Learner v . Marvin Lumber et a l . CV-08-177-JL 12/19/08 UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
Lawrence Learner and Marilyn Learner
v. Civil N o . 08-cv-177-JL Opinion N o . 2008 DNH 212 Marvin Lumber and Cedar Company and A.W. Hastings & Co., LLC
O R D E R
The plaintiffs, Lawrence and Marilyn Learner, have sued
Marvin Lumber and Cedar Company and A.W. Hastings & Co., L.L.C.,
alleging defects in residential window units that the Learners
purchased from the defendants. The defendants have moved to
dismiss the plaintiffs’ claims as barred by res judicata and
release as the result of a judgment and settlement agreement
entered in a class-action lawsuit against Marvin Lumber in a
Minnesota state court, O’Hara v . Marvin Lumber & Cedar Co., Civil
Action N o . 00-14027 (Minn. Dist. C t . Dec. 4 , 2001). The Learners
object, arguing that the defendants have not conclusively
established that the Learners were members of the O’Hara class so
as to bind them by the judgment or the release.
This court has jurisdiction over this matter between the
Learners, citizens of Hollis, New Hampshire, and the defendants,
citizens of other states, under 28 U.S.C. § 1332 (diversity jurisdiction). The court heard oral argument on the motion to
dismiss on December 1 8 , 2008. For the foregoing reasons, the
motion is denied without prejudice to the defendants’ reasserting
their res judicata and release arguments in a motion for summary
judgment, as more fully explained infra.
I. Applicable legal standard
Because res judicata and release are affirmative defenses,
see Fed. R. Civ. P. 8 ( c ) , the burden falls to the defendants to
prove them. See Caban Hernandez v . Philip Morris USA, Inc., 486
F.3d 1 , 8 (1st Cir. 2007) (release); Banco Santander de P.R. v .
Lopez-Stubbe (In re Colonial Mtg. Bankers Corp.), 324 F.3d 1 2 ,
15-16 (1st Cir. 2003) (res judicata). While this can be
accomplished through a motion to dismiss under Rule 12(b)(6) of
the Federal Rules of Civil Procedure, dismissal can occur only
when facts that “conclusively establish the affirmative defense”
are “definitively ascertainable from the allegations of the
complaint, the documents (if any) incorporated therein, matters
of public record, and other matters of which the court may take
judicial notice,” including the records of prior judicial
proceedings. In re Colonial Mtg., 324 F.3d at 1 6 .
2 II. Analysis
In determining the res judicata effect of a state-court
judgment, a federal court applies the law of the issuing state.
See Migra v . Warren City Sch. Dist. Bd. of Educ., 465 U.S. 7 5 , 81
(1984). Under Minnesota law, “‘a judgment on the merits
constitutes an absolute bar to a second suit for the same cause
of action, and is conclusive between parties and privies, not
only as to every other matter which was actually litigated, but
also as to every matter which might have been litigated
therein.’” Reppert v . Marvin Lumber & Cedar Co., 359 F.3d 5 3 , 58
(1st Cir. 2004) (quoting Sondel v . Nw. Airlines, Inc., 56 F.3d
934, 938 (8th Cir. 1995)) (bracketing and further internal
quotations omitted). In Reppert, in fact, the court of appeals
ruled that the O’Hara judgment satisfied this test for res
judicata, barring those plaintiffs’ claims against Marvin Lumber
arising from its allegedly defective windows. Id. at 56-58.
As the court recognized, “‘under elementary principles of
prior adjudication a judgment in a properly entertained class
action is binding on class members in any subsequent
litigation.’” Id. at 56 (quoting Matsushita Elec. Indus. C o . v .
Epstein, 516 U.S. 367, 379 (1996) (further internal quotation
marks omitted)). But the Learners argue that--unlike the
plaintiffs in Reppert--they were not members of the O’Hara class
3 and, as a result, their complaint cannot be dismissed on res
judicata grounds. See Perez v . Volvo Car Corp., 247 F.3d 303,
310-12 (1st Cir. 2001).
The O’Hara judgment approved a class action settlement
between Marvin Lumber and two “Settlement Classes,” a defined
term including, in relevant part, “all current owners of Marvin
PILT Units manufactured in calendar years 1985 through 1989.”
The term “Marvin PILT Units,” in turn, “means windows, doors, or
components thereof, manufactured by Marvin during calendar years
1985 through 1989 and using PILT as a preservative.”1 The
Learners, who allege that “[i]n or around 1986, [they] purchased
certain aluminum-clad window units and related hardware . . .
designed, manufactured and sold by defendant Marvin,” were
therefore “current owners” of windows manufactured by Marvin
between 1985 and 1989 at the time the O’Hara settlement was
approved. They do not allege, however, that those windows
“us[ed] PILT as a preservative.” This means, the Learners argue,
that their membership in the O’Hara class and, consequently, the
binding nature of the O’Hara judgment as to them, are not
“definitively ascertainable” from their complaint, making
dismissal on res judicata grounds inappropriate.
1 PILT was the trade name of a wood sealant manufactured by PPG Industries, Inc.
4 This argument dodges the res judicata defense, at least for
now. The materials properly considered on a motion to dismiss
under Rule 12(b)(6)--here, just the complaint and the O’Hara
judgment--do not conclusively establish that the Learners’
windows “us[ed] PILT as a preservative.”2
In resisting this conclusion, the defendants rely on the
O’Hara court’s finding, in its judgment incorporating the terms
of the parties’ settlement agreement, that “[b]etween 1985 and
1988 Marvin treated all windows and doors with PILT.” The
defendants say that this finding collaterally estops the Learners
from arguing to the contrary in this litigation. As with res
judicata, however, the collateral estoppel effect of a judgment
extends only to its parties and their privies. See Crossman v .
Lockwood, 713 N.W.2d 5 8 , 62 (Minn. C t . App. 2006). This
2 At oral argument, the defendants took the position that, because the Learners had not specifically alleged that their windows were not covered by the O’Hara settlement, the court should grant the motion to dismiss. The court disagrees with this reading of the Learner’s complaint which, at this stage in the game, must be construed in the light most favorable to them, see, e.g., Gray v . Evercore Restructuring L.L.C., 544 F.3d 320, 324 (1st Cir. 2008), but, in any event, it is the defendants who have the burden of establishing that the Learners’ claims are barred by O’Hara, as just discussed; it is not the Learners’ burden to plead around that judgment. The defendants also suggested that, if they had moved for judgment on the pleadings under Rule 12(c) rather than dismissal under Rule 12(b)(6), the outcome would be different, but those rules impose identical standards in all respects relevant here. See id.
5 limitation would be meaningless if findings from the judgment
itself could estop a litigant from arguing that it was not in
fact a party and therefore should not be estopped, in the manner
urged by the defendants. See Discover Fin. Servs., Inc. v . Visa
U.S.A., Inc., Nos. 04-7844, 04-8967, 2006 WL 2807187, at *1-*2
(S.D.N.Y. Sept. 2 7 , 2006) (rejecting this notion as “circular
logic”). S o , assuming, without deciding, that the defendants
could show that the O’Hara judgment meets the other criteria for
collateral estoppel, they have not conclusively shown that the
Learners were parties to it so as to bind them to its
determination that Marvin used PILT as a preservative on all of
its windows during the time at issue.3
This does not mean that there is any reason to doubt that,
as the O’Hara court found, Marvin did use PILT on all of the
windows it manufactured between 1985 and 1989--including the
Learners’, which would therefore place them in the O’Hara class
3 Apart from its potential collateral estoppel effect--which, as just discussed, has not been demonstrated--the finding of the O’Hara court has no evidentiary value, because prior judicial findings are inadmissible hearsay, subject to exceptions (e.g., the use of a prior criminal conviction as evidence of credibility) not applicable here. See EnergyNorth Natural Gas, Inc. v . UGI Utils., Inc., 2003 DNH 5 7 , 5 ; see also, e.g., United States v . Sine, 493 F.3d 1021, 1036-37 & n.16 (9th Cir. 2007); Herrick v . Garvey, 298 F.3d 1184, 1191-92 (10th Cir. 2002); United States v . Jones, 29 F.3d 1549, 1554 (11th Cir. 1994); Nipper v . Snipes, 7 F.3d 415, 417 (4th Cir. 1993).
6 and bind them to the judgment. So it remains unclear, at least
from the materials presently before the court, what basis the
Learners and their counsel have for alleging in their complaint
that “[o]n information and belief, the claims asserted in the
. . . class action did not include windows of the type at issue
in this case,” namely, their own “aluminum-clad window units.”
The Learners point to excerpts from the trial of Marvin’s
own products liability case against PPG Industries, the
manufacturer of PILT, Marvin Lumber & Cedar C o . v . PPG
Industries, Inc., N o . 95-cv-739 (D. Minn. 1995), which, they say,
suggest that Marvin’s aluminum-clad windows suffered from
problems unrelated to PILT. But, even accepting the Learners’
view as to the implication of these excerpts--which consist of a
portion of one colloquy between counsel and the court, and a
portion of the testimony of one witness whose identity is not
apparent--it does not follow that Marvin’s aluminum-clad windows
were not treated with PILT, only that PILT may not have been the
cause of all of the problems experienced with those windows.
These materials thus provide no support for the Learners’ claim
that, because their windows were aluminum-clad, the windows did
7 not “us[e] PILT as a preservative” so as to place the Learners
outside of the O’Hara settlement class.4
Relatedly, the Learners argue that their claims cannot be
barred by the O’Hara judgment because they allege defects in
Marvin’s aluminum-clad windows apart from PILT, which they say
was the only defect asserted in the O’Hara class action. But
this argument understates the preclusive effect of the O’Hara
judgment. As the court of appeals noted in Reppert, “[u]nder
Minnesota law, res judicata principles apply not only as to every
matter which was actually litigated, but also as to every matter
which might have been litigated, therein.” 359 F.3d at 58
(internal quotation marks omitted).
Any claim of a defect in Marvin’s windows manufactured
between 1985 and 1989 plainly could have been litigated in the
O’Hara action, whether or not that defect was PILT. Indeed, the
4 The Learners also rely on an order entered in Marvin’s lawsuit against PPG stating that Marvin “commenced this action . . . after [it] became dissatisfied with a wood preservative product--PILT--that [it] had purchased from [PPG] . . . between February 1 7 , 1985, and December 1 1 , 1988.” Marvin Lumber & Cedar Co. v . PPG Indus., Inc., 34 F. Supp. 2d 738, 741 (D. Minn. 1999), rev’d, 223 F.3d 873 (8th Cir. 2000). The Learners argue that this statement shows, contrary to the O’Hara court’s finding, that Marvin could not have treated all of its windows made between 1985 and 1989 with PILT, since it did not even start buying it from PPG until six weeks into 1985. Leaving the soundness of this logic aside, it has no bearing on whether Marvin used PILT on the Learners’ windows, purchased in 1986.
8 Reppert court rejected the argument that claims “arising from a
post-sale duty to warn, which continued through the O’Hara
proceedings and thereafter” were not barred by the judgment in
that action, identifying a “common nucleus of operative fact
between the two cases,” namely, “Marvin’s sale of defective
windows.”5 359 F.3d at 57-58 & n.4. Insofar as the Learners are
claiming problems with their windows unrelated to PILT--a claim
which, it should be noted, is hardly apparent from the face of
their complaint, which alleges only that the windows “allowed
water to enter and pass through” without specifying whether this
was due to PILT o r , if not, what--that claim likewise arises out
of Marvin’s sale of defective windows. As the court ruled in
5 At oral argument, the Learners attempted to characterize this statement from Reppert as (1) limited by its context to windows defective due to PILT, as opposed to anything else, (2) non-binding dictum, or (3) simply wrong. As to point ( 1 ) , the court disagrees that, simply because the plaintiffs in Reppert made claims arising from PILT, Reppert does not support giving broader preclusive effect to the O’Hara judgment, but the point is ultimately irrelevant anyway, as explained infra. As to point ( 2 ) , assuming the statement is dictum, it is nevertheless owed “considerable deference” by this court. Doe v . Friendfinder Network, Inc., 540 F. Supp. 2d 288, 299 (D.N.H. 2008) (internal quotation marks omitted). As to point ( 3 ) , the decisions of the court of appeals are binding on this court, regardless what it thinks of them, but, as also explained infra, this court harbors no doubt whatsoever that Reppert was correct in observing that Marvin’s alleged sale of defective windows was the transaction at issue in O’Hara and thus the scope of its preclusive effect.
9 Reppert, such a claim could have been litigated in O’Hara and, as
a result, is precluded by the judgment there.6 See id.
At oral argument, the Learners vociferously disputed this
conclusion, arguing that the O’Hara judgment barred the claims by
the plaintiffs in Reppert only because--unlike the Learners’
claims here--they arose out of the failure of PILT. While the
Reppert court’s description of the plaintiffs’ claims does
suggest that they were premised on “inadequate preservatives used
in the manufacturing process,” 359 F.3d at 5 5 , it does not follow
that the preclusive effect of the O’Hara judgment extends only to
such claims. Whether or not what might be called “non-PILT”
claims were at issue in Reppert, it is black-letter law that a
final judgment in an action extinguishes “all rights of the
plaintiff to remedies against the defendant with respect to all
or any part of the transaction, or series of connected
transactions, out of which the action arose.” Restatement
(Second) of Judgments § 24(1) (1982).
6 It may be fair to say that the Learners’ claim, whatever it i s , was asserted in O’Hara: in its judgment incorporating the parties’ settlement, the court there described the action as “seeking compensation for the class described of all current owners of defective windows and doors manufactured by” Marvin, without further specifying the defect. The court need not resolve this point, however, because the Learners’ claim clearly could have been asserted in O’Hara.
10 There is no question that the “transaction” out of which the
O’Hara action arose was Marvin’s sale of allegedly defective
windows and that, as a result, the judgment in that action bars
any rights that the plaintiffs to that action had against Marvin
with respect to that transaction. This result follows, moreover,
“even though the plaintiff is prepared in the second action to
present evidence or theories of the case not presented in the
first action,” id. § 25 (formatting altered), e.g., the Learners’
theory that Marvin’s windows suffered from defects aside from
PILT. As the citations to the Restatement of Judgments suggest,
these are fundamental principles of res judicata followed in this
circuit, see, e.g., AVX Corp. v . Cabot Corp., 424 F.3d 2 8 , 31
(1st Cir. 2005), Minnesota, see, e.g., Hauschildt v . Beckingham,
686 N.W.2d 829, 840-41 (Minn. 2004), and, for that matter, New
Hampshire, see, e.g., Grossman v . Murray, 141 N.H. 265, 269
(1996). S o , while the Learners’ counsel repeatedly urged the
court to “read the cases” that purportedly support their cramped
view of res judicata, it remains unclear what “cases” those are.
There is simply no support for the Learners’ position that a
plaintiff may sue a manufacturer, alleging that one of its
products is deficient in one respect, then, after that suit
proceeds to a final judgment, sue the same manufacturer again,
only this time alleging that the same product is deficient in
11 some other respect. In fact, the authority is specifically to
the contrary. See Hart v . Yamaha-Parts Distribs., Inc., 787 F.2d
1468, 1470-71 (11th Cir. 1986) (ruling that claiming “different
theories of liability for alleged defects in . . . design and/or
manufacture” did not avoid res judicata); Little v . V & G Welding
Supply, Inc., 704 S o . 2d 1336, 1338 (Miss. 1997) (ruling that
judgment in earlier suit alleging design defect barred later suit
alleging manufacturing defect); Abbott Labs. v . Gravis, 470
S.W.2d 639, 642-43 (Tex. 1971) (ruling that earlier suit claiming
defect in drug when injected into spinal column precluded later
suit claiming defect in drug when given intravenously). More
importantly, so are the basic rules of res judicata, as just
discussed, and common sense.
Furthermore, even assuming, dubitante, that the Learners’
claims could not have been brought in O’Hara and for that reason
are not barred by the res judicata effect of the judgment, they
would nevertheless be barred by the release incorporated into the
judgment. See Reppert, 359 F.3d at 58-59. As the circuit
recognized there, “‘a court may permit the release of a claim
based on the identical factual predicate as that underlying the
claims in the settled class action even though the claim was not
presented.’” Id. at 59 (quoting Matsushita, 516 U.S. at 377
(further internal quotation marks omitted)). The release in
12 O’Hara accordingly applied to all claims “that have been or could
have been asserted arising out of any purchase or performance of
a Marvin PILT Unit,” not only “to the extent that such claims are
based upon any allegations that were or could have been asserted
in the Amended Complaint” in that case, but also insofar as they
“arise out o f , directly or indirectly, any acts, facts,
transactions, occurrences, conduct, representations, or omissions
alleged in the Amended Complaint.”
The Reppert court understood this release as “sufficiently
broad to encompass” the claims by the plaintiffs there, 359 F.3d
at 5 9 , that their windows experienced “wood decay problems . . .
caused by inadequate preservatives used in the manufacturing
process,” id. at 5 5 . Again, the Learners suggest that their
claims are different from those of the Reppert plaintiffs because
they do not arise from the failure of PILT. Even if that
description is apt, however, it does not follow that the
Learners’ claims could not have been asserted in O’Hara--as just
discussed, they could have--or, in the alternative, that they do
not arise “directly or indirectly” from anything alleged in the
amended complaint in that case. See note 6, supra. In any
event, the court cannot rule at this point that the Learners are
bound by the release because, whatever the scope of its other
limitations, it extends only to claims “arising out of any
13 purchase or performance of a Marvin PILT Unit.” I f , and only i f ,
the Learners’ windows fit that description can they be bound by
either the O’Hara judgment or the release.
The Learners also maintain that even if the judgment and
release apply to them, their claims are not barred because the
O’Hara settlement “was not fair and reasonable.” In response,
the defendants argue that, as a federal tribunal, this court
cannot examine the “fairness” or “reasonableness” of a state-
court judgment due to the Rooker-Feldman doctrine. See Rooker v .
Fidelity Trust Co., 236 U.S. 413 (1923); D.C. C t . of Appeals v .
Feldman, 460 U.S. 462 (1983). This, in turn, has prompted the
Learners to challenge this court’s jurisdiction over this matter
altogether on the theory that the doctrine “in broad terms,
deprives the district court of jurisdiction over a final judgment
of a state court.”7 Geiger v . Foley Hoag LLP Ret. Plan, 521 F.3d
6 0 , 65-66 (1st Cir. 2008).
Both of these arguments suffer from the common error of
“conflat[ing] preclusion law with Rooker-Feldman.” Lance v .
Dennis, 546 U.S. 459, 466 (2006). As the Supreme Court explained
there, “[t]he Rooker-Feldman doctrine does not bar actions by
nonparties to the earlier state-court judgment simply because,
7 The Learners filed a motion to remand this case to state court on this basis, which was denied.
14 for purposes of preclusion law, they could be considered in
privity with a party to the judgment.” Id. (footnote omitted).
Otherwise, federal district courts would be stripped of the
jurisdiction expressly conferred on them by Congress every time
the preclusive effect of a state-court judgment was raised as a
defense. This would violate both the general rule that defenses
do not affect federal jurisdiction, see Metro. Life Ins. C o . v .
Taylor, 481 U.S. 5 8 , 63 (1987), and the more specific one that
the Rooker-Feldman doctrine does not “stop a district court from
exercising subject-matter jurisdiction simply because a party
attempts to litigate in federal court a matter previously
litigated in state court.” Exxon Mobil Corp. v . Saudi Basic
Indus. Corp., 544 U.S. 280, 293 (2005). The parties’ arguments
to the contrary fly in the face of this precedent.8
8 The court acknowledges that, in a footnote in the Reppert opinion, the court of appeals called it “doubtful that [the O’Hara judgment’s] validity [is] subject to challenge in federal court,” citing Rooker and Feldman, as well as 28 U.S.C. § 1257, the Full Faith and Credit Act. 357 F.3d at 57 n.3. The defendants, perhaps understandably, rely on this footnote in arguing that the Rooker-Feldman doctrine insulates the O’Hara judgment from collateral attack in this court. But the Reppert court’s observation, in 2004, appears to rest on the broad construction of the Rooker-Feldman doctrine that held sway before the Supreme Court reined it in substantially in Exxon Mobil, in 2005. See 544 U.S. at 283 (criticizing applications of the doctrine “superseding the ordinary application of preclusion law pursuant to 28 U.S.C. § 1738”). Again, as the Court made clear in that case, “Rooker-Feldman does not otherwise override or supplant preclusion doctrine.” Id. at 284.
15 Yet this is not to say that this court is free to entertain
a collateral attack on the “fairness” or “reasonableness” of the
O’Hara judgment; it is just that any limits on this court’s
ability to do so are imposed by res judicata principles, rather
than by the Rooker-Feldman doctrine. Lance, 546 U.S. at 466;
Exxon-Mobil, 544 U.S. at 293. Those principles are codified in
the Full Faith and Credit Act, 28 U.S.C. § 1738, which “requires
‘the federal court to give the same preclusive effect to a state-
court judgment as another court of that State would give.’”
Exxon-Mobil, 544 U.S. at 293 (quoting Parsons Steel, Inc. v .
First Ala. Bank, 474 U.S. 518, 523 (1986)). Thus, as the court
of appeals has instructed, federal courts “must give full faith
and credit to what [state] courts have lawfully found and
ordered” as part of class-action judgments. Nottingham Partners
v . Trans-Lux Corp., 925 F.2d 2 9 , 32-33 (1st Cir. 1991).
Nevertheless, the prevailing view holds that a party may
collaterally attack a class action judgment on the grounds that
it was entered with insufficient notice or that the class members
were not adequately represented. See 18A Charles Alan Wright et
al., Federal Practice & Procedure § 4455, at 468-87 (2d ed.
2002); accord Reppert, 359 F.3d at 56-57 (considering argument
against giving res judicata effect to O’Hara judgment due to
allegedly inadequate notice).
16 Here, the Learners argue, generally, that the O’Hara
judgment violates due process, specifically in that the notice
was insufficient. This is an exceedingly difficult argument to
sustain at either level. First, the court in Reppert expressly
found the notice of the O’Hara proceedings to be “appropriate,”
binding the plaintiffs there to the settlement even though they
had not received actual notice. 359 F.3d at 56-57. The court
observed that the notice consisted of “notification by mail to
all known members of the certified class, and the publication of
this notice being placed in 33 newspapers of general circulation
throughout the United States,” including “a toll-free number and
the address of a web-site, established to provide potential class
members with information about the class action and to make
available appropriate forms for their active participation in the
proceedings or to allow them to opt out of the suit.” Id. at 5 5 .
The court ruled that “as applied to [the plaintiffs], the
newspaper notices met the legal requirements of due process,”
even though they had not received the mailing. Id. at 5 7 .
The Learners argue that, because this ruling was based on
the appearance of the notice in The Boston Globe, rather than any
newspaper published in New Hampshire, it does not foreclose their
argument that notice to New Hampshire residents like them was
17 insufficient. That notion strikes the court as farfetched.9 The
Learners have also claimed that the “class notice was vague, and
failed to give sufficient information,” but the Reppert court
ruled otherwise, at least implicitly, in concluding that the
notice satisfied due process. See also One Cowdray Park LLC v .
Marvin Lumber & Cedar Co., 371 F. Supp. 2d 167, 171 (D. Conn.
2005) (concluding that notice of O’Hara settlement satisfied due
process). That ruling would appear to be controlling here.
The Learners also argue that, apart from its allegedly
defective notice, the O’Hara judgment violated their due process
rights by extinguishing their claims despite their “favorable
legal position” under New Hampshire products liability law as
opposed to the law of other states. Again, however, absent
inadequate notice--which has been rejected by Reppert--or
representation--which the Learners have not claimed--a class
member cannot collaterally attack the resulting judgment. See
Nottingham Partners, 925 F.2d at 32-33; Haas v . Howard, 579 F.2d
654, 657-59 (1st Cir. 1978); see also Epstein v . MCA, Inc., 179
F.3d 641, 648-50 (9th Cir. 1999); Thompson v . Edward D. Jones &
Co., 992 F.2d 187, 190 n.5 (8th Cir. 1993); Patrowicz v .
9 The court notes that The Boston Globe is widely circulated in New Hampshire, particularly in the southern part of the state where the Learners reside.
18 Transamerica HomeFirst, Inc., 359 F. Supp. 2d 140, 151-52 (D.
Conn. 2005). As Wright, Miller, and Cooper have observed,
If class members could sit back and see whether the court awards them a desirable judgment and then attack the judgment collaterally if unsatisfied with the award they receive, the purpose of res judicata would be undermined . . . . Due process entitles class members to notice and adequate representation. It does not entitle them to continue to challenge the defendant’s conduct until they are ultimately successful.
18A Wright, supra, § 4455, at 477 (quoting Quigley v . Braniff
Airways, Inc., 85 F.R.D. 7 4 , 76-77 (N.D. Tex. 1979)); see also
Restatement (Second) of Judgments § 72 cmt. d (1980).
That is precisely what the Learners are trying to accomplish
here by questioning the “fairness” and “reasonableness” of the
judgment resulting from the O’Hara settlement.10 The Learners
10 Even if the Learner’s attack on the “fairness” and “reasonableness” of the O’Hara judgment were treated as a challenge to the adequacy of the class representation in that proceeding, further obstacles remain. First, while the issue remains far from settled, see 18A Wright, supra, § 4455, at 484- 487, some courts have held that if a state court deems representation adequate in the course of issuing a class action judgment, federal courts are bound to give full faith and credit to that determination: it may not be re-examined in a collateral proceeding. See, e.g., Epstein, 179 F.3d at 648. The court of appeals appears to have endorsed that view in Reppert, as discussed in note 8 , supra. Here, the O’Hara court specifically found that the action satisfied Rule 23 of the Minnesota Rules of Civil Procedure, which demands, among other things, adequate representation. Minn. R. Civ. P. 23.01(d). Second, even if a class-action judgment could be collaterally attacked for inadequate representation, the court of appeals has indicated that, for such an attack to be successful, it must rely on more than the representative’s mere “failure to
19 had the chance to appear in the O’Hara proceedings to object to
the proposed settlement, or to opt out of them altogether, on the
grounds they now urge, viz., the relative strength of their
claims under New Hampshire law. See Reppert, 359 F.3d at 55-57.
Had they opted out, the settlement would have posed no obstacle
at all to their bringing such claims, see One Cowdray Park, 371
F. Supp. 2d at 171. Had they objected but been overruled, they
would have been entitled to appeal in the Minnesota courts and,
if that failed, to press their due process concerns by seeking
certiorari in the United States Supreme Court, see Nottingham
Partners, 925 F.2d at 3 3 . The court of appeals has instructed
that this, rather than resort “to the lower federal courts in the
vain pursuit of back-door relief,” is the proper means of
challenging the merits of a class-action settlement.11 Id.
pursue a variation in the claim for relief.” Haas, 579 F.2d at 657 n.2. Any failure on the part of the O’Hara class representative to press its members’ potential claims under New Hampshire law would seem to fall into that category. 11 At oral argument, the Learners invoked the Supreme Court’s decision in Epstein in support of their right to attack the O’Hara judgment collaterally. But the Court in Epstein specifically declined to consider that issue. 516 U.S. at 379 n.6. And, when the case was remanded to the Ninth Circuit, that court expressly held that rulings of adequate notice and representation by a class-action court could not be collaterally attacked, see Epstein, 179 F.3d at 648, which, again, appears to reflect the view of the First Circuit.
20 Of course, the “fairness” and “reasonableness” of the O’Hara
settlement are beside the point here unless the Learners were
parties to i t . If they were not, in fact, they do not have
standing to challenge the judgment at all, see Restatement
(Second) of Judgments § 76 cmt. a (1982), even on the limited
bases on which a class action judgment may be collaterally
attacked. The court has discussed the Learners’ attempt at
undermining the O’Hara judgment, then, only to alert them and
their counsel to the seeming inevitability that, if they are
indeed members of the O’Hara class, they cannot prevail in this
action. Because establishing the Learners’ membership in the
O’Hara class seems similarly--if not definitively--inevitable,
they may wish to consider the value of prolonging litigation in
which they have little chance of prevailing.12
12 In addition to their strict products liability theory, the Learners have also brought a claim against the defendants for violating the New Hampshire Consumer Protection Act, N.H. Rev. Stat. Ann. § 358-A, by entering into the class settlement in O’Hara and subsequently advising the Learners that their claims were barred by it “without having a good faith basis for believing that the O’Hara settlement applied to [their] claims, or, even if it did apply nominally to their claims, that it was legally effective to bar such claims.” But any theory based on the defendants’ invocation of the O’Hara settlement obviously cannot succeed i f , in truth, it does bar the Learners’ products liability claim (putting aside other potential problems with that theory). And, insofar as the Learners’ consumer protection claim arises out of the scope of the O’Hara settlement itself, it amounts to a collateral attack on the fairness of that settlement which, as just discussed, is impermissible--particularly because,
21 This may be particularly wise in light of the court’s
question, already noted, as to whether the Learners and their
counsel had a good-faith basis for maintaining their claim that
their windows were not covered by the O’Hara judgment. See Fed.
R. Civ. P. 11(b); see also 28 U.S.C. § 1927 (authorizing court to
require counsel who “multiplies the proceedings in any case
unreasonably and vexatiously” to pay “costs, expenses and
attorneys’ fees reasonably incurred because of such conduct”).
Nevertheless, at this stage in the proceedings, the court
cannot definitively say that the Learners’ windows used PILT so
that the O’Hara settlement bars their claims; any decision on
that issue will have to await summary judgment. To that end,
counsel shall confer no later than December 3 1 , 2008 for the
purpose of agreeing upon a schedule for taking discovery on the
limited issue of whether PILT was used as a preservative in the
allegedly defective windows that the Learners purchased from the
defendants, and for briefing motions for summary judgment on that
issue. See Fed. R. Civ. P. 26(f). The parties shall then
forthwith submit the schedule, which need not include deadlines
for any other events in the litigation, to the court for
if the Learners were indeed parties to O’Hara, they are collaterally estopped from relitigating that court’s finding that the settlement was fair.
22 approval. If counsel cannot reach agreement, each party shall
submit its own version of such a schedule to the court for
ruling. No discovery will be permitted on any other subject
until the defendants’ res judicata and release defenses are
adjudicated in this fashion.
III. Conclusion
For the foregoing reasons, the defendants’ motion to dismiss
(document n o . 4 ) is denied without prejudice to reasserting their
res judicata and release arguments in a motion for summary
judgment, following a period of discovery on the limited issue of
whether PILT was used in the allegedly defective windows
purchased by the Learners.
SO ORDERED.
___ Joseph N. Laplante United States District Judge Dated: December 1 9 , 2008
cc: John R. Harrington, Esq. Beth G. Catenza, Esq. Donald J. Brown, Esq. Emily G. Rice, Esq.