Thorogood v. Sears, Roebuck and Co.

In the

United States Court of Appeals
For the Seventh Circuit

No. 10-2407

S TEVEN J. T HOROGOOD , individually
and on behalf of all others
similarly situated,
Plaintiff-Appellee,
v.

S EARS, R OEBUCK AND C OMPANY,
Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 C 1999—Harry D. Leinenweber, Judge.

S UBMITTED O CTOBER 12, 2010—D ECIDED N OVEMBER 2, 2010

Before P OSNER, K ANNE, and E VANS, Circuit Judges.
P OSNER, Circuit Judge. In this third appeal arising out
of a near-frivolous class action suit by Steven Thorogood,
Sears Roebuck, the defendant, asks us to reverse the
district court, which has denied Sears’s motion to enjoin
a virtually identical class action suit—a suit filed in the
name of Martin Murray by counsel who represented
2 No. 10-2407

Thorogood, and pending in a federal district court
in California. Murray v. Sears, Roebuck & Co., No. 4:09-cv-
5744-CW (N.D. Cal.). Judge Leinenweber, who had pre-
sided over Thorogood’s suit and to whom Sears’s motion
for an injunction was referred, ruled that Sears could
obtain adequate relief against being harassed by repeti-
tive litigation by pleading collateral estoppel in Murray’s
suit. Sears appeals.
Class counsel challenge the jurisdiction of the district
court over Sears’s motion and our jurisdiction over
Sears’s appeal. Thorogood’s suit was resolved by
the entry of a final judgment in favor of Sears without
reservation of jurisdiction, and so was no longer
pending when Sears asked the district court to enjoin
the California suit. But Sears’s motion had been filed
under the “All Writs Act,” which authorizes a federal
court to issue “all writs necessary or appropriate in aid
of [its] jurisdiction[ ] and agreeable to the usages and
principles of law,” 28 U.S.C. § 1651(a), and which has
been interpreted to empower a federal court “to issue
such commands . . . as may be necessary or appropriate
to effectuate and prevent the frustration of orders it has
previously issued in its exercise of jurisdiction other-
wise obtained.” United States v. N.Y. Tel. Co., 434 U.S.
159, 172 (1977). This power “extends, under appropriate
circumstances, to persons who, though not parties to the
original action or engaged in wrongdoing, are in a posi-
tion to frustrate the implementation of a court order or
the proper administration of justice, and encompasses
even those who have not taken any affirmative action
to hinder justice.” Id. at 174 (citations omitted). For the
No. 10-2407 3

application of these principles in class action suits, see,
e.g., In re Bridgestone/Firestone, Inc., Tires Products Liability
Litigation, 333 F.3d 763, 768 (7th Cir. 2003); In re VMS
Securities Litigation, 103 F.3d 1317, 1323-24 (7th Cir. 1996);
Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1200-01 and n. 4
(7th Cir. 1996).
A person seeking such an order applies to the court
that issued the judgment. No other basis of jurisdiction
need be shown. In re Bridgestone/Firestone, Inc., Tires
Products Liability Litigation, supra, 333 F.3d at 768; Bryan
v. BellSouth Communications, Inc., 492 F.3d 231, 236 (4th
Cir. 2007); Klay v. United Healthgroup, Inc., 376 F.3d 1092,
1100 (11th Cir. 2004). So class counsel’s jurisdictional
challenge fails.
The district court at our direction had decertified
Thorogood’s class, 547 F.3d 742 (7th Cir. 2008), and Sears
argues that by filing a nearly identical suit Thorogood’s
lawyer has defied that judgment. Consistent with the
principles set forth above, “the All Writs Act empowers
a federal court to enjoin parties before it from attempting
to relitigate decided issues and to prevent collateral
attack of its judgments.” In re March, 988 F.2d 498,
500 (4th Cir. 1993); see also TBG, Inc. v. Bendis, 36 F.3d 916,
925-27 (10th Cir. 1994); Wood v. Santa Barbara Chamber of
Commerce, Inc., 705 F.2d 1515, 1524 (9th Cir. 1983). Thus
the only question is whether the district judge abused his
discretion in ruling that a plea of collateral estoppel in
the California litigation would give Sears adequate relief
from the consequences of the refusal of Thorogood’s
lawyer—who found someone (Murray) willing to be the
4 No. 10-2407

nominal plaintiff in a copycat suit in California—to
accept defeat.
We remind the reader of the quixotic nature of the
quest on which Clinton Krislov, the plaintiff’s lawyer in
Thorogood’s case (including the current appeal), as well
as in the California litigation (though he has co-counsel
there, as we’ll have occasion to note), has embarked.
Thorogood, a Tennessean, bought a Kenmore-brand
clothes dryer from Sears (Kenmore is a Sears brand name).
The words “stainless steel” were imprinted on the dryer,
and point-of-sale advertising explained that this meant
that the drum in which the clothes are dried was made
of stainless steel. Thorogood claimed to have thought
that this meant that the drum was made entirely of stain-
less steel, whereas part of the front of the drum—a part
the user would see only if he craned his head inside
the drum—is made of a ceramic-coated “mild” steel,
which is not stainless steel because it doesn’t contain
chromium. Thorogood alleged that the “mild” steel in
the drum rusted, and stained his clothes.
Lawyer Krislov filed a class action suit on behalf of
Thorogood and a half million other purchasers, scattered
across 28 states plus the District of Columbia, of Kenmore
dryers that had been advertised as having stainless steel
drums. The suit claimed that the sale of a dryer so ad-
vertised is deceptive unless the drum is made entirely
of stainless steel because otherwise it might rust and by
doing so stain the clothes in the dryer. Thorogood’s
individual claim was based on Tennessee’s consumer
protection statute but the suit alleged that the unnamed
No. 10-2407 5

class members had identical claims under similarly
worded state consumer protection statutes in their own
states, including California.
The suit was originally filed in a state court but was
removed to federal district court under the Class Action
Fairness Act, 28 U.S.C. §§ 1332(d), 1453, 1711-1715.
Judge Leinenweber certified the class. We accepted
Sears’s appeal from the order of class certification,
Fed. R. Civ. P. 23(f), and reversed, ordering the class
decertified. We called the case “a notably weak candidate
for class treatment.” Not only did common issues of law
or fact not predominate over the issues particular to
each purchaser of a stainless steel Kenmore dryer, as
Rule 23(b)(3) requires; there were, we said, “no common
issues of law or fact.” 547 F.3d at 746-47 (emphasis
in original).
It was well-nigh inconceivable that the other members
of the class had the same understanding of Sears’s ad-
vertising as Thorogood claimed to have. Sears hadn’t
advertised the dryers as preventing rust stains on clothes;
and it’s not as if such stains are a common concern
of owners of dryers—there was no suggestion of that
either. Stainless steel appliances are popular even among
consumers, undoubtedly the vast majority, who do not
expect a dryer to cause rust stains. Stainless steel
does not rust, and that is certainly a plus, clothing stains
to one side. But ceramic doesn’t rust either. Many
people prefer a stainless steel appliance because it is
highly durable, does not stain (we are referring here to
stains on the machine, rather than on the clothes being
6 No. 10-2407

dried in it), and, when polished, looks better (some people
think) than ceramic—but not because they think that a
dryer drum that contains a bit of “mild” steel, which
anyway is coated with ceramic, would cause rust stains
on their clothes. Consumers whose preference for stain-
less steel is unrelated to an anxiety (probably unrea-
soning) about rust stains would not be upset to discover
that a small, inconspicuous portion of the drum was
made of a different kind of steel that anyway was
coated with ceramic and hence was rust proof.
Advertisements for clothes dryers mention a host of
features that might matter to consumers, such as price,
size, electrical usage, appearance, speed, and controls, but
not the prevention of clothing stains attributable to rust.
The litigation of the class members’ claims would thus
have devolved into a series of individual hearings in
which each class member who wanted to pursue relief
against Sears would testify to what he understood to
be the meaning of a label or an advertisement that identi-
fied a clothes dryer as containing a stainless steel drum.
Few if any of them, we imagine, would share Thorogood’s
concerns, which, judging from the record in his case
and the argument of his lawyer, are a confabulation.
But the important point is that there would be no econo-
mies of class action treatment because there would be
no issues that could be resolved in a single, class-wide
evidentiary hearing.
An additional consideration in deciding whether to
allow the claims in a suit to be litigated as a class action
is relief. Thorogood was seeking on behalf of himself
No. 10-2407 7

and the members of the class actual damages rather than
statutory damages; the latter might not require indi-
vidual proof, but calculation of actual damages would.
And even if there were other consumers who like
Thorogood were prepared to testify that they wouldn’t
pay a premium for a dryer that contained a drum that
was not 100 percent stainless steel, the amount of
damages would vary from consumer to consumer. A
few might (though we were and are dubious) have ex-
perienced rust stains, or be fearful of experiencing them,
and therefore seek as damages either the cost of
removing the stains, or the difference between the
resale value of their stainless steel dryer and what a new
dryer would cost, or both. Others may have bought a
Kenmore at a discount and as a result ended up paying
no more than they would have paid for a machine with
a porcelain drum. And some—since the Kenmore’s stain-
less steel drum is packaged with other premium
features rather than offered as a separately priced op-
tion—may have incurred no damages at all, because they
prefer their stainless steel dryer to any other dryer they
could buy even if the stainless steel feature itself was
a neutral or even negative consideration in their pur-
chasing decision.
The difficulty of determining the relief to which indi-
vidual class members in Thorogood’s suit who could
prove that they had been deceived by Sears’s representa-
tions might be entitled, though serious, was not the deal
breaker, because “aggregate class proof of monetary
relief may . . . be based on sampling techniques or other
reasonable estimates, under accepted rules of evidence.”
8 No. 10-2407

3 Herbert B. Newberg & Alba Conte, Newberg on Class
Actions § 10.3, p. 480 (4th ed. 2002). The deal breaker was
the absence of any reason to believe there was a single
understanding of the significance of advertising clothes
dryers as containing a stainless steel drum, and so a
predominating issue that was common to all class mem-
bers.
After we ordered the class decertified, thus shrinking
the suit to Thorogood’s individual claim, and with the
parties in agreement that the maximum damages that he
could recover under Tennessee law were $3,000, Sears
made Thorogood an offer of judgment under Rule 68 of
the civil rules of $20,000 inclusive of attorneys’ fees. The
district judge, believing that Thorogood should receive
no attorneys’ fees, dismissed the suit because the defen-
dant’s offer exceeded the amount in controversy ($3,000,
without attorneys’ fees), and so the case was moot.
Thorogood appealed. He had, he claimed, incurred attor-
neys’ fees of $246,000, and even though they exceeded
the value of the relief he had received by a factor of 82,
he claimed that the fees had been a worthwhile invest-
ment that Sears should be ordered to reimburse him
for. Because Sears had offered him in settlement an
amount equal to the maximum damages (and more) that
he could have obtained for his individual claim, he
argued that his theory of liability had been vindicated,
entitling him to a judgment on which he hoped to build
a claim for attorneys’ fees and, as we’ll see, obtain a
litigation advantage in other states.
The argument for attorneys’ fees was beyond weak. The
relief that Thorogood had received was not ordered by a
No. 10-2407 9

court and could by no stretch of the imagination be
thought a vindication of a threadbare, idiosyncratic
claim worth at most $3,000. The $246,000 in attorneys’
fees that class counsel sought reimbursement for had
been incurred in a doomed effort to maintain the suit as
a class action; no one incurs such fees to prosecute a
claim worth at most $3,000. Sears was paying to rid itself
of a nuisance. The effort to escalate Thorogood’s dubious
claim into a sprawling nationwide class action had been
a flop. Not believing that Sears should have to bear the
entire cost of the flop, we affirmed the district court’s
denial of attorneys’ fees and dismissal of the suit. 595
F.3d 759 (7th Cir. 2010).
Thorogood’s counsel had told the district court that
he wanted a judgment in his client’s individual case, for
however little money, not only as a premise for an award
of attorneys’ fees but also so that he could use it as “offen-
sive” res judicata in other cases (that is, to preclude
Sears’s defending similar cases on the merits); for
he was already planning to circumvent our order
decertifying the class by bringing class actions else-
where. The California suit here sought to be enjoined
was thus foreordained, and unless enjoined will be the
precursor to other class actions materially identical to
Thorogood’s. For lawyer Krislov is nothing if not deter-
mined, indeed pugnacious.
He argues that Murray’s case is “different” from
Thorogood’s. Yet Murray was a member of Thorogood’s
class; and Krislov (who as we noted is also Murray’s
counsel) had represented to us in Thorogood’s case that
10 No. 10-2407

the laws of all 29 jurisdictions in which members of the
class resided were so similar, as far as the claims in his
class action suit were concerned, that “all litigants [in-
cluding all class members] are governed by the same
legal rules”—“plaintiff will need to prove the same stan-
dards for every jurisdiction” (emphasis in origi-
nal)—“all the class members here are covered by the
same legal rule”—“plaintiff has essentially created a
subclass of all jurisdictions with the same substantive
consumer fraud statute.”
Now singing a different tune, Krislov contends that
California’s consumer fraud law is different from that of
the other 28 jurisdictions. We’ll see that the contention
is irrelevant to the applicability of collateral estoppel.
He also contends that the California state courts are
reluctant to apply collateral estoppel to judgments in
consumer protection cases. That, if true, is also irrelevant,
because the preclusive effect of a federal judgment, in
this case the judgment of the district court in Illinois
decertifying Thorogood’s class, is determined by federal
law. Semtek Int’l, Inc. v. Lockheed Martin Corp., 531 U.S. 497,
508-09 (2001); In re Bridgestone/Firestone, Inc., Tires Products
Liability Litigation, supra, 333 F.3d at 767-68; In re Baycol
Products Litigation, 593 F.3d 716, 721 (8th Cir. 2010), cert.
granted under the name Smith v. Bayer Corp., No. 09-1205,
2010 WL 1526440 (Sept. 28, 2010). Often, as these opinions
note, the federal court will “borrow” the local state’s
doctrine of collateral estoppel to serve as the federal rule
of decision. But a court in Illinois would not borrow the
California doctrine when the named plaintiff in the suit
No. 10-2407 11

in which the federal judgment was issued was a Tennes-
sean suing under Tennessee law.
The class in Murray’s case is of course smaller than
Thorogood’s because it is limited to California purchasers,
but it is still very large. The claims in Murray’s case, when
Sears pleaded the defense of collateral estoppel, were
identical to Thorogood’s; they challenged the same ad-
vertising for the same models of clothes dryer. Murray
acknowledged that he was alleging “a similar general set
of operative facts as alleged in the Thorogood case.” And
although normally “ ‘one is not bound by a judgment in
personam in a litigation in which he is not designated as a
party or to which he has not been made a party by service
of process,’ Hansberry v. Lee, 311 U.S. 32, 40 (1940) . . . [,] in
a class action, for example, a person not named as a party
may be bound by a judgment on the merits of the action, if
she was adequately represented by a party who actively
participated in the litigation. See id., at 41 . . . . Representa-
tive suits with preclusive effect on nonparties [thus]
include properly conducted class actions.” Taylor v.
Sturgell, 553 U.S. 880, 884, 894-95 (2008).
And so the district court in California ruled that Murray
was collaterally estopped to bring his suit as a class
action. But Murray then amended his complaint to
allege additional facts in an effort to show that he had a
different case, perhaps one more amenable to class
action treatment. On the basis of the amendment the
district judge in California reversed his earlier ruling, and
having thus rejected the defense of collateral estoppel
allowed discovery to begin. Murray then issued bulky
12 No. 10-2407

discovery requests. The district judge, as far as we know,
will not rule on whether the suit can be maintained as a
class action suit because common issues predominate
over individual class members’ issues, until discovery is
complete.
Ordinarily the ability to plead res judicata or collateral
estoppel gives a litigant adequate protection against
being harassed by repetitive litigation by the loser in a
previous suit against him. And when the remedy at law
(as by pleading a defense to a damages action) for
harmful conduct is adequate, there is no basis for an
injunction, including injunctive relief under the All
Writs Act. But this case is unusual both because it
involves class action litigation and because of the
specific tactics employed by class counsel, which include,
as we’ll see, something close to settlement extortion.
The class action is a worthwhile device for economizing
on the expense of litigation and enabling small claims,
illustrated by Thorogood’s claim, capped at $3,000, to be
litigated at all (though when the claim is deceptive ad-
vertising, a proceeding before the Federal Trade Com-
mission is a more economical alternative to a class
action suit). But the device also lends itself to abuse. As
Judge Friendly pointed out many years ago, class
members are interested in relief for the class but the
lawyers are primarily interested in their fees, and the
class members’ stakes in the litigation are ordinarily
(and in the present case or cases) too small to motivate
them to supervise the lawyers in an effort to align the
lawyers’ incentives with their own. Saylor v. Lindsley, 456
No. 10-2407 13

F.2d 896, 900-01 (2d Cir. 1972). Defendants, wanting to
minimize the sum of the damages they pay the class and
the fees they pay the class counsel, are willing to trade
small damages for high attorneys’ fees, especially since,
as Judge Friendly put it in another case, “a juicy bird in
the hand is worth more than the vision of a much larger
one in the bush, attainable only after years of effort not
currently compensated and possibly a mirage.” Alleghany
Corp. v. Kirby, 333 F.2d 327, 347 (2d Cir. 1964) (dissenting
opinion). These convergent incentives forge a com-
munity of interest between class counsel, who control
the plaintiff’s side of the case, and the defendants, but
may leave the class members out in the cold.
The judge who presides over a class action and must
approve any settlement is charged with responsibility
for preventing the class lawyers from selling out the
class, but it is a responsibility difficult to discharge
when the judge confronts a phalanx of colluding counsel.
“The defendant wants to minimize outflow of expendi-
tures and the class counsel wants to increase inflow of
attorneys’ fees. Both can achieve their goals if they
collude to sacrifice the interests of the class.” Christopher
R. Leslie, “The Significance of Silence: Collective Action
Problems and Class Action Settlements,” 59 Fla. L. Rev. 71,
79-81 (2007) (footnote omitted); see also (besides refer-
ences in our original opinion) John C. Coffee, Jr., “Litiga-
tion Governance: Taking Accountability Seriously,” 110
Colum. L. Rev. 288, 326-27 (2010).
Another problem with the class action is the enhanced
risk of costly error, which creates a pressure for settle-
14 No. 10-2407

ment that may be disproportionate to the actual merits
of the suit. Suppose a company is sued a number of times
for selling a defective product. It wins some of the cases
and loses others, so that the aggregate outcome reflects
more or less accurately the expected litigation value of
the plaintiffs’ claims. (This assumes no offensive res
judicata, which would give preclusive effect to the plain-
tiff’s first win. See In re Rhone-Poulenc Rorer, Inc., 51
F.3d 1293, 1299-1300 (7th Cir. 1995).) But when the
central issue in a case is given class treatment and so will
be resolved once and for all, a trial becomes a roll of the
dice. Depending on the size of the class, a single throw
may determine the outcome of an immense number of
separate claims (hundreds of thousands, in the dryer
litigation)—there is no averaging of decisions over a
number of triers of fact having different abilities, priors,
and biases. The risk of error becomes asymmetric when
the number of claims aggregated in the class action is
so great that an adverse verdict would push the
defendant into bankruptcy; in such a case the defendant
will be under great pressure to settle even if the merits
of the case are slight. Id. at 1298-99. A small probability
of a large dollar loss can be a large dollar figure.
A variant of this problem arises when class counsel
can, as they are attempting to do in their scorched-
earth campaign against Sears, increase the number of
throws of the litigation dice. If for example class counsel
have a 10 percent chance of winning a given state-
wide class action against a given defendant, and they
sue that defendant 50 times (one suit per state), they
are pretty certain to win quite a number of their cases,
No. 10-2407 15

although the aggregate damages will be smaller than if
they won a single nationwide class action. Even if class
counsel filed only 12 cases, the probability that the de-
fendant would win them all would be only 28 percent
(.9 12 = .28). And that probability (the probability of the
defendant’s winning all the cases) would fall to one-half
of one percent (.950 = .005) if class counsel sued in all
50 states. And this despite the fact that the defendant
in our example has a 90 percent chance of winning any
one of the 50 cases.
An additional asymmetry, also adverse to defendants,
involves the cost of pretrial discovery in class actions.
One purpose of discovery—improper and rarely acknowl-
edged but pervasive—is: “it makes one’s opponent
spend money.” Brian Anderson & Andrew Trask, The
Class Action Playbook § 4.5, pp. 115-16 (2010); see Joint
Project of the American College of Trial Lawyers Task
Force on Discovery and the Institute for the Advancement
of the American Legal System, “Interim Report,” p. 1
(Aug. 1, 2008), www.actl.com/AM/Template.cfm?Section=
Home&template=/CM/ContentDisplay.cfm&ContentID=
3650 (visited Oct. 15, 2010). In most class action suits,
including this one, there is far more evidence that plain-
tiffs may be able to discover in defendants’ records (in-
cluding emails, the vast and ever-expanding volume of
which has made the cost of discovery soar) than vice
versa. For usually the defendants’ conduct is the focus of
the litigation and it is in their records, generally much
more extensive than the plaintiffs’ (especially when as
in a consumer class action the plaintiffs are individuals
rather than corporations or other institutions), that
16 No. 10-2407

the plaintiffs will want to rummage in quest for smoking
guns.
The merit of Murray’s case, like Thorogood’s, of which
it is a close copy, is slight. But the pressure on Sears to
settle on terms advantageous to its opponent will mount
up if class counsel’s ambitious program of discovery is
allowed to continue. A letter from Mark Boling, Murray’s
co-counsel, to Sears’s counsel, printed at the end of this
opinion, illustrates the point. The letter reminds Sears
that discovery is proceeding and “will involve Plain-
tiff’s counsel delving into the full extent of Defendants’
alleged wrongdoing” in order to justify not only
equitable relief but also punitive damages—which are
potentially very large given the size of the class and the
possible preclusive use of any judgments favorable to the
plaintiffs in suits brought in other states. The letter contin-
ues: “as we progress through the various stages of
this litigation, the cost of settlement will necessarily
increase . . . . At this point, we may want to consider
whether an appropriate olive branch for resolution can
be mutually created on a class wide basis commensurate
with the status of the case. If interested, please pick up
the telephone and call me. In the meantime, Plaintiff will
continue to diligently and timely prosecute this case to
an appropriate result.” In other words, unless Sears settles
now (implicitly for modest relief for the class and an
agreement with class counsel to recommend to the judge
generous fees for Krislov and Boling), it will incur the
considerable cost of responding to class counsel’s dis-
tended project of “delving” and assume the risk of a very
large adverse judgment. And as Boling’s letter also
No. 10-2407 17

points out, “if plaintiff is successful on a motion for class
certification, the court as the gate keeper will demand a
more significant recovery for resolution.”
The threat to turn the screws on Sears is all the
more credible because Murray’s suit is a duplicate of
Thorogood’s, with just enough differences to confuse
the district judge in California about Sears’s defense of
collateral estoppel. If the refusal to enjoin Murray’s suit
sticks, there is nothing standing in the way of Krislov’s
filing carbon-copy class actions against Sears in other
states as well.
In refusing to enjoin Murray’s suit, Judge Leinenweber
mentioned none of these considerations. He seems to
have believed that pleading res judicata or collateral
estoppel always provides adequate relief against vex-
atious litigation. This case shows that it does not, as do
the similar cases we cited earlier and the cases that say
that enjoining vexatious litigation is preferable to “the
harassment of an expensive, time-consuming procedure
to prove [a defendant’s] res judicata or estoppel claims
in another court.” Kentucky Fried Chicken Corp. v.
Diversified Packaging Corp., 552 F.2d 601, 603 (5th Cir. 1977);
see also Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, 500 F.3d 111, 123-24
(2d Cir. 2007); In re Hartford Textile Corp., 681 F.2d 895, 897
(2d Cir. 1982); Blanchard v. Commonwealth Oil Co., 294 F.2d
834, 841 (5th Cir. 1961).
The district judge in California, by rescinding his ac-
ceptance of Sears’s defense of collateral estoppel and
allowing discovery to proceed, has visited on Sears the
18 No. 10-2407

consequences that the injunction that Sears sought from
the district court in Illinois would have prevented.
Murray’s case was removed to federal district court in
California in December 2009 and as of early October of this
year had already accrued 126 docket entries. There is no
way in which Sears can recoup the expense of responding
to Murray’s extravagant discovery requests and of filing
preclusion defenses against duplicative class actions in
other states. The harm it faces from the denial of the
injunction is irreparable and its remedy at law against
settlement extortion nonexistent.
Of course we must pay respectful attention to the
ruling by the district judge in California. But we cannot
brush aside Sears’s challenge to its correctness by telling
Sears to appeal to the Ninth Circuit. It can’t, at least in time
to avert irreparable harm, because the judge’s order
rejecting the defense of collateral estoppel and thus
letting discovery proceed is an unappealable inter-
locutory order. Sears’s action under the All Writs Act is
its only means, other than submitting to lawyer Boling’s
demands, of avoiding being drowned in the discovery bog.
The district judge in California said that Murray had
“sufficiently amended his complaint so as to differentiate
it from the complaint in Thorogood to avoid the applica-
tion of collateral estoppel.” Murray had done this, the
judge continued, by “includ[ing] allegations that [Sears
had] expressly advertised the significance of the fact that
[the] dryers contain stainless steel drums,” for example
by advertising that “Durable Drum eliminates rusting and
chipping for long lasting performance” and “KEEP YOU
No. 10-2407 19

[sic] CLOTHES LOOKING GREAT: an exclusive, all
stainless steel drum provides lasting durability” (emphasis
in original). The judge said: “These allegations are of the
precise type that the Seventh Circuit said would distin-
guish Thorogood from a claim in which common issues
might predominate.”
The judge has misunderstood both the ads and our
opinion. It’s true that stainless steel does not rust or chip,
and therefore a dryer that is made, even if only in part
(the drum), of stainless steel should indeed provide
“lasting durability.” But the claim is not falsified if a
small part of the drum is made of “mild” steel coated with
ceramic. And a dryer’s durability has nothing to do with
rust stains in clothing, Thorogood’s contention and
Murray’s as well. The only reference to stains in the
advertising of the dryer is the claim, mysteriously quoted
in Murray’s 129-paragraph amended complaint, that
“stainless steel also resists staining from clothes” (em-
phasis added), that is, the staining of the dryer itself.
Our original opinion discussed a representation by
Sears in marketing the dryer that is materially identical to
the one that the district judge in California quoted from
Murray’s amended complaint to show that Murray’s suit
is critically different from Thorogood’s—“Stainless Steel
Drum resists rust and won’t chip, peel or snag clothes.” 547
F.3d at 747. There is nothing new in Murray’s complaint
that would allow an escape from the bar of collateral
estoppel. The critical issue was and is what consumers
would understand by representations that the Kenmore
dryer has a stainless steel drum. Would they think it
20 No. 10-2407

meant that the drum was 100 percent stainless steel?
Would they not have bought it had they thought it was
only 99 percent stainless steel? These questions can’t be
answered on a class-wide basis, and so there would be no
economies from allowing the suit to proceed as a class
action.
The question is not whether Murray has a stronger case
than Thorogood had. What collateral estoppel does is
forbid the reexamination, in a subsequent suit, of a
finding essential to a previous decision. Montana v. United
States, 440 U.S. 147, 153-54 (1979); Chicago Truck Drivers,
Helpers & Warehouse Union (Independent) Pension Fund
v. Century Motor Freight, Inc., 125 F.3d 526, 530 (7th
Cir. 1997). The finding is that common issues did not
predominate in Thorogood’s suit. Well, neither do they
in Murray’s; the differences between the suits do not
bear on that finding. The judge in California thus was
wrong; Murray’s suit is barred by collateral estoppel.
But because of the cost of responding to discovery, and
the erroneous but unappealable ruling permitting discov-
ery in Murray’s suit, Sears has no adequate remedy at
law against a litigation aimed at coercing a settlement
by running up Sears’s discovery expense.
Abuse of litigation is a conventional ground for the
issuance of an injunction under the All Writs Act, e.g., In
re Martin-Trigona, 737 F.2d 1254, 1262 (2d Cir. 1984),
because without an injunction a defendant might have
to plead the defense of res judicata or collateral estoppel
in a myriad of jurisdictions in order to ward off a judg-
ment, and would be helpless against settlement extor-
No. 10-2407 21

tion if a valid such defense were mistakenly rejected by
a trial court.
So Sears is entitled to an injunction. But we must be
careful about precisely who and what are to be en-
joined. Sears wants to enjoin all members of the class that
was decertified pursuant to our decision in Thorogood’s
case, plus their lawyers. The lawyers should indeed be
included in the injunction, as has been done in other cases.
See In re Bridgestone/Firestone, Inc., Tires Products Liability
Litigation, supra, 333 F.3d at 769; Newby v. Enron Corp., 302
F.3d 295, 300-03 (5th Cir. 2002) (the “district court had
authority under the All Writs Act to enjoin [the law firm]
from filing future state court actions without its permission
and did not abuse its discretion in doing so”); In re
Bridgestone/Firestone, Inc., Tires Products Liability Litigation,
271 F. Supp. 2d 1080 (S.D. Ind. 2003), on remand from 333
F.3d 763 (7th Cir. 2003) (“ ‘all members of the putative
national classes . . . , and their lawyers,’ are hereby prohib-
ited ‘from again attempting to have nationwide classes
certified over defendants’ opposition with respect to the
same claims’ ”) (emphasis added) (the interior quotation is
from this court’s opinion in In re Bridgestone/Firestone); cf.
Lorillard Tobacco Co. v. Chester, Willcox & Saxbe, 589 F.3d
835, 837 (6th Cir. 2009). If Krislov and the other class
counsel are not enjoined, they will continue their state-by-
state quest for certification and will doubtless be able
to find at least one lead plaintiff in every state.
Nevertheless Sears’s proposed injunction suffers from
defects both of under- and of overinclusion. On the one
hand, an injunction against class action suits “based on the
22 No. 10-2407

same allegations” as Thorogood’s suit would not bar
even Murray’s suit, since he’s added allegations, though
his claim is materially the same. On the other hand,
(1) Thorogood’s class consisted of hundreds of thousands
of persons scattered across the country, and there is
no feasible means of notifying them of the injunction;
(2) no one can be enjoined from filing an individual suit,
as distinct from a class action suit, on the basis of a
finding relating only to class certification; and (3) there
is an additional defendant in Murray’s suit—Electrolux
Home Products, Inc., the manufacturer of the Kenmore
dryer—and it is not a party to the proceeding under the
All Writs Act or to this appeal and is therefore entitled
to no relief. All these qualifications must be reflected in
the injunction.
The members of Thorogood’s class must be enjoined as
well as the lawyers so that additional Murrays don’t start
popping up, class action complaint in hand, all over the
country, represented by other members of the class
action bar. It is true as we recall that an unnamed class
member can be bound by the judgment in a class action
suit only “if she was adequately represented by a party
who actively participated in the litigation.” Taylor v.
Sturgell, supra, 553 U.S. at 884. But Thorogood did partici-
pate actively in seeking class certification, and his repre-
sentation by lawyer Krislov was adequate (it was
energetic and pertinacious to a fault).
We ordered the class decertified because of the absence
of issues common to all the class members. That ruling—as
the injunction must make clear—does not preclude any
No. 10-2407 23

of the class members from filing individual suits. For it
was not a ruling on the merits of any class member’s
claim (including Thorogood’s). All that’s precluded is
the filing (by members of Thorogood’s class, which in-
cludes the members of Murray’s class, or by the lawyers
for those classes) of class action suits that are indistin-
guishable, so far as lack of commonality among class
members’ claims is concerned, from Thorogood’s. See
Hansberry v. Lee, supra, 311 U.S. at 40-42; Tice v.
American Airlines, Inc., 162 F.3d 966, 971 (7th Cir. 1998);
In re Prudential Ins. Co. of America Sales Practice Litigation,
261 F.3d 355, 366 (3d Cir. 2001).
The injunction should state that no unnamed class
member can be punished for contempt until and unless
a copy of the injunction is served on him; should cover
all class action suits challenging representations, in
Sears’ existing advertising, labeling, and other marketing
that the stainless steel drums in Kenmore dryers are
made of stainless steel; and should not forbid class
action suits challenging representations materially dif-
ferent from those in Thorogood’s and Murray’s cases,
or representation concerning a dryer that contains a
different amount of stainless steel.
There is a final wrinkle to be considered. Naturally
Sears wants to enjoin further class action suits con-
cerning the dryers regardless of whether they are filed
in state court and not removed to federal court, or filed
in state court and removed to federal court as in the
present case, or filed originally in federal court. But a
federal court’s injunction against a suit in state court
24 No. 10-2407

must comply with the limitations imposed by the Anti-
Injunction Act, 28 U.S.C. § 2283, and in Smith v.
Bayer Corp., supra, the Supreme Court has granted
certiorari to decide two issues of interpretation (sum-
marized by SCOTUSblog, “Smith v. Bayer Corp.,” www.
scotusblog.com /case-files/cases/sm ith-v-bayer-corp
(visited Oct. 18, 2010)) that could affect the scope of an
injunction in the present case:
1. Whether . . . a district court can enjoin parties from
seeking class certification in state court under state
procedural rules when the district court had
previously denied certification of a similar class
under federal procedural rules but neither the
parties sought to be estopped nor the issues to be
presented in state court are identical as those
presented to the district court. 2. Whether a district
court that previously denied class certification none-
theless has personal jurisdiction over the absent
putative class members such that it may enjoin them
from seeking class certification in state court.
The judge should nevertheless make the injunction
applicable to further copycat suits in state as well as in
federal courts. But he should make clear that persons
subject to it will be allowed to obtain modification in
light of the Supreme Court’s decision in the Smith case,
when it is rendered.
We do not think it likely that the Court will go so far as
to hold that injunctive relief against class-action harass-
ment is inappropriate under the All Writs Act even when
No. 10-2407 25

the actions sought to be enjoined are actions in federal
rather than state court, on the theory that before certifica-
tion class members cannot be thought to have been ade-
quately represented. That would be inconsistent with the
Court’s opinion in Taylor and the cases cited in it. And
quite apart from the green light that such a ruling would
give to extortionate class action practice, a denial of
relief would make no sense in a case like this, in which the
class (Thorogood’s) was certified, albeit later decertified
at our direction. Class counsel had and took the oppor-
tunity to litigate the certification issue fully—so that to
say that a ruling against certification could not be the
basis of an injunction would be inconsistent with the
doctrine of collateral estoppel itself. There is no denying
that a final ruling against certification has collateral
estoppel effect. And the basis of the injunction sought in
this case is simply the need for enforcing collateral
estoppel more effectively than by forcing the defendant
to plead it as a defense in case after case.
We leave the details of the injunction to be worked
out by the district judge, but commend for his consider-
ation similar injunctions entered in In re Bridgestone/
Firestone, Inc., Tires Products Liability Litigation (by the
district court on remand); In re Prudential Ins. Co. of America
Sales Practice Litigation, supra, 261 F.3d at 360-61, and
Wood v. Santa Barbara Chamber of Commerce, Inc., supra, 705
F.2d at 1523 n. 6.
R EVERSED AND R EMANDED.
26 No. 10-2407

A PPENDIX —T HE B OLING L ETTER

From: Mark Boling

Sent: Monday, September 06, 2010 7:26 PM

To: Dosker, Mark C.; Mark S. Mester; Oliss, Philip M.

Subject: Murray: OPC—Settlement Communication

Dear Counsel,

Your law firms have represented Defendants honorably, but
unsuccessfully, on the issue of collateral estoppel in this case. At
every significant stage of a lawsuit, a business decision must
be made by the parties to extend and accept an olive branch
for resolution of the case or continue to litigate. We are at one
of those stages.

Judge Wilken has decided in Dkt No. 120 (“Order”) that the
Murray case will go forward with class claims. In so doing, this
district court has also preliminarily determined that the
toughest requirement for class certification, i.e. common issues
of fact and law, exists in this case as compared with the
Thorogood case.

“Plaintiff has sufficiently amended his complaint so as to
differentiate it from the complaint in Thorogood to avoid
the application of collateral estoppel. Unlike the complaint
in Thorogood, the amended complaint includes allega-
tions that Defendants expressly advertised the significance
of the fact that their dryers contain stainless steel drums.
For instance, Sears’ website describes the “Stainless Steel
Drum” as “Durable Drum eliminates rusting and chipping
for long lasting performance.” First Amended Complaint
(IAC) ¶50 (emphasis added). Sears’ website and in-store
brochures state that Kenmore Dryers will “KEEP YOU
No. 10-2407 27

CLOTHES LOOKING GREAT: An exclusive, all stainless
steel drum provides lasting durability.” Id. ¶52 (upper
case in original; emphasis added). These allegations are of
the precise type that the Seventh Circuit said would distin-
guish Thorogood from a claim in which common issues
might predominate.” (Order, 7:10-25.)

The stay on discovery is lifted and Plaintiff may com-
mence discovery on his class claims. Currently, four discovery
matters against defendants are pending with the magistrate
judge. As you are aware other discovery disputes are in prog-
ress. This next stage of litigation will involve Plaintiff’s
counsel delving into the full extent of Defendants’ alleged
wrongdoing to establish not merely a likelihood to mislead,
but Defendants’ intentional fraudulent acts to justify the court
in exercising the full extent of its equitable powers and a jury
to award punitive damages against each Defendant.

With respect to the issue of relief, the risk of a substantial
recovery is very probable in this case. Under California law,
equitable relief is steadily evolving against the wrongdoer
under the California Unfair Competition Law (Cal. Bus. & Prof.
Code Section 17200 et seq.). In fashioning a remedy under the
unfair competition law, section 17203 does not mandate
restitutionary or injunctive relief, rather it provides that the
court “may make such orders or judgments . . . as may be
necessary to prevent the use or employment . . . of any practice
which constitutes unfair competition . . . or as may be necessary
to restore to any person in interest any money or property . . .
which may have been acquired by means of such unfair competi-
tion.” Thus, the court has broad equitable power to create
a remedy. Cortez v. Purolator Airfiltration Products Co. (2000)
23 Cal.4th 163, 179.

While rescission may be followed by restitution in an appropri-
ate contract action, rescission is not a necessary predicate to
28 No. 10-2407

granting restitution in a statutory action under the UCL. (People
ex rel. Kennedy v. Beaumont Investment, Ltd. (2003) 111
Cal.App.4th 102, 132-33.) Nelson v. Pearson Ford Co. (2010) 186
Cal.App.4th 983, 1018. In the recent Nelson case, the California
appellate court upheld the trial court’s decision to award the
members of the insurance class all the money they had paid
for their vehicles and acquired through Pearson Ford’s unfair
practices as of the date of the judgment and without having the
class members return their vehicles. In the instant case, this
means that each of the affected Sears’ customers may recover
their entire purchase price, delivery and installation costs as
of the date of judgment and not have to return the dryer.

Plaintiff Murray’s initial disclosures set forth alternative
damages calculations ranging from the premium paid
for a stainless steel drummed dryer as compared with a non-
stainless steel drummed dryer to the full purchase price of the
dryer plus consequential damages of delivery and installation
costs. The affected Sears customers also have an interest in the
profits seeking to be disgorged from both Sears and Electrolux
as a restitutionary recovery under the provisions of the CLRA
and/or UCL statute based upon what has been improperly
received by Defendants through the sales transactions in the
stream of commerce involving the subject products. These
profits constitute money that once had been in the possession
of these Sears customers to whom it is to be restored.

As we progress through the various significant stages of this
litigation, the cost of settlement will necessarily increase. If
plaintiff is successful on a motion for class certification, the
court as the gate keeper will demand a more significant
recovery for resolution. Finally at time of trial, Plaintiff will
be seeking restitutionary relief of the full amounts of all
transactional costs without offset, punitive damages based on
Defendants’ intentional deception and injunctive relief reen-
No. 10-2407 29

forcing the terms of the FTC Order against Sears and ex-
tending the terms of the FTC Order against Electrolux.

At our first appearance in court, Judge Wilken was surprised
that Defendants have not already conceded that the drum
front for the products was not made of stainless steel. There can
be no vindication for Defendants in this case, only damage
control. At this point, we may want to consider whether an
appropriate olive branch for resolution can be mutually
created on a class wide basis commensurate with the status of
the case. If interested, please pick up the telephone and call
me. In the meantime, Plaintiff will continue to diligently and
timely prosecute this case to an appropriate result, and expect
your timely cooperation.

Thank you in advance for your consideration of this matter.
I trust that good business judgment will prevail by all parties.

Sincerely,

Mark B.

11-2-10