FORD MOTOR CO. v. MCCAULEY
When Ford Motor Company and Citibank (South Dakota), N.A. canceled a credit card rebate program that enabled cardholders to accrue and redeem rebates towards the purchase of a new Ford, cardholders filed multiple state-based class actions. Ford and Citibank removed the cases to federal court. The cardholder plaintiffs consolidated their actions, seeking reinstitution of the program. Ultimately, the Court of Appeals found that each class member was asserting a separate and distinct claim and that the individual claims did not satisfy the $75,000 amount-in-controversy requirement. The appellate court also concluded that premising jurisdiction on the cost of complying with an injunction in favor of a single plaintiff would conflict with the principle of the amount-in-controversy requirement.
Is the amount-in-controversy requirement of the federal diversity statute satisfied where a class representative seeks an injunction that would cost the defendant more than $75,000 to implement whether the injunction applies to one plaintiff or all class members?
In a per curiam opinion, the Court dismissed the writ of certiorari as improvidently granted.
Argument of Seth P. Waxman
Chief Justice Rehnquist: We'll hear argument next in No. 01-896, the Ford Motor Company and Citibank v. John B. McCauley.
The Court would appreciate hearing argument on, I'm sure, not just on the question presented in the petition for certiorari, but on the question posed in the supplemental briefing about whether there is appellate jurisdiction where a nominally prevailing party in the district court can... can appeal, and also about whether the question of... under 1447(d), if this was an order of remand, whether the... the thing was appealable to the Ninth Circuit at all.
Mr. Waxman: Mr. Chief Justice, and may it please the Court:
Perhaps with that observation, I would... it would behoove me to address the quest... the appellate jurisdiction of this Court first, as much as I would like to rush into why there clearly is subject matter jurisdiction in this case, regardless of whether the plaintiffs' claims for injunctive relief are viewed as separate and distinct or common and then divide it.
So let me first address why I think the Ninth Circuit and this Court had appellate jurisdiction, and it is straightforward.
That is, there is an appeal in this case from the dismissal with prejudice of a consolidated complaint which was filed voluntarily by the plaintiffs in this case seeking... as against plaintiffs that are different than any... than the constituent State court actions, including different plaintiffs seeking different causes of action and seeking a different form of relief, that is, specific performance of the Ford rebate program.
And it is very clear, both from the cont... the... the four corners of the consolidated complaint and from an express representation that my friend, Mr. Berman, made at the oral argument in the class certification stage, that the consolidated complaint was filed for the purpose of obtaining, in front of Judge Dwyer in the Northern Dis... the Western District of Washington, a judgment on the merits in the case.
That is, it was different than the treatment, the maximum treatment, that he would have been permitted to provide under the multi-district litigation panel's reference.
Justice Scalia: What's sort of unusual, though, is that you didn't suffer the dismissal.
I mean, yes, a dismissal is... is usually a final... a final action, and it's usually the person whose suit was dismissed who appeals--
Mr. Waxman: --That is--
Justice Scalia: --not... not the person who benefitted by the dismissal and that--
Mr. Waxman: --Indeed, and that, Justice Scalia, is the... is the question I believe, the specific question, that the Court directed the parties' attention to in its request for supplemental briefs.
Now, it is clear that a prevailing party normally cannot appeal, but the operative word that this Court has recognized, at least since the Electrical Fittings case, is normally.
And this Court and the lower courts have applied a rather particular test to determine when normally doesn't apply, and that is, is the nominally prevailing party sufficiently aggrieved by a decision in its favor that it retains a, quote, stake in the appeal?
And that's... that test was articulated by this Court in Guaranty Trust v. Roper--
Justice Ginsburg: --Mr. Waxman.
Mr. Waxman: --and in Forney v. Apfel.
Justice Ginsburg: Mr. Waxman, a defendant who removes a case and then is remanded is surely aggrieved but, nonetheless, cannot appeal.
And the problem I have with an answer that you went by too fast for me is this case is in... was in the Washington district court for pretrial purposes only under 1407.
The transfer from the several district courts to which these cases were initially removed... that transfer under the statute was for pretrial purposes only, not for trial.
And after the pretrial, under the statute, the cases, unless all the parties consent, would go back to the district courts from whence they came.
So I don't understand how the Western District which is dealing with a complaint for pretrial purposes only... I mean, the... the request that a complaint... consolidated complaint be filed was for pretrial processing.
How do you get from that an action that displaces all of the other actions that had been removed from the State court?
Mr. Waxman: Justice Ginsburg, the appealability of the dismissal with prejudice of the consolidated complaint does not depend on whether the consolidated complaint, quote, did away with the other actions.
The reason... we would, of course, readily concede that under 1447(d), if all that had happened was a removal of the six State court actions, a transfer for pretrial purposes to a multi-district litigation court and a determination by that court that it lacked subject matter jurisdiction over the complaints, there would be no appeal because the remand of removed State court actions for lack of subject matter jurisdiction, Congress has decided, is not a determination that may be reviewed by Federal appellate courts.
But here... and this, I think, is the salient point.
Here, the judge did not require the plaintiffs' lawyers in the six cases to file some sort of concordance or a consolidating document that often is ordered so as to facilitate pretrial proceedings.
What the judge said is if anybody wants to file a consolidated complaint, they may.
The consolidated complaint that was filed in this case avowedly invoked this Court's 13... the Federal court's 1332 jurisdiction and sought not just pretrial consolidated proceedings on discovery and motions, they wanted a full trial or a full resolution on the merits.
In other words, it's... it's as if the judge, having had the six cases transferred, said expressly, look, I'm going to deal with all of the pretrial matters that are the subject of this transfer order, but if you all like me--
Justice Ginsburg: Mr. Waxman, may I stop you at that point?
Because the pretrial consolidated... the order... this is... I'm looking at the appendix, page 35.
It says, by order of the multi-district panel, the cases have been consolidated for pretrial purposes only.
Now, you're saying that there is something... something that I don't see in the written orders that says they... no, it's going to be now for trial purposes.
Mr. Waxman: --No, no, no.
I'm... I'm not explaining myself correctly.
The... the order doesn't say these six removed cases are here for trial purposes, and if it did, it would exceed the court's authority under 1407 and this Court's specific holding in Lexecon.
On page 41 of the joint appendix, the court under a heading say... entitled consolidated complaint says, should plaintiffs in all or some of the consolidated actions decide to file a consolidated complaint, you have to do so within a certain period of time.
Now, that raises the question, since they did it voluntarily, whether what they were filing was something that, in essence, sort to... as I said, to be a concordance, to consolidate in one document all of the various parties and all the various claims and all various theories so that a court can meaningful and... meaningfully and efficiency... efficiently manage the pretrial proceedings.
Chief Justice Rehnquist: But ordinarily you wouldn't go... go about it that way.
You'd have a memorandum, not a consolidated complaint.
Mr. Waxman: That... that's true, Mr. Chief Justice, although there are instances where the court... where the transferee court has ordered the filing of something called a consolidated complaint.
But here, there are two salient... at least two salient differences.
One is this complaint has different parties.
It has different causes of action.
It seeks a different type of relief.
And at the motion... and... and it seeks quite clearly, based on the conduct of the parties and the representations, this is, in essence, saying thank you very much for having... having us here for consolidated proceedings on our underlying state court actions, but we have decided we like you, Judge Dwyer, and we want you to try a case, and we're going to file a brand new Federal action that is docketed in the Western District.
Justice Ginsburg: Mr. Waxman, things like that, juris... basic jurisdictional thing, agreeing... this would be a consent to have a court that has no authority to adjudicate a case to adjudicate it.
Usually such a major step is done not by inference, not by implication.
This is saying, court, even though you have no authority under the Federal statutes to proceed without our consent, we are consenting, so go ahead.
We're waiving any questions of venue or anything else.
The fact that this is labeled consolidated complaint is simply what the multi-district statute says.
It says that the actions may be transferred for consolidated pretrial proceedings.
So why couldn't this consolidated complaint be simply for pretrial proceedings, the only thing that the multi-district panel transferred the case to Western District of Washington for?
Mr. Waxman: Justice Ginsburg, it certainly could have been, and if it were ordered by the court, that is the most that it could have been.
But in this case, that's not what it was.
There are parties, claims, and requests for relief, and particularly the... what is really the object of the litigation, the request for specific performance of the Ford rebate program--
Justice Stevens: Mr. Waxman, can I interrupt you with a question?
It seems to me you're, in effect, arguing that the Federal consolidated complaint was kind of a brand new lawsuit, and we forget about everything else that happened before.
Now, if that were the case and you just had that complaint filed against you and you filed a motion to dismiss and you prevailed and they dismissed the complaint, it clearly would not be appealable.
In order for you to find reasons to appeal, you got to go back and say, well, now we're going to have to face a lot of other lawsuits.
Mr. Waxman: --That... I think your premise... the premise of your question, Justice Stevens, with respect, is incorrect, which is if we had asked for a dismissal on subject matter jurisdiction grounds and prevailed... that is, we would have--
Justice Stevens: No.
They asked for dismissal on subject matter jurisdiction.
Mr. Waxman: --If we had asked for it, then we would have gotten all that we could possibly have expected.
What we asked for... what happened in this case was they voluntarily filed it.
They asked for trial and judgment on the merits.
The court sua sponte said, I don't think I have subject matter jurisdiction, and we have the right to appeal that because we are sufficiently aggrieved that we have a stake in the case.
Chief Justice Rehnquist: Why did the district court say it had no subject matter?
Because of the amount in controversy?
Mr. Waxman: --Yes, because of the amount in controversy.
It refused to apply... it followed prior Ninth Circuit precedent and refused to apply the defendants' viewpoint in a class action seeking injunctive--
Justice Breyer: Or you have a brand new--
Justice Stevens: --You would not have been aggrieved... if... if that was the only case pending and so... and if it was dismissed, how would you have been aggrieved?
Mr. Waxman: --We would have been aggrieved in the same way... because what we sought was... what we wanted was litigation in a single forum, in a forum which had already conducted substantial pretrial proceedings and a Federal forum.
We sought judgment in our favor on the merits.
What we... which would have produced a dismissal or a judgment with prejudice.
What we received, but did not ask for, was a result that permits the... either these plaintiffs or anybody else in the country to continue this litigation in State court.
And... and their... the lower courts in the cases that we've cited are--
Justice Stevens: Do you... do you argue that in just an ordinary case if a... you file... a defendant files a motion to dismiss both on the grounds of no cause of action and so forth and so on and also no jurisdiction, you win on no jurisdiction, you can appeal that?
Mr. Waxman: --Well, I think, this Court's decision in Forney v. Apfel stands for that proposition.
But it would... this is an easier case because we did not seek to dismiss this for subject matter jurisdiction grounds.
We wanted to be in Federal court.
We were the ones who removed the underlying State court actions here.
As it turns out, they decided they wanted to be in Federal court too.
But there are a long line of cases, and really an uninterrupted line of cases, in the lower courts that have interpreted this Court's jurisprudence in Forney and Guaranty Trust and Electrical Fittings to mean that where there is a dismissal on... of State law claims, not on the merits, but for lack of jurisdiction, defendants are aggrieved in a practical sense.
And we've discussed a--
Justice Ginsburg: Mr. Waxman, I think the problem is those six State court actions that haven't vanished.
Nobody ever dismissed them.
And as aggrieved as you are... and I agree that you're aggrieved... you could not appeal from the remand.
It seems to me these two, the dismissal of the consolidated complaint, the return of the actions from which this consolidation originated, that those two are inextricably tied together.
And you would like to cut them off and say, Court, just look at the consolidated complaint.
Forgot about those separate actions.
Somehow they vanished.
Mr. Waxman: --Not... with respect, Justice Ginsburg, maybe I... perhaps I'm not understanding you.
I... there's an interesting epistemological question in this case whether the underlying State court actions continue to exist or whether they had been, in fact, superseded but the--
Justice Souter: Let... let me ask you about one solution to the epistemological question.
Let's assume... let's assume that on the remand the State courts think they are still alive.
Are you going to the State courts, let's try them now?
Hear us immediately.
We want a trial.
Mr. Waxman: --You mean--
Justice Souter: You're not going to do that.
What you're going to say is, defer any action here, if you win on this... on your point here.
You're going to say, defer any action so we can try the Federal case.
Mr. Waxman: --Well--
Justice Souter: And... and that it seems to me, unless I am missing the point of what you are necessarily going to do, it follows that... that the... that the Federal case is, in fact, simply the alter ego of the State cases, and if you win here, you are functionally doing nothing but eliminating subsection (d).
Mr. Waxman: --I... with respect, Justice Souter, if... there are plaintiffs in two of the State cases who are not even named plaintiffs in the Federal case.
There are defendants.
There is a defendant.
Justice Souter: Are they within the class?
Mr. Waxman: Well, the... all of the cases seek a nationwide class.
Justice Souter: Sure, and don't you think those non-named plaintiffs would be happy to let somebody else carry the ball for them in... in the Federal action?
Mr. Waxman: Well--
Justice Souter: They're... they're not going to fight you when you say to the State courts, just let them sit here until we get the Federal case taken care of.
Mr. Waxman: --There are... I'll go to door number two.
There are claims.
There are causes of action in the underlying State cases that are not included in the consolidated complaint and vice versa.
In short, the... the... from a case management perspective, whether both a Federal case and a State case that are both in existence can go forward simultaneously or whether one should follow the other is something that happens all the time, and it has never been understood to divest one court or the other of jurisdiction.
And our submission here is that we have something that is distinctly new.
Chief Justice Rehnquist: The consolidated complaint?
Mr. Waxman: --Yes.
Justice Souter: No, but I mean, you... but our point is if functionally you are going to treat this as the alt... the equivalent, the alternative to all of these State actions... and you have told me nothing to suggest that you're not going to do that... then it seems to me that the... the... the argument has got to prevail that functionally this in... in fact is nothing but an end run around the non-appealability of the remand.
Mr. Waxman: Well, in point of fact, Justice Souter, if this Court reverses the Ninth Circuit for the... for... for one of the two errors of law that it committed, and on remand, the conclusion is made that there is subject matter jurisdiction and the case can proceed, we will be in precisely the same posture that we were in at the time that the plaintiffs filed the consolidated complaint.
Justice Souter: No, because at that time the... the... the State cases had been remanded.
Mr. Waxman: And... well, the State cases have not yet been remanded, but if the State--
Justice Souter: I... I mean... I'm sorry.
They had been... they had been removed.
Mr. Waxman: --They had been removed.
Justice Souter: They had been removed.
Mr. Waxman: And they will remain removed if this... if a Federal court concludes that there is subject matter jurisdiction.
Justice Ginsburg: I thought that the order of the Western District of Washington was that the State cases are remanded.
Justice Souter: That's what I thought.
Justice Ginsburg: And that the Ninth Circuit did not touch that, that the Ninth Circuit dealt only with the consolidated complaint.
Mr. Waxman: There is a single order in the case that says there is no jurisdiction.
And it's in the... in the joint appendix.
There is no subject matter jurisdiction over the consolidated complaint or over the six removed actions.
And therefore, the consolidated complaint is dismissed, and the clerk is directed to remand the underlying State actions back to the States.
Now, that order was stayed by the Ninth Circuit at our request pending the outcome of this case.
That is, if--
Chief Justice Rehnquist: Well, but stayed by the Ninth Circuit prior to argument there?
Mr. Waxman: --No.
After... yes, it was stayed prior to argument there and--
Chief Justice Rehnquist: Well, didn't that stay expire with the decision of the court of appeals?
Mr. Waxman: --It would have except that we moved for a stay of the mandate.
The mandate issued before the court ruled on it, and the court then recalled the mandate and directed that the remand of the underlying State actions not proceed until this Court... at least until this Court... has resolved the question.
Justice Souter: But I still think... I still think you're in trouble because even if we accept your... your reading of what the... the court ordered and what it's likely to do if you prevail here, it simply changes the characterization of what's going on.
You're... you're saying that the... that if the... if the consolidated case stays in the Federal court, it does not die, and in fact, because of that, there is no remand.
Then it simply follows that the consolidated course is a trump to the remand and you're excluding the operation of subsection (d) in a slightly different way.
Mr. Waxman: --Not true, Justice Souter, for two reasons.
I'll give the broader one first.
If we had filed as all parties in the case and the Solicitor General as well agree is the complete functional equivalent of the consolidated complaint... if Ford and Citi had filed a declaratory judgment action in Federal court, even after the State cases had been filed, before or after they had been removed, and we asked for a declaration that we can terminate the Ford rebate program, there would be no question that--
Justice Ginsburg: Mr. Waxman, give me an example of any case in which a defendant in a product liability suit, in a credit suit like this one, a defendant has said I want to preempt the class action and so I am going to bring this declaratory suit against all the credit card holders of this plan all over America in the forum that I choose, and that's going to be where the class action is going to proceed.
Can you give me any precedent for a defendant being able to take over what would have ordinarily been the plaintiff's product liability claim, credit card claim?
I... I don't know of any such case where a defendant has been allowed to make such a case its show rather than the plaintiff's show.
Mr. Waxman: --I... as I'm standing here, Justice Ginsburg, I... I can't bring any cases to mind.
I'll... I'll... I'll... I'll try and bring one to mind prior to my rebuttal.
But I don't understand what the objection would be if, before terminating the program, we said, we're going to terminate this program--
Justice Ginsburg: Because you have--
Mr. Waxman: --and we want a declaration that--
Justice Ginsburg: --Because, Mr. Waxman, you have potential plaintiffs from all over the country.
Normally a lawsuit is begun by a plaintiff and the plaintiff's choice of forum is respected.
Here you are saying a defendant, not dealing with one plaintiff, but dealing with hundreds, maybe thousands... I don't know how many credit card holders there are... across the country can start the lawsuit and a Federal court would listen to that, would, at the defendant's urging, somehow certify the plaintiff class.
I don't know of any such action.
I don't know of any district judge who has done that at the urging of a defendant.
Mr. Waxman: --Well, Justice Ginsburg, if we were to have filed such a case... and my submission is it would be the functional equivalent of a consolidated complaint... it would not disempower plaintiffs or plaintiffs' representatives from filing their own class actions in State or Federal court.
And if that were the case, there would then... there would be... thereafter be a determination made by the courts involved--
Justice Ginsburg: Well, in any case you said it--
Mr. Waxman: --as to whether it makes sense--
Justice Ginsburg: --It doesn't occur to you that there is such a case, but--
Mr. Waxman: --I am... I am sure that there are many such cases.
I can't cite you one as I'm standing here.
Justice Ginsburg: --Where defendant starts the action as a declaratory action and a class gets certified on the plaintiff's side.
Mr. Waxman: That's correct.
I... I know that our brief and the red brief and the Solicitor's General brief all address this scenario, but I can't bring to mind the cases.
But just to get back to Justice Souter's question again, let me give you the ex... in terms of whether, if we proceed here, a State case could go forward and... and would go forward, If you take, for example, the Alabama case where there's no Alabama plaintiff here, they have not only not sought specific performance, they have disavowed any specific performance and brought separate claims on different theories.
Since they haven't sought specific performance, there is no subject matter jurisdiction over the claim because we are... and this Court basing subject matter jurisdiction on the cost of providing that performance... the Alabama case can and presumably will go forward.
Justice Souter: Will it go forward without your objection?
Are you representing that... that you will walk into the Alabama court and say, sure, we're ready to go ahead?
Mr. Waxman: Under this... yes.
Under this Court's... under the Court's current jurisprudence, yes, we would.
The only... it would only be if this Court were to resolve the question it left open in Free v. Abbott Labs that we would then have some argument, or that the Court determined that punitive damages could be accumulated.
But since they aren't asking for a specific performance... and neither, by the way, are I think four other of the six cases.
Since they're not asking for a specific performance, we don't have an argument under this Court's existing case law for keeping the cases there.
And they could--
Justice Souter: How many... how many... I'm sorry, but how many other cases like the Alabama case are there?
In other words, you... you say, okay, we'll litigate in Alabama.
Mr. Waxman: --I... I don't know that I have the... all of the details of the underlying cases in mind.
But if they are simply a claim for damages and punitive damages in which the amount in controversy is not $75,000, and they aren't asking for specific performance, I don't think, consistent with the law of this case, we would have any basis for objecting to them going forward.
Justice Ginsburg: They all ask for compensation.
There are none of them that ask just for specific performance, and... and even in this consolidated complaint, the first thing that they ask for is compensatory damages.
Mr. Waxman: Well, it's... it is clear, Justice Ginsburg... and if it isn't clear from the complaint, it is utterly clear from the... from the plaintiffs' red brief in this case at page 45 that what they... the object of this litigation is reinstatement of the national Ford credit rebate program under which they can earn credits toward the purchase of a Ford vehicle.
They... they're... they don't... none of these plaintiffs have a liquidated claim for damages because they're not asking that they be paid rebates that they earned and weren't paid.
Those were credited to them.
They are all asking for reinstatement of a program, which doesn't exist, that will allow them to earn credits, based on purchases, toward the purchase of a vehicle.
And on the... on the question of subject matter jurisdiction, the court below made two errors of law.
First, it held incorrectly that class actions joining separate and distinct claims for injunctive relief cannot be viewed from the defendants'... cannot be valued from the defendants' viewpoint.
And secondly, it erred in concluding that the plaintiffs' interest in specific performance cannot be viewed as common and undivided.
And if the Court has no questions at this time, I'd like to reserve the balance of my time and perhaps address the merits on rebuttal.
Argument of Steve W. Berman
Chief Justice Rehnquist: Very well, Mr. Waxman.
Mr. Berman, we'll hear from you.
Mr. Berman: Mr. Chief Justice, and may it please the Court:
I will turn to the question that's taken the balance of the argument so far and that is whether this Court has jurisdiction.
And I do so with the same reluctance that Mr. Waxman did because the underlying question is an important question that has troubled courts dealing with class actions for some time now.
But despite the fact that I'd like the Court to answer that question, I don't think there was jurisdiction on appeal or... or before this Court because it's quite clear that no matter how you artfully look at this, this is a simple situation that's subject to 1407(c) and (d) which this Court has said commands... and that's in the Grauded case... unmistakably commands that where there is a remand, based on the lack of subject matter jurisdiction, that that's not reviewable.
Chief Justice Rehnquist: I... it was your clients, Mr. Berman, who filed the consolidated complaint in the Western District, I take it.
Mr. Berman: That's correct, Your Honor.
Chief Justice Rehnquist: And who was it that moved to dismiss that complaint?
Mr. Berman: No one moved to dismiss that complaint.
The court, after consideration of class certification, wrestling with... I think with the laws of the various different States that were invoked by that motion, said to us, I'm issuing an order to show cause why I shouldn't, on my own motion, dismiss this case for lack of jurisdiction.
Chief Justice Rehnquist: And did he... on the subject matter ground that there's not... not $75,000 in controversy?
Mr. Berman: That's correct, Mr. Chief Justice.
Chief Justice Rehnquist: Thank you.
Mr. Berman: And then we briefed that issue and the judge dismissed the case in response to the briefing on the order to show cause.
Justice Ginsburg: And that was before there was any certification.
You didn't get up to any certification of any class, did you?
Mr. Berman: Justice Ginsburg, that was... the answer is yes.
It was before.
We were in the midst of the class certification hearings.
We had two or three hearings.
No class had been certified, and I think, as I said earlier, that in the process of wrestling with the various State laws, the district court scratched his head and said, why is this case before me?
Justice Kennedy: Now, as I understand Mr. Waxman's position, it is that the consolidated complaint is a new Federal action.
To be sure, the effect of the district court's order being appealed here and being reversed may affect... may control the remand of the cases that were being held.
But this action must be looked at on its own as a Federal action.
True, one of the proximate causes of our retaining the action by saying that there is jurisdiction may defer the remand of those other cases.
True, that looks like something of an end around the no appealability for remand, which is the express command of the Congress.
But we have here a separate case and we have to look just at that separate case.
Number one, am I understanding his argument correctly?
And number two, what is your response?
Mr. Berman: I think you are understanding his argument correctly, but I submit that he's incorrect.
It's not a new case.
As one of the Justices pointed out, there's no authority under the MDL rules for us to just say this is a whole new case.
Justice O'Connor: Well, who filed the... the consolidated complaint?
Your... presumably you did.
Mr. Berman: I did, Your Honor, and if you read Judge--
Justice O'Connor: And it had different parties and different complaints than... than the separate State actions.
Mr. Berman: --That's correct.
Justice O'Connor: Why did you file that consolidated complaint in that fashion?
It was before the district court as part of a pretrial situation in a multi-court jurisdiction problem.
Mr. Berman: It is not uncommon in MDL practice for pretrial purposes to try to organize the pleadings for the district judge in a consolidated complaint.
In fact, I... I can't think of any MDL case I handle--
Justice O'Connor: But didn't it do more than just organize the pleadings?
Didn't it change parties and causes of action and look like a whole new ball of wax?
Mr. Berman: --Well, there were some representative changes because after all the lawyers across the country got together for the first time, because we were thrown together, some of those lawyers said, if you're going to move for class certification of a nationwide class in one of these State court cases, maybe my representative doesn't need to be there because there's five other representatives.
So for consolidation purposes and for organizational purposes, we streamline and we try to be as organized as we can.
That doesn't mean we've abandoned the cases underlying below.
We... we did not.
Justice Kennedy: It's not a question of abandonment.
It's a question of which one takes precedence.
There's now a Federal case which Mr. Waxman's argument is takes precedent.
We just hold everything else until this one is done.
Mr. Berman: Well, there's a Federal case for pretrial purposes, and the judge, Judge Dwyer of the lower court, found he had no jurisdiction anymore over that case which is proceeding in Federal court.
But it's a diversity case asserting State law claims.
So it's not, quote, a Federal case.
It's been removed, and once a court determines that there's no jurisdiction, it's no longer a Federal case.
Justice Ginsburg: Mr. Berman, Mr. Waxman points out that you have submitted an entire complaint.
It doesn't look like a pretrial-only complaint.
It's a... it's a complete complaint that has a prayer for relief.
So it looks like a different action.
And he said by filing such a complaint, you in effect waived any objection to the... to the multi-district forum going on to dispose of the whole case, not just pretrial.
Mr. Berman: Well, to answer that, Justice Ginsburg, the pretrial order that Mr. Waxman cited to and I think that you cited to as well said that the consolidated complaint was to be filed for pretrial purposes only.
There was no waiver in the record that we filed.
The judge didn't order that we submit such a waiver.
And I don't know that I have the authority as a lawyer to alter the MDL rules.
The MDL rules don't provide that I can decide on my own that the case will proceed for all purposes forever in front of Judge Dwyer.
And... and yes, the complaint--
Justice Scalia: Where does it say that?
For pretrial purposes only.
Mr. Berman: --It's in the--
Justice Scalia: I mean, the judge says on page 41, should plaintiffs in all or some actions decide to file a consolidated complaint, that complaint shall be filed within 15 days.
And then the complaint itself doesn't say it's for pretrial purposes only.
Mr. Berman: --No, it does not, Your Honor, and the judge didn't mandate that we do it.
He said, should you.
Chief Justice Rehnquist: But in Lexecon, we said that the judge who... to whom it was referred for pretrial... couldn't try the case unless both parties consented, didn't we?
Mr. Berman: Yes, you did.
And there's... there's nothing in this record other than the complaint.
If you read from the complaint consent, that's the only thing in the record that you could draw that we consented to Judge Dwyer trying this case for all purposes.
Justice Scalia: Could... could you come back to my question?
Where... you... you say that the complaint was only filed for pretrial purposes.
On... on what do you base that?
Mr. Berman: I base that on my understanding of MDL practice.
I mean, we didn't say we're filing this for trial purposes.
We didn't say we're filing it for pretrial purposes.
Justice Scalia: You filed a complaint.
I mean, you file a complaint--
Mr. Berman: In MDL practice, I submit, Justice Scalia, that you do file a complaint of some form that brings all these plaintiffs from all over the country together.
I can't think of an... an MDL case, whether it Brand Name Prescription Drugs or the various cases that are pending involving the pharmaceutical industry, for example, where a consolidated complaint of... of removed State court cases is not put together in some fashion.
Justice Breyer: --That's true, but does it normally... is it normally just look like an ord... your complaint looks like an ordinary complaint.
It names four people.
It says we're bringing a case.
It's diversity jurisdiction.
It's quite clear, I think, there's venue.
And... and that's it.
It looks like a normal complaint.
So is it ordinary MDL practice that what happens when you transfer things for pretrial proceedings, the lawyers get together and file what to the naked eye looks exactly like a normal complaint, as if they marched into Federal court on day one and filed a complaint?
Is that normal MDL practice?
Mr. Berman: I think it is very typical--
Justice Breyer: How do I verify that?
Mr. Berman: --I could submit my supplemental record--
Justice Breyer: No, no.
Not your... I mean, is there some... I guess I could look it up in a book on MDL practice.
Now, on MDL practice, when you finish, as I read the rules, it says the transferee judge can reach a judgment.
But if he doesn't get to a judgment that finishes the case, he's supposed to send it back to the transferor districts, not the State court, but back to several transferor districts.
Is that what happened here?
Mr. Berman: --It never got there because--
Justice Breyer: Why?
Mr. Berman: --that... the order of remand, both by the district judge and the Ninth Circuit, was stayed.
Justice Breyer: No, but was the order of remand the... an order to send it back not to the States but to the Federal transferor districts?
Mr. Berman: Actually I think the language of the order is that the cases are remanded back to the State courts.
Justice Breyer: To the State courts.
Mr. Berman: Yes.
Justice Breyer: That must be wrong, mustn't it?
Mr. Berman: That's correct.
Justice Breyer: It should go to the transferor districts.
Mr. Berman: That's correct.
Justice Breyer: And there also... it says specifically and that is pursuant to the MDL order, which we can review, can we not?
Mr. Berman: Yes, you can.
Justice Breyer: Okay.
So we would have the power in this case to review what should have been the Ninth Circuit's order remanding the case to the transferor districts, even though they said it wrong.
Mr. Berman: If you... if you took jurisdiction under that scenario--
Justice Breyer: Yes.
Mr. Berman: --in all due respect, you would be violating both the spirit and the intent--
Justice Breyer: Not at all.
Mr. Berman: --of 1407.
Justice Breyer: --Not at all.
Not at all.
If, after all, an order of the MDL panel were to have an underlying theory that there wasn't jurisdiction in some court or other under 1447, I don't see why we couldn't by writ, as provided, review it.
And our reason for doing it would be to solve an important and serious problem of jurisdiction that is plaguing the lower courts.
In other words--
Justice Scalia: --Mr. Berman, you don't want us to review an order that never existed, do you?
Mr. Berman: I'm not sure--
Justice Scalia: You wouldn't want us to... to review an order that should have issued but didn't issue.
How could we review an order that never issued?
Justice Breyer: No, it did issue.
Mr. Berman: --There was... there was an erroneous order of the district court.
And... and I submit that--
Justice Scalia: I think we can review... the... the erroneous order is nonreviewable.
Mr. Berman: --That's correct.
Justice Breyer: No.
There is an order dismissing.
There is an order that says remand it to the courts.
Chief Justice Rehnquist: It says remand to the State--
Justice Breyer: --To the State courts.
But that... that isn't what they meant.
Mr. Berman: That is... that is not what he meant.
Justice Breyer: All right.
That is a problem.
I see that as a problem, but I don't know if it's an insuperable problem--
Mr. Berman: And the problem I have, Justice Breyer, is that I would like to agree with your argument because, as you pointed out, this is something that's plaguing the courts.
Justice Breyer: All right.
The way it would have worked if they had gotten... hadn't said remand to State courts, is they would have sent it back to transferor districts.
Some transferor districts would have agreed with this judge, some would have come to other conclusions, and we plainly could have reviewed the ones that came to other conclusions so we could have decided the issue.
So is that what you think should happen?
What should happen?
Mr. Berman: Well, I would like the Court to review the underlying merits, but to do so, I think you have to do some gamesmanship and do injustice to 1407.
Justice Ginsburg: Isn't, Mr. Berman, what--
Justice Kennedy: --Justice Breyer told you that... said that it would have to go back to the State courts.
But the question is what is the it.
You have to first dispose of the action that was instituted by the consolidated complaint.
Mr. Berman: That was disposed of.
Justice Kennedy: But that's the only thing we're arguing about here, and the arg... and the contention is it was improperly disposed of and that it was disposed of on a basis that injures the defendants and that they can appeal that because they're aggrieved under the cases that Mr. Waxman cites.
And that's all we're talking about.
Mr. Berman: And I understand that, Justice Kennedy, but the case that Mr. Waxman cites and the cases he cites for the proposition that an aggrieved party can appeal, I don't quarrel with that.
The problem with that authority in this case is that none of those cases that he cites are cases where there's been a dismissal, which there was in this case, of the consolidated complaint on the grounds of a lack of subject matter jurisdiction.
Justice Ginsburg: Mr. Berman, I think something needs clarification here.
When a district judge in a multi-district case like this makes a pretrial order, determination, decision, and on the basis of that, those cases go back to the district courts from whence they came, that ruling is not up for grabs in the individual district courts.
That is the law of the case that they all must follow.
And as I understand the Western District of Washington decision, that there was no subject matter jurisdiction, that would not be open for contest in the district courts.
Mr. Berman: --I... I agree with that.
It would go to the district courts pursuant to proper MDL practice.
We would move for enforcement of the judge's order remanding the case, but we couldn't fight that issue of subject matter jurisdiction because it would have been decided--
Justice Souter: Okay.
So... so that if that had happened... going back to an answer you gave earlier, if that had happened, and... and the... the missing step had been included and it said, back to the transferor court, the only thing that could have happened with the transferor court, the jurisdictional issue having been decided in the Western District of Washington, would be to remand.
Mr. Berman: --That's correct.
Justice Souter: Yeah, okay.
Mr. Berman: And... and because of that--
Justice Stevens: May... may I ask?
Mr. Waxman pointed out to us that this order was actually stayed by the district court and by the Ninth Circuit, and I don't find the stay order in the appendix.
I'm sure it's in the record, as he points out.
But in connection with getting that stay and the... the both... in both the district court and the court of appeals, did anyone point out to either of those courts that the order was defective for... for failing to... to include the transferor court rather than going direct to the State court?
Mr. Berman: --No.
Justice Stevens: So that just surfaced today.
Mr. Berman: It just surfaced today.
And... and the jurisdictional issue just surfaced in response to your question.
No one raised the 1407 issue in any of the courts below.
I had originally had come to talk about the important issue.
And I... I don't know that Mr.--
Justice Scalia: Us too.
Unknown Speaker: [Laughter]
Mr. Berman: --Mr. Waxman hasn't had time to address that issue.
I don't know if the Court wants me to go into that.
I have some time remaining.
Chief Justice Rehnquist: I think the Court would like to.
Mr. Berman: Very briefly then.
This Court has, since the Judiciary Act of 1789 was passed, consistently construed diversity jurisdiction so as to avoid expanding the Federal caseload.
That's the teaching of Snyder v. Harris.
The proposition that's asserted here today by the petitioners that you can use administrative costs in satisfying the amount in controversy would vastly expand the Federal caseload in two ways.
Chief Justice Rehnquist: Is your objection just to the concept of administrative costs, Mr. Berman, or to the idea that it can be compute... the amount in controversy can be computed at all from the defendants' point of view?
Mr. Berman: Mr. Chief Justice, my answer to that is I think that the Court could adopt a rule allowing the amount in controversy to be determined from either viewpoint, both from the plaintiffs' viewpoint or from the defendants' viewpoint.
But that doesn't answer the question.
The... the question really presented then is how do we value that amount.
And this Court's teachings I think have answered that question, and that is in the Hunt case, the Court has ruled and has consistently followed this proposition, that it is well established that the amount in controversy is measured by the value of the object of the litigation.
And so, another way the Court has put it is what right does the plaintiff seek to have enforced here.
Chief Justice Rehnquist: In a... in a couple of those quotes, you know, taken out of context, they seem to support your position.
They certainly don't controvert your position.
But the Court wasn't really faced with the issue here.
Mr. Berman: --I... I think the Court has never squarely been faced with the issue of should the plaintiff's rule be adopted or not.
There is suggestions that it should be, but I think what the Court has been consistent on is looking at the value of the object of litigation from the point of view, what is it that the plaintiff wants, not what are the incidental costs to the defendant.
In fact, there is a case... and I... I know it's an old case, but the Ross case and the Elliott case squarely hold that jurisdiction does not depend upon any contingent injuries or damage to a defendant in a case.
And if the rule is otherwise... and by the way, I think there's a big difference, for the purposes of this Court's review, of an administrative cost versus injunctive relief.
So let me first focus on administrative cost.
The mischief, I think, of allowing administrative cost to be considered is illustrated by an earlier Ninth Circuit decision in Snow v. Ford.
And there the plaintiff sought an injunction because Ford had sold a trailer package without an $11 wiring kit.
And Ford argued then, as it does now, that because it would have to incur substantial costs in supplying this $11 kit, that there was Federal jurisdiction.
Well, the value of the object of litigation from the plaintiffs' point of view, if you can't aggregate, which under Snyder v. Harris you can't, is $11.
If the Court is going to allow administrative cost to be considered, then this Court is going to have hundreds... Federal courts are going to have hundreds of $11 cases in front of them.
And I think Judge Posner hit the nail right on the head in the Brand Name Prescription Drug case, in which he said that if the costs of compliance were considered, then every case, virtually every case, quote, however trivial would cross the threshold.
Justice Breyer: Why shouldn't they have it if in fact it really does cost the defendant the $75,000, however you categorize it?
Why shouldn't the Federal courts hear those cases?
Mr. Berman: Because consistently this Court has looked at the value of the right to be protected and excluded such incidental costs.
The value of the right there--
Justice Breyer: There might be a legal argument there, but I thought you were making a policy argument that it was a bad thing.
Mr. Berman: --Well, I do... I do--
Justice Breyer: And I don't see why that's so if in fact in most cases I think that if it's going to cost $75,000 for an $11 claim, if it's really just one claim, the defendant will settle it.
And, of course, if it's not really just one claim, but really involves class actions involving many hundreds of claims, that's just what's supposed to be in the Federal court.
Mr. Berman: --Well, then you'd have to overrule Snyder and the non-aggregation--
Justice Breyer: There's a legal... you're making a purely legal argument then.
Mr. Berman: --Yes, which... which they're not advocating.
But from a policy argument, my argument is that you would suddenly thrust the Federal courts in determination of what basically are State... routine State law matters.
Justice Ginsburg: But that's what... that's what this Class Action Fairness Act, which has considerable support, that's pending in Congress... it's still pending, isn't it?
Mr. Berman: That's correct.
Justice Ginsburg: That's what it would do.
It would allow... if... if the price tag of all these small claims for the defendant was more than the amount in controversy... well, I think it puts a much higher price tag than $75,000.
But anyway, that... that's the idea of the class action bill that's pending in Congress, to put all these cases, to aggregate them if the total dollar amount for the defendant is very high.
Mr. Berman: That's correct.
That... it's $2 million, the new proposed limit, and it would allow aggregation, which this Court so far has not allowed.
So Congress realizes under existing precedent that what the... Ford wants to do here is not permitted.
Justice Souter: Well, is... is... is there a... is there a distinction to be made along these lines?
And I... I may not be able to... to state what I'm trying to work out in my mind, but here... here's... here's the distinction I'm trying to... to get at.
Let's assume that the... that the only issue is... is an issue in one case.
They didn't give the $11 taillight or whatever it was.
And because of the bureaucracy of a big company, in order to provide the one $11 tail light, it's going to cost $100,000 to galvanize everybody into action and get the tail light.
I see your argument in that case.
There's a difference, though, in this case because what they're saying in this case is they promised that they would have a kind of administrative system in place that would take account of all these various credit charge card... credit card charges and... and would... would ultimately result in... in this... this credit of up to $3,500 for our benefit.
The various people who are aggrieved by their failure to do it aren't all claiming $3,500.
You know, they may be claiming everything from $5 to $3,500.
The only way to satisfy our... our... the claims of all these people who are in the class is to put the system in place.
If that's the essence of their claim, they're not saying we want you to incur a lot of administrative costs in order to get to a particular result, which is jurisdictionally insufficient.
They're saying, we want you to put the system in the place... in place that you agreed you would do.
The system is not an administrative cost.
It's what you promised in the first place.
The system is the tail light.
Is that a fair distinction, and does... does that count against you?
Mr. Berman: That's their argument, and I don't think it counts against my position for two reasons.
In order to make that argument, what they're really doing is aggregating what it would cost to reinstitute the system as if they were going to pay all 6 million class--
Justice Souter: But the system is not an aggregated system.
There's either a system or there isn't a system.
If there is a system, it produces different results depending on the kind of business that individuals do.
But the system is not a separate system for all of the members of the class which is being aggregated.
It's a system to fulfill one promise which was made in common form to the entire class.
And isn't that a distinction which removes it from this notion simply of administrative cost?
Mr. Berman: --No, because right now there are just six plaintiffs.
This is not a class.
And those six plaintiffs may have a total of $20,000 at stake.
All Ford has to do to satisfy their claim in this case is to give those six people the rebates.
Justice Souter: Okay.
Mr. Berman: And the only way to get around that is to aggregate this case, which they can't do.
And so the danger--
Justice Souter: There is... there is no claim for specific performance?
Mr. Berman: --There is as to each plaintiff.
Justice Souter: But not as to a class.
Mr. Berman: That's right, because what we have here and the--
Justice Souter: So they... so they could multiply 3,500 by 6 and that would be the end of the case.
Mr. Berman: --That's right, because prior to this litigation... this gets to the common and undivided interest.
Prior to this litigation, these plaintiffs, these 6 million people, were completely unrelated.
They had no common interest in this issue, and therefore, you can't follow... you can't aggregate.
They have to be treated--
Justice Souter: Let me ask you a philosophical question.
Mr. Waxman got into epistemology a minute ago.
Let me ask you a contrary-to-fact question.
If in fact the Federal action were a class action and it included everybody who had been included in the State class actions and specific performance had been requested in the form that I suggested, would that not take it out of the aggregation problem and... and... and... and satisfy the jurisdictional amount, even on your own theory?
Mr. Berman: --No, because under the analysis of... of this Court and the Gilman court in the Second Circuit and the Ninth Circuit, again because each person had a separate right, as they've admitted.
They've admitted that for damage purposes each person had a separate and distinct claim.
Chief Justice Rehnquist: Yeah, but that's not the same as for specific performance purposes.
Mr. Berman: It is.
If... if I... if one of my plaintiffs decides he no longer wants to be in this litigation, they have don't have to up the specific performance to someone else.
Each person only has the right to the rebates they were entitled to.
So they're separate and distinct no matter what the relief is.
Justice Ginsburg: Were these class actions... were these actions certified as class actions in the State court before they were removed?
Mr. Berman: No.
They... they were removed before anything happened.
Justice Ginsburg: So we have... you need the aggregation of the class action.
Mr. Berman: That's correct.
You have an... you have an uncertified class here.
The other danger I'll touch on in my last minute of allowing the injunctive... amount it would cost the defendant, either by way of injunction or administrative cost, is that plaintiffs could use this new theory to invoke Federal court jurisdiction.
The amicus seem to suggest that plaintiffs never want to be in Federal court.
That's not correct.
If you adopt the petitioners' rule, anytime I have a case where I want to be in Federal court, where I normally could not be in Federal court... and I have many such cases right now... I would just simply have to say in my prayer for relief that the... the injunction would cost the defendant more than $75,000.
And bingo, I have a whole new rule and there's a whole new group of Federal cases that suddenly would arise.
So in closing, unless there's any questions, the problem with the defendants'... the petitioners' position in this case is that it would open up the flood gates of litigation to the Federal court system.
We cited a RAND Institute study that about 65 percent of the country's class actions are in State courts, and to adopt their rule would mean that many of those, probably thousands of cases, that are now residing in State courts would suddenly find their way into Federal courts.
That I think is not consistent with this Court's policy of strictly construing the diversity statute and giving deference to State courts and State governments with respect to laws that they have the power to enact and to have those cases heard in State courts.
Thank you, Mr. Chief Justice.
Rebuttal of Seth P. Waxman
Chief Justice Rehnquist: Thank you, Mr. Berman.
Mr. Waxman, you have 3 minutes remaining.
Mr. Waxman: Thank you, Your Honor.
I'll use 1 minute on appellate jurisdiction and I hope 2 minutes on subject matter jurisdiction.
On appellate jurisdiction, there is no doubt whatsoever that what was intended here was a new complaint about new things to proceed to judgment at trial.
At page 11 of the transcript of oral argument before the district judge on the class certification issue, the court says,
"if a nationwide class were to be certified. "
--he's talking about the consolidated complaint...
"would there be any need for further MDL proceedings, or would the whole litigation just be there in this one case for trial or other disposition? "
"Mr. Berman: That is my understanding. "
"There would be no further... everyone has consented. "
"All the plaintiffs' counsel and defendants have consented to have this case here. "
Justice Ginsburg, in response to your question about cases in which a declaratory judgment action was filed where it... the case could have been litigated by a plaintiff class in a consumer case, that was the case in the Greenwood Trust case filed by a bank in the First Circuit that ultimately produced this Court's decision in Smiley which was a consumer class action that came up out of California.
Now, with respect to specific performance, specific performance is the object of this complaint.
It is what they want.
It is the thing they need in order for any of them to be able to realize the benefits.
And as this Court said in Mississippi & Missouri River Bridge v. Ward... in that case, it involved removing a bridge obstruction... the removal of the obstruction is the matter of the controversy and the value of the object must govern.
The complaint itself says they want specific performance of the national rebate program, and if there were any clarification needed, you look at page 45 of the red brief and they explain that that's just what they want.
If there were any--
Justice Scalia: They don't... they don't need that for their relief.
And wouldn't that be a frivolous complaint?
Wouldn't that be conferring jurisdiction by... by making an assertion that goes way beyond what anybody would consider reasonable?
Mr. Waxman: --It's... it would not if... the Court may or may not grant specific performance of the national program in response to a particular plaintiff, but it would certainly not be a frivolous claim.
Cases like that are brought all the time.
Justice Ginsburg: Why... Mr.... Mr. Waxman, if you... if the test is one plaintiff... if it's Judge Posner's test, you assume there's one plaintiff, what will it cost the defendant.
Injunctive relief for one plaintiff would only involve tracking that particular plaintiff's purchases, and that wouldn't add up to $75,000.
Mr. Waxman: Justice Ginsburg, first, the cost is... the test is the cost of supplying the relief requested in the complaint to any one plaintiff, and that is class-wide relief.
It would also cost a sufficient amount even if it were only one plaintiff.
Chief Justice Rehnquist: Thank you, Mr. Waxman.
Mr. Waxman: Thank you.
Chief Justice Rehnquist: The case is submitted.
Argument of Speaker
Mr. Berman: I have the opinion of the Court to announce in No. 01-896, Ford Motor Company versus McCauley.
The petition for writ of certiorari is dismissed as improvidently granted.