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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Motion to Dismiss or Affirm
- **Published:** January 1, 2003
- **Citation:** 537 U.S. 1105

## Text

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

PR Fase Ae WERE We WRRIOPEEIS DDD sscnsosecuccescusonssecsnsrcneseonsavesencosness 1
ERR AP BPM MARIE. 5 scascovcncossesvensccsvessssansasssevensveeces ll
OIE PART ERMINE ENEES cose scussesnevsacecsscssessssccavascenecceeses Vv
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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

cs alesis acanuemaceinsivsnlavnitnasans 22

ae acai cencsckssciass scusnuayrsksaesensnssiswrureréasnes 26

iV
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
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Fed. R. Civ. P. 23

Press Release, NHTSA, “NHTSA Denies
Firestone Request for Ford Explorer

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investigatk hd Feb _——_—~ - ( a)

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KopDert L. Stern et al., supreme (our

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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,

4
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1]

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

ee ee Pe el Pe ee ST Tee ee ae ee ee a vo

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0524%3A3. Public record. Not legal advice.