Motion to Dismiss or Affirm — Gustafson v. Bridgestone/Firestone, Inc.

NO. 02-530

IN THE

Supreme Court of the Gnited States

GARY L. GUSTAFSON, et al..

Petitu ners,

>.

BRIDGESTONE’ FIRESTONE, INC.. et al..

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Seventh Circuit

RESPONDENT FORD MOTOR COMPANY'S

BRIEF IN OPPOSITION

JOHN H. BEISNER

(Counsel of Record)

STEPHEN J. HARBURG

NEIL K. GILMAN

JONATHAN D. HACKER

MORGEN A. SULLIVAN

O’MELVENY & MYERS LLP

555 13th St., N.W.

Washington, D.C. 20015

(202) 383-5300

Attorneys for Respondent

IDR ERAS ESI IME POE APN LEE aia

QUESTIONS PRESENTED

The court of appeals held that this proposed nationwide

class action fails to satisfy the commonality and manageabu-

ity requirements of Rule 23 because the matenally different

laws of 51 jurisdictions would apply to the claims of putative

class members, and because the many different configura-

tions of tires and vehicles at issue precluded uniform, class-

wide treatment of all tires and vehicles. The questions pre-

sented are:

1. Whether certiorari should be granted to review the

court of appeals’ determination that, under Indiana choice-

of-law rules, petitioners’ tort and contract claims would be

governed by the laws of the 51 junsdictions in which the

claimants’ vehicles were purchased and used, rather than by

the laws of the manufacturers’ home states.

2. Whether certioran should be granted where petition-

ers fail to seek review of the court of appeals’ independently

dispositive holding that vanations among the tires and vehi-

cles at issue preclude the finding of factual commonality

necessary to adjudicate petitioners’ product defect claims on

a classwide basis.

11

RULE 29.6 DISCLOSURE

Respondent Ford Motor Company has no parent corpora-

tion and no publicly held company owns 10% or more of its

stock.

il

TABLE OF CONTENTS

Page

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REASONS FOR DENYING THE PETITION.................... 12

I. THE COURT OF APPEALS’ LEGAL

COMMONALITY DETERMINATION

DOES NOT CONFLICT WITH DECISIONS

RM MORE vs clccicniscsvechervensenseniivesinesrssiesvanes 13

Il. THE COURT OF APPEALS’ OBSERVATION

THAT REGULATION BY NHTSA IS A

SUPERIOR METHOD OF ADJUDICATING

DISSIMILAR CLAIMS DID NOT “USURP

STATES’ LAWMAKING POWER?” ....0oo.occc LS

Il. THE COURT OF APPEALS DID NOT RELY

ON THE “SMALL VALUE” OF INDIVIDUAL

CLAIMS TO DENY CERTIFICATION ....00..0..00c00000. 20

IV. THE COURT OF APPEALS’ APPROACH TO

EFFICIENCY IS CONSISTENT WITH RULE 23

AND THE DECISIONS OF OTHER CIRCUIT

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TABLE OF CONTENTS

(continued)

Page

APPENDIX A: Distnct Court’s Order Granting in

Part and Denying in Part the Motion to Dismiss

the Master Complaint in /n re Bridgestone

Firestone, Inc. Tires Products Liability Litiga-

tion, No. IP-00-9373-C-B/S (S.D. Ind.

NN oe Tg: MID atacas cuscnnccinuagidicse ccckesakatiohaniants isiacsabasepees la

APPENDIX B: Defendants’ State Law Vanations

Chart submitted to the Distnct Court and Seventh

neal age a ene ue eS Re a

Vv

TABLE OF AUTHORITIES

Page(s)

CASES

Allison v. Citgo Petroleum,

BO PE UA CO GE. BW ic nsccannisceisnssarsievnntnnauienntes 21

Amchem Products, Inc. v. Windsor,

FEk Ra PE CE cienenericeemcneniicnnce ont Passim

American Suzuki Motor Corp. v. Superior Court,

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

Andrews v. AT&T Co.,

Po Fe BOE CEI Ce. TI aries 14

Bates v. Ford Motor Co.,

Pe Fe Be Ce Gell. Re cceinaucemeantinnn 14,15

Black v. Cutter Labs.,

Fol UB. 0ne CERO csiccccceiniataaenoaae 12

Broussard v. Meineke Discount Muffler Shops, Inc.,

ESF FSG Dak CO Ae CO Rencecctasteeisciennteienanmass 25

California v. Rooney,

RED Wath. SUF CUT ) tcintssteciencinctsionsmanaecanaeeaen 12

Castano v. American Tobacco Co.,

SSF .2G 150 CI GS. Te iieteccnecncuewne 15, 25

Chin v. Chrysler Corp..,

182 F.R.D. 448 (D.N.J. 1998)....000000000... ssicstienettaeeneeian 18

Eisen v. Carlisle & Jacquelin,

GET WB. FS CE scnscrecass ecicimennsnsccnemeen 21

Erie R.R. v. Tompkins,

Fe a CIE sda ciiiscscccsnvesconsoancnnicneheeeeanonneee 18

Frank v. DaimlerChrysler Corp.,

141 A. ¥ 3.20 9 CARD. TOUV. BUR) vinccsncsesccctaseccuccsstcncessbs 19

Georgine v. Amchem Prods.,

48 ew Pik oe ee). eee in. 14

v1

TABLE OF AUTHORITIES

(continued)

Page(s)

Green v. General Motors Corp.,

No. L-4643-99, 2002 WL 1575589 (N.J.

Seer. Ch. FO, By Pied cvisiccescencesecnenttsanieeataiininaien 19

Hanlon v. Chrysler Corp.,

ASO FFG BOTT CR Ae, Se ic che srececcnssccccnaehatntalestnenen 16

Herb vy. Pitcairn,

SEB UG. EET CG ccccsenictcccnmionnaee 12

In re Air Bag Products Liability Litigation,

FOF. Saag, 26 TSS CREP. A Se eceeneiniircieneelctoens 19

In re American Medical Systems,

TS F.S0 TOGD (GG CW. Te acviageinsiscnnctcatnesenintereceans 14, 25

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

Liab. Litig.

155 F. Supp. 2d 1069 (S.D. Ind. 2001)... ee 3

In re Bronco II Prod. Liab. Litig.,

177 FEB. OCC TP iicicnnnnee 14,15

In re LifeUSA Holding Inc.,

24S F.36 156 GEC, Be ii ninniintas 14, 17, 26

In re Mexico Money Transfer Litigation,

267 F.36 743 CPR CA. Be bkinnicaninmenennnen 13, 16

In re Prudential Ins. Co.,

148 F.36 26s (FG Gs Bi iitirecectnccnaann 16, 21

In re Rhone-Poulenc Rorer, Inc.,

RR BY re, Le A). |) Reeser 13, 19,20

In re School Asbestos Litig.,

TO? F.20 990 (OGG, Peterman 17

Jackson v. Motel 6 Multipurpose, Inc.,

130 FS Die Ci TG Ge FF ioccesicstvnaccnctninnsomennenian 22

Jarman v. United Indus. Corp.,

98 F. Supp. 2d 757 (S.D. Miss. 2000).............eeeseseeeee 19

Vil

TABLE OF AUTHORITIES

(continued)

Judge v. Pilot Oil Corp.,

205 F.3d 335 (7th Cir. 2000)................-ccccesseees

Klaxon Co. v. Stentor Electrical

Manufacturing Co.,

SES Wade SOT CIPFA) cceeevcenscrvevvnvsvccncennssovevesoseses

Land v. Yamaha Motor Corp.,

ZT2 F.36 S14 (7a Cie. ZOO1 ).....cveversovesccecseovesses

Lee v. General Motors Corp.,

950 F. Supp. 170 (S.D. Miss. 1996).................

Newton v. Merrill Lynch, Pierce, Fenner &

Smith, Inc.,

259 F.3d 154 (3d Cir. 2001).............cceeeeeeeereeeee

Nichols v. General Motors Corp.,

No. 99-C-566, 1999 WL 33292839 (N.H.

Super. Ct. Dec. 13, 1999)..........ccccsrrrsersererssees

Nucor Corp. v. Aceros y Maquilas de

Occidente,

2B F.36 S72 CI Cat. UGE) .ccccceevsacccvrcccovoseneees

Phillips Petroleum Co. v. Shutts,

BT2Z US. THT CUBS) oovcceercnscerevevesosscsesensvnssvsenses

Ruhlin v. New York Life Insurance Co.,

FOR U.S. JAZ C1GSE) acveeservcossscoccossoscovecscvcevsoveces

Secon Service Systems, Inc. v. St. Joseph Bank

& Trust Co.,

855 F.2d 406 (7th Cir. 1988).........cccceeeeeeeeees

Sikes v. Teleline, Inc.,

281 F.3d 1350 (11th Cir. 2002)............ccceeeeeee

Spence v. Glock, GES.m.b.H.,

227 F.3d 308 (Sth Cir. 2000).............:::ccceeeeeeees

Spuhl v. Shiley, Inc.,

795 S.W.2d 573 (Mo. Ct. App. 1990)..............

sapanlidinkies 16

tadeaeiabinaens 19

leadiieinaeit 24

pnbivebonntete 12

TABLE OF AUTHORITIES

(continued)

Stirman v. Exxon Corp.,

Page(s)

te ee Ce ls Be Prcrcaeicecccesciesntninensinaasenenetnan _

Szabo v. Bridgeport Machines, Inc.,

249 F.3d 672 ( 7th Cir. 2001)

United States v. Johnson

5 . To i | . | 5s

268 U.S 0 (1925)

Walsh v. Ford Motor Co

807 F.2d 1000 (D.C. Cir. 1986)

rr - , 7 r , ,, ; ,

Wharf (Holdings) Ltd. v. United Internationai

Holdings. Inc

$32 U.S. 588 (2001)

Wisniewski v. United States

353 US. 901 (1957)

{

732 N.E.2d 1173 (Ill. App. Ct. 2000)

OTHER AUTHORITIES

rrc ~- *“\2770 ents

.

49 U.S.C. 99 30118-30

vo ‘ r - _*

Fed. R. Civ. P. 23

Press Release, NHTSA, “NHTSA Denies

Firestone Request for Ford Explorer

74 5 5

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investigatk hd Feb _——_—~ - ( a)

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INTRODUCTION

The petition for certiorari in this case is entirely without

merit. Petitioners all but ignore the essence of the decision

below: a straightforward, uncontroversial application of the

choice-of-law rules of Indiana. The court’s core holding

turns entirely on that purely state-law issue, and nothing

about it warrants review by this Court.

The choice-of-law issue arose when petitioners filed in

the U.S. District Court for the Southern District of Indiana a

master complaint seeking certification of two nationwide

classes of purchasers of Ford vehicles and Bndge-

stone Firestone tires. The complaint alleged tort and contract

claims for economic injuries suffered “at the instant” peti-

tioners purchased their vehicles and tires in the 50 states and

the District of Columbia. Pet. 4. That presented a serious

problem for class certification. Under Indiana’s unexcep-

tional choice-of-law rules, petitioners’ consumer purchase

claims would be governed by the law of the place of pur-

chase — here, by the laws of every United States jurisdiction.

And because the relevant tort and contract laws vary substan-

tially across jurisdictions, it was evident that petitioners’

could not satisfy the requirements of Rule 23(a) and Rule

23(b)(3) that the claims in the class present predominately

common legal issues.

Petitioners attempted to argue that the tort and contract

laws of all 51 jurisdictions are sufficiently similar to satisfy

Rule 23’s legal commonality requirements. The district

court rejected that argument. But petitioners also suggested

an alternative route to commonality: a bizarre reading of

Indiana choice-of-law rules that would make the law of the

manufacturer’s home jurisdiction applicable to any tort or

contract claim arising out of a consumer purchase, such that,

for example, Korean law would govern the sale of a Hyundai

in Indiana. Surprisingly, the district court accepted that read-

ing, and held that the law of each respondent’s home state

Dama

2

would govern every claim against each respondent, regard-

less where the vehicle or tire was purchased.

On expedited appeal, a unanimous Seventh Circuit panel

corrected that obvious error, holding that under Indiana

choice-of-law rules, the laws of the state in which a product

was purchased must be applied to tort and contract claims

arising out of the purchase. Thus the laws of not just one

jurisdiction, but of all 51, would apply to the class claims

against each respondent. Because the Seventh Circuit agreed

with the district court that those different sets of laws varied

too much to allow for nationwide class treatment of petition-

ers’ claims, it held that the class certification order was erro-

neous.

To forestall further litigation in the district court and an-

other appeal over whether 51 statewide classes would be

proper, the court of appeals went on to address respondents’

other objections to the class certification order. The court of

appeals agreed with respondents that factual variations

among the claims of individual class members — including

differences in the configurations of the individual vehicles

and tires at issue, differences in usage patterns, and differ-

ences in purchase circumstances — rendered the claims insuf-

ficiently common in their factual dimensions to justify

treatment on a classwide basis, even if common questions of

law had predominated. Finally, the court of appeals cau-

tioned courts not to repeat the district court’s error of dis-

pensing with Rule 23’s important legal and factual common-

ality requirements merely to avoid hundreds of smaller, indi-

vidual claimant cases in multiple jurisdictions.

The decision of the court of appeals could hardly be

more fact-bound or state-law intensive. To the extent that

the decision below rests on federal-law premises, those

premises are entirely uncontroversial: all circuits agree with

both courts below that nationwide class actions must be

premised on laws that do not differ materially, and all cir-

——— eC

3

cuits agree with the court of appeals that the fundamental

requirements of Rule 23 cannot be disregarded simply to

avoid multiple trials on small-value claims. Certiorari

should be denied.

OPINIONS BELOW

The petition’s recitation of the relevant opinions below

omits mention of the district court opinion setting forth the

choice-of-law ruling that is the focus of the decision below.

Nor is the opinion attached as an appendix to the petition.

That opinion is reported at 155 F. Supp. 2d 1069 (S.D. Ind.

2001), and attached as an appendix (“App. A’’) hereto.

STATEMENT OF THE CASE

1. This action began with an investigation by the Na-

tional Highway Traffic Safety Administration (“NHTSA”) in

May 2000 into the safety of certain tires manufactured by

respondent Bridgestone/Firestone, Inc. (“Firestone”). Within

weeks after Firestone announced a recall of some of the in-

vestigated tires in August of that year, over 100 purported

class actions were filed against Firestone in state and federal

courts around the country alleging that both recalled and un-

recalled tires were defective. These lawsuits soon included

Ford Motor Company (“Ford”) as a defendant, and the com-

plaints added a distinct set of allegations that all Ford Ex-

plorers (the primary vehicle model on which the recalled

tires were installed) were defective because they were unrea-

sonably prone to rollover accidents.’ These cases generally

' In May 2001, Ford launched a voluntary program to replace, free of

charge, all of the remaining investigated tires that were sold as original

equipment on Explorers and other Ford vehicles. Firestone agreed to

replace another 3.5 million tires in October 2001 after NHTSA issued a

preliminary defect determination regarding those tires. Several months

ago, NHTSA considered and rejected the types of allegations asserted by

plaintiffs against Ford. After an “extensive analysis of agency data and

information provided by Ford and Firestone,” NHTSA conclusively re-

jected the claim that “Explorers are defectively designed because they

4

excluded any individuals who had actually suffered personal

injury allegedly attributable to the alleged defects. Instead,

the theory of the lawsuits was that product purchasers who

had not suffered any personal injury, or even any manifesta-

tion of the asserted product defect (i.e., a tread separation or

rollover event), had still suffered an economic injury in the

form of “overpayment” for their products. See Pet. 4.

2. All of the actions pending in federal courts were

transferred to the Southern District of Indiana under the

multi-district litigation (“MDL”) statute, 28 U.S.C. § 1407.7

In January 2001, petitioners filed a master complaint in the

district court combining the allegations of the class actions

consolidated there. The master complaint listed 235 named

plaintiffs suing on behalf of themselves and multiple putative

classes and subclasses and asserted 14 distinct legal claims

under state and federal law premised upon various allega-

tions of product defect, misrepresentation, and omission.

a. Respondents moved to dismiss the master complaint.

To rule on that motion, the district court was required to de-

termine what law to apply to claims arising out of purchases

in many different state jurisdictions. Applying the settled

rule that “before ‘entangling itself in messy issues of con-

flicts of laws a court ought to satisfy itself that there actually

is a difference between the relevant laws of the different

states,’’” App. 4a (quoting Jean v. Dugan, 20 F.3d 255, 260

(7th Cir. 1994)), the court held that “the relevant substantive

laws . . . are sufficiently different to require a choice of law

analysis,” id.

To conduct that analysis, the court purported to follow

have an inadequate margin of control for an average driver following a

tread separation incident.” Press Release, NHTSA, “NHTSA Denies

Firestone Request for Ford Explorer Investigation” (Feb. 12, 2002).

* Several putative class actions asserting similar claims on behalf of

similar classes remain pending in various state courts.

ee

5

the choice-of-law rules of Indiana, the forum state for the

master complaint. Jd. at 5a; see Klaxon Co. v. Stentor Elec.

Mfg. Co., 313 U.S. 487, 496-97 (1941). Indiana courts apply

a version of the familiar /ex loci delicti test to determine the

law applicable to tort claims: the law of the “place of injury”

governs, unless that place is “insignificant” to the tort. Pet.

App. 4a (citing Hubbard Mfg. Co. v. Greeson, 515 N.E.2d

1071 (Ind. 1987)); see Land v. Yamaha Motor Corp., 272

F.3d 514, 516 (7th Cir. 2001); Judge v. Pilot Oil Corp., 205

F.3d 335, 336-37 (7th Cir. 2000). Even though the place of

injury for petitioners’ tort claims was the place where the

product was purchased — which is also where most purchas-

ers resided, where price negotiations would have occurred,

where point-of-sale advertising would have been placed, and

where the product was to be used — the district court held

that the place of purchase was “insignificant” to the pur-

chase-based injury asserted by petitioners. App. 9a. Decid-

ing that the “conduct of Defendants as manufacturers” was

the only issue significant to petitioners’ claims, the court

held that the laws of each respondent’s home state would

apply to all tort claims, regardless of where the product was

purchased and regardless of how that state’s law would treat

the purchase transaction. /d. at 12a-13a. Applying Michigan

law to the claims against Ford and Tennessee law to the

claims against Firestone, the court dismissed most, but not

all, of the tort claims.

Indiana courts apply the RESTATEMENT (SECOND) OF

CONFLICT OF LAWS choice-of-law rule for contract claims:

the law that governs is the law of the state with the most “in-

timate contacts” to “the transaction,” as determined by such

factors as the place of contracting, negotiating, and perforn-

ance, location of the transaction’s subject matter, and loca-

tions of the parties. Nucor Corp. v. Aceros y Maqguilas de

Occidente, 28 F.3d 572, 581-83 (7th Cir. 1994) (citing W.H.

Barber Co. v. Hughes, 63 N.E.2d 417, 423 (Ind. 1945)); see

Secon Serv. Sys., Inc. v. St. Joseph Bank & Trust Co., 855

6

F.2d 406, 412-13 (7th Cir. 1988). Even though essentially

all those factors directly point to the law of the place of pur-

chase, the district court again ruled that the laws of each re-

spondent’s home state would apply to the contact claims

against it. App. 15a-16a. Applying those laws, the court de-

clined to dismiss any of the contract claims.

b. Several months later, the court issued an order on

class certification. That order certified three nationwide

breach-of-warranty/fraud classes. One class consisted of all

current U.S. residents who owned or leased variously con-

figured Ford Explorer models during the period 1991 to

2000. A second class consisted of all current U.S. residents

who during the same period owned or leased vehicles of any

kind equipped with a broad array of Firestone tires. A third,

overlapping subclass consisted of all current U.S. residents

who owned or leased Ford Explorers equipped with any of a

wide variety of Firestone tires. See Pet. App. 73a-74a. The

court rushed out its order “in aid of its jurisdiction,” in an

explicit effort to preclude a South Carolina state court from

certifying a class of “South Carolina owners of Explorers

equipped with Firestone tires.” Jd. at 72a n.1.

Over a month Jater, the court issued an opinion explain-

ing its order. Jd. at 14a. The court began its opinion by ob-

serving that the “choice of law determination” set forth in its

earlier partial dismissal order “is an important element of the

class certification analysis,” and incorporated it by reference

into the class certification opinion. /d. at 16a. Recognizing

that the Seventh Circuit would have the opportunity to re-

view the choice-of-law determination “as part of an appeal of

the class certification ruling,” the court rejected a request by

Firestone for certification of an immediate interlocutory ap-

peal of the choice-of-law ruling. /d.

The court made clear its view that Rule 23 was satisfied

only because of its choice-of-law conclusion. Having al-

ready determined that the relevant laws of the various states

>

differ materially, App. 4a, the district court acknowledged

that “common issues of law predominate” only because “all

class members claims will be governed by the laws of

Michigan and Tennessee,” Pet. App. 40a n.17. “Due to our

earlier choice of law decision,” the court added, “this case

does not involve the numerous subclasses on the basis of

state law variation that plague the pursuit of class certifica-

tion in many cases.” Jd. at 67a n.45. Applying one state’s

law to every claim against each respondent, the court deter-

mined that common issues of law predominated enough to

satisfy Rule 23. Jd. at 40a-60a.

The court reached the same conclusion with respect to

common issues of fact. The court recognized that because

petitioners’ theory of economic injury in their claims against

Ford turned entirely on whether Explorers are defective, see

Pet. App. 40a (stating that petitioners’ theory requires them

to “prove that the products Defendants sold were defective

and that the prices they paid for their products were therefore

too high’), the key question on factual commonality was

whether petitioners had advanced a defect theory that they

could prove on evidence “applicable to all Explorers,” id. at

42a. The one theory advanced by petitioners was that the so-

called “Static Stability Factor” (“SSF’’) for Explorers is too

low, while their “oversteer” is too high, creating an unrea-

sonable propensity to roll over. Ford submitted evidence,

wholly unrebutted by petitioners, establishing that SSF and

oversteer vary substantially among the 44 different Explorer

configurations at issue. Defs.’ 7th Cir. Jt. App. 435-36, 461-

80. The court nevertheless concluded that petitioners could

prove an SSF/oversteer rollover defect on evidence common

to every one of the Explorer configurations, pointing to evi-

dence that Ford itself had allegedly treated Explorers simi-

larly for certain purposes, Pet. App. at 42a-43a, though none

of that evidence showed that Ford treated all Explorers the

same with respect to their SSF or oversteer characteristics.

8

Having satisfied itself of legal and factual commonality,

the distnct court concluded by addressing the question of

“supenority’ under Rule 23(b)(3). The court’s analysis was

guided by the firm belief that centralization of all claims in

one forum would be the most efficient approach:

In our view, class certification is the most appropnate

means of continuing this litigation. As Plaintiffs note,

without class certification, if individual Plaintiffs wish

to continue pursuing their claims, either we must try

hundreds of claims or we must remand them to the

transferor courts who will then be faced with the need

to try hundreds of cases.... Such a result would be

immensely burdensome to the courts, parties, and wit-

nesses. This would also create the nsk of inconsistent

results. And while these multitudinous lawsuits are

clogging the courts, other litigants must wait and wait

and wait.

Pet. App. 66a. The court concluded its opinion by holding

that NHTSA’s administrative mechanisms were not superior

to centralization of all claims in the MDL proceeding, on the

palpably incorrect ground that NHTSA has insufficient re-

medial power to resolve economic losses arising from al-

leged vehicle defects. Jd. at 70a.°

3. Respondents petitioned for interlocutory review of the

certification order under Rule 23(f). The Seventh Circuit

granted review and promptly reversed.

a. The first ground for reversal was that the district court

had erred as a matter of Indiana law in applying the law of

> NHTSA is the federal agency specifically charged by Congress

with identifying and remedying vehicle defects. If NHTSA finds a defect

in a vehicle, NHTSA can force the manufacturer to repair the defect

(eliminating any economic loss), to replace the vehicle with one that is

defect-free (eliminating any economic loss), or to buy back the vehicle

(eliminating any economic loss). See 49 U.S.C. §§ 30118-30120.

Tweed

9

respondents’ principal place of business, rather than the law

of the place of purchase, to all the class claims. The court,

per Judge Easterbrook, concluded that “(nJeither Indiana nor

any other state has applied a uniform place-of-the-

defendant’s-headquarters rule to products liability cases.”

Pet. App. 5a. Applying Indiana contract and consumer pro-

tection precedents holding that the sale of products within

Indiana is governed by Indiana law (as opposed to the law of

seller’s home state), the court concluded that Indiana’s

“choice-of-law rule selects the 50 states and multiple ternto-

ries where the buyers live, and not the place of the sellers’

headquarters, for these suits.” /d. at 8a.*

That conclusion left the question whether the 51 different

state laws were sufficiently dissimilar that certification was

precluded under Rule 23’s legal commonality and manage-

ability standards. The Seventh Circuit identified an analyti-

cal flaw in petitioners’ “economic-injury-only” theory, id. at

6a & n.l, and observed that, because of the flaw, “most

states would not entertain the sort of theory that plaintiffs

press,” id. at 7a (citing cases rejecting theory under laws of

ten different states). The court did not address the merits of

this theory under the laws of every state; rather, it was

enough for purposes of its Rule 23 holding that “state laws

about theories such as those presented by our plaintiffs dif-

fer,” id. at 3a, as the district court had expressly held. Fol-

lowing numerous precedents rejecting the certification of

other nationwide classes on the basis of state-law variations

in the warranty and fraud claims asserted, id., the court of

appeals held that a proper application of Indiana choice-of-

law rules compelled reversal of the class certification order,

id. at 9a (“Because these claims must be adjudicated under

* Were it otherwise, the court observed, Indiana would have to apply

Korean law to the sale of a Hyundai car in Indiana, and French law to the

sale of a Michelin tire in Indiana, an inconceivable result. Pet. App. 7a-

8a.

10

the law of so many junsdictions, a single nationwide class is

not manageable.”’).

b. After correcting the district court’s error of state law,

the court turned to issues of factual commonality. /d. at 9a.

Pointing to undisputed vanations in the configurations, at-

tnbutes, and purchase and use circumstances of the various

vehicles and tires, id. at 9a-10a, the court held that those dif-

ferences, as well as others too numerous too mention, “pre-

clude any finding ‘that the questions of law or fact common

to the members of the class predominate over any questions

affecting only individual members, and that a class action is

superior to other available methods for the fair and efficient

adjudication of the controversy,” id. at 10a-lla (quoting

Fed. R. Civ. P. 23(b)(3)). Given such a lack of legal or fac-

tual commonality sufficient to satisfy Rule 23, the court con-

cluded that “[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. at

lla.

c. The court of appeals concluded with three paragraphs

responding to the district court’s assertion that centralization

of all claims in a single forum, for all-or-nothing resolution

by a single lay jury, is more efficient than resolution through

multiple, smaller trials or through NHTSA’s administrative

procedures. According to the court of appeals, the district

court was wrong to believe that “efficiency” required the

litigation to be centralized despite significant legal and fac-

tual variations among the claims. It is the “model of the cen-

tral planner,” the court observed, to ignore local legal and

factual vanation in favor of a one-size-fits-all resolution:

The central planning model — one case, one set of

rules, one settlement price for all involved — sup-

presses information that is vital to accurate resolution.

What is the law of Michigan, or Arkansas, or Guam,

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as applied to this problem? Judges and lawyers will

have to guess, because the central planning model

keeps the litigation far away from the state courts.

Id. In many situations, the court suggested, a “decentralized

process” of multiple individual trials with different juries

under different legal rules will lead to the more sensible so-

cial resolution. Jd. at 12a (quoting Jn re Rhone-Poulenc

Rorer, Inc., 51 F.3d 1293, 1299 (7th Cir. 1995)).

But even if one objects to the “decentralized approach as

an original matter,” the court explained, id., the fact is that

both Rule 23 and principles of federalism forbid courts from

centralizing millions of individual claims on a nationwide

basis when there is legal and factual variation among the

claims: “Differences across states may be costly for courts

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

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

clear the queue in court. ... Tempting as it is to alter doc-

trine in order to facilitate class treatment, judges must resist

so that all parties’ legal rights may be respected. Amchem

Products, Inc. v. Windsor, 521 U.S. 591, 613 (1997).” Id. at

12a-13a.

Concluding that the district court had essentially altered

Indiana choice-of-law doctrine to reach a legal commonality

conclusion that would facilitate class treatment, the court of

appeals reversed the certification order. Petitioners sought

en banc review of the panel’s unanimous decision; not one

judge of the Circuit voted to review the decision.

4. In the wake of the Seventh Circuit’s decision decerti-

fying the classes, the so-called “negative value” of individual

claims has not led to their withdrawal or demise, contrary to

the ominous warnings of the petition. Indeed, petitioners

recently submitted a proposal to the district court seeking

trial on the individual claims of eleven plaintiffs.

12

REASONS FOR DENYING THE PETITION

The foregoing Statement, standing alone, amply demon-

strates why the petition should be denied. Fundamentally,

this is a case about the application of state choice-of-law

rules. Nothing in the Seventh Circuit’s holding or analysis is

remotely controversial. Petitioners seem to recognize this,

and do their best to ignore the holding and its true rationale.

They propose four questions for review, all of which are

drawn primarily from the opinion’s more colorful rhetoric,

and none of which addresses either the ruling on Indiana

state conflicts law, or the ruling on factual commonality.

The court’s ruling on the state-law conflicts issue, of course,

is no basis for certioramn. See Wharf (Holdings) Ltd. v.

United Int'l Holdings, Inc., 532 U.S. 588, 596 (2001); Black

v. Cutter Labs., 351 U.S. 292, 298-99 (1956); Ruhlin v. New

York Life Ins. Co., 304 U.S. 202, 206 (1938); see generally

Robert L. Stern et al., Supreme Court Practice 226 (8th ed.

2002). Nor is its intensely fact-bound, case-specific deter-

mination that the many different vehicle and tire configura-

tions involved in the class claims present individuated fac-

tual issues too varied to permit common, all-or-nothing,

classwide adjudication. See United States v. Johnson, 268

U.S. 220, 227 (1925) (“We do not grant a certiorari to review

evidence and discuss specific facts.””); Stern et al., supra, at

249. And whatever petitioners have to say about additional

language in the opinion, “(t}his Court ‘reviews judgments,

not statements in opinions.’” California v. Rooney, 483 U.S.

307, 311-14 (1987) (per curiam) (quoting Black, 351 US. at

297); see Herb v. Pitcairn, 324 U.S. 117, 126 (1945) (“{O]ur

power is to correct wrong judgments, not to revise opin-

ions.’’).

Because petitioners do not even purport to seek review of

the dispositive factual commonality ruling below, review of

the questions petitioners do present could not change the re-

sult below. Certioran should be denied for that reason alone.

4

3

:

13

See Stern et al., supra, at 231. But even on their own terms,

none of petitioners’ Questions Presented offer any basis for

granting certiorari. The petition should be denied.

I. THE COURT OF APPEALS’ LEGAL COMMON-

ALITY DETERMINATION DOES NOT CON-

FLICT WITH DECISIONS OF OTHER CIRCUITS.

The first Question Presented in the petition attacks the

court of appeals’ observation that “[n]o class action is proper

unless all litigants are governed by the same legal rules.”

Pet. App. 3a. According to petitioners, that statement an-

nounces a rule that all litigants must be governed by /iterally

the exact same rules before a class may be certified. In fact,

of course, the opinion simply applies the wholly uncontro-

versial rule, previously articulated on numerous recent occa-

sions by Judge Easterbrook himself, that if “recovery de-

pends on law that varies materially from state to state,” a

nationwide litigation class cannot be certified. Jn re Mexico

Money Transfer Litig., 267 F.3d 743, 746-47 (7th Cir. 2001)

(citing Isaacs v. Sprint Corp., 261 F.3d 679, 682 (7th Cir.

2001) (per Easterbrook, J.), cert. denied, 122 S. Ct. 1607

(2002); Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 674

(7th Cir. 2001) (per Easterbrook, J.), cert. denied, 534 U.S.

951 (2002); Jn re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293,

1300 (7th Cir.) (per Posner, J.), cert. denied, 516 U.S. 867

(1995); see also Amchem Prods., Inc. v. Windsor, 521 US.

591, 623-34 (1997) (“The Rule 23(b)(3) predominance in-

quiry tests whether proposed classes are sufficiently cohesive

to warrant adjudication by representation.” (emphasis

added)). As the court of appeals observes immediately after

the sentence quoted by petitioners: “State laws about theo-

ries such as those presented by our plaintiffs differ, and such

differences have led us to hold that other warranty, fraud, or

products-liability suits may not proceed as nationwide

classes.” Pet. App. 3a (citing Mexico Money, Isaacs, Szabo,

and Rhone-Poulenc).

i4

Importantly, the distnct court itself reached just the same

conclusion, holding that the relevant state laws — if applica-

ble under choice-of-law principles — differ too significantly

to permit class certification. Supra at 6-7. The central ques-

tion before the court of appeals was simply whether, as a

matter of Indiana choice-of-law rules, each respondent’s

home-state law applied to all class claims — the ruling that

the district court believed was the only way to establish legal

commonality. When the court of appeals held that the dis-

tnct court’s choice-of-law analysis was erroneous, the con-

clusion that the class claims lacked sufficient cohesiveness

followed as a matter of course.

The court’s state-law choice-of-law ruling is both unas-

sailable and all but unreviewable. See supra at 12. Petition-

ers are therefore forced to argue that the conclusion of both

lower courts that the tort and contract laws of the 51 relevant

junsdictions differ too significantly to satisfy the Rule 23

legal commonality requirement conflicts with decisions of

other circuits. Petitioners are quite wrong.

The decision below is fully consistent with the broad

consensus among the federal circuits that, outside of the set-

tlement context, legal vanations in different states’ tort and

contract laws typically preclude findings of commonality,

predominance and manageability in nationwide and multi-

state class actions.” These conclusions are, of course, largely

* E.g., Sikes v. Teleline, Inc., 281 F.3d 1350, 1367 n.44 (11th Cir.),

cert. denied, 123 S. Ct. 117 (2002); Stirman v. Exxon Corp., 280 F.3d

554, 565-66 (Sth Cir. 2002); Jn re LifeUSA Holding Inc., 242 F.3d 136,

148 n.13 (3d Cir. 2001); Zinser v. Accufix Research Inst., Inc., 253 F.3d

1180, 1187-90 (9th Cir. 2001); Szabo, 249 F.3d at 674; Spence v. Glock,

GES.m.b.H., 227 F.3d 308, 313-15 (Sth Cir. 2000); /n re Bronco II Prod.

Liab. Litig., 177 F.R.D. 360, 368-69 (E.D. La. 1997), aff'd mem. sub

nom. Bates v. Ford Motor Co., 174 F.3d 198 (Sth Cir. 1999}; Georgine v.

Amchem Prods., 83 F.3d 610, 627 (3d Cir. 1996), aff'd sub nom. Am-

chem Prods. v. Windsor, 521 U.S. 591 (1997); Andrews v. AT&T Co., 95

F.3d 1014, 1024-25 (11th Cir. 1996); Jn re Am. Med. Sys., 75 F.3d 1069,

15

dependent on the particular facts alleged, the particular legal

theories asserted, and the particular state laws invoked. Any

differences in outcome in applying properly stated Rule 23

principles to such varying factual circumstances would not

justify certiorari. See Stern et al., supra, at 250 (where as-

serted conflict “arises from mere differences in the factual

situations, certiorari will be denied”’).

In any event, it is clear that the Third, Fifth, Ninth and

D.C. Circuits have not departed from the broad consensus, as

petitioners submit. Petitioners’ reliance on the Fifth Cir-

cuit’s decision in Castano and the D.C. Circuit’s decision in

Walsh is especially inapt. Just like the ruling below, each of

those decisions reversed the certification of a nationwide

class, each on the ground that the district court had failed to

determine that the applicable laws of every state were suffi-

ciently uniform to satisfy the commonality and manageabil-

ity requirements of Rule 23. See Castano v. Am. Tobacco

Co., 84 F.3d 734, 741-43, 749-50 (Sth Cir. 1996); Walsh v.

Ford Motor Co., 807 F.2d 1000, 1017-19 (D.C. Cir. 1986),

cert. denied, 482 U.S. 915 (1987); see also Spence v. Glock,

GES.m.b.H., 227 F.3d 308, 313-15 (Sth Cir. 2000) (reversing

certification of nationwide class in no-personal-injury prod-

uct defect case on ground of state-law variation); Bates v.

Ford Motor Co., 174 F.3d 198 (5th Cir. 1999) (affirming de-

nial of nationwide product defect class involving Ford

Bronco Ils premised upon the same alleged small-value

claims and same alleged rollover defect asserted in this case

on ground of state-law variation), aff’g Bronco II Prod. Liab.

Litig., 177 F.R.D. 360, 368-69 (E.D. La. 1997).

Petitioners ignore the outcomes in Castano and Walsh

and read them only for the proposition that a court must con-

1085 (6th Cir. 1996); Castano v. Am. Tobacco Co., 84 F.3d 734, 741-43,

749-50 (Sth Cir. 1996); Rhone-Poulenc, 51 F.3d at 1300-02; Walsh v.

Ford Motor Co., 807 F.2d 1000, 1017-19 (D.C. Cir. 1986), cert. denied,

482 U.S. 915 (1987).

AA? eA

16

duct an analysis of whether variations in state law affect pre-

dominance and manageability. Pet. 14. But that rule would ;

create no conflict here, where both courts below did conduct

such an analysis, and both agreed with the respondents’ ex- i

tensive submission demonstrating that the petitioners’ indi-

vidual causes of action vary significantly in their material

elements from state to state. See supra at 6-7, 9-10; Defs.’

7th Cir. Jt. App. 280-316 (attached as “App. B”).° At bot-

tom, petitioners’ claim of conflict with decisions of the Fifth

and D.C. Circuits reduces to nothing more than petitioners’

belief that the courts below erred in assessing the variations

in state law. Petitioners are wrong, but no matter: their pre-

dictable disagreement with the courts’ view of the effects of

state-law variations on the particular facts and theories al-

4 leged here presents no recurring question of federal law wor- 5

thy of review. 4

Petitioners’ claim that the decision below conflicts with

decisions from the Ninth Circuit, Hanlon v. Chrysler Corp.,

150 F.3d 1011 (9th Cir. 1998), and the Third Circuit, Jn re :

Prudential Ins. Co., 148 F.3d 283 (3d Cir. 1998), is also

meritless. Those cases each involved the certification of a

settlement class, not a class in which claims actually would

have been tried. Such cases are not comparable, as the Third

and Seventh Circuits have agreed. See Newton v. Merrill

Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 192 (3d

Cir. 2001) (“Although plaintiffs attempt to fit this case under i

Prudential, that case raised different issues because the class

-~ was certified for the purpose of settlement.”); Mexico

Money, 267 F.3d at 746-47 (variations in state law mav be

less consequential to certification of settlement class, where

° In fact, virtually every state court to address “economic-loss-only”

product-defect theories like petitioners’ has flatly rejected them. See

infra note 8. Petitioners therefore could not even show — as they must —

that every state would actually recognize their theory, much less that

— every state would treat it in substantially the same way.

17

“no one need draw fine lines among state-law theories of re-

lief’). Indeed, just like the Seventh Circuit in this case and

others, the Third and Ninth Circuits have issued decisions

rejecting efforts to certify nationwide Jitigation classes on

the same state-law variation grounds underlying the decision

below. See Zinser, 253 F.3d at 1185-86, 1188-1193 (9th

Cir.); LifeUSA Holding Inc., 242 F.3d at 148 n.13 (3d Cir.)

(“The individual adjudications of causation, reliance,

LifeUSA’s multiple defenses, and application of differing

state laws would make trying the plaintiffs’ claims in a class

action a thoroughly unwieldy endeavor and in the terms of

Georgine make it impossible to conclude that this class ac-

tion is superior to alternative means of adjudication.”).

Nothing in the decision below conflicts with these deci-

sions,’ and nothing about the Seventh Circuit’s unremarkable

application of Rule 23’s commonality and manageability re-

quirements merits review.

a

7 The Third Circuit’s older decision affirming a nationwide asbestos

class in In re School Asbestos Litig., 789 F.2d 996, 1011 (3d Cir. 1986),

reflects only a fact-bound difference in outcome, inappropriate for the

exercise of certiorari jurisdiction. See supra at 12. What is more, in that

case the court was explicitly “influenced” in its Rule 23 analysis “by the

highly unusual nature of asbestos litigation,” id., an approach explicitly

rejected in Amchem, 521 U.S. at 628-29 (refusing to depart from Rule 23

requirements even if “nationwide administrative claims processing re-

gime would provide the most secure, fair, and efficient means of com-

pensating victims of asbestos exposure”); see Pet. App. 13a (“Tempting

as it may be to alter doctrine in order to facilitate class treatment, judge

must resist so that all parties’ legal rights may be respected.”). An as-

serted conflict with “a decision that has been discredited or that has lost

all weight as authority by reason of intervening decisions of the Supreme

Court or other courts of appeals, as well as of the same court, will not be

an adequate basis for granting certiorari.” Stern et al., supra, at 230.

18

Il. THE COURT OF APPEALS’ OBSERVATION

THAT REGULATION BY NHTSA IS A SUPERIOR

METHOD OF ADJUDICATING DISSIMILAR

CLAIMS DID NOT “USURP STATES’ LAWMAK-

ING POWER.”

Petitioners’ second Question Presented attacks the court

of appeals’ observations that compensating plaintiffs whose

products have not suffered any defect manifestation results

in excess compensation and overdeterrence, Pet. App. 6a,

and that “(rJegulation by the NHTSA, coupled with tort liti-

gation by persons suffering physical injury, is far superior to

a suit by millions of uninjured buyers for dealing with con-

sumer products that are said to be failure-prone,” id. at 11a.

Tying those two statements together, petitioners contend that

the court of appeals violated Erie R.R. v. Tompkins, 304 U.S.

64 (1938), by supposedly finding NHTSA administrative

regulation superior to adjudication of a state-law theory that

results in overdeterrence. Pet. 19-20, 23.

Petitioners either badly misunderstand or baldly misrep-

resent the opinion below. The court of appeals did not de-

cide that NHTSA regulation is superior because states should

not recognize petitioners’ theory. Rather, the court’s critique

of that theory was part of its analysis of legal commonality

and manageability, where the court simply explained why

most states do not recognize petitioner’s theory. Pet. App

6a-7a. This was no mere supposition by the court; it cited

numerous state-law cases so holding, id. at 7a, and there are

indeed many, many more.® If most states do not recognize

* Petitioners’ contrary claim that all states recognize “no manifesta-

tion of defect” product claims as part of their warranty law, Pet. 21, is

false. Petitioners outright ignore the many courts that have rejected “no

manifestation of defect” claims whether the claims were brought as tort-

based or contract-based causes of action. See Chin v. Chrysler Corp.,

182 F.R.D. 448, 460 (D.N.J. 1998) (“In most jurisdictions, the courts

recognize that unless a product actually manifests the alleged defect, no

cause of action for breach of express or implied warranty or fraud is ac-

er

19

petitioners’ theory, then petitioners necessarily have failed to

carry their burden of establishing that their claims would be

recognized and treated the same in every state. Moreover,

the court went on to hold that even if there were jurisdictions

that would recognize a legal injury for an alleged product

defect that has not manifested itself, the warranty and fraud

law vehicles that would be invoked to vindicate that injury

“vary considerably” among the states, “and courts must re-

spect these differences rather than apply one state’s law to

sales in other states with different rules.” Pet. App. 7a.

tionable.”); Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9, 12, 16-17

(App. Div. 2002) (dismissing, inter alia, breach of implied warranty and

consumer protection act claims because “it would be manifestly unfair to

require a manufacturer to become [] an indemnifier for a loss that may

never occur”); Green v. Gen. Motors Corp., No. L-4643-99, 2002 WL

1575589, at *1-*2 (N.J. Super. Ct. Jan. 4, 2002) (rejecting claims under,

inter alia, breach of implied warranty and consumer protection act be-

cause the product in question has “never . . . failed to work properly”);

Ziegelmann v. DaimlerChrysler Corp., 649 N.W.2d 556, 559-64 (N.D.

2002) (same for fraud and negligence claims); Jarman v. United Indus.

Corp., 98 F. Supp. 2d 757, 768 (S.D. Miss. 2000) (same for breach of

warranty, unjust enrichment, and fraud); Yu v. JBM Corp., 732 N.E.2d

1173, 1177 (Ill. App. Ct. 2000) (same for breach of warranty and con-

sumer protection act claim “[a]s plaintiff failed to allege that the Medic

system actually malfunctioned and caused damages due to the Y2K de-

fect”); Nichols v. Gen. Motors Corp., No. 99-C-566, 1999 WL 33292839,

at *3 (N.H. Super. Ct. Dec. 13, 1999) (same for, inter alia, breach of im-

plied warranty and consumer protection act claims); Jn re Air Bag Prods.

Liab. Litig., 7 F. Supp. 2d 792, 805 (E.D. La. 1998) (dismissing tort and

implied warranty claims because “[t]he absence of a manifested defect

precludes a cognizable claim”); Lee v. Gen. Motors Corp., 950 F. Supp.

170, 172, 174-75 (S.D. Miss. 1996) (rejecting claims that roofs on sport-

utility vehicles were defective where plaintiffs experienced no defects in

their vehicles); Am. Suzuki Motor Corp. v. Superior Ct., 44 Cal. Rptr. 2d

526, 529 (Cal. Ct. App. 1995) (“[I]n the case of automobiles, the implied

warranty of merchantability can be breached only if the vehicle manifests

a defect that is so basic it renders the vehicle unfit for its ordinary pur-

pose of providing transportation.”); Spuhl v. Shiley, Inc., 795 S.W.2d

573, 580 (Mo. Ct. App. 1990) (same for failure to warn claims because

plaintiff did not allege “failure or malfunction of the product”). — —

20

If petitioners seriously believe the court based its view of

NHTSA’s superiority on a conclusion that applicable state

laws are not wise enough for a federal court to follow in ac-

cordance with Erie, petitioners are seriously mistaken. What

the court held, as part of its commonality and manageability

analysis, is that state laws must be followed, and that such

laws not only generally do not recognize petitioners’ theory,

but to the extent any do, such laws do not provide a basis for

common, classwide adjudication of the theory. Yet again,

closer scrutiny of petitioners’ Question Presented reveals it

to be nothing more than disagreement over a purely state-law

issue: the court of appeals’ entirely correct conclusion that

most states do not recognize their theory. Petitioners’ objec-

tion to this state-law conclusion does not raise any federal

issue or implicate any circuit conflict. And petitioners sim-

ply ignore the court’s distinct holding that the relevant state-

law vehicles for adjudicating their theory would not permit

sufficiently uniform treatment of all claims in the nationwide

class in any event. The Erie issue petitioners raise is a fig-

ment of their imagination, not a basis for certiorari.

Iii. THE COURT OF APPEALS DID NOT RELY ON

THE “SMALL VALUE” OF INDIVIDUAL CLAIMS

TO DENY CERTIFICATION.

Petitioners next argue that by “us[ing] the small value of

each individual class member’s claim as a basis for denying

certification,” the court of appeals created a conflict with

decisions of other circuits. Pet. 25. But the Seventh Circuit

did not rely on the “small value” of individual claims to deny

certification, and petitioners’ conflict is again illusory.

Petitioners devote an entire Question Presented to the

“small value” issue, but cite not one passage in the opinion

that actually discusses the purportedly “small value” of the

class members’ individual claims. No such passage exists.

Instead petitioners trot out the same combination of the

court’s “superiority” language and its observations about

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21

overcompensation and overdeterrence that they rely upon for

their second Question Presented. Pet. 25 (citing Pet. App.

6a-7a n.1 & 11a). Nowhere in either of these passages does

the court of appeals make even a passing reference to the

size of any of the petitioners’ claims. The issue argued by

petitioners is simply not presented by the opinion helow.

In any event, there is no confusion in the lower courts

about the significance of “small value” claims to the class

certification decision. It is of course true, as petitioners em-

phasize, that Rule 23 is intended to “overcome the problem

that small recoveries do not provide the incentive for any

individual to bring a solo action prosecuting his or her

rights.” Amchem, 521 U.S. at 617. But that does not mean

that every case involving small monetary claims can or

should be tried as a class action. Small-value claimants, like

any other claimants, must meet all of the requirements for

class certification (e.g., commonality, predominance and su-

periority) plainly set forth in Rule 23. Indeed, this Court has

specifically rejected the idea that the “unambiguous require-

ment[s] of Rule 23” can be overlooked for the sake of per-

mitting small value claims to be prosecuted as a class action,

Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 175-76 (1974),

and there is, not surprisingly, no circuit conflict on the point.

All of the circuits to which petitioners point for their

“conflict” recognize that Rule 23 operates both to facilitate

aggregation of small claims and also, through its require-

ments of commonality, predominance and superiority, to en-

sure that such aggregation occurs only when it would not

deprive eiiher plaintiffs or defendants of a fair opportunity to

iitigate individual claims or defenses. See, e.g., In re Pru-

dential, 148 F.3d at 316 (certifying small-value claims only

on finding of “sufficient unity so that absent members can

fairly be bound”) (quoting Amchem, 521 U.S. at 621); Alli-

son v. Citgo Petroleum, 151 F.3d 402, 422 n.17 (Sth Cir.

1998) (small-value claims may not be certified for settlement

22

where would result in “unfairness to all’’); Jackson v. Motel 6

Multipurpose, Inc., 130 F.3d 999, 1005-06 (11th Cir. 1997)

(“When there are no predominant issues of law or fact... .

class treatment would be . . . unjust, as the various factual

and legal nuances of particular claims are lost in the press to

clear the lone court’s docket.’’).

The decisicn below is entirely consistent with this well-

established understanding. The Seventh Circuit did not use

the small size of the claims as a reason for denying certifica-

tion despite Rule 23; if anything, it was the district court that

used the small size of the claims as a reason for certification

despite Rule 23. Beyond the Seventh Circuit’s Indiana

choice-of-law and factual commonality holdings, the court’s

discussion of the flaws in the certification order was devoted

to explaining why Rule 23’s important procedural protec-

tions could not be circumvented merely to facilitate nation-

wide class treatment of petitioners’ claims. No circuit would

tolerate the certification of a nationwide class that otherwise

failed Rule 23’s commonality and manageability require-

ments simply because of the size or nature of the individual

claims; the Seventh Circuit’s correction of such an error here

merits approbation, not further review.

IV. THE COURT OF APPEALS’ APPROACH TO EF-

FICIENCY IS CONSISTENT WITH RULE 23 AND

THE DECISIONS OF OTHER CIRCUIT COURTS.

Petitioners’ final Question Presented asks whether the

court of appeals erred in “interpreting ‘efficient adjudication’

under Rule 23(b)(3) to require ‘a decentralized process of

multiple trials, involving different juries, and different stan-

dards of liabiiity, in different jurisdictions.”” Pet. i. Once

again, petitioners are arguing an issue that is not raised by

this case. The Seventh Circuit did not, of course, hold that

Rule 23 or its “efficiency” component “requires” decentral-

ized tnials. The court’s discussion of efficiency merely reit-

erates the well-settled point that not every complex case is

23

handled “efficiently” by certifying a nationwide class, and

that efficiency — on whatever model — cannot trump the plain

requirements of Rule 23.

The court of appeals’ treatment of efficiency comes in

response to the district court’s views on the subject. The dis-

trict court had concluded that the only “efficient” disposition

of these claims was by centralized trial in a single forum.

The alternative of separate trials of individual claims, the

district court believed, would be so inefficient that class cer-

tification was obviously superior: separate trials would “be

immensely burdensome to the courts, parties, and wit-

nesses,” and would “create the risk of inconsistent verdicts.”

Pet. App. 66a. In the passage to which petitioners object, the

court of appeals questioned the assumptions behind the dis-

trict court’s approach, observing that the “model of the cen-

tral planner” will not always lead to more accurate and sen-

sible resolutions than a decentralized process of multiple tn-

als. Id. at 12a.

What is important here — and what petitioners neglect to

mention — is that the Seventh Circuit expressly recognized

that this issue is in any event resolved by the terms of Rute

23, as well as principles of federalism, which prohibit certifi-

cation in the face of factual or legal variation regardless of

purported “efficiencies.” Jd. (“No matter what one makes of

the decentralized approach as an original matter, it is hard to

adopt the central-planner model without violence not only to

Rule 23 but also to principles of federalism.”). The problem

below, in other words, was that the district court had ignored

fundamental Rule 23 principles in a myopic quest for “effi-

ciency” in the litigation of petitioners’ claims. As the court

of appeals observed variously throughout its opinion:

According to the district court, other obstacles (such

as the fact that the six named tire models represent 67

designs for different sizes and performance criteria,

and that half of all 1996 and 1997 model Explorers

24

came with Goodyear tires) are worth overcoming in

light of the efficiency of class treatment. Pet. App.

3a.

[I]t is state law rather than a quest for efficiency in

litigation (or in product design decisions) that con-

trols. Jd. at 5a.

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. Tempting as it is to

alter doctrine in order to facilitate class treatment,

judges must resist so that all parties’ legal nghts may

be respected. /d. at 12a (citations omitted).

On top of those observations, the Seventh Circuit’s discus-

sion of the “market” model and “central planner” model of

efficiency simply explains why the district court’s emphasis

on the supposed efficiency of centralization was misguided

in theory, as well as misplaced in light of Erie and Rule 23.

But the latter point is the only actual “conclusion about effi-

ciency” (Pet. 27) adopted by the Seventh Circuit: the district

court was not free to bend the state choice-of-law rules dic-

tated by Erie or to disregard Rule 23’s commonality re-

quirements in the name of a purported “efficiency” goal.

That holding is obviously correct and entirely uncontro-

versial. The Court has made clear that a “one case, one

court, one set of rules” approach, Pet. App. 11a, is precluded

by Erie and Rule 23 where the applicable state choice-of-law

rules do not support the streamlining of the litigation and

where the circumstances and claims of individual plaintiffs

differ from state to state and transaction to transaction. See,

e.g., Amchem, 521 U.S. at 620, 622-23 (“[O]f overriding im-

portance, courts must be mindful that [Rule 23] as now com-

posed sets the requirements they are bound to enforce.’’);

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 821-23

(1985) (“constitutional limitations on choice of law” in the

25

class action context are “not altered by the fact that it may be

more difficult or more burdensome to comply with th[ose]

limitations” notwithstanding any “practical reasons” support-

ing a different approach). Nor is there any conflict on this

point in the lower courts. To the contrary, both the circuits

identified by petitioner, Pet. 29, adhere to the same principle

adopted by the court below: district court discretion to ad-

vance policy goals through class certification is limited by

the commonality requirements of Rule 23. See, e.g., Zinser,

253 F.3d at 1186 (9th Cir.) (““While the trial court has broad

discretion to certify a class, its discretion must be exercised

within the framework of Rule 23.”); Jn re Am. Med. Sys., 75

F.3d at 1079 (6th Cir.) (same). Other circuits agree. See,

e.g., Broussard v. Meineke Discount Muffler Shops, Inc., 155

F.3d 331, 343-44 (4th Cir. 1998) (“[A] class action may be

the most economical and efficient means of litigation in

many circumstances” but not where the “disparate nature of

the claims precludes class treatment”): Castano, 84 F.3d at

752 (Sth Cir.) (reversing class certification for lack of supe-

riority because district court “ignor[ed] variations in state

law and how a trial on the alleged causes of action would be

tried”).°

* Midway though their final argument, petitioners recast it as one in-

volving a conflict between Seventh Circuit panel decisions. Pet. 29-30

(arguing that decision below departs from the prior “teaching” of Rhone-

Poulenc). Confusion within a single circuit, of course, is not grounds for

granting certiorari. Wisniewski v. United States, 353 U.S. 901, 902

(1957). In any event, there is no such intra-circuit conflict, as reflected

by the fact that not one Seventh Circuit judge voted to hear this case en

banc when petitioners so moved. Pet. App. 77a. The panel below

merely reiterated Rhone-Poulenc’s discussion of the benefits of decen-

tralized litigation of mass tort actions involving plaintiffs with claims

arising under different factual circumstances and different laws. Pet.

App. 12a. Other aspects of Rhone-Poulenc also lend direct support to the

panel’s holding in this case. Rhone-Poulenc, 51 F.3d at 1302 (reversing

certification of nationwide class because district court applied an “amal-

gam, an averaging, of the nonidentical negligence laws of 51 jurisdic-

tions” in violation of its Erie responsibility).

26

Petitioners seem to suggest, once again, that application

of this well-established rule to small-value claims raises spe-

cial problems for the lower courts. Pet. 29. But as discussed

above, the circuit courts agree that small-value claimants are

not exempt from the requirements of Rule 23. Any efficien-

cies that come from trying small claims together cannot be

purchased at the price of Rule 23’s procedural protections.

See supra Part II; see also LifeUSA Holding Inc., 242 F.3d

at 148 n.13 (3d Cir.) (“Although plaintiffs’ claims are rela-

tively modest and separate suits may be impracticable, that

factor by itself is insufficient to overcome the hurdles of pre-

dominance and superiority and efficient and fair manage-

ment of a trial, which Rule 23(b) requires.”).'° The court of

appeals well understood that important principle. That peti-

tioners do not, or that they wish it were otherwise, is no rea-

son to grant certiorari.

CONCLUSION

For the foregoing reasons, the petition for a wnt of cer-

tiorari should be denied.

'° As a matter of fact, petitioners are in no position to assert that the .

Seventh Circuit’s approach to efficiency undermines their incentive to

pursue their so-called “small value” claims, Pet. 29 — claims for several

thousand dollars apiece, not including the attorneys’ fees and punitive

damages sought. Eleven of the plaintiffs petitioning this Court are cur-

rently pursuing the trial of their claims. Petitioners promised the Seventh

Circuit that they would pursue their claims on an individualized basis if

class certification was reversed, and they are making good on that prom-

ise. Even if there were some open question regarding the treatment of

small-value claims under Rule 23 (which there is not), petitioners’ own

conduct reveals this case to be an exceptionally poor vehicle for address-

ing it.

27

Respectfully submitted,

JOHN H. BEISNER

(Counsel of Record)

STEPHEN J. HARBURG

NEIL K. GILMAN

JONATHAN D. HACKER

MORGEN A. SULLIVAN

O’MELVENY & MYERS LLP

555 13th St., N.W.

Wash’ igton, D.C. 20015

(202) 383-5300

Dated December 6, 2002

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