Thomas, Walter J. v. Powell, Colin L.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 18, 2001 Decided April 27, 2001

No. 00-5022

Walter J. Thomas, et al.,
Appellants

v.

Colin L. Powell, Secretary of the
Department of State, et al.,
Appellees

Appeal from the United States District Court
for the District of Columbia
(86cv02850)

G. Arthur Robbins argued the cause for appellants. On
the briefs was David G. Whitworth, Jr.

Henry F. Schuelke, III argued the cause for appellees.
With him on the brief were S. Robert Sutton, Henry Morris,
Jr., and Marc L. Fleischaker.

 Before: Edwards, Chief Judge, Sentelle and Randolph,
Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Dissenting opinion filed by Circuit Judge Sentelle.

Randolph, Circuit Judge: The Anti-Injunction Act forbids
federal courts from granting injunctions "to stay proceedings
in a State court," with three exceptions. 28 U.S.C. s 2283.
One of the exceptions permits a federal court to enjoin state
proceedings when "necessary ... to protect or effectuate its
judgments." 28 U.S.C. s 2283. The scope of this "relit-
igation exception" is the central issue in this case.

Walter J. Thomas cites the Anti-Injunction Act as the
reason why the district court erred in issuing an injunction
barring him and his co-plaintiffs from prosecuting a lawsuit in
the Superior Court for the District of Columbia. We shall
assume, without deciding, that the District of Columbia is a
"State" within s 2283's meaning. A lawsuit Thomas and
others brought in the Superior Court complains about the
performance of their attorneys in a class action filed in the
United States District Court for the District of Columbia in
1986. Much of the history is recounted in Thomas v. Al-
bright, 139 F.3d 227 (D.C. Cir. 1998). The federal action
began when Thomas and another plaintiff filed a complaint in
district court seeking certification as a class action and alleg-
ing that the Department of State discriminated against black
Foreign Service Officers. See id. at 229. After six years of
discovery, an amended complaint allowing 30 additional indi-
viduals to intervene, the addition of still more class represen-
tatives and lengthy settlement negotiations, attorneys for
parties signed a consent decree resolving the case and agree-
ing that the district court should certify the class and approve
the settlement pursuant to Rule 23(b)(2) of the Federal Rules
of Civil Procedure. See Thomas, 139 F.3d at 229. By this
point, however, the relationship between class counsel and
Thomas and several other class representatives had frayed.

At a hearing on January 31, 1996, Thomas complained at
length that several of the named class action plaintiffs had

neither been informed of, nor agreed with the impending
settlement. One month earlier, in December 1995, Thomas
had retained another attorney--Barbara B. Hutchinson--to
represent his interests. On March 20, 1996, the district court
held a preliminary fairness hearing. The new attorney repre-
senting Thomas and Allen Latimer (a co-plaintiff in the
Superior Court action) argued that because her clients disa-
greed with parts of the proposed settlement, the court could
and should modify it. An attorney representing Odie Fields,
Mary Cynthia Smoot, and Alfred Neal (the remaining co-
plaintiffs in the Superior Court action) argued against the
consent decree and urged the district court to reject it.
Thomas personally asked the court not to give preliminary
approval to the proposed settlement. Despite Thomas's plea,
the court tentatively approved the settlement and ordered
notice to be given to the 359 putative class members, of which
34 wrote to the court supporting the settlement, while 55
wrote in opposition to it. See Thomas, 139 F.3d at 230. On
July 15 and 23, 1996, the court held an additional fairness
hearing. Attorneys for Thomas and other class members
again urged the court to modify or to reject the settlement.

In its final judgment, the district court concluded that the
settlement was fair and reasonable, but the court added a
provision permitting nine class members to opt out of the
settlement. See id. On appeal, we held that the district
court had abused its discretion in allowing these class mem-
bers to opt out. We also concluded that the overall class
settlement was fair. See id. at 233. Five of the class
members then sued the class counsel for professional negli-
gence in the Superior Court of the District of Columbia. On
a motion by the class counsel defendants, the district court
enjoined these class members from pursuing their suit. See
Thomas v. Albright, 77 F. Supp. 2d 114, 124 (D.D.C. 1999).

Thomas and his co-plaintiffs think the Anti-Injunction Act
barred the injunction and that the relitigation exception does
not apply. The exception rests on the idea that federal courts
should not be forced to rely on state court application of res
judicata or estoppel principles to protect federal court judg-
ments and decrees. See Chick Kam Choo v. Exxon Corp.,

486 U.S. 140, 147 (1988); Toucey v. New York Life Ins. Co.,
314 U.S. 118, 146 (1941) (Reed, J., dissenting). Although the
attorney-defendants in the Superior Court action case were
not parties to the concluded federal action, traditional preclu-
sion principles may nonetheless bar Thomas and his co-
plaintiffs from prosecuting that action against them. See
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5 (1979);
Ethnic Employees of the Library of Congress v. Boorstin, 751
F.2d 1405, 1409 (D.C. Cir. 1985); Restatement (Second) of
Judgments s 29 (1980). The doctrine of collateral estoppel,
or as it is now commonly called "issue preclusion," see Re-
statement, supra, at 1, provides that "once an issue is actually
and necessarily determined by a court of competent jurisdic-
tion, that determination is conclusive in subsequent suits
based on a different cause of action involving a party to the
prior litigation." Montana v. United States, 440 U.S. 147,
153 (1979); see McLaughlin v. Bradlee, 803 F.2d 1197, 1201-
02 & n.1 (D.C. Cir. 1986); Otherson v. Department of Justice,
711 F.2d 267, 273 (D.C. Cir. 1983). The relitigation exception
to the Anti-Injunction Act therefore permits federal courts to
enjoin state court adjudication of those "claims or issues ...
[that] ... actually have been decided by the federal court."
Chick Kam Choo v. Exxon Corp., 486 U.S. at 148.

Even if a federal court had not decided all the issues raised
in the state court action, the relitigation exception could still
apply. Assume, for instance, that issues not decided in the
federal action would be resolved in plaintiff's favor in the
state court. If the plaintiff still could not prevail because an
essential element of his state cause of action had already been
determined against him in the federal suit, the relitigation
exception would permit an injunction against the state pro-
ceedings. See, e.g., Next Level Communications v. DSC
Communications Corp., 179 F.3d 244, 256-57 (5th Cir. 1999)
(enjoining entire state court action where state court would
be required to decide issues already litigated in federal
court); see also United States v. District of Columbia, 654
F.2d 802, 809-10 (D.C. Cir. 1981) (finding that relitigation
exception permits federal courts to enjoin state proceedings
that raise a different cause of action, but still threaten

judgment in federal proceeding). In this case, we must
therefore compare the complaint in the Superior Court to the
record in the class action in order to determine whether, in
order for the plaintiff to succeed in Superior Court, that court
will have to rule upon an issue or claim already decided by
the federal district court or the court of appeals. See Chick
Kam Choo, 486 U.S. at 148.

In their Superior Court complaint, Thomas and his co-
plaintiffs alleged the following:

1. The class action attorneys breached a duty of undivided
loyalty to Thomas by " 'selling out' and betraying [the Plain-
tiffs] ... when they entered into [a] secret agreement" to
settle the case without seeking Thomas's approval first. See
Complaint for Professional Negligence p 28, Thomas v. Akin,
Gump, Strauss, Hauer & Feld, L.L.C., No. 99ca1898 (D.C.
Super. Ct. filed Mar. 19, 1999); see also id. p p 37, 46, 55, 64
(making same allegations for Thomas's co-plaintiffs).

2. The class action attorneys failed to disclose the alleged
conflict of interest created by acting as class counsel and
failed to inform Thomas of the negotiating position they
would take with the State Department. See id. p 29; see also
id. p p 38, 47, 56, 65 (making same allegations for Thomas's
co-plaintiffs).

3. The class action attorneys failed to follow Thomas's
"express instructions regarding the certification of the class
action as a Rule 23(b)(3), which would have provided for him
to 'opt-out' of the class in order to receive his full measure of
damages...." Id. p 26; see also id. p p 35, 44, 53, 62 (making
same allegation for Thomas's co-plaintiffs).

Thomas and his co-plaintiffs claimed that because of these
alleged breaches of duty, they lost their federal cause of
action and the potential damages they might have derived
from it. See id. p 31; see also id. p p 40, 49, 58, 66 (making
same allegations for Thomas's co-plaintiffs). They also al-
leged that they suffered damages by having to retain sepa-
rate counsel and spend additional time and money dealing
with the federal lawsuit. See id. p p 30, 39, 48, 57, 65.

 As to the first two of these claims there can be no doubt
that the district court's injunction falls within the exception to
the Anti-Injunction Act. Before approving the class action
settlement, the district court performed its duty of determin-
ing whether the "settlement is fair, adequate, and reasonable
and is not the product of collusion between the parties."
Pigford v. Glickman, 206 F.3d 1212, 1215 (D.C. Cir. 2000)
(internal quotations omitted). The court found that the "set-
tlement was clearly negotiated at arm's length and presents
no danger of collusion" between the parties. See Thomas v.
Christopher, 169 F.R.D. 224, 239 (D.D.C. 1996). The court
further found that class counsel "fairly and adequately pro-
tected the interests of the class." Id. While the Superior
Court complaint alleges that the class action attorneys "sold
out" their clients, that they engaged in collusive secret negoti-
ations to the detriment of their clients, the district court
squarely decided otherwise. The Superior Court plaintiffs
may not relitigate these matters and an injunction preventing
them from doing so in the Superior Court was in order.

The third claim set forth above rests partly on the retainer
agreement between Thomas and the class action attorneys, an
agreement Thomas says imposed additional duties on the
class action attorneys.1 Thomas's complaint pointed to this
language in the agreement:

In the event there is any offer of settlement that would
compromise and resolve all the plaintiffs' claims in Wal-
ter J. Thomas v. Shultz, C.A. No. 86-2850, the Client
hereby agrees to abide by the wishes of the majority of
the plaintiffs with respect to the acceptance or rejection
of the settlement offer.

Compl. p 9.

His claim regarding the retainer agreement is part of a
larger argument about whether the class action attorneys
committed professional negligence. In the District of Colum-

__________
1 Though the Superior Court complaint does not make this
distinction, the retainer agreement is between the class action
attorneys and Thomas alone.

bia, a legal malpractice plaintiff is required to demonstrate
duty, breach, causation, and harm. "As with any tort action,
legal malpractice liability is predicated on a finding that the
injury was proximately caused by the breach of duty." Dalo
v. Kivitz, 596 A.2d 35, 41 (D.C. 1991). For the sake of
argument we shall assume that Thomas (and his co-plaintiffs)
would be able to make his case in the Superior Court that the
class action attorneys had a duty and breached it. Thomas
would still have to prove that he suffered a harm as a result.
According to the complaint, his harm or injury consisted in
his loss of the ability to pursue a potentially lucrative individ-
ual claim for damages. See Compl. p 31. In explaining his
theory of damages to us he adds that had "Conflicted Counsel
timely informed the Named Class Representatives of the
conflict, or withdrawn pursuant to the retainer agreements,
the Named Class Representatives would have earlier engaged
independent counsel to protect their personal interests."
Brief of Appellants at 17.

This separate counsel would have protected Thomas's per-
sonal interests, he thinks, by having the class action certified
with opt-out provisions allowing for individual suits. In other
words, if the class action had been certified under Federal
Rule of Civil Procedure 23(b)(3), rather than Rule 23(b)(2),
Thomas and his co-plaintiffs would have been able to opt-out
and pursue individual actions (in which they suppose they
would have done better). See Compl. p p 13-14. To prove
this case in the Superior Court, the plaintiffs would have to
establish that they were damaged because the class should
have been certified under Rule 23(b)(3). See Macktal v.
Garde, 111 F. Supp. 2d 18, 21 (D.D.C. 2000) (to prove
malpractice, must establish that plaintiff had a valid claim);
Niosi v. Aiello, 69 A.2d 57, 60 (D.C. 1949) (same). But that
necessarily would entail relitigating an issue already decided
in the federal courts.

In Thomas v. Albright, 139 F.3d at 235, we rejected the
district court's decision to create a hybrid class certified
under Rule 23(b)(2) with an opt-out clause. See Thomas, 139

F.3d at 230.2 The district court had made no findings that
the class was appropriately certified under Rule 23(b)(3); but
the court had "made all the factual findings necessary to show
that a hybrid class was not appropriate." Thomas, 139 F.3d
at 235. We found it unnecessary to remand the case to the
district court because "the dissidents do not allege any alter-
native basis that, if proved, would enable the district court
upon remand to permit them to opt out." Id. at 237. In our
view the claims of the dissident plaintiffs--Thomas and the
others--were not "different in kind from those of other class
members." Id. at 236. We thus held that the class was
properly certified under Rule 23(b)(2) with no opt-outs.
Thomas's malpractice action could survive only if that holding
were relitigated and found to be incorrect.

The only other claim Thomas might have is that the alleged
defects in representation damaged him to the extent that he

__________
2 Our conclusion in Thomas that there was no basis for certify-
ing a hybrid class necessarily meant that there was no basis for
certifying a class under Rule 23(b)(3). Though the case considered
the propriety of a hybrid class action--which is different from a
pure (b)(3) class action--we explicitly concluded that no plaintiff's
claim was sufficiently atypical to justify permitting class members
to opt out, which is the key characteristic of both hybrid and (b)(3)
class actions. See Thomas, 139 F.3d at 236. If an opt out right
could not be justified, there would be no reason to certify the class
action under 23(b)(3) rather than 23(b)(1) or (2). See 1 Herbert
Newberg & Alba Conte, Newberg on Class Actions s 4.20 (3d ed.
1992) (arguing that Rule 23 requires a court to certify a class action
as a (b)(3) class action only if it cannot be certified under (b)(1) or
(2)). Moreover, a hybrid class action is certified under both (b)(2)
and (b)(3). See Thomas, 139 F.3d at 234; Eubanks v. Billington,
110 F.3d 87, 96 (D.C. Cir. 1997). By finding that a hybrid class
action was unjustified, we necessarily found that the claims did not
meet (b)(3)'s criteria for an opt out class action. See Thomas, 139
F.3d at 235 (noting that the district court did not make findings
necessary for a (b)(3) class action and then noting that "[t]o the
contrary, the court made all the factual findings to show that a
hybrid class was not appropriate"). We therefore disagree with the
dissent that the federal proceedings left open the question whether
the class could be certified under Rule 23(b)(3).

had to hire outside counsel to represent him in the fairness
disputes. See Compl. p p 30, 39, 48, 57, 64. Under District of
Columbia law, one can sue to recover the cost of retaining
additional counsel in response to a lawyer's malpractice. See
Knight v. Furlow, 533 A.2d 1232, 1235 (D.C. 1989). But that
narrow claim is undercut by Thomas's own litigation posture
here, which is that he wanted the opportunity to bring in
individual counsel earlier in the process. It is senseless to
suppose that damages resulted from failing to bring in indi-
vidual counsel to advance the losing claim that the class
should be certified either as a hybrid class or a Rule 23(b)(3)
class. As we have held, that claim could prevail if and only if
Thomas were permitted to relitigate the issues already decid-
ed in the class action.

We therefore conclude that if the Anti-Injunction Act
applies to the District of Columbia, the relitigation exception
to the Act permitted the district court to enjoin Thomas and
his co-plaintiffs from pursuing their complaint in the Superior
Court. Since Thomas has not argued that the court abused
its discretion in issuing the injunction, we have no reason to
question the court's judgment that the balance of interests,
both public and private, weighed in favor of issuing the
injunction. See Thomas, 77 F. Supp. 2d at 123-24.

Affirmed.

 Sentelle, Circuit Judge, dissenting: The decision reached
by the majority in this case depends upon the proposition that
all issues that could be raised in the malpractice action
brought by Walter J. Thomas and his co-plaintiffs were
precluded by the disposition of the class action. While this is
almost true, I do not think it is entirely so.

In their complaint before the District of Columbia Superior
Court, the plaintiffs allege that their counsel entered into a
consent decree certifying the class pursuant to Rule 23(b)(2),
"[c]ontrary to the express instructions and wishes of the
Plaintiffs." The plaintiffs further allege that their attorneys
breached a fiduciary duty because the plaintiffs "had rejected
any compromise or settlement which would result in a certifi-
cation of the class pursuant to Rule 23(b)(2), rather than
23(b)(3), which would allow the individual Plaintiffs to 'opt-
out' of the class in order to maintain their individual causes of
action." It would appear that Thomas and his co-plaintiffs
are stating, or attempting to state, a cause of action depend-
ing upon the propositions that class counsel had an individual
duty to the plaintiffs and that the plaintiffs had instructed
counsel not to agree to the (b)(2) certification. These propo-
sitions raise factual issues that should be resolved by the D.C.
Superior Court.

When the district court approved the settlement in the
underlying action and certified the class under Rule 23(b)(2),
it noted that "Plaintiffs moved for certification under Rule
23(b)(2)." Thomas v. Christopher, 169 F.R.D. 224, 239
(D.D.C. 1996). Similarly, on appeal, this Court stated that
"[c]lass counsel repeatedly requested certification pursuant to
(b)(2), [and] the consent decree stated that the parties agreed
to certification pursuant to (b)(2)." Thomas v. Albright, 139
F.3d 227, 235 (D.C. Cir. 1998). Indeed, the consent decree
barred the district court from "modifying the terms of the
agreement." Id. at 233. Although the plaintiffs argued for
the right to opt out of the settlement during the fairness
hearings and again on appeal, they did so within the confines
of Rule 23(b)(2). Their arguments would have been unneces-
sary if their counsel had negotiated for a Rule 23(b)(3)
certification.

 The majority mistakenly asserts that in order to prevail in
their Superior Court case, "the plaintiffs would have to
establish that they were damaged because the class should
have been certified under Rule 23(b)(3)." Slip Op. at 7.
Rather, to prevail, the plaintiffs simply would have to estab-
lish that the class could have been certified under Rule
23(b)(3).1 That question has never been litigated.

Although the plaintiffs were represented separately during
the fairness hearings, they contend that they essentially were
not represented at the table when counsel negotiated with the
State Department. If they had been adequately represented,
then their views on opting out surely would have been
expressed in the precertification negotiations. If the plain-
tiffs had instructed counsel not to agree to a 23(b)(2) certifica-
tion and if counsel had an individual duty to the plaintiffs (two
very big "ifs"), then, as the plaintiffs allege, counsel may have
violated its fiduciary duty by (1) not telling them about the
conflict between the interests of the plaintiffs and the class as

__________
1 I disagree with the majority's analysis of the rules governing
class actions. The majority states that "no plaintiff's claim was
sufficiently atypical to justify permitting class members to opt out,
which is the key characteristic of ... (b)(3) class actions." Slip Op.
at 8 n.2. Rule 23(a) unequivocally states that one prerequisite to
any class action is that the representative parties' claims are
"typical of the claims ... of the class." Fed. R. Civ. P. 23(a).
Specifically, a 23(b)(3) class action is justified whenever "the court
finds that the questions of law or fact common to the members of
the class predominate over any questions affecting only individual
members, and that a class action is superior to other available
methods for the fair and efficient adjudication of the controversy."
Fed. R. Civ. P. 23(b)(3). The district court undoubtedly could have
certified the Thomas class under 23(b)(3), even though--and, per-
haps, because--the plaintiffs' claims were "no different in kind from
those of other class members." 139 F.3d at 236. Nevertheless,
because the consent decree compelled the district court to certify
the class under 23(b)(2), it had no reason to confront this question.
Cf. Eubanks v. Billington, 110 F.3d 87, 96 (D.C. Cir. 1997) (refusing
to address whether "full (b)(3) protections" should be afforded to
the plaintiffs because "the plaintiffs did not seek certification as ...
a (b)(3) ... class").

a whole and (2) not advocating the plaintiffs' position in the
negotiations. These issues were not addressed by the district
court in its initial decision or by this Court on appeal. In
fact, these issues could not have been litigated because the
consent decree negotiated by counsel locked the district court
in to certifying the class pursuant to Rule 23(b)(2). See
Thomas, 139 F.3d at 233.

The majority assumes, without deciding, that the District of
Columbia is a "State" within the meaning of the Anti-Injunc-
tion Act, 28 U.S.C. s 2283, suggesting that the scope of the
Act's relitigation exception "is the central issue in this case,"
Slip Op. at 2. In this case, the Court need not assume, much
less decide, that the Act applies to D.C.2 The scope of the
relitigation exception is not the central issue in this case.
With or without the Anti-Injunction Act, the United States
District Court cannot enjoin the ongoing litigation in the
Superior Court without some legal basis for doing so. Here,
as I understand the appellees' complaint, the basis is that the
issues involved in the Superior Court case have been hereto-
fore litigated in the federal litigation. It may be that the
appellees should ultimately prevail, but in my view it should
be achieved after the litigation of what appear to me to be
open issues in the Superior Court.

A court cannot issue a permanent injunction without first
finding that the applicant has demonstrated actual success on
the merits. See Amoco Production Co. v. Village of Gambell,
480 U.S. 531, 546 n.12 (1987). Here, to establish success on
the merits, counsel must show that Thomas and his co-

__________
2 As I have noted before, some sections of the Court Reform
Act, Pub. L. No. 91-358, 84 Stat. 473 (1970), require D.C. courts "to
be treated as state courts, others do not." United States v. Mills,
964 F.2d 1186, 1198 (D.C. Cir. 1992) (en banc) (Sentelle, J., dissent-
ing). "Congress has not, for example, plainly extended the prohibi-
tion upon the issuance of federal injunctions staying state court
proceedings, see 28 U.S.C. s 2283, to District proceedings." Id.
Indeed, whether D.C. courts are protected by s 2283 is a valid
question that has not been resolved. There is no reason to suggest
that the Anti-Injunction Act plays any role in the outcome of this
case.

plaintiffs are collaterally estopped from asserting the issues
raised in their malpractice claims. The plaintiffs have not
actually litigated the issues I discuss above, nor has any court
decided those issues. Whether we apply the Anti-Injunction
Act or the general law governing issue preclusion, our analy-
sis is the same, and the district court plainly erred when it
enjoined the D.C. Superior Court. Compare Chick Kam
Choo v. Exxon Corp., 486 U.S. 140, 149 (1988) (holding that
for the Act's relitigation exception to apply the party moving
for an injunction must show that the issue "was itself actually
litigated and decided by the District Court"), with Davis v.
Davis, 663 A.2d 499, 501 (D.C. 1995) (explaining that issue
preclusion applies when "the issue is actually litigated and
... determined by a valid, final judgment on the merits").

The majority may be correct that Thomas and his co-
plaintiffs suffered no harm, but that seems to me a merits
question and not a preclusion one. That is, if the injunction is
lifted, it may well be that the Superior Court can rule that
there is no harm, and therefore no cause of action, but I
believe that is for the Superior Court to determine and not
for us. Like my colleagues, I agree that Thomas and his co-
plaintiffs' malpractice claim is very shaky. Unlike my col-
leagues, however, I believe that ruling is not for this Court to
make.

For these reasons, I respectfully dissent.