ZUZANNA JURIS, Plaintiff-Appellant, versus INAMED CORPORATION, MCGHAN MEDICAL CORP., et al., Defendants-Appellees.
No. 10-12665
United States Court of Appeals, Eleventh Circuit
July 6, 2012
D. C. Docket No. 2:97-cv-11441-RDP
Before TJOFLAT, CARNES and ANDERSON, Circuit Judges.
Appeal from the United States District Court for the Northern District of Alabama
(July 6, 2012)
ANDERSON, Circuit Judge:
In 1999, the United States District Court for the Northern District of Alabama approved a mandatory, limited fund class settlement, which resolved tens
For the reasons explained below, we affirm.
I. BACKGROUND1
Well after the creation of silicone breast implants, women implanted with them began claiming that leaking gel was causing them various diseases. In 1992, the Food and Drug Administration (“FDA“) first banned the use of silicone gel implants, and a flood of litigation followed. The FDA relaxed the ban later that year to permit the use of such implants for specified medical procedures. The
A. Inamed‘s Pre-Settlement Financial Condition
In 1991, women with Inamed breast implants began filing individual suits against Inamed and its subsidiaries. The litigation ballooned. At one point, more than 15,000 lawsuits were pending against Inamed across the country. Breast implant litigation forced the company to divert substantial capital to funding defense efforts. In 1994, in an attempt to stem the tide, Inamed and the plaintiffs’ settlement committee negotiated a global settlement agreement, which would have required Inamed to pay $1 million per year for twenty-five years. Anticipating
Responding to its growing financial troubles, in 1996, Inamed approached a high risk investment group and raised $35 million through the private placement of senior secured convertible notes. The notes were senior to all claims, including operational liabilities and tort claims, and were secured by interests in substantially all of Inamed‘s assets. Pursuant to the terms of the offering, Inamed deposited $15 million in escrow for the sole purpose of financing a non-opt-out class settlement if approved before January 23, 1997. That temporal condition
In January of 1997, Inamed secured an additional $6.2 million through another private debt placement. All proceeds were immediately applied towards day-to-day operational expenses and payments against past-due income tax liabilities. Around this time, Inamed defaulted on its repayment obligations under the senior secured notes and its stock price dropped. The company continued to explore options for raising working capital. However, between the senior secured noteholders exercising their veto authority over Inamed‘s ability to raise capital through equity offerings and, more generally, the unavailability of commercially reasonable lending opportunities given the company‘s dire financial predicament, Inamed‘s only option was to borrow approximately $10 million from an entity associated with its former chairman.
Throughout the 1990s, each audit letter prepared by Inamed‘s independent auditing firm, Coopers & Lybrand, included a qualified opinion expressing “substantial doubt about the Company‘s ability to continue as a going concern.”
Those litigation expenses, however, were staggering. For example, it cost Inamed‘s attorneys approximately $150,000 to take a single case to the brink of trial, and an additional $150,000 to defend through trial. In 1997 alone, Inamed settled sixteen breast implant cases. The settlement values ranged from $2,500 to $50,000, averaging out to $18,500 per case.3 During this time, neither Inamed nor its subsidiaries had products liability insurance coverage.
In light of Inamed‘s rapidly deteriorating financial condition, in the latter part of 1997, the company and plaintiffs’ counsel revisited settlement negotiations. By this time, investors were unwilling to finance any settlement that would not
The parties considered the possibility of Inamed pursuing bankruptcy. Chapter 7 liquidation, as opposed to Chapter 11 reorganization, was the only viable solution to Inamed‘s financial stresses. If Inamed had elected to pursue Chapter 7 bankruptcy at the end of 1997, the company‘s saleable assets, discounted by the impairment likely to result from a forced liquidation, would have totaled between $11.4 million and $20.4 million. From this sum, the senior secured noteholders would have been entitled to $19 million, leaving unsecured creditors—trade creditors, subordinated noteholders and tort claimants—with somewhere between $0 and $1.4 million. At best, the tort claimants would have been left to compete for $1.4 million against trade creditors, with rights to payment valued at $12.5 million, and subordinated noteholders, with rights to payment valued at $10 million.
Plaintiffs’ counsel, including Ernest Hornsby, an attorney designated to
B. Notice of the Proposed Settlement Class
The parties presented Judge Pointer with the proposed settlement, which called for class certification of a $31.5 million mandatory, limited fund class and
Judge Pointer first directed notice to be sent to approximately 250,000
Each of the above-described notices contained the following details: The district court had preliminarily certified and approved a $31.5 million mandatory class settlement against Inamed; if approved, the class settlement would extinguish all claims, filed or otherwise, against Inamed in connection with implants received prior to June 1, 1993; certification and settlement objections had to be postmarked by December 11, 1998; a copy of the proposed settlement could be obtained for free; and a hearing on the propriety of final class certification and settlement approval would be held on January 11, 1999, at the federal courthouse in Birmingham, Alabama.
C. Certification of the Inamed Settlement Class
On January 11, 1999, Judge Pointer held a hearing for the purpose of considering class certification and approval of the settlement. The class‘s negotiation committee agreed with Judge Pointer that, to the extent there was a conflict between current injury and future injury claimants, it was relevant only to the distribution plan. There were no conflicts with respect to the initial decision as to whether to certify a limited fund class. More specifically, Judge Pointer
Various concerns were presented at the hearing through oral and written objections. Among the objections presented were the following: (1) the settlement fund was insufficient; (2) future claimants should be entitled to opt out and reserve their legal rights; (3) the settlement lacked a predetermined distribution plan; (4) mandatory class members should nevertheless be given a right to opt out under Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S. Ct. 2965 (1985); (5) notice was inadequate as to future injury claimants; (6) the settlement would violate the Rules Enabling Act; (7) the settlement would improperly side step bankruptcy; (8) Inamed was not a limited fund in light of the slight economic turnaround the company experienced after provisional approval of the mandatory class settlement; (9) the district court should delay consideration of the proposed class settlement in light of the Supreme Court‘s pending decision in Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295 (1999); and (10) the district court did not have jurisdiction to enjoin parallel state court proceedings.
The class was certified pursuant to
Judge Pointer certified the class even though Inamed had experienced a slight financial rebound following announcement of the proposed settlement. Inamed‘s stock price had risen, suggesting an increased aggregate market value, and class objectors argued that Inamed was therefore not a limited fund. Inamed responded that market capitalization was not an appropriate valuation method. First, it was circular to say that Inamed was not a limited fund because the announcement of a mandatory class settlement caused its stock to rise. The stock value reflected a market expectation that the settlement would be completed and the company would achieve total relief from the expense and uncertainty surrounding the breast implant litigation. Second, the increase in Inamed‘s stock
Judge Pointer additionally evaluated the settlement for fairness pursuant to Rule 23(e)10 and determined it was non-collusive, negotiated in good faith, fair,
The evidence shows, inter alia, that—absent the new capital contributed to the company conditioned upon approval of this settlement—Inamed has negative net worth, net liquidation value of essentially zero, and no resources to pay claims. The company has had to borrow heavily in order to stay afloat. The settlement is to be funded by additional borrowing available only in the context of this settlement, and the amount Inamed was able to raise for that purpose was constrained both by restrictions associated with its existing debt and the willingness of its lenders to assume the risk that the company‘s post-settlement operations would repay their investment. The record establishes that Inamed would be unable to raise such additional funds in the absence of this settlement, that the alternative of continued litigation of individual claims would drive Inamed to bankruptcy, and that the funds available to class members from this settlement are substantially greater than the funds, if any, that would remain for class members after an Inamed bankruptcy. Considering the record evidence of Inamed‘s financial condition, the court finds a substantial risk that an Inamed bankruptcy would leave all class members with nothing.
District Court order, Docket No. 59 at 4.
The class included “all persons and entities, wherever located, who have or may in the future have any unsatisfied claim (whether filed or unfiled, pending or reduced to judgment, existing or contingent, and specifically including claims for
[A]ny and all Breast Implant Related claims . . . whether known or unknown, asserted or unasserted, regardless of legal theory, that are or may be asserted now or in the future by any and/or all Settlement Class Members against any or all of Inamed . . . . “Settled Claims” include, without limitation: (1) any and all claims of personal injury and/or bodily injury, damage, death, emotional or mental harm; (2) any and all claims for alleged economic or other injury or loss or for statutory damages under any state statute; (3) any and all claims for medical monitoring and claims for injunctive or declaratory relief based on, arising out of, or relating to Breast Implants; (4) any and all claims for loss of support, services, consortium, companionship, and/or society by spouses, parents, children, other relatives or “significant others” of persons implanted with Breast Implants; (5) any and all claims for conspiracy or concert of action; (6) any and all claims for wrongful death or survival actions; and (7) any and all claims for punitive or exemplary damages based on or arising out of or related to Breast Implants.
Id. at 2. The settlement “conclusively compromised, settled and released” all “settled claims” of each member of the class. Id. at 5. Correspondingly, Order 47A permanently enjoined all members of the class “from instituting, asserting or prosecuting against Inamed . . . in any pending or future action in any federal or state court, any Settled Claim that the member had, has, or may have in the future.” Id.
D. Distribution of the Settlement Fund
Order 47A merely certified the limited fund class and approved the settlement insofar as it required Inamed to infuse the settlement fund with $31.5 million. Having tabled a decision regarding a plan for allocation of the settlement recovery, Judge Pointer revisited the issue. Class counsel—including Hornsby, the attorney designated to represent solely future injury class members—presented
In May of 1999, the court preliminarily approved the proposed distribution plan and ordered notice of it sent to approximately 350,000 implant recipients on file, of whom 45,000 were likely Inamed settlement class members. The notice requested comments and objections to the proposal. The court received sixty-two objections to the proposal. Many of the objections concentrated on the perceived inequity of the plan‘s failure to differentiate between claimants without injuries and claimants with current injuries. Following a July 6, 1999, hearing, Judge Pointer overruled these objections, citing the unique financial constraints affecting the settlement terms. He explained that the fund was so severely limited in relation to the number of claimants, that a distribution plan differentiating between claimants with varying degrees of injuries would have “substantially increased administrative costs,” “not greatly increase[d] the amount of distribution to those determined to be eligible for enhanced benefits,” and “decrease[d] even more the meager distribution to other claimants.” District Court order, Docket No. 70 at 5.
In sum, Judge Pointer agreed with class counsel that pro rata division remained “the only workable solution under the facts of this case,” and he approved the proposed distribution plan. Id. On July 7, 1999, he entered Order
E. Events Following the Inamed Class Settlement
For fiscal year 1998, Inamed‘s net sales increased by twenty-four percent. It reported a net income in 1998, compared to a substantial net loss in 1997. However, Inamed‘s book value in 1998 was still negative $15,625,000, and it remained a debt-ridden company. By 1999, Inamed began reporting a much improved operating income, openly attributing its profitability to settling the breast implant litigation and an aggressive cost-reduction program. On September 1, 1999, Inamed purchased Collagen Aesthetics, Inc., for approximately $159 million, the funding for which was provided by substantial borrowing. Nevertheless, even after undergoing a public offering to raise proceeds to pay the debt incurred in the purchase, Inamed‘s financial viability remained precarious.
On March 23, 2006, Allergan purchased substantially all of Inamed‘s outstanding common stock, as well as its wholly-owned subsidiary, McGhan Medical Corporation (“McGhan“). Shortly thereafter, on May 16, 2006, Juris filed suit against Allergan, Inamed, and McGhan (hereinafter, collectively, “Allergan“) in the Superior Court of California for the County of Los Angeles. She alleged that Inamed/McGhan breast implants caused her injuries and asserted claims for strict liability, negligence, breach of express warranty, breach of implied warranty, deceit/negligent misrepresentation, and intentional infliction of emotional distress. Allergan filed a demurrer to Juris‘s complaint, arguing that the “doctrine of res
F. Procedural History
On September 20, 2006, Allergan filed a motion in the district court for the Northern District of Alabama—the Inamed class action court—requesting that Juris and her attorney show cause why they should not be held in contempt for violating Order 47A‘s anti-suit injunction. Allergan contended that Juris was a member of the Inamed settlement class and her claims were “settled claims” as defined in Order 47A. As a result, the company argued, the settlement‘s injunction prohibited Juris‘s lawsuit. In her opposition to Allergan‘s contempt motion, Juris argued that she had a right to collaterally attack the class judgment and that the Anti-Injunction Act denied the district court power to enjoin the California state court action. Subsequently, on October 19, 2006, counsel for both parties jointly requested that the California court stay the proceedings before it, pending a decision from the district court. Their joint motion stated that they “agree that [Juris‘s] legal and constitutional challenge to Order No. 47A should be brought before the Alabama district court, and that the Los Angeles Superior
On October 3, 2008, District Judge U.W. Clemon traveled to California, where he heard evidence and oral argument from the parties on Allergan‘s show cause motion.13 The parties filed post-hearing briefs addressing various issues. In November of 2009, Juris filed a motion in the California state court seeking a hearing and requesting that the stay be lifted, and she notified the district court of her intention to proceed with the California litigation. The district court promptly informed the parties that a second hearing would be held with respect to Allergan‘s motion for an order to show cause. On December 14, 2009, Judge Proctor heard oral argument from counsel representing Juris, Allergan, and the Inamed settlement class. The parties again submitted post-hearing briefs. Thus, in all, the issues before the district court were explored at two hearings and through three rounds of briefing.
Juris advanced four arguments: (1) she may raise a collateral attack against the Inamed class settlement in the forum of her choice; (2) in light of Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295 (1999), the district court erroneously certified the Inamed class under
Judge Proctor noted that, although Juris had initially argued that the California court was the only proper court to entertain her collateral challenge to the Inamed class settlement, she subsequently abandoned that position and agreed to resolve the collateral challenge in the district court in Alabama. However, in an abundance of caution, Judge Proctor nevertheless addressed the merits of the issue of the appropriate forum. Concluding that “Juris’ arguments have evolved from defensive, forum-specific contentions to offensive, relief-oriented requests,” Judge Proctor construed Juris‘s filings as a motion for relief from judgment pursuant to
In addition, with respect to Juris‘s contention that
Judge Proctor specifically rejected Juris‘s contention that post-settlement financial disclosures, which placed Inamed‘s economic status in a more positive light than the evidence presented at class certification, provided a basis for setting aside the judgment. He emphasized the fact that the reports at issue reflected Inamed‘s financial position after announcement and final approval of the settlement. He additionally observed that provisional certification of the class had an “incalculable impact” on Inamed‘s financial status by enjoining all litigation by the then-putative class. Most importantly, Judge Proctor found that Juris was ignoring one essential point: “If Inamed had not resolved the breast implant cases on a global scale, then the company was destined for liquidation at the direction of its senior secured creditors—a fact which Juris has never disputed.” Id. at 62.
Thus, Judge Proctor concluded that Juris‘s argument was circular; it simply made no sense to say that certification of the Inamed settlement was flawed because Inamed rebounded, when it was the settlement itself that prompted the rebound. Judge Proctor undertook an independent analysis of Inamed‘s financial condition at the time of the certification, examining the evidence on which Judge Pointer had relied. Judge Proctor‘s analysis confirmed Judge Pointer‘s previous
Judge Proctor then held that Juris‘s due process and personal jurisdiction arguments could not enable her to escape the Inamed class settlement. As more fully developed below, Judge Proctor concluded that opt-out rights are not required in the case of a
II. DISCUSSION
On appeal Juris argues: (A) that she can collaterally challenge the res judicata effect of the Inamed class settlement; (B) that the California court—not the Northern District of Alabama—is the appropriate forum for the collateral attack; and (C) that she was denied fundamental due process during the Inamed class proceedings in that (1) she did not receive adequate notice, (2) she was not adequately represented, and (3) she was denied the right to opt out. In addition, Juris seeks to escape the preclusive effect of the class settlement by arguing that Judge Pointer erred in certifying the class under
A. Availability of Collateral Attacks
Class action judgments will typically bind all members of the class. Kemp v. Birmingham News Co., 608 F.2d 1049, 1054 (5th Cir. 1979).15 Thus, “[g]enerally, principles of res judicata, or claim preclusion, apply to judgments in class actions as in other cases.” Twigg v. Sears, Roebuck & Co., 153 F.3d 1222, 1226 (11th Cir. 1998). There is an exception to this rule, however, which is grounded in due process. Kemp, 608 F.2d at 1054. This Court has explained:
Before the bar of claim preclusion may be applied to the claim of an absent class member, it must be demonstrated that invocation of the bar is consistent with due process, see, e.g., Johnson v. General Motors Corp., 598 F.2d 432, 435, 437 (5th Cir. 1979), and an absent class member may collaterally attack the prior judgment on the ground that to apply claim preclusion would deny him due process, see, e.g., Silber v. Mahon, 957 F.2d 697, 699-700 (9th Cir. 1992); Gonzales v. Cassidy, 474 F.2d 67, 74-75 (5th Cir. 1973), see generally Note, Collateral Attack on the Binding Effect of Class Action Judgments, 87 HARV. L. REV. 589 (1974).
Twigg, 153 F.3d at 1226; see also 3 William B. Rubenstein et al., Newberg on Class Actions § 8:30 (4th ed. 2011) (“A right of collateral attack, through which
The propriety of collateral attacks “is amply supported by precedent.” Stephenson v. Dow Chem. Co., 273 F.3d 249, 258 (2d Cir. 2001), aff‘d in part by an equally divided court and vacated in part, 539 U.S. 111, 123 S. Ct. 2161 (2003); see Hansberry v. Lee, 311 U.S. 32, 42, 61 S. Ct. 115, 118 (1940) (“[T]here has been a failure of due process only in those cases where it cannot be said that the procedure adopted [in the representative action], fairly insures the protection of the interests of absent parties who are to be bound by it.“). Absent class members can collaterally challenge the res judicata effect of a prior class judgment either because they were not adequately represented, see, e.g., Gonzales v. Cassidy, 474 F.2d 67, 72 (5th Cir. 1973); Stephenson, 273 F.3d at 261; Van Gemert v. Boeing Co., 590 F.2d 433, 440 n.15 (2d Cir. 1978), or because there was not adequate notice, see, e.g., Twigg, 153 F.3d at 1229; Johnson v. Gen. Motors Corp., 598 F.2d 432, 434 (5th Cir. 1979); King v. S. Cent. Bell Tel., 790 F.2d 524, 530 (6th Cir. 1986); Pate v. United States, 328 F. Supp. 2d 62, 73-74 (D.D.C. 2004). In addition, absent class members have successfully attacked a class action court‘s ability to bind them by arguing that they were denied the ability to opt out or exclude themselves from the class. See, e.g., Brown v. TicorTitle Ins. Co., 982 F.2d 386, 392 (9th Cir. 1992), cert. dismissed, 511 U.S. 117, 114 S. Ct. 1359 (1994).
The traditional collateral attack involves a class member commencing a separate suit on a similar subject matter as a prior class settlement, the defendant‘s assertion that the prior class settlement has preclusive effect and bars the new suit, and the class member‘s contention that giving res judicata effect to the prior settlement would violate her rights to due process. At the same time, “[a] related, collateral method for attacking judgment finality after expiration of the appeals period is available under federal
As a preliminary matter, we must ensure that the district court was the proper forum to resolve Juris‘s due process challenge. Early on, in response to Allergan‘s contempt motion, Juris posited that she had the right to select the court where she would pursue her attack on the binding effect of the Inamed class settlement. She complained that she should not be forced to travel across the country to Alabama to litigate her constitutional challenge in the class action court. Instead, Juris maintained, she should be allowed to launch a traditional collateral attack in the California state court.
Juris relies principally on the Third Circuit‘s decision In re Real Estate Title & Settlement Services Antitrust Litigation, 869 F.2d 760 (3d Cir. 1989). In that case, following settlement of a multidistrict class action in the Eastern District of Pennsylvania, absent class members filed an Arizona state court action collaterally attacking the class settlement. Id. at 762. The Pennsylvania district court enjoined
In this case, the [plaintiffs] were haled across the country . . . merely because of the fortuity that plaintiffs in Pennsylvania had similar claims and the Judicial Panel on Multi-District Litigation elected to consolidate all the MDL 633 cases there. Thus we must look carefully at the protections that the [plaintiffs] were given in the class action proceeding, to assess whether it would violate due process to force them to litigate their adequacy as part of an injunction action in Pennsylvania district court.
Id. at 768. The court characterized the issue as “whether an absent class member can be enjoined from relitigation if the member does not have minimum contacts with the forum.” Id. at 769. On this point, the court held that “if the member has not been given the opportunity to opt out in a class action involving both important injunctive relief and damage claims, the member must either have minimum contacts with the forum or consent to jurisdiction in order to be enjoined by the district court that entertained the class action.” Id. Because the plaintiffs were not given an opportunity to opt out of the class settlement, did not have minimum contacts with Pennsylvania, and had not consented to jurisdiction in the Pennsylvania district court, the Third Circuit vacated the injunction; and the plaintiffs were allowed to proceed with their collateral attack in Arizona. Id.
First, Real Estate did not involve a limited fund class action. The prior settlement in that case involved a “hybrid class,” which sought substantial damages, but primarily injunctive relief, certified pursuant to
Second, and more importantly, we hold that Juris consented to jurisdiction in the court below.18 Juris and Allergan filed a consent motion to stay the California case, which stated that they “agree that [Juris‘s] legal and constitutional challenge to Order No. 47A should be brought before the Alabama district court, and that the Los Angeles Superior Court should not rule on this issue.” The joint motion similarly provided: “To the extent Plaintiff intends to pursue a constitutional challenge to Order 47A, Plaintiff and Defendants agree that the Northern District of Alabama is the proper court to interpret and review said order, and to determine its effect on Plaintiff‘s claims herein.” In support, Juris‘s counsel filed a sworn declaration explaining that “[c]ounsel for the Plaintiff and counsel for the Defendants, including their respective local Alabama counsel, have jointly agreed to seek to resolve the legal and constitutional issues related to Plaintiff‘s commencement of the above-entitled action before the federal court in
Given her express consent, we have no difficulty concluding that the Alabama district court was the proper forum to resolve Juris‘s constitutional challenge to the res judicata effect of the Inamed class settlement. Juris cannot now be heard to complain that she was “haled across the country” to a forum for which she did not have minimum contacts or consent to jurisdiction. We do not reach the issue left open by the Third Circuit in Real Estate—whether, in the absence of her express consent to jurisdiction, it would have run afoul of the due process clause to require Juris to litigate her collateral attack on the limited fund settlement in the certifying court.20
1. Adequate Notice
Juris argues that the Inamed settlement should not be given res judicata effect because she did not receive adequate notice of the class proceedings. She does not challenge the class judgment on the theory that the content of the notices was constitutionally inadequate. See Twigg v. Sears, Roebuck & Co., 153 F.3d 1222, 1227 (11th Cir. 1998) (concluding that prior class judgment could not bar absent class member‘s claims because, “even if Twigg had received the notices, their language was insufficient to notify him that claims like his were being litigated in the action“). Rather, her due process argument takes aim at the method of distributing class notice approved by Judge Pointer. Juris specifically urges us to find that the class notice was constitutionally deficient because she did not receive actual, individual notice.21
Under certain circumstances, however, even when not provided for by
The due process violation in Temple arose because the district court certified a mandatory, limited fund class action without any notice to absent class members. The decision does not stand for the proposition that the Constitution requires that each individual class member receive actual notice. Instead, our concern was with the total absence of notice, which led to the “non-adversarial nature of the [class certification] proceedings.” Id. at 1272. We therefore agree with the district court that Temple is not controlling in this case. Where the notice afforded reaches a critical mass of putative class members, such that the facts underlying certification are contested and approached in a sufficiently adversarial manner, the due process pitfall identified in Temple can be avoided.
The careful analysis of the notice mandated by due process in Battle, 770 F. Supp. 1499, is also persuasive here.22 In that case, years after a class settlement, absent members sought to circumvent the prior judgment on the theory that it violated their due process rights to actual, personal notice. Battle, 770 F. Supp. at 1508, 1510. Although the court stopped short of holding that no notice at all would have passed constitutional muster, it concluded that individual notice to
Because such notice was appropriately designed not to afford absent members the chance to exclude themselves from the class, but rather to inform them of the pendency of the action and permit them to challenge the representation by the named plaintiffs and class counsel or to otherwise intervene, the fact that paid-up policyholders did not receive notice did not frustrate this purpose. Because such policyholders shared the same interests as those who did receive notice, the latter could adequately speak for them vis-a-vis the named plaintiffs and class counsel.
Id. at 1520 (citation omitted). As such, Battle holds that when a mandatory class is composed of plaintiffs with singular interests, and where the representatives and objectors reflect the interests of those who did not receive notice, failure to individually notify each class member will not equate to a constitutional violation.23
To the extent that Temple and Battle require notice to ensure that the class certification and the underlying facts supporting it are sufficiently scrutinized and
Even with the benefit of hindsight, Juris cannot point to a single objection
We likewise find that the notice with respect to the proposed plan for distribution of the Inamed settlement fund satisfied due process. See Battle, 770 F. Supp. at 1520 (explaining that, apart from notice of the pendency of the action, a court must analyze whether class members received constitutionally sufficient notice of and the right to object to the settlement). Per Judge Pointer‘s orders, notices requesting objections and comments on the proposed fund distribution plan were mailed to 350,000 implant recipients registered with the claims office. The court received sixty-two objections to the proposal, and Judge Pointer held a
Juris‘s conclusory assertion that the Inamed class settlement cannot be given preclusive effect because “[t]here is no dispute that she did not receive actual notice” rests on a faulty premise. As demonstrated by our discussion of Temple and Battle, where due process calls for absent members of a mandatory class to
However, even assuming this heightened standard applied, Juris would be unable to demonstrate that the notice in the class proceeding was constitutionally deficient. Courts have consistently recognized that, even in
Judge Pointer constructed a notice campaign which he intended to approximate the level of notice that would have been provided to a
Juris additionally seeks to circumvent the binding effect of the Inamed class settlement on the basis that she was not adequately represented. She claims she was inadequately represented for several reasons; we address her arguments in turn.
“Due process of law would be violated for the judgment in a class suit to be res judicata to the absent members of a class unless the court applying res judicata can conclude that the class was adequately represented in the first suit.” Gonzales v. Cassidy, 474 F.2d 67, 74 (5th Cir. 1973).
To answer the question whether the class representative adequately represented the class so that the judgment in the class suit will bind the absent members of the class requires a two-pronged inquiry: (1) Did the trial court in the first suit correctly determine, initially, that the representative would adequately represent the class? and (2) Does it appear, after the termination of the suit, that the class representative adequately protected the interest of the class? The first question involves us in a collateral review of the [class action] court‘s determination to permit the suit to proceed as a class action with [the named plaintiffs] as the representative[s], while the second involves a review of the entire suit—an inquiry which is not required to be made by the trial court but which is appropriate in a collateral attack on the judgment such as we have here.
Juris argues that Judge Pointer erred by failing to create discrete subclasses for those breast implant recipients with current injuries and those with only
[N]amed parties with diverse medical conditions sought to act on behalf of a single giant class rather than on behalf of discrete subclasses. In significant respects, the interests of those within the single class are not aligned. Most saliently, for the currently injured, the critical goal is generous immediate payments. That goal tugs against the interest of exposure-only plaintiffs in ensuring an ample, inflation-protected fund for the future.
Quoting from a Second Circuit decision, the Court shed light on its precise concern: “The class members may well have thought that the Settlement serves the aggregate interests of the entire class. But the adversity among subgroups requires that members of each subgroup cannot be bound by a settlement except
Two years later, in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), the Court again discussed the potentially conflicting interests within a class of current and future injury asbestos claimants certified for global settlement purposes. Id. at 856. According to the Court, under the law of Amchem, “a class divided between holders of present and future claims (some of the latter involving no physical injury and attributable to claimants not yet born) requires homogenous subclasses under Rule 23(c)[], with separate representation to eliminate conflicting interests of counsel.” Id. Ortiz involved
The cases describe a requirement that there be structural assurances of adequate representation that protect against the conflicting goals of present and future injury class members. These protections must ensure that class representatives understand that their role is representing solely members of their respective constituency, not the whole class. Although we need not rule definitively, Amchem and Ortiz appear to hold that
Judge Pointer and class counsel put in place procedures to protect against antagonistic alignment within the class and avoid the fatal flaw in Amchem. Judge Pointer appointed six Inamed breast implant recipients as class representatives, among them, a representative with no manifested injury, one with minor to moderate injuries, and one who was totally disabled. He appointed five
In contrast with Amchem and Ortiz, the structure of the negotiations in the case at bar ensured that class representatives operated with a proper understanding of their representative responsibilities. The negotiation process did not resemble that in Amchem and Ortiz where there were no structural assurances whatsoever and where nobody “exclusively advanced the particular interests of either subgroup.” In re Literary Works in Elec. Databases Copyright Litig., 654 F.3d 242, 250 (2d Cir. 2011). Because of this, we are confident that the class settlement, as well as the plan for distribution, was achieved only by the consent of those who understood that their role was to advocate on behalf of their respective subgroups.27 We therefore conclude that the structural protections put in place
Our holding that formal subclasses were not constitutionally required is reinforced by Judge Proctor‘s unchallenged findings. According to Judge Proctor, “the class‘s court-appointed representatives and counsel served as the functional equivalents of formally sub-classed groups, which ensured that the class representatives, as well as their counsel, participated directly in negotiations and litigation.” District Court order, Docket No. 303 at 93. He additionally found that formal sub-classing would have been “superfluous” because Judge Pointer received objections that mirrored the concerns that subdivided “currents” and “futures” subclasses likely would have produced respectively. Id. at 95. On appeal, Juris does not contest Judge Proctor‘s findings, and she has not articulated how formal subclasses would have provided increased assurance of adequate representation.
Juris does argue that “Hornsby did not, and could not, vigorously and tenaciously protect the plaintiff‘s interests” because “Hornsby represented all kinds of plaintiffs in the Inamed litigation—those who had no current injuries, some who had current injuries, and some who were going to develop a condition
“A federal appellate court will not, as a general rule, consider an issue that is raised for the first time on appeal.” In re Pan Am. World Airways, Inc., 905 F.2d 1457, 1461-62 (11th Cir. 1990). “The corollary of this rule is that, if a party hopes to preserve a claim, argument, theory, or defense on appeal, she must first clearly present it to the district court, that is, in such a way as to afford the district court an opportunity to recognize and rule on it.” Id. at 1462. In her appellate briefs, Juris cites to a portion of the hearing before Judge Proctor in which Hornsby made a stray remark that, at the beginning, he represented some breast implant plaintiffs with current injuries and some with no manifested injuries.29 Juris‘s counsel did not respond, at that point or any other point during the hearing,
Having foregone an opportunity to explore Hornsby‘s representation before Judge Proctor (at which time the matter could have been investigated and clarified), and having raised the conflict-of-interest claim in such a vague and tangential manner on appeal, Juris has waived it. Having doubly waived the conflict of interest issue, and especially having deprived Allergan of the opportunity to adduce evidence to clarify the situation, Juris is deemed to have abandoned the issue. See id. at 1461-62; Marek v. Singletary, 62 F.3d 1295, 1298 n.2 (11th Cir. 1995).
Even setting aside Juris‘s abandonment of this issue, we would hold that the record amply supported Judge Proctor‘s finding that counsel in this case served as the functional equivalents of formal subclasses, such that the situation falls far short of a due process violation. The record reveals that the parties agreed, and Judge Pointer was aware, that Hornsby represented solely future claimants with no
One concern that we raised and explored, as discussions and negotiations proceeded, was whether breast implant recipients with manifest injuries, and those who have not yet suffered injuries from their implants, had a common interest in a mandatory fund settlement as opposed to the inevitable alternative of Inamed insolvency. To assure that all interests and perspectives were represented, Ernest Hornsby, a plaintiffs’ attorney with extensive Breast Implants trial experience, who represents Inamed implant recipients with potential future claims, was added as class counsel in this action, and participated in the final round of discussions and negotiations that led up to the instant settlement.
Subsequently, when adopting the proposed distribution plan, Judge Pointer stated: “Class counsel—some of whom represent clients with existing medical problems and others of who represent clients without presently documented problems—have, with the Court, struggled . . . and reluctantly come to the conclusion that pro rata division remains the better—and indeed only workable—solution under the facts of this case.” District Court order, Docket No. 70 at 5. This establishes not only that Hornsby was brought in and designated to represent exposure-only class members, but also that this procedural safeguard was put in place for the express purpose of addressing the divergent interests that could arise between present and future injury claimants. For this reason, even if
Juris next urges us to find that she was not in fact adequately represented because Hornsby did not prosecute an appeal of Order 47A, the order certifying the settlement-only class and approving the settlement as fair, based on Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295 (1999). The Supreme Court’s decision in Ortiz, which was still pending when Judge Pointer entered Order 47A, ultimately narrowed the grounds upon which certification of a limited fund class settlement could be supported. In support of her failure-to-appeal argument, Juris cites Gonzales v. Cassidy, 474 F.2d 67 (5th Cir. 1973).
In Gonzales, the plaintiffs collaterally attacked a class action judgment on the grounds that they had not been adequately represented. Id. at 72. In the prior proceeding, a three-judge district court declared a Texas statute unconstitutional. Id. at 71. However, that court limited the scope of relief by holding that its order only applied retroactively to the named plaintiff himself; with respect to all other class members, the court’s order granted only prospective relief. Id. “Having
On appeal, the former Fifth Circuit found that the named plaintiff’s representation was adequate up through the time that the three-judge court entered its final order. Id. at 75. The Court then characterized the “narrow question” before it as “whether [the class representative’s] failure to appeal this order, which denied retroactive relief to all members of the class except [himself], constitutes inadequate representation so that they are not bound by the judgment.” Id. Concluding that the failure to appeal rendered the representation inadequate, the court explained:
The problem is that he was representing 150,000 persons, who, although having had their licenses and registration receipts suspended without due process, were denied any relief by the three-judge court’s prospective only application of its decision. So long as an appeal from this decision could not be characterized as patently meritless or frivolous, [the named plaintiff] should have prosecuted an appeal. . . . [His] failure to prosecute an appeal deprived the members of his class, whose rights were not vindicated by the three-judge court’s decision, of full participation in [the judicial] process.
Gonzales is easily distinguished from the case at bar. That case does not hold that a class representative’s failure to appeal, in the abstract, will render
Additional factors establish that Hornsby’s decision not to appeal did not constitute inadequate representation. First, even if filed the same day the Supreme Court decided Ortiz, any appeal of the limited fund class certification would have been untimely. Judge Pointer entered Order 47A on February 1, 1999, and the Ortiz decision was released on June 23, 1999, approximately five months later.
More significantly, there was a compelling tactical reason for Hornsby not to pursue an appeal of Order 47A. Inamed’s senior creditors had conditioned financing of the settlement on certification of a mandatory class, and the undisputed evidence established that if class representatives or objectors successfully appealed, those lenders would have withdrawn financing and forced Inamed into a Chapter 7 liquidation. Hornsby later explained, “I didn’t file a notice of appeal obviously because I just didn’t see where—it would have made
Under these circumstances, Hornsby’s decision not to prosecute an appeal of Order 47A based on the then-pending Ortiz does not call into question the extent to which he “vigorously and tenaciously protected the interests of the class.” Gonzales, 474 F.2d at 75. That decision, therefore, did not render Hornsby’s representation constitutionally inadequate.
In conclusion, Juris has not presented facts demonstrating a due process violation stemming from the lack of adequate representation.32 Her inadequate
3. Opt-out Rights and Personal Jurisdiction
Juris further argues that applying the Inamed settlement to bar her claims would violate due process because she did not have an opportunity to opt out or exclude herself. Juris asserts that because she was a California resident with no contacts with Alabama, the class action court—Judge Pointer’s court—never had personal jurisdiction over her. Therefore, she urges us to conclude that, pursuant to Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S. Ct. 2965 (1985), she had a constitutional right to opt out.
In Shutts, the Supreme Court described the procedural requirements for asserting personal jurisdiction over absent, nonresident class members in a Kansas class action that asserted claims for money damages.33 The petitioner argued that “Kansas should not be able to exert jurisdiction over the plaintiff’s claims unless the plaintiffs have sufficient minimum contacts with Kansas.” Id. at 808, 105 S. Ct. at 2972. The petitioner contended that the Kansas “opt out” procedure was not
The Court held that “a forum State may exercise jurisdiction over the claim of an absent class-action plaintiff, even though that plaintiff may not possess the minimum contacts with the forum which would support personal jurisdiction over a defendant.” Id. It proceeded to explain that a forum state could bind absent plaintiffs “concerning a claim for money damages or similar relief at law,” so long as certain procedural protections are provided. Id. at 811-12, 105 S. Ct. at 2974. Namely, under the circumstances of that case, absent plaintiffs needed to receive notice and an opportunity to be heard, an opportunity to remove themselves from the class by returning an opt out, and adequate representation. Id. at 812, 105 S. Ct. at 2974. Because these minimal due process protections were afforded, Shutts concludes that the Kansas court properly asserted jurisdiction over the absent class members. Id. at 814, 105 S. Ct. at 2976. However, the Court emphasized: “Our
Significantly, the question now before us—whether Shutts requires that an absent class member be afforded an opportunity to exclude herself from a limited fund class settlement—presents a question of first impression in this Circuit.34 Shutts is a case about personal jurisdiction—i.e., the forum state’s adjudicatory power over nonresident, non-consenting absent class members who did not otherwise have minimum contacts. Opt-out rights were of critical importance in Shutts for the reason that they allowed for an inference of consent, which was sufficient to support the class action court’s jurisdiction over the class members who otherwise had no connection with Kansas.35 With respect to these
In a limited fund class action, the presence within the jurisdiction of a res or fund that is the subject of the litigation resolves the personal jurisdiction objection of absent claimants. See Flanagan v. Ahearn (In re Asbestos), 90 F.3d 963, 987 (5th Cir. 1996) (“The court can appropriately adjudicate all claims against the fund because of its jurisdiction over the fund . . . .”);36 Fanning v. Acromed Corp. (In re Orthopedic Bone Screw Prods. Liab. Litig.), 176 F.R.D. 158, 180 (E.D. Pa. 1997)
We hold that the $31.5 million limited fund recovery, which was
The cases cited in Juris’s brief are easily distinguished and not persuasive with 38 respect to our analysis. For example, she relies heavily on In re Real Estate Title & Settlement Services Antitrust Litigation, 869 F.2d 760 (3d Cir. 1989), and Brown v. Ticor Title Insurance Co., 982 F.2d 386 (9th Cir. 1992). Both cases analyzed the due process rights of absent members in the same class action, which was certified under
D. Propriety of Class Certification
Juris dedicates other portions of her briefs to arguing that Judge Pointer erred in certifying the Inamed settlement class. She claims that the class did not conform to the Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295 (1999), requirements for certification under
In Ortiz, the Supreme Court reversed class certification in a
Judge Proctor concluded that Juris’s argument that the Inamed settlement class was erroneously certified under
On appeal, Juris argues that Judge Proctor’s alternative conclusion—that the Inamed settlement possesses the presumptively necessary characteristics of a
Significantly, however, Juris has not challenged, or even acknowledged, Judge Proctor’s holding that this line of argument is foreclosed as a matter of law by the doctrine of res judicata. Allergan claims that Juris has therefore waived any argument on this issue, and we agree. In the absence of any argument to the contrary, we will not disturb the district court’s holding that Juris’s position with respect to the propriety of Judge Pointer’s final, unappealed class certification presented an improper basis for collateral attack.41
Thus, our primary holding in this Part II.D is that, by failing to challenge Judge Proctor’s res judicata holding on appeal, Juris has abandoned any challenge to the propriety of the
“[C]ertain fundamental defects—lack of subject matter jurisdiction, personal jurisdiction, or due process—in a prior litigation will render the judgment void and without legal effect . . . .” Note, Collateral Attack on the Binding Effect of Class Action Judgment, 87 Harv. L. Rev. 589, 593-94 (1974). However, “the res judicata consequences of a final, unappealed judgment on the merits [are not] altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case.” Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S. Ct. 2424, 2428 (1981). Therefore, an absent class member will not typically be able to collaterally attack a prior judgment by arguing that there was an error in the certification.42
E. Anti-Injunction Act
Finally, Juris argues that the
1. In Aid of Jurisdiction
The “necessary in aid of” jurisdiction exception to the ban on federal injunctions exists “to prevent a state court from so interfering with a federal court’s consideration or disposition of a case as to seriously impair the federal court’s flexibility and authority to decide that case.” Atl. Coast Line R.R. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 295, 90 S. Ct. 1739, 1747 (1970). As a general matter, however, “[c]oncurrent in personam jurisdiction does not satisfy
Ordinarily, a federal court may issue an injunction ‘in aid of its jurisdiction’ in only two circumstances: (1) the district court has exclusive jurisdiction over the action because it had been removed from state court; or, (2) the state court entertains an in rem action involving a res over which the district court has been exercising jurisdiction in an in rem action.
In re Ford Motor Co., 471 F.3d 1233, 1250-51 (11th Cir. 2006).
Importantly, federal courts have recognized a narrow exception to this general rule, allowing the “in aid of its jurisdiction” exception to be used “to enjoin parallel state class action proceedings that might jeopardize a complex federal settlement and state in personam proceedings that threaten to make complex multidistrict litigation unmanageable.” 17A Moore’s Federal Practice § 121.07 (3d ed. 2010). For example, in Battle v. Liberty National Life Insurance Co., 877 F.2d 877 (11th Cir. 1989), we held that a district court that had issued a final judgment in a complex and lengthy class action, and expressly retained jurisdiction over the settlement, properly enjoined a subsequent state court suit involving substantially similar claims. We stated that “it ma[de] sense to consider th[e] case, involving years of litigation and mountains of paperwork, as similar to
The lengthy, complicated litigation at issue in this case was likewise the “virtual equivalent of a res.” The district court has spent countless hours managing the highly complex multidistrict breast implant litigation, and it was only after years of extended settlement negotiations that the parties were able to resolve the claims of over 40,000 Inamed breast implant recipients. Moreover, the district court, like that in Battle, retained exclusive jurisdiction to review, interpret, and enforce the Inamed class settlement. The district court has continually exercised that jurisdiction in interpreting the Inamed settlement
2. To Protect or Effectuate Judgments
The “to protect or effectuate” judgments exception to the
Without elaboration or citation to authority, Juris makes a conclusory assertion that the relitigation exception cannot apply because the Inamed class action did not result in a decision on the merits.48 The record belies that assertion. For purposes of determining res judicata, an order approving a settlement agreement provides a final determination on the merits. See Martin v. Pahiakos, 490 F.3d 1272, 1277 (11th Cir. 2007); Norfolk S. Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285, 1288 (11th Cir. 2004); Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1501-02 (11th Cir. 1990). Judge Pointer’s Order 47A was styled “Order and Final Judgment”; further, after stating that “every Settled Claim of each member of the Inamed Settlement Class is conclusively compromised, settled and released,” Order 47A dismissed those claims with prejudice. District Court order, Docket No. 59 at 1, 4-5. Accordingly, the Inamed class settlement resulted
III. CONCLUSION
We emphasize the collateral posture of this case. Judge Pointer’s order certifying the Inamed settlement class as a limited fund class under
Upon review, we conclude that the 1999 Inamed class settlement precludes Juris from bringing her action against Allergan. Accordingly, we affirm.
AFFIRMED.