Opposition Brief — Richard v. Hoechst Celanese Chemical Group, Inc.

|

(2)

No. 03-1543

IN THE

Supreme Court of the United States

RICHARD R. RICHARD, JR., on behalf of himself

and all others similarly situated.

Petitioner,

V.

HOECHST CELANESE CHEMICAL GROUP, INC..

SHELL OIL COMPANY d/b/a SHELL CHEMICAL

COMPANY, HOECHST CELANESE CORPORATION,

and E. 1. DU PONT DE NEMOURS AND COMPANY.

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION OF RESPONDENT

FE. 1. DU PONT DE NEMOURS AND COMPANY

KATHLEEN TAYLOR SOOY RAYMOND MICHAEL RIPPLE

CLIFTON S. ELGARTEN Counsel of Record

LUTHER ZEIGLER DONNA L. GOODMAN

TRACY A. ROMAN E. 1. DU PONT DE NEMOURS AND

CROWELL & MORING LLP COMPANY

1001 Pennsylvania Avenue, N.W. Legal D-7012

Washington, DC 20004 1007 Market Street

(202) 624-2500 Wilmington, DE 19898

(302) 773-3072

Attorneys for Respondent

E. 1. du Pont de Nemours and Company

(Additional counsel are listed on the inside front cover)

SS PL A A ey “ree MPP

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

So REAAERRRTE eT

ANDREW C. SCHIRRMEISTER III

JIM C. EZER

SCHIRRMEISTER DIAZ-ARRASTIA, LLP :

Pennzoil Place — South Tower .

711 Louisiana, Suite 2150

Houston, TX 77002

(713) 228-3545

| REET PANE

AERO AER RE OIL sot

i Ta eee

QUESTIONS PRESENTED

1. Whether the Court of Appeals for the Fifth Circuit erred

in finding that petitioner’s claim under 42 U.S.C. § 1983 is

jurisdictionally barred by the Rooker-Feldman doctrine as an

impermissible collateral attack on two state court final

judgments and is substantively meritless because of the

failure to allege state action.

2. Whether the Court of Appeals for the Fifth Circuit erred

in holding that, even assuming arguendo that disgorgement is

a remedy available in private civil RICO actions, petitioner

was not entitled to a disgorgement remedy under the

circumstances of this case because there was no allegation of

future misconduct.

(i)

i a i i i a

ii

CORPORATE DISCLOSURE STATEMENT

PURSUANT TO RULE 29.6

Pursuant to Supreme Court Rule 29.6, Respondent E. I. du

Pont de Nemours and Company states that it has no parent

corporations and that there are no publicly held companies

that own more than 10% of its stock.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ..............ccccssosssesrreseerenseees i

CORPORATE DISCLOSURE STATEMENT

PURSUANT TO RULE 29.6 occcsceccceconescssersssoresesenens ii

TABDE OF AUTHORITIES. ......ccccscesscscscsescocscsssssosserees iv

TIE TROIIUIC TION cccccnsvsacessessocnssssssvesssnnpnevensectesertsssenes l

COUNTERSTATEMEN T ..nsceccssrssscosssosssooessesccssenseenseses 3

A. The Cox and Spencer Settlements ............:.:00+ 3

B. The Proceedings Below. ..............sssccereseereesees 6

C. The Decisions Below ............ccrcccsoccsssrresssseserees 8

REASONS FOR DENYING THE PETITION ............. 9

I. THE FIFTH CIRCUIT PROPERLY FOUND

THAT PETITIONER’S § 1983 CLAIM CAN-

NOT BE SUSTAINED............cccccccsesresssrseseees 10

A. The Rooker-Feldman Doctrine Bars Peti-

tioner’s § 1983 Claim Because The Under-

lying Class Action Settlements Afforded

Class Members Due Process............:00cceee 10

B. Petitioner’s § 1983 Claim Fails Because

There Is No State Action ...cccsvescesersescressoseess 18

Il. THE FIFTH CIRCUIT’S DISMISSAL OF

PETITIONER’S RICO CLAIM RAISES NO

QUESTIONS THAT WARRANT REVIEW

BY THIS COURT .......rccsccsscsccscsosessceserescsennsesess 21

CONCLUSION ...ccrscsoscsssccesssrsscsosssonccsecsesnosseensenosszecesens 26

ge

iv

TABLE OF AUTHORITIES

CASES Page

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

CPI Ths -scdsinsssdcncnsnmnilanindessestenanemmansiensadmaataaas 15

Car Carriers, Inc. v. Ford Motor Co., 789 F.2d

SF ee Ge: PIE sconseneiinenieieamens 23

Cooper v. Fed. Reserve Bank of Richmond,

467 U.S. 867 (1984) 0. piiseusceiiaeanennasals 23

Cox v. Shell Oil Co., No. 18,844 (Tenn. Ch. Ct.,

Obion County Nov. 17, 1995) ...cccceeeeeseeseeeeee 4

Cromwell v. County of Sac, 94 U.S. 351 (1876) ... 23

Dennis v. Sparks, 449 U.S. 24 (1980) c.cccccsccsseeseen 18, 19

D.C. Ct. App. v. Feldman, 460 U.S. 462 (1983)... 1] |

Epstein v, MCA, Inc., 179 F.3d 641 (9th Cir.

FFU) csverecenccediisioionassunnistseannemnticioameaammananaall 16

Fine v. Am. Online, Inc., 743 N.E.2d 416 |

CC CA. AR Bi iicrecseentanenicnsaaenni 15

GASH Assocs. v. Vill. of Rosemont, 995 F.2d 726 )

(FD CR, 199 S) uwiiimuiinndionasumnns 1]

In re General Motors Corp. Pick-Up Truck Fuel )

Tank Prods. Liab. Litig., 134 F.3d 133 (3d Cir.

SPUR lis ccesiocsnsiangnevsnsnssvecaessides tae aaeele 11

Grimes vy. Vitalink Communications Corp., 17 ; /

P.O 1983 (OCR. FI soiinicsisescocrenimionn 15, 16

Hansberry v. Lee, 311 U.S. 32 (1940)........cceeseees 15,17

Holmes v. Secs. Investor Prot. Corp., 503 U.S. |

Ee CUP tisistetiesnorseicianvienian sebeubsestapsaaumaiialiaiinn 7, a0

ITT Corp. v. Intelnet Int'l Corp., 366 F.3d 205

(36 CR, BOD) jcsssesrssserstesinicimpieasiasemaanans 1]

Kamilewicz v. Bank of Boston Corp., 92 F.3d 506

CFI CU, ESOP vserisicssesticsercenrsepamennnaaen 1]

Lugar v. Edmondson Oil Co., 457 U.S. 922

(BPR ciscsessesrsecrtisitennintebusaanaiaaaaae 18

Marrese v. Am. Acad. of Orthopaedic Surgeons,

STO US, F7S CIP sinister 13

Si —~—

Vv

TABLE OF AUTHORITIES-—Continued

Page

Matsushita Elec. Indus. Co. v. Epstein, 516 U.S.

FE ee icisaiscanteeblnssinidininbinaaaisadiiiiansémiasdaaldedinn 14, 15

Meers v. Shell Oil Co., No. M-30590 (Cal. Sup.

Ct., Monterey County Nov. 8, 1995). 0... 4

Mullane v. Cent. Hanover Bank & Trust Co.,

Fe She BASE sctndintisstatenntinviaensenicncninne 16

Nevada v. United States, 463 U.S. 110 (1983)...... 23

Norman v. Niagara Mohawk Power Corp., 873

Fe ee ls FID csscnincesnctasnoruisaceneniscibanes 23

Nottingham Partners v. Trans-Lux Corp., 925

of FF gt. Le | eR enereremennn 15, 16

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999)... 16

Phillips Petroleum Co. v. Shutts, 472 U.S. 797

EP per eiccossdensuieinenecdneiotenspninanbessesenonisulsauaeanannens 9, 16,17

Ritter v. Ross, 992 F.2d 750 (7th Cir. 1993).......... 11

Rooker vy. Fid. Trust Co., 263 U.S. 413 (1923)... 11

Scheidler v. Nat'l Org. for Women, Inc., 537 U.S.

FO GE nisrestocnteianesnnensicnniinnnansdbintensetounionnie 22

Snider v. City of Excelsior Springs, Mo., 154

Fc I ee Getta FUE cncicnssesstesernscentiesareinneonnn 1]

Spencer v. Shell Oil Co., No. CV-94-047 (Ala.

Cir. Ct., Greene County Nov. 17, 1995)............ 3

Summit Props., Inc. v. Hoechst Celanese Corp.,

yee ee Tk Ae nen 6,7

Tafflin v. Levitt, 493 U.S. 455 (1990)... ccecscceneeees 23

United States v. Carson, 52 F.3d 1173 (2d Cir.

PUTT Dcsenecednisenesiiichisitesiiaiecebantaueadieeevsnebmmeinsieniens 24

United States v. Lester, 363 F.2d 68 (6th Cir

PUM Cccansicnoschincsensiuiensbanensapidnceummnantianeseiientias 19

United States v. Philip Morris USA, Inc., 321

A OY Re ik oy | enn 24

vi

TABLE OF AUTHORITIES—Continued

United States v. Rashwan, 328 F.3d 160 (4th Cir.

CONSTITUTIONS AND STATUTES

es HI I, BF ciessttscictincvsisesesniecibicnianionns

ete: Ob We PR itetieessnnicantaicessnancnicaiiasdenmpeiicinaiinii

OTHER AUTHORITIES

RESTATEMENT (SECOND) OF JUDGMENTS § 41

Ci Pae re csinunishensncsscanbnisilsantpteaineiioneisiciaiabiaiannsisiets

23

ee

ee ne et ee

IN THE

Supreme Court of the United States

No. 03-1543

RICHARD R. RICHARD, JR., on behalf of himself

and all others similarly situated,

Petitioner,

V.

HOECHST CELANESE CHEMICAL GROUP, INC..,

SHELL OIL COMPANY d/b/a SHELL CHEMICAL

COMPANY, HOECHST CELANESE CORPORATION,

and E. I. DU PONT DE NEMOURS AND COMPANY,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION OF RESPONDENT

E. 1. DU PONT DE NEMOURS AND COMPANY

INTRODUCTION

This petition arises out of petitioner’s effort to mount a

federal court collateral attack on two state court judgments

that approved national class action settlements of consumer

products lawsuits involving polybutylene plumbing. Apply-

ing the due process standards applicable to class actions set

forth by this Court, the respective state courts presiding over

the two class action settlements determined that due process

had been afforded absent class members (i.e., that notice was

proper, representation was adequate and thus that nationwide

settlement classes could be certified).

2

Petitioner ultimately sought to cast his collateral attack

on these judgments as a claim under 42 U.S.C. § 1983.

However, in order to prevail on his § 1983 claim, he would

have to overturn the state court judgments that disposed of his

due process argument. Such an attack upon a state court

judgment in a federal district court is jurisdictionally barred

by the Rooker-Feldman doctrine. The federal courts have

consistently held that the Rooker-Feldman doctrine bars

federal court review of state class action settlements.

Petitioner is unable to identify even a hint of conflict among

the circuit courts on that point.

Petitioner’s effort to state a § 1983 claim for denial of cue

process was likewise defective, for equally uncontroversial

reasons. Petitioner was unable to show state action by

respondents, private actors. Under this Court’s clear prece-

dents, a private party does not become a state actor liable for

a constitutional violation under § 1983 by persuading a state

court judge to issue an allegedly erroneous ruling on a

constitutional issue. The Fifth Circuit properly recognized

that petitioner’s “blatant nonconformity with the requirements

of § 1983 [] suggests that he has merely cast his complaint in

the form of a civil rights action in an attempt to circumvent

Rooker-Feldman.” Pet. App. 11.

Petitioner's attempt to obtain federal court jurisdiction by

transforming his consumer products lawsuit into a fraud claim

under the Racketeer Influenced and Corrupt Organization Act

(“RICO”), 18 U.S.C. §§ 1961, et seg., was equally unsuc-

cessful. The Fifth Circuit was willing, arguendo, to indulge

petitioner the triple assumptions that a private party can avail

itself of equitable remedies under RICO, that “disgorgement”

of profits is an equitable remedy potentially available in this

context, and that a party pursuing equitable remedies does not

have to show reliance on a misrepresentation. But fully

consistent with the only other circuit court to consider this

issue, the Fifth Circuit held that an equitable remedy is not

a.

3

available under RICO where there is no ongoing or future

misconduct to prevent because the consumer products at issue

have not been manufactured or marketed for years.

COUNTERSTATEMENT

A. The Cox and Spencer Settlements.

1. Respondents Shell Oil Company (“Shell”), Hoechst

Celanese Corporation (“Celanese”), and E. I. du Pont de

Nemours and Company (“DuPont”) produced raw materials

sold to otlicr manufacturers who used those materials to make

plumbing components. Shell sold polybutylene resin to

manufacturers who extruded it into pipes for use in plumbing

systems. Celanese and DuPont sold acetal plastic resin to

manufacturers who molded it into fittings used to connect

pipes in plumbing systems. DuPont ceased marketing and

selling its raw material for use in polybutylene plumbing in

the late 1980s. _

2. In November 1994, Spencer v. Shell Oil Co., No. CV-

94-047 (Ala. Cir. Ct.. Greene County), a nationwide class

action, was filed against respondents in Alabama state court

alleging defects asseciated with polybutylene plumbing. In

May 1995, DuPont agreed to a national class action set-

tlement in Spencer. Under the terms of the Spencer settle-

ment, DuPont agreed to pay class members 10% of replumbs

and physical damage to tangible property caused by leaks.

DuPont agreed to provide $120 million to fund these costs.

The $120 million figure is a “soft cap,” meaning that if costs

exceed this figure, DuPont may provide additional funding.

If DuPont declines to provide additional funding, any unpaid

class members will retain their rights to pursue claims against

DuPont. R. 838.

—_—

' Citations to “R.” refer to the record on appeal in the Fifth Circuit.

4

3. In June 1995, Cox v. Shell Oil Co., No. 18,844 (Tenn.

Ch. Ct., Obion County) (“Cox”), a nationwide class action,

was filed in Tennessee state court against Shell and Celanese.

(DuPont was not a party.) The Cox court preliminarily

approved a nationwide class settlkement with Shell and

Celanese in August 1995. Under the settlement agreement,

Shell and Celanese agreed to fund replumbs and physical

damage to tangible property of the class members caused

by a qualifying leak and to provide $850 million in a “soft

cap” fund.

Class counsel in each of the Cox and Spencer actions filed

objections to the other settleineiit. Other parties also filed

objections. In October and November 1995, Cox and Spencer

class counsel and respondents participated in a mediation

conducted by California Superior Court Judge Robert Silver.’

The mediation resulted in some changes to the Cox

settlement, inc uding an increase in the initial funding to $950

million. Judg:, Silver noted that “[b]efore I would agree to

recommend .he settlement, it would have to meet a class

fairness standard ....” Meers v. Shell Oil Co., No. M-30590

(Cal. Super. Ct., Monterey County Nov. 8, 1995) (recom-

mendation re: Spencer/Cox settlement).

4. The Spencer court conducted a fairness hearing and

approved the settlkement on November 17, 1995. The court

specifically addressed the appropriate due process consid-

erations, finding the settlement “fair, adequate. and reason-

able to the Plaintiffs.” App. 16a-17a. The court ruled that

the $7.4 million notice program had “accurately described the

pending Action” and that “the means of disseminating the

notice was the best practicable, reasonably calculated, under

all the circumstances, to apprise interested parties of the

* Judge Silver was then presiding over yet another putative statewide

class action in California, Meers v. Shell Oil Co., No. M-30590 (Cal.

Super. Ct., Monterey County). The Cox and Spencer courts were aware of

Judge Silver’s mediation efforts.

neaiant

tT aa ye

5

pendency of the Action and their rights therein.” /d. at 17a.

The court considered and overruled objections to the

adequacy of representation, finding that the class represen-

tatives would “fairly and adequately represent and protect the

interests of all class members, and not put any perceived

individual interests above those of the class.” /d. at 10a.

The Spencer court’s order approving the class sett:ement

released DuPont from any claims by a member of the

settlement class, “whether known, unknown, foreseen, un-

foreseen, patent or latent, . . . arising from, resulting from, or

in any manner relating to polybutylene plumbing systems.”

Id. at 19a-20a. The release further enjoined members of the

settlement class from “commencing or participating in any

action, either directly, individually, representatively, or in any

capacity, against [DuPont] arising from, resulting from or in

any manner relating to polybutylene plumbing systems or the

subject of the above-captioned Action.”

* The record before the Alabama court included an estimate from an

independent notice expert that the paid advertising program reached 96.6

percent of adults nationwide and that they were exposed to the message an

average of 4.9 times. Notice included (1) direct mailing of over 2.5

million notices to individuals; (2) a massive national campaign consisting

of national network and cable television advertisements, radio advertise-

ments, an extensive print campaign that targeted national, regional, and

local publications, and the mailing of information kits to numerous

membership organizations with interests related to polybutylene piumb-

ing; and (3) a non-paid or “earned media” campaign, such as press re-

leases and video news releases. Two supplemental notice programs were

conducted in 1999 and 2004.

4 The Alabama court “reserve[d] jurisdiction, without affecting the

finality of this Order, over: (a) implementation of this Settiement Agree-

ment: (b) enforcing and administering this Order as against any of the

Settling Parties or Settlement Class Members; (c) enforcing and admin-

istering the Settlement Agreement, including any releases in connection

therewith; and (d) otter matters related or ancillary to the foregoing.”

App. 20a.

6

5. The Tennessee court similarly conducted a fairness

hearing on the Cox settlement, giving that class settlement

final approval on November 17, 1995. The Cox court

carefully addressed the due process issues. The court char-

acterized the notice program as “singularly comprehensive

and creative,’ found that it provided the best notice

practicable under the circumstances, and specifically ruled

that it “met and exceeded” minimum due process require-

ments. App. 36a, 40a. With respect to adequacy of repre-

sentation, the court held that “Cox Class Counsel maintained

the highest standards of professionalism and advocacy in

protecting and promoting the interests of the Class throughout

the prosecution and settlement of this case.” /d. at 45a.

B. The Proceedings Below.

In 1997, petitioner purchased a used mobile home

containing polybutylene plumbing. On January 19, 2000, he

filed the instant federal court action in the United States

District Court for the Eastern District of Texas. The origina!

complaint alleged conspiracy, strict liability, negligence,

and breach of implied warranties arising from polybuty-

lene plumbing—claims resolved and released in Cox and

Spencer.”

After respondents moved to dismiss for lack of subject

matter jurisdiction because petitioner’s claims were based

solely on state law, petitioner alleged violations of RICO and

the Due Process Clause of the United States Constitution.°

On June 27, 2000, the Fifth Circuit decided Summit

Properties, Inc. v. Hoechst Celanese Corp., 214 F.3d 556 (Sth

> Petitioner could have, but did not, file a claim under the Cox and

Spencer settlements seeking recovery for his alleged plumbing damages.

° Petitioner also added a Lanham Act claim, which he voluntarily dis-

missed when respondents pointed out that consumers have no standing to

sue under the Lanham Act.

J

Cir. 2000), a case brought against respondents by some of the

same counsel representing petitioner, and which alleged

RICO violations involving polybutylene plumbing. Applying

Holmes v. Securities Investor Protection Corp., 503 U.S. 258

(1992), which held that a RICO plaintiff must show that

defendant proximately caused its injury, the Summit court

dismissed the case because plaintiffs had not alleged reliance

on any misrepresentations by respondents. Summit, 214 F.3d

at 560.

Respondents moved to dismiss petitioner’s RICO claims in

this case because they were identical to those dismissed in

Summit. Respondents also moved to dismiss petitioner’s due

process claim as barred by the Rooker-Feldman doctrine. On

October 2, 2000, attempting to avoid the holding of Summit,

petitioner amended his RICO claims to include an allegation

of reliance on alleged misrepresentations by respondents.

Petitioner filed a RICO statement of facts on March 15,

2001. That statement demonstrated that—contrary to his

earlier allegations—petitioner had not relied on any misrep-

resentations by respondents; indeed, he was unaware of any

representations by respondents. Respondents immediately

renewed their motions to dismiss based on Summit.

Petitioner’s effort to contrive a RICO claim evolved further

during an October 17, 2001 hearing, during which he argued

that he could avoid the obligation to allege reliance and

proximate cause, as required by Holmes and Summit, by

instead pursuing equitable remedies. The particular “equit-

able remedy” he sought was monetary: “disgorgement” of

respondents’ “‘past profits.”

With respect to the due process allegations, although no

version of his complaint specified a § 1983 claim, petitioner’s

June 14, 2001 brief asserted a violation of 42 U.S.C. § 1983

based on his allegations that “Defendants conspired to

8

corruptly use state courts to enforce a legal process that

violated Plaintiffs due process rights.” R. 930.

C. The Decisions Below.

On March 24, 2002, the district court dismissed petitioner’s

§ 1983 claim for lack of subject matter jurisdiction. The

court noted that, under the Rooker-Feldman doctrine, “Plain-

tiff cannot seek to have this Court review the final judgments

of the Cox and Spencer Courts.” Pet. App. 35. Although

“framed as a § 1983 claim,” the petitioner’s claim was, in

effect, a collateral attack on the state court judgments fore-

closed by Rooker-Feldman. Id.

With respect to petitioner’s RICO claims, the district court

held that it had subject matter jurisdiction, but found that

petitioner’s claims failed under Holmes and Summit because

petitioner had not alleged reliance on any misrepresentation.

Id. at 45. The district court also held that petitioner was not

exempted from showing reliance vy claiming that disgorge-

ment was an appropriate remedy.

The United States Court of Appeals for the Fifth Circuit

affirmed. The court held that petitioner’s due process claims

under § 1983 “indisputably denounce the express findings” of

the Cox court on the due process issues and “would result in

setting aside a state court judgment,” id. at 10, and therefore

were barred by the Rooker-Feldman doctrine.

The Fifth Circuit also rejected petitioner’s effort to plead a

claim under § 1983, finding that petitioner had “attempted to

circumvent the Rooker-Feldman doctrine by intertwining a

groundless § 1983 claim with the state court findings.” /d.

at 15. Because petitioner’s claims against the private defend-

ants did not involve state action, they could not form the

predicate for a constitutional claim under 42 U.S.C. § 1983.

9

With respect to petitioner’s claim seeking disgorgement

under RICO, the Court of Appeals assumed, arguendo, thet a

private party could obtain equitable relief under RICO

without showing reliance on a misrepresentation. The court

nevertheless found that disgorgement was not available as a

remedy to petitioner under the facts of this case because

18 U.S.C. § 1964(a) “establishes that equitable remedies

[under RICO] are available only to prevent ongoing and

future conduct.” /d. at 17. Because respondents had ceased

marketing the products at issue years earlier, petitioner

“fail[ed] to argue that disgorgement would ‘prevent and

restrain’ similar RICO violations in the future.” /d.

REASONS FOR DENYING 7HE PETITION

The petition presents no question warranting this Court’s

review. Applying this Court’s prescribed standards for judg-

ing due process in the context of a class action (as set forth in

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

Cox and Spencer courts that approved the class settlements

specifically considered and rejected the due process argu-

ments that petitioner now raises. The judgments of those

courts are entitled to full faith and credit. Because peti-

tioner’s § 1983 claim directly attacks those judgments, it is

barred by the Rooker-Feldman doctrine. Moreover, peti-

tioner’s § 1983 claim against respondents cannot succeed

because petitioner cannot show “state action.” Private parties

do not become “state actors” because they persuaded a state

court to make what petitioner asserts is an erroneous due

process determination. There are no circuit decisions in

conflict with the decision of the Fifth Circuit on either of

these points.

Petitioner’s effort to present an issue to this Court

regarding the precise scope of one form of equitable relief

potentially available under RICO is equally unavailing.

Assuming arguendo that disgorgement is available under

10

RICO to private plaintiffs, the plain language of the RICO

statute demonstrates that disgorgement is unavailable as an

equitable remedy under RICO where it would not prevent

future misconduct. The only other circuit court to address a

similar issue reached an identical conclusion. Even on the

narrow, fact-bound issue that petitioner proffers, there is no

conflict in the circuits.

I. THE FIFTH CIRCUIT PROPERLY FOUND

THAT PETITIONER’S § 1983 CLAIM CANNOT

BE SUSTAINED.

Petitioner bases his § 1983 claim on the theory that the

private defendants in the class actions—respondents here—

deprived him of due process by leading the state courts into

erroneous decisions on the due process issue. Pet. 7, 18. The

Fifth Circuit rejected this claim. First, it found that peti-

tioner’s request to have a federal court review the Tennessee

and Alabama state courts’ determinations that due process

had been afforded absent class members was barred by the

Rooker-Feldman doctrine. Second, the Fifth Circuit found

that petitioner could not present a colorable claim under

§ 1983 because private defendants are not rendered state

actors merely by seeking and obtaining judgments from

state courts.

Both conclusions are clearly correct and are not in conflict

with the law of any other circuit.

A. The Rooker-Feldman Doctrine Bars Petitioner’s

§ 1983 Claim Because The Underlying Class

Action Settlements Afforded Class Members

Due Process.

1. The Rooker-Feldman doctrine recognizes a fundamental

principle: The grant of federal question jurisdiction to the

federal district courts does not give those courts the authority

and jurisdiction to sit in review of the final judgments of state

re

1]

courts, even on federal questions.’ Rooker v. Fid. Trust Co..

263 U.S. 413, 415 (1923). To the contrary, state courts are

bound by federal law; state appellate courts are fully capable

of evaluating violations of federal and constitutional law.

Therefore, only the United State Supreme Court may under-

take federal review of final state court judgments, even those

involving federal and constitutional law. See D.C. Ct. App. v.

Feldman, 460 U.S. 462, 482 (1983) (holding that ‘a United

States District Court has no authority to review final

judgments of a state court in judicial proceedings”). Even ifa

state court is alleged to have decided a matter of federal

constitutional law incorrectly, the Rooker-Feldman doctrine

forecloses review in the lower federal courts.®

The Fifth Circuit here, following the lead of the Seventh

Circuit in Kamilewicz v. Bank of Boston Corp., 92 F.3d 506,

510-11 (7th Cir. 1996), and the Eighth Circuit in Snider vy.

City of Excelsior Springs, Mo., 154 F.3d 809, 812 (8th Cir.

1998), held that Rooker-Feldman bars precisely this type of

collateral attack on a class action judgment. Pet. App. 8. See

also In re General Motors Corp. Pick-Up Truck Fuel Tank

Products Liab. Litig., 134 F.3d 133, 143 (3d Cir. 1998)

(refusing to examine the due process afforded to class mem-

bers in a Louisiana class action because “Rooker-Feldman

bars exactly this sort of intermediate appellate review of state

” The Rooker-Feldman doctrine is a jurisdictional bar—unlike res

judicata or full faith and credit, which are traditionally raised as affirm-

ative defenses. Where a claim is subject to dismissal both as a matter of

res judicata and Rooker-Feldman, Rooker-Feldman typically provides

the grounds for dismissal because as a jurisdictional doctrine, it is ad-

dressed first.

* See ITT Corp. v. Intelnet Int'l Corp., 366 F.3d 205, 212 (3d Cir.

2004) (whether the state court’s decision was correct as a matter of federal

law is irrelevant under Rooker-Feldman); GASH Assocs. y. Vill of Rose-

mont, 995 F.2d 726, 728 (7th Cir. 1993) (Rooker-Feldman applies even

when state court’s judgment is erroneous and based on unconstitutional

procedures) (citing Ritter v. Ross, 992 F.2d 750, 755 (7th Cir. 1993)).

| 12

court judgments”). There is no circuit that has held or

suggested to the contrary.

Here, the Cox and Spencer courts, applying Shutts, each

examined whether absent class members had been afforded

due process in the form of adequate notice and adequate

representation by both the class representatives and class

counsel. For example, the Spencer court ruled that “the

means of disseminating the [class] notice was the best prac-

ticable, reasonably calculated, under all the circumstances, to

apprise interested parties of the pendency of the Action and

their rights therein.” App. 17a. It also considered objections

to the adequacy of representation, finding that the class

representatives would “fairly and adequately represent and

protect the interests of all class members, and not put any

perceived individual interests above those of the class.” /d.

at 10a.

The Cox court likewise addressed the due process issues.

The Cox court described notice to class members as

“singularly comprehensive,” found that it provided the best

notice practicable under the circumstances, and held that it

“met and exceeded” minimum due process requirements. /d.

at 36a, 40a. With respect to adequacy of representation, the

court held that “Cox Class Counsel maintained the highest

standards of professionalism and advocacy in protecting and

promoting the interests of the Class throughout the prose-

cution and settlement of this case.” /d. at 45a.

In light of these determinations, the Fifth Circuit had little

difficulty concluding that petitioner’s claim that the Cox court

violated absent class members’ due process rights was barred

by Rooker-Feldman. Petitioner’s allegations that absent class

members were deprived of due process “indisputably de-

nounce the express findings of the Cox state court. Because

his challenge would result in setting aside a state court

judgment, Rooker-Feldman seems to bar federal review of

these findings.” Pet. App. 10.

13

2. Petitioner asserts that the Fifth Circuit erred by using

the Rooker-Feldman doctrine to give the judgments of the

Cox and Spencer courts greater preclusive effect than they

would be given in the states where they were rendered.” Pet.

4-5. Petitioner asserts that he would be free to raise a due

process challenge to those judgments in any state court; i.e.,

that full faith and credit would not bar a due process

challenge to those judgments. On that basis, he contends that

the Fifth Circuit improperly applied the Rooker-Feldman

doctrine to preempt his right to have a federal court examine

whether the state court had, in fact, afforded absent class

members due process. /d.

Petitioner is wrong both in his description of the Fifth

Circuit’s holding and on the law.

The Fifth Circuit did not give the judgment of the Cox

court a broader effect under the Rooker-Feldman doctrine

than it would have as a matter of full faith and credit, as

petitioner claims. To the contrary, the Court of Appeals

recognized at the outset that “the Rooker-Feldman doctrine

only applies insofar as a state court judgment merits full faith

and credit.”'" Pet. App. 8-9. This, in turn, required the court

issuing the judgment to have considered the relevant due

process issues. See id. at 9 (noting that the court must ensure

that “class members have received adequate notice, repre-

sentation, and an opportunity to opt-out” and that the

settlement judgment has no preclusive effect if the court does

not comply with these procedures). Thus, the Fifth Circuit

” A court entertaining a collateral attack on a state court judgment must

determine, before granting preclusive effect to that judgment, whether the

law of the state in which the judgment was rendered would grant pre-

clusive effect to the judgment. See Marrese v. Am. Acad. of Orthopaedic

Surgeons, 470 U.S. 373,381 (1985).

'° The full faith and credit principle is set forth in Article IV, Section |

of the United States Constitution and codified in the Full Faith and Credit

Act, 28 U.S.C. § 1738.

14

did not give the state court judgment broader binding effect

under Rooker-Feldman than it would have as a matter of full

faith and credit.

Moreover, petitioner makes a fundamental mistake in

assuming that the Cox court’s due process determinations

would be subject to collateral attack in state court on due

process grounds. Pet. 10. To the contrary, the law is clear

that if the court presiding over a class settlement conducted

the due process inquiry mandated by this Court’s cases,

including Shutts—as both the Cox and Spencer courts did

here—the state court’s determination that the class could

properly bind absent class members is entitled to full faith

and credit. Its determination is not subject to second-

guessing by any subsequent court.'' Significantly, each of

the several state courts that has considered whether the Cox

class action settlement and ensuing judgment is entitled to

full faith and credit, notwithstanding efforts to mount

coliateral due process attacks on that judgment, has rejected

such challenges.

It is the responsibility of the seft/ement court to determine

whether absent class members were afforded due process.

See generally Matsushita Elec. Indus. Co. v. Epstein, 516

U.S. 367 (1996). As this Court made clear in Matsushita, a

“judgment entered in a class action, like any other judgment

entered in a state judicial proceeding, is presumptively

entitled to full faith and credit under the express terms of the

Act.” /d. at 374. In that case, this Court found that the state

court judgment approving the settlement should be afforded

full faith and credit. The Court did so by seferencing the

findings of the Delaware courts on the due » -cess issues,

'' If petitioner were correct, then no class settlement would ever be

effective: parties seeking to bring claims already resolved by a prior class

settlement could simply claim that the presiding court had erred in judging

the adequacy of notice or class representation.

OO EE ee eee

15

rather than by independently determining whether due

process requirements had been met. /d. at 378-79,'?

As long as the state court in which the class action was

pending had procedures in place to protect absent class

members’ due process rights, Hansberry v. Lee, 311 U.S. 32.

42-43 (1940), its judgment and express determination that the

class was properly certified and notified is entitled to full

faith and credit. See Grimes v. Vitalink Communications

Corp., 17 F.3d 1553, 1558 (3d Cir. 1994) (rejecting absent

class members’ collateral attack on the adequacy of repre-

sentation because opportunity to appeal within state court

system and United States Supreme Court “granted all the

process that was due”); Nottingham Partners v. Trans-Lux

Corp., 925 F.2d 29, 33 (Ist Cir. 1991) (objections to

determinations of certifying court had to be remedied on

appeal to state supreme court or United States Supreme

Court, rather than by recourse to the “federal courts in the

vain pursuit of back-door relief’); Fine v. Am. Online, Inc..

743 N.E.2d 416, 420 (Ohio Ct. App. 2000) (“{mJodern

constitutional jurisprudence requires that the absent class

members’ rights to due process be protected not by

substantive collateral review, bw, rather, by the application of

? It is only in those circumstances, typified by Amchem Products, Inc.

v. Windsor, 521 U.S; 591 (1997), where some specific subclass, such as a

class of future claimants, cannot receive notice, participate in the case, or

be fairly represented by those who do appear in the litigation, that sig-

nificant due process questions may arise.

This is not such a case, despite petitioner’s assertion that the Cox and

Spencer class representatives could not adequately represent him because

he was a “future class member.” Pet. 6. While petitioner apparently

believes that “future class member” is the magic phrase that triggers the

due process concerns discussed in Amchem, this case does not present the

Situation presented in Amchem. Petitioner is not a member of a discrete

subclass of persons whose claims had not yet arisen, who could not

receive notice, and whose interests could not be adequately represented by

those narties that did participate in the case.

nd

16

appropriate procedures in the certifying court”). Here, the

Cox and Spencer courts had such procedures in place to

protect the due process rights of absent class members.”

Therefore, contrary to petitioner's assertions and assump-

tions (Pet. 12), a settlemem: court’s explicit determination that

due process has been afforded to all class members cannot

be collaterally challenged. See Epstein v. MCA, Inc., 179

F.3d 641, 648 (9th Cir. 1999); Grimes, 17 F.3d at 1558;

Nottingham, 925 F.2d at 33. Where that court conducts the

proper due process inquiry, absent class members’ due

process rights to notice and adequate representation are

protected not by collateral review of the state court’s

judgment in a federal district court or the courts of another

state, but rather by appeal within the state court system, with

ultimate federal review in the United States Supreme Court.'*

'' In asserting that the settlement courts’ treatment of absent class

members raises serious due process issues in this case, petitioner cites

Shutts, Amchem, and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

Pet. 13, 19. But those cases did not involve a collateral attack on, but

rather a direct appeal of, a class action judgment. Indeed, Shutts empha-

sizes that it is the certifying court that is charged with protecting the rights

of absent class members. See Shutts, 472 U.S. at 809.

'* Petitioner’s claim that he did not personally receive notice of the Cox

and Spencer settlements does not change the analysis. This Court long

ago explained in Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

306 (1950), that actual notice is not required in every instance. To the

contrary, what due process requires is “notice reasonably calculated,

under all the circumstances, to apprise interested parties of the pendency

of the action and afford them an opportunity to present their objections.”

Id. at 314. Mullane and its progeny established that due process requires

no more than notice that is reasonable and appropriate given “the

practicalities and peculiarities of the case.” /d.

Moreover, the nature of notice in a class action setting assumes that

actual notice might not be received by some potential parties in interest.

The premise of the class action is that those parties who are not reached

by notice, and who do not appear in the action, share common interests

with those who do appear, either as class representatives or otherwise.

17

Petitioner also asserts that he is free to collaterally attack

the Cox and Spencer settlements because he was not a party

to those cases. Pet. 6, 15. This argument ignores the funda-

mental purpose of the class action mechanism. As this Court

recognized in Shutts, the essence of the modern class action is

the ability to bind absent class members, provided that due

process requirements are satisfied. See Shutts, 472 U.S. at

811-12 (state court may exercise jurisdiction over non-

resident members of plaintiff class as long as the court

provides minimal procedural due process protection in the

form of notice, an opportunity to be heard and participate, and

a right to opt out from the class); see also Hansberry, 311

U.S. at 40-41 (class action is exception to the rule that one

cannot be bound by judgment in personam in a litigation

unless one was made a party in the traditional sense).

Therefore, as petitioner himself concedes, the issue

whether he should be deemed a “party” to the Cox settlement

depends on “whether the state court obtained jurisdiction over

absent class members by applying procedural rules mandated

by Tennessee law and the Constitution.” Pet. 17. However.

petitioner fails to acknowledge that the Cox and Spencer

courts already made this determination. Therefore, this is not

a matter for the federal courts to decide in the first instance,

let alone to decide by way of review of the state court

determination. Indeed, allowing a federal district court to

review a state court’s determination that due process had been

afforded absent class members is precisely the type of federal

court review of state court judgments barred by the Rooker-

Feldman doctrine.

See Shutts, 472 U.S. at 809. Therefore, even if notice does not reach

particular individuals, many others, with virtually identical interests and

incentives (as determined by the court), will have received actual notice

and can represent the interests of those parties who did not receive notice.

18

Although petitioner cites a number of decisions in which

Rooker-Feldman was held not to apply on the particular facts

of the case (Pet. 13-17), none of those cases involve the

guestion presented here: Whether in the guise of a § 1983

claim alleging due process violations, a lower federal court

may review a state court’s judgment that determined that

class certification was proper because all due process

considerations were met.

B. Petitioner’s § 1983 Claim Fails Because There

Is No State Action.

The Fifth Circuit also; examined petitioner's § 1983

“claim” on the merits, paying close attention to whether

petitioner could show the requisite “state action.” After

conducting that examination, the Fifth Circuit recognized

petitioner's § 1983 claim as a contrivance. Specifically, the

Fifth Circuit concluded Richard’s “blatant noncontormity

with the requirements of § 1983 ... suggests that he has

merely cast his complaint in the form of a civil rights action

in an attempt to circumvent Rooker-Feldman.” Pet. App. 11.

See also id. at 15. (°R.chard has attempted to circumvent the

Rooker-Feldman doctrine by intertwining a groundless

§$ 1983 claim with the state court findings.”) Indeed, in his

multiple complaints in the district court, petitioner did not cite

§ 1983, much less attempt to plead facts sufficient io describe

a cause of action under § 1983.

To allege a cause of action under 42 U.S.C. § 1983, a

plaintiff must show that the defendant is a “state actor,” e.,

that the defendant acted “under color of state law.” Pet. App.

11 (citing this Court’s cases). In this case, the Fifth Circuit

applied the uncontroversial principle that a private party does

not become a “state actor” merely by causing a court to take

an unlawful or unconstitutional action. /d. at 14. Rather,

applying the precedents of this Court—including Lugar v.

Edmondson Oil Co., 457 U.S. 922 (1982), and Dennis. vy.

19

Sparks, 449 U.S. 24, 28 (1980) —the Fifth Circuit held that

only if a court official (i.e., state employee) consciously and

jointly participates with a private party in a single scheme can

it be said that the private party’s actions are “state action.”

Merely “resorting to the courts and being on the winning side

of a lawsuit does not make a party a co-conspirator or a joint

actor with the judge.” Pet. App. 14, quoting Sparks, 449 U.S.

at 28.

In the face of these precedents and elementary principles,

petitioner offers an “innocent agent” theory, pursuant to

which he argues that liability should be imposed if a private

party causes a state employee to deprive someone of his or

her civil rights. Pet. 18. In support of his “innocent agent”

theory, petitioner points to 18 U.S.C. § 2(b), which statutorily

imposes criminal liability for causing a crime to be

committed. Petitioner then cites three criminal law decisions

that he says recognize the “innocent agent” principle in

implementing that statutory directive. See United States vy.

Rashwan, 328 F.3d 160 (4th Cir. 2003) (criminal case arising

out of fraudulent immigration documents); United States v.

Lester, 363 F.2d 68 (Sth Cir. 1966) (criminal civil rights

prosecution}; United States v. Smith, 584 F.2d 731 (Sth Cir.

1978) (violation of firearms record-keeping regulations).

Suffice it to say that the criminal law statute on which

petitioner relies has no application to civil liability under

§ 1983.

Petitioner has not identified any conflict among the Cir-

o, $$ : - ; .

cults.” Instead, he is complaining about a consistent refusal

by the federal courts and this Court to export a specific,

statutory criminal law principle to civil cases.

'S Smith (which petitioner relies upon as applying the innocent agent

theory, aibeit in the context of a criminal case) is itself a Fifth Circuit

decision, thus demonstrating that Fifth Circuit law is fully consistent with

the law of other Circuits on this point.

20

Petitioner asserts that this case involves duplicity. Peti-

tioner says that “corrupt class counsel” deceived and manip-

ulated the state court judges in the Cox and Spencer cases,

thus transforming class counsel—private parties—into state

actors. Pet. 18. To accept the theory that a private party’s

improper actions become state action if the private party uses

wrongful means in persuading a state court judge to agree

with its position would render meaningless the standards of

joint participation (by state officials and private parties) that

this Court established in cases such as Lugar and Sparks.

Under those precedents, there is simply no constitutional

remedy under § 1983 for the actions of private pariies.

Petitioner’s second theory of state action (raised for the

first time in his petition) is that “[a]pproval of a settlement by

a state court constitutes ‘state action.” Pet. 18-19. This as-

sertion, while true enough, does not advance petitioner’s

argument. Clearly, state court judges are state actors; yet

petitioner did not bring his claims against any state judicial

officials. The question here is whether the respondents, who

are not state employees, are properly deemed state actors.

Absent some joint action with the state court officials, they

remain private parties.

Finally, petitioner asserts (for the first time in his petition)

that the record in the Cox settlement “raises the substantial

possibility of judicial malfeasance (bribery).” Petitioner

makes his bald assertion of judicial corruption without any

factual reference or support.'° See ‘id. at 7. It is conceivable

'© Petitioner’s new claims of bribery were not raised in his pleadings

below and expressly conflict with his previous descriptions of the role

played by the Cox court. For example, in his second amended comple‘nt,

petitioner alleged that Shell’s counsel “concealed frora the Cox court” the

fact that it took conflicting positions before another court. R. 508. In his

reply brief before the Fifth Circuit, petitioner alleged “improprieties,

irregularities, and misconduct through the actions of an innocent agent; in

this case, the state judge.” Likewise, petitioner states that “[t]he innocent

ee ee ee

Oe ee UE ren Yee Ne ae EE Se aE ee

21

that a class member could state a valid § 1983 claim by

alleging that class counsel bribed a state couri judge to

approve a collusive class settlement—making class counsel

and the judge prties to a single corrupt scheme—and that

such a claim of collusion and corruption would not be barred

by the Rooker-Feldman doctrine. But petitioner has not

alleged any facts in this case, in either the district court or the

Fifth Circuit, to support the assertion of bribery and cor-

ruption that he casually tenders in his petition.

Il. THE FIFTH CIRCUIT’S DISMISSAL OF

PETITIONER’S RICO CLAIM RAISES NO

QUESTIONS THAT WARRANT REViEW BY

THIS COURT.

The RICO issue that petitioner seeks to posture for this

Court’s review concerns the precise circumstances under

which disgorgement of profits might be available to a private

party as an equitable remedy under RICO. The availability of

particular forms of equitable relief turns in most instances on

the factual setting in which relief is sought, as it does here.

Indeed, the novelty and narrowness of the question that

petitioner seeks to present to this Court is highlighted by the

number of suppositions and assumptions that the Fifth Circuit

had to indulge even to reach the disgorgement question that

petitioner tenders.'’ For example, the Fifth Circuit assumed

agent here, on one theory of the litigation, was the state court judge.

‘Corrupt class counsel willfully deceived and manipulated the judge into

approving a coliusive settlement ....” Pet. 18. Petitioner’s new bribery

allegation appears to be nothing more than his latest attempt to recast his

§ 1983 claim in order to maneuver around the binding effect of the Cox

and Spencer settlements.

” In addition to assuming that equitable remedies are available to civil

RICO plaintiffs, it is necessary to make the following highly questionable

22

(without evaluating whether it were true) that equitable

remedies are available to a private litigant under RICO. See

Scheidler v. Nat'l Org. for Women, Inc., 537 U.S. 393 (2003)

(reserving on that question).'* It further had to assume that

the remedy would be available to a party that could not allege

that it had been proximately injured by any conduct of

defendants. But even giving petitioner the benefit of the

doubt Gn these questions (as the court below did), the Fifth

Circuit decided the disgorgement issue in accordance with the

plain language of the statute, and in a manner consistent with

the decision of the only other Court of Appeals that has

addressed a similar issue (as well as a recent district court

decision)."”

legal assumptions in order to even consider petitioner’s disgorgement

argument:

(1) a private party alleging fraud in connection with a RICO

claim need not meet the proximate cause requirements imposed by

Holmes vy. Securities Investor Protection Corp., 503 U.S. 258

(1992), if he seeks an equitable remedy;

(2) the rule in (1) above would apply even if the plaintiff were

seeking a monetary equitable remedy, such as disgorgement;

(3) a private party (as opposed to public party) is entitled to seek

a windfall monetary remedy of disgorgement of profits; and

(4) as a matter of election of remedies, a plaintiff can obtain

disgorgement after already receiving damages for the same transac-

tions via a class settlement (and a defendant can be forced to

disgorge profits after already hiazying paid damages).

'’ Although petitioner asserts that this case provides the Court with ar

opportun'ty to address whether equitable remedies are available to private

litigants under RICO (Pet. 20, 25), toth the district and appellate courts

below declined to rule on the issue. ‘stead, they assumed (in petitioner’s

favor) that such remedies might be available, but found they were not

available to petitioner under the circzmstances of this case.

Petitioner’s RICO claims are also foreclosed for two additional rea-

sons. First, petitioner’s RICO causes o* action are based on the allegation

that respondents formed a “Polybutylene Group” that censpired “to

E 23

Petitioner maintains that he may use the equitable remedy

of disgorgement to recover the respondents’ past profits

obtained from the alleged RICO violations, notwithstanding

that the class action settlements already provided for damages

fraudulently advertise and sell polybutylene systems that they knew to be

unsuitable for potable water.” R. 502. These allegations are identical

to the factual allegations upon which the Cox and Spencer class actions

were premised. Thus, these claims were released as part of the Cox and

Spencer settlements. App. 19a, 24a.

Second, petitioner’s RICO claims are precluded by the docirine of res

judicata, “{U)nder elementary principles of prior adjudication a judgment

in a properly entertained class action is binding on class members in any

subsequent litigation.” Cooper v. Fed. Reserve Bank of Richmond, 467

U.S. 867, 874 (1984); see also Nevada v. United States, 463 U.S. 110,

129-30 (1983) (“[T]he doctrine of res judicata provides that when a final

judgment has been entered on the merits of a case, ‘[i]t is a finality as to

the claim or demand in controversy, concluding parties and those in

privity with them, not only as to every matter which was offered and

received to sustain or defeat the claim or demand, but as to any other

admissible matter which might have been offered for that purpose’”’)

(quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1876)).

The elements of res judicata are clearly met in this instance. Final

judgments were entered in the state court proceedings. See App. B, C.

Petitioner is a member of the classes defined in Cox and Spencer and,

therefore, bound by those judgments. See Restatement (Second) of

Judgments § 41, cmt. e (1980) (“[When] . . . a class action is authorized

under rules such as Rule 23 of the Federal Rules of Civil Procedure,

persons within the class are bound by a judgment for or against the

representative”). Petitioner’s RICO claims arise from the same transac-

tions and occurrences alleged in Cox and Spencer. See Norman y.

Niagara Mohawk Powe- Corp., 873 F.2d 634 (2d Cir. 1989) (RICO

claims barred by res judicata where based on same transactions and

occurrences alleged in prior civil rights suits); Car Carriers, Inc. v. Ford

Motor Co., 789 F.2d 589 (7th Cir. 1986) (RICO claims barred by res

judicata where based on same transactions and occurrences alleged in

prior antitrust action). The Cox and Spencer plaintiffs could have brought

RICO claims in the state court, see Tafflin v. Levitt, 493 U.S. 455 (1990)

(state courts possess jurisdiction to consider civil RICO ciaims), but chose

not to do so. Other class members have no right to bring them now.

24

arising out of the same alleged transactions. Even assuming

that petitioner is correct, “ie court below nonetheless

correctly rejected petitioner , argument based on the scope of

equitable remedies availat ie under RICO. The Fifth Circuit

noted that 18 U.S.C. § 1964(a) extends RICO jurisdiction

only “to prevent and restrain” violations of RICO and held

that “Section 1964(a) establishes that equitable remedies are

available only to prevent ongoing and future conduct.” Pet.

App. 17. Thus, even if equitable relief is sometimes available

as a private remedy, and disgorgement is among the forms of

equitable relief that might be available in some circumstances

to a private party, it is not available here. The court below

observed that “Richard concedes that the Appellees no longer

market the plumbing systems.” /d. Indeed, DuPont ceased

selling Delrin” to other manufacturers for use in polybutylene

plumbing in 1989. Thus, in this case, disgorgement cannot

serve the purpose of preventing future misconduct.

Contrary to petitioner’s assertion that there is a conflict in

the circuits on this issue (Pet. 20), the Fifth Circuit’s

reasoning is fully consistent with that of the Second Circuit in

United States v. Carson, 52 F.3d 1173, 1181 (2d Cir. 1995),

the only other federal appellate decision to have addressed the

scope of a possible disgorgement remedy under § 1964(a).7°

The court below noted that “when disgorgement is sought for

the purpose of compensating a party for past injuries, the

{Second Circuit] held that the plain language of § 1964 bars

relief.” Pet. App. 17. The Fifth Circuit specifically stated

© The United States District Court for the District of Columbia

recently criticized Carson in United States v. Philip Morris USA, Inc., 321

F. Supp. 2d 72, 77 (D.D.C. 2004) (citing Carson, 52 F.3d at 1182).

Nevertheless, the Philip Morris court ultimately ruled that the proper

inquiry in determining whether disgorgement is available is whether the

plaintiff presented “a showing of a reasonable likelihood of future RICO

violations.” /d. at 76. Even under this formulation, there is no reasonable

likelihood of continuing RICO violations with respect to a product that

has not been manufactured for nearly a decade.

ee

Le ee ee

25

that “[w]e agree with the Second Circuit's reasoning in

Carson.” Id.

Referring to Carson, petitioner asserts that the court below

“twisted the decision it purported to follow” because the

defendant in Carson was a retired union official and

respondents here “are big corporations, perpetual in duration

and constantly obtaining new revenue.” Pet. 20-22.

However, the size and income of respondents is irrelevant to

the question of whether disgorgement will halt a continuing

series of RICO violations. As in Carson. the significant fact

here is that the acts petitioner complains of occurred many

years ago and petitioner has not alleged any facts showing

continuation of the alleged conduct. Indeed, all of the alleged

RICO predicate acts described in petitioner's most recent

amended complaint occurred between 1978 and 1987. R.

499-501. Equitable relief would not put a halt to continuing

misconduct in this case, because there is none. The Fifth

Circuit’s decision is fully consistent with the language of

§ 1964(c) and with the only other circuit court to have

considered a similar issue.

26

CONCLUSION

The petition should be denied.

KATHLEEN TAYLOR SOOY

CLIFTON S. ELGARTEN

LUTHER ZEIGLER

TRACY A, ROMAN

CROWELL & MORING LLP

1001 Pennsylvania Avenue,

N.W.

Washington, DC 20004

(202) 624-2500

ANDREW C. SCHIRRMEISTER III

JIMC. EZER

SCHIRRMEISTER DIAZ-

ARRASTIA, LLP

Pennzoil Place — South Tower

711 Louisiana, Suite 2150

Houston, TX 77002

(713) 228-3545

Respectfully submitted,

RAYMOND MICHAEL RIPPLE

Counsel of Record

DONNA L. GOODMAN

E. 1. DU PONT DE NEMOURS AND

COMPANY

Legal D-7012

1007 Market Street

Wilmington, DE 19898

(302) 773-3072

Attorneys for Respondent

E. I. du Pont de Nemours and Company

August 13, 2004