Zuzanna Juris v. Inamed Corporation

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JULY 6, 2012
No. 10-12665
JOHN LEY
________________________
CLERK
D. C. Docket No. 2:97-cv-11441-RDP
ZUZANNA JURIS,
Plaintiff-Appellant,
versus
INAMED CORPORATION,
MCGHAN MEDICAL CORP.,
et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(July 6, 2012)
Before TJOFLAT, CARNES and ANDERSON, Circuit Judges.
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
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of thousands of claims arising out of injuries allegedly caused by defective
silicone breast implants manufactured by Inamed Corporation (“Inamed”).
Several years later, in 2006, Zuzanna Juris filed an individual action in California
state court against Inamed and Allergan, Inc. (“Allergan”), Inamed’s successor,
alleging injuries caused by her Inamed implants. The defendants contended that
Juris’s lawsuit was barred because the 1999 class settlement resolved her claims;
Juris posited that she could avoid the settlement’s res judicata effect on due
process grounds. The district court held that the class settlement precluded Juris
from prosecuting the California case. This is Juris’s appeal.
For the reasons explained below, we affirm.
I. BACKGROUND 1
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
1
The district court should be commended for the comprehensive narrative in which
it set forth this case’s complex procedural and factual history. Throughout Part I.A through E,
we borrow in large part from the findings of fact in the district court’s memorandum opinion.
2
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number of lawsuits only increased further. As a result, the Judicial Panel on
Multidistrict Litigation consolidated more than 21,000 cases against various breast
implant manufacturers for pretrial proceedings and transferred them to District
Judge Sam Pointer in the Northern District of Alabama.2 See In re Silicone Gel
Breast Implants Prods. Liab. Litig., 793 F. Supp. 1098 (J.P.M.L. 1992); In re
Silicone Breast Implants Prods. Liab. Litig., MDL 926, 2:92-cv-10000 (N.D.
Ala.). The transfer included all pending federal lawsuits against Inamed regarding
allegedly defective implants.
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
2
Troubled by allegations of forum shopping, litigation strategies, and underlying
motives, the multidistrict panel rejected the forum preferences of both sides and independently
assigned the case to Judge Pointer in light of his experience and reputation.
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approval of that proposal, Inamed booked the $25 million annuity as a contingent
liability in the amount of $9.2 million (the present value of twenty-five annual
payments of $1 million). Inamed sought to certify a limited fund settlement class
pursuant to Federal Rule of Civil Procedure 23(b)(1)(B) in an effort to secure a
mandatory, global resolution of all present and future claims. The plaintiffs’
settlement committee retained Ernst & Young to review Inamed’s finances and
determine whether limited fund treatment was appropriate. Ernst & Young issued
a report confirming Inamed’s claims that its liabilities, both operational and
litigation-related, dwarfed its assets. Counsel for the plaintiffs did not dispute this.
However, they questioned whether the $9.2 million present value contribution was
prudent considering Inamed’s potential future earnings. Disagreement yielded
further negotiations, and the possibility of a global settlement languished.
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
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was not met. Inamed returned the $15 million to the noteholders in exchange for
warrants to purchase Inamed common stock in the event a mandatory class
settlement was later approved. Inamed quickly exhausted the balance, $20
million, which provided necessary cash to stay in business and cover expenditures
related to inventory, payments to vendors, and other operational items.
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.”
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For fiscal years 1995, 1996, and 1997, Inamed reported pre-tax operating losses of
$8.6 million, $6.0 million, and $6.6 million, respectively. By the end of 1997, the
company’s consolidated book value—subtracting liabilities from assets—was
negative $10.9 million. Setting aside the $9.2 million contingent liability booked
in 1994 in anticipation of the proposed global settlement, Inamed’s book value
was still negative $1.7 million. And, significantly, other than the $9.2 million
contingent liability, Inamed’s balance sheet did not account for any other litigation
expenses, including possible settlements, attorneys’ fees, and potential judgments.
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
3
In addition, an individual case that went to trial against Inamed could
produce—and in the past had produced—a multimillion dollar jury verdict.
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extinguish substantially all of the breast implant litigation. They considered
elimination of the enormous costs and risks associated with the implant litigation
an essential precondition to the economic turnaround that would be necessary to
repay any investment. Coupling this pressure with the senior secured noteholders’
authority over Inamed’s financial decisions, Inamed’s ability to afford any
settlement was dependent on the senior creditors’ willingness to finance it.
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
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represent the interests of Inamed breast implant recipients with potential, future
injury claims, negotiated with Inamed and its senior secured noteholders.4 The
senior secured noteholders—the only lenders open to advancing Inamed funds for
settlement—conditioned financing on the settlement being mandatory and not
exceeding $31.5 million. These senior creditors had no obligation to contribute
funds. If plaintiffs’ counsel demanded either opt-out rights or settlement funds
beyond $31.5 million, Inamed, steered by its senior creditors, was prepared to
pursue liquidation. Thus, the proposed class settlement created a substantial
recovery fund that otherwise would not exist. Plaintiffs’ counsel ultimately
accepted the comparative benefit of the $31.5 million limited fund, obtained by
Inamed from the senior secured noteholders, as the only available resolution.
They concluded that all Inamed implant claimants, whether their injuries had
manifested or not, had a common interest in securing a certain source of recovery
for their claims; none would be well served by the alternatives of default,
insolvency, or bankruptcy.
4
Hornsby was brought in to address the possibility that implant recipients with
manifested injuries and those without manifested injuries had divergent or conflicting interests.
In order to ensure that all viewpoints were represented, Hornsby directly participated in
negotiations on behalf of the implant recipients with only potential, future claims.
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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
imposed on Inamed certain disclosure obligations with respect to ongoing breast
implant studies. On June 2, 1998, Judge Pointer provisionally certified and
approved the mandatory, limited fund class under Rule 23(b)(1)(B). He expressly
conditioned permanent certification and final approval “upon an evidentiary
showing, to this Court’s satisfaction, that a ‘limited fund’ or other circumstances
exist satisfying the criteria for mandatory class certification under Rule 23, and
that the proposed settlement is in the best interests of the class and should be
approved under Rule 23(e).” District Court order, Docket No. 10 at 3.
Subsequently, on October 7, 1998, Judge Pointer entered Order 47. Among other
things, that order directed that notice be given to all individuals potentially
affected by the class settlement. In furnishing the notice plan, Judge Pointer
attempted to approximate the level and quality of notice required by Rule 23(b)(3),
even though the class was provisionally certified under Rule 23(b)(1)(B).5
Judge Pointer first directed notice to be sent to approximately 250,000
5
“For any class certified under Rule 23(b)(3), the court must direct to class
members the best notice that is practicable under the circumstances, including individual notice
to all members who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B).
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women registered with the MDL 926 claims office, estimating that 80,000 were
potential class members.6 He also directed notice to 28,000 attorneys known to
represent plaintiffs with breast implant-related claims against Inamed. However,
because not all Inamed breast implant recipients were registered with the claims
office or represented by counsel, Judge Pointer ordered that notice of the proposed
settlement be published in various periodicals. Judge Pointer approved the text of
the proposed notice, and class counsel retained Hilsoft Notifications to design the
layout and select the appropriate publications. Notices of the proposed settlement
appeared in the October 28, 1998, edition of USA Today and the October 30,
1998, edition of People Magazine. Together, these publications reached an
estimated 26,641,000 females. In addition, Judge Pointer approved another notice
that was placed in the December 7, 1998, edition of Modern Healthcare Magazine,
a publication with a total readership of 76,482. The magazine posted the same
notice on its website from November 23, 1998, through December 7, 1998.
6
In 1994, in connection with the “Original Global Settlement,” an extensive notice
campaign invited all women with breast implants to register with the MDL 926 claims office.
That particular settlement sought to resolve claims against Inamed and various other
manufacturers; as such, the 1994 notice campaign resulted in several hundred thousand women
registering with the claims office, only a fraction of whom had Inamed breast implants.
Although the 1994 settlement ultimately fell apart, the pool of information collected remained on
file with the claims office. In 1999, Judge Pointer directed that notice of the proposed Inamed
class settlement be mailed to all individuals registered with the MDL 926 claims office, except
for those who clearly would not qualify as class members or have any interest in participating.
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Finally, Judge Pointer had notice of the proposed settlement placed on the court-
supervised website from October of 1998 through January of 1999.
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
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explained that it would be premature to consider potential conflicts or proper
distribution methods before he could be certain that there was, in fact, a settlement
fund with money to distribute. He believed it was in the best interest of all
members of the proposed class to secure the largest fund possible, as soon as
possible, and to bring that fund under the control of the court.
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.
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After carefully considering these objections, on February 1, 1999, Judge
Pointer entered Order 47A, certifying the non-opt-out settlement class. Judge
Pointer concluded that the proposed class satisfied the threshold requirements for
certification found in Rule 23(a).7 In doing so, he found as follows: There were
tens of thousands of individuals in the Inamed settlement class, making joinder
impracticable; questions of fact and law common to the class existed, including
whether Inamed’s breast implant products were defective and unreasonably
dangerous, and whether the company’s conduct, level of knowledge, or duty
would give rise to liability; the class members had a common interest in
determining whether a limited fund existed, avoiding that fund’s diminishment
through bankruptcy, and establishing equitable procedures for its distribution; and
the claims of the class representatives were typical of the class in that they asserted
the same types of factual and legal liability theories generally asserted by the class
members. With respect to Rule 23(a)(4), Judge Pointer noted that the
“Representative Plaintiffs, who reflect the full spectrum of breast implant
claimants ranging from claimants with no manifested injuries to claimants with
7
Rule 23(a) provides that “[o]ne or more members of a class may sue or be sued as
representative parties on behalf of all members only if: (1) the class is so numerous that joinder
of all members is impracticable; (2) there are questions of law or fact common to the class; (3)
the claims or defenses of the representative parties are typical of the claims or defenses of the
class; and (4) the representative parties will fairly and adequately protect the interests of the
class.” Fed. R. Civ. P. 23(a).
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serious illnesses . . . will fairly and adequately protect the interests of the Inamed
Settlement Class.” District Court order, Docket No. 59 at 3.
The class was certified pursuant to Rule 23(b)(1)(B), which authorizes
certification when “prosecuting separate actions by or against individual class
members would create a risk of . . . adjudications with respect to individual class
members that, as a practical matter, would be dispositive of the interests of the
other members not parties to the individual adjudications or would substantially
impair or impede their ability to protect their interests.”8 Based on evidentiary
submissions,9 Judge Pointer found that Inamed’s probable liability to the class
members from the implant litigation greatly exceeded Inamed’s limited financial
resources; that the settlement fund made available by certification was
substantially greater than the amount, if any, that would be available in the
8
“In contrast to class actions brought under subdivision (b)(3), in cases brought
under subdivision (b)(1), Rule 23 does not provide for absent class members to receive notice
and to exclude themselves from class membership as a matter of right. It is for this reason that
such cases are often referred to as ‘mandatory’ class actions.” Ortiz v. Fibreboard Corp., 527
U.S. 815, 834 n.13, 119 S. Ct. 2295, 2309 (1999) (citation omitted).
9
The parties submitted evidence regarding Inamed’s financial condition, inability
to fully satisfy class members’ claims, and imminent Chapter 7 liquidation. This evidence
included a declaration from Alan Jacobs, a partner at Ernst & Young who served as a financial
advisor to the settlement class counsel since 1994; a declaration from Richard Babbit, Inamed’s
President and CEO, which attached recent SEC filings and explained their significance; and a
declaration from L. Richard Rawls, Inamed’s national coordinating trial counsel. In addition, at
the January 11, 1999, hearing, Judge Pointer heard testimony from Jacobs, who was examined by
counsel representing future injury claimants as well as counsel representing objecting class
members.
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absence of certification; and that Inamed constituted a “limited fund” against
which claims are properly subject to certification under Rule 23(b)(1)(B). Thus,
Judge Pointer found that mandatory certification was warranted because
“continued prosecution of separate actions by individual members of the Inamed
Settlement Class would create a risk of adjudications with respect to individual
Inamed Settlement Class members that would as a practical matter be dispositive
of the interests of the other Inamed Class Settlement members not parties to the
adjudications or substantially impair or impede their ability to protect their
interest.” District Court order, Docket No. 59 at 3.
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
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price in no way measured the company’s ability to pay, especially if the flood of
pending breast implant cases was not resolved with the proposed settlement.
Inamed reiterated that it was the settlement’s preliminary approval that had, in
large part, made possible the restructuring efforts that further contributed to the
company’s improved financial condition. After careful consideration of the
arguments of the parties and the underlying evidence, Judge Pointer overruled the
objection grounded in the recent improvements in Inamed’s operation performance
and stock price. He later found that the $31.5 million settlement fund was
substantially greater than the amount that would be available in the absence of
certification, that the settlement fund was the maximum fund that feasibly could be
expected, and that Inamed’s probable liability to the class members greatly exceed
the $31.5 million fund (which in turn greatly exceeded the value of the entirety of
all other resources available to pay claims to the class members).
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,
10
At the time Judge Pointer considered the propriety of the settlement proposal,
Rule 23(e) provided that “[a] class action shall not be dismissed or compromised without the
approval of the court, and notice of the proposed dismissal or compromise shall be given to all
members of the class in such manner as the court directs.” Fed. R. Civ. P. 23(e) (1998). In 2003,
however, Rule 23(e) was expanded. The rule now requires that, before the claims of a “certified
class may be settled, voluntarily dismissed, or compromised,” the court must approve the
proposed settlement, subject to the following procedures and considerations: “(1) The Court must
direct notice in a reasonable manner to all class members who would be bound by the proposal.
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adequate, and reasonable. Importantly, he found:
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
(2) If the proposal would bind class members, the court may approve it only after a hearing and
on finding that it is fair, reasonable, and adequate. (3) The parties seeking approval must file a
statement identifying any agreement made in connection with the proposal. (4) If the class action
was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless
it affords a new opportunity to request exclusion to individual class members who had an earlier
opportunity to request exclusion but did not do so. (5) Any class member may object to the
proposal if it requires court approval under this subdivision (e); the objection may be withdrawn
only with the court’s approval.” Fed. R. Civ. P. 23(e). All of these requirements were satisfied
here, Judge Pointer having presciently foreseen what the rule currently provides.
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alleged injuries and damages not yet known or manifest) . . . related to, or
involving Inamed Breast Implants that were implanted in an operation that
occurred before June 1, 1993.” Id. at 1-2. In addition, Order 47A expansively
defined “settled claims” as follows:
[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 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.
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Judge Pointer made explicit that there was no just reason for delay and that
Order 47A constituted a final judgment with respect to all settled claims. All
questions regarding distribution of the settlement fund would be subject to
subsequent orders enforcing the court’s judgment, based on Judge Pointer’s belief
that these considerations were irrelevant to the question of whether the overall
fund available was adequate. Accordingly, Order 47A states that, “[w]ithout
deferring or delaying the finality of this order and judgment, this court retains
exclusive and continuing jurisdiction to (1) implement, interpret, and enforce the
Settlement Agreement, (2) administer, allocate, and distribute the settlement fund,
and (3) rule on any applications for cost and expenses incurred in implementing
this order and the Settlement Agreement.” Id. No appeal was taken from Order
47A.
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
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a proposed plan of fund distribution, which called for a pro rata division of the
$31.5 million among all claimants, without reference to extent of injury.
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
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47B, pursuant to which the settlement fund was promptly distributed by equal pro
rata division, without reference to the extent of injuries or expenses, to eligible
class members who returned satisfactory claim forms prior to October 1, 1999.
Each claimant ultimately received approximately $725. Class counsel received no
fees out of the Inamed settlement fund.11 Order 47B was not appealed.
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.
11
Class counsel were ultimately paid out of a separate, common benefit account
funded years earlier by a coalition of breast implant manufacturers.
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Around 2002, Plaintiff Zuzanna Juris began experiencing “chronic fatigue,
severe chest wall and breast pain, capsular contraction, joint and muscle pain,
muscle weakness, significant weight loss, severe headaches, skin rashes, memory
loss, and loss of mental acuity.” In May of 2005, a surgeon removed her implants.
Upon removal, the surgeon discovered that the implants, which Juris received in
1991,12 had deflated and leaked silicone and gel into her chest cavity and lymph
nodes. She was, according to her physician, suffering from “silicone-related
immune dysfunction, atypical neurological disease and infection.”
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
12
Juris first received breast implants in 1989. In 1991, however, as a result of
capsular contraction, a surgeon removed that set, and Juris received her second set of breast
implants.
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judicata . . . gives conclusive effect to the [Inamed] settlement and bars [Juris]
from re-litigating her claims in this case.” Juris responded that applying res
judicata as a bar to her claims would deprive her of due process.
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
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Court should not rule on this issue.”
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 Rule 23(b)(1)(B); (3) even if
13
Notably, by this point, Judge Pointer, now deceased, was no longer presiding over
the Inamed class action. The case was reassigned a number of times, and the district court order
at issue in this appeal was authored by District Judge R. David Proctor.
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correctly certified, the district court lacked personal jurisdiction over her and
application of res judicata to her claims would violate her due process rights; and
(4) the anti-suit injunction contained in Order 47A is unenforceable because it
violates the Anti-Injunction Act. Judge Proctor considered each argument in turn.
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
Federal Rule of Civil Procedure 60(b). District Court order, Docket No. 303 at
33-34. He held that the class action court properly could consider Juris’s
collateral challenge.
In addition, with respect to Juris’s contention that Rule 23(b)(1)(B)
certification was improper under the requirements outlined in Ortiz, Judge Proctor
held that Juris’s substantive attack on Orders 47A and 47B, which were not
appealed, were foreclosed by res judicata. In the alternative, he held that “even if
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Juris were able to contest Judge Pointer’s conclusions of law . . . the Inamed Class
Settlement was properly certified as a limited fund.” Id. at 45.
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
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findings. Judge Proctor found that the $31.5 million settlement fund was “the
maximum value available for settling the pending tort claims.” Id. at 52, 65.
Judge Proctor also confirmed the earlier findings by Judge Pointer that the $31.5
million was substantially greater than the then-value of the entirety of Inamed’s
net assets, and that the magnitude of the claims of the class members greatly
exceeded that amount.14
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 Rule 23(b)(1)(B) limited fund, Juris was adequately
represented, and the class notice ordered by Judge Pointer was adequate. Finally,
Judge Proctor held that Order 47A’s anti-suit injunction did not violate the Anti-
Injunction Act because the injunction was necessary in aid of the court’s
jurisdiction and to protect or effectuate its judgments.
14
Aside from Juris’s flawed and conclusory assertions about the subsequent
improvement in Inamed’s financial condition, and aside from her conclusory assertion that Judge
Pointer blindly accepted the settling parties valuations (an assertion squarely belied by the
record), Juris fails to mount any challenge to the foregoing crucial findings of fact by both Judges
Pointer and Proctor. For example, despite full opportunity in these collateral proceedings, Juris
has failed to offer any expert witness, or any other evidence at all, to challenge the undisputed
facts that, in the absence of certification, Inamed was destined for a Chapter 7 bankruptcy in
which the tort claimants would receive virtually nothing, that the $31.5 million settlement fund
was substantially greater than the class could feasibly expect in the absence of certification, and
that the settlement fund was therefore the maximum feasibly expected.
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Accordingly, the district court granted in part and denied in part Allergan’s
motion for an order to show cause. Although the court declined to hold Juris or
her counsel in contempt for violating Order 47A’s anti-suit injunction, it held that
she was bound by Judge Pointer’s injunction, prohibiting her from proceeding
with the California litigation. Correspondingly, the district court denied Juris’s
request to be excluded from the Inamed class settlement, which the court
construed as a Federal Rule of Civil Procedure 60(b) motion.
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 Rule 23(b)(1)(B) (which we
address in Part II.D). Finally, she urges us to conclude that the Anti-Injunction
Act prohibited the district court from enjoining her state court suit (which we
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address in Part II.E)
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 essential fairness of a judgment is questioned during subsequent litigation,
15
Fifth Circuit opinions issued prior to October 1, 1981, are binding precedent on
this court. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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remains a potential limitation on the binding effect of determinations in
representative actions.”).
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. Ticor
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Title 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 Rule 60(b).” 3 William B. Rubenstein et al.,
Newberg on Class Actions § 8:30 (4th ed. 2011). Courts treat Rule 60(b)(4)
motions, pursuant to which a litigant can seek relief from a final judgment on the
grounds that “the judgment is void,” as a vehicle for absent class members to
advance the same due process challenges that can be raised in a traditional
collateral attack. See In re Diet Drugs Prods. Liab. Litig., 431 F.3d 141, 145 (3d
Cir. 2005) (“This [due process] challenge can take the form of an appeal of the
class certification itself, a collateral attack on an already-certified class, or a Rule
60(b) motion.”); Arthur Andersen & Co. v. Ohio (In re Four Seasons Sec. Laws
Litig.), 502 F.2d 834, 842-44 (10th Cir. 1974) (analyzing due process challenge to
binding effect of prior class settlement in the context of a Rule 60(b)(4) motion);
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Battle v. Liberty Nat’l Life Ins. Co., 770 F. Supp. 1499, 1522-23 (N.D. Ala. 1991)
(same), aff’d, 974 F.2d 1279 (11th Cir. 1992). “Since the claim in both instances
is that the judgment is void and since the requirements for a valid judgment are not
altered by the setting in which validity is tested, this treatment seems logical.”
Note, Collateral Attack on the Binding Effect of Class Action Judgments, 87 Harv.
L. Rev. 589, 598 n.55 (1974). The primary difference is that a Rule 60(b) motion
must be brought in the class action court, and a traditional collateral attack is
typically litigated in a second, reviewing court.16
16
The parties have briefed an apparent split of authority with respect to the proper
scope of collateral review. Some courts hold that collateral review is limited, and absent class
members are not permitted to relitigate—in a collateral attack—due process arguments that were
raised by class objectors and rejected by the certification court. See, e.g., Epstein v. MCA, Inc.,
179 F.3d 641, 648 (9th Cir. 1999) (“Simply put, the absent class members’ due process right to
adequate representation is protected not by collateral review, but by the certifying court initially,
and thereafter by appeal within the state system and by direct review in the United States
Supreme Court.”); Diet Drugs, 431 F.3d at 146 (“Once a court has decided that the due process
protections did occur for a particular class member or group of class members, the issue may not
be relitigated.”). On the other hand, other authorities favor a more probing, broader, merits-
based collateral review. See, e.g., Epstein, 179 F.3d at 652 (Thomas, J., dissenting) (stating that
the court had a “responsibility to examine the merits of the [absent class members’] due process
arguments fully and fairly”); Hege v. Aegon USA, LLC, 780 F. Supp. 2d 416, 429 (D.S.C. 2011)
(“Having thus established that it is proper for this Court to inquire whether [absent class
members] were afforded due process in [a prior class action], this Court next considers whether
the notice and representation [the absent plaintiffs] received in [the prior action] were
constitutionally sufficient.”); Patrick Woolley, The Availability of Collateral Attack for
Inadequate Representation in Class Suits, 79 Tex. L. Rev. 383, 445 (2000) (criticizing the narrow
approach to collateral review and concluding that “the Constitution forbids denying an absent
class member the right to collaterally attack the class judgment”). Allergan argues we should
conduct a limited collateral review, urging us to affirm without reaching the merits of Juris’s due
process arguments because Judge Pointer considered and rejected similar arguments at class
certification.
Notably, the former Fifth Circuit’s binding decision in Gonzales may have already
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B. Appropriate Forum for Juris’s Due Process Challenge
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
decided this issue, as it apparently prescribes a broad, merits-based collateral review. See 474
F.2d at 72 (noting that the second, reviewing court must engage in a collateral review of the class
action court’s initial determination that the class representatives would be adequate). Regardless,
to the extent it presents an open question, we need not decide the proper scope of collateral
review available to Juris in this case. As will be demonstrated below, even assuming arguendo it
was proper for Judge Proctor to revisit the underlying merits of each of Juris’s arguments, we
would affirm his holding that Juris has failed to demonstrate a violation of her due process rights.
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the Arizona litigation, holding that if the plaintiffs wished to challenge the due
process safeguards they received in the class proceeding, they could only do so in
the Eastern District of Pennsylvania. Id. On appeal, the Third Circuit observed:
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.
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Juris complains that she was similarly “haled across the country” to defend
Allergan’s contempt motion, even though she did not have the opportunity to opt
out of the Inamed class settlement, she did not have minimum contacts with
Alabama, and she did not consent to the jurisdiction of the Alabama district court.
That is, she ended up litigating in Alabama by nothing more than the “fortuity”
that, years earlier, thousands of lawsuits related to silicone breast implants were
consolidated by the Judicial Panel on Multidistrict Litigation and transferred to the
Northern District of Alabama. Juris contends that the California state court action
should have been allowed to proceed to decide whether she was afforded due
process in the Inamed class settlement. We cannot agree.
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 Rule 23(b)(1)(A) and
Rule 23(b)(2). Id. at 764, 768. The Third Circuit limited its holding to the facts
before it, stating that it was not “address[ing] the due process requirements in a
class action certified under 23(b)(1)[B] in which there is only a limited common
fund from which the plaintiffs can obtain relief.”17 Id. at 768 n.8. Thus, even if
17
The Third Circuit’s express qualification suggests that the due process
considerations in a limited fund class actions might yield a different outcome. At least one
district court in that circuit has distinguished Real Estate on this basis. See Fanning v. Acromed
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Real Estate were binding authority in this Circuit, that decision would not control
our analysis because the case at bar involves a limited fund.
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
Corp. (In re Orthopedic Bone Screw Prods. Liab. Litig.), 176 F.R.D. 158, 180-81 (E.D. Pa.
1997).
18
Significantly, whether Juris consented to having the district court—i.e., Judge
Proctor’s court—rule on her due process challenges is an inquiry separate from whether the
district court—i.e., Judge Pointer’s court—had jurisdiction to adjudicate Juris’s claims as part of
the Inamed class action over a decade earlier. We address the latter issue below.
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Alabama.”19
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
19
Although Juris initially pressed her forum choice argument, she abandoned it in
the district court. In a post-hearing reply brief, Juris’s counsel acknowledged that she consented
to having the district court decide her due process challenge, stating that, “[d]espite Plaintiff’s
continuing belief that the California court could properly address the issue of whether Plaintiff’s
claims were barred by res judicata, out of deference for [District] Judge Clemon Plaintiff Juris
and her counsel nonetheless agreed that this Court could rule on the issue in the first instance.”
Juris’s subsequent briefs altogether dropped the argument that her collateral attack should
proceed in the California court. Thus, Judge Proctor held that Juris “appears to have abandoned”
her earlier choice of the California forum and “has now apparently consented to this court’s
jurisdiction.” District Court order, Docket No. 303 at 35. We agree both that she abandoned the
issue in the district court and, in any event, that she had expressly consented to the jurisdiction of
that court to rule on her collateral challenge.
20
We therefore need not decide whether Judge Proctor properly construed our
decision in Battle v. Liberty National Life Insurance Co., 877 F.2d 877 (11th Cir. 1998), to be in
conflict with the Third Circuit’s decision in Real Estate. We also note that the unique procedural
posture of this case closely parallels that in Adams v. Southern Farm Bureau Life Insurance Co.,
493 F.3d 1276 (11th Cir. 2007). There, the defendant filed a “Motion to Enforce Final
Judgment” in the Middle District of Georgia, arguing that a 1999 class settlement approved by
that court barred two Mississippi state court actions that were filed in 2005. Id. at 1278. The
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C. Juris’s Due Process Arguments
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
motion to enforce sought in part to enjoin the Mississippi litigation. Id. In opposition, the state
court plaintiffs contended that they did not receive adequate notice in the prior class action, and
therefore, permitting the class settlement to have res judicata effect would be inconsistent with
due process. Id. at 1285. The class action court resolved the collateral challenge, holding there
were no due process violations, although neither the district court nor the Eleventh Circuit
addressed the issue of the appropriate forum. Id. at 1289.
21
In the district court, relying on Amchem Products, Inc. v. Windsor, 521 U.S. 591,
117 S. Ct. 2231 (1997), Juris contended that “meaningful notice for ‘future’ claimants, such as
Juris was, in fact, impossible.” In Amchem, although it did not decide the issue, the Supreme
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The notice provisions of Rule 23, which are meant to protect the due
process rights of absent class members, set forth “different notice requirements to
different kinds of cases and even to different phases of the same case.” Battle v.
Liberty Nat’l Life Ins. Co., 770 F. Supp. 1499, 1515 (N.D. Ala. 1991), aff’d, 974
F.2d 1279 (11th Cir. 1992). The rule itself does not require notice in Rule
23(b)(1) and (b)(2) class actions. See Fed. R. Civ. P. 23(c)(2)(A)-(B). Instead, in
these “mandatory” class actions, Rule 23 allows courts to exercise their discretion
to provide appropriate notice “to protect class members and fairly conduct the
action.” Fed. R. Civ. P. 23(c)(2)(A), (d)(1)(B); see also 3 William B. Rubenstein
et al., Newberg on Class Actions § 8:5 (4th ed. 2011) (“[T]he court may make
Court questioned whether constitutionally sufficient class notice could ever be given to exposure-
only asbestos tort claimants. Id. at 628, 117 S. Ct. at 2252. The Court emphasized that many
exposure-only individuals “may not even know of their exposure, or realize the extent of the
harm they may incur.” Id. Judge Pointer rejected this argument when raised by class objectors in
1998, and Judge Proctor did the same. According to Judge Proctor, unlike exposure-only
asbestos tort claimants, who may not know of their exposure until they contract asbestos-related
illnesses, all breast implant recipients—whether they have manifested injuries or not—know that
they have had implants and are capable of being notified. Judge Proctor was additionally
persuaded that the Amchem court’s concern that “those without current afflictions may not have
the information or foresight needed to decide, intelligently, whether to stay in or opt out,” id., is
inapplicable in a non-opt-out class action.
We need not in this case decide whether Judge Proctor’s reasoning, and his distinction of
Amchem, was sound, because Juris has not fairly raised the issue on appeal. Notwithstanding
her briefs in the court below and the fact that she discussed this potential notice issue during oral
argument, Juris did not sufficiently develop this argument in her appellate briefs and has
therefore abandoned it. See McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1263 (11th Cir.
2004) (“A party is not allowed to raise at oral argument a new issue for review.”); Marek v.
Singletary, 62 F.3d 1295, 1298 n.2 (11th Cir. 1995) (“Issues not clearly raised in the briefs are
considered abandoned.”).
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appropriate orders requiring notice to some or all of the members regarding the
pendency of the class, proposed judgment or settlement, soliciting input on the
adequacy of class representation, opportunity to intervene or present claims or
defenses, and the like.”). “Regardless of the category under which a class suit may
be or potentially may be certified, however, Rule 23(e) requires that absent class
members be informed when the lawsuit is in the process of being voluntarily
dismissed or compromised.” Id. § 8:17; see Fed. R. Civ. P. 23(e)(1).
Under certain circumstances, however, even when not provided for by Rule
23, due process may require that class members receive notice of the pendency of
the proceeding. See, e.g., Johnson v. Gen. Motors Corp., 598 F.2d 432, 437 (5th
Cir. 1979) (holding that due process required notice, “[a]lthough under the text of
Rule 23 and the cases interpreting it notice is not required in all representative
suits”). Although other courts have held that adequate representation alone is a
sufficient test for assessing due process in the context of a limiedt fund class
action, see, e.g., Flanagan v. Ahearn (In re Asbestos), 90 F.3d 963, 986-87 (5th
Cir. 1996), rev’d on other grounds sub nom. Ortiz v. Fibreboard Corp., 527 U.S.
815, 119 S. Ct. 2295 (1999), we have held that due process will additionally
require at least some notice to potential absent members prior to class certification
under Rule 23(b)(1)(B). See In re Temple, 851 F.2d 1269, 1272 (11th Cir. 1988).
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In Temple, an asbestos manufacturer moved to consolidate all present and
future asbestos-related injury actions against it and to certify a mandatory class
action. Id. at 1270. The company asserted that certification was warranted under
Rule 23(b)(1)(B) because its assets constituted a limited fund in the sense that they
were insufficient to satisfy all claims. Id. at 1271. Without notifying any putative
class members or conducting an adversarial proceeding on the existence of a
limited fund, the district court accepted the defendant’s assertions. Id. The
district court found that the company’s insurance and other funds would not be
able to cover its potential tort liability, and it observed that the costs of defending
numerous small actions were rapidly depleting the company’s resources. Id. On
appeal, we held that the certification was due to be reversed because, inter alia,
“[t]he [district] court’s failure to notify petitioners of the certification hearing
violated due process.” Id. at 1272. We reasoned that, “[u]nlike class members in
cases certified under 23(b)(3) who may opt out of the action and have no need for
prior notice of efforts to obtain class certification, members of a mandatory class
need to be provided with notice to contest the facts underlying a certification they
may strenuously oppose.” Id. The lack of notice produced a non-adversarial
proceeding that “almost certainly led to the premature and speculative finding that
a limited fund existed.” Id. Therefore, we held, the district court’s order “clearly
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violate[d] the individual constitutional rights of the petitioners.” Id.
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
22
In our opinion affirming the trial court’s decision in Battle, we stated only that we
were “not presented with any reversible error on the part of the district judge.” 974 F.2d at 1279.
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certain class members as well as certain “media” notice “was enough to
subsequently bind this 23(b)(2)-type plaintiff class . . . consistent with due
process.” Id. at 1519-20. The court reasoned:
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
23
This notion is consistent with the understanding of the drafters of the 1966
amendments to Rule 23. The drafters explained that, “[i]n the degree that there is cohesiveness
or unity in the class and the representation is effective, the need for notice to the class will tend
toward a minimum.” Fed. R. Civ. P. 23, supplementary note of advisory committee on 1966
Amendment; see also 7AA Charles Alan Wright et al., Federal Practice & Procedure § 1786 (3d
ed. 2005) (“In representative actions brought under [Rule 23(b)(1) and (b)(2)], the class generally
will be more cohesive. . . . This means there is less reason to be concerned about each member
of the class having an opportunity to be present.”).
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to ensure that the varied interests of non-participating class members are
represented, notice in the present case was sufficient to satisfy due process. Judge
Pointer directed individual notices to be mailed to 250,000 women who had
registered with the claims office and 28,000 attorneys representing Inamed breast
implant recipients. He also ordered that notice of the proposed settlement and the
certification-fairness hearing be published in People Magazine, USA Today, and
Modern Healthcare Magazine, as well as on Modern Healthcare Magazine’s
website and the district court’s website. At the certification-fairness hearing,
potential class members—including those with no manifested injury—objected,
arguing among other things that the settlement fund was too small, that the named
class representatives did not adequately reflect the putative class members’
varying degrees of injuries, that future claimants should be allowed to opt-out of
the class, that the settlement would improperly sidestep the bankruptcy system,
and that Inamed did not constitute a limited fund in light of the company’s
economic rebound. The hearing was far different from “[t]he district court’s ex
parte proceeding” in Temple, which “denied petitioners their right to contest [the
asbestos company’s] assertions.” 851 F.2d at 1272. The proceedings before
Judge Pointer were sufficiently adversarial.
Even with the benefit of hindsight, Juris cannot point to a single objection
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that she would have raised that was not actually advanced by putative class
members before Judge Pointer. Accordingly, the ordered notice amply satisfied
the requirements of Temple and Battle that absent class members be sufficiently
informed of the pendency of the action.24
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
24
Class counsel have suggested that extensive paid notice associated with the failed
Original Global Settlement, which resulted in 500,000 women registering with the MDL 926
claims office, as well as the informal notice stemming from the enormous volume of news stories
about breast implant litigation, further increased exposure to the Inamed class settlement.
Because we find that the formal notice campaign approved by Judge Pointer was sufficient, we
need not address the precise constitutional significance of this “other” notice. See In re Agent
Orange Prod. Liab. Litig., 818 F.2d 145, 169 (2d Cir. 1987) (taking judicial notice of the
widespread publicity that litigation received and concluding that “the omissions noted were of
little consequence in light of the actual notice and widespread publicity”); Battle, 770 F. Supp. at
1520 (finding individual notice to some class members and “certain ‘media’ notice in the
Birmingham area” was enough to bind absent class members); 7AA Charles Alan Wright et al.,
Federal Practice & Procedure § 1786 (3d ed. 2005) (noting that courts have suggested that Rule
23 “does not require publication to be accomplished through formal newspaper advertisements,”
and citing cases in which “widespread notoriety given to the case” and “attention given the action
by the news media” were held to provide adequate notice).
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hearing to consider the propriety of pro rata distribution of the fund. For example,
Judge Pointer addressed concerns that the plan was inequitable because it failed to
differentiate between claimants with current injuries and those without injuries; he
also overruled objections that certain claimants could not identify the
manufacturer of their breast implants and thus could not provide the necessary
information to be eligible to claim from the Inamed settlement fund. Judge
Pointer was not required to provide each absent class member individual notice of
the proposed settlement allocation plan, and the notice here satisfied “the broad
reasonableness standards imposed by due process.” Fowler v. Birmingham News
Co., 608 F.2d 1055, 1059 (5th Cir. 1979); see also Franks v. Kroger Co., 649 F.2d
1216, 1222-23 (6th Cir. 1981), aff’d on reh’g, 670 F.2d 671 (1982). Importantly,
under the circumstances, “the interests of those class members . . . who did receive
notice of the settlement were essentially identical to the interests of [those] who
were not alerted to the settlement . . . and the former raised just the sort of
objections that the latter would have raised .” Battle, 770 F. Supp. at 1521.
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
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receive notice, it does not automatically require that the notice match that in a
23(b)(3) class action. That is, something less than “the best notice that is
practicable under the circumstances, including individual notice to all members
who can be identified through reasonable effort,” may suffice. Fed. R. Civ. P.
23(c)(2)(B); see also 3 William B. Rubenstein et al., Newberg on Class Actions
§ 8:13 (4th ed. 2011) (“As a rule, class certification notice, even if held to be
required in a Rule 23(b)(1) . . . class suit by . . . due process, will invariably mean
significant cost savings by means of published or other general notice, compared
to the corresponding but stricter requirements of individual Rule 23(c)(2) notice to
members of classes certified only under Rule 23(b)(3).”); Johnson v. Gen. Motors
Corp., 598 F.2d 432, 438 (5th Cir. 1979) (holding that individual monetary claims
in a 23(b)(2) class cannot be barred where absent class members received no
notice, but stating that “[i]t will not always be necessary for the notice in such
cases to be equivalent to that required in (b)(3) actions”).
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 Rule 23(b)(3) class
actions, due process does not require that class members actually receive notice.
See Silber v. Mabon, 18 F.3d 1449, 1453-54 (9th Cir. 1994) (explaining that even
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in an opt-out class action, class notice standard is “best practicable,” as opposed to
“actually received”); Adams v. S. Farm Bureau Life Ins. Co., 417 F. Supp. 2d
1373, 1380 n.6 (M.D. Ga. 2006) (“The analysis for purposes of due process is on
the notice plan itself, and actual receipt of notice by each individual class member
is not required.”), aff’d, 493 F.3d 1276 (11th Cir. 2007); In re Prudential Sec. Inc.
Ltd. P’ships Litig., 164 F.R.D. 362, 368 (S.D.N.Y. 1996), (“It is widely accepted
that for the due process standard to be met it is not necessary that every class
member receive actual notice . . . .”), aff’d, 107 F.3d 3 (2d Cir. 1996); Trist v. First
Fed. Sav. & Loan Ass’n of Chester, 89 F.R.D. 1, 2 (E.D. Pa. 1980) (“Mullane[ v.
Ctr. Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S. Ct. 652, 656 (1950),] has
never been interpreted to require the sort of actual notice demanded by the
defendants . . . .”); see also 4 William B. Rubenstein et al., Newberg on Class
Actions § 11:53 (4th ed. 2011) (“Thus, due process does not require actual notice,
but rather a good faith effort to provide actual notice. Courts have consistently
recognized that due process does not require that every class member receive
actual notice so long as the court reasonably selected a means likely to apprize
interested parties.”); 7AA Charles Alan Wright et al., Federal Practice &
Procedure § 1789.1 (3d ed. 2005) (“[A]s long as the notice scheme that is adopted
meets [the constitutional standards], courts generally have ruled that an absent
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class member will be bound by any judgment that is entered, even though the
absentee never actually received notice.”). Where certain class members’ names
and addresses cannot be determined with reasonable efforts, notice by publication
is generally considered adequate. See In re Agent Orange Prod. Liab. Litig., 818
F.2d 145, 168-69 (2d Cir. 1987) (finding that, with respect to a 23(b)(3) class,
unidentified absent class members that could not be located through reasonable
efforts did not need to be provided with individual, mailed notice in order to be
bound); Gordon v. Hunt, 117 F.R.D. 58, 63 (S.D.N.Y. 1987) (“This combination
of mailed notice to all class members who can be identified by reasonable effort
and published notice to all others is the long-accepted norm in large class
actions.”). Juris cites no case law to the contrary.
Judge Pointer constructed a notice campaign which he intended to
approximate the level of notice that would have been provided to a Rule 23(b)(3)
class. Juris has done nothing to call into question the fact that the dissemination
of notice was—as Judge Pointer intended, and Judge Proctor later found—the best
practicable under the circumstances. We hold that the notice campaign in the
Inamed class action was sufficient in a constitutional sense, and we cannot
conclude that there was a deficiency in notice that prevents res judicata from
attaching to the class settlement.
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2. Adequate Representation
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.
Id. at 72.
Juris argues that Judge Pointer erred by failing to create discrete subclasses
for those breast implant recipients with current injuries and those with only
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potential, future injuries. She relies primarily on Amchem Products, Inc. v.
Windsor, 521 U.S. 591, 117 S. Ct. 2231 (1997). In Amchem, the Supreme Court
analyzed, on direct appeal, the certification of a settlement-only class action
involving persons exposed to asbestos products. The “sprawling class” included
not only presently injured individuals, but also those who had only been exposed
to asbestos with no present manifestation of injury. Id. at 602-03, 117 S. Ct. at
2239-40. The Court reversed class certification, noting, among other defects, that
Rule 23(a)(4)’s requirement that the named representatives “will fairly and
adequately protect the interests of the class” had not been satisfied. Id. at 625, 117
S. Ct. at 2250. Importantly, the Court reasoned:
[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.
Id. at 626, 117 S. Ct. at 2251.
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
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by consents given by those who understand that their role is to represent solely
members of their respective subgroups.” Id. at 627, 117 S. Ct. at 2251 (quoting In
re Joint E. & S. Dist. Asbestos Litig., 982 F.2d 721, 742-43 (2d Cir. 1992),
modified on reh’g, 993 F.2d 7 (2d Cir. 1993)). The crux of the problem in
Amchem was that there was “no assurance . . . either in the terms of the settlement
or in the structure of the negotiations—that the named plaintiffs operated under a
proper understanding of their representational responsibilities.” Id.; see id. (“The
settling parties, in sum, achieved a global compromise with no structural assurance
of fair and adequate representation for the diverse groups and individuals
affected.”).
Two years later, in Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295
(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, 119 S. Ct. at 2319. 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 Rule 23(b)(1)(B)
certification requirements, as opposed to Rule 23(a)(4), but the Court found that
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the intra-class conflict was “as contrary to the equitable obligation entailed by the
limited fund rationale as it was to the requirements of structural protection
applicable to all class actions under Rule 23(a)(4).” Id. at 856, 119 S. Ct. at 2320;
see id. at 856 n.31, 119 S. Ct. at 2319 n.31 (noting that the Rule 23(b) “adequacy
of representation concern parallels the enquiry required at the threshold under
Rule 23(a)(4)”).
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 Rule 23(a)(4) calls for some
type of adequate structural protection, which would include, but may not
necessarily require, formally designated subclasses.25 Of course, both Amchem
25
We are not the first court to suggest that Amchem and Ortiz impose a requirement
of adequate structural assurances, as opposed to a per se requirement of formally designated
subclasses. For example, in In re Literary Works in Electric Databases Copyright Litigation, 654
F.3d 242 (2d Cir. 2011), after noting that an Amchem conflict was present, the Second Circuit
considered whether certain protections, including the fact that the settlement was the product of
“intense, protracted, adversarial mediation, involving multiple parties and complex issues,” were
sufficient to satisfy Rule 23(a)(4). Id. at 252. Although the court ultimately concluded that these
protections did not provide sufficient assurance of adequate representation, its analysis of the
issue is revealing. See id. at 251-55; see also Stephenson v. Dow Chem. Co., 273 F.3d 249, 261
n.9 (2d Cir. 2001) (describing the problem in Amchem and Ortiz as a “lack of procedural
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and Ortiz involved review on direct appeal of the Rule 23 pre-certification
requirements, as opposed to the collateral challenge context of our case in which
Juris must show that her due process rights were violated. In the context of this
case, we are unwilling to hold that the due process concept of adequate
representation is so rigid and inflexible as to demand formal subclasses in the case
at bar.
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
safeguards like subclasses”), aff’d in part by an equally divided court and vacated in part, 539
U.S. 111, 123 S. Ct. 2161 (2003). Commentators have also suggested (or at least implied) that
the certification of subclasses is just one example of structural protection capable of ensuring
adequate representation in the face of intra-class conflicts. See, e.g., 1 William B. Rubenstein et
al., Newberg on Class Actions § 3:61 (5th ed. 2011) (noting that “subclasses or other managerial
mechanisms can be employed to resolve the potential conflict”); 2 John F.X. Peloso et al.,
Business and Commercial Litigation in Federal Courts § 19:106 (3d ed. 2011) (“The Supreme
Court suggested that some of the problems noted in the proposed class could have been resolved
by procedural devices, such as the use of subclasses, each with independent representatives and
counsel.”); 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 4:45 (8th ed. 2011) (“Thus,
Amchem suggested that the adequate representation requirement may be satisfied
notwithstanding differences among subclasses within a class if there is some form of ‘structural
assurance of fair and adequate representation . . . .’”); Note, Kevin R. Bernier, The Inadequacy of
the Broad Collateral Attack: Stephenson v. Dow Chemical Company and its Effect on Class
Action Settlements, 84 B.U. L. Rev. 1023, 1042 (2004) (“Therefore, Ortiz and Amchem do not
stand for a per se rule against settlements that do not include subclasses, but rather require a
demand for strong procedural protection at the certifying level.”).
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attorneys with extensive breast implant trial experience as class counsel. Most
significantly, and anticipating an Amchem problem, separate counsel, Ernest
Hornsby, was specifically brought in for the sole purpose of representing those
plaintiffs with only potential, future injuries. Thus, even prior to provisional
certification of the class, the interests of those claimants with unmanifested
injuries were represented and given a separate seat at the negotiation table through
qualified and independent counsel.26 Hornsby continued his representation of
exposure-only plaintiffs throughout the case, including when, at the certification
stage, Judge Pointer considered approving the settlement and the settlement fund,
and, more significantly, later, when he considered various proposals for allocating
26
Judge Pointer found that there were no conflicts among the class representatives
or class counsel at certification. He believed that all class members had a common, overriding
interest in identifying and preserving a limited fund that provided the maximum possible
recovery for all; divergent interests would occur, if at all, during the later stages of the case in
which the court would take up the issue of how to distribute the settlement fund. We agree that
the interests of the Inamed class members were in complete alignment at certification. The
present circumstances are therefore unlike those in Amchem, where the proposed class
settlement, which was negotiated by lawyers who had no attorney-client relationship with future
claimants, made essential allocation decisions as to how the recovery was to be allocated among
various types of plaintiffs. 521 U.S. at 610, 117 S. Ct. at 2243. Here, the goal of the currently
injured did not “tug against” the goal of the exposure-only plaintiffs until the court considered,
post-certification, the proper method of distribution. See Kohen v. Pac. Inv. Mgmt. Co., 571
F.3d 672, 680 (7th Cir. 2009) (“At this stage in the litigation the existence of such conflicts is
hypothetical. If and when they become real, the district court can certify subclasses with separate
representation of each.”); 1 William B. Rubenstein et al., Newberg on Class Actions § 3:58 (5th
ed. 2011) (explaining that potential conflicts over distribution will not bar an initial finding of
adequacy at class certification, and that the court can resolve conflicts over distribution through
the use of subclasses at a later stage). Adequate structural protections were in place well before
that time.
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the fund. This combination of named plaintiffs representing the full spectrum of
breast implant claimants and separate counsel to represent the present injury and
future injury claimants addressed the potential and actual divergent interests
within the Inamed class.
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
27
We emphasize that class counsel’s behavior is directly intertwined with that of the
named plaintiffs. See, e.g., Pelt v. Utah, 539 F.3d 1271, 1288 (10th Cir. 2008) (“Realistically,
for purposes of determining adequate representation, the performance of class counsel is
intertwined with that of the class representative.”); Culver v. City of Milwaukee, 277 F.3d 908,
913 (7th Cir. 2002) (“For purposes of determining whether the class representative is an adequate
representative of the members of the class, the performance of the class lawyer is inseparable
from that of the class representative. . . . Realistically, functionally, practically, [the class lawyer]
is the class representative, not [the class representative].”); Greenfield v. Villager Indus., Inc.,
483 F.2d 824, 832 n.9 (3d Cir. 1973) (“Experience teaches that it is counsel for the class
representative and not the named parties, who direct and manage these actions. Every
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were sufficient to meet the demands of due process.
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
experienced federal judge knows that and any statements to the contrary is [sic] sheer
sophistry.”).
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or disease in the future.” Juris’s initial appellate brief makes this conclusory
assertion, without even labeling it a conflict of interest, and provides no follow-up
argument on the issue.28 Even more problematic, Juris has raised this claim for the
first time on appeal.
“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,
28
In her reply brief, Juris again makes mention of “Hornsby’s representation of class
members with both present illnesses and future claims.” Although that brief labels Hornsby’s
alleged dual representation a conflict of interest for the first time, Juris again failed to provide
any follow-up discussion or elaborate on her assertion.
29
Hornsby stated as follows: “Well, as I said, when I came in, I came in with a real
bias against [the limited fund settlement]. I represented people that were going to be adversely
affected by it just like Miss Juris, some who had no current injuries, some who had current
injuries, and some who were going to develop a condition or disease in the future . . . .”
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by arguing that Hornsby had a conflict of interest which deprived Juris of adequate
representation.30 Most importantly, Juris discussed adequate representation in five
briefs in the court below, and she never once suggested that Hornsby suffered
from a conflict of interest.
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
30
In fact, at that same hearing, “Juris’s counsel conceded . . . that there is absolutely
nothing in the record to suggest that Hornsby, acting as Class Counsel on behalf of future
claimants, suffered from a conflict of interest.” District Court order, Docket No. 303 at 96.
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current manifestations of injury. An affidavit submitted by class counsel in
support of provisional certification of the Inamed settlement class provides as
follows:
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
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Hornsby had previously represented some clients with current injuries, he, by
agreeing to be the designated representative for the named plaintiff with merely
future, potential claims, implicitly ceded the representation of any other clients to
class counsel representing currently injured plaintiffs. We conclude that Juris has
failed to show that her due process rights were violated.
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
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obtained relief for himself, [the class representative] did not appeal the court’s
denial of retroactive relief to the other members of his class.” Id. The district
court rejected the argument that this constituted inadequate representation. Id. 72.
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.
Id. at 76.
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
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representation inadequate. Critically, the absent plaintiffs in Gonzales had been
“denied any relief” by the unappealed judgment’s prospective application, and the
fact that the representative had secured a better deal for himself than the remainder
of the class prompted him not to pursue an appeal. See Brown v. Ticor Title Ins.
Co., 982 F.2d 386, 390 (9th Cir. 1992) (“In Gonzales, the class members
collaterally attacked the settlement, demonstrating that the class representative
secured a better monetary deal for himself than the rest of the class, and it was
because of this that he failed to pursue an appeal on behalf of the class. In the
MDL 633 litigation, the settlement was similar for each class member.”) (citation
omitted); Kemp v. Birmingham News Co., 608 F.2d 1049, 1054 (5th Cir. 1979)
(“Because Kemp received the same relief as all other members of the class,
Gonzales is inapplicable.”); see also Frank v. United Airlines, Inc., 216 F.3d 845,
852 (9th Cir. 2000) (“Consequently, when the class representatives chose not to
appeal the adverse ruling on the facial validity of the weight policy, they
abandoned any representation of the interests of those present and potential future
class members in order to protect present class members seeking back pay and
reinstatement.”). Here, it cannot be said that the rights of absent class members
such as Juris “were not vindicated” by Order 47A. Nor is there anything to
suggest that Hornsby’s failure to take an appeal was motivated by the fact that
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Order 47A benefitted certain representatives to the detriment of other class
members. In electing not to appeal, Hornsby did not abandon the interests of the
segment of the class he represented—i.e., the exposure-only claimants.31
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
31
Juris does not contend that her due process rights were violated by Hornsby’s
failure to appeal Order 47B, which approved the allocation plan for the Inamed settlement fund.
Nevertheless, we emphasize that the representatives received the same pro rata share of the
settlement recovery that absent class members like Juris received. The distribution plan also did
not distinguish between presently injured claimants and those with only future, potential injuries.
The decision not to appeal therefore did not advance the interests of some class members by
subordinating the interests of others. Indeed, an appeal of Order 47B may have actually been
contrary to the interests of exposure-only plaintiffs.
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the only arrangement that could have gotten claimants anything collapse because it
would have delayed it, the investors would have pulled out and gone on, and I just
didn’t see the benefit.” Opting not to take an appeal was not antagonistic to
Juris’s interests. Instead, it was a strategic decision that protected exposure-only
claimants by ensuring that a limited fund even existed for the class’s benefit.
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
32
Juris’s remaining arguments do not warrant extended discussion. Her assertion
that Hornsby made no objections at the certification/fairness hearing does not, without more,
establish inadequate representation. Juris does not specify any particular objection that Hornsby
should have presented. And significantly, each of the points now raised by Juris in this collateral
posture were raised by objecting class members before Judge Pointer.
We likewise reject Juris’s argument that representation was inadequate because nobody
filed a Rule 60 motion to set aside the limited fund certification based on Inamed’s 1998 10-K,
which she contends undermined Inamed’s pleas of poverty. Judge Pointer overruled an objection
on similar grounds, and Judge Proctor made a reasonable finding of fact that Inamed’s post-
settlement economic rebound was due to the prospect that the company would be relieved from
its overwhelming debt burden and its otherwise undisputed path towards insolvency. On appeal,
Juris does not even attempt to challenge Judge Proctor’s factual finding. We agree with Judge
Proctor that “a failure to pursue an otherwise insubstantial question of fact or law does not
amount to inadequate representation.” District Court order, Docket No. 303 at 90.
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representation claims cannot free her from the Inamed class settlement’s
preclusive effect.
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
33
The class action at issue there was certified under the Kansas equivalent of
Federal Rule of Civil Procedure 23(b)(3). That is, the state procedural rule required that class
members receive notice of the action by first-class mail and an opportunity to opt out and remove
themselves from the litigation. Shutts, 472 U.S. at 810-11, 105 S. Ct. at 2974.
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enough; instead, it posited, an “opt in” procedure—which would require plaintiffs
without minimum contacts with the forum state to affirmatively consent to
inclusion in the class—was necessary to satisfy due process. Id. at 811, 105 S. Ct.
at 2974. The Court disagreed. Id. Noting that fewer burdens are placed on absent
class-action plaintiffs than on absent defendants in non-class suits, the Court
concluded that “the Due Process Clause need not and does not afford the former as
much protection from state-court jurisdiction as it does the latter.” Id.
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
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holding today is limited to those class actions which seek to bind known plaintiffs
concerning claims wholly or predominately for money judgments.” Id. at 811 n.3,
105 S. Ct. at 2974 n.3. The Shutts court “intimate[d] no view concerning other
types of class actions, such as those seeking equitable relief.” Id.
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
34
In In re Temple, 851 F.2d 1269 (11th Cir. 1988), on appeal of a decision certifying
a Rule 23(b)(1)(B) class, we stated that, based on a “literal reading of Shutts,” absent class
members “may . . . have the right to opt out of even a mandatory class action where the
predominant issue is money damages.” Id. 1272-73 n.5. However, because we vacated the
certification order on other grounds, we did not need to decide the issue. Id.
35
Our understanding as to the import of Shutts finds support in the works of
commentators interpreting that case. See, e.g., 4 William B. Rubenstein et al., Newberg on Class
Actions § 13:33 (4th ed. 2011) (“[Under Shutts,] absent class members without minimum
contacts with the forum had to consent to personal jurisdiction. This could be achieved with
notice and opt-out provisions.”); Arthur R. Miller et al., Jurisdiction and Choice of Law in
Multistate Class Actions After Phillips Petroleum Co. v. Shutts, 96 Yale L. J. 1, 52 (1986) (“The
right to opt out is essential to the Supreme Court’s inference of consent, and that reasoning, in
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nonresident, non-consenting absent plaintiffs, the opt-out rights functioned as a
substitute for the traditional personal jurisdiction analysis (minimum contacts)
applicable to defendants. Therefore, courts have concluded, “the Shutts holding as
to what due process requires where a court lacks personal jurisdiction over some
class members does not apply where the court has an independent basis for
jurisdiction.” In re Joint E. & So. Dist. Asbestos Litig., 78 F.3d 764, 778 (2d Cir.
1996); see, e.g., White v. Nat’l Football League, 41 F.3d 402, 407-08 (8th Cir.
1994) (finding that Shutts opt-out protection was inapplicable in a Rule 23(b)(1)
class action where “each of the objectors either had minimum contacts with the
forum or submitted himself to the jurisdiction of the district court”); Grimes v.
Vitalink Commc’n Corp., 17 F.3d 1553, 1558 (3d Cir. 1994) (“Although the class
members in the present case were not provided with an opportunity to opt out, the
state court had the requisite power to bind absent class members as long as they
had minimum contacts with the forum and they were not otherwise denied due
turn, is essential to the Court’s validation of jurisdiction over members who have no affiliation
with a distant forum.”); Note, Stephen T. Cottreau, The Due Process Right to Opt Out of Class
Actions, 73 N.Y.U. L. Rev. 480, 490 (1998) (“Where a state wishes to bind nonresidents lacking
minimum contacts with the forum, due process requires the granting of opt out rights to establish
consent of the class members to the court’s adjudicatory jurisdiction.”). We also note that in
Adams v. Robertson, 520 U.S. 83, 117 S. Ct. 1028 (1997), in dismissing a writ of certiorari as
improvidently granted, the Court characterized the petitioner’s contention in Shutts as arguing
that “the state court lacked personal jurisdiction over out-of-state class members, not the different
and broader question of whether . . . due process requires that all class members have the right to
opt out.” Id. at 88-89, 117 S. Ct. at 1030.
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process.”); In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285, 292 (2d Cir.
1992) (holding that Shutts did not require opt-out rights in a Rule 23(b)(1)(B)
class action because the plaintiffs had already submitted to the district court’s
jurisdiction by filing bankruptcy claims against the defendant); see also Arthur R.
Miller et al., Jurisdiction and Choice of Law in Multistate Class Actions After
Phillips Petroleum Co. v. Shutts, 96 Yale L. J. 1, 52 (1986) (explaining that
whether a mandatory class can be brought after Shutts may depend on “whether
there are sufficient contacts between the claimants (or the object of the action) and
the forum”).
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
36
The Supreme Court granted certiorari and ultimately reversed the Fifth Circuit’s
Ahearn decision in Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S. Ct. 2295 (1999). However,
the Court, which had the case on direct review of certification, resolved the appeal on the narrow
grounds that the certification of the limited fund class was improper under the substantive
requirements of Rule 23. Id. at 821, 119 S. Ct. at 2302. Thus, the decision was grounded in a
construction of Rule 23(b)(1)(B) instead of due process. See id. at 830, 119 S. Ct. at 2307 (“The
nub of this case is the certification of the class under Rule 23(b)(1)(B) on a limited fund rationale
. . . .”). The Court did not reach the issue of whether and under what circumstances limited fund
class members have a constitutional right to opt out. Therefore, the Fifth Circuit’s concept that
limited fund class members do not have a right to opt out under Shutts “was not disturbed by the
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Orthopedic Bone Screw Prods. Liab. Litig.), 176 F.R.D. 158, 180 (E.D. Pa. 1997)
(same); 6 William B. Rubenstein, et al., Newberg on Class Actions § 20:14 (4th
ed. 2011) (“Certain types of equitable actions involving allocations of limited
funds . . . historically have been deemed constitutional yet have never provided for
opt-out rights.”); Note, Stephen T. Cottreau, The Due Process Right to Opt Out of
Class Actions, 73 N.Y.U. L. Rev. 480, 505 (1998) (“Many actions that demand a
unitary adjudication will not require opt out rights because the forum will have
minimum contacts with the class or the property at stake.”) (emphasis added);
Miller et al. supra, at 52 (“For example, a case concerning a limited fund located
in a particular state can be brought as a mandatory action, because the nexus
between the fund, the claimants, and the action supports the exercise of
jurisdiction over claimants even against their will.”); Barbara A. Winters,
Jurisdiction over Unnamed Plaintiffs in Multistate Class Actions, 73 Cal. L. Rev.
181, 197 (1985) (“There could still be jurisdiction over such non residents if, for
example, rights to a res within the state were at issue in the litigation.”). The class
action court’s adjudicatory power over the claimants in such a case is akin to in
rem or quasi in rem jurisdiction. See Ahearn, 90 F.3d at 987 (“This view of a
Supreme Court [because] the case was reversed on other grounds.” 4 William B. Rubenstein et
al., Newberg on Class Actions § 13:34 (4th ed. 2011).
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limited-fund class action as similar to an action in rem makes particular sense
because . . . the court in such an action has before it for disposition all the assets in
which class members could claim an interest.”); In re Joint E. & S. Dist. Asbestos
Litig., 982 F.2d 721, 734-35 (2d Cir. 1992) (holding that in rem and quasi in rem
jurisdiction was available over absent class members because trial courts were
“fully entitled to exercise jurisdiction over the beneficiaries of a [limited fund]
trust created in New York, pursuant to the authority of the Southern District
bankruptcy court”), modified on reh’g, 993 F.2d 7 (2d Cir. 1993); Grimes, 17 F.3d
at 1567-68 (Hutchinson, J., dissenting) (“Many cases which state or seem to imply
that personal jurisdiction can be exercised over absent members of a plaintiff
‘class’ without minimum contacts are ‘common fund’ cases in which the court
entertaining the action had jurisdiction over nonresident members. Jurisdiction
there is present because the plaintiffs have a property interest in the fund or
alternatively because the court had in rem or quasi in rem jurisdiction over the
fund.”).37 We hold that the $31.5 million limited fund recovery, which was
37
“Like an interpleader action, the raison d’etre of a limited fund or impairment
class action is the prejudice and impairment of rights that would result to some claimants if
others are permitted to seek individual adjudications.” 6 William B. Rubenstein et al., Newberg
on Class Actions § 20:14 (4th ed. 2011). That is, a unitary adjudication of a limited fund is
necessary for the very reason that permitting a class member to opt out of such a limited fund
“would defeat its essential purpose.” Id.; see also Ortiz, 527 U.S. at 838, 119 S. Ct. at 2311
(“The concept driving [limited fund actions] was insufficiency, which alone justified the limit on
early feast to avoid a later famine.”); Ahearn, 90 F.3d at 986 (“Unitary adjudication of a limited
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deposited into a court-supervised settlement account in Birmingham, Alabama,
prior to class certification, provided Judge Pointer’s court with jurisdiction over
the fund and all claimants to that fund, wherever located.38
fund is crucial because allowing plaintiffs to sue individually would make the litigation an
unseemly race to the courtroom door with monetary prizes for a few winners and worthless
judgments for the rest.”) (quotations and citation omitted); Zechariah Chafee, Jr., Bills of Peace
with Multiple Parties, 45 Harv. L. Rev. 1297, 1311 (1932) (explaining that in a limited fund case
“it is impossible to make a fair distribution of the fund or limited liability to all members of the
multitude except in a single proceeding where the claim of each can be adjudicated with due
deference to the claims of the rest”). Because a court cannot separately resolve individual claims
to a limited fund without prejudicing the rights of absent claimants, equity demands that all
claimants to a limited fund be represented before the court and bound by the court’s disposition
of the fund. See Ortiz, 527 at 835-36, 119 S. Ct. at 2309-10.
38
The cases cited in Juris’s brief are easily distinguished and not persuasive with
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 Rule 23(b)(1)(A) and (b)(2), not (b)(1)(B).
Real Estate, 869 F.2d at 763; Brown, 982 F.2d at 392. Significantly, the courts’ due process
discussion—more specifically, their treatment of the opt-out issue—was not in the context of a
limited fund. In fact, the Real Estate court expressly stated that its holding did not “address the
due process requirements in a class action certified under Rule 23(b)(1) in which there is only a
limited common fund from which the plaintiffs can obtain relief.” 869 F.2d at 768 n.8.
Juris’s reliance on In re Telectronics Pacing Systems, Inc., 221 F.3d 870 (6th Cir. 2000),
is also unavailing. In that case, the Sixth Circuit reversed a Rule 23(b)(1)(B) certification
because the limited fund settlement at issue suffered from some of the same deficiencies as that
in Ortiz. Most notably, there was no limited fund because the district court excluded the value of
two potentially liable parent companies in calculating the “fund available” for satisfying the
claims. Id. at 878. Although the named defendant alone did not have assets sufficient to cover
the expected tort liability, the settlement released the parent companies who would have been
“able to bear the expense of litigation and pay damages if found liable.” Id. In the case at bar,
there were no insurance assets and there were no parent companies. Inamed’s assets constituted
the entirety of the fund available to satisfy the claims, and the fund at issue was limited
independently of any agreement by the parties. Finally, Juris’s citations to Jefferson v. Ingersoll
International Inc., 195 F.3d 894 (7th Cir. 1999), and Molski v. Gleich, 318 F.3d 937 (9th Cir.
2003), are likewise unpersuasive. Those cases arose in the context of direct appeals of class
certification, and each involved a Rule 23(b)(2) class action, not a limited fund action certified
pursuant to 23(b)(1)(B). Jefferson, 195 F.3d at 897; Molski, 318 F.3d at 943.
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The opt-out requirement in Shutts addressed the class action court’s
jurisdiction over absent class members without minimum contacts with the forum.
Because established law39 holds that a court with jurisdiction over a res or fund
also has jurisdiction over all claims against that fund, Juris’s personal jurisdiction
objection is resolved, and the need for opt-out rights is removed.40
39
The court’s jurisdiction in a limited fund action is well-established as is indicated
in the foregoing authorities, and is akin to that described in common fund cases. In the common
fund cases, it was established historically that, so long as the interests of all claimants are
represented before the court, a unitary decision with respect to common interests in the fund will
bind all claimants to that fund. See, e.g., Mullane v. Ctr. Hanover Bank & Trust Co., 339 U.S.
306, 313, 70 S. Ct. 652, 656 (1950) (“It is sufficient to observe that . . . the interest of each state
in providing means to close trusts that exist by the grace of its laws and are administered under
the supervision of its courts is so insistent and rooted in custom as to establish beyond doubt the
right of its courts to determine the interests of all claimants, resident or nonresident, provided its
procedure accord full opportunity to appear and be heard.”); Hartford Life Ins. Co. v. Ibs, 237
U.S. 662, 670-71, 35 S. Ct. 692, 695 (1915) (“The fund was single . . . . It would have been
destructive of their mutual rights in the plan of mutual insurance to use the mortuary fund in one
way for claims of members residing in one state, and to use it another way as to claims of
members residing in a different state.”); Smith v. Swormstedt, 57 U.S. 288, 303 (1853) (“For
convenience, therefore, and to prevent a failure of justice, a court of equity permits a portion of
the parties in interest to represent the entire body, and the decree binds all of them the same as if
all were before the court. The legal and equitable rights and liabilities of all being before the
court by representation, and especially where the subject matter of the suit is common to all,
there can be very little danger but that the interest of all will be properly protected and
maintained.”).
40
In resolving Juris’s particular opt-out challenge, we note two additional issues
which today’s opinion does not address. First, Allergan argues that the Shutts holding with
respect to opt-out rights is simply inapplicable in a limited fund case. In essence, Allergan urges
us to adopt the broader reasoning of the Fifth Circuit in Ahearn, 90 F.3d at 986, which holds that
“[t]he limitation of Shutts to claims that are predominantly for money damages forecloses
application of its holding to 23(b)(1)(B) actions which have always been equitable and often
involve unknown plaintiffs.” Juris responds that Shutts applies with equal force to the Inamed
class settlement because, although it was certified under Rule 23(b)(1)(B), it purportedly bound
class members with respect to their individual claims for money damages. See id. at 1004-06
(Smith, J., dissenting) (arguing that not all classes certified under Rule 23(b)(1)(B) seek equitable
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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 Rule 23(b)(1)(B), and also that the settlement
was not an appropriate substitute for bankruptcy. We hold that these arguments
relief and that a limited fund settlement that resolves mass torts would not be equitable). As
discussed, the inference of consent to jurisdiction from the opt-out procedure as understood in
Shutts is not needed in the instance case, where Judge Pointer’s court had jurisdiction over all
Inamed claimants by virtue of the limited fund’s presence in the forum state. We therefore need
not decide more broadly whether Shutts is simply not applicable at all in a limited fund class
action because such an action is equitable in nature. In similar circumstances, the Third Circuit
did not address this broader issue. See Grimes, 17 F.3d at 1560 n.7.
Second, commentators have suggested that all class members may have a due process
right to opt out that is grounded in the right to individual control of litigation. Under this view of
the opt-out right, absent members may have a due process right to exclude themselves from the
class even in situations, such as the instant case, where the court’s adjudicatory jurisdiction over
them is not subject to question. See Miller et al., supra, at 54 (“Another way to analyze Shutts is
a decision protecting the right to opt out for its own sake. In this view, the right to opt out not
only is a check against distant forum abuse, but it also protects the claimant’s right to control her
litigation.”); Cottreau, supra, at 510 (arguing that “due process requires opt out rights in some
class actions where no jurisdictional concerns exist”). Juris briefly mentioned this alternative
opt-out argument before Judge Proctor, although even there her suggestion was sufficiently
vague and unaccompanied by any reasoning or authority that it is doubtful the argument was
preserved. In any event, her position on appeal can only be understood as arguing that Judge
Pointer’s “court lacked personal jurisdiction over out-of-state class members, not the different
and broader question of whether, [even] if a state has jurisdiction over the plaintiffs, due process
requires that all class members have the right to opt out of the class and settlement agreement.”
Adams, 520 U.S. at 88-89, 117 S. Ct. at 1030. Because the alternative opt-out argument has not
been fairly raised on appeal, we deem it abandoned and decline to entertain it. See Marek v.
Singletary, 62 F.3d 1295, 1298 n.2 (11th Cir. 1995).
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are—at this stage—barred by res judicata.
In Ortiz, the Supreme Court reversed class certification in a Rule
23(b)(1)(B) limited fund class action that purported to settle actual and potential
asbestos-related tort claims. After describing traditional limited funds, the Court
identified three “common characteristics” consistent with the “historical limited
fund model.” Id. at 838, 119 S. Ct. at 2311. “The first and most distinctive
characteristic,” Ortiz explains, “is that the totals of the aggregated liquidated
claims and the fund available for satisfying them, set definitively at their
maximums, demonstrate the inadequacy of the fund to pay all the claims.” Id.
The second historical characteristic is that “the whole of the inadequate fund was
to be devoted to the overwhelming claims.” Id. at 839, 119 S. Ct. at 2311. The
third characteristic is that “the claimants identified by a common theory of
recovery were treated equitably among themselves.” Id. According to the Court,
these characteristics should be treated as “presumptively necessary, and not merely
sufficient,” to justify certification of a Rule 23(b)(1)(B) limited fund class. Id. at
842, 119 S. Ct. at 2312. Because the settlement at issue in Ortiz failed to satisfy
these presumptively necessary characteristics, the Court concluded that
certification was improper. Id. at 864, 119 S. Ct. at 2323. Ortiz ultimately leaves
open the question of whether—even if the three essential premises are
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supported—a mandatory, limited fund class settlement can ever be used to resolve
tort claims. Id. at 844, 119 S. Ct. at 2314.
Judge Proctor concluded that Juris’s argument that the Inamed settlement
class was erroneously certified under Rule 23(b)(1)(B) amounted to an improper
basis for seeking relief under Rule 60. He expressly held that Juris’s attack on the
certification order was “foreclosed as a matter of law,” because “a collateral
attack, such as one launched through Rule 60(b) proceedings, is not a vehicle for
subsequently correcting past errors of law, which undoubtedly includes a
conclusion as to certification under Rule 23(b).” District Court order, Docket No.
303 at 45. Stated otherwise, Juris’s Rule 23 contentions were not cognizable due
process arguments available to an absent plaintiff collaterally attacking a prior
class judgment. Judge Proctor then proceeded to explain: “But even if Juris were
able to contest Judge Pointer’s conclusions of law, the court finds in the
alternative that the Inamed class settlement was properly certified as a limited
fund.” Id. (emphasis added). Thus, in what was a true alternative holding, the
district court found that the Ortiz requirements for application of the limited fund
rationale under Rule 23(b)(1)(B) had been satisfied.
On appeal, Juris argues that Judge Proctor’s alternative conclusion—that the
Inamed settlement possesses the presumptively necessary characteristics of a
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limited fund—is off the mark. She asserts that, if anything, Judge Pointer should
have certified the class under Rule 23(b)(3), as opposed to 23(b)(1)(B).
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 Rule 23(b)(1)(B) certification by Judge Pointer. See
Sepulveda v. U.S. Attorney Gen., 401 F.3d 1226, 1228 n.2 (11th Cir. 2005)
(“When an appellant fails to offer argument on an issue, that issue is abandoned.”).
However, even in the absence of Juris’s waiver, we would affirm Judge Proctor’s
41
Allergan’s response brief clearly argues, under a separate heading styled in bold
type face, that Juris failed to challenge the district court’s holding that her class certification
argument was not a proper collateral attack. Nevertheless, Juris’s reply brief fails to address the
res judicata issue. Instead, Juris continues to dispute only Judge Proctor’s alternative conclusion,
contending that “the Inamed class settlement did not qualify for certification under Rule
23(b)(1)(B) as required by Ortiz,” and that “certification of the Inamed settlement class was
defective under the standards pronounced by Ortiz.”
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res judicata conclusion. There is considerable support for the proposition that a
collateral attack is not a vehicle for an absent class member to retrospectively
challenge the propriety of class certification under the Federal Rules of Civil
Procedure. Put otherwise, an absent class member cannot escape the res judicata
effect of a prior judgment by demonstrating—without more—that certification was
in error or that the class should have been certified under a different subsection of
Rule 23.
“[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
42
The Supreme Court’s decision dismissing a writ of certiorari as improvidently
granted in Ticor Title Insurance Co. v. Brown, 511 U.S. 117, 114 S. Ct. 1359 (1994), is
illustrative. Therein, the Court stated: “Before the Ninth Circuit, respondents did not (and indeed
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It should be emphasized that Ortiz arose on direct appeal of certification,
not a collateral attack; and as discussed above—and as Juris concedes—the Court
expressly decided the case on a construction of Rule 23(b)(1)(B), rather than due
process. Juris asserts that Judge Pointer erred in certifying the Inamed settlement
class because it did not satisfy the rules-based requirements for limited fund
treatment later announced in Ortiz. She has not attempted to articulate how that
alleged Rule 23 error amounts to a jurisdictional defect or a violation of due
process, making it an appropriate subject for attempting to avoid res judicata in a
collateral attack.43 Moreover, although Juris asserts that certification of the class
was in error because the settlement was an inappropriate substitute for bankruptcy,
could not) [collaterally] challenge whether the class in the MDL No. 633 litigation was properly
certified under Rules 23(b)(1)(A) and (b)(2).” Id. at 120, 114 S. Ct. at 1361. According to the
Court, res judicata prevented that non-constitutional issue from being relitigated on collateral
attack; “[i]t was conclusively determined in the MDL No. 633 litigation that respondents’ class
fit within Rule 23(b)(1)(A) and (b)(2),” and “even though that determination may have been
wrong, it is conclusive upon these parties.” Id. at 121, 114 S. Ct. at 1361-62.
43
Admittedly, Ortiz states that “serious constitutional concerns” provide “further
counsel against adventurous application of Rule 23(b)(1)(B).” 527 U.S. at 845, 119 S. Ct. at
2314. However, the constitutional concerns expressed in Ortiz related to risks entailed in
adventurous departures from the traditional characteristics of the limited fund cases. By contrast,
in this collateral attack on a final judgment, Juris must demonstrate an actual violation of her due
process rights. To be sure, we do not rule out the possibility that—in addition to adequacy of
notice, adequacy of representation, and the right to opt out—the extent to which there was a
“truly limited fund” could ever be the subject of a collateral attack. However, even assuming that
some other case might involve departures from a “truly limited fund” sufficiently significant as to
rise to the level of a due process violation, Juris has wholly failed to identify any such deficiency
in this case.
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she provides no explanation as to how that potential error would rise to the level
of a constitutional or jurisdictional deficiency.44 Accordingly, even in the absence
of Juris’s waiver of any challenge to Judge Proctor’s res judicata holding, we
would affirm the district court’s holding that Juris is barred from bringing her
rules-based challenges to Judge Pointer’s certification.45
44
Juris cites to In re Joint Eastern & Southern District Asbestos Litigation, 982 F.2d
721 (2d Cir. 1992), modified on reh’g, 993 F.2d 7 (2d Cir. 1993). That case discusses the
possibility that the use of a limited fund class action in situations where there is a likelihood that
an aggregate of tort claims would render a defendant insolvent may “constitute[] an
impermissible circumvention of bankruptcy law protections.” Id. at 738. Significantly, the
court’s analysis was in the context of a direct appeal from certification, and not collateral review,
and the discussion therein is grounded in terms of comparing the procedural protections available
under the statutory bankruptcy scheme with those provided by the class action procedures of
Rule 23. See id. at 736 (“To lessen the risk that these pressures will lead to unfair compromises,
bankruptcy law provides numerous safeguards not contained in class action procedures.”). The
court framed the issue as whether a Rule 23(b)(1)(B) class should have been certified given the
court’s rules-based and policy-based concerns. There is nothing in the court’s decision (or
Juris’s appellate briefs) to suggest that circumventing the bankruptcy scheme would entail the
sacrifice of absent class members’ constitutional rights.
In any event, although the Joint Eastern court vacated certification on other grounds, it
actually concluded that “the need to insist on bankruptcy law protections” was not so great as to
prevent certification of a limited fund settlement class under the circumstances. Id. at 739-40.
We also note that, in Ortiz, the Supreme Court expressly stated that “there is no inherent conflict
between a limited fund class action under Rule 23(b)(1)(B) and the Bankruptcy Code.” 527 U.S.
at 860 n.34, 119 S. Ct. at 2321 n.34.
45
Although the propriety vel non of Judge Pointer’s Rule 23(b)(1)(B) certification is
an issue which is not before us—both because of Juris’s failure to challenge Judge Proctor’s res
judicata holding and because of the merits of the operation of res judicata—we make brief
comments to illustrate how far short of any due process violation are the relevant facts. Judge
Pointer’s Rule 23(b)(1)(B) certification was far different from that in Ortiz. To the extent the
instant circumstances depart at all from the historical limited fund model, it is not nearly as
significant a departure as Juris suggests.
Ortiz first requires that there be a demonstration that the fund, “set definitively at [its]
maximum,” is inadequate “to pay all the claims.” 527 U.S. at 838, 119 S. Ct. at 2311. Unlike
the facts of Ortiz, Judge Pointer undertook a careful analysis of both the magnitude of the claims
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and the value and adequacy of the entirety of the resources to pay those claims. Because there
was no insurance coverage, the only resources available to pay claims were Inamed’s own assets.
In contrast with Ortiz, external factors here—not the mere agreement of the parties—imposed the
limit on the size of the fund. The fund was limited by the net value of the entirety of the assets of
Inamed. As summarized in Part I.A and Part I.C, supra, Judge Pointer’s careful findings of fact
established that the $31.5 million settlement fund was substantially greater than the value of the
entirety of the net assets of Inamed which could have been available to pay claims in the absence
of certification, and that the magnitude of the claims of the class members far exceeded that
value. Moreover, notwithstanding the absence of a serious challenge to these crucial facts, Judge
Proctor carefully reviewed the evidence and Judge Pointer’s findings. Judge Proctor similarly
found that the $31.5 million fund was the maximum amount that could have been available for
the claimants, and that the claims of the class far exceeded any possible recovery. On appeal,
Juris fails to challenge these crucial fact findings by Judge Pointer and Judge Proctor, and she has
never denied that the value of the outstanding tort claims vastly exceeded the assets available to
meet the claims.
The second defect identified in Ortiz was the fact that the limited fund settlement failed to
ensure “equity among the members of the class.” 527 U.S. at 854, 119 S. Ct. at 2318. There are
two issues here, “the inclusiveness of the class and the fairness of distributions to those within
it.” Id. In Ortiz, the settlement was improper in part because class counsel had agreed to
“exclude what could turn out to be as much as a third of the claimants that . . . might eventually
be involved.” Id. at 854, 119 S. Ct. at 2319. There has been no suggestion that any such
exclusions occurred with respect to the instant settlement class. The Ortiz limited fund class was
also improper because the lack of structural protections—i.e., “independent representation as for
subclasses with conflicting interests”—ran contrary to the equitable obligation within the limited
fund rationale. Id. at 855-57, 119 S. Ct. at 2319-20. Here, as discussed in Part II.C.2, supra, the
proceedings before Judge Pointer were protected by the functional equivalent of subclasses, and
these “procedures . . . resolve[d] the difficult issues of treating . . . differently situated claimants
with fairness as among themselves.” Ortiz, 527 U.S. at 856, 119 S. Ct. at 2319. Juris can hardly
make any challenge to the equity among the class members, particularly in light of the fact that
she was a mere future claimant at the time, and future claimants shared with the currently injured
on a pro rata basis.
The final feature of the settlement in Ortiz that departed from the historical model was
“the ultimate provision for a fund smaller than the assets understood . . . to be available.” Id. at
859, 119 S. Ct. at 2321. The Court stopped short of deciding whether this fact would alone be
fatal, but it observed that the defendant contributed only $500,000 of its own assets, retaining
nearly all of its net worth, with an estimated value of around $235 million. Id. at 859-61, 119 S.
Ct. at 2321-22. The bulk of the settlement recovery was provided for by the company’s insurers.
Id. Importantly, Ortiz leaves open how close to insolvency a limited fund defendant would need
to be brought as a condition of certification, id. at 860 n.34, 119 S. Ct. at 2321 n.34, and also the
extent to which saved transaction costs and expenses “that would never have gone into a class
member’s pocket in the absence of settlement” may be credited to the defendant as an incentive
to settle, id. at 860-61, 119 S. Ct. 2321-22. Here, it is significant that Judge Proctor found that,
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E. Anti-Injunction Act
Finally, Juris argues that the Anti-Injunction Act barred the district court
from enjoining her California state court action. The Anti-Injunction Act prohibits
a federal court from enjoining state court proceedings “except as expressly
beyond the $31.5 million loaned by Inamed’s senior noteholders, the company had almost no
other assets to contribute to the settlement, and the entirety of the settlement fund was earmarked
exclusively for the class. Additionally, Judge Pointer found and Judge Proctor confirmed that
Inamed had a negative net worth, net liquidation value of essentially zero, and no resources to
pay claims. As noted above in note 14, supra, and in stark contrast with Ortiz, it is undisputed
that the recovery fund ultimately provided for the class was greater than the assets understood to
be available.
Thus, although the issue is not before us, the instant certification would seem to fall
within the dicta of Ortiz: “[I]f Fibreboard’s own assets would not have been enough to pay the
insurance shortfall plus any claims in excess of the policy limits, the projected insolvency of the
insurers and Fibreboard would have indicated a truly limited fund.” 527 U.S. at 853, 119 S. Ct.
at 2318. We note also that the record here reflects that the settlement was reached by arms-
length dealings. Moreover, the instant case may be unique in that there can be no concern about
conflicts of interest on the part of class counsel by virtue of the potential gigantic fees
emphasized by the Ortiz court. Id. at 852 n.30, 119 S. Ct. at 2317 n.30. Judge Proctor found that,
“unlike Ortiz, class counsel in this case received their fees from a separate account, funded years
earlier, by a coalition of breast implant manufacturers.” District Court order, Docket No. 303 at
54. There is also no issue here regarding a defendant-favorable forum selection; the forum was
carefully selected by the Judicial Panel on Multidistrict Litigation.
However, even assuming arguendo that a court on direct review would, after Ortiz, be
reluctant to approve certification of a limited fund class on these facts, that could provide no
comfort to Juris. In the collateral challenge posture of this case, Juris must demonstrate more
than the failure to satisfy the requirements of Rule 23(b)(1)(B). She must demonstrate that her
own due process rights were violated. In the preceding sections of this opinion, we have
addressed each argument asserted by Juris to support a due process violation, and concluded that
each argument is without merit. In addition, the particular facts of this case suggest the very
opposite of a due process violation; they indicate fundamental fairness. It is apparent that there
was adequate notice, that class objectors had ample opportunity to make—and did make—all the
arguments Juris now raises, that future claimants like Juris received adequate representation, and
finally, it is apparent that the class did in fact receive a greater recovery than was possible with
any other available option.
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authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to
protect or effectuate its judgments.” 28 U.S.C. § 2283. We hold that the district
court’s injunction in this case was permissible because it was necessary “in aid of
its jurisdiction” and “to protect or effectuate its judgments.”46
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
46
It is not clear that the Anti-Injunction Act is even applicable under the present
circumstances. The district court entered Order 47A in 1999, permanently enjoining the Inamed
settlement class members from “instituting, asserting or prosecuting . . . 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,” and Juris subsequently commenced the California suit in 2006. District Court order,
Docket No. 59 at 5; see Dombrowski v. Pfister, 380 U.S. 479, 484 n.2, 85 S. Ct. 1116, 1119 n.2
(1965) (“This statute and its predecessors do not preclude injunctions against the institution of
state court proceedings, but only bar stays of suits already instituted.”); Martingale LLC v. City
of Louisville, 361 F.3d 297, 303 (6th Cir. 2004) (agreeing that “the Anti-Injunction Act does not
prevent a court from enjoining the parties from commencing state court proceedings, as opposed
to enjoining the parties from proceeding with already-filed state actions.”). As noted above in
the penultimate sentence of Part I.F, supra, Judge Proctor in 2010 did not himself issue an
injunction against the California suit. Rather, he held that Judge Pointer’s 1999 injunction was
binding on Juris, thus barring her subsequent 2006 California suit. However, because we reject
Juris’s Anti-Injunction Act argument on other grounds, we need not decide whether the Act is
even applicable in this situation.
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the ‘necessary in aid of jurisdiction’ exception to the Anti-Injunction Act.” 17A
Moore’s Federal Practice § 121.07 (3d ed. 2010). As such, this Court has
explained that:
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
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a res to be administered,” and that the “lengthy, complicated litigation [wa]s the
‘virtual equivalent of a res.’” Id. at 882 (quotations and citation omitted). We
reasoned that “[a]ny state court judgment would destroy the settlement worked out
over seven years, nullify this court’s work in refining its Final Judgment over the
last ten years, add substantial confusion in the minds of a large segment of the
state’s population, and subject the parties to added expense and conflicting
orders.” Id. (quotations and citation omitted); see also Wesch v. Folsom, 6 F.3d
1465, 1470-71 (11th Cir. 1993) (affirming injunction and finding that “virtual
equivalent of a res to be administered” existed where the district court had
“invested a great deal of time and other resources in the arduous task of
reapportioning Alabama’s congressional districts”).
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
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agreement and supervising the escrow agent charged with administering the
settlement fund. Admittedly, “Battle and Wesch offer little guidance as to how the
parallel federal and state proceedings were sufficiently similar to an in rem
proceeding so as to warrant an injunction.” Burr & Forman v. Blair, 470 F.3d
1019, 1032-33 (11th Cir. 2006). However, we agree with Judge Proctor that this
“paradigmatically complex” litigation “presumptively satisfies this standard.”47
District Court order, Docket No. 303 at 109.
2. To Protect or Effectuate Judgments
The “to protect or effectuate” judgments exception to the Anti-Injunction
Act, referred to as the “relitigation exception,” is “appropriate where the state law
claims would be precluded by the doctrine of res judicata.” Burr & Forman, 479
F.3d at 1029-30 (citation omitted). “In a sense, the relitigation exception
empowers a federal court to be the final arbiter of the res judicata effects of its
own judgments because it allows a litigant to seek an injunction from the federal
court rather than arguing the res judicata defense in the state court.” Id. at 1030
n.30; see also Wesch, 6 F.3d at 1471 (“[The relitigation exception] is essentially a
47
Notably, Judge Proctor found that ”the Battle fiction (that a complex class action
is sufficiently comparable to a res) is arguably unnecessary here.” District Court order, Docket
No. 303 at 108 n.53. As discussed above, the district court continues to supervise the equitable
division of a limited fund, which is “not analogous to a res—it is a res.” Id. Thus, the instant
case is very different from the situation addressed by Judge Tjoflat’s opinion in Burr & Forman.
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res judicata concept designed to prevent issues that have already been tried in
federal court from being relitigated in state court.”).
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
48
Juris also argues that this exception is inapplicable because the class judgment in
Order 47A did not satisfy the demands of due process. Juris is correct that an injunction
contained in a class judgment may be collaterally attacked on due process grounds. See
Stephenson v. Dow Chem. Co., 273 F.3d 249, 257 (2d Cir. 2001) (“The injunction was part and
parcel of the judgment that plaintiffs contend failed to afford them adequate representation. If
plaintiffs’ inadequate representation allegations prevail, as we so conclude, the judgment, which
includes the injunction on which defendants rely, is not binding as to these plaintiffs.”), aff’d in
part by an equally divided court and vacated in part, 539 U.S. 111, 123 S. Ct. 2161 (2003).
However, because we have already resolved Juris’s due process and personal jurisdiction
challenges, we need not address them again here.
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in a decision on the merits, and we hold the district court’s injunction was
necessary “to protect or effectuate its judgments.”
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 Rule
23(b)(1)(B) is not before us on direct appeal. The issue is not whether we would
on direct appeal vacate certification under the strict Rule 23 guidelines later
announced in Ortiz or whether Rule 23(b)(1)(B) should be used to settle
aggregated tort claims in a post-Ortiz world. Instead, Juris can avoid the res
judicata effect of the Inamed class settlement only by demonstrating a violation of
her due process rights. This she has not done.
Upon review, we conclude that the 1999 Inamed class settlement precludes
Juris from bringing her action against Allergan. Accordingly, we affirm.
AFFIRMED.
89