Supreme Court: Federal Court Erred In Precluding State Court Baycol Class Action

Supreme Court: Federal Court Erred In Precluding State Court Baycol Class Action

WASHINGTON, D.C. - (Mealey's) A unanimous U.S. Supreme Court ruled Jun. 16 that a federal court presiding over federal Baycol lawsuits improperly enjoined a West Virginia state court from considering a class action involving the heart drug (Keith Smith, et al. v. Bayer Corporation, No. 09-1205, U.S. Sup.).

In 2001, Keith Smith and Shirley Sperlazza filed a lawsuit in the Brook County Circuit Court seeking to certify a class of state residents who bought Baycol, an anti-cholesterol drug made by Bayer Corp. that was withdrawn because of injury to muscle tissue.  Earlier, George McCollins had filed a similar class action in the Cabell County Circuit Court.

McCollins' case was removed to the U.S. District Court for the Southern District of West Virginia and was then transferred into the Baycol multidistrict litigation court in the District of Minnesota. The MDL court denied certification, and Bayer then obtained an injunction from the federal court against the Smith/Sperlazza state court action.

The Eighth Circuit U.S. Court of Appeals upheld the injunction, and Smith and Sperlazza appealed to the U.S. Supreme Court.

Writing for the court, Justice Elena Kagan said the federal court exceeded its authority under the relitigation exception to the federal Anti-Injunction Act.  She said Smith and Sperlazza's state court issue was not identical to McCollins' federal court issue.

While the federal court found that McCollins did not meet the requirements of Federal Rule of Civil Procedure 23, the West Virginia state court was applying the requirements of West Virginia's Rule 23, which differs from its federal counterpart, the high court said.  It noted that the West Virginia Supreme Court declared its independence from Federal Rule 23 in 2003 in a ruling concerning Rezulin drug litigation.

The federal court denied class certification for McCollins' lack of injury from Baycol, the court said.  West Virginia's class action rule considers all factors and attempts to balance them, it said.

"The federal court's resolution of one issue does not preclude the state court's determination of another," Justice Kagan wrote.  "It then goes without saying that the federal court may not issue an injunction.  The Anti-Injunction Act's re-litigation exception does not extend nearly so far."

In addition, the court said Smith and Sperlazza did not have the requisite connection to the federal suit to be bound by the federal court's judgment.  It rejected Bayer's claim that Smith and Sperlazza were members of the McCollins "class" because there never was a class.

"Neither a proposed class action nor a rejected class action may bind nonparties," Justice Kagan wrote.

Bayer's concern that it would be subject to "serial relitigation," Justice Kagan said, "flies in the face of the rule against nonparty preclusion."  She said the federal Class Action Fairness Act of 2005 (CAFA) provides Bayer a remedy, as does centralization in multidistrict litigations and the principles of comity.

In a footnote, the court said Congress can address relitigation concerns by modifying CAFA or changing the Federal Rules of Civil Procedure.

[Editor's Note:  Full coverage will be in the July 7 issue of Mealey's Emerging Drugs & Devices.  In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #28-110707-001Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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