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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2004
- **Citation:** 543 U.S. 917

## Text

——
No. 03-1543

Jn The
Supreme Court of the Anited States

4

RICHARD R. RICHARD, JR.
on behalf of himself and all others similarly situated,

Petitioners,
V.
HOECHST CELANESE CHEMICAL GROUP, INC.,
SHELL OIL COMPANY d/b/a SHELL CHEMICAL

COMPANY, HOECHST CELANESE CORPORATION,
and E.1. DuPONT de NEMOURS AND COMPANY,

Respondents.

*

On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Fifth Circuit

4

SHELL OIL COMPANY’S BRIEF IN OPPOSITION
+

DavID T. HARVIN

Counsel of Record
ERICA L. KRENNERICH
VINSON & ELKINS L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
(713) 758-2368

Attorneys for Respondent
Shell Oil Company d/b/a
Shell Chemical Company

COCKLE LAW BRIEF PRINTING CO (800) 225-6964
OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Whether the Fifth Circuit properly affirmed the
dismissal of Petitioner’s due process claim for lack of
subject matter jurisdiction when ruling in his favor
would have required the district court to review the
final decisions of two state courts and determine their
judgments were wrong in violation of the Rooker-
Feldman doctrine.

Whether the Fifth Circuit properly affirmed the
dismissal of Petitioner’s civil RICO action for failure
to state a claim upon which relief can be granted.

il

PARTIES TO THE PROCEEDING
AND RULE 29.6 STATEMENT

Petitioners have identified all parties in this proceed-
ing.

Pursuant to Supreme Court Rule 29.6, Respondent
Shell Oil Company advises the Court that Shell Oil Com-
pany is a wholly-owned subsidiary of Shell Petroleum,
Inc., a Delaware corporation. Shell Petroleum, Inc. is
directly or indirectly owned 60% by Royal Dutch Petro-
leum Company and 40% by The “Shell” Transport and
Trading Company, p.1.c.

TABLE OF CONTENTS

Page
QUESTIONS PRESENTED ........... cecseseesseeserseeneeeeeeees i
PARTIES TO THE PROCEEDING AND RULE 29.6
I oc con isin snencépsesoosiincsvghennvevestensiieseveent ii
TE OOF AUT Tee Ee vcccccesessovcccnonessvscessssecesesovones Vv
EXPLANATION OF RECORD CITES .............::::eeeeeees ix
SHELL OIL COMPANY’S BRIEF IN OPPOSITION. ... 1
STATEMENT OF THE CASE.........c::::scsssesesssesseeesseeen 83
A. Factual Background ..................cssecccreceeersees 3
B. Procedural Backgroung ................:ccceeeseeeeeeeeeeees 4
REASONS THE PETITION SHOULD BE DENIED... 8

I. The Fifth Circuit Correctly Held That Under
the Rooker-Feldman Doctrine the District
Court Lacked Subject Matter Jurisdiction
Over Petitioner’s Due Process Claim ...... Co asend ; 8

A. The Rooker-Feldman Doctrine Prohibited
the District Court From Reviewing the
Cox and Spencer Final Judgments.............. 8

B. There Is No Exception to the Rooker-
Feldman Doctrine For Absent Class Mem-
bers Who Collaterally Attack State Court
Class Action Judgments ...........:::sssceeeeeeeeees 12

1. There Is No Procedural Due Process
Exception to the Rooker-Feldman Doc-
ln Las cad siasinitiebbonensabeeeens 12

2. There Is No Exception to the Rooker-
Feldman Doctrine For Absent Class
Members Who Were Not Named Par-
ties to a State Court Judgment............. 15

iv

TABLE OF CONTENTS - Continued
Page

3. The Theory of Injury By an Adverse
Party Does Not Apply Here................... 17

II. The Fifth Circuit Correctly Affirmed the
Dismissal of Petitioner’s RICO Claim For Fail-
ure To State a Claim on Which Relief Can Be

IIIT ius snccdsnesanxsnscelcantsacvesmaiasaanenaiebaaaacmanes 19
A. The Equitable Remedy of Disgorgement Is
Not Available to Petitioner .....................04. 21

B. Petitioner’s Inability To Satisfy the Proxi-
mate Cause Requirement of Holmes
Dooms His RICO Claim No Matter What

Form of Relief He Seeks ................:ccceeeeeeeee 23
C. RICO Does Not Authorize Private Plain-

tiffs To Seek Equitable Relief ..............0...... 25
D. Petitioner Sued for Damages and Not for

PN SIE sevicnssvevcaccoensticaasatosuvoncdeossin 29

CDE U TARP EIEG xncteevssntsncevsnncsbincinvtanesiesinenpalnnstnanierseinnets 30

TABLE OF AUTHORITIES
Page
CASES
Ace Const. v. City of St. Louis, 263 F.3d 831 (8th
Cee IND os svccvscenesevcovenintnavsennunnipesesuvenseeutinventionientannne 12
Allen v. Allen, 48 F.3d 259 (7th Cir. 1995) .........ccceeeeeeseees 16
Bennett v. Spear, 520 U.S. 154 (1997).......ccccceceereeeeeeeens 20
Bolin v. Sears, Roebuck & Co., 231 F.3d 970 (5th
Ch DOD oc vccscocsvacesscenssinnconsensunecenvacseaverrsansnencnsvecessannnenll 28
Catz v. Chalker, 142 F.3d 279 (6th Cir. 1998)............. 13, 14
Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984)........::ccceeeeeseeerreeees 20
Conkling v. Turner, 18 F.3d 1285 (5th Cir. 1994) ............. 28
Cox v. Shell Oil Co., Case No. 18,844 (Chancery Ct.,
Obion Cty., Tenn. Nov. 17, 1995) ........cseseseeeeeeeees passim
Doe & Assoc. Law Offices v. Napolitano, 252 F.3d
1026 (Oth Cir. 2001)............ssccsccccccrccsrrrrrccsesssssssoscosees 12
District of Columbia Court of Appeals v. Feldman,
A460 U.S. 462 (19838) .........ccccccccssscrrrreressssssscesssscsevens passim
Franchise Tax Bd. v. Construction Laborers Vaca-
tion Trust, 463 U.S. 1 (1983) ........cccceceeeeeeeeeeeeeeeeeeeeeeeeens 19
Granfinanciera, S.A. v. Nordberg, 492 USS. 33
(2ODB) ...cccvercessssscscsvccessnssesconevtcessesounssetacrssbenneenesconnensaenne 20
Great Plains Trust Co. v. Morgan Stanley Dean
Witter & Co., 313 F.3d 305 (5th Cir. 2002).......... sees 30
Hansberry v. Lee, 311 U.S. 32 (1940) .....ceceseeeeseereerenens 16
Holmes v. Securities Investor Protection Corp., 503
CFB, SEB (IGOR). ccccceccrssvicssesscesrnesssessessepsatenevensnssteenes 23, 24

In re F redeman Litig., 843 F.2d 821 (5th Cir. 1988)... 27, 28

TABLE OF AUTHORITIES — Continued

Page
In re General Motors Corp. Pick-Up Truck Fuel
Tank Prods. Liab. Litig., 134 F.3d 133 (3rd Cir.
DID ivcncsvsststsnatnertinceedsiiensapteserdisiesineaeeae 16
Johnson v. Collins Entm’t Co., Inc., 199 F.3d 710
CORR Ce, Sy iccstinnseritusicdsinevisscnietans aes 28
Kamilewicz v. Bank of Boston Corp., 92 F.3d 506 (7th
Cir. 1996), cert. denied, 520 U.S. 1204 (1997).......... 14, 16
Liedtke v. State Bar of Texas, 18 F.3d 315 (5th Cir.),
cert. denied, 513 U.S. 906 (1994)..........ccrcccccccccscsccccevsees 14
Lincoln House, Inc. v. Dupre, 903 F.2d 845 (1st Cir.
GOGO) cccoscvcicsscctstenssstetssaoundseisissuseanaaameaeee 29
National Org. For Women, Inc. v. Scheidler, 510
C.D. BOD CEO kciscasvessesssssssistscstasseereennen 25
National Org. for Women, Inc. v. Scheidler, 267 F.3d
687 (7th Cir. 2001), rev'd on other grounds, 537
CF, BO ee ccssssssssserestsnscinecnneae 7, 24, 25, 29
Noel v. Hall, 341 F.3d 1148 (9th Cir. 2003)................. 17, 18
Pennzoil Co. v. Texaco, Inc., 481 U.S. 1 (1987) ............0666 12
Peterson Novelties, Inc. v. City of Berkley, 305 F.3d
SHB (Ghia Cle, BI vtccsssccesevicccassessiccjeamecaeanaan 12
Phillips Petroleum v. Shutts, 472 U.S. 797
(SGD no covesrcseocsscsctsensnionsieanaeeanel 9, 11, 13, 16, 17
Price v. Pinnacle Brands, Inc., 138 F.3d 602 (5th
Cle, 26GB? vccssiskisissssonensvcaenraaaeeee 28
Proctor & Gamble Co. v. Amway, 242 F.3d 539 (5th
Cir.), cert. denied, 584 U.S. 945 (2001).............cccccceeseeeees 6

Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076
(9th Cir. 1986), cert. denied, 479 U.S. 1103
(GBF) sissscccssechsandcnseeaeeneeee 25, 26, 27, 28

Vil
TABLE OF AUTHORITIES -— Continued

Richard v. Hoechst Celanese Chem. Group, Inc., 355
F.3d 345 (Sth Cir. 20038)............ccssccsccessessesssnensssesesssesssees 7

Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923)......passim
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) ... 23, 24

Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379 (5th
Chee BID a orcxcconsrovsreccenssscensescoceseoscononsonepeconoqnosasensoonesesanees 5

Simes v. Huckabee, 354 F.3d 823 (8th Cir. 2003)........ 14, 15

Spencer v. Shell Oil Co., Case No. CV-94-047
(Circuit Ct., Greene Cty., Ala. Nov. 17, 1995)........ passim

Snider v. City of Excelsior Springs, 154 F.3d 809
(Sth Cir, 1998).......cccccccccceccrcccccrccrrereseressssesssevees 14, 15, 16

Summit Properties, Inc. v. Hoechst Celanese Corp.,
214 F.3d 556 (5th Cir. 2000), cert. denied, 531

U.S. 1132 (2001) .......cccccrressccccvecereveccseesessssesceeeeeecees passim
Switzer v. Coan, 261 F.3d 985 (10th Cir. 2001)...........:006 28
Trane Co. v. O’Connor Sec., 718 F.2d 26 (2d Cir.

SEIU). .ccnvsscoscescosessrvsensnecoveoceseoesescososeneonsnssseteassonsessseconens 29
United States v. Carson, 52 F.3d 1173 (2d Cir.

1995), cert. denied, 516 U.S. 1122 (1996).......ccceeeeeee 22
United States v. Sasso, 215 F.3d 283 (2d Cir. 2000) ......... 22
United States v. Totten, 286 F.3d 542 (D.C. Cir.

OGY .. . ccccorcncscesceeoneverasussnecessensesesesssonsessenssscousnenepnessetens 30
Washington v. Yakima Indian Nation, 439 U.S. 463

(1079) ...ccescccrcoscccrscccsrcvssovesescoscavosssosssensesossoonnssccssocssoossees 20

Whitley v. Albers, 475 U.S. 312 (1986).....:.cccesereeererens 20

Vili

TABLE OF AUTHORITIES — Continued

p Page
STATUTES
Or passim
OTHER AUTHORITIES
Smith and Reed, Civil RICO, § 10.02 (Matthew
SEIN IIIIIIIEY sicnisinssisaueiednuennesemvanavesasdexansedushooribiddebtnaenans 21

7B Wright, Miller, & Kane, Federal Practice and
© Fre Ce I, Bi icacccncecsstnsecncstuasecnccinovecens 16

ix

EXPLANATION OF RECORD CITES

“Pet.” refers to the Petition for Writ of Certiorari.

“Pet. App. ” refers to the Appendix attached to
the Petition for Writ of Certiorari.
“Shell App. ” refers to the Appendix attached

to Respondent Shell Oil Company’s Brief in Op-
position to Writ of Certiorari.

* R. ” refers to the Record on Appeal filed
with the United States Court of Appeals for the
Fifth Circuit cited by specific volume and page
number.

“Supp. R. ___” refers to the Supplemental Record
on Appeal filed with the United States Court of
Appeals for the Fifth Circuit cited by specific
docket and exhibit number.

ee Se ee ee

SHELL OIL COMPANY’S BRIEF IN OPPOSITION

This case represents yet another failed attempt to
make a federal case out of leaking plumbing. In Summit
Properties, Inc. v. Hoechst Celanese Corp., 214 F.3d 556
(5th Cir. 2000), cert. denied, 581 U.S. 1132 (2001), the
Fifth Circuit rejected an effort to turn “garden variety”
state law products liability claims into a federal racketeer-
ing case, and this Court denied the petition for writ of
certiorari. The Fifth Circuit held that a plaintiff similarly
situated to Petitioner could not meet RICO’s proximate
cause requirement because he did not personally receive or
rely upon the alleged misrepresentations made the basis of
his mail and wire fraud claims.

Petitioner argues that a different result should obtain
here because he says he sought equitable relief under
RICO in the form of disgorgement of profits rather than
damages. He did not. Petitioner also claims that he was
entitled to seek equitable disgorgement in a RICO civil
action even thougt: he too could not meet the detrimental
reliance requirement for a damage claim. He cannot. The
district court rejected Petitioner’s RICO contentions, and
the Fifth Circuit affirmed. They were correct.

However, Petitioner’s case was in fact different from
Summit in one significant way: regardless of the merits of
his RICO arguments, Petitioner’s claims were precluded
by the 1995 final judgments of Tennessee (Cox) and Ala-
bama (Spencer) courts approving two nationwide class
action settlements.’ Anticipating this, Petitioner also

! Final Judgment in Cox v. Shell Oil Co., Case No. 18,844 (Chan-
cery Ct., Obion Cty., Tenn. Nov. 17, 1995) (Shell App. 39-34) and Final
Order Approving the Class Action Settlement, Attorneys’ Fees and

(Continued on following page)

sought to set aside the Cox and Spencer settlements on the
ground that absent class members were not afforded
adequate notice or adequate representation. However,
Petitioner’s efforts to have the federal district court void
the final judgments of the Tennessee and Alabama courts
ran afoul of the Rooker-Feldman doctrine.”

Contrary to Petitioner’s contentions, the courts below
followed well-established precedents in dismissing Peti-
tioner’s RICO claims for failure to state a claim upon
which relief could be granted and dismissing Petitioner’s
collateral attacks on the Cox and Spencer judgments for
lack of subject matter jurisdiction under the Rooker-
Feldman doctrine. As a result, this case does not require
this Court’s review.

Expenses, and Awards to Representative Plaintiffs in Cox (filed Nov. 17,
1995) (Shell App. 1-29) (collectively “Cox”); Spencer v. Shell Oil C».,
Case No. CV-94-047 (Circuit Ct., Greene Cty., Ala. Nov. 17, 1995) (3 R.
852-857) (“Spencer”). Contrary to Petitioner’s claim, Respondents did
not cause these cases to be brought. (Pet. 5-6).

? Under the Rooker-Feldman doctrine, a federal district court lacks
jurisdiction to review, modify, nullify, or otherwise engage in appellate-
style review of a state court’s judgment. Rather, review of any constitu-
tional challenges to a state court’s judgment must be through the state’s
appellate system and ultimately in the United States Supreme Court.
See §1.A. infra. The doctrine derives from the Supreme Court’s
decisions in Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923), and
District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 476-82
(1983).

3

STATEMENT OF THE CASE
A. Factual Background

Petitioner’ is the owner of a used mobile home with
polybutylene (“PB”) plumbing. PB plumbing systems are
comprised of PB pipe and various “fittings” that join
sections of the pipe. These fittings are made from different
raw materials and different designs. Respondents did not
manufacture or sell PB plumbing systems or the compo-
nent parts of those systems. Rather, Shell manufactured
PB resin that was sold to third parties who extruded it
into PB plumbing pipes, and Celanese and DuPont manu-
factured and sold acetal resins named Celcon and Delrin,
respectively, which were molded into the plastic fittings
used to join the pipes together.

In 1995 Shell and Celanese entered into a settlement
with a nationwide class of owners of structures with PB
plumbing. The Cox settlement, approved by a state court
in Tennessee, obligates Shell and Celanese to provide $950
million to pay for replumbs’ for claimants with a qualify-
ing plumbing leak and for the repair of physical damage to
property resulting from a leak. (Supp. R. Docket No. 185,
Ex. 84 at 10, § 4.5, and Third Amendment at 3, § 2.2).
DuPont entered into a separate settlement with a similar

> Because Petitioner’s Statement of the Case is simply a self-
serving recitation of his allegations, replete with misstatements and
mischaracterizations of fact and law, Shell respectfully presents its owa
Statement of the Case.

‘ Petitioner did not sue any of the manufacturers of the pipe and
fittings installed in his mobile home, the manufacturer of his mobile
home, or the previous owner who Petitioner claims misrepresented to
him the condition and quality of the plumbing in his mobile home.

* A “replumb” is the replacement of a class member’s leaking PB
plumbing system with a new copper or CPVC plumbing system.

4

nationwide class of homeowners with PB plumbing. Its
Spencer settlement, approved by a court in Alabama,
obligates DuPont to contribute further sums toward the
replacement of PB plumbing systems and the repair of
associated property damage.

By purchasing a mobile home containing PB plumb-
ing, Petitioner became a member of the Cox and Spencer
nationwide settiement classes. He did not timely exercise
his right to opt out. Assuming he otherwise met the
_ eligibility requirements of the settiement, he was entitled
to have the PB plumbing in his mobile home replaced free
of charge with a copper or CPVC plumbing system and any
water damage to his home repaired. Petitioner does not
allege any circumstances peculiar to him that would make
this anything less than a complete remedy for the harm he
claims to have sustained. Nevertheless, Petitioner chose to
forego that full and effective relief. Instead he sought to
set aside the final judgments of the Tennessee and Ala-
bama courts approving the Cox and Spencer settlements
and litigate on behalf of a new putative class the product
liability claims settled in those prior class actions.

B. Procedural Background

In his Origina! Class Action Complaint filed in Janu-
ary 2000, Petitioner alleged that Respondents were liable
for the damages he and the class sustained as a result of
leaks in their PB plumbing systems on theories of conspir-
acy, strict liability, negligence, and breach of implied
warranties. In addition, he alleged that the Tennessee and
Alabama judgments approving the Cox and Spencer
nationwide class action settlements should not be given
full faith and credit and thereby preclude his lawsuit

+)

~ because those courts allegedly failed to provide absent
class members with due process. (1 R. 1-25).

Petitioner’s Original Class Action Complaint was
insufficient to invoke the district court’s subject matter
jurisdiction. His claims for relief arose strictly under state
law, and there was no diversity of citizenship. His due
process attack on the Cox and Spencer settlements did not
create federal subject matter jurisdiction because of the
well-pleaded complaint rule’ and the Rooker-Feldman
doctrine. In response to Respondents’ motions to dismiss,
Petitioner tried to manufacture federal subject matter
jurisdiction by amending his complaint to add Lanham Act
and RICO claims. (Shell App. 52-66). He also transformed
his due process challenge to the Cox and Spencer judg-
ments into a “claim for relief” and sought an injunction
barring Respondents’ use of the Cox and Spencer judg-
ments to prevent his recovering damages attributable to
his leaking plumbing. (Shell App. 66-74).

Petitioner’s Lanham Act claim was patently frivolous.
Section 43(a) of the Lanham Act addresses only competi-
tive injuries and a consumer such as Petitioner lacks
standing to assert a claim. E.g., Seven-Up Co. v. Coca-Cola
Co., 86 F.3d 1379, 1383 (5th Cir. 1996). Petitioner eventu-
ally recognized the futility of his Lanham Act claim and
“withdrew” it. (3 R. 979).

Petitioner’s RICO claim was foreclosed by the Fifth
Circuit’s decision in Summit, in which the Fifth Circuit

‘ Under the well-pleaded complaint rule, a plaintiff cannot
establish federal question jurisdiction by pleading a federal ground in
avoidance of an anticipated defense. See footnote 12 infra. Although not
relied on by the Fifth Circuit, the well-pleaded complaint rule provided
an alternative basis for affirming the dismissal of Petitioner’s due
process claim.

held that the owner of a structure with PB plumbing couid
not maintain a RICO claim against these same Respon-
dents unless he could show he personally received and
relied upon the alleged misrepresentations made the basis
of his RICO mail and wire fraud claims. To avoid the
conclusive effect of Summit, Petitioner first argued that
his case was different because, unlike the Summit plain-
tiffs, he had pled reliance. (3 R. 990). However, when the
district court ordered him to file a RICO Case Statement
detailing the factual bases for his RICO claim, he was
forced to admit that he too never personally received,
heard, saw, or relied on any alleged misrepresentation by
any of the Respondents, which brought his case squarely
within the rule of Summit. (2 R. 664-65).

Faced with this dilemma, Petitioner then sought
refuge in the narrow “target exception” to the civil RICO
requirement of detrimental reliance. (3 R. 991). However,
this argument was foreclosed noi only by Summit, but also
by the Fifth Circuit’s subsequent decision in Proctor &
Gamble Co. v. Amway, 242 F.3d 539 (5th Cir.), cert. denied,
534 U.S. 945 (2001). In both Summit «nd Proctor &
Gamble the Fifth Circuit made clear that FICO’s “narrow
target exception” applies only to injured competitors who
can establish that their customers were lured away
because they relied on a defendant’s fraudulent misrepre-
sentations. See Proctor & Gamble, 242 F.3d at 564-65.
Consequently, the district court rejected Petitioner’s |
“target exception” argument. (Pet. App. 46-48). In his Fifth |
Circuit brief Petitioner finally admitted that Summit |
prevented him from obtaining a RICO damage recevery.

In a last-ditch effort to salvage a RICO claim, Peti-
tioner raised orally at a hearing in the district court a new
argument — that under the Seventh Circuit’s decision in

7

National Org. for Women, Inc. v. Scheidler (“NOW”), 267
F.3d 687 (7th Cir. 2001), rev’d on other grounds, 537 U.S.
393 (2003), he could maintain a RICO claim for equitable
relief in the form of disgorgement of profits. (6 R. 16-18).
After receiving briefs on Petitioner’s new argument, the
district court rejected it for two reasons. First, the district
court held that “Plaintiff’s foundational claim that equita-
ble relief is permissible under RICO is tenuous at best,”
since “[t]o the extent that courts in the Fifth Circuit have
considered equitable remedies under RICO, the idea has
been dismissed.” (Pet. App. 51-52). Second, the district
court held that the NOW case did not change Summit's
requirement that a civil RICO plaintiff must demonstrate
direct reliance on a fraudulent misrepresentation, which
Petitioner could not do. (Pet. App. 52). As a result, the
district court held that Petitioner’s RICO allegations failed
to state a claim upon which relief could be granted. (Pet.
App. 52).

In addition, the district court held that under the
Rooker-Feldman doctrine it lacked jurisdiction over
Petitioner’s due process challenge to the Cox and Spencer
judgments. (Pet. App. 33-35). Having dismissed Peti-
tioner’s purported federal law claims, the district court
then dismissed without prejudice his pending state law
claims. (4 R. 1312).

In December 2003, the Fifth Circuit affirmed the
district court’s dismissal of Petitioner’s claims. Richard v.
Hoechst Celanese Chem. Group, Inc., 355 F.3d 345 (5th Cir.
2003) (Pet. App. 1-18). Although the Fifth Circuit could
have reached that result on any number of grounds,
ultimately it chose two. First, the court affirmed the
dismissal of Petitioner’s due process challenge to the Cox
and Spencer judgments based on the district court’s lack of

subject matter jurisdiction under Rooker-Feldman. Sec-
ond, the Fifth Circuit held that the district court had
properly dismissed Petitioner’s RICO claim for failure to
state a claim because it found the remedy Petitioner
claimed to be seeking — equitable disgorgement — was not
available under the circumstances of this case. (Pet. App.
18).

REASONS THE PETITION SHOULD BE DENIED

I. The Fifth Circuit Correctly Held That Under
the Rooker-Feldman Doctrine the District
Court Lacked Subject Matter Jurisdiction
Over Petitioner’s Due Process Claim

The Fifth Circuit correctly found that the Rooker-
Feldman doctrine deprived the district court of subject
matter jurisdiction over Petitioner’s due process claim.

A. The Rooker-Feldman Doctrine Prohibited
the District Court From Reviewing the
Cox and Spencer Final Judgments

The Rooker-Fe.dman doctrine derives from this
Court’s holdings in Rooker v. Fidelity Trust Co., 263 U.S.
413 (1923), and District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462 (1983). In Rooker, this Court held
that federal district courts cannot exercise “appellate
jurisdiction” over constitutional questions decided by state
courts, even if the state court judgment was in error.
Rooker, 263 U.S. at 415. In such instances, the appropriate
remedy is through the state appellate system. Jd. Recourse
in the federal courts is limited strictly to seeking review in
the United States Supreme Court since all lower federal
courts lack subject matter jurisdiction to review or modify
state court judgments. Jd. at 416. In Feldman, this Court

—— SSS Ewen aaa

9

explained that the lower federal courts also lack jurisdic-
tion to review final judgments of state courts when consti-
tutional claims are “inextricably intertwined” with the
challenged state court judgment. Feldman, 460 U.S. at 483
n.16.

Here Petitioner sought to have the federal district
court decide issues “inextricably intertwined” with the
final judgment of the Tennessee court approving the Cox
settlement. He argued that the Tennessee judgment was
not entitled to full faith and credit because absent class
members were not afforded the due process — adequate
notice and adequate representation — that Phillips Petro-
leum v. Shutts, 472 U.S. 797, 811-12 (1985), requires. (Pet.
11-12).

However, in approving the Cox settlement, the Ten-
nessee court expressly addressed the Shutts due process
requirements — and, indeed, many of Petitioner’s specific
complaints. For example, in his Second Amended Com-
plaint Petitioner complained about the adequacy of class
counsel’s representation. (Shell App. 71-74, 1] 123-128).
The Cox court, however, found that “[t]here is no factual
basis for the asserted objection that there is any conflict of
interest with respect to the Cox Class Counsel.” (Shell
App. 23, J 64). The Cox court further found that “[t]he Cox
Class Counsel maintained the highest standards of profes-
sionalism and advocacy in protecting and promoting the
interests of the Class throughout the prosecution and
settlement of this case.” (Shell App. 23, § 65). Finally, the
Cox court found that the settlement was “in all respects
fair, reasonable, and adequate and in the best interests of
the Settlement Class.” (Shell App. 18, { 38; Shell App. 27,

{ 7).

10

In addition, Petitioner alleged that the notice provided
to absent class members in Cox was constitutionally
inadequate. (Shell App. 68, 7 113; Shell App. 69, 9 117;
Shell App. 74, 7 129). However, the Cox court’s Final Order
also reveals the careful attention it paid to the issue of
notice to absent class members. After reviewing the details
of the multi-faceted, multi-media notice campaign and
considering the testimony of experienced class notice
experts, the Cox court ruled that the notice campaign “as
designed and implemented, met and exceeded the re-
quirements of the United States Supreme Court, Tennes-
see’s Rule 23, due process and the Constitution, as
construed in [Shutts].” (Shell App. 17, J 32). The Cox court
further found that “the notice program is one of the most
comprehensive class notice campaigns ever undertaken,”
that “all reasonable efforts have been made to reach
affected consumers,” and that “the best notice practicable
under the circumstances has been provided to the settle-
ment class.” (Shell App. 6; Shell App. 17, 7 33).

Moreover, the Cox court found that “[t]he notice
provided to the Settlement Class was neither misleading
nor defective.” (Shell App. 21, 7 50). Rather, the Cox court
found that the notice “fully and accurately informed
Settlement Class members of all material elements of the
proposed Settlement” and complied with all applicable
legal standards. (Shell App. 3; Shell App. 17, {] 32, 33).

"In reaching its conclusion the Cox court noted that the Cox
settlement provided for not only an initial notice campaign, but also re-
noticing the class every three years thereafter until 2009. (Shell App.
11, 9 12(e)). The Cox settlement further provided an opportunity for
subsequent purchasers of homes with PB plumbing - such as Petitioner
— to opt out of the settlement in response to the subsequent notice.
(Supp. R. Docket No. 185, Ex. 84 at § 10.2).

11

Petitioner disputes all of these material findings of
the Tennessee court and sought to have the federal district
court declare that the Cox court was wrong in its conclu-
sion that the due process requirements of Shutts were
met. However, as the Fifth Circuit held, Petitioner’s claims
collided head-first with the Rooker-Feldman doctrine,
which bars exactly this type of appellate review of state
court judgments:

([Petitioner’s] allegations indisputably denounce

the express findings of the Cox state court....

The Feldman holding appears to squarely fit [Pe-

titioner’s] situation. The Cox court’s findings that

allow for certification are “inextricably inter-
twined” with [Petitioner’s] constitutional chal-
lenge to the state’s compliance with due process
requirements. A federal court cannot examine the
due process deficiencies in Cox without disturb-
ing the underlying judgment.
(Pet. App. 10-11). In short, the Fifth Circuit’s holding that
the federal district court lacked subject matter jurisdiction
over Petitioner’s due process challenge to the Cox final
judgment is an unexceptional application of Rooker-
Feldman.' Accepting the formulation of Justice Marshall

* Although it could have stopped there, the Fifth Circuit went on to
find that Petitioner had failed to state a claim under § 1983. (Pet. App.
11-15). Respondents Hoechst Celanese and DuPont have fully ad-
dressed this issue in their Briefs in Opposition. Shell would add only
that Petitioner never pleaded the § 1983 claim he hypothesizes. (Pet. 7).
Plaintiff’s Second Amended Complaint does not reference § 1983 at all.
It contains no allegations of any facts supporting state action under
either the “innocent agent” or “judicial malfeasance (bribery)” theory. To
the contrary, Petitioner based his due process claim on, first, an obscure
“door closing” theory applicable only to South Carolina state courts,
and, second, supposed deficiencies in the Cox court’s findings with
respect to due process. (Shell App. 66-74, 7/1 105-129).

12

in Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 25 (1987), the
circuit courts universally hold that when the federal
district court can provide relief only by determining that
the state court was wrong, then plaintiff’s case is; in
effect, an appeal of the state court decision prohibited by
the Rooker-Feldman doctrine. See, e.g., Peterson Novelties,
Inc. v. City of Berkley, 305 F.3d 386, 393 (6th Cir. 2002);
Ace Const. v. City of St. Louis, 263 F.3d 831, 833 (8th Cir.
2001); Doe & Assoc. Law Offices v. Napolitano, 252 F.3d
1026, 1030 (9th Cir. 2001).

B. There Is No Exception to the Rooker-
Feldman Doctrine For Absent Class Mem-
bers Who Collaterally Attack State Court
Class Action Judgments

Petitioner offers a grab bag of arguments about how
the Fifth Circuit’s application of Rooker-Feldman suppos-
edly conflicts with other circuits. Taken together, these
arguments amount to a claim that there is an exception to
Rooker-Feldman for absent class members who collaterally
attack state court class judgments. In fact, there is no such
exception, and no circuit court has so held. As Shell will
demonstrate below, Petitioner’s claim of a circuit conflict is
based not on class action cases, but solely on a motley
collection of divorce cases — and a misreading of those
cases to boot.

1. There Is Nao Procedurs' Due Process
Exception to the Rook+e,-feldman Doc-
trine

Petitioner argues for a procedural due process excep-
tion to the Rooker-Feldman doctrine in which every absent
class member is entitled to endlessly relitigate in federal

13

district court the rendering state court’s findings with
respect to the Shutts due process requirements. (Pet. 11-
13). Notably, Petitioner cannot — and does not — cite any
authority endorsing such an extreme proposition. Rooker-
Feldman applies with equal force to both the procedural
and substantive findings of state courts. The fact that a
plaintiff affirmatively alleges he was not afforded proce-
dural due process in a state court class action makes no
difference in the Rooker-Feldman analysis.

The authority Petitioner cites for this argument is the
decision in Catz v. Chalker, 142 F.3d 279 (6th Cir. 1998),
one of at least five different lawsuits between parties to a
divorce. Petitioner claims that in Catz, the “Ninth Circuit”
distinguished between “plaintiffs seeking to set aside state
judgments because of their substance from those challeng-
ing the state court’s procedure.” (Pet. 15). According to
Petitioner, “when a plaintiff challenges procedure rather
than merits, his claim is ... not precluded by Rooker-
Feldman.” (Pet. 15-16). Petitioner’s reliance on Catz,
however, is utterly misguided.

In Catz the Sixth Circuit held simply that certain
due process allegations were not “inextricably inter-
-wined” with the merits of a state court divorce decree
such that Rooker-Feldman did not apply. 142 F.3d at 294-
95. Catz bears no resemblance to the situation here. In
Cox the Tennessee court made specific findings pertain-
ing to the adequacy of notice and the adequacy of repre-
sentation. Indeed, Tennessee Rule of Civil Procedure 23
required that it do so before approving the class settle-
ment. Petitioner seeks to relitigate those same findings.
Here then is the classic situation where “federal relief

* Catz is actually a Sixth Circuit decision.

14

can only be predicated upon a conviction that the state
court was wrong,” which even Catz recognized would be
barred by the Rooker-Feldman doctrine. Id.

In fact, contrary to Petitioner’s claim, the circuits
uniformly reject the notion of a procedural due process
exception to Rooke’-Feldman in a class action context. For
example, in Kamilewicz v. Bank of Boston Corp., 92 F.3d
506 (7th Cir. 1996), cert. denied, 520 U.S. 1204 (1997), the
Seventh Circuit rejected plaintiffs’ “far-reaching proposed
exception to the Rooker-Feldman doctrine” when urged to
conclude that it could “overturn the decision of the Ala-
bama court insofar as it involved a determination that
procedural due process was complied with.” Kamilewicz,
92 F.3d at 510. Similarly, in Snider v. City of Excelsior
Springs, 154 F.3d 809, 812 (8th Cir. 1998), the Eighth
Circuit reiterated: “As we have held before in a case in
~ which the plaintiffs alleged insufficient notice in a state
court action, there is no procedural due process exception
to the Rooker-Feldman rule.”

The Fifth Circuit has similarly refused to recognize an
exception to Rooker-Feldman for procedural due process
claims. In Liedtke v. State Bar of Texas, 18 F.3d 315 (5th
Cir.), cert. denied, 513 U.S. 906 (1994), an attorney sued in
federal court to prevent the enforcement of a state court
judgment disbarring him, claiming he had not been
afforded due process or a full and fair opportunity to be
heard. The court, however, applied Rooker-Feldman and
affirmed dismissal of the attorney’s action, noting that
“the casting of a complaint in the form of a civil rights
action cannot circumvent this rule.” Jd. at 317-18."°

” Petitioner also claims the Fifth Circuit’s decision below conflicts
with cases like Simes v. Huckabee, 354 F.3d 823 (8th Cir. 2003), that
(Continued on following page)

15

2. There Is No Exception to the Rooker-
Feldman Doctrine For Absent Class
Members Who Were Not Named Parties
to a State Court Judgment

Petitioner also contends that Rooker-Feldman cannot
bar his due process attack on the Cox and Spencer judg-
ments because he was not a “party” to those cases. (Pet.
15-17). In effect, he argues there is an exception to Rooker-
Feldman for absent class members who are not named
parties to the lawsuit. Under this theory absent class
members would always litigate anew their various due
process challenges to state court class action judgments.
Petitioner’s argument is wrong both legally and conceptu-
ally because it ignores the fundamental notion that a class
action is a representative lawsuit.

For example, in Snider, the Eighth Circuit specifically
rejected the argument that Rooker-Feldman did not apply
to absent members of a state court-approved class because
they were not “parties.” The court stated that “to deter-
mine that the plaintiffs here were not ‘parties’ in the state
court action would require us to hold that the state court
wrongly certified the class,” which is not an issue a federal

refuse to apply Rooker-Feldman where the plaintiff has not had a
“reasonable opportunity” to raise his federal claims in state court. (Pet.
16). For example, in Simes plaintiff attempted to raise his federal
claims in state court, but the state court declined to consider them. Jd.
at 828-30. In other of the “reasonable opportunity” cases cited in Simes,
the state court procedures themselves did not allow the plaintiffs to
present their federal claims. All of these cases are inapposite here. In
Cox. the Tennessee state court afforded absent class members the
opportunity to object to the settlement and specifically considered
objections to the adequacy of the notive and adequacy of representation
similar to those that Petitioner urges. (Shell App. 19-23, q] 41, 42, 46,
47, 64, 66). Thus in Cox there was no lack of “reasonable opportunity” to
contest these due process issues.

16

district court has jurisdiction to decide under the Rooker-
Feldman doctrine. Snider, 154 F.3d at 812.

Other courts have also ruled that Rooker-Feldman
precludes absent class inembers from obtaining review of
final state court judgments in federal district court. In
Kamilewicz, absent class members sued the parties to a
nationwide class settlement and class counsel alleging,
like Petitioner here, that the state court judgment approv-
ing the settlement was null and void because of lack of due
process. Kamilewicz, 92 F.3d at 509. Notwithstanding that
the plaintiff'class members were not named parties to the
original state court case, the Seventh Circuit held Rooker-
Feldman barred the district court from hearing their due
process claims. Jd. at 509-12. Similarly, in In re General
Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig.,
134 F.3d 133 (8rd Cir. 1998), the Third Circuit held that
under Rooker-Feldman absent class members could not
sue in federal court to enjoin a Louisiana state court
judgment approving a nationwide class settlement. GMC,
134 F.3d at 143.”

In fact, Petitioner’s entire argument runs counter to
the very representational nature of a class action. The
Supreme Court long ago noted that a class action, or a
“representative” suit, is an exception to the rule that one
cannot be bound by a judgment in personam unless one
was made fully a party in the traditional sense. Shutts,
472 U.S. at 808 (citing Hansberry v. Lee, 311 U.S. 32, 40-
41 (1940)); see also 7B Wright, Miller, & Kane, Federal

" Petitioner’s citation to Allen v. Allen, 48 F.3d 259 (7th Cir. 1995),
a child custody case, is irrelevant because Allen does not involve or
address a court’s ability to bind absent class members to a class action
judgment.

NE ROE CAIDA Bei RLS tO BN Oat ice Ah ve Vln Soi wowed

—_—
Vike:

eee ee

——_

17

Practice and Procedure § 1789 at 238 (2d ed. 1986). There
is no requirement that a class member must be a named
party in a class action to be bound by the resulting judg-
ment. The whole point of the Shutts minimum due process
requirements — as set forth by this Court — is to establish
when a class member will be bound even though he does
not appear and is not a named party.

3. The Theory of Injury By an Adverse
Party Does Not Apply Here

In a final twist, Petitioner argues that Rooker-
Feldman does not apply when a plaintiff alleges his injury
was caused by an adverse party. (Pet. 13-14). Petitioner
contends that because he alleges damage to his mobile
home caused by PB plumbing, “Rooker-Feldman does not
bar jurisdiction, as it would if the legai injury were caused
by the state judgment itself.” (Pet. 14). Petitioner’s charac-
terization of his claim, however, is demonstrably false, and
his reliance on Noel v. Hall, 341 F.3d 1148 (9th Cir. 2003),

is misplaced.

First. Petitioner’s claim that he is “not seeking to
invalidate the state court judgment” (Pet. 15) is disin-
genuous at best. Petitioner’s Second Amended Complaint
alleged that the Cox and Spencer judgments were void and
sought an injunction barring the use of the Cox and
Spencer judgments to preclude the product liability claims
of Petitioner and the nationwide class he purported to
represent. (Shell App. 69, {| 118; Shell App. 74, q 129). His
pleading included an eight-page attack on the validity of
the Cox and Spencer judgments. (Shell App. 66-74). As the
Fifth Circuit found, his “allegations indisputably denounce
the express findings uf the Cox state court.” (Pet. App. 10).

18

Even the Noel court would regard such claims as
barred by Rooker-Feldman. In that case the Ninth Circuit
summarized this Court’s decisions in Rooker and Feldman
and its own precedents as follows:

It is a forbidden de facto appeal under Rocker-

Feldman when the plaintiff in federal district

court complains of a legal wrong allegedly com-

mitted by the state court, and seeks relief from

the judgment of that court.

341 F.3d at 1163. The Noel court subsequently reiterated,

If a federal plaintiff asserts as a legal wrong an
allegedly erroneous decision by a state court, and
seeks relief from a state court judgment based on
that decision, Rooker-Feldman bars subject mat-
ter jurisdiction in federal] district court.

Id. at 1164. That is of course precisely the situation here.

Second, when the Noel court contrasted the situation
where the plaintiff complains of an injury caused by an
adverse party, it was addressing an entirely different
circumstance. In Noel, the federal district court mistak-
enly invoked ?tooker-Feldman to dismiss a fiduciary duty
claim simply because an identical claim was pending
between the same parties in a simultanevus state court
action. Noel, 341 F.3d at 1165. On appeal, the Ninth
Circuit found that the district court had erred and Rooker-
Feldman could not apply because there was no state court
judgment whatsoever relating to the fiduciary duty claim —
in fact, the state court litigation was still pending:

We rave never held that when there are simul-

taneous suits in state and federal court, in

which related ... claims are being litigated, the
federal suit must be dismissed under Rooker

Feldman.... The Supreme Court has repeat-
edly stated that simultaneous state and federal

£ ad eR AL Lo let ew

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ita a

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19

litigation of overlapping, and even identical, is-
sues is an important feature of our federai sys-
tem.... The pending suit in [state court]
therefore dees not prevent [plaintiff] from pursu-
ing his fiduciary duty claim simultaneously in
his federal court suit, and we reverse the district
court’s dismissal of that claim.

Id.

In summary, Petitioner has failed to identify any
exception to the Rooker-Feldman doctrine that would alter
the Fifth Circuit’s conclusion that the federal district court
lacked subject matter jurisdiction over Petitioner’s due
process claim.”

Il. The Fifth Circuit Correctly Affirmed the
Dismissal of Petitioner’s RICO Claim For
Failure To State a Claim on Which Relief Can
Be Granted

Petitioner also seeks review of the Fifth Circuit’s
decision upholding the dismissal of his RICO claim.
Petitioner claims this issue is worthy of this Court’s review
because, in his view, the Fifth Circuit construed too
narrowly the disgorgement remedy of 18 U.S.C. § 1964(a).

Moreover, even if Rooker-Feldman were not dispositive of
Petitioner’s due process claim, the well-pleaded complaint rule provided
an independent basis for the district court to find that the claim was
barred. As Shell demonstrated in the courts below, Petitioner’s due
orocess attack on the judgment of the Tennessee court — asserting that
the Cox judgment should not be enforced for due process reasons —
merely anticipaved the full faith and credit defense that Respondents
were likely to raise. Under the well-pleaded complaint rule, matters
raised in avoidance or anticipation of a defense do not present a federal
question and cannot establish federal subject matter jurisdiction. E£.g.,
Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1,
10 (1983).

20

However, granting certiorari to decide this issue would be
largely futile, as there were numerous other grounds on
which Petitioner’s RICO claim should have been dis-
missed. Thus this Court would likely never even reach the
issue of the proper scope of the disgorgement remedy.”

Among the numerous flaws in Petitioner’s RICO
claims were the following:

e = As the Fifth Circuit previously held in Summit,
Petitioner could not sue for damages for mail or
wire fraud because, by his own admission, he did
not directly receive or rely upon Respondents’ al-
legedly fraudulent statements;

e While Petitioner claimed he cou!d nevertheless
sue for equitable relief, he never sought to amend
his complaint to allege a RICO claim for equita-
ble relief;

e Even if he had pleaded a claim for equitable re-
lief, that claim would still be barred by his ad-
mitted inability to meet the detrimental reliance
requirement for a civil RICO fraud action;

'* It is well established that this Court “reviews judgments, not
opinions.” Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842 (1984). The Court has repeatedly stated that the
prevailing party may “defend its judgment on any ground properly
raised below whether or not that ground was relied upon, rejected, or
even considered by the District Court or the Court of Appeals.” Granfi-
nanciera, S.A. v. Nordberg, 492 U.S. 33, 38 (1989) (quoting Washington
v. Yakima Indian Nation, 439 US. 463, 479 n.20 (1979)); Benne’t v.
Spear, 520 U.S. 154, 166 (1997) (“a Respondent is entitled, however, to
defend the judgment on any ground supported by the record”); Whitley
v. Albers, 475 U.S. 312, 326 (1986, (any ground properly raised below
may be urged as a basis for £uyreme Court’s affirmance of Court of
Appeals’ decision). Therefore, even if this Court had some question
about the Fifth Circuit’s reaso” ig, it could not reverse the judgment of
the Court of Appeals until it cosidered all of the grounds urged below
and found that the judgment was not sustainable on any basis.

21

e In any event, the weight of authority holds that
RICO does not authorize private plaintiffs to sue
for equitable relief;

e The equitable relief Petitioner suggests but never
pleaded — disgorgement —- is a remedy available
only to the Government;

e And, finally, the point on which the Fifth Circuit
chose to rest its decision: disgorgement is avail-
able only to “prevent and restrain” ongoing or fu-
ture violations and not, as here, to compensate
for past injuries. (Pet. App. 16-17).

Any of the foregoing would provide an independent basis
for affirming the dismissal of Petitioner’s RICO claims.

A. The Equitable Remedy of Disgorgement Is
Not Available to Petitioner

As discussed infra (§§ II. C. and D), equitable reme-
dies are not available to private RICO plaintiffs, and
Petitioner did not sue for equitable relief. But even if he
had, disgorgement is a remedy that courts have allowed
under RICO only in favor of the Government and, even in
the case of the Government, it is allowed only under very
limited circumstances not applicable here.

Both courts and commentators have uniformly recog-
nized that “disgorgement is an equitable remedy available
to the government in a civil RICO action” in appropriate
cases. Smith and Reed, Civil RICO, § 10.02 (Matthew
Bender 2000) (emphasis added). No case has ever held
that disgorgement is available to a private civil RICO
plaintiff and, noticeably, Petitioner cites none.

In fact, the Second Circuit — the only court of appeals
to consider whether disgorgement is an appropriate civil
RICO remedy — has restricted even the Government’s use

22

of the remedy solely + situations aimed at preventing
future RICO violatic is. In the seminal case of United
States v. Carson, 52 #3d 1173 (2d Cir. 1995), cert. denied,
516 U.S. 1122 (1996), the court rejected the idea that
§ 1964(a) authorized “disgorgement of gains ill-gotten long
in the past.” 52 F.3d at 1181. The court reasoned that
§ 1964(a) is “forward looking, and calculated to prevent
RICO violations in the future.” Jd. Therefore, the court
held, the only disgorgements available to the Government
were those “designed to ‘prevent and restrain’ future
conduct rather then to punish past conduct.” Jd. at 1182
(emphasis in original).

As Petitioner conceded in his Second Amended Com-
plaint, PB plumbing systems are no longer being sold.
(Shell App. 39, 9 14). Thus, the Fifth Circuit reasoned,
consistent with Carson, that even if disgorgement were a
remedy available to Petitioner, disgorgement would not be
available to Petitioner because he did iiot seek disgorge-
ment to prevent or restrain ongoing or future injury, but
rather solely for the purpose of compensation for past
injuries:

Even if equitable relief were available to a pri-

vate party, disgorgement is not a proper remedy

given the circumstances of this case.... We
agree with the Second Circuit’s reasoning in Car-

son. Section 1964(a) establishes that equitable

remedies are available only to prevent ongoing

and future conduct. Here, [Petitioner] does not
seek disgorgement to “prevent and restrain” the

[Respondents] from producing PB plumbing sys-

tems. In fact, in his Second Amended Complaint,

“The Second Circuit has repeatedly reaffirmed its holding in
Carson. See United States v. Sasso, 215 F.3d 283, 290-91 (2d Cir. 2000).

a

23

[he] concedes that the [Respondents] no longer
market the plumbing systems.

(Pet. App. 17).

Consequently, the Fifth Circuit properly affirmed the
dismissal of Petitioner’s RICO claim. However, even if the
Fifth Circuit too narrowly construed the disgorgement
remedy, Petitioner’s RICO claim would fail for several
other reasons.

B. Petitioner’s Inability To Satisfy the
Proximate Cause Requirement of Holmes
Dooms His RICO Claim No Matter What
Form of Relief He Seeks

As discussed infra (§§ II. C. and D), equitable reme-
dies are not available to private RICO plaintiffs, and
Petitioner did not sue for equitable relief. Nevertheless,
even if he had sued for equitable relief, and even if it were
a remedy available to him, Petitioner’s RICO claim fails —
as the district court held — because he cannot satisfy the
proximate cause requirement this Court mandated in
Holmes, which precludes him from establishing RICO
standing. Thus, even if equitable relief were potentially
available to him, Petitioner still would have to meet the
standing requirement of 18 U.S.C. § 1964(c) for maintain-
ing a civil RICO action.

The analysis is straightforward. A private plaintiff’s
standing to bring a RICO action derives from § 1964(c),
which authorizes a private suit under RICO by “any
person injured in his business or property by reason of a
violation of section 1962.” (Pet. 2; 18 U.S.C. § 1964(c)). In
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985),
this Court explained that a private RICO plaintiff “only
has standing if, and can only recover to the extent that, he

24

has been injured in his business or property by the con-
duct constituting the violation.” Then, in Holmes v. Securi-
ties Investor Protection Corp., 503 U.S. 258, 268 (1992),
this Court held that the “by reason of” component of
§ 1964(c) imposes a proximate cause requirement on the
plaintiff, i.e., a civil RICO plaintiff must show the alleged
predicate acts were the proximate cause of injury to his
business or property. In Summit the Fifth Circuit held
that for mail or wire fraud the proximate cause require-
ment of Holmes can be met only by an allegation that the
private plaintiff personally received and relied on the
alleged misrepresentation. Summit, 214 F.3d at 560-62.
Taken together, these cases mean that a private plaintiff
who cannot allege that he relied on the defendants’ mis-
representations cannot establish the proximate cause
required under Holmes (and also by Summit in the Fifth
Circuit). Consequently, under Sedima such a plaintiff has
no standing to bring a RICO claim based on mail or wire
fraud.

Here Petitioner admitted that he did not rely on any
alleged misrepresentations by any Respondent and there-
fore could not satisfy the detrimental reliance requirement
of Summit. As a result, he could not meet the require-
ments of § 1964(c) and has no standing to assert a civil
RICO claim regardless of what form of relief he seeks.
Thus, whether or not equitable relief is available to pri-
vate RICO plaintiffs, the district court correctly held his
RICO claim failed as a matter of law.”

'* No case — not even NOW — would allow a private plaintiff who
lacks standing under § 1964(c) to maintain a RICO action for equitable
relief. Even that court believed a private RICO plaintiff must meet the
standing requirements of § 1964(c) to be able to maintain an action for
equitable (or any other form of) relief under § 1964(a). The NOW court’s

(Continued on following page)

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Re aes

Pb ee een AE FUE ere wi

25

C. RICO Does Not Authorize Private Plain-
tiffs To Seek Equitable Relief

Even if Petitioner could meet RICO’s standing re-
quirements, no federal court of appeals other than the
Seventh Circuit in NOW has held that private plaintiffs
can seek injunctive or other equitable relief under RICO.
Indeed, the great weight of authority holds that RICO does
not authorize equitable relief for private parties.

For example, in Religious Tech. Ctr. v. Wollersheim,
796 F.2d 1076 (9th Cir. 1986), cert. denied, 479 U.S. 1103
(1987), the Ninth Circuit rejected the availability of
injunctive relief for private RICO plaintiffs based on a
thorough analysis of both the statute’s language and its
legislative history. The court reversed a district court’s
order granting an injunction against the use or dissemina-
tion of materials allegedly stolen from the Church of
Scientology because “injunctive relief is not available to a
private plaintiff in a civil RICO action.” Wollersheim, 796

theory was that private parties could sue for injunctive relief by virtue
of “the combination of grants in §§ 1964(a) and (c).” NOW, 267 F.3d at
697. In other words, the NOW court believed that § 1964(c) grants
private parties a right of action under the terms specified, and § 1964(a)
grants district courts the authority to render injunctive relief in such
actions. Therefore, even under the NOW theory Petitioner could not
obtain equitable relief because he cannot meet the proximate cause
requirement of § 1964(c) and hence lacks standing to bring a private
RICO action. In fact, the prior opinions in the case establish that the
NOW courts clearly regarded standing under § 1964(c) as an indispen-
sable element of the plaintiffs’ case. On appeal from an initial dismissal
of plaintiffs’ RICO claims, this Court said “the threshold question” was
“whether petitioners have standing to bring their claim.” National Org.
For Women, Inc. v. Scheidler, 510 U.S. 249, 255 (1994). The Court
proceeded only after satisfying itself that plaintiffs had adequately
alleged injury to their business or property by reason of the defendants’
alleged conspiracy. Jd. at 255-56.

26

F.2d at 1077. In reaching its decision, the court first

analyzed the language of the statute itself:
Part (a) is a broad grant of equitable jurisdiction
to the federal courts. Part (b) permits the gov-
ernment to bring actions for equitable relief... .
Part (c), the private civil RICO provision, states
that a private plaintiff may recover treble dam-
ages, costs and attorney’s fees. In contrast to part
(b), there is no express authority to private plain-
tiffs to seek the equitable relief available under
part (a)....

[T]he inclusion of a single statutory reference to
private plaintiffs, and the identification of a
damages and fees remedy for such plaintiffs in
part (c), legically carries the negative implication
that no other remedy was intended to be con-
ferred on private plaintiffs.

Id. at 1082-83 (emphasis in original).

Next, the court confirmed that RICO’s “legislative
history mandates us to hold that injunctive relief is not
available to a private party in a civil RICO action.” Jd. at
1084. The court stressed that proposed language expressly
authorizing private plaintiffs to sue for injunctive relief as
well as treble damages had been rejected by a Congres-
sional subcommittee, which instead adopted a bill that
“explicitly created only the private action for treble dam-
ages which was eventually enacted as section 1964(c).” Id.
(emphasis in original). Moreover, the Ninth Circuit also
found it significant that Congress had subsequently
rejected a proposed amendment to § 1964 that would have
expressly permitted private parties to sue for injunctive
relief. Jd. at 1085-86. For these reasons, the court con-
cluded that the statute’s legislative history also did not
support a claim for equitable remedies for private plain-
tiffs:

27

The clear message from the legislative history is
that, in considering civil RICO, Congress was re-
peatedly presented with the opportunity ex-
pressly to include a provision permitting private
plaintiffs to secure injunctive relief. On each oc-
casion, Congress rejected the addition of any such
provision.

Id. at 1086 (emphasis in original).

Finally, the Ninth Circuit noted that analogy to the
antitrust laws also supported its decision. The court
observed that “civil RICO was intended to provide a
private cause of action modeled on the analogous provision
of the antitrust laws.” Jd. at 1086. The court stressed that
the Supreme Court had already held § 4 of the Clayton Act
— the provision of the antitrust laws analogous to RICO’s
§ 1964(c) — did not permit a private plaintiff to sue for
injunctive relief. Jd. at 1087. Rather, private antitrust
plaintiffs could obtain injunctive relief only because
another section of the antitrust laws — for which there is
no analogous RICO provision — expressly authorized such
relief. Jd. Summarizing its findings, the Ninth Circuit
concluded that “taken together, the legislative history and
statutory language suggest overwhelmingly that no
private equitable action should be implied under civil
RICO.” Id. at 1088.

Although the Fifth Circuit did not deem it necessary
to decide the issue (Pet. App. 16), it, and virtually every
other court of appeals that has commented on the issue,
has also expressed serious doubt that injunctive or equita-
ble relief is available to private plaintiffs under RICO. In
In re Fredeman Litig., 843 F.2d 821 (5th Cir. 1988), the
Fifth Circuit reviewed the Ninth Circuit’s Wollersheim
decision at length, id. at 828-30, and found “the analysis
contained in the Wollersheim opinion persuasive”:

28

Congress indeed had several opportunities to

give express authorization to private injunctive

actions but chose not to do so, apparently be-

cause it hesitated in the face of the ramifications

of that remedy.
Id. at 830. While the court acknowledged that RICO
should be “liberally construed to effectuate its remedial
purposes,” id. at 830, it concluded that “liberal construc-
tion” did not allow it to disregard convincing evidence that
Congress had not authorized private injunctive remedies.
In re Fredeman, 843 F.2d at 830."

In light of the strong and persuasive statements by
both the Ninth and Fifth Circuits, it is not surprising that
the majority of other federal courts of appeals have also
expressed substantial doubt that injunctive or other
equitable relief is available to private RICO plaintiffs.”
E.g., Switzer v. Coan, 261 F.3d 985, 992 n.14 (10th Cir.
2001) (“there is considerable doubt that equitable relief is
available to private RICO litigants under any circum-
stances”); Johnson v. Collins Entm’t Co., Inc., 199 F.3d
710, 726 (4th Cir. 1999) (noting “substantial doubt
whether RICO grants private parties ... a cause of action
for equitable relief” and “this doubt is especially acute in

‘* Subsequent to its In re Fredeman decision, the Fifth Circuit has
continued to (1) reiterate substantial doubt that injunctive relief is
authorized under RICO for private plaintiffs, and (2) emphasize
agreement with the Ninth Circuit’s holding in Wollersheim. See Bolin v.
Sears, Roebuck & Co., 231 F.3d 970, 977 n.42 (5th Cir. 2000); Price v.
Pinnacle Brands, Inc., 138 F.3d 602, 605 n.5 (5th Cir. 1998); Conkling v.
Turner, 18 F.3d 1285, 1296-97 nn.7 & 8 (5th Cir. 1994).

’ Most courts have found it unnecessary to decide the issue
directly because a civil RICO plaintiff normally has pendent state law
claims that will support an award of injunctive relief and obviate the
need to decide the RICO issue.

ORAL Re ew

Bea tee ee a

29

light of the fact that Congress has declined to authorize
injunctive remedies for private parties”); Lincoln House,
Inc. v. Dupre, 903 F.2d 845, 848 (1st Cir. 1990) (“it is not
clear whether injunctive or other equitable relief is avail-
able at all in private civil RICO actions”); Trane Co. uv.
O’Connor Sec., 718 F.2d 26, 28 (2d Cir. 1983) (expressing
“serious doubt” about “the propriety of private party
injunctive relief” under RICO).

In contrast, the Seventh Circuit in NOW is the only
federal court of appeals that has allowed injunctive relief
to a private litigant under RICO.

D. Petitioner Sued for Damages and Not for
Equitable Relief

Finally, while Petitioner hypothesizes that he could
sue for equitable disgorgement, in fact he did not. In
Petitioner’s Second Amended Complaint, Petitioner
repeatedly emphasized that the relief he sought on behalf
of the class was damages. (Shell App. 35-80, J 32(d), 34-
36, 50, 73, 79, 86, 92, 141, 151, 160, 161(1)). His only
request for equitable relief was for an injunction to bar the
use of the Cox and Spencer judgments to preclude the class
“from asserting their rights to recover damages.” (Shell
App. 74, § 129 (emphasis added)). Moreover, contrary to
Petitioner’s representation (Pet. 20), the class Petitioner
sought to certify was a damages class. (3 R. 795-806).

In short, Petitioner’s argument for equitable dis-
gorgement was purely hypothetical — conjured up only as a
last-ditch effort to try and avoid having to show the direct

30

reliance necessary to establish RICO damages under
Summit.”

CONCLUSION

The petition for writ of certiorari should be denied.
The judgment of the Fifth Circuit was surely correct. The
district court properly dismissed Richard’s due process
attack on the Cox and Spencer judgments for lack of
subject matter jmiisciction under the Rooker-Feldman
doctrine. In addivivn, the district court properly dismissed
Richard’s RICO claim for faiiure to state a claim.

Respectfully submitted,

DAVID T. HARVIN

Coussel of Record
ERICA L. KRENNERICH
VINSON & ELKINS L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
(713) 758-2368

* Petitioner argues that he “should have been allowed to amend
[his] complainv.” (Pet. 23). However, Petitioner never sought leave of
the district court eo amend his complaint. It is well established that a
party does not preserve error by merely alleging he should have been
given an opportunity to amend his complaint or that he stood ready to
amend his complaint. Great Plains Trust Co. v. Morgan Stanley Dean
Witter & Co., 313 F.3d 305, 330 (5th Cir. 2002); United States v. Totten,
286 F.3d 542, 552 (D.C. Cir. 2002) (plaintiffs whose complaint was
dismissed for lack of subject matter jurisdiction waived right to amend
by failing to make a motion either before or after the district court
granted their opponent’s dismissal motion). Instead, a party must move
to amend his complaint and claim as error on appeal the district court’s
failure to allow him to amend. See id. Petitioner did neither. Accord-
ingly, he has waived the alleged error.

APPENDIX

Shell App. 1

IN THE CHANCERY COURT
FOR OBION COUNTY, TENNESSEE

AT UNION CITY, TENNESSEE

TINA COX, CHARLES HOMER ) Civil Action No. 18,844
CLOAR, MARY H. CLOAR, )

MELODY ALFORD, COUNTRY ) CLASS ACTION
VILLAGE MOBILE HOME )

PARK, and PHYLLIS BIR- ) OBION COUNTY
MING" AM, individually and on )

behalf of al! other individuals )

and entities similarly situated,

Plaintiffs,

Vv.

)
)
)
SHELL OIL COMPANY, d/b/a?
SHELL CHEMICAL COMPANY, )
and HOECHST CELANESE _ ?
CORPORATION, ;

)

Defendants.

FINAL ORDER APPROVING THE CLASS
ACTION SETTLEMENT, ATTORNEYS’ FEES
AND EXPENSES, AND AWARDS TO
REPRESENTATIVE PLAINTIFFS

(Filed Nov. 17, 1995)

This matter is before the Court on motion by the
parties’ for final approval of their proposed settlement

" The parties are the named individual and representative Cox
plaintiffs, on behalf of the certified Settlement Class, and defendants
(Continued on following page)

Shell App. 2

(the “Settlement”) as set forth in the Settlement Agree-
ment filed July 31, 1995, as amended by an Amendment
dated October 6, 1995, a Second Amendment dated
October 24, 1995, and a Third Amendment dated No-
vember 9, 1995 (the “Agreement”). Also before the Court
is the Application of Class Counsel for Award of Attor-
neys’ Fees and Expenses, and Awards to the Represen-
tative Plaintiffs (the “Application”). A duly noticed
hearing on the motion and Application was held on
November 8 and 9, 1995, (the “Fairness Hearing”)
pursuant to the Court’s Order of July 31, 1995, granting
preliminary approval of the Settlement and the August
7, 1995, order conforming the class definition (collec-
tively the “Preliminary Approval Order”), under proce-
dures set forth in the August 24, 1995, Order Approving
Forms of Notice, Scheduling Fairness Hearing and
Setting Opt-out and Objection Dates.

Notice of the Fairness Hearing was given to poten-
tial class members nationwide in accordance with the
Preliminary Approval Order and the Court approved
notice program. Voluminous pleadings and briefs were
submitted by the settling parties in support of the
Settlement and in response to all objections and motions
filed regarding the Settlement, including the various
objections and related papers filed by objector Tony
Martin, et al., and affiliated objectors through their
attorneys (the “Martin Objectors”). The parties, numerous
interested members of the Settlement Class, and others
appeared at the Fairness Hearing, either individually or
by their respective attorneys. The Court heard and

Shell Oil Company d/b/a Shell Chemical Company and Hoechst
Celanese Corporation.

LA PPA I SER AS A CE Att

Shell App. 3

considered evidence in support of the proposed Settle-
ment. This evidence included live testimony, effidavits,
documentary and video presentations, as well as oral
representations by various attorneys. The attorneys for
the parties and others were heard. An opportunity to be
heard was given to all other persons requesting to be
heard in accordance with the Preliminary Approval
Order. This included a significant number of members of
the Settlement Class who, in some instances, had
traveled great distances from other states to appear and
participate in the Fairness Hearing, who were invited to
and did make statements and ask questions regarding
the terms of the Settlement and the relief it provides.

As more fully set forth below, the Court has deter-
mined that the notice given to members of the Settle-
raent Class certified in the Preliminary Approval Order
fully and accurately informed the Settlement Class
members of all material elements of the proposed Set-
tlement; was the best notice practicable under the
circumstances; was valid, due, and sufficient notice to
all Settlement Class members; and complied fully with
Rule 23 of the Tennessee Rules of Civil Procedure, the
United States Constitution, and any other applicable
law.

OPINION

The Court has greatly benefited from the fine briefs
and oral arguments of the attorneys in this case, all of
whom are worthy adversaries, and appreciates the
manner in which they have conducted themselves in this
most difficult, complex, and hotly contested litigation.
Great credit must be given to Judge Richard Silver of

Shell App. 4

Monterey County, California for his initiative to coordi-
nate a settlement conference with the Cox and Spencer’
parties. The revised Cox Settlement is due, in no small
part, to his efforts. The Court also commends Judge
Hardaway of Greene County, Alabama, for his willing-
ness to join in this unprecedented effort by three state
courts to coordinate and settle competing national class
actions. As to the settling parties, the plaintiffs, the
plaintiff class, Shell Oil Co., and Hoechst Celanese
Corp., the Court acknowledges that if it were not for
your recognition of this opportunity to reach a global
settlement of these issues, all of these efforts would
have been in vain. You have put aside your armor and
your hardened positions from years of battle and have
finally made peace.

Compromises are favored in the law. Neither this
Court, nor any court, has the resources to fully litigate
all issues, nor is it always fair to the parties to do so.
The time, cost, and lack of finality of protracted litiga-
tion require certain matters to be settled. The polybuty-
lene plumbing litigation’s time has come. Closure is not
only appropriate, but timely. The parties to this and to
the many other individual and- group cases that have
comprised the polybutylene plumbing litigation have
fought long and hard with varying degrees of success
and defeat; however, the affected party, the consumer,
has seen very little benefit from these efforts. The Cox
settlement agreement is a compromise. In every com-
promise, each side must abandon or set aside its ideal

? Spencer, et al. v. Shell Oil, et al., Case No. CV 94-074, Circuit
Court of Greene County Alabama, Honorable Eddie Hardaway, Jr.,
presiding.

Shell App. 5

position and reach an agreement that is fair and rea-
sonable to all concerned under the circumstances, and
not insist on terms only beneficial to one party. The Cox
settlement is not perfect. I would have preferred that
the Agreement include no leak requirements and a
larger claims “window” for class members. The Court
has some concern the $75 million cap on past damages
may not adequately pay all past damages in full; how-
ever, these concerns must be weighed in light of the
numerous unique advantages to the consumer that the
Cox settlement does provide.

The Court finds the Settlement is fair, adequate and
reasonable. The $950 million dollars is a minimum
contribution of the defendants to those who are affected
by polybutylene plumbing. When the court initially gave
preliminary approval to the proposed Settlement, this
factor was the leading factor in granting that approval.
As counsel for the parties have confirmed at various
times in open court as the hearings have progressed in
this matter, the initial funding commitment (now
increased to $950 million) may ultimately be more if
funds are expended and provided by the defendants and
if other responsible parties contribute to the fund in the
future. Due to the uncertainty of the size of the class
and how many claims will ultimately be filed, this Court
would not have approved a “limited fund” which pro-
vided less than full relief while demanding full release.
If the worst case does present itself, that is, if the class
is as large as six million people, all claims are pre-
sented, and the fund is totally expended; the only
prejudice to the consumer will be the delay caused by
the filing of claims and payment of funds. The Agree-
ment tolls statutes of limitations for class members. The

Shell App. 6

Agreement provides that any consumers not fully
reimbursed or compensated under the terms of the
Agreement would be able to pursue all legal and equita-
ble claims and remedies (including punitive damages)
individually and as a class.

The Court finds the notice program is excellent. As
specified in the findings below, the evidence supports
the conclusion that the notice program is one of the most
comprehensive class notice campaigns ever undertaken.
The Court is satisfied that all reasonable efforts have
been made to reach affected consumers.

The Court must also consider the complexity, the
expense, and the likely duration of these proceedings if
settlement were not reached and approved. The Court
must weigh the benefits of settlement against the likely
outcome of litigation. As the Court has already stated,
much has been spent and much has been done over the
past years in group and individual polybutylene pipe
litigation across the country, but not much has been
accomplished for the benefit of the consumer. The claims
in Cox and Spencer each have their own legal problems,
which, if fully litigated, would delay the ultimate resolu-
tion of these cases for many years to come. If litigated,
complex legal issues would be presented, such as stat-
utes of limitations and repose, choice of appropriate
state laws, liability, and measure of damages. All of
these issues, if litigated and appealed, could clog the
courts across the country for years to come. There is a
question as to whether some state courts would give full
faith and credit to another state court’s determination of
these issues.

Shell App. 7

It is an important aspect of the Settlement that the
plaintiffs’ attorney’s fees and costs are paid by the
defendants in addition to the settlement fund, and are
not deducted from the settlement fund. In the absence of
a comprehensive Class Settlement now, as presented
here in Cox, after the resolution of the contentious
issues described above, any ultimate recovery available
for consumers would be reduced by attorney’s fees.
These normally range from a third to forty percent.
None of this delay, risk, mounting transaction costs and
reduction of recovery by individual fees would be in the
long-term interest of the consumer. In Cox, the attor-
ney’s fees requested are much less; approximately five
percent of the settlement fund; moreover, unlike a
typical contingent fee, they are not paid from the fund.
The request for fees in the case is approved. The Court
finds that they are reasonable under the circumstances,
and the Court is pleased to approve them.

The Court is pleased with the reaction of the class
members to the proposed Settlement. The Court is
-greatly comforted by the small number of individual opt-
outs, the removal of objections by Spencer class counsel
and by Tony Martin, who is represented by the Fleming
group, and the support expressed by the consumers who
testified at the Fairness Hearing. The Court finds that
the Consumer Plumbing Recovery Center (“CPRC”)
claims facility procedures which have been outlined to
the Court and which are provided for in the Agreement,
appear to constitute a simple, consumer-friendly and
efficient method of adjusting the claims in this case.

The discussions and negotiations that ultimately
lead to the settlement presented for Court approval were,
from all reports and from the Court’s own observation,

Shell App. 8

intensive, exhaustive, and often heated. The Court finds
the Agreement is the result of good faith, arms-length,
and non-collusive negotiations. The Agreement is fair,
adequate, and reasonable under the circumstances, and
it is approved.

ADDITIONAL FINDINGS AND CONCLUSIONS

The entire matter of the proposed Settlement and
the Application having been fully heard and duly con-
sidered by the Court, the Court further FINDS and
CONCLUDES, in addition to the i:ndings and conclu-
sions in the foregoing Opinion, as follows:

1. The polybutylene plumbing litigation has been
pending, in various forms and in various courts around
the country, for more than a decade. It has included
individual cases, cases with large numbers of individual
plaintiffs, and putative nationwide or statewide class
actions brought in federal court and in many state
courts.

2. The first nationwide polybutylene plumbing
class action was filed in September 1993 by lawyers who
are now members of the team of Cox Class Counsel. The
action, Robert Beeman, et al. v. Shell Oil Company, et
al., No. 93-047363, was filed in a state district court in
Harris County, Texas.

3. Over the course of many months of intensive
negotiations, involving a neutral mediator at many
critical junctures, a tentative settlement of the Beeman
case was achieved in October 1994. In February 1995,
however, the Texas state court denied preliminary
approval of that settlement without comment.

a

Shell App. 9

4. After the Court in this case certified the na-
tionwide class on June 13, 1995, Cox Class Counsel
joined with the plaintiffs’ attorneys in the Beeman
action to prosecute this case for the benefit of mobile
and site-built homes with polybutylene plumbing across
the country.

5. Collectively, this combined team of Class Coun-
sel included highly qualified and well-regarded lawyers
with extensive class action and complex litigation
experience, as well as lawyers with vast experience in
polybutylene plumbing litigation.

6. Class Counsel then were able to negotiate a
settlement generally patterned after that originally
arrived in Beeman, although the minimum funding
commitment was $100 million greater, other features
were added, and only two of the three Beeman defen-
dants, Shell and Celanese, were involved.

7. Because of the pendency of a nationwide class
action in Greene County, Alabama, and of other polybu-
tylene actions around the country, with many brought
as class actions, including an uncertified case for a
putative statewide mobile homeowner class in the
Superior Court of Monterey County, California,’ Judge
Hardaway and this Court agreed that Judge Silver in
Monterey would further the cause of final resolution of
polybutylene plumbing litigation if he was appointed to
serve as a settlement judge for all three courts.

* Meers, et al vs. Shell Oil, et al, Case No. M 30590, Superior Court
of the State of California, County of Monterey, Honorable Richard M.
Silver, presiding.

Shell App. 10

8. Judge Silver issued an October.12, 1995 Order
Setting Settlement Conference with the endorsement of
this Court and Judge Hardaway, to convene the coordi-
nated settlement process. Other state courts with
proposed class actions were asked, by the parties and/or
by Judge Silver, to dismiss or stay their proceedings in
deference to the coordinated settlement effort in order to
give it an opportunity to succeed, undistracted by
collateral litigation.

9. Accordingly, from October 23, 1995, through
November 7, 1995, the day before the rairness Hearing
in this Court, intensive and continuous global settle-
ment negotiations were conducted among Cox Class
Counsel, the Spencer counsel, and defendants’ counsel
and representatives through the mediation and supervi-
sion of Judge Silver.

10. As a result of these concentrated efforts, a
comprehensive settlement was reached, resulting in
significant enhancements to the Settlement as it was
originally presented to the Court and preliminarily
approved on July 31, 1995.

11. The resulting Settlement, documented and as
presented for final approval at the Fairness Hearing,
provides consumers with a recovery program consisting
of reimbursement of otherwise unreimbursed expenses
for repairs to and replacement of leaking polybutylene
plumbing systems and property damage caused by such
leaks, as well as an extensive program for replacement
of such leaking plumbing systems.

12. Some of the features of this Settlement are
these:

Shell App. 11

a. Free replacement of polybutylene plumbing
systems installed since January 1, 1978, if two or more
qualifying leaks occurred before August 21, 1995, or if
only one such leak occurs either in the two years follow-
ing that date or during a period (of from 10 to 16 years,
depending on the type of structure) following installa-
tion of the system;

b. Reimbursement of the unreimbursed ex-
penses of plumbing repairs, replacements, and property
damage from January 1, 1978, to August 21, 1995, up to
$75 million will be distributed, pro rata if necessary, for
these expenses; and property damage after August 21,
1995, at 100 cents on the dollar;

c. An unlimited funding potential, with the
defendants committed to to [sic] initially provide up to
$950 million for the relief: if additional funds are re-
quired, the defendants will either provide them, or
litigation will be resumed with all applicable statutes of
limitations and repose tolled in the interim;

d. Provision for additional relief to eligible
members of the Settlement Class who experience special
needs in connection with qualifying leaks;

e. A comprehensive notice program, including
notice every three years through the life of the program,
which ends in 2009; and

f. The payment of class counsel’s attorneys’
fees and expenses in addition to the $950 million re-
served for relief for the Settlement Class.

13. The Court is not aware of any other class
action settlement with successive notice as provided in
the Cox Settlement.

Shell App. 12

14. In reaching this Settlement, the defendants
have foregone very significant defenses and issues which
could have precluded or limited liability as to some or
many class members’ claims. These include the statutes
of limitations and repose, selection of the appropriate
states’ laws applicable to various issues, the “economic
loss” limitation on recoveries of the type sought here,
the lack of privity between the members of the Settle-
ment Class and the defendants, the fact that many of
the members of the Settlement Class purchased their
structures “as is,” and, of course, the risk that plaintiffs
would not be successful in proving their allegations. In
agreeing to this Settlement, the defendants have dis-
played commendable corporate responsibility, respon-
siveness, and good will toward consumers.

15. The Court appointed Rust Consulting, Inc. and
Kinsella Communications Ltd. as class notice providers
in this case. Richard Redfern, president of Rust Consult-
ing, and Katherine Kinsella, president of the communi-
cations firm bearing her name, testified at the Fairness
Hearing. The Court also considered Ms. Kinsella’s
affidavit and the affidavit of Jeffrey Dahl, Executive
Vice President of Rust Consulting, in connection with
their activities as notice providers.

16. Cox Class Counsel and the notice providers
worked with Todd B. Hilsee, an experienced class action
notice consultant, to design a class ncetice program of
unprecedented reach, scope, and effectiveness. Mr.
Hilsee was accepted by the Court as a qualified class
notice expert at an earlier hearing to approve the com-
mencement of the notice program. He testified at the
Fairness Hearing, and his affidavit was also considered

Shell App. 13

by the Court, as to the operation and outcome of this
program.

17. The above-mentioned individuals provided
documents, information, and affidavits at the outset of
the notice period that assisted the parties in designing,
and the court preliminarily approving for implementa-
tion, a singularly comprehensive and creative notice
program.

18. Beginning in August, 1995, and extending into
October, 1995, an extensive notice effort was under-
taken in this case to implement the Court approved

notice program specified in the Preliminary Approval
Order.

19. Since not all Settlement Class members were
known or readily identifiable, the notice program im-
plemented in this case combined multimedia publication
(newspapers, magazines, radio and television), individ-
ual mailed notice, ongoing press and media outreach,
and a toll-free telephone information service. The
purpose of the program was to make potential Settle-
ment Class members aware of the Action and the Set-
tlement, and to encourage them to identify themselves
to the notice providers, as they could receive further
written notices and information, and be placed on the
notice providers’ Settlement Class member database.

20. Commencing on or before August 21, 1995,
which is the Initial Notice Date as specified in the
Agreement, more than 5.6 million copies of the Court
approved Notice of Class Action and Proposed Settle-
ment were mailed, by first class mail or overnight
service, to Settlement Class members in accordance
with the Preliminary Approval Order.

Shell App. 14

21. During September, 1995, the Court approved
summary notice was published in Parade Magazine,
USA Weekend, People Magazine, and TV Guide in
accordance with the Preliminary Approval Order. The
combined circulation of these consumer publications and
national magazines is over 73 million. During August
and September, 1995, Court approved notice appeared
twice in Friday editions of USA Today, with combined
circulation of over 4.7 million.

22. Also during September, 1995, the Court ap-
proved summary notice appeered in 201 daily and
weekly newspapers in 13 targeted states (Alabama,
Arizona, California, Colorado, Florida, Georgia, Louisi-
ana, Maryland, Nevada, North Carolina, South Caro-
lina, Texas, and Virginia) and the District cf Columbia.
The combined circulation of these newspapers exceeds
23.6 million. In addition, the notice appeared in Spanish
in 38 Hispanic newspapers, with a combined circulation
over 3 million, in 29 media markets during September,
1995. Moreover, the notice appeared in 247 daily,
weekly, bi-monthly, and monthly African-American
newspapers with a combined circulation of nearly 6
million.

23. Notices were also published in the October,
1995, editions of various trade publications, comprising
a total circulation of 244,000.

24. A 30-second spot television notice was pro-
duced and appeared 213 times from August 21, 1995,
through September 3, 1995, on national and cable
television, including on such networks as ABC, NBC,
CBS, TNN, CNN, and TNT. During the same period, a
30-second Spanish language television notice appeared

Shell App. 15

18 times on the Univision arin, a popular Spanish
language network.

25. A press release, a media advisory, a public
service announcement, a video news release, a radio
news release, and a press kit were all prepared and
disseminated as part of the notice program in this case.
The press release went to 2,000 newspapers, wire
services, magazines, and broadcast points across the
United States through PR Newswire. The press release
and media advisory were also disseminated to 469
media outlets, specifically targeting consumer reporters
and media in the top 250 media markets and 84 local
daily newspapers in the 13 targeted states and the
District of Columbia. 142 outlets, with a combined
circulation of more than 14.5 million, have confirmed
using the press materials tc publish articles. It is esti-
mated that the public service announcement was broad-
cast by radio stations yielding nearly 2.9 million gross
impressions; an additional 5.5 million impressions are
estimated from the broad¢ast of the radio news release.
The video news release was used by at least 21 outlets
with combined viewership of more t} n 1.7 million.
Finally, a two-column article was provided to 10,000
daily and weekly newspapers.

26. Court approved notice forms were dissemi-
nated through various online computer services, includ-
ing CompuServe, Prodigy, and America Online, and with
Legal Link on the Internet.

27. The various forms of published notice provided
recipients with a toll free “800” telephone number to
which potential Settlement Class members could call to
obtain further information and to request the full notice

Shell App. 16

packet to be mailed to them. The telephone message was
updated as the notice program progressed, and com-
monly raised questions were answered by live operators,
in English or Spanish as required by the caller. The
parties prepared and updated scripts and information by
which the operators were able to provide the general
information commonly requested by callers.

28. The toll-free telephone facility established for
notice purposes in this case received more than one
million telephone calls in response to the published
notice program.

29. Over 195,000 requests for a claim form have
been received by the notice providers.

30. Mr. Hilsee demonstrated, by affidavit and in
live testimony at the Fairness Hearing, a number of
significant facts regarding the reach and effectiveness of
the notice. The national media campaign reached an
extraordinarily high percentage of United States adults
aged 35 years and over: approximately 114 million
individuals, or 92.11% of this population. Each of these
adults was exposed to the national media notice an
average of 4.01 times. The national media campaign also
reached approximately 151 million persons in the
United States aged 25 years and over, representing
90.88% of this population. Each of the individuals in
this larger, secondary target group was reached an
average of 3.76 times by the national media notice, a
frequency that also exceed [sic] the primary target reach
in other class actions. These are higher reach and
frequency statistics than have been found adequate by
courts in other class actions. These data do not include
the reach of the notice campaign through means other

Shell App. 17

than the national paid notice campaign, such as the
television and print notices targeted to Hispanic and
African-American media, the local newspaper notices,
the non-paid media and direct mail notices to millions of
Settlement Class members.

31. Multifaceted notice programs like that imple-
mented in this case have been approved by other courts
and utilized successfully for similar purposes in large
consumer or product class acticas such as this one,
where most class members are not individually identi-
fied at the outset. See, e.g., In re Domestic Air Transpor-
tation Antitrust Litigation, 141 F.R.D. 534 (E.D. Pa.
1992); 148 F.R.D. 297 (E.D. Pa. 1992); In re Silicone Gel
Breast Implant Products Liability Litigation, MDL 926
(N.D. Ala. 1994); Roberts v. Bausch & Lomb, Inc., 94-C-
1144-W (N.D. Ala. 1995).

32. As other courts have done with respect to the
less comprehensive notice programs they approved, this
Court finds that the notice program described above, as
designed and implemented, met and exceeded the
requirements of the United States Supreme Court,
Tennessee’s Rule 23, due process and the Constitution,
as construed in Phillips Petroleum Co. v. Shutts, 472
U.S. 797 (1985) and its progeny.

33. Thus, the best notice practicable under the
circumstances has been provided to members of the
Settlement Class. That notice accurately and adequately
advised them of this action; the proposed Settlement
and its terms, features, and benefits; their rights and
options; and the applicable procedures and deadlines for
exercising them.

Shell App. 18

34. A full opportunity has been provided to the
members of the Settlement Class to participate in the
Fairness Hearing, both orally and by way of written
submission to the Court.

35. The Court previously found the requirements
of Rule 23 of the Tennessee Rules of Civil Procedure
were met and certified a nationwide class for litigation
and trial purposes in the Order of National Class Certi-
fication. While such certification was and is contested by
the defendants, they have agreed to class certification
for settlement purposes, to promote a comprehensive,
classwide resolution of polybutylene pipe litigation.

36. The numerosity, typicality, commonality, and
adequacy requirements of Rule 23.01 of the Tennessee
Rules of Civil Procedure are satisfied as to the Settle-
ment Class in connection with the Settlement in this
case.

37. In accordance with Rule 23.02(3), common
issues of fact and law predominate and make certifica-
tion of the Settlement Class for settlement purposes
efficient and appropriate. The members of the Settle-
ment Class have been afforded the right and opportu-
nity to exclude themselves from the Settlement Class.

38. The settlement encompassed within the
Agreement is in ali respects fair, reasonable, and ade-
quate and in the best interests of the Settlement Class.

39. The Court-approved notice program provided
clear and simple procedures and instructions for the
submission of objections by or on behalf of Settlement
Class members. For example, paragraph 10 of the
Court-approved Notice of Class Action and Proposed

ee

Shell App. 19

Settlement required objections to be submitted, in
writing, postmarked not later than October 20, 1995,
and further stated, “if you do not comply with the
procedure and the deadline stated herein, you may not
be entitled to be heard at the Fairness Hearing or to
otherwise contest the approval of the Settlement, or to
appeal from any orders or judgments of the Court
entered thereon.” All objections, however styled, that
failed to comply with the procedures and deadlines set
forth in the notice program, are hereby found to be
procedurally deficient and are disqualified in accordance
with the foregoing statement.

40. The Court has also reviewed the Principles of
Agreement dated November 7, 1995, executed by the
parties, including the terms applicable to U.S. Brass
Corp., Eljer Manufacturing, Inc., and Eljer Industries,
Inc. The terms of the Principles of Agreement appear to
be reasonable and in accordance with the efforts being
made to seek a global resolution of all litigation pertain-
ing to the issues among the parties. The prior Cox
settlement was unclear as to the effect of funds received
from U.S. Brass Corp., Eljer Manufacturing, Inc., and
Eljer Industries, Inc. The revised settlement makes
clear that amounts received from U.S. Brass and/or
Eljers will add to the minimum fund of $950 million. If
that settlement is perfected and approved by the United
States Bankruptcy Court, the minimum fund would
substantially increase.

41. In independently determining to approve the
Settlement and the Application, the Court has consid-
ered the substance of all objections to the Settlement,
whether timely, qualified or not, including those by the

Shell App. 20

Martin Objectors and others that have since been
withdrawn or stricken.

42. Certain objectors have asserted that the
proposed Settlement must be reduced by a proposed
settlement of claims against du Pont in the Spencer case
pending in the Circuit Court of Greene County, Alabama,
which the objectors characterized as a $120 million set-
tlement.

43. The proposed du Pont settlement has not been
approved by the Spencer court, and this Court may not
speculate whether it will be approved by the Spencer
court.

44. The proposed du Pont settlement in Spencer
purports to entitle a claimant to a rebate of 8% of monies
the claimant pays for replumbing his or her structure.

45. The Settlement before this Court, in the mini-
mum amount of $950 million, provides for the assignment
of Settlement Class members’ claims against du Pont and
others to defendants Shell and Celanese.

46. Objectors are incorrect in asserting that the
“credit” arising from the assignment reduces the Defen-
dants’ contribution to the Settlement. The original Cox
settlement was $850 million to be paid by the Defendants.
The revised Cox settlement requires the Defendants to pay
a minimum of $950 million to consumers with assignment
of rights, against du Pont, regardless of whether du Pont
ultimately participates in the settlement. The revised Cox
settlement substantially increases benefits to consumers.

47. Contrary to objectors’ assertions, all interest
earned on funds held by the CPRC will be for the benefit of

Shell App. 21

the Settlement Class and will not be credited against the
Defendants’ obligations under the Agreement.

48. Because of the structure of the Settlement, the
Defendants’ obligation to fund the CPRC on an ongoing,
as-needed basis, and the Defendants’ obligation to pay
reimbursement for Past Expenses in a reasonable time
after the close of the one year claim filing period on Au-
gust 21, 1996, and any related opt out period that may be
necessary under § 4.5.1 of the Agreement, there is no
significant ability by the Defendants to delay payments
due under the Settlement.

49. Objectors are incorrect in asserting that, even
before the Defendants’ initial funding commitment was
increased from $850 million to $950 million, the “net
funding by Shell and Celanese under ... the agreement
[was] only $547 million.”

50. The notice provided to the Settlement Class was
neither misleading nor defective.

51. The defendants are each responsible for one-half
of the settlement obligations as specified in the Settlement
Agreement unless and until the respective liabilities are
established by arbitration under the Funding Agreement.

02. The Cox Class Counsel have undertaken a
reasonable risk that each of the defendant companies will
be solvent and capable of fulfilling its obligations under
this agreement.

53. Had the plaintiffs settled at separate times with
Shell and Celanese, it is highly unlikely that there would
ever have been joint and several liability between them.

Shell App. 22

54. The Settlement is more favorable to the Settle-
ment Class than litigation if it is assumed that one of the
defendants will, some years from now, become unable to
pay all claims, since the class will receive payment under
the Settlement promptly, thereby reducing the number of
claimants who would be subjected to proving claims in a
bankruptcy.

55. The Agreement provides broad ranging powers
for the enforcement of a defaulting defendant’s obligations,
including the full panoply of equitabie powers this Court
possesses.

56. The Agreement expressly provides that the
default of one defendant does not exonerate the other
defendant of its obligations under the Agreement.

57. Past expenses will be compensated after expira-
tion of one year from August 21, 1995, the Initial Notice
Date under the Agreement.

58. Claimants will not, contrary to an objection, be
required to wait 14 years to receive their entitled reim-
bursements or distributions under the Agreement.

59. The so-called exclusion of a “hot water heater
leak” — a leak occurring within six feet of piping measured
from the take-off at the unit’s hot water heater — does not
apply to any claim for reimbursement of repair costs and
property damage. Thus, the only exclusion is for eligibility
for a replumb, and even there, the exclusion applies only if
(1) it is the first leak in the unit and (2) it can be repaired
without cutting into the unit’s walls, ceilings, or floors.

60. Therefore, a replumb will be provided under the
Agreement even if the hot water heater leak is the first
leak, if to repair the leak would require cutting into the

Shell App. 23

walls, ceilings, or floors of the unit. Similarly, there will be
a replumb if the hot water heater leak is the second leak
in the system.

61. The claimant has the right to select the contrac-
tor to do the replumbing and property damage repair
work.

62. Nothing in the Agreement abrogates the war-
ranty of work done by the contractors and suppliers of pipe
and other components in the replumb.

63. The Agreement permits special relief involving
unusual hardship, so long as the CPRC Ombudsman and
President concur that such relief should be provided. This
provision allows the CPRC to provide relief from a breach
of warranty arising out of replumbing work, where the
warrantor fails to provide or cannot provide corrective
relief. CPRC § VI, E.

64. There is no factual basis for the asserted objec-
tion that there is any conflict of interest with respect to
the Cox Class Counsel.

65. The 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.

66. There is no factual basis for the asserted objec-
tion that settlements in individual cases are improperly
disparate from the Cox Settlement.

67. There is no need to provide additional notice to
the entire Settlement Class by reason of the revised terms
of the Settlement since the Court approved the notices
disseminated to the Settlement Class. All changes have

Shell! App. 24

been to improve the Settlement over that described in the
notices, and none of the changes has an adverse impact on
any Class member.

68. As class action jurisprudence has accumulated,
various federal and state courts, in Ternessee and else-
where, have articulated criteria and factors that courts
may consider in evaluating proposed settlements for final
approval. See, e.g., Third Natl Bank v. Scribner, 212 Tenn.
400, 410, 370 S.W.2d 482 (1963); Clark Equip. Co. v.
International Union, Allied Indus. Workers, 803 F.2d 878,
880 (6th Cir. 1986), cert. denied sub nom. Jones v. Clark
Equip. Co., 480 U.S. 934 (1987); Williams v. Vukovich, 720
F.2d 909, 922 (6th Cir. 1983); Bailey v. Great Lakes Can-
ning, Inc., 908 F.2d 38, 42 (6th Cir. 1990); In re Warner
Communications Sec. Litig., 618 F. Supp. 735 (S.D.N.Y.
1985) affd, 798 F.2d 35 (2d Cir. 1986); Girsh v. Jepson,
521 F.2d 153, 157 (3d Cir. 1975). This Court has been
guided, generally, by the procedures and criteria recom-
mended in the Manual for Complex Litigation, 3d ed.
(Federal Judicial Center 1995), §§ 30.4 et seq., since the
federal and Tennessee class action provisions and criteria
are consistent.

69. Factors that may be considered in assessing the
fairness, adequacy, and reasonableness of the proposed
settlement include: the plaintiffs’ likelihood of ultimate
success on the merits balanced against the amount and
fe - of relief offered in the settlement; the stage of the
proceedings at which the settlement is reached; the extent
of cumulative discovery or investigation; the nature of the
settlement negotiations; the costs, risks, and delays of
establishing liability and damages; the views of experi-
enced counsel; the reaction of the class members them-
selves; the comparison of the settlement’s benefits with

ae ae

Shell App. 25

other settlements or with the alternative of continuing
litigation; and whether approval of the settlement is in the
class members’ and the public interest. As the above
opinion and findings demonstrate, consideration of these
and other recognized factors, such as the participation and
recommendations of an experienced and able settlement
judge and the testing of the settlement’s merits in the
class of adversary proceedings, demonstrate the Settle-

‘ment’s entitlement to approval.

70. “xpert opinions have been submitted in support
of the proposed Settlement. (See Opinion of Professor
David Rosenberg, Affidavit of Professor Paul H. Rubin). In
approving the Settlement, the Court has considered these
opinions.

71. The Court will retain jurisdiction and address a
supplemental notice program, on a joint motion of the
settling parties, to advise all members of the Settlement
Class on whose behalf a purported or actual request for
exclusion was received of the enhanced Settlement, provid-
ing those individuals with a new opportunity to request
exclusion from the Settlement Class in light of the en-
hanced Settlement.

72. There is no just reason for delay in the entry of a
fina: judgment and decree by reason of such supplemental
notice and related proceedings or of the retention by the
Court of continuing jurisdiction to oversee the implemen-
tation and enforcement of the Agreement and Settlement.

73. The Application is fair and should be granted.

Based upon the foregoing, it is hereby ORDERED,
ADJUDGED, and DECREED:

Shell App. 26

1. The Court has jurisdiction over all claims asserted
in the Action on behalf of all Settlement Class members
and over all parties to the Action, including all members of
the Settlement Class.

2. The Settlement Class is defined as follows:

All persons and entities that (1) own real prop-
erty or structures in the United States in which
there was installed between January 1, 1978 and
July 31, 1995, polybutylene plumbing with acetal
insert or metal insert fittings or a polybutylene
yard service line; (2) own or previously owned
such real property or structures and have al-
ready incurred any cost or expense, by reason of
leakage from, or from failure, repair, or removal
of, all or any portion of such polybutylene plumb-
ing or yard service line which was installed be-
tween January 1. 1978 and July 31, 1995; or (3)
will own such real property or structures during
the term of entitlement to relief under the Set-
tlement Agreement.

The definition of the Settlement Class excludes:

(1) All persons who, in accordance with the terms
of the Settlement Agreement, execute a timely
request for exclusion from the Settlement Class;
(2) the Defendants; the Released Manufacturers;
the parent and any subsidiary, affiliate and con-
trolled entity of any of them; and the officers and
directors of each of them; and (3) all parties to
Geno Cioe, et al. v. Shell Oil Company, et al.,
Case No. 662214, and Robert L. Williams, et al. v.
Shell Oil Company, et al., Case No. 658403, and
related combined actions (Case Nos. 640245,
654709, 656787, 661372, 665521 and 665527) in
the Superior Court of the State of California in

Shell App. 27

and for the County of San Diego, and all mem-
bers of the certified classes in those lawsuits.

3. All members of the Settlement Class who have not
timely elected to be excluded from the Settlement Class
are members thereof and are bound by this Order and the
Final Judgment being entered herewith.

4. Pursuant to Rule 23.01, Rule 23.02, and Rule
23.03 of the Tennessee Rules of Civil Procedure, the Court
confirms the certification of the Settlement Class provided
in the Preliminary Approval Order and maintains such
certification for purposes of final approval of the settle-
ment.

5. The Class Representatives and Plaintiffs’ Class
Counsel designated in paragraph 8 of the Court-approved
Notice of Class Action and Proposed Settlement to repre-
sent the Settlement Class are hereby confirmed.

6. The Agreement and the Funding Agreement
entered into by the Defendants pursuant to the Agreement
are hereby made part of the record in this case and as such
sha!l have the full force and effect of an order of the Court.

7. Pursuant to Rule 23.05 of the Tennessee Rules of
Civil Procedure, the Court hereby grants final approval of
the Agreement and the Settlement set forth in the Agree-
ment and finds that it is fair, adequate, and reasonable to
the members of the Settlement Class.

8. The objections that were filed, whether timely or
not, have been considered and are all overruled.

9. Accordingly, the Court directs that the Settlement
be consummated in accordance with the terms and condi- -
tions of the Agreement.

Shell App. 28

10. Plaintiffs and all members of the Settlement
Class are barred and permanently enjoined from prosecut-
ing (in any forum) against Shell Oil Company and/or
Hoechst Celanese Corporation any and all claims, de-
mands, causes of action of every kind and nature, obliga-
tions, damages, losses, and costs, whether known or
unknown, actual or potential, suspected or unsuspected,
contingent or fixed, either arising out of or relating to any
of the facts, transactions, actions, or conduct alleged in
this action, or that were or could have been asserted or
sought in the action, other than any past, present, or
future claim for bodily injury (including wrongful death)
and associated einotional distress anc mental anguish.

11. The Complaint as amended, and all claims and
causes of action asserted therein are dismissed with
prejudice and costs, as provided in the Agreement, to be
paid from the settlement fund.

12. The Application is hereby granted. In accordance
with the Funding Agreement referred to in the Agreement,
the defendants shall pay Plaintiffs’ Class Counsel, as
attorneys’ fees and expenses, the sum of $45 million plus
interest at the rate applicable to federal court judgments
entered on July 31, 1995, for the period from July 31,
1995, until the earlier of July 31, 1996, or when paid. In
addition, in accordance with Section 25.1 of the Agreement
and with the Funding Agreement referred to in the
Agreement, the defendants shall pay the sum of $3,000.00
to each single Representative Plaintiff or Representative
Plaintiff married couple.

13. In the event that the Settlement does not become
Final (as more fully defined in the Agreement) in accor-
dance with the terms of the Agreement, then this Order

Shell App. 29

and the Final Judgment and Decree being entered here-
with shall be rendered null and void and be vacated and
the Agreement shall be rendered null and void in accor-
dance with the provisions thereof.

14. Without affecting the finality of this Order or of
the Final Judgment being entered herewith, the Court
shall retain continuing jurisdiction over the Action and the
settling Parties (as more fully defined in the Agreement),
including all members of the Settlement Class; the ad-
ministration and enforcement of the Settlement; and the
benefits to the Settlement Class, including for such pur-
poses as supervising the implementation, enforcement,
construction, and interpretation of the Agreement.

15. Any disputes or controversies arising with
respect to the interpretation, enforcement, or implementa-
tion of the Agreement shall be presented by motion to the
Court.

16. Pursuant to Rule 54.02 of the Tennessee Rules of
Civil Procedure, the Court hereby directs the entry of this
judgment based upon the Court’s finding that there is no
just reason for delay notwithstanding the Court’s reten-
tion of jurisdiction to oversee implementation and en-
forcement of the Agreement and its continuing jurisdiction
to provide for supplemental notice (and related proceed-
ings) to potential members of the Settlement Class as to
whom the Court previously received requests for exclusion
from the Settlement Class.

/s/ W. Maloan
CHANCELLOR

ENTERED: November 17, 1995

Shell App. 30

IN THE CHANCERY COURT FOR OBION COUNTY,
TENNESSEE AT UNION CITY, TENNESSEE

TINA COX, CHARLES
HOMER CLOAR, MARY H.
CLOAR, MELODY ALFORD,
COUNTRY VILLAGE
MOBILE HOME PARK, and
PHYLLIS BIRMINGHAM,
individually and on behalf of
all other individuals and
entities similarly situated,

Plaintiffs,

Civil Action No. 18,844
CLASS ACTION
OBION COUNTY

Vv.

SHELL OIL COMPANY,
d/b/a SHELL CHEMICAL
COMPANY, and HOECHST
CELANESE CORPORATION,

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Defendants.

FINAL JUDGMENT
(Filed Nov. 17, 1995)

This matter is before the Court on motion by the
parties for final approval of their proposed settlement as
set forth in the Settlement Agreement filed July 31, 1995,
as amended by an Amendment dated October 6, 1995, a
Second Amendment dated October 24, 1995, and a Third
Amendment dated November 9, 1995 (the “Agreement”).
Also before the Court is the Application of Class Counsel
for Award of Attorneys’ Fees and Expenses, and Awards to
the Representative Plaintiffs (the “Application”).

A hearing on the motion and Application was held on
November 8 and 9, 1995, pursuant to the Court’s Order of

Shell App. 31

July 31, 1995, granting preliminary approval of the
settlement and the August 7, 1995, order conforming the
class definition, under procedures set forth in the August
24, 1995, Order Approving Forms of Notice, Scheduling
Fairness Hearing and Setting Opt-outs and Objection
Dates.

This Final Judgment is entered pursuant to a Final
Order Approving the Class Action Settlement, Attorneys’
Fees and Expenses, and Awards to Representative Plain-
tiffs (the “Final Order”) which is entered together here-
with. The Court has determined that the Class Action
Settlement, as encompassed within the Agreement, should
be approved as fair, adequate, and reasonable to the
Settlement Class under Rule 23.05 of the Tennessee Rules
of Civil Procedure, and that the Application should be
granted.

The Court has further determined that there is no just
reason for delay in the catry of final judgment in accor-
dance with the Final Order pursuant to Rule 54.02 of the
Tennessee Rules of Civil Procedure.

Accordingly, it is ORDERED that judgment is hereby
entered in accordance with the Final Order.

It is further ORDERED that the Settlement Class is
defined as follows:

All persons and entities that (1) own real prop-
erty or structures in the United States in which
there was installed between J anuary 1, 1978 and
July 31, 1995, polybutylene plumbing with acetal
insert or metal insert fittings or a polybutylene
yard service line; (2) own or previously owned
such real property or structures and have al-
ready incurred any cost or expense, by reason of

Shell App. 32

lea_.age from, or from failure, repair, or removal
of, all or any portion of such polybutylene plumb-
ing or yard service line which was installed be-
tween January 1, 1978 and July 31, 1995; or (3)
will own such real property or structures during
the term of entitlement to relief under the Set-
tlement Agreement.

The definition of the Settlement Class excludes:

(1) All persons who, in accordance with the terms
of the Settlement Agreement, execute a timely
request for exclusion from the Settlement Class;
(2) the Defendants; the Released Manufacturers;
the parent and any subsidiary, affiliate and con-
trolled entity of any of them; and the officers and
directors of each of them; and (3) all parties to
Geno Cioe, et al. v. Shell Oil Company, et al.,
Case No. 662214, and Robert L. Williams, et al. v.
Shell Oil Company, et al., Case No. 658403, and
related combined actions (Case Nos. 640245,
654709, 656787, 661372, 665521 and 665527) in
the Superior Court of the State of California in
and for the County of San Diego, and all mem-
bers of the certified classes in those lawsuits.

It is further ORDERED that the Court directs that
the settlement be consummated in accordance with the
terms and conditions of the Agreement.

It is further ORDERED that the Amended Complaint
and all claims and causes of action asserted therein are
dismissed with prejudice with costs to be paid from the
settlement fund in accordance with the terms of the
Settlement Agreement.

It is further ORDERED that, in the event that the
settlement does not become final (as more fully defined in

Shell App. 33

the Agreement) in accordance with the terms of the
Agreement, then this Final J udgment and the Final Order
shall be rendered null and void and be vacated, and the
Agreement shall be rendered null and void in accordance
with the provisioz.: thereof.

It is further ORDERED that, without affecting the
finality of the Final Order and this Final Judgment, the
Court shall retain continuing jurisdiction over this action
and the settling Parties (as more fully defined in the
Agreement), including all members of the Settlement
Class; the administration and enforcement of the settle-
ment; and the benefits to the Settlement Class, including
for such purposes as supervising the implementation,
enforcement, construction, and interpretation of the
Settlement Agreement.

It is further ORDERED that, subject and pursuant to
the terms and conditions of the Agreement, Plaintiffs and
all members of the Settlement Class are barred and
permanently enjoined from prosecuting (in any forum)
against Shell Oil Company and/or Hoechst Celanese
Corporation any and all claims, demands, causes of action
of every kind and nature, obligations, damages, losses, and
costs, whether known or unknown, actual or potential,
Suspected or unsuspected, contingent or fixed, either
arising out of or relating to any of the facts, transactions,
actions, or conduct alleged in this action, or that were or
could have been asserted or sought in the action, other
than any past, present, or future claim for bodily injury
(including wrongful death) and associated emotional
distress and mental anguish.

It is further ORDERED that, in accordance with the
above-described Application and the Funding Agreement

Shell App. 34

: erred to in the Agreement, the defendants shall pay
Plaintilfs Class Counsel, as attorneys’ fees and expenses,
the sum of $45 million, plus interest at the rate applicable
to federal court judgments entered on July 31, 1995, for
the period from July 31, 1995, until the earlier of July 31,
1996, or when paid.

It is further ORDERED that, in accordance with
Section 25.1 of the Agreement and with the Funding
Agreement referred to in the Agreement, the defendants
shall pay the sum of $3,000.00 to each single Representa-
tive Plaintiff or Representative Plaintiff married couple.

It is further ORDERED, pursuant to Rule 54.02 of the
Tennessee Rules of Civil Procedure, that the Court hereby
DIRECTS the entry of this judgment as a final judgment
based upon the Court’s finding that there is no just reason
for delay, notwithstanding the Court’s retention of juris-
diction to oversee implementation and enforcement of the
Agreement as set forth above, and the Court’s continuing
jurisdiction to provide for supplemental notice (anu related
proceedings) to potential members of the Settlement Class
as to whom the Court previously received requests for
exclusion from the Settlement Class.

Dated at Union City, Tennessee, this 17 day of No-
vember, 1995.

/s/ W. Michael Maloan
W. MICHAEL MALOAN,
CHANCELLOR

Shell App. 35

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TEXARKANA DIVISION

RICHARD R. RICHARD, JR.,
on behalf of himself and
all others similarly situated,

Plaintiffs, CASE NO. 500 CV 008

VS.

HOECHST CELANESE
CHEMICAL GROUP, INC.;
SHELL OIL COMPANY D/B/A
SHELL CHEMICAL COMPANY;
HOECHST CELANESE
CORPORATION; and

E.I. DUPONT DE NEMOURS

& COMPANY,

Defendants.

PPMP LP LP LP LP LP LP LO Lr Lr LO Cr Lr Or

S D LAINT

Plaintiff Richard R. Richard, Jr., on behalf of himself
and all others similarly situated, submits this Second
Amended Complaint against Defendants Hoechst Cela-
nese Chemical Group, Inc., Shell Oil Company d/b/a Shell
Chemical Company, Hoechst Celanese Corporation and
E.I. DuPont de Nemours & Company (collectively “the
Polybutylene Group”):

INTRODUCTION

1. This class action lawsuit is brought to recover
damages for injury caused by the Polybutylene Group’s

Shell App. 36

manufacture, promotion and sale of polybutylene for use
in residential and commercial plumbing systems for
potable water. Not only was polybutylene unsuitable for
such use, but the Polybutylene Group knew their product
was defective for this purpose. Nevertheless, the Polybuty-
lene Group promulgated fraudulent misrepresentations in
order to continue to produce and sell polybutylene systems
without regard to the damage such systems would impose
on unknowing purchasers. Plaintiffs bring the First
through Fourth Causes of Action under the Racketeer
Influenced and Corrupt Organization (RICO) statute, 18
U.S.C. §§ 1961 et seq.. The Fifth Cause of Action arises
under Section 42(a) of the Lanham Act, 15 U.S.C. § 1125 to
recover damages arising from the Polybutylene Group’s
misrepresentations in commercial advertising and promo-
tion. The Sixth Cause of Action alleges violation of the Due
Process Clause of the U.S. Constitution. The Seventh
through Tenth Causes of Action sound respectively in
conspiracy, strict liability, negligence and breach of implied
warranties under Texas law.

JURISDICTION

2. The Court has subject matter jurisdiction pursu-
ant to 18 U.S.C. § 1964(c) (RICO); 28 U.S.C. Section 1338
(Trademark Jurisdiction) in that this action arises, in part,
under 15 U.S.C. § 1125(a) (Lanham Act); 28 U.S.C. § 1331
(Federal Question Jurisdiction) and 28 U.S.C. § 1367
(Supplemental Jurisdiction).

VENUE

3. Venue is proper in this district pursuant to 28
U.S.C. § 1391(b), because Plaintiff resides in this district

Shell App. 37

and a substantial portion of the events giving rise to the
claims set forth in this action took place herein.

THE PARTIES

4. Plaintiff Richard R. Richard, Jr., (Richard), is an
individual residing in the Eastern District of Texas who
owns structures equipped with polybutylene plumbing.
Richard has never participated in a polybutylene class
action lawsuit in a court with competent personal and
subject matter jurisdiction over him.

5. Defendant Hoechst Celanese Chemical Group,
Inc., now

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_1667%3A6. Public record. Not legal advice.