IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 95-10060
___________________
J.R. CLEARWATER INC., ET AL.,
Plaintiffs,
JEFF YOUNG RUSSELL KING., ET AL.,
Intervenor-Appellees,
and
FRANK FALGIANI and MARIUS GRIFFO,
Plaintiffs-Appellees
versus
ASHLAND CHEMICAL CO., ET AL.,
Defendants-Appellants.
________________________________________________
Appeal from the United States District Court for the
for the Northern District of Texas
________________________________________________
August 15, 1996
Before WISDOM, GARWOOD and JONES, Circuit Judges.
GARWOOD, Circuit Judge:
This appeal presents the question whether a federal district
court, having denied class certification in a previous proceeding,
may enjoin certification of a similar class in state court under
the Anti-Injunction Act, 28 U.S.C. § 2283. Because we conclude
that the instant denial of class certification does not come within
one of the exceptions to the Anti-Injunction Act, we affirm the
order of the district court denying the requested relief.
Facts and Proceedings Below
In May 1991, a class action was brought in Texas state court
on behalf of named plaintiff Joseph Lawshe and a class of similarly
situated individuals (Lawshe class) against Ashland Chemical
Company, Inc. (Ashland). The gravamen of the complaint was that
the class members had sustained damage to their swimming pools as
the result of Ashland’s mistaken delivery of sodium citrate rather
than sodium sesquicarbonate to J.R. Clearwater, Inc. (Clearwater),
which then mistakenly used the sodium citrate to service the pools.
The complaint alleged that the use of the sodium citrate had
created an imbalance in the alkalinity of the swimming pools that
caused algae growth, staining and corrosion of the pools, pipes,
and pool equipment. The Lawshe class asserted Texas law claims for
breach of contract, negligence, and deceptive trade practices
against Ashland seeking compensatory damages of between $500 and
$5,000 per class member as well as punitive damages. The Lawshe
class asserted no claims against Clearwater.
Ashland removed the suit to the United States District Court
for the Northern District of Texas, Dallas Division, on the basis
of diversity jurisdiction. The Lawshe class action was then
transferred to the Fort Worth Division and consolidated with a
suit, also asserting Texas law claims, filed against Ashland by
Clearwater that was pending in that court. In addition, two new
named plaintiffs, Marius Griffo and Frank Fagliani (class
plaintiffs), were substituted for Lawshe.
After extensive discovery over a two-year period, a class
2
certification hearing was held in September 1993. The district
court denied class certification on the grounds that the individual
class plaintiffs were subject to unique defenses not typical of the
class, and that common issues of fact and law did not predominate
due to individualized circumstances pertaining to each pool.
Following the denial of class certification, the class plaintiffs
sought a voluntary dismissal without prejudice pursuant to Federal
Rule of Civil Procedure 41(a)(2). The district court ruled that
dismissal without prejudice should not be allowed at such a late
stage in the litigation, yet the court declined to dismiss the two
class plaintiffs’ individual claims sua sponte in the event that
they elected to take their claims to trial or allow other proposed
class members to intervene individually.
The attorney for the class plaintiffs then filed a second
class action, likewise asserting Texas law claims, in the Texas
state courts naming Jack E. Sims as the class representative. The
class was defined in the same terms as the class in the initial
action, and the complaint was almost identical except that it
included a negligence claim against Clearwater, asserted no
deceptive trade practices claims against Ashland and sought no
punitive damages, and sought compensatory damages of $15,000 per
class member.
Ashland moved the district court to enjoin class certification
in the state court proceeding in order to protect or effectuate its
own earlier denial of class certification under the relitigation
exception to the Anti-Injunction Act. The district court denied
3
the motion on the grounds that its denial of class certification
was not a final appealable order entitled to collateral estoppel
effect “notwithstanding the Court’s previous statement that its
denial of class certification was final.”1
Discussion
Through the Anti-Injunction Act, 22 U.S.C. § 2283, the
Congress imposed a general prohibition on the federal courts from
interfering in state judicial proceedings. As the Supreme Court
explained in Chick Kam Choo v. Exxon Corp., 108 S.Ct. 1684 (1988):
“The Act . . . is a necessary concomitant of the Framers’
decision to authorize, and Congress’ decision to
implement, a dual system of federal and state courts. It
represents Congress’ considered judgment as to how to
balance the tensions inherent in such a system.
Prevention of frequent federal court intervention is
important to make the dual system work effectively. By
generally barring such intervention, the Act forestalls
‘the inevitable friction between the state and federal
courts that ensues from the injunction of state judicial
proceedings by a federal court.’ Vendo Co. v. Lektro-
Vend Corp., 433 U.S. 623, 630-31, 97 S.Ct. 2881, 2887, 53
L.Ed.2d 1009 (1977)(plurality opinion). Due in no small
part to the fundamental constitutional independence of
the States, Congress adopted a general policy under which
state proceedings ‘should normally be allowed to continue
unimpaired by intervention of the lower federal courts,
with relief from error, if any, through the state
appellate courts and ultimately this Court.’ Atlantic
Coast R. Co. v. Locomotive Engineers, 398 U.S. 281, 287,
90 S.Ct. 1739, 1743, 26 L.Ed.2d 234 (1970).” Id. at
1689.
The Act does permit the federal courts to enjoin state judicial
proceedings in three limited instances: when expressly authorized
by statute, when necessary in aid of the court’s jurisdiction, or
1
However, Ashland did later secure an order enjoining
relitigation of the class certification issue in state court
pending this appeal.
4
when necessary to protect or effectuate the court’s judgment. 28
U.S.C. § 2283. The third of these exceptions, commonly referred to
as the “relitigation exception,” is at issue in the present case.
“The relitigation exception was designed to permit a
federal court to prevent state litigation of an issue
that previously was presented to and decided by the
federal court. It is founded in the well-recognized
concepts of res judicata and collateral estoppel.” Chick
Kam Choo, 108 S.Ct. at 1690.
See also Deus v. Allstate Ins. Co., 15 F.3d 506, 524 (5th
Cir.)(quoting Chick Kam Choo), cert. denied, 115 S.Ct. 573 (1994).
However, these “exceptions are narrow and are ‘not [to] be
enlarged by loose statutory construction.’” Chick Kam Choo, 108
S.Ct. at 1689 (quoting Atlantic Coast Line, 90 S.Ct. at 1743);
Total Plan Serv., Inc. v. Texas Retailers Assn., Inc., 925 F.2d
142, 144 (5th Cir. 1991). Any doubts as to the propriety of an
injunction must be resolved in favor of allowing the state court
action to go forward. Texas Employers Ins. Ass’n. v. Jackson, 862
F.2d 491, 499 (5th Cir. 1988)(en banc), cert. denied, 109 S.Ct.
1932 (1989).
Ashland urges that the district court erred in denying its
motion to enjoin relitigation of the class certification issue in
state court because this issue was fully litigated during the
course of the federal proceedings. While we are sympathetic to
Ashland’s desire to avoid another protracted and costly round of
litigation over class certification in the Texas state courts, the
Anti-Injunction Act requires a different result.
Finality is an essential component of the concepts of both res
5
judicata and collateral estoppel. Avondale Shipyards v. Insured
Lloyd’s, 786 F.2d 1265, 1269 (5th Cir. 1986). An order denying
class certification is not a final judgment, and therefore is not
appealable as a matter of right until conclusion of the litigation
in the district court. Coopers & Lybrand v. Livesay, 98 S.Ct.
2454, 2457 (1978). Accordingly, it seems apparent to us that the
denial of class certification similarly lacks sufficient finality
to be entitled to preclusive effect while the underlying litigation
remains pending. Because finality is central to the concepts of
both res judicata and collateral estoppel, which animate the Anti-
Injunction Act, such a lack of finality is also fatal to a request
for injunction under the Act.2
2
In its brief, Ashland cites both the Second Circuit’s
decision in Lummus v. Commonwealth Oil Ref. Co., 297 F.2d 80,89 (2d
Cir. 1961), cert. denied, 368 U.S. 96 (1962), and the Restatement
(Second) Judgments for the proposition that something less than
section 1291 finality is sufficient for purposes of issue
preclusion. However, in our decision in Avondale, which we view as
directly analogous to the case at hand, we declined to adopt this
more flexible notion of finality.
In Avondale, we were presented with the question whether a
partial summary judgment was entitled to collateral estoppel
effect. In holding that it was not, we noted that a partial
summary judgment was not a final appealable order and that it
further lacked the necessary finality because it was within the
district court’s plenary power to revise or set aside at its
discretion prior to final judgment. We distinguished Lummus and
similar cases on the grounds that appellate review of the matter on
which issue preclusion was sought was available in each instance.
Indeed, we noted that both Lummus and the Restatement expressly
cited the availability of appellate review as a significant factor
in determining whether an otherwise nonfinal order should be given
preclusive effect.
In the case at bar, the denial of class certification is not
itself a final appealable order, Coopers & Lybrand, supra, and is
also subject to reconsideration by the district court under Federal
Rule of Civil Procedure 23(c)(1). Ashland argues that appellate
review was available to the class plaintiffs either through the
discretionary appeal mechanism of 28 U.S.C. § 1292(b) or by
6
While we are given to understand by correspondence from
counsel that a final judgment was subsequently entered by the
district court one month after this case was argued before this
panel, that does not change our disposition of the present appeal,
given the discretionary nature of the class certification
determination generally.
The denial of class certification is “a procedural ruling,
collateral to the merits of a litigation. . . .,” Deposit Guaranty
Nat. Bank v. Roper, 100 S.Ct. 1166, 1173 (1980), and the decision
as to whether to certify a class lies within the “wide discretion”
of the trial court. Shipes v. Trinity Ind., 987 F.2d 311, 316 (5th
Cir.), cert. denied, 114 S.Ct. 548 (1993); see also, Wright, Miller
and Cooper, § 1785 at 119(court has “broad discretion”).3 While
Texas Rule of Civil Procedure 42 is modeled on Rule 23 of the
Federal Rules, and federal decisions are viewed as persuasive
refusing to strike the class allegations and allowing the district
court to dismiss the entire action with prejudice, thereby
rendering the class action ruling final and appealable. We are not
persuaded. As Ashland concedes, it is not likely that discretionary
review would be granted. Nor should the class representatives be
faced with the equally unpalatable choices of either having the
order denying class certification be afforded preclusive effect
without review or risking the forfeit of their claims on the merits
in order to secure such review. See Wright, Miller and Cooper,
Federal Practice and Procedure: § 1802 at 483 (noting this means of
securing appellate review of order denying class certification
“tactically risky” due to risk of forfeiting rights to present
merits of claim).
3
This is clearly applicable to the “predominate” determination
that formed the ultimate basis of the district court’s ruling in
the present case. See Salazar-Calderon v. Presidio Valley Farmers
Assn., 765 F.2d 1334, 1350 (5th Cir. 1985) (reviewing predominance
determination for abuse of discretion), cert. denied, 106 S.Ct.
1245 (1986).
7
authority regarding the construction of the Texas class action
rule, see American Exp. Travel Related Services Co. v. Walton, 883
S.W.2d 703, 708 (Tex.App.--Dallas 1994, no writ); Ventura v.
Banales, 905 S.W.2d 423, 425 (Tex.App.--Corpus Christi 1995, no
writ), a Texas court might well exercise this discretion in a
different manner. It is our considered view that the wide
discretion inherent in the decision as to whether or not to certify
a class dictates that each court——or at least each jurisdiction——be
free to make its own determination in this regard. See Wright,
Miller & Cooper, § 4434 at 327 (“If preclusion is to be denied, it
should be on the ground that many procedural matters may be so far
discretionary that a second court should be free to make its own
determination.”). This reasoning is particularly applicable when
matters of state-federal relations are involved as in the present
case in which an injunction would impinge upon the state court’s
ability to exercise discretion in the administration of its own
docket contrary to the policies underlying the Anti-Injunction Act.
The element of discretion that inheres in this class
certification determination must be emphasized. Indeed, one Texas
court applying the federal collateral estoppel rules concluded that
collateral estoppel did not bar relitigation of the class
certification issue in part because even those aspects of the state
class action rule which are identical to the federal rule have
sometimes been applied differently by the state courts. Morgan v.
Deere Credit, Inc., 889 S.W.2d 360, 368 (Tex.App.--Houston (14th
Dist.) 1994, no writ). Therefore, the Texas court concluded that
8
the identity of issues necessary to collateral estoppel was
lacking.
For the foregoing reasons, we conclude that the district court
did not err in denying Ashland’s motion to enjoin relitigation of
the class certification in state court. The order of the district
court is accordingly
AFFIRMED.
9
J R Clearwater v. Ashland
Combined Opinion