Smith v. Bayer Corp.

PETITIONER:Keith Smith, et al.
LOCATION: Cabell County Court

DOCKET NO.: 09-1205
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 564 US (2011)
GRANTED: Sep 28, 2010
ARGUED: Jan 18, 2011
DECIDED: Jun 16, 2011

Philip S. Beck – for the respondent
Richard A. Monahan – for the petitioners

Facts of the case

Bayer Corp. withdrew the cholesterol-lowering drug, Baycol, from the market in August 2001 because of its alleged role in serious side effects and the deaths of some patients using the drug. Keith Smith and Shirley Sperlazza filed a lawsuit in West Virginia state court in 2001, seeking class certification for Baycol users throughout the state. Meanwhile, a separate putative West Virginia class action, filed was removed to federal court and consolidated as part of a multidistrict litigation in the U.S. District Court for the District of Minnesota. In August 2008, the court denied certification on grounds that plaintiffs could not litigate economic loss claims as a class.

Counsel for Smith and Sperlazza later received a notice declaring that their case in West Virginia state court was bound by that ruling. They appealed to the U.S. Court of Appeals for the Eighth Circuit, which affirmed the lower court order in January 2010.


Did a lower court erroneously prevent a group of plaintiffs from proceeding with a class-action lawsuit over a cholesterol-lowering drug that was removed from the market in 2001?

Media for Smith v. Bayer Corp.

Audio Transcription for Oral Argument – January 18, 2011 in Smith v. Bayer Corp.

Audio Transcription for Opinion Announcement – June 16, 2011 in Smith v. Bayer Corp.

Elena Kagan:

This is a very complicated procedural case.

So if you understand anything that I say right now, you have a law degree and you’ve had your cups of coffee this morning.

In this case, a federal court ordered a West Virginia State Court not to rule on a motion to certify a class action.

The federal judge thought that he could issue that order because he had refused to certify a class action in a similar case that was brought against the same defendant but by a different plaintiff.

We took this case to decide whether the federal judge’s order was permissible under the Anti-Injunction Act, a federal statute that generally prohibits federal courts from interfering with state court proceedings.

We hold that it was not permissible.

As the Anti-Injunction Act’s name suggests, its purpose is to prevent federal court injunctions against state court proceedings otherwise it might be called the Pro-Injunction Act.

But the Act stand on these injunctions is not absolute.

The Act contains three narrow exceptions.

And the one at issue here is called the relitigation exception.

What it does is to say that a federal court may grant an injunction to stay proceedings in a state court when necessary to protect or effectuate the federal court’s judgment.

This exception we’ve held is grounded in the law of preclusion which generally determines whether one court’s judgment forecloses another court from considering issues or claims already adjudicated in the first suit.

An injunction under the relitigation exception is justified only when the initial federal judgment clearly precludes relitigation of a given issue or claim in state courts under standard principles of preclusion law.

The two fundamental principles of preclusion law are at stake in this case.

First is the rule that a judgment cannot preclude relitigation of an issue in a second suit unless the two courts here, the federal court and the state court are addressing the very same issue.

Under the law of issue preclusion, two courts do not address the same issue unless they are using the same legal standard.

And here that requirement was not met because in determining whether to certify these class actions, the federal court and the state court were governed by different legal standards.

In federal court, the question was controlled by a Federal Rule of Civil Procedure 23.

While on state court, the question is governed by West Virginia Rule of Civil Procedure 23.

And although the texts of these two rules are mostly the same, the governing judicial interpretations are not.

The West Virginia Supreme Court has made clear that it does not necessarily follow federal class certification precedents and in its leading case, it adopted an approach markedly different from the approach applied by the federal court.

Because the governing legal standards were different, the issues before the two courts were also different.

And that means the federal court had no right to order the state court to accept its judgment that a class action should not be certified.

The District Court’s injunction also violated a separate rule of preclusion law what we called “the rule against nonparty preclusion”.

This means that a person who was not a party to a case cannot be bound by a judgment in that case except in very limited and precisely defined circumstances.

And here the plaintiff in the state suit was not a party and the federal suit he in fact had no connection to that suit.

And none of the exceptions to the rule against nonparty preclusion apply.

The only exception we were asked to consider is one from members of a properly conducted class action.

But that exception does not apply for the simple reason that the federal court in this case never certified a class.

To the contrary, it found that the case was not appropriate for class treatment.

Elena Kagan:

And the properly conducted class action exception cannot be invoked when there was no certified class action.

So for this reason too, the District Court was wrong to enjoin the state court proceedings.

Because the Court of Appeals affirmed the District Court’s conjunction, we must reverse the judgment of the Court of Appeals.

The opinion of the Court is unanimous.

Justice Thomas joins only Parts I and II–A of the opinion.