Opposition Brief — BNL Equity Corp. v. Pearson

2 gupreme Court, US |

a | . “

No. 99-2002 =

AUG 14 2000

IN THE once OE THE SLERN

Supreme Court of the United Stator

BNL EQUITY CORPORATION (formerly known as UNITED

ARKANSAS CORPORATION), BNL FINANCIAL

CORPORATION (formerly known as UNITED IOWA

CORPORATION), WAYNE E. AHART, KENNETH TOBEY

and BARRY N. SHAMAS,

Petitioners,

v.

MYRA JO PEARSON, PAUL PEARSON

and JAMES STILWELL,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI

TO THE ARKANSAS SUPREME COURT

BRIEF IN OPPOSITION

JAMES R. PENDER JOHN E. Tutt III

MICHAEL J. PTAK Counsel of Record

PENDER, MCCASTLAIN & PTAK, P.A. PATRICK W. MCALPINE

900 South Shackleford QUATTLEBAUM, GROOMS, TULL

Suite 750 & Burrow PLLC

Little Rock, Arkansas 72211 111 Center Street

(501) 312-2020 Suite 1850

Little Rock, Arkansas 72201

PETER G. KUMPE (501) 379-1700

WILLIAMS & ANDERSON LLP

Twenty-Second Floor

111 Center Street

Little Rock, Arkansas 72201

(501) 372-0800

Attorneys for Respondents

161604 @ Counsel Press LLC

(800) 274-3321 + (800) 359-6859

;

ee By

TABLE OF CONTENTS

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

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

I.

If.

The Decision Of The Supreme Court Of

Arkansas Is Consistent With Decisicns Of

This Court, Circuit Courts Of Appeals, And

ne rs hoe aad

A.

The Supreme Court Of Arkansas’

Decision In BNL Equity Does Not

Conflict With Decisions Of This Court.

8&8 6 CSR EOE BHSEHROCEER ESB EROEOS EE 8 6S ES

The Supreme Court Of Arkansas’

Decision In BNL Equity Does Not

Conflict With Decisions Of The Circuit

Courts Of Appeals. .........6e0508.

The Supreme Court Of Arkansas’

Decision In BNL Equity Does Not

Conflict With The — Of Sister

RRR aan ro Prey ey

This Court Should Not Grant Certiorari

Because Of Well-Settled Jurisdictional And

a re

A. The Arkansas Supreme Court’s Decision

Is Based On An Independent And

Adequate State Ground. ............

11

i

Contents

Page

B. Arkansas Rule Of Civil Procedure 23

Is A Procedural Rule That Does Not

Implicate Substantive Rights. ........ 15

C. A Grant Of Certiorari In This Case

Would Violate Fundamental Principles

Of The Constitutional Federal System.

PPT eee ee Ye 16

III. Petitioners Did Not Properly Raise Or

Preserve The Question Presented By Their

POOR veo wae ace ean 17

ORG MNOOE 2. ocd oc Qheieerc ee eee 21

it

TABLE OF CITED AUTHORITIES

Page

Cases:

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

0 TASTE ee wr are a nee ene 4,5

Board of Directors of Rotary Int'l v. Rotary Club of

RP ME AE. DOT CRED occ ksanrseseseee 18

Carroll v. Cellco Partnership, 713 A.2d 509

eae. er. Gt. Ape. TV. I99S) on 6s ee cs dies 10

Castano v. American Tobacco Co., 84 F.3d 734

he wie eos pa Ad Ke wes 6, 7, 10

Coleman v. Thompson, 501 U.S. 722 (1991) ..... 13

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

ED are ee Ray 5 Ckas es ba tev ad Gack Ca HRs a2

Ex parte Equity National Life Ins. Co., 715 So. 2d

Ee Cid Wie ean kkk CR a be 9

Ex parte Mayflower National Life Ins. Co. v. Heard,

2000 WL 548211 (Ala. May 5, 2000) ......... 9

Ford Motor Co. v. Sheldon, 2000 WL 566766

IN 55 COS ka oe BOER AOS 6 Aye es xs 10

iv

Cited Authorities

Page

Fraley v. Williams Ford Tractor Co., 339 Ark. 322,

es REE 4 oh oe sa oe SKS ORS 10, 14, 15

General Tel. Co. of the Southwest v. Falcon,

ROE Uc. FET GEES cancun sancaewes , ee

Hartman v. Duffey, 19 F.3d 1459 (D.C. Cir. 1994)

ek aS Ra ash bed A eee EN a ee et 6,7

Heath vy. Alabama, 474 U.S. 82 (1985) .......... 18

Johnson v. Georgia Highway Express, Inc., 417 F.2d

SR e 6o a SE ok Oo ak a bens 3

Lambrix v. Singletary, 520 U.S. 518 (1997) ...... 13

Michigan v. Long, 463 U.S. 1032 (1983) ........ 13

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) .. 4,5

Petrovic v. Amoco Oil Co., 200 F.3d 1140 (8" Cir.

SE ete ita eo ba Cina nis Ne Re

a)

Phillips Petroleum v. Shutts, 472 U.S. 797 (1985) . 15

Southwestern Refining Co., Inc. v. Bernal,

2000 Wi, S6G743 (TEx. 2000) «0.5 ic veces 10

Sprague v. General Motors Corp., 133 F.3d 388

Sl NE: ot ree deu ok renee aes 6,7

Cited Authorities

Page

Statute:

Ark. Code Ann. § 23-42-106(a)(1)..... 2.0.05. 7

Rules:

Arkansas Rule of Civil Procedure 23 .......... passim

Arkansas Rule of Civil Procedure 23(a) ......... 9

Arkansas Rule of Civil Procedure 23(b) ......... 9

Federal Rule of Civil Procedure 23 ...... 4,6, 7, 10, 16

Supreme Court Rule 14(g)(i) ........-.-----55 19, 20

Other Authorities:

Wright, Miller & Cooper, FEDERAL PRACTICE AND

Procepure, § 4021 (2d ed. 1996 and Supp. 2000)

ere ere ry Per rer ee rere rr 15, 16, 17

oan

REASONS FOR DENYING THE WRIT

Petitioners ask this Court for a writ of certiorari based

on their claim that Arkansas Rule of Civil Procedure 23

violates constitutional due process because the Supreme

Court of Arkansas’ interpretation of Rule 23 does not employ

the “rigorous analysis” approach discussed in General Tel

Co. of the Southwest y. Falcon, 457 U.S. 147 (1982).

The writ should be denied because the issue sought to

be reviewed does not present a compelling case for this

Court’s review. It does not demonstrate a conflict with

decisions of this Court, Circuit Courts of Appeals, or highest

courts in sister states. This Court’s jurisdictional and

prudential requirements militate against a grant of certiorari

in this case. Further, Petitioners did not adequately present

the issue to the trial court and to the Supreme Court of

Arkansas. Under United States Supreme Court Rules and

precedent, issues to be reviewed by certiorari must be

presented with “fair precision and in duc time.” Petitioners’

claim was not thus preserved. The writ should be denied.

THE DECISION OF THE SUPREME COURT OF

ARKANSAS IS CONSISTENT WITH DECISIONS OF

THIS COURT, CIRCUIT COURTS OF APPEALS,

AND SISTER STATES.

Petitioners claim that the decision of the Arkansas

Supreme Court creates a conflict with decisions of this Court,

the Circuit Courts of Appeals, and courts of last resort in

sister states. See Petition for Writ of Certiorari (hereinafter,

‘Petitioners’ Brief’), at 17-26.

2

A. THE SUPREME COURT OF ARKANSAS’

DECISION IN BNL EQUITY DOES NOT

CONFLICT WITH DECISIONS OF THIS COURT.

The Supreme Court of Arkansas’ decision does not

conflict with the decisions of this Court. Specifically, the

opinion at issue here is completely consistent with both Eisen

v. Carlisle & Jacquelin, 417 U.S. 156 (1974) and General

Tel. Co. of the Southwest v. Falcon, 457 U.S. 147 (1982).

Eisen was a class action brought by odd-lot securities

traders against brokerage firms and a stock exchange for

violation of the securities and antitrust laws. This Court

reversed the Circuit Court and held that the plaintiffs’ claims

could proceed as a class action. The Eisen decision laid out

the applicable rule for district courts’ consideration of class

actions under Rule 23:

We find nothing in either the language or history

of Rule 23 that gives a court any authority to

conduct a preliminary inquiry into the merits of a

suit in order to determine whether it may be

maintained as a class action. Indeed, such a

procedure contravenes the Rule by allowing a

representative plaintiff to secure the benefits of a

class action without first satisfying the

requirements for it. He is thereby allowed to

obtain a determination on the merits of the claims

advanced on behalf of the class without any

assurance that a class action may be maintained.

Id. at 177-78. The Court went on to summarize:

Additionally, we might note that a preliminary

determination of the merits may result in

3

substantial prejudice to a defendant, since of

necessity it is not accompanied by the traditional

rules and procedures applicable to civil trials.

Id. at 178.

Falcon, on the other hand, was a class action brought

by an employee under Title VII. The district court in that

case did not hold an evidentiary hearing before certifying

the class. See Falcon at 152. This Court stated:

Sometimes the issues are plain enough from the

pleadings to determine whether the interests of

the absent parties are fairly encompassed within

the named plaintiff's claim, and sometimes it may

be necessary for the court to probe behind the

pleadings before coming to rest on the

certification question.

Id. at 160. Thus, the “rigorous analysis” petitioners contend

is mandated by this Court can be anything from looking at

the face of the pleadings to a full-blown evidentiary hearing,

but it must stop short of examining the merits of the case.

See Eisen at 177.

Petitioners’ claim that the Arkansas Supreme Court

interpreted Falcon too narrowly is incorrect on the face of

the opinion itself. This Court’s holding in Falcon was

specifically limited to Title VII class actions. Falcon at 161.

Falcon’s “rigorous analysis” language was a direct reaction

to the Fifth Circuit’s “across-the-board” approach to class

certification first announced in Johnson v. Georgia Highway

Express, Inc., 417 F.2d 1122, 1124 (5" Cir. 1969). Under

the “across-the-board” approach, a Title VII plaintiff could

4

challenge every employment practice of a particular

employer, even though that particular employee was not

harmed by each and every one of those practices. Falcon

rejected that approach, holding that Title VII plaintiffs are

subject to the strictures of Federal Rule 23, just like any

other private plaintiff.

Contrary to petitioners’ assertions, the Supreme Court

of Arkansas did not expressly reject the “rigorous analysis”

approach in its decision in BNL Equity. The essence of the

state court’s holding is that the case cannot be tried at the

class certification stage. While the Supreme Court of

Arkansas has expressly prohibited trial courts from delving

into the merits of the case at the class certification stage,

nothing in this holding (or in the holdings of any of the cases

decided on this point in recent years) prevents Arkansas trial

courts from conducting a “rigorous analysis” of Rule 23

issues; the trial court in this case did in fact conduct such a

“rigorous analysis.” See Part I.C, infra. The trial court and

appellate court’s decisions unquestionably provided

petitioners the due process protections guaranteed by the

United States Constitution.

Moreover, the other cases relied upon by petitioners,

Ortiz and Amchem, are class action settlement suits.

Respondents concede that a more rigorous analysis is

necessary for settlement classes because substantive rights

of class members are directly implicated by the courts’

decisions. However, a settlement class is inherently distinct

from the initial certification of a class.

In Amchem and Ortiz, the parties agreed upon a class

definition and a settlement before formally initiating

litigation. According to the Eighth Circuit,

GIN Dit DELL

ne a TN NN Ae

5

The difficulty inherent in such a situation is that

a district court “lack[s] the opportunity, present

when a case is litigated, to adjust the class,

informed by the proceedings as they unfold.”

* * *

The difficulties associated with settlements like

those in Amchem and Ortiz — the possibility of

“collusion between class counsel and the

defendant ... [and] the need for additional

protections when the settlement is not negotiated

by a court designated class representative,” .. .

— are therefore not present here.

Petrovic v. Amoco Oil Co., 200 F.3d 1140 (8" Cir. 1999)

(citations omitted). The process and protections necessary

in Amchem and Ortiz were fundamentally different from the

initial class certification process in this case. Under Arkansas

Rule of Civil Procedure 23, the trial court retains jurisdiction

to adjust, modify, or decertify the class at any time, thus

avoiding the problems addressed in Amchem and Ortiz.

Therefore, those cases are inapposite to the situation before

this Court.

B. THE SUPREME COURT OF ARKANSAS’

DECISION IN BNL EQUITY DOES NOT

CONFLICT-WITH DECISIONS OF THE CIRCUIT

COURTS OF APPEALS.

The Circuit Courts of Appeals cases cited by petitioners

do not compel a grant of certiorari in this case. Petitioners

principally rely on three cases from the F ifth, Sixth, and

District of Columbia Circuits to support their argument that

6

Arkansas’ class certification approach is improper. See, e.g.,

Castano v. American Tobacco Co., 84 F.3d 734 (5" Cir.

1996); Sprague v. General Motors Corp., 133 F.3d 388

(6" Cir. 1998); Hartman v. Duffey, 19 F.3d 1459 (D.C. Cir.

1994). Those three cases are clearly distinguishable in several

ways.

The three cases cited by petitioner are federal court cases

construing Federal Rule of Civil Procedure 23. As discussed

above, there are inherent distinctions between the Federal

Rules of Civil Procedure and the Arkansas Rules of Civil

Procedure, even though the Supreme Court of Arkansas has

stated that construction of Arkansas Rule 23 should be guided

by federal precedent. Nonetheless, the Supreme Court of

Arkansas is free at any time to interpret its own rule as it

desires, so long as that construction is consistent with the

U.S. Constitution. Moreover, the Supreme Court of Arkansas

is free to apply federal precedent as it sees fit to construe its

own rule. This is especially true when the federal precedent

is ambiguous, as it is here.

The Fifth Circuit case cited by petitioners was a

multistate tobacco suit. See Castano, 84 F.3d 734. A key

point in the Fifth Circuit’s decision to reverse class

certification was that variations in state law could affect the

predominance requirement of Rule 23. The Fifth Circuit

reversed, at least in part, because “the district court’s

consideration of state law variations was inadequate ....

Nothing in the record demonstrates that the court critically

analyzed how variations in state law would affect

predominance.” Castano at 743.

To the contrary, the Arkansas Supreme Court faced none

of these considerations in the BNL Equity case. The issue in

BNL Equity is straightforward — whether or not the

J

petitioners violated Ark. Code Ann. § 23-42-106(a)(1). It is

purely an issue of Arkansas law. As such, the primary

consideration underlying the Fifth Circuit’s decision in

Castano is not present in this case.

The petitioners also cite the Sixth Circuit case of Sprague

v. General Motors Corp., 133 F.3d 388 (6" Cir. 1998), which

was a class action brought under ERISA. Again, the Sprague

case construed Rule 23 of the Federal Rules of Civil

Procedure rather than a comparative state provision. The

decision turned on unique provisions of ERISA that affected

Rule 23 considerations. Thus, the concerns facing the Sixth

Circuit in Sprague are not applicable here.

The petitioners’ reliance on Hartman v. Duffey, 19 F.3d

1459 (D.C. Cir. 1994), is also misplaced. Hartman involved

a gender discrimination class action brought by employees

of the United States Information Agency (USIA) against the

agency. The court discussed the necessity for a rigorous

analysis in the employment discrimination context because

of the particular distinctions inherent in individual jobs.

Specifically, the D.C. Circuit stated:

We emphasize that there is no requirement in this

circuit that a trial court conduct an evidentiary

hearing or make specific factual findings on the

issue of class certification in every case. But in

this instance the paucity of the record on the

question of the appropriate class certification

effectively precludes us from performing our

reviewing task.

/d. at 1473. Thus, the D.C. Circuit case cited by petitioners

reemphasizes the point that the level of inquiry in class

8

certification analysis is case-specific and varies according

to the facts.

The Supreme Court of Arkansas’ approach, as outlined

in BNL Equity, does not conflict with the approach used by

various Circuit Courts of Appeals because each case relied

upon by the petitioners can be easily distinguished on its

facts. Moreover, the BNL Equity trial and appellate courts

reviewed the class certification motion with the proper

scrutiny as outlined by Arkansas precedent. Indeed, the trial

court’s opinion thoroughly analyzed the relevant authorities

and applied the law therein enunciated to the facts before it

in BNL Equity, concluding that class certification was

appropriate. See Appendix to Petitioners’ Brief at 19a-42a.

The petition for certiorari should be denied.

C. THE SUPREME COURT OF ARKANSAS’

DECISION IN BNL EQUITY DOES NOT

CONFLICT WITH THE APPROACH OF SISTER

STATES.

Finally, petitioners argue that the Supreme Court of

Arkansas’ approach varies from that of sister states. To

support this assertion, petitioners cite cases from Texas,

South Carolina, and (in a footnote) Alabama and New Jersey.

In reality, the cases cited by petitioners do not reflect that

other states have a different procedure than Arkansas.

Instead, these cases indicate that petitioners are elevating

form over substance. While some other states have embraced

the “rigorous analysis” language of Falcon, the substance

of those states’ actual procedure for certifying class actions

is virtually indistinguishable from Arkansas’ procedure.

:

.

|

;

:

:

9

The Alabama case cited by petitioners is a classic

example. In Ex parte Mayflower National Life Ins. Co. v.

Heard, 2000 WL 548211 (Ala. May 5, 2000), the Alabama

Supreme Court elaborated on its definition of “rigorous

analysis:”

The United States Supreme Court, applying

Rule 23 of the Federal Rules of Civil Procedure,

has said that, before issuing any class certification

order, a trial court must be “satisfied, after a

rigorous analysis, that the prerequisites of Rule

23(a) have been satisfied.” The essence of this

holding, it appears to us, is that every class

certification must, at a minimum, identify each of

the four elements of Rule 23(a) and explain in

detail how the proponents of the class have met

their burden of proving those elements.

Id. at *2 (quoting from Ex parte Equity National Life Ins.

Co., 715 So. 2d 192 (Ala. 1997)) (quotations omitted)

(emphasis added).

Under this definition of “rigorous analysis,” it is clear

that the Pulaski County Circuit Court’s class certification

order satisfies the requirements. The trial court’s certification

order analyzed each of the requirements of Arkansas-Rule

of Civil Procedure 23(a) and then discussed in detail the

requirements of Rule 23(b). See Appendix to Petitioners’

Brief at 24a-34a (discussing language of Rule 23(a) and (b))

and 34a-41a (applying the law to the particular facts of this

case). Thus, even assuming that petitioners’ characterization

of the Arkansas Supreme Court’s holdings on this issue are

correct, petitioners are still attempting to elevate form over

substance. The trial court did employ a “rigorous analysis”

10

in this case even though it was not specifically required to

do so under Arkansas law.

In the New Jersey case cited by petitioners, the court

reversed a certification order “because of the trial court’s

too brief analysis ....” Carroll v. Cellco Partnership,

713 A.2d 509, 514 (N.J. Super. Ct. App. Div. 1998). The

Carroll case involved class-wide issues affected by variance

in state law. As in the Fifth Circuit’s Castano decision, the

trial court failed adequately to consider how variance in state

law would affect the predominance requirement of Rule 23.

Thus, the New Jersey court’s decision was based on the

particular facts of the case. It also does not add to any

supposed “conflict” between states because it is not a

decision of the highest court in New Jersey. '

The Texas cases cited by petitioners liberally cite

Castano while restating the Falcon rule of “rigorous

analysis.” Importantly, the main case cited by petitioners,

Southwestern Refining Co., Inc. v. Bernal, 2000 WL 566745

(Tex. 2000) states very clearly that federal case law on

Rule 23 is only “persuasive authority” in the state court

context. Southwestern Refining Co. v. Bernal, 2000 WL 566745

at *7; see also Ford Motor Co. v. Sheldon, 2000 WL 566766,

at *6. Since the same type of approach is used in Arkansas,’

1. The New Jersey case is not a decision of the highest court

of that state; rather, it is a decision from the Superior Court, Appellate

Division. See Carroll v. Cellco Partnership, 713 A.2d 509

(N.J. Super. Ct. App. Div. 1998).

2. See Fraley v. Williams Ford Tractor Co., 339 Ark. 322, 336,

5 S.W.3d 423, 432 (1999) (“We have said that we will interpret

Ark. R. Civ. P. in the same manner the federal courts interpret the

comparable Fed. R. Civ. P. 23.”).

4

>

3

i

q

}

é

1-1

a careful analysis shows there is no true conflict between

the Supreme Court of Arkansas’s Rule 23 precedent and

holdings of this Court, the Circuit Courts of Appeals, or

highest courts of sister states.

Il.

THIS COURT SHOULD NOT GRANT CERTIORARI

BECAUSE OF WELL-SETTLED JURISDICTIONAL

AND PRUDENTIAL PRINCIPLES.

The jurisdiction of this Court to review decisions of state

courts has been historically limited by constitutional and

prudential concerns. Review of state court decisions by this

Court is antithetical to the federal system of government

contemplated by the United States Constitution and

reinforced by decisions of this Court. Petitioners have

asserted no compelling grounds on which this Court has

jurisdiction to issue a writ of certiorari. Under the doctrines

discussed below, this Court should deny the petition for writ

of certiorari.

A. THE ARKANSAS SUPREME COURT’S DECISION

IS BASED ON AN INDEPENDENT AND

ADEQUATE STATE GROUND.

In Adams v. Robertson, 520 U.S. 83 (1997), this Court

clearly stated the principles governing certiorari in a situation

similar to the one at bar:

Here, the Alabama Supreme Court has an

undeniable interest in having the opportunity to

determine in the first instance whether its existing

rules governing class-action settlements satisfy

12

the requirements of due process, and whether to

exercise its power to amend those rules to avoid

potential constitutional challenges.

Adams v. Robertson, 520 U.S. at 90. The Court went on to

state:

Here, even if the state court’s construction of its

class-action rules would not obviate the due

process challenge, it would undoubtedly aid our

understanding of those rules as a predicate to our

assessment of their constitutional adequacy. And

not incidentally, the parties would enjoy the

opportunity to test and refine their positions

before reaching this Court.

Id. at 91.

This well-established principle of deference to states on

questions of purely state law is embodied in the constitutional

principle of “independent and adequate state grounds.” Under

this doctrine,

this Court “will not review a question of federal

law decided by a state court if the decision of that

court rests on a state law ground that is

independent of the federal question and adequate

to support the judgment.” We in fact lack

jurisdiction to review such independently

supported judgments on direct appeal: Since the

state-law determination is sufficient to sustain the

decree, any opinion of this Court on the federal

question would be purely advisory.

j

4

5

}

SR eR NEA Oita he ALN ad i aN 2 aig RI It he eae Me

13

See Lambrix v. Singletary, 520 U.S. 518, 522-23 (1997)

(quoting Coleman v. Thompson, 501 U.S. 722, 729 (1991))

(citations omitted).

The test for adequate and independent state grounds is

most eloquently stated in Michigan v. Long:

[WJhen, as in this case, a state court decision fairly

appears to rest primarily on federal law, or to be

interwoven with the federal law, and when the

adequacy and independence of any possible state

law ground is not clear from the face of the

opinion, we will accept as the most reasonable

explanation that the state court decided the case

the way it did because it believed that federal law

required it to do so. If a state court chooses merely

- to rely on federal precedents as it would on the

precedents of all other jurisdictions, then it need

only make clear by a plain statement in its

judgment or opinion that the federal cases are

being used only for the purpose of guidance, and

do not themselves compel the result that the court

has reached. If the state court decision indicates

clearly and expressly that it is alternatively based

on bona fide separate, adequate, and independent

grounds, we, of course, will not undertake to

review the decision.

Michigan v. Long, 463 U.S. 1032 (1983).

Here, it is evident that the state court decision of which

petitioners seek review is supported by “bona fide separate,

adequate, and independent grounds.” The decision is based

squarely on Supreme Court of Arkansas case precedent and

14

the language of Arkansas Rule of Civil Procedure 23. While

it is true that Arkansas courts rely on federal precedent in

construing Arkansas Rule of Civil Procedure 23, see Fraley v.

Williams Ford Tractor & Equip. Co., 339 Ark. 322, 336, 5

S.W.3d 423, 432 (1999), it does not automatically follow

that a federal question is present in the case. The Supreme

Court of Arkansas, in its most recent pronouncement on the

issue, stated clearly:

We have said that we will interpret Ark. R. Civ.

P. 23 in the same manner the federal courts

interpret the comparable Fed. R. Civ. P. 23.

Fraley v. Williams Ford Tractor & Equip. Co., 339 Ark. at

336, 5 S.W.3d at 432 (emphasis added). Thus, the Supreme

Court of Arkansas is relying on federal precedent for

guidance rather than as conirolling law, just as the

independent and adequate state grounds test envisions.

The Supreme Court of Arkansas is free to construe its

own rule of civil procedure in any way it chooses, as long as

that construction is constitutional. The Supreme Court of

Arkansas has promulgated a long line of opinions on the

proper scrutiny courts should give class certification

decisions. The most recent of these cases were cited in the

Supreme Court of Arkansas’s opinion in this case, where

the justices explicitly chastised BNL Equity:

The appellants, however, are plowing old ground

in raising an issue that has clearly been decided

by this court. Most recently, we said:

We have held that neither the trial court

nor the appellate court may delve into

ne EE aes tera eae os

15

the merits of the underlying claim in

determining whether the elements of

Rule 23 have been satisfied. In that

regard a trial court may not consider

whether the plaintiffs will ultimately

prevail, or even whether they have a

cause of action. Thus, the propriety of a

class action is “basically a procedural

question.”

BNL Equity, 10 S.W.3d at 841 (quoting Fraley v. Williams

Ford Tractor & Equip. Co., 339 Ark. at 335, 5 S.W.3d at

431 (1999)).

B. ARKANSAS RULE OF CIVIL PROCEDURE 23 IS

A PROCEDURAL RULE THAT DOES NOT

IMPLICATE SUBSTANTIVE RIGHTS.

According to prevailing law, “Supreme Court

jurisdiction to protect federal rights requires distinction

between state procedural grounds and state substantive

grounds in an assessment of independence and adequacy.”

See Wright, Miller & Cooper, FEDERAL PRACTICE AND

PROCEDURE, § 4021 (2d ed. 1996 and Supp. 2000). The

Supreme Court of Arkansas has held that the construction

of Rule 23 is a procedural issue which does not implicate

substantive rights. See Fraley v. Williams Ford Tractor &

Equip. Co., 339 Ark. at 335, 5 S.W.3d at 431 (1999).

In Phillps Petroleum v. Shutts, this Court discussed the

requirements of the Due Process Clause in the context of

class actions: “notice, an opportunity to be heard, a right to

opt out, and adequate representation.” See Phillips Petroleum

v. Shutts, 472 U.S. 797, 812 (1985). While the Shutts case

discussed procedural due process requirements necessary to

16

bind absent class members, its holding is broad enough to

include due process requirements for class-action defendants

as well.

Petitioners had notice of the class certification hearing,

and they actually appeared and presented their case both at

the trial and appellate court levels. Petitioners make no claim

that the trial or appellate courts denied them an opportunity

to defend themselves against respondents’ claims. Thus,

procedural due process was served by the Arkansas

procedure, and petitioners’ constitutional rights are not

implicated.

C. A GRANT OF CERTIORARI IN THIS CASE

WOULD VIOLATE FUNDAMENTAL PRINCIPLES

OF THE CONSTITUTIONAL FEDERAL SYSTEM.

Even though Arkansas Rule of Civil Procedure 23 is to

be construed using federal precedent, principles of federalism

demand that Arkansas be given leeway to promulgate its own

rules and construe these rules as its courts deem proper. States

are and should be free-to set up their own procedural

requirements and to have control over their own court

systems. Arkansas-and other states may use Rule 23 of the

Federal Rules of Civil Procedure precedent as persuasive

authority, but federal authority should not be controlling,

especially when the rule at issue is a state procedural rule.

According to Wright, Miller & Cooper: |

State courts have their own strong interests in

applying state procedure to litigation that involves

federal questions. At a minimum, courts and

counsel are familiar with the local procedure, and

often are better able to apply it correctly than

.

Pia DM

SS Sa Saree ae

a

;

4

™ 4

|

17

federal procedure. Even if litigators and courts

were equally well versed in both state and federal

procedure, moreover, efficiency is promoted and

mistake-inducing confusion is avoided by applying

a uniform and integrated set of rules to litigation

in a single case. State courts, further, may have

developed a procedure that is either intrinsically

better than federal procedure, or that is better

adapted to the institutional setting of the state

courts. The state interest, in short, is in following

procedure that is familiar, uniform, and good. The

Supreme Court as well has an interest in leaving

State courts free to follow their own procedure.

Wright, Miller & Cooper, FEDERAL PRACTICE AND PROCEDURE,

§ 4021.

In this case, respondents submit that the proper

prudential path for this Court to take is to deny petitioners’

request for a writ of certiorari to the Supreme Court of

Arkansas. The state trial and appellate court decisions were

based on independent and adequate state grounds, proper

procedure was followed, and the federal system compels

deference to the Arkansas appellate court’s decision in this

case. The writ should be denied.

III.

PETITIONERS DID NOT PROPERLY RAISE

OR PRESERVE THE QUESTION PRESENTED

BY THEIR PETITION.

Questions to be reviewed by this Court must be raised

and presented to the court rendering the judgment below. In

Adams v. Robertson, 520 U.S. 83 (1997), this Court stated:

18

With “very rare exceptions” . . . we have adhered

to the rule in reviewing state court judgments

under 28 U.S.C. § 1257 that we will not consider

a petitioner’s federal claim unless it was either

addressed by, or properly presented to, the state

court that rendered the decision we have been

asked to review.

Id. at 86 (citations omitted) (citing Heath v. Alabama,

474 U.S. 82 (1985)). In addition, it is well-settled that

“[w]hen the highest state court is silent on a federal question

before us, we assume that the issue was not properly

presented.” /d. (citing Board of Directors of Rotary Int'l v.

Rotary Club of Duarte, 481 U.S. 537 (1987)).

In Adams, this Court granted certiorari to decide whether

Alabama’s state class action rules violated federal due

process standards. Later, this Court dismissed the writ,

holding that certiorari was improvidently granted because

the issue was not properly raised in the courts below. The

Court reached this decision even though the petitioners in

Adams had addressed the federal question in their briefs at

the trial court and state supreme court levels. See id. at 87-89.

The Supreme Court of Arkansas’ opinion in this case is

resoundingly silent concerning petitioners’ due process

claim. Thus, petitioners must overcome the presumption that

the issue was not presented to the Arkansas Supreme Court.

See Adams, supra, 520 U.S. at 86-87. Petitioners undeniably

have failed to overcome this presumption and are barred from

raising the due process claim before this Court.

Petitioners assert that the claim was properly raised

before the trial court and the Arkansas Supreme Court.

ATRL BAP Al SAW Ne AS teat i ROR PB i a oe?

dccaltecatel

19

See Petitioners’ Brief, at 6-7. Petitioners, however, are under

an obligation to do more than merely raise the issue. As

discussed in the Adams case, the petitioners have the burden

of proving they presented the federal claim with “fair

precision and in due time.” Adams, 520 U.S. at 88. It is

axiomatic that this Court should not “disturb the finality of

state judgments on a federal ground that the state court did

not have occasion to consider.” /d. at 90.

Supreme Court Rule 14(g)(i) states that a petition for

writ of certiorari should contain, among other materials,

(g) A concise statement of the case setting out

the facts material to consideration of the questions

presented, and also containing the following:

(i) If review of a state-court judgment

is sought, specification of the stage in

the proceedings, both in the court of first

instance and in the appellate courts,

when the federal questions sought to be

reviewed were raised; the method or

manner of raising them and the way in

which they were passed on by those

courts; and pertinent quotations of

specific portions of the record or

summary thereof, with specific reference

to the places in the record where the

matter appears (e.g., court opinion,

ruling on exception, portion of court’s

charge and exception thereto, assignment

of error), so as to show that the federai

question was timely and properly raised -

and that this Court has jurisdiction to

20

review the judgment on a writ of

certiorari. When the portions of the

record relied on under this subparagraph

are voluminous, they shall be included

in the appendix referred to in

\ subparagraph 1(1).

Sup. Ct. R. 14(g)(1).

Petitioners have not demonstrated that they adequately

presented their due process argument to either the trial court

or the Supreme Court of Arkansas. The requirements of Rule

14(g)(i) have not been followed with sufficient specificity

because the pages of the record cited by petitioners are

voluminous. This Court, however, does not have the actual

pages reproduced or a fair and accurate summary of those

pages. Moreover, the Arkansas courts were never asked or

given the proper opportunity to contour their interpretation

of Arkansas Rule of Civil Procedure 23 in a due process

context. For this reason, the writ should be denied.

21

CONCLUSION

For all of the foregoing reasons, respondents respectfully

request that this Honorable Court deny the petition for writ

of certiorari.

Respectfully submitted,

JOHN E. Tutt III

Counsel of Record

PATRICK W. MCALPINE

QUATTLEBAUM, GROOMS, TULL

& Burrow PLLC

111 Center Street

Suite 1850

Little Rock, Arkansas 72201

(501) 379-1700

JAMES R. PENDER

MICHAEL J. PTAK

PENDER, McCCasTLAIN & PtTak, P.A.

900 South Shackleford

Suite 750

Little Rock, Arkansas 72211

(501) 312-2020

PETER G. KUMPE

WILLIAMS & ANDERSON LLP

Twenty-Second Floor

111 Center Street

Little Rock, Arkansas 72201

(501) 372-0800

Attorneys for Respondents