The United States Supreme Court held on June 16, 2011 that a federal court could not enjoin a state court from considering certification of a class unless it had previously denied certification under essentially the same standard AND the cases have the same parties.  See Smith v. Bayer Corp.pdf, Case No. 09-1205 (June 16 2011). True, it’s not an employment case, but almost any Supreme Court decision regarding class actions is important and there is little question that it will apply in the employment context. 

The Bayer case arose out of a product called “Baycol” that was taken off the market in 2001.  At approximately the same time, two lawsuits were filed by different plaintiffs in West Virginia state court contending, among other things, that the product was defective.  One case was removed to federal court and ultimately transferred to a federal court in Minnesota pursuant to the order of an MDL panel.  The other was non-removable due to the existence of non-diverse parties and proceeded through the West Virginia state court system.  Ultimately, the Minnesota court denied Rule 23 certification, largely on predominance grounds, and also dismissed the individual plaintiff’s claims on the merits as he could not show that the product had harmed him.  Bayer then successfully persuaded the court to enjoin the West Virginia state court from considering certification in the case pending there.  The Eighth Circuit Court of Appeals affirmed.

The Supreme Court, however, reversed.  In a decision authored by Justice Kagan, all of the Justices agreed that the district court had exceeded its authority in enjoining the state court action.  All nine of the Justices agreed that the matter was subject to the Anti-Injunction Act, 29 U.S.C.§ 2283, which prohibits federal courts from enjoining state proceedings except in rare cases.  For a district court to be able to enjoin a state law proceeding, it must be shown that (1) the state and federal courts were deciding the same issue; and (2) the cases involve the same parties.  Because the West Virginia version of Rule 23 was not identical to the Federal Rule, and in fact had a different (and likely lesser) predominance requirement, the court unanimously concluded that the Act barred the federal court from enjoining the state law proceeding.  Eight of the Justices (the exception being Justice Thomas) also concluded that the differences among the named plaintiffs between the two cases also precluded injunctive relief.  They rejected the notion that the two cases might have had the same parties in that the plaintiff in the West Virginia state action was an unnamed potential class member in the uncertified federal case.

Interestingly, the Court’s opinion seems to express some sympathy for a defendant subject to multiple class action proceedings.  The opinion notes possible relief under the provisions of the Class Action Fairness Act (“CAFA”) for cases filed after 2005, and even suggests that further legislative relief, or even changes to the federal rules themselves, might address the problem in the future.   Still, as a result of the opinion, employers may still be exposed to multiple class action proceedings even though they have prevailed in one court. 

The Bayer case is one of several the Supreme Court has issued lately regarding the interplay of potential class action forums.   Just a few weeks ago, in the Concepcion case we wrote about on April 27, the court determined that class action waivers in arbitration agreements are enforceable.  Last year, in Stolt-Nielsen v. AnimalFeeds Int’l (which we wrote about on June 1, 2010), the court addressed the issue of which forum, a court or arbitral panel, should determine whether a class action was available in arbitration.  The most highly anticipated decision at this point is the Dukes v. Wal-Mart case which has been argued and may have a deep impact on employment class action litigation going forward.

The Bottom Line:  Plaintiffs seeking certification in some sets of cases may end up with separate bites at the apple in state and federal court.