi TTA on bn cess sesaneneeee ues 24

Il. THE SEVENTH CIRCUIT’S RULING THAT

INDIVIDUAL FACTUAL ISSUES

PREDOMINATE PROVIDES FURTHER

GROUNDS FOR DENYING REVIEW ........ 25

CAM AAR 60550 os dbane kode r dese ereeeeee 28

v

TABLE OF AUTHORITIES ~

Page

Cases

Adams v. Kan. City Life Ins. Co., 192 F.R.D. 274

Ce Ee eed cd Sb uacsaveuxeund cuakeees 16

In re Air Bag Prods. Liab. Litig., 7 F. Supp. 2d 792

Up ioe d bec vanes secs cave saban eens 20

In re Am. Med. Sys., 75 F.3d 1069

ee SE hos ve eran ees bs ces baleen scuk 14, 25

Amchem Prod., Inc. v. Windsor,

se es ae 6, 12, 15, 23,

Am. Suzuki Motor Corp. v. Superior Court,

44 Cal. Rptr. 2d 526 (Ct. App. 1995) .......... 19, 21

Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014

Pes SEE bo Net Nane sewed oroawdieets 15, 23

Angus v. Shiley, Inc., 989 F.2d 142 (3d Cir. 1993) ..... 19

Arch v. Am. Tobacco Co.,

17S Fad. 469 (ED. Pa. 1997)... ccc cecccccess 23

Barbarin v. Gen. Motors Corp., No. CIV.A.84-0888,

1993 WL 765821 (D.D.C. Sept. 22, 1993) ......... 16

Barreras Ruiz v. Am. Tobacco Co.,

180 F.R.D. 194 (D.P.R. 1998)... 0. eee 23

Begley v. Acad. Life Ins. Co., 200 F.R.D. 489

EE ci vcec has soe e ence teeehiecees 16

Borskey v. Medtronics, No. CIV.A.94-2302,

1998 WL 122602 (E.D. La. Mar. 18, 1998) ........ 16

In re Bridgestone/Firestone, Inc. Tires Prods. Liab.

Litig., 155 F. Supp. 2d 1069 (S.D. Ind. 2001) ........ 8

Briehl v. Gen. Motors Corp.,

eg ee ee 19

Broussard v. Meineke Discount Muffler Shops, Inc.,

15S FG S28 COM Civ. 1998) ... ce ccccescccvcecs 25

California v. Rooney, 483 U.S. 307 (1987) ........... 19

Capital Holding Corp. v. Bailey,

C75 BW. 167 (Ry. 1996)... ccc ncscccieccs 19, 20

vi

TABLE OF AUTHORITIES

(Continued)

Page

Carlson v. Gen. Motors Corp., 883 F.2d 287

i eee re ere errr 19

Carpenter v. BMW of N. Am., Inc., No. 99-CV-214,

1999 WL 415390 (E.D. Pa. June 21, 1999) ..... - 16,17

Castano v. Am. Tobacco Co.,

84 F.3d 734 (Sth Cir. 1996) .. 0... cece neces 10, 15, 23

Chilton Water Auth. v. Shell Oil Co..,

No. CIV.A.98-T-1452-N, 1999 WL 1628000

ee ee, ER OES Ce oo sv cck oaks esas 60% 16

Chin v. Chrysler Corp.,

PGS FRED. SOG CRIS. TSE) oc cccevccccceses 16, 21

In re Citigroup, Inc., No. CIV.A.10011912REK,

2001 WL 1682865 (D. Mass. Dec. 19, 2001) ....... 15

Clay v. Am. Tobacco Co.,

188 F.R.D. 483 (S.D. Tl. 1999) 0... csecccccneess 16

Clement v. Am. Honda Fin. Corp., 176 F.R.D. 15

i. A CEE a +056 6n bee bs nesebesceteueueees 16

Coughlin v. Wellcraft Marine Corp.,

Bee FO ee CG: BOOED onc c cc veceséanceeess 20

Dhamer v. Bristol-Myers Squibb Co.,

FES FA. SRO CTREA Me BOER ccc cceeccevacecen 16

Dubose v. First Sec. Sav. Bank,

EGS FIRE SEP Cee Fs SUED 6 v6 ee Mose sedeces 16

Duncan v. N.W. Airlines, Inc., 203 F.R.D. 601

vf § Peer rere Tree TTS 16

Feinstein v. Firestone Tire & Rubber Co.,

$35 F. Supp. 595 (S.D.N.Y. 1962) ........00%, 20, 21

Fisher v. Bristol-Myers Squibb Co.,

181 F.R.D. 365 (N.D. Ill. 1998) ................. 16

In re Ford Motor Co. Bronco II Prod. Liab. Litig.,

ETF Fee BOO Ce EA, TR ED hoc cccencneces 16, 22

In re Ford Motor Co. Ignition Switch Prod. Liab.

Litig., 174 F.R.D. 332 (D.N.J. 1997) ........... 16, 21

Vil

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(Continued)

Ford Motor Co. v. Magill, 698 So. 2d 1244

ee 21

Ford Motor Co. v. Rice, 726 So. 2d 626 (Ala. 1998) ...20

In re Ford Motor Co. Vehicle Paint Litig.,

182 F.R.D. 214 (E.D. La. 1998) .............. 11, 16

Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9

SEE 8 oy 5s RGU b ox Wie 0645 06 se 05 0s 21

Georgine v. Amchem Prods., Inc., 83 F.3d 610

(3d Cir. 1996), aff'd sub nom. Amchem Prods.,

Inc. v. Windsor, 521 U.S. 591 (1997) ....... 12, 13,14

Hallaba v. Worldcom Network Serv. Inc.,

196 F.R.D. 630 (N.D. Okla. 2000) ............... 16

Hammett v. Am. Bankers Ins. Co..,

203 F.R.D. 690 (S.D. Fla. 2001) ................. 16

Hanlon v. Chrysler Corp.,

150 F.3d 1011 (9th Cir. 1998) .......00..00.. 11,12

Harding v. Tambrands Inc.,

165 F.R.D. 623 (D. Kan. 1996) .................. 16

Herb v. Pitcairn, 324 U.S. 117 (1945)... 00.0000... 19

Isaacs v. Sprint Corp., 261 F.3d 679 (7th Cir. 2001) ...14

In re Jackson Nat'l Life Ins. Co. Premium Litig.,

183 F.R.D. 217 (W.D. Mich. 1998) ............... 16

Jones v. Allercare, Inc.,

203 F.R.D. 290 (N.D. Ohio 2001) ................ 16

Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718

(11th Cir. 1987), cert. denied, 485 U.S. 959 (1988) .. 14

Lewallen v. Medtronic USA, Inc., No. C 01-20395

RMW, 2002 WL 31300899 (N.D. Cal.

ee a een eee 15

In re Life'JSA Holding Inc.,

242 F.3d 136 (3d Cir. 2001) .......... 13, 14, 15, 23

Lyon v. Caterpillar, Inc., 194 F.R.D. 206

LEE Sata ten sauce cuesd eer weat erence 16

tear

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Page

Marascalco v. Int’l Computerized Orthokeratology

Soc’y, Inc., 181 F.R.D. 331 (N.D. Miss. 1998) ...... 16

In re Masonite Corp. Hardboard Siding Prods. Liab.

Litig., 170 F.R.D. 417 (E.D. La. 1997) ......... 16, 23

Neely v. Ethicon, Inc., No. 1:00- CV-00569, 2001

WL 1090204 (E.D. Tex. Aug. 15, 2001) ........... 16

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

Foo 3g Ba) re 13

Oxford v. Williams Cos., 137 F. Supp. 2d 756

i eC ahi ek cheered Cee e cae ees 16

Peoples v. Am. Fid. Life Ins. Co., 176 F.R.D. 637

ee a oy ca cava reer e ts ee es Oo 16

Powers v. Gov't Employees Ins. Co., 192 F.R.D. 313

EN rr er er er ee re 16

In re Prudential Ins. Co. of Am. Sales Practices

Litig., 148 F.3d 283 (3d Cir. 1998) ............ 12, 13

In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61

I ico hie heel y Vanek s ox ORE RS 15

In re Rhone-Poulenc Rorer, 51 F.3d 1293 |

ek | ee ene Saree eee 13, 14, 15

Rohlfing v. Manor Care, Inc., 172 F.R.D. 330

re me eee ne 16

Rothwell v. Chubb Life Ins. Co. of Am.,

De © ey ee RE. TUE bik ch ened bee eeeeers 16

Ruhlin v. New York Life Ins. Co., 304 U.S. 202 (1938) ...7

Sanneman v. Chrysler Corp., 191 F.R.D. 441

8 8 ee end coe rere re ee 22

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

Os ee re ee re ere 12, 13 |

Shelley v. AmSouth Bank, No. CIV.A.97-1170-RV-C,

2000 WL 1121778 (S.D. Ala. July 24, 2000)

Od, B0t £50 Zoe CLIC: FOOT) cies iesecees 16

ix

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(Continued)

Page

Sikes v. Teleline, Inc., 281 F.3d 1350 (11th Cir.),

cert. denied sub nom. Sikes v. Am. Tel. & Tel. Co.,

ee eS Be | ee ee 14,15

Smith v. Brown & Williamson Tobacco Corp.,

174 F.R.D. 90 (W.D. Mo. 1997) ..............0.- 16

Spence v. Glock, 227 F.3d 308 (5th Cir. 2000) ..... 14, 23

Stipelcovich v. DirecTV, Inc., 129 F. Supp. 2d 989

Ee re rns 16

Stirman v. Exxon Corp., 280 F.3d 554 (5th Cir. 2002) .. 14

In re Stucco Litig., 175 F.R.D. 210 (E.D.N.C. 1997) ... 16

Szabo v. Bridgeport Machs., Inc., 249 F.3d 672

(7th Cir.), cert. denied, 122 S. Ct. 348 (2001) ....... 14

In re Trans Union Corp. Privacy Litig., No. 00 C 4729,

2002 WL 31028234 (N.D. Ill. Sept. 10,2002) ...... 15

United States v. Gen. Motors Corp., 518 F.2d 420

Sas eG OI oie late Wa wx kw ek ox oc :

Velasquez v. Crown Life Ins. Co., MDL-1096

No. CIV. A.M-97-064, 1999 WL 33305652

(5.0. Tex. Aug. 10, 1999)... cc cee encees 16

Walsh v. Ford Motor Co., 807 F.2d 1000

(D.C. Cir. 1986), cert. denied, 482 U.S. 915

Ses oes ce etek ae eee ee cee ek 1]

Walsh v. Ford Motor Co., 130 F.R.D. 260

EE SE ee ee 1]

Weaver v. Chrysler Corp., 172 F.R.D. 96

ec WO gk oc ce Aa cece ea ein eke en 20

Weikel v. Tower Semiconductor Ltd., 183 F.R.D.

PF ED ci dig ors Pep Bw eo eo eed tba 16

Willett v. Baxter Int’l, Inc., 929 F.2d 1094

ee OEE iis i's 00-044 20a dake eR oeever ivan 19

The Wharf (Holdings) Ltd. v. United Int’l Holdings,

lg Oe rs ED 5k 6-6 ven wo va vce nceeaka es 7

Yu v. IBM Corp., 732 N.E.2d 1173 (Ill. App. Ct. 2000) . 19

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Page

Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180

(9th Cir.), as amended, 273 F.3d 1266

i Le | re nana ey ere rari te a 11, 14, 25

Statutes

Pe Ghee IEE Ds 6 k's we dew daeueGeb aol 8

ee ee OY 8k as oe x eo a ieee eee 3

Re Us Be OD, 6k. 00 caeecuee ene 2

PRED 04465550008 eee Oe eee passim

INTRODUCTION

The petition provides no reason to grant review of the

unanimous panel opinion of the Seventh Circuit reversing the

district court’s erroneous and unprecedented nationwide class

certification decision. In attempting to justify review,

plaintiffs misstate controlling law, misstate the Seventh

Circuit’s opinion, and misstate the facts of record.

No federal appellate court has ever approved certification

of a litigation class as sprawling and unusual as the one

certified by the district court here—a nationwide class of

millions of “persons whose tires did not fail, whose vehicles

did not roll over.” Pet. App. 4a (emphasis in original). As the

Seventh Circuit recognized, the district court improperly

lumped together warranty, unjust enrichment, and consumer

fraud claims relating to 60 million tires made to scores of

different design specifications and sold nationwide over more

than a decade. Plaintiffs cite no federal precedent that is even

vaguely similar to this case. There is none.

The district court granted class certification based upon a

misapplication of Indiana choice-of-law rules, under which all

of these nationwide claims against Firestone would be

governed by Tennessee law, and on a skewed factual

predominance analysis that ignored significant portions of the

record. The district court also ignored the reality that most of

the tires at issue had been used without incident for many

years and for thousands of miles. The district court thus

breathed life into millions of “no-injury” claims that likely

would have been barred by the laws of most states.

It is unsurprising that the Seventh Circuit reversed class

certification: reversal is consistent with the mandates of Rule

23 and the settled law of this Court and circuit courts around

the nation. There is no basis for review.

2

COUNTER-STATEMENT OF THE CASE

In May 2000, the National Highway Traffic Safety

Administration (“NHTSA”) began an investigation into

certain ATX and Wilderness brand tires made by

Bridgestone/Firestone, Inc.' That investigation was very

broad, including about 60 million tires made in 41 different

sizes and 53 different lines, to scores of different design

specifications, at seven plants, over a decade.

On August 9, 2000, during the course of the NHTSA

inquiry and with that agency’s oversight, Firestone began a

recall of about 14 million P235/75R15-sized ATX and

Wilderness AT tires that had been sold, beginning in 1991,

primarily to Ford Motor Company for use as original

equipment on Explorer vehicles.” Although Firestone was

unable to identify any defect in the recalled tires, a tiny

fraction of them—fewer than 1%—had experienced tread

separation failures.°

' The entity that conducted the recall and was named as a defendant in this

litigation is Bridgestone/Firestone, Inc. Due to a November 2001

restructuring, that entity has been succeeded by Bridgestone/Firestone

North American Tire, L.L.C. For ease of reference, however, we refer to

both as “Firestone” throughout this brief. Bridgestone Corporation, which

was also named as a defendant in this lawsuit, joins in this opposition brief.

* Different tires are identified by brand or tire line and by alpha-numeric

indicators that detail certain features of the tire. For example,

“P235/75R15” conveys the following information: the “P” ordinarily

indicates a passenger tire; “235” is the tire’s section width (from sidewall

to sidewall) in millimeters; “75” is the tire’s aspect ratio (i.e., the tire’s

section height expressed as a percentage of the tire’s section width); “R”

denotes a radial tire; and “15” is the rim diameter in inches.

> Under the Motor Vehicle Safety Act, 49 U.S.C. § 30101 ef seqg., a

“determination of ‘defect’ may be based exclusively on the performance

record of the vehicle or component” (United States v. Gen. Motors Corp.,

518 F.2d 420, 432 (D.C. Cir. 1975)), and NHTSA need only establish a

“non-de minimus number of failures” to order a product recall (id. at 438

n.84). Thus, “[d]eterminations of fault or liability relevant to the award of

3

When Firestone announced the August 2000 recall, it

estimated that about 6.5 million of these tires were still on the

road—the others having been worn out and replaced after

regular use. To expedite the recall, Firestone replaced recalled

tires with new Firestone tires, and also reimbursed tire owners

up to $100 per tire if they replaced recalled tires with

competitive brands. By December 2000, the recall was

essentially complete.

In October 2001, NHTSA determined that approximately

3.5 million Wilderness AT P235/75Ri5 and P255/70R16-

sized tires that had been manufactured prior to May 1998 and

used on sport utility vehicles should be recalled. Firestone

estimated that about 768,000 of those tires might still be on

the road; it agreed to replace those tires as well. NHTSA

subsequently closed its investigation as to all other tires.

When all was said and done, less than a third of the tires in the

NHTSA investigation were subject to recall.

In the wake of the August 2000 recall, numerous consumer

class action complaints were filed in state and federal courts

against Firestone, Bridgestone, and Ford Motor Company.

The defendants removed many of the state-court actions and

sought pretrial consolidation of all federal cases under 28

U.S.C. § 1407. Ultimately the cases were consolidated before

Judge Sarah Evans Barker of the United States District Court

for the Southern District of Indiana.

Thereafter, more than 200 plaintiffs filed a consolidated

master class action complaint. These plaintiffs are a disparate

group of individuals. They owned tires of different sizes and

damages at common law” do not enter into the defect inquiry under the

Safety Act. /d. at 434.

* In May 2001, Ford separately announced that it would provide free

replacement of all Wilderness AT tires on Ford vehicles, regardless of

whether those tires were subject to any NHTSA order or had been recalled

by Firestone.

4

types that were used on different vehicles. They bought their

vehicles or tires both new and used, at different times, and in

different places. With three exceptions, none of them alleged

any failure of any kind in any Firestone tire or any Ford

Explorer. Rather, plaintiffs claimed generally that their

Firestone tires have a “propensity to fail” from tread/belt

separation. Relying on this novel theory, they sought damages

and injunctive relief based on fraud and contract theories.

Although plaintiffs focused their allegations upon alleged

conduct relating to Ford Explorers and recalled P235/75R15

tires, they nevertheless sought to have the trial court certify a

massive class of millions of consumers who owned, or had

owned, any of the 60 million tires that NHTSA included in its

investigation.

In July 2001, the district court granted in part and denied in

part defendants’ motion to dismiss. Rejecting the position that

the law of each plaintiff's state of residence and/or purchase

governed his or her claims, the court ruled as a matter of

Indiana choice of law that Tennessee law would apply to all of

plaintiffs’ claims against Firestone and Michigan law to their

claims against Ford. It then determined that plaintiffs failed

to state valid claims for violations of RICO, negligence, or

breach of redhibitory defects under Louisiana law, but could

proceed on claims for breach of express and implied warranty,

unjust enrichment, and consumer fraud.”

In December 2001, the district court certified three classes

of owners of Firestone tires and Ford Explorers. In doing so,

it rejected prior Seventh Circuit decisions instructing that

nationwide purchaser classes aileging fraud and warranty

theories raised manageability problems at odds with Rule

23(b)(3). Instead, the district court incorporated its ruling that

Tennessee and Michigan law would govern claims against

* In a ruling denying Bridgestone’s separate motion to dismiss, the district

court ruled that Tennessee law would apply to all claims against

Bridgestone.

5

Firestone and Ford, respectively, and with minor exceptions,

ruled that the proposed classes should be certified for all of the

legal theories remaining in the case. Thus, after the August 9,

2000 recall was complete and after NHTSA’s investigation

was closed, the district court certified a massive class of

owners of all 60 million Firestone tires that had been subject

to the NHTSA inquiry.

Defendants sought review under Rule 23(f). In a

unanimous panel decision written by Judge Frank Easterbrook,

the Seventh Circuit reversed. The Seventh Circuit first ruled

that the district court erred as a matter of Indiana law in its

choice-of-law analysis. | Under Indiana choice-of-law

principles, the laws of all 50 states and the District of

Columbia would apply to class members’ claims. The

Seventh Circuit then determined that the various jurisdictions’ :

laws differed with respect to the elements of plaintiffs’ claims.

It thus concluded that “[b]ecause [plaintiffs’] claims must be

adjudicated under the law of so many jurisdictions, a single

nationwide class is not manageable.” Pet. App. 9a.

The Seventh Circuit also ruled that numerous factual

differences among members of the class made class

certification inappropriate. The tires included in the class

“exhibit variability.” Jd. 10a. “[F]ewer than half of those

included in the tire class were recalled,” and “the six trade

names listed in the class certification order comprise 67 master

tire specifications: ‘Firehawk ATX’ tires, for example, come

in multiple diameters, widths, and tread designs; their safety

features and failure modes differ accordingly.” Jd. And,

although plaintiffs claimed that all of the tires lacked certain

design characteristics, “whether a particular feature is required

for safe operation depends on other attributes of the tires, and

as these other attributes varied across the 67 master

specifications it would not be possible to make a once-and-for-

all decision about whether all 60 million tires were defective,

even if the law were uniform.” Jd. (emphasis in original).

After noting that “there are other differences” in the factual

ee

6

circumstances of class members, the court held that the factual

differences “preclude[d] any finding ‘that the questions of law

or fact common to the members of the class predominate over

any questions affecting only individual members.’” /d.

(quoting Fed. R. Civ. P. 23(b)(3)).

Finally, the Seventh Circuit rejected the district court’s

“certify-at-all-costs” approach to class certification. To begin

with, the court noted that, because the plaintiffs seek to pursue

novel, no-injury claims, “most states would not entertain the

sort of theory that plaintiffs press.” Pet. App. 7a. Thus, in

assessing whether this litigation satisfied the “superiority”

requirement of Rule 23, the district court had misconceived its

role: in an attempt to resolve all of the claims of these

millions of tire and vehicle owners in a single proceeding, the

district court had violated choice-of-law rules and proceeded

in a manner that would not allow plaintiffs’ claims to be

addressed under the various states’ laws. The Seventh Circuit

recognized that what it labeled as a “decentralized” approach

is necessary to permit a fair and efficient assessment of the

value (if any) of these nationwide consumer claims.

“Differences across states may be costly for courts and

litigants alike, but they are a fundamental aspect of our federal

republic and must not be overridden in a quest to clear the

queue in court.” /d. 12a (citing BMW of N. Am., Inc. v. Gore,

517 U.S. 559, 568-73 (1996)).

Contrary to plaintiffs’ assertions, the Seventh Circuit

neither took issue with the judgment of state lawmakers nor

derived a rule that plaintiffs’ claims should not be adjudicated.

Rather, the court assessed the manageability and superiority of

a single proceeding in which the disparate claims of millions

of tire owners located throughout the nation would be

aggregated and adjudicated under the law of one state. The

court determined that such a proceeding could not be squared

with Indiana choice-of-law rules or the requirements of Rule

23. Following this Court’s decision in Amchem Products, Inc.

v. Windsor, 521 U.S. 591, 613 (1997), the Seventh Circuit held

7

that as “[t]empting as it is to alter doctrine in order to facilitate

class treatment, judges must resist so that all parties’ legal

rights may be respected.” Pet. App. 13a. Accordingly, on the

facts presented here, “[rJegulation by the NHTSA, coupled

with tort litigation by persons suffering physical injury, is far

superior to a suit by millions of uninjured buyers for dealing

with consumer products that are said to be failure-prone.” Jd.

1 1a (emphasis in original).

Plaintiffs sought en banc review. On June 5, 2002, the full

court denied their petition, with no judge voting for en banc

consideration.

REASONS FOR DENYING THE WRIT

I. THE SEVENTH CIRCUIT’S CHOICE-OF-LAW

RULING DOES NOT CONFLICT WITH THE LAW

OF OTHER CIRCUITS

A. The Seventh Circuit Properly Determined That

Because The Laws Of The Jurisdictions At Issue

Would Vary Concerning Plaintiffs’ Claims, Nation-

wide Class Certification Would Be Unmanageable

Plaintiffs do not seek review of the Seventh Circuit’s core

state-law holding that, under a proper interpretation of Indiana

choice-of-law rules, the laws of all 51 jurisdictions would

apply to the diverse claims of millions of tire and Explorer

owners around the nation.® Based upon the record before the

Seventh Circuit, reversal of class certification correctly

followed as a matter of course.

Even the district court had recognized that the laws of the

different jurisdictions at issue vary materially with respect to

plaintiffs’ warranty, unjust enrichment, and consumer fraud

° In any event, this Court generally does not review state law rulings. See,

e.g., The Wharf (Holdings) Ltd. v. United Int’l Holdings, Inc., 532 U.S.

588, 596 (2001); Ruhlin v. New York Life Ins. Co., 304 U.S. 202, 206

(1938).

8

claims. In a portion of its motion-to-dismiss ruling that was

incorporated into its class certification decision, the district

court recognized that “the relevant substantive laws of the

different states involved are sufficiently different to require a

choice of law analysis.” Jn re Bridgestone/Firestone, Inc.

Tires Prods. Liab. Litig., 155 F. Supp. 2d 1069, 1078 (S.D.

Ind. 2001). Plaintiffs’ proposal to apply Tennessee law to all

claims nationwide against Firestone, and the district court’s

willingness to accept it, show their basic recognition of the

variability of state laws. Indeed, the district court recognized

in its class certification ruling that applying Tennessee law

nationwide was critical to finding that the case would be

manageable, since that eliminated problems of “state law

variation that plague the pursuit of class certification in many

cases.” Pet. App. 67a n.45.

Nevertheless, in addition to attempting to justify the district

court’s choice-of-law ruling, plaintiffs also argued to the

Seventh Circigipsthat the laws relating to their claims were

uniform nationwide. Plaintiffs referred to charts purporting to

show similarities among state laws, but those charts in fact

illustrated that the law differs. Defendants also submitted 33

additional pages of charts showing that plaintiffs significantly

understated material variations among the laws of different

jurisdictions.’

’ Plaintiffs did not submit defendants’ state-law charts to this Court with

their petition. But even according to plaintiffs’ own charts, for example,

some states model their consumer fraud laws after the Federal Trade

Commission Act, 15 U.S.C. § 45(a)(1); others incorporate provisions

adopted by the Commission on Uniform State Laws; others use provisions

from both sources; still others enumerate their own deceptive acts and

practices. Pet. App. 139a-156a. Some states, like Colorado, Kansas,

South Dakota, Utah, and Wisconsin, require scienter but not individual

reliance. /d. 142a, 145a, 154a, 155a. Others, like Georgia, Indiana, Texas,

Vermont, and Wyoming, require individual reliance but not scienter (id.

143a, 145a, 154a, 155a, 156a), while in the District of Columbia, the

scienter standard is unknown (id. 143a). And Iowa’s consumer protection

statute does not permit private claims at all (id. 145a).

2 tee ae

BEST AVAILABLE COPY

9

The Seventh Circuit rejected plaintiffs’ argument that the

laws were substantially similar. Pet. App. 3a (“state laws

about theories such as those presented by our plaintiffs

differ”); id. 7a (“most states would not entertain the sort of

theory that plaintiffs press”); id. (“[s]tate consumer-protection

laws vary considerably, and courts must respect these

differences”). Thus, the Seventh Circuit concluded that

nationwide class treatment would be unmanageable. Citing

four of its own prior decisions, the Seventh Circuit explained

that, “such differences [in relevant state laws] have led us to

hold that other warranty, fraud, or products-liability suits may

not proceed as nationwide classes.” /d. 3a.

The Seventh Circuit certainly did not view this conclusion

as a Close call, and it was not. As shown below, the ruling is

soundly within the body of federal decisions finding that

differences in state laws generally preclude nationwide class

certification of such claims. In short, the Seventh Circuit’s

decision was not only correct, but also in the mainstream of

contemporary Rule 23 jurisprudence.

B. The “Conflicts” Cited By Plaintiffs Are Illusory

Plaintiffs’ assertion that the Seventh Circuit’s ruling

conflicts with the decisions of other courts of appeals is

wrong.

Plaintiffs’ charts show that state unjust enrichment laws also incorporate

divergent elements—ranging from proof of fraud, to failure of

consideration, to a showing that defendant’s conduct was “morally

wrong.” Pet. App. 91a n.7; 92a n.17; 94a n.33; 95a n.45. The charts also

show that states vary in their formulation of express warranty law: at least

ten states require proof of plaintiff's reliance on the express warranty,

while seventeen have not yet addressed the question. /d. 107a-109a. With

respect to implied warranty, the charts reveal that states are split on

whether the buyer and seller must be in privity: 18 states require privity,

32 do not. /d. 114a-115a. Louisiana, which has not adopted the UCC,

does not recognize breach of implied warranty claims. /d. 123a.

ETT er el

10

Plaintiffs latch onto a single sentence in the Seventh

Circuit’s opinion: “[{nJo class action is proper unless all

litigants are governed by the same legal rules.” Pet. 14.

Plaintiffs contend that the Seventh Circuit announced an

inflexible rule that unless the unitary law of a single

jurisdiction applies, class treatment is unavailable. But that is

neither the essence of the Seventh Circuit’s holding nor

essential to its conclusion that this case would be

unmanageable under the divergent laws of 51 different

jurisdictions. The Seventh Circuit was essentially reiterating

the longstanding view of federal courts that a proposed

litigation class will be unmanageable unless there is

substantial similarity among the laws applicable to all of the

claims at issue. If the laws implicated diverge materially, “the

class cannot satisfy the commonality and superiority

requirements of Fed. R. Civ. P. 23(a) [and] (b)(3).” Pet. App.

3a. The Seventh Circuit’s holding does not conflict with any

of the decisions cited by plaintiffs.

Fifth Circuit. Contrary to plaintifis’ argument (Pet. 16),

the Fifth Circuit’s decision in Castano v. American Tobacco

Co., 84 F.3d 734, 750 (Sth Cir. 1996), is entirely consistent

with the Seventh Circuit’s ruling. In the first place, the Fifth

Circuit decertified the class action and dismissed the class

allegations, relying in part upon differences in state law. See

id. at 742-44, 752. Second, the Castano court did not remand

to the district court for “the opportunity to conduct” a choice-

of-law analysis, as plaintiffs contend the Seventh Circuit

should have done here. Pet. 16. Instead, the Castano court

assessed how “variations in state law affect predominance and

superiority” (84 F.3d at 741), and based upon that review (id.

at 741-44 & nn.15, 16), determined that the trial court’s class

certification order should be reversed (id. at 749-50). The

Seventh Circuit approached this case in the same way. There

is no conflict.

DC Circuit. Nor does the Seventh Circuit’s approach

conflict with the DC Circuit’s decision in Walsh v. Ford

1]

Motor Co., 807 F.2d 1000 (D.C. Cir. 1986). Cf Pet. 17. The

Walsh court, like the Seventh Circuit here, reversed class

certification based in part upon choice-of-law problems. The

DC Circuit chose to remand to the district court for an analysis

of whether variations in state law “present insuperable

obstacles” to class treatment under Rule 23(b)(3), rather than

performing that analysis itself. 807 F.2d at 1016-17. But the

DC Circuit did not purport to hold that an appellate court

cannot perform that analysis; nor did the DC Circuit suggest

that an appellate court should ignore numerous prior decisions

consistent with its current ruling.* Here, the Seventh Circuit,

relying on its own recent decisions, chose to perform the

evaluation and decertify the class.

Ninth Circuit. Plaintiffs also err in contending (Pet. 16)

that the Seventh Circuit’s approach conflicts with the Ninth

Circuit’s decision in Hanlon v. Chrysler Corp., 150 F.3d 1011

(9th Cir. 1998). Because Hanlon was a settlement

certification, that court did not have to evaluate whether

choice-of-law problems would be insuperable at trial. See,

e.g., In re Ford Motor Co. Vehicle Paint Litig., 182 F.R.D.

214, 225 (E.D. La. 1998) (distinguishing Han/on as settlement

certification decision).? But even on its own terms, Hanlon

does not establish any conflict warranting certiorari review.

The Hanlon court stated that state-law variations “do not

necessarily preclude” Rule 23(b)(3) certification, but noted

that plaintiffs must “be prepared to demonstrate the

* On remand, the district court in Walsh ruled that differences in relevant

state warranty laws made class treatment impossible. Walsh v. Ford Motor

Co., 130 F.R.D. 260, 271-76 (D.D.C. 1990).

* By contrast, in a subsequent /itigation class decision, the Ninth Circuit

recognized that, “*[w]here the applicable law derives from the law of the

50 states, as opposed to a unitary federal cause of action, differences in

state law will ‘compound the [] disparities’ among class members from the

different states.”” Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180,

1189 (9th Cir.), as amended, 273 F.3d 1266 (9th Cir. 2001) (citations

omitted).

a ee EE

12

commonality of substantive law applicable to all class

members.” Hanlon, 150 F.3d at 1022. That approach is not

at odds with the Seventh Circuit’s decision below: the

Seventh Circuit assessed the relevant law and determined that’

there is no commonality with respect to the applicable «

consumer fraud and contract laws at issue here; it then ,

reversed nationwide class certification.

Third Circuit. Finally, plaintiffs contend that the Third

Circuit permits plaintiffs to proceed with nationwide class

certification under Rule 23(b)(3) when plaintiffs have made a

“creditable showing” that the laws can be grouped into

manageable patterns. Pet. 15. They cite Jn re School Asbestos

Litigation, 789 F.2d 996, 1010 (3d Cir. 1986), Georgine v.

Amchem Products, Inc., 83 F.3d 610, 627 (3d Cir. 1996), aff'd

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

(1997), and Jn re Prudential Insurance Co. of America Sales

Practices Litigation, 148 F.3d 283 (3d Cir. 1998). The

Seventh Circuit ruling here conflicts with none of these

decisions.

The Seventh Circuit’s ruling is completely consistent with

School Asbestos. Plaintiffs here failed to show that the

specific no-injury claims at issue could be separated into

manageable subsets, let alone make a “creditable showing . . .

that class certification does not present insuperable obstacles.”

School Asbestos, 789 F.2d at 1010. The Seventh Circuit

rejected plaintiffs’ argument that the laws relating to these

claims are substantially uniform, and instead found that

differences in state law would make class certification

unmanageable.'°

'° In any event, School Asbestos is weak authority for the proposition that

nationwide class actions may readily proceed under multiple states’ laws.

The Third Circuit harbored “doubt” about whether plaintiffs could separate

the law of the different states into four categories (789 F.2d at 1010), and

noted that “‘there will be a point at which the sheer magnitude of the task

of construing the various laws will compel a court not to certify a

multistate class or to reduce it to a more manageable number of states”

13

Plaintiffs’ reliance on Georgine is also misplaced; in fact,

that decision reversed a settlement class certification, ruling

that individualized choice-of-law issues implicated there

would make the “proliferation of disparate factual and legal

issues . .. compound[] exponentially.” 83 F.3d at 627. fhere

is no conflict with Georgine.

Plaintiffs also err in relying on Prudential, which reviewed

a settlement class certification.'' The Prudential court

recognized that “relatively minor differences in state law” may

be overcome by subclassing, and ruled that the appellant

objectors “ha[d] failed to demonstrate that the differences in

applicable state law were sufficient to foreclose a similar

approach.” 148 F.3d at 315. The Seventh Circuit here found

that the state-law differences were not minor, and accepted

defendants’ argument that the differences would create

insuperable difficulties at trial. Thus, as with School Asbestos

and Georgine, Prudential creates no conflict with the Seventh

Circuit’s ruling here.

(id. at 1010 n.11 (citation omitted)). But the Third Circuit was “reluctan|t]

to vacate” because of “the highly unusual nature of asbestos litigation.”

Id. at 1011. Judge Posner of the Seventh Circuit has since noted that the

choice-of-law analysis in School Asbestos was essentially sui generis,

given that “(t]he number of asbestos cases was so great as to exert a well-

nigh irresistible pressure to bend the normal rules.” Jn re Rhone-Poulenc

Rorer, 51 F.3d 1293, 1304 (7th Cir. 1995).

'' Notably, the Third Circuit subsequently reversed nationwide class

certification of a litigation class based in part upon “individual issues”

involving, inter alia, “state laws” that “would require individual

determinations.” Jn re LifeUSA Holding Inc., 242 F.3d 136, 148 (3d Cir.

2001). In doing so, the Third Circuit specifically distinguished Prudential

on the ground that Prudential involved “certification of a settlement class

action,” noting that “[a] settlement class, as distinct from a class action to

be tried, does not implicate trial management problems.” /d. at 146 & n.10

(emphasis in original); see also Newton v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 259 F.3d 154, 192 (3d Cir. 2001) (distinguishing Prudential

as settlement certification).

14

C. The Seventh Circuit’s Choice-Of-Law Ruling Is

Consistent With The Overwhelming Trend In

Contemporary Federal Class-Action Jurisprudence

At bottom, plaintiffs attempt to suggest that the Seventh

Circuit is somehow out of step with federal case law involving

proposed nationwide class certifications of product- or

consumer-based tort and contract claims. Nothing could be

further from the truth. Federal courts of appeals have

repeatedly rejected proposed nationwide class actions under

Rule 23(b)(3). In addition to cases like Castano, Walsh, and

Georgine, at least eleven other court of appeals decisions have

reversed multistate class certifications or affirmed denials of

nationwide class actions, citing choice-of-law concerns.’

This Court denied certiorari in three of those

cases—including the petition in Sikes v. American Telephone

& Telegraph Co., No. 02-124, just two months ago, which ~

challenged, inter alia, the Eleventh Circuit’s choice-of-law

ruling. See 123 S. Ct. 117 (Oct. 7, 2002).

The rationale supporting these court of appeals decisions is

consistent and compelling: applying the different laws of

multiple state jurisdictions to claims like those at issue here

ordinarily makes class treatment unmanageable and is at odds

with the superiority requirement of Rule 23(b)(3). A district

'2 In re LifeUSA, 242 F.3d at 147 (reversing nationwide class certification);

Sikes v. Teleline, Inc., 281 F.3d 1350, 1367 n.44 (11th Cir.) (same), cert.

denied sub nom. Sikes v. Am. Tel. & Tel. Co., 123 S. Ct. 117 (Oct. 7,

2002); Stirman v. Exxon Corp., 280 F.3d 554, 564-66 (Sth Cir. 2002)

(same); saacs v. Sprint Corp., 261 F.3d 679, 682 (7th Cir. 2001) (same);

Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 677 (7th Cir.) (same),

cert. denied, 122 S. Ct. 348 (2001); Spence v. Glock, 227 F.3d 308, 313 &

n.8 (Sth Cir. 2000) (same); Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014,

1024 (11th Cir. 1996) (same); Jn re Am. Med. Sys., 75 F.3d 1069, 1085

(6th Cir. 1996) (same); Jn re Rhone-Poulenc Rorer, 51 F.3d at 1300

(same). See also Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th

Cir. 2001), (affirming denial of nationwide class certification); Kirkpatrick

v. J.C. Bradford & Co., 827 F.2d 718, 725 (11th Cir. 1987) (same), cert.

denied, 485 U.S. 959 (1988).

|

15

court would have to apply these different laws at every stage

of the proceedings, “complicat[ing] matters exponentially.”

Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1024 (11th Cir.

1996). Thus, a trial court would have to learn the law relating

to multiple claims from as many as 51 different jurisdictions,

including all of the nuances of each legal regime, since even

“nuance can be important” when interpreting different states’

laws. In re Rhone-Poulenc Rorer, 51 F.3d 1293, 1300 (7th

Cir. 1995). “While [that] task may not be impossible, its

complexity certainly makes individual trials a more attractive

alternative and, ipso facto, renders class certification

treatment not superior.” Castano, 84 F.3d at 750 (emphasis

added).

No fair trial could realistically proceed under such

circumstances. Different standards of conduct would apply,

“compound[ing] the[ ] disparities” among class members from

different states. Amchem Prods., 521 U.S. at 624. And no

jury could possibly apply the laws of so many jurisdictions to

the different facts of hundreds of thousands of class members.

See, e.g., In re LifeUSA Holding Inc., 242 F.3d 136, 148 (3d

Cir. 2001) (reversing nationwide litigation class action

because, inter alia, any attempt to try plaintiffs’ claims under

varied state laws “would not only be inordinately time

consuming and difficult, but it would impermissibly transgress

upon the required standards of fairness and efficiency”).

The decisions of lower federal courts are consistent with

these appellate rulings. Thus, scores of federal district court

decisions have denied class certification based in whole or in

part upon the fact that the laws of numerous jurisdictions

would apply, making class treatment unmanageable.'? Under

> See, e.g., In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61, 67-68, 71

(S.D.N.Y. 2002); Jn re Trans Union Corp. Privacy Litig., No. 00 C 4729,

2002 WL 31028234, at *14 (N.D. Ill. Sept. 10, 2002); Lewallen v.

Medtronic USA, Inc., No. C 01-20395 RMW, 2002 WL 31300899, at *5

(N.D. Cal. Aug. 28, 2002); In re Citigroup, Inc., No. CIV.A.

16

10011912REK, 2001 WL 1682865, at *3 (D. Mass. Dec. 19, 2001);

Hammett v. Am. Bankers Ins. Co., 203 F.R.D. 690, 700-02 (S.D. Fla.

2001); Duncan v. N.W. Airlines, Inc., 203 F.R.D. 601, 613-14 (W.D.

Wash. 2001); Neely v. Ethicon, Inc., No. 1:00- CV-00569, 2001 WL

1090204, at *8-11, 15 (E.D. Tex. Aug. 15, 2001); Begley v. Acad. Life Ins.

Co., 200 F.R.D. 489, 497 (N.D. Ga. 2001); Oxford v. Williams Cos., 137

F. Supp. 2d 756, 764 (E.D. Tex. 2001); Jones v. Allercare, Inc., 203

F.R.D. 290, 307-08 & n.8 (N.D. Ohio 2001); Stipelcovich v. DirecTV, Inc.,

129 F. Supp. 2d 989, 995 (E.D. Tex. 2001); Shelley v. AmSouth Bank, No.

CIV.A.97-1170-RV-C, 2000 WL 1121778, at *8-10 (S.D. Ala. July 24,

2000), aff'd, 247 F.3d 250 (11th Cir. 2001); Lyon v. Caterpillar, Inc., 194

F.R.D. 206, 219-23 (E.D. Pa. 2000); Adams v. Kan. City Life Ins. Co., 192

F.R.D. 274, 277-78 (W.D. Mo. 2000); Hallaba v. Worldcom Network

Servs. Inc., 196 F.R.D. 630, 640, 645 (N.D. Okla. 2000); Velasquez v.

Crown Life Ins. Co., MDL-1096 No. CIV.A.M-97-064, 1999 WL

33305652, at *3-*7 (S.D. Tex. Aug. 10, 1999); Clay v. Am. Tobacco Co.,

188 F.R.D. 483, 497-98, 503 (S.D. Ill. 1999); Carpenter v. BMW of N.

Am., Inc., No. 99-CV-214, 1999 WL 415390, at *4, *8 (E.D. Pa. June 21,

1999); Chilton Water Auth. v. Shell Oil Co., No. CIV.A.98-T-1452-N,

1999 WL 1628000, at *7-*8 (M.D. Ala. May 21, 1999); Powers v. Gov't

Employees Ins. Co., 192 F.R.D. 313, 319-20 (S.D. Fla. 1998); Rothwell v.

Chubb Life Ins. Co. of Am., 191 F.R.D. 25, 33 n.7 (D.N.H. 1998); Dhamer

v. Bristol-Myers Squibb Co., 183 F.R.D. 520, 532-34 (N.D. Ill. 1998);

Weikel v. Tower Semiconductor Ltd., 183 F.R.D. 377, 402-03 (D.N.J.

1998); In re Jackson Nat'l Life Ins. Co. Premium Litig., 183 F.R.D. 217,

225 (W.D. Mich. 1998); Chin v. Chrysler Corp., 182 F.R.D. 448, 465

(D.N.J. 1998); Marascalco v. Int’l Computerized Orthokeratology Soc’y,

Inc., 181 F.R.D. 331, 339-41 (N.D. Miss. 1998); In re Ford Motor Co.

Vehicle Paint Litig., 182 F.R.D. at 222-26; Fisher v. Bristol-Myers Squibb

Co., 181 F.R.D. 365, 368 (N.D. Ill. 1998); Borskey v. Medtronics, No.

CIV.A.94-2302, 1998 WL 122602, at *3 (E.D. La. Mar. 18, 1998);

Peoples v. Am. Fid. Life Ins. Co., 176 F.R.D. 637, 646 (N.D. Fla. 1998);

In re Ford Motor Co. Bronco II Prod. Liab. Litig., 177 F.R.D. 360, 370-

72, 376 (E.D. La. 1997); Clement v. Am. Honda Fin. Corp., 176 F.R.D. 15,

23 & nn.10-12 (D. Conn. 1997); Dubose v. First Sec. Sav. Bank, 183

F.R.D. 583, 587-88 (M.D. Ala. 1997); In re Ford Motor Co. Ignition

Switch Prods. Liab. Litig., 174 F.R.D. 332, 347-52 (D.N.J. 1997); In re

Stucco Litig., 175 F.R.D. 210, 215-17 (E.D.N.C. 1997); Smith v. Brown &

Williamson Tobacco Corp., 174 F.R.D. 90, 94-96 (W.D. Mo. 1997);

Rohlfing v. Manor Care, Inc., 172 F.R.D. 330, 341-42 (N.D. Ill. 1997); Jn

re Masonite Corp. Hardboard Siding Prods. Liab. Litig., 170 F.R.D. 417,

422-27 (E.D. La. 1997); Harding v. Tambrands Inc., 165 F.R.D. 623, 629-

30 (D. Kan. 1996); Barbarin v. Gen. Motors Corp., No. CTV.A.84-0888,

17

these circumstances, it is unsurprising that one federal district

court judge could confidently report that “no federal court has

[ever] attempted to try a case under the laws of every state.”

Carpenter v. BMW of N. Am., Inc., No. 99-CV-214, 1999 WL

415390, at *6 n.11 (E.D. Pa. June 21, 1999) (quotations and

citations omitted).

In order to certify a nationwide litigation class here, the

district court ignored this consistent precedent, misread

Indiana choice-of-law rules, and applied a novel interpretation

of Tennessee law to all claims of all consumers nationwide

against Firestone. The Seventh Circuit’s ruling reversing that

erroneous and unprecedented decision was unexceptional, and

does not deserve review.

Il. PLAINTIFFS’ CHALLENGES TO THE

SEVENTH CIRCUIT’S SUPERIORITY

ANALYSIS ARE BASED UPON DISTORTIONS

OF THE SEVENTH CIRCUIT’S DECISION

Plaintiffs’ second, third, and fourth questions presented,

which challenge supposed aspects of the Seventh Circuit’s

superiority ruling, are based upon misinterpretations of the

Seventh Circuit’s decision. None of those questions

accurately reflects the decision below, and none warrants

review by this Court.

A. The Seventh Circuit Did Not “Usurp” State Law-

making Power In Violation Of Erie v. Tompkins Or

Settled Principles Of Federalism

Plaintiffs contend that the Seventh Circuit decision

reversing class certification somehow overruled or overrode

state law that would permit recovery by plaintiffs who have

suffered actual economic losses. Pet. 19-25. The court did no

such thing.

1993 WL 765821, at *3 (D.D.C. Sept. 22, 1993).

18

Plaintiffs’ argument is based upon a contrived reading of

the Seventh Circuit decision and a misleading characterization

of their claims. To begin with, plaintiffs strive mightily to

find an Erie issue in the Seventh Circuit’s rulings. There is

none. The Seventh Circuit ruled on the requirements for

application of Rule 23—a federal procedural rule—and in that

context assessed the variability of the laws of the 51

jurisdictions at issue.

Second, plaintiffs seek to cast their own allegations as

routine economic loss claims, asserting, for example, that no

state would deny a breach of warranty claim “because of the

absence of physical harm.” Pet. 21. But plaintiffs’ assertion

of such obvious points ignores the novei theory they seek to

press—a claim for damages where the product owned by the

plaintiff has functioned without incident, but a tiny fraction

(fewer than one percent) of products owned by others have

failed.

Thus, in the course of analyzing whether Tennessee law

could be applied to the propensity-to-fail, no-injury claims of

class members around the nation, the Seventh Circuit

acknowledged plaintiffs’ position that their claims are not

based on a product-liability theory. Pet. App. Sa-6a. The

Seventh Circuit also recognized plaintiffs’ assertions about

breach of warranty and fraud, but expressed doubts about the

strategy, observing that “most states would not entertain” a

theory under which a consumer whose product has performed

without incident, and who therefore got substantial

uninterrupted use from the product, can nevertheless sue for

damages. Jd. 7a. But the Seventh Circuit’s statement was

made in the context of evaluating plaintiffs’ claims to

determine which states’ laws would apply and whether those

laws varied. Jd. Thus, in observing the state of “no-injury/no-

manifestation” law, the Seventh Circuit did not purport to

supplant state law. Nor did it even predict state law in a

manner that implicates Erie. The court did not definitively

determine any particular state’s law relating to plaintiffs’

19

claims, and it certainly did not purport to overrule or

undermine the actions of any state court or legislature in

defining the substance of any particular state’s laws. It merely

cited to existing case law on the issue. Thus, when the actual

opinion is examined, plaintiffs’ rhetoric about the court having

“accreted to itself... the power to judge the wisdom of state

lawmakers in creating various causes of action” (Pet. 20) rings

hollow."

Furthermore, the Seventh Circuit’s observation about the

state of “no-injury/no-manifestation” law was absolutely

correct. The observation was based upon decisions from four

federal appellate courts and four state courts.'> And although

'* Plaintiffs take issue with Judge Easterbrook’s observations about the

economic effects of competing legal rules. E.g., Pet. 20, 23. While Judge

Easterbrook’s analysis (see Pet. App. 6a & n.1) is correct, it is also dictum,

and does not rise to something reviewable by this Court. See California

v. Rooney, 483 U.S. 307, 311-14 (1987) (per curiam); Herb v. Pitcairn,

324 U.S. 117, 126 (1945) (“[O]ur power is to correct wrong judgments,

not to revise opinions.”’).

'° Plaintiffs’ attempt to distinguish the case law cited by the Seventh

Circuit is unavailing. Plaintiffs do not even address two of the cases,

American Suzuki Motor Corp. v. Superior Court, 44 Cal. Rptr. 2d 526 (Ct.

App. 1995), and Yu v. IBM Corp., 732 N.E.2d 1173 (Ill. App. Ct. 2000).

Cf. Pet. App. 7a. In Briehl v. General Motors Corp., 172 F.3d 623 (8th

Cir. 1999), the Eighth Circuit ruled that “[w]here . . . a product performs

satisfactorily and never exhibits an alleged defect, no cause of action lies.”

Id. at 628 (emphasis added). Similarly, in Angus v. Shiley, Inc., 989 F.2d

142 (3d Cir. 1993), and in Willett v. Baxter Int’l, Inc., 929 F.2d 1094 (Sth

Cir. 1991), plaintiffs with properly functioning artificial heart valves

sought recovery because artificial heart valves implanted in other people

had failed. Both courts of appeals refused to recognize such claims.

Angus, 989 F.2d at 148; Willett, 929 F.2d at 1099-1100 & n.20. In

Carlson v. General Motors Corp., 883 F.2d 287 (4th Cir. 1989), plaintiffs

sought recovery under the implied warranty of merchantability for loss of

vehicle resale value due to mechanical failures of GM diesel engines in

other people’s automobiles. The Fourth Circuit called this theory “novel”

and affirmed the district court’s dismissal of those no-injury claims. /d. at

297-98. In Capital Holding Corp. v. Bailey, 873 S.W.2d 187 (Ky. 1994),

the Supreme Court of Kentucky rejected plaintiffs’ no-injury negligence

20

plaintiffs assert that “it is incontrovertible that states do

provide such causes of action for purchasers of defective

products who have not (or not yet) been physically injured”

(Pet. 23), that assertion, like the one quoted above, is off the

mark. The question is the variability of a “no-injury” claim;

on that, plaintiffs plainly did not persuade the Seventh Circuit,

and do not cite any case law in the petition showing that states

have uniformly adopted a propensity-to-fail approach like

plaintiffs assert here. In fact, they have not.'®

The Seventh Circuit did, in fact, conclude that the NHTSA

process was superior to the district court’s nationwide class

claims and held that “with a substance capable of causing cancer, just as

with any other defective product, no cause of action accrues until the

potentially harmful exposure actually ‘causes injury that produces loss or

damage.”” Id. at 192 (emphasis added) (citation omitted). And in Ford

Motor Co. v. Rice, 726 So. 2d 626, 631 (Ala. 1998), the Alabama Supreme

Court explicitly noted that “courts have generally concluded that claims

based upon allegations of inherent product ‘defects’ that have not caused

any tangible injury are not viable.” /d. at 629. Thus, each of the cases

cited by the Seventh Circuit supports the proposition that consumers who

bought and received tires that functioned without incident for thousands

of miles of actual use have no injury and no viable claim.

Indeed, numerous other cases not cited by the Seventh Circuit support

the same basic principle that people whose products function without

incident cannot recover on the theory that a small number of products

owned by other people have failed. See, e.g., In re Air Bag Prods. Liab.

Litig., 7 F. Supp. 2d 792, 806 & n.21 (E.D. La. 1998); Weaver v. Chrysler

Corp., 172 F.R.D. 96, 99-100 (S.D.N.Y. 1997); Feinstein v. Firestone Tire

& Rubber Co., 535 F. Supp. 595, 602 (S.D.N.Y. 1982).

'® Plaintiffs err in relying (Pet. 22) on Coughlin v. Wellcraft Marine Corp.,

240 F.3d 449, 452 (Sth Cir. 2001). That case did not purport to rule that

courts around the nation permit recovery by plaintiffs whose products have

performed without incident. Furthermore, Coughlin is inapposite: it dealt

with someone who thought he had bought a boat made of one material,

then found out that it was made of another. 240 F.3d at 451. By contrast,

plaintiffs here thought they were purchasing—and did in fact

purchase—tires that would function without incident for thousands of

miles.

en ow SS a

a

21

action, which was based upon announcing new law (by finding

that Tennessee and Michigan would permit “no-injury/no-

manifestation” claims to proceed), declaring that law to

control all of the claims of consumers throughout the land, and

then applying that law to facts that varied materially from

purchaser to purchaser.'’ In doing so, the Seventh Circuit

aligned itself with numerous other courts that have found the

NHTSA process to be superior to sprawling and

unmanageable class actions by those whose products have

performed without incident. See, e.g., Chin v. Chrysler Corp.,

182 F.R.D. 448, 464 (D.N.J. 1998) (“the administrative

remedy provided by NHTSA .. . is more appropriate than civil

litigation seeking equitable relief and money damages in a

federal court”); Jn re Ford Motor Co. Ignition Switch Prods.

Liab. Litig., 174 F.R.D. 332, 353 (D.N.J. 1997) (same).'8

Finally, plaintiffs’ assertion of some sort of conflict

between the Seventh Circuit’s ruling and Hanlon or School

Asbestos on this issue (Pet. 24) is frivolous. Neither Hanlon

nor School Asbestos addressed whether the NHTSA process is

superior to a nationwide class action lawsuit by those whose

products have performed without incident, and whose claims

would therefore be subject to dismissal under many, if not all,

states’ laws.

'’ Neither Tennessee nor Michigan case law authorized plaintiffs to

proceed with warranty-based claims, unjust enrichment claims, or

consumer fraud claims when the product at issue had performed without

incident. No Tennessee or Michigan court had recognized plaintiffs’

novel, propensity-to-fail theory of product defect. And plaintiffs had not

cited a single federal nationwide litigation class action of no-injury product

defect claims that would serve as a model for litigation.

'* Accord, e.g., Feinstein, 535 F. Supp. at 607 n.18; Frank v. Daimler/

Chrysler Corp., 741 N.Y.S.2d 9, 17 (App. Div. 2002); Ford Motor Co. v.

Magill, 698 So. 2d 1244, 1245 (Fla. Dist. Ct. App. 1997); Am. Suzuki

Motor Corp., 44 Cal. Rptr. 2d at 531-32.

22

B. The Seventh Circuit’s Treatment Of Plaintiffs’

Allegedly “Negative-Value” Claims Does Not

Conflict With The Law Of This Court Or Any

Circuit

Plaintiffs also err in suggesting that the Seventh Circuit

held that small-value claims weighed against class

certification. Pet. 25-29. Again, the Seventh Circuit did

nothing of the sort.

At the threshold, plaintiffs’ claims are not “negative-value”

claims. Attorneys’ fees provisions in most consumer fraud

statutes provide ample incentive to ensure that, if a claim has

merit, it will be pursued. See, e.g., Sanneman v. Chrysler

Corp., 191 F.R.D. 441, 456 (E.D. Pa. 2000) (ability to recover

attorneys’ fees belies the projected problems of a negative

value suit); /n re Ford Motor Co. Bronco II Prod. Liab. Litig.,

177 F.R.D. 360, 375 (E.D. La. 1997) (same).

The Seventh Circuit, however, did not address whether

plaintiffs’ claims were large- or small-value. It did not take

the small value of plaintiffs’ claims “as a basis for finding that

a class action would not be superior... .” Pet. 26 (emphasis

in original). Rather, the court recognized that the novel and

speculative nature of plaintiffs’ claims—the fact that

purchasers’ products “have so far performed properly,” and

whose owners seek compensation based only on “the risk of

failure, which may be reflected in diminished resale

value .. . and perhaps mental stress” (Pet. App. 2a) (emphasis

in original}—made class certification inferior to alternatives.

In deciding that plaintiffs’ claims could proceed, the district

court had broken new ground. The district court had no

precedent—from Tennessee, Michigan, or

otherwise—showing how a class action asserting such novel

claims could be tried. The district court was thus essentially

flying blind, and any assessment of manageability or

superiority was pure speculation.

23

As a result, the Seventh Circuit properly found that a class

action would not satisfy the superiority requirement of Rule

23(b)(3). That ruling is consistent with other courts that have

addressed the issue. “In the context of an immature” legal

theory, “any savings in judicial resources is speculative.”

Castano, 84 F.3d at 749; In re Masonite Corp. Hardboard

Siding Prods. Liab. Litig., 1}0 F.R.D. 417, 425 (E.D. La.

1997) (finding plaintiffs’ theory that siding is “prone to

fail . . . runs into Castano’s admonition not to certify novel

tort classes”); see also, e.g., Arch v. Am. Tobacco Co., 175

F.R.D. 469, 494-95 (E.D. Pa. 1997).

In any event, the supposed “negative value” of plaintiffs’

claims does not change the analysis under Rule 23(b)(3). The

rule does not distinguish between litigation involving large

and small claims, and courts “lack authority to substitute for

Rule 23’s certification criteria a standard never adopted . . . .”

Amchem, 521 U.S. at 622. None of the cases cited by the

plaintiffs (Pet. 25-27) held that either Rule 23 standards or

appellate scrutiny of any particular consumer class action

should be any less demanding because of the type or size of

the claims. And “the negative value of [a] case cannot justify

the headlong plunge into an unmanageable and interminable

litigation process ....” Barreras Ruiz v. Am. Tobacco Co.,

180 F.R.D. 194, 199 (D.P.R. 1998); Masonite, 170 F.R.D. at

426-27 (“the magnitude or kind of injury does not make these

claims, by virtue of their character, any the more suitable for

class management”). Thus, the courts of appeals have not

hesitated to reverse class certifications of supposed “negative-

value” claims. See, e.g., Spence v. Glock, 227 F.3d 308, 314-

16 (Sth Cir. 2000) (reversing class certification of numerous

small-value common-law claims); Andrews, 95 F.3d at 1023-

25 (reversing class certification of small-value RICO claims);

In re LifeUSA, 242 F.3d at 148 n.13 (rejecting “relatively

modest” common-law claims, noting that size of claims is

“insufficient to overcome the hurdles of predominance and

superiority”).

24

C. The Seventh Circuit’s Assessment Of The District

Court’s Misguided View Of Litigation “Efficiency”

Does Not Conflict With The Law Of Any Other

Court

Plaintiffs further err in suggesting that the Seventh Circuit

interpreted the word “efficient” in Rule 23(b)(3) in a manner

that conflicts with the law of other courts. Pet. 27-30. Again,

that argument rests on a fundamental misreading of the

Seventh Circuit’s opinion.

The Seventh Circuit recognized that the district court’s

proposed class action was a litigation nightmare, in which

novel theories would have to be assessed under a variety of

different legal standards and then applied to countless

individualized factual circumstances. The district court was

determined to proceed despite these problems. Pet. App. 1 la-

13a. This approach, according to the Seventh Circuit, valued

“central planning” over the ordered development of.the law by

those entities primarily charged with deciding the law of the

states—namely, the states themselves. /d. According to the

Seventh Circuit, “[d]ifferences across states may be costly for

courts and litigants alike, but they are a fundamental aspect of

our federal republic and must not be overridden in a quest to

clear the queue in court.” /d. 12a (citing BMW of N. Am., Inc.

v. Gore, 517 U.S. 559, 568-73 (1996)). That view is

unassailable, and does not conflict with the law of this Court

or any other jurisdiction. None of the cases cited by the

plaintiffs (Pet. 27-30) hold, or even suggest, that a court can

override substantive law or ignore issues of fairness in an

attempt to achieve “efficiency.”

Indeed, plaintiffs’ arguments ignore the text of Rule 23,

which requires that class certification be superior to other

mechanisms for the “fair and efficient” resolution of the

controversy. Rule 23(b)(3) (emphasis added). Just as the

district court had done, plaintiffs focus entirely on speed,

costs, and available resources. The Seventh Circuit’s analysis

vcmatioaes 0 tia «

25

confirms, as it should, that speed and cost savings alone

cannot justify class certification. Fairness is critical. That

analysis is consistent with decisions of this Court and other

federal courts of appeal. See Amchem Prods., 521 U.S. at 615;

Zinser, 253 F.3d at 1192; Broussard v. Meineke Discount

Muffler Shops, Inc., 155 F.3d 331, 343-44 (4th Cir. 1998); Jn

re Am. Med. Sys., 75 F.3d at 1085.

iil. THE SEVENTH CIRCUIT’S RULING THAT ~

INDIVIDUAL FACTUAL ISSUES PREDOM-

INATE PROVIDES FURTHER GROUNDS FOR

DENYING REVIEW

In addition to its choice-of-law and superiority rulings, the

Seventh Circuit held that individualized factual issues

predominate, preventing certification of even a statewide class

action. Pet. App. 9a-1 la. This additional holding makes this

case unsuitable for certiorari review, since the nationwide

class proposed by the plaintiffs cannot proceed in any event.

The district court held, and plaintiffs conceded, that all of

their claims depend upon showing that all of the tires in the

Tire Class are defective. Pet. 5. Proving defect would require

examining how the tires were designed, how they were used,

and how they performed over time. The record before the

district court and the Seventh Circuit demonstrated that the

millions of tires in the Tire Class differed in design, use, and

performance—confounding any classwide proof of defect.

The proposed Tire Class put at issue 60 million tires,

manufactured over more than ten years. Plaintiffs’ own

submission to the district court illustrated that the multiple

different tires in the Tire Class were manufactured to scores of

different design specifications. Unrefuted evidence showed

that those specifications created tires with different sizes,

different vehicle applications (i.e., SUVs versus pick-up

trucks), and different performance characteristics.

26

The NHTSA investigation underscored that tires in the Tire

Class differed materially in design. NHTSA investigated

these tires for eighteen months. Firestone recalled 14 million

of the 60 million investigated tires in August 2000. Upon

completion of its investigation, NHTSA determined that only

about 3.5 million additional tires should be replaced, and

Firestone promptly complied. NHTSA did not think the rest

of the tires—more than 40 million—required recall.

Furthermore, even if all the tires had been identical, the

evidence established that individual issues still would

predominate. The circumstances of each class member’s

purchase and use of the tires are unique. As but one example,

tire purchasers used their tires for differing periods of time and

differing mileage, with many or most receiving full usage for

the expected lifetime of their tires. Evidence of actual use

would be relevant to issues such as the existence (or absence)

of a defect, merchantability, and the existence (if any) of an

injury.

Against this backdrop, the Seventh Circuit properly

recognized that the district court had abused its discretion by

ignoring record evidence showing that there was no factual

predominance. Pet. App. 9a-1la. The Seventh Circuit noted

the legal significance of only a limited number of the tires

being recalled (id. 10a), the fact that most tires were not

designed for Explorers (id.), and the different design

specifications put at issue (id.). The district court had not even

attempted to reconcile its predominance ruling with those

facts—let alone the rest of the record. Nor had the district

court explained how the claims relating to the 60 million

different tires could be fairly or manageably tried in a single,

all-or-nothing trial.

For these reasons, the Seventh Circuit properly found that

class certification—even on a_ statewide basis—was

impossible. /d. 9a. This renders the questions presented in the

petition ultimately superfluous: wholly apart from the Seventh

0 A PE 8 BT SO: LOE

IAA oe I Nl ea ST Bre EE, Se

27

Circuit’s manageability and superiority rulings, this case could

not proceed as a class action because individual issues of fact

predominate. Thus, if this Court were inclined to review

questions like those presented in plaintiffs’ petition, it should

await a more appropriate case for doing so.

28

CONCLUSION

The petition for a writ of certiorari should be denied.

Of Counsel:

MARK J.R. MERKLE

KRIEG DEVAULT, LLP

One Indiana Square

Suite 2800

Indianapolis, Indiana 46204

(317) 636-4341

Of Counsel:

THOMAS G. STAYTON

ELLEN E. BOSHKOFF

BAKER & DANIELS

300 North Meridian Street

Suite 2700

Indianapolis, Indiana 46204

(317) 237-0300

Dated: December 6, 2002

Respectfully submitted,

HUGH R. WHITING

JONES, DAY, REAVIS & POGUE

JP Morgan Chase Tower

600 Travis Street, Suite 6500

Houston, Texas 77002

(832) 239-3939

EDWARD K.M. BILICH

Counsel of Record

MARK C. CAWLEY

JONES, DAY, REAVIS & POGUE

51 Louisiana Avenue, N.W.

Washington, D.C. 20001

(202) 879-3939

Counsel for Respondent

Bridgestone/Firestone North

American Tire, L.L.C. (successor

to Bridgestone/Firestone, Inc.)

THOMAS S. KILBANE

ROBIN G. WEAVER

JOSEPH C. WEINSTEIN

SQUIRE, SANDERS & DEMPSEY,

LLP

4900 Key Tower

127 Public Square

Cleveland, Ohio 44114

(216) 479-8500

Counsel for Respondent

Bridgestone Corporation