Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-01069/USCOURTS-ca8-09-01069-0/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-1069

___________

In re: Baycol Products Litigation, *

-------------------------------------- *

*

Peggy Ann Mays; George F. McCollins, *

individually, and on behalf of all others *

similarly situated, *

*

Plaintiffs, *

* Appeal from the United States

Keith Smith; Shirley Sperlazza, * District Court for the

* District of Minnesota.

Respondents-Appellants, *

*

v. *

*

Bayer Corporation, a foreign *

corporation, authorized to do business *

in West Virginia as Bayer Corporation, *

and also known as Bayer AG and Bayer * 

Pharmaceutical, *

*

Defendant-Appellee, *

*

Bayer AG, a foreign corporation; *

GlaxoSmithKline, Inc., a foreign *

corporation; SmithKline Beecham *

Corporation; GlaxoSmithKline PLC, *

*

Defendants. *

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The Honorable Michael J. Davis, Chief Judge, United States District Court for

the District of Minnesota.

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___________

Submitted: November 17, 2009

Filed: January 5, 2010

___________

Before MURPHY, SMITH, and BENTON, Circuit Judges.

___________

MURPHY, Circuit Judge.

Plaintiff George McCollins represented a putative West Virginia class in this

multidistrict litigation against the defendants who manufactured and produced Baycol,

a prescription cholesterol lowering medication. His was one of thousands of similar

Baycol lawsuits consolidated for pretrial proceedings in the district court, In re Baycol

Prods. Litig., MDL No. 1431. After the presiding judge1 denied certification of the

class McCollins sought to represent, two other former Baycol users from West

Virginia, Keith Smith and Shirley Sperlazza, sought to certify a class in West Virginia

state court. Defendant Bayer Corporation brought a motion in this case for the district

court to enjoin Smith and Sperlazza from relitigating in state court the certification of

a West Virginia class. Smith and Sperlazza responded by special appearance in

opposition to the motion for injunctive relief. The district court granted the

injunction, and respondents appeal. We affirm.

I.

Baycol was distributed from 1997 until August 2001, when the drug was

withdrawn from the market after its use was linked to thirty one deaths in the United

States. In re Baycol Prods. Litig., 532 F.Supp.2d 1029, 1035 (D.Minn. 2007). Tens

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of thousands of former Baycol users have filed suit since the drug was withdrawn.

The Judicial Panel on Multidistrict Litigation, see 28 U.S.C. § 1407, consolidated the

federal cases in the district court for pretrial proceedings. 

In August 2001, McCollins and two others initiated their putative class action

in West Virginia state court. Defendants removed the case to federal court on

diversity grounds, and it was subsequently transferred to the multidistrict court. By

2008 McCollins was the only remaining class representative. He had not experienced

the side effect that led to Baycol's withdrawal from the market; undisputed record

evidence showed that he had physically benefitted from the drug. Rather than suing

for physical damages, he sought refunds for economic loss caused by the defendants'

breach of warranties and violation of the West Virginia Consumer Credit and

Protection Act (WVCCPA), W.Va. Code § 46A-6-101. 

Respondents Smith and Sperlazza, purporting to represent a similar class with

similar allegations, brought their case in West Virginia state court in September 2001.

Since the one year statute of limitations on removal had run by the time complete

diversity existed, see 28 U.S.C. § 1446, respondents remained in state court. Had their

case been filed a few years later, defendants could have removed it pursuant to the

Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (codified in

scattered sections of 28 U.S.C.). 

The multidistrict (MDL) district court has issued over 160 pretrial orders and

engaged in extensive efforts to coordinate its proceedings with state courts handling

Baycol cases. In 2002, the Plaintiffs' Steering Committee filed a Master Class Action

Complaint and subsequently moved for certification of, among other classes, a

nationwide refund class. In re Baycol Prods. Litig., 218 F.R.D. 197, 202 (D.Minn.

2003). The district court denied the motion, concluding that since such plaintiffs

"would have to demonstrate that they were either injured by Baycol, or that Baycol

did not provide them any health benefits[,]" common issues did not predominate

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 McCollins characterized the defendants' motion as a motion to strike under

Fed.R.Civ.P. 12(f), since the specific relief they requested was for "Plaintiff's Class

Allegations [to] Be Stricken as a Matter of Law." The district court and the parties in

this appeal considered the motion as one to deny class certification. See Vinole v.

Countrywide Home Loans, Inc., 571 F.3d 935, 939-40 (9th Cir. 2009) (Rule 23 allows

defendants to move preemptively to deny class certification prior to plaintiffs' moving

for certification). 

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pursuant to Fed.R.Civ.P. 23(b)(3) and (c)(4). Id. at 213-14. A further barrier to class

certification, the district court concluded, was the lack of uniformity among state tort

laws governing unjust enrichment and breach of warranty. Id. at 214.

Defendants subsequently moved the district court to deny class certification of

the West Virginia economic class proposed by McCollins,2

 and to enter summary

judgment against McCollins on his individual claims. The district court granted the

defendants' motions on August 25, 2008, after concluding that nothing in West

Virginia law would alter its prior analysis that individual issues of fact predominate

with regard to economic loss claims. In re Baycol Prods. Litig., McCollins v. Bayer

Corp., et al., MDL No. 1431, No. 02-0199, slip op. at 11-12 (D. Minn. Aug. 25, 2008)

(Order Denying Certification). Holding that under the WVCCPA, McCollins would

need to "demonstrate Baycol was something other than what he bargained for" and

that McCollins could not meet this burden since Baycol in fact lowered his cholesterol

and resulted in no side effects, id. at 18, the court also granted summary judgment to

the defendants on his individual claims. Id. at 19. No part of the order was appealed.

Shortly after the deadline expired to appeal the order denying certification,

respondents moved for certification of a West Virginia economic loss class in state

court. Bayer moved the district court to enjoin respondents, as absent putative class

members in this case, from relitigating the previous decision denying certification of

a West Virginia economic loss class. Respondents specially appeared before the

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district court in this case to object to the motion for an injunction. The district court

granted an injunction, and respondents filed this appeal.

II.

Although the Anti-Injunction Act generally prohibits federal courts from

interfering in state proceedings, it permits injunctions necessary to "protect or

effectuate its judgments." 28 U.S.C. § 2283; see also All Writs Act, 28 U.S.C. § 1651

(providing statutory authority to issue injunction when justified). We review de novo

the district court's determination that the Act's "relitigation exception" applies, Jones

v. St. Paul Cos., Inc., 495 F.3d 888, 890 (8th Cir. 2007), and that it had personal

jurisdiction over respondents, Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072

(8th Cir. 2004). 

"Because of the sensitive nature of federal interference with state court

litigation," the relitigation exception "must be narrowly construed." Jones, 495 F.3d

at 891. The district court's injunction was proper if collateral estoppel would bar

respondents from seeking certification of a West Virginia economic loss class in state

court. See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988) (relitigation

exception "founded in the well-recognized concepts of res judicata and collateral

estoppel").

In determining the preclusive effect of the order denying certification, we rely

on federal common law. See Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S.

497, 508 (2001) (federal common law governs the preclusive effect of a dismissal in

a diversity case); In re Bridgestone/Firestone, 333 F.3d 763, 767-68 (7th Cir. 2003)

(applying federal law to determine the preclusive effect of a federal court's denial of

class certification). We usually incorporate the collateral estoppel doctrine of the

relevant state unless it is "incompatible with federal interests[,]" in which case "a

contrary federal rule" may be justified. Semtek, 531 U.S. at 509. 

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We begin by considering the West Virginia collateral estoppel requirements:

(1) The issue previously decided is identical to the one presented in the

action in question; (2) there is a final adjudication on the merits of the

prior action; (3) the party against whom the doctrine is invoked was a

party or in privity with a party to a prior action; and (4) the party against

whom the doctrine is raised had a full and fair opportunity to litigate the

issue in the prior action. 

State v. Miller, 459 S.E.2d 114, 120 (W.Va. 1995). 

The issue presented by respondents' motion in state court for class certification

was previously decided by the district court in this case. Respondents seek

certification on the same legal basis of the same class already denied in this case.

Respondents argue that the issues are different because the district court applied

Fed.R.Civ.P. 23 while they moved for certification in state court under W.Va.R.Civ.P.

23. Respondents point to no relevant substantive or procedural differences between

the two certification rules, however.

In order to reach the question of class certification, the district court

appropriately decided a substantive issue of West Virginia law as to what a former

Baycol user suing Bayer must prove under the WVCCPA. The district court

determined that a plaintiff must show that Baycol injured or did not benefit him

through an "in depth review of [his] medical records[.]" Order Denying Certification,

slip op. at 12. In other words, the district court concluded that Baycol plaintiffs

cannot state a claim under the WVCCPA without proof of harm or injury. Economic

loss alone is insufficient. Certification under the state rule would undermine this

conclusion of substantive state law properly made by the district court. See Canady

v. Allstate Ins. Co., 282 F.3d 1005, 1018 (8th Cir. 2002) ("[A]ppellants may not . . .

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We acknowledge that some parts of Canady have been overruled. See Ark.

Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d 812, 821-

22 (8th Cir. 2009) (theory that the All Writs Act provides an independent grant of

subject matter jurisdiction abrogated by Syngenta Crop Protection, Inc. v. Henson,

537 U.S. 28 (2002)).

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recycle the same claims and issues in different courts, hoping to achieve the result

they desire.").3

Though technically a procedural ruling, a certification determination "involves

considerations that are enmeshed in the factual and legal issues comprising the

plaintiff's cause of action." Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978)

(quotation omitted). Under federal rule 23(b)(3), common issues of fact or law must

predominate over individual issues. A judge must delineate what issues of law exist

to determine whether they are common to the class. See Blades v. Monsanto Co., 400

F.3d 562, 567 (8th Cir. 2005) (disputes "going to the factual setting of the case" and

"overlap[ping] with the merits" may be resolved in a certification decision "[as]

necessary to determine the nature of the evidence that would be sufficient, if the

plaintiff's general allegations were true, to make out a prima facie case"); see also In

re Initial Pub. Offering Sec. Litig., 471 F.3d 24, 41 (2d Cir. 2006). Recognizing this

phenomenon, federal courts sometimes apply a de novo standard of review to legal

determinations made in the course of deciding whether or not to certify a class despite

the overall abuse of discretion standard applicable to certification rulings. See, e.g.,

Yokoyama v. Midland Nat. Life Ins. Co., --- F.3d ----, No. 07-16825, 2009 WL

2634770, at *3 (9th Cir. Aug. 28, 2009); Andrews v. Chevy Chase Bank, 545 F.3d

570, 573 (7th Cir. 2008). 

Respondents' argument that In re W. Va. Rezulin Litig., 585 S.E.2d 52 (W.Va.

2003), indicates that a West Virginia court might apply its own certification rule

differently thus misses the point. In that litigation involving a diabetes drug, the West

Virginia Supreme Court of Appeals reversed the denial of class certification for

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In addition, the district court observed that the West Virginia court based its

Rezulin decision on its "reject[ion of] the argument that individual issues of damages

predominated[,]" while here "individual issues of causation, not damages,

predominated over common issues." In re Baycol Prods. Litig., McCollins v. Bayer

Corp., et al., MDL No. 1431, No. 02-0199, slip op. at 7 (D.Minn. Dec. 9, 2008) (Order

Granting Injunction). 

5

The putative McCollins class asserted breach of warranty and WVCCPA

claims too, while respondents also alleged a common law fraud claim. The addition

of a fraud claim does not change our analysis. "The same cause of action framed in

terms of a new legal theory is still the same cause of action[.]" Canady, 282 F.3d at

1015. 

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former Rezulin users who sought a refund as well as medical monitoring costs. The

court recognized that a "conclusion on the issue of predominance [in a certification

decision] requires an evaluation of the legal issues and the proof needed to establish

them." Id. at 72 (quotation omitted). The state appellate court concluded that

common issues predominated based on (1) its interpretation of medical monitoring

claims under its decision in Bower v. Westinghouse Elec. Corp., 522 S.E.2d 424

(W.Va. 1999), and (2) its determination that a prima facie WVCCPA case does not

require a plaintiff to allege specific damages but only to show that "she has purchased

an item that is different from or inferior to that for which he bargained[.]" In re W.

Va. Rezulin Litig., 585 S.E.2d at 73-75. These were substantive legal determinations

necessary to support its conclusion that certification was appropriate in that litigation.

Likewise, the district court reached its certification decision in this case based

on its own "evaluation of the legal issues and the proof needed to establish them[,]"

namely its determination that all Baycol plaintiffs will need to show an individualized

physical injury.4

 This conclusion has a preclusive effect and is inseparable from the

certification question.5

 That respondents may disagree with the district court's legal

conclusions about the WVCCPA is unavailing. See Liberty Mut. Ins. Co. v. FAG

Bearings Corp., 335 F.3d 752, 763 (8th Cir. 2003) (application of collateral estoppel

not dependent on correctness of prior decision). 

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This is not always the case. See, e.g., In re Gen. Motors Corp. Pick-Up Truck

Fuel Tank Prods. Liab. Litig., 134 F.3d 133, 146 (3d Cir. 1998) (prior decision

reversing certification of a settlement class on grounds unrelated to substantive

conclusions of state law did not preclude a state court from subsequently certifying

a settlement class according to its own procedural rule).

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The issues here are also distinguishable from those in Chick Kam Choo, where

the Supreme Court considered the preclusive effect of a federal court's application of

forum non conveniens. 486 U.S. at 149. Since the original federal decision there had

discussed only federal forum non conveniens principles, its injunction preventing

consideration of whether Texas state courts were an appropriate forum was "not

within the relitigation exception." Id. A forum non conveniens determination is

different from what is at issue here, for class certification is often entwined with

substantive conclusions of state law.6

 See Bridgestone/Firestone, 333 F.3d at768

("Determining the permissible scope of litigation is as much substantive as it is

procedural."). In addition, Texas had an "open-courts" concept substantively different

from the forum non conveniens analysis applied in federal court. Chick Kam Choo,

486 U.S. at 148-49. The state and federal certification rules here, by contrast, are not

significantly different. Compare W.Va.R.Civ.P. 23 with Fed.R.Civ.P. 23.

Our holding today comports with the reasoning of Bridgestone/Firestone, in

which the Seventh Circuit concluded that the relitigation exception permitted an

injunction barring relitigation in state court of a federal court's denial of class

certification. 333 F.3d at 769. The Bridgestone/Firestone plaintiffs sought national

class certification in various state courts after it had been denied in federal court.

Relitigation in state court of whether to certify the same class rejected by a federal

court presented an impermissible "heads-I-win, tails-you-lose situation." Id. at 767.

We agree. 

The Bridgestone/Firestone court also reasoned that to the extent that the

plaintiffs sought to "urge state courts to disregard [its earlier] judgment" on a state

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This situation is distinguishable from the non MDL class action in J.R.

Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176, 180 (5th Cir. 1996), where the

Fifth Circuit observed that "each court–or at least each jurisdiction–[should] be free

to make its own [certification] determination[,]" a comment not suited to the collateral

estoppel principles of finality and uniformity which are particularly important in MDL

proceedings. 

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collateral estoppel principle of finality, "that course is cut off by Semtek's proviso[,]"

namely that "state rules that undermine the finality of federal judgments are not

incorporated." Id. at 767-68; Semtek, 531 U.S. at 509. Likewise, if a West Virginia

estoppel principle would undermine the federal interest in "protect[ing] or

effectuat[ing a federal court's] judgment[,]" 28 U.S.C. § 2283, a contrary rule under

federal common law is permissible. 

We conclude that in the context of MDL proceedings, certification in a state

court of the same class under the same legal theories previously rejected by the federal

district court presents an issue sufficiently identical to warrant preclusion under

federal common law.7

 We have previously recognized that "administering cases in

multidistrict litigation is different from administering cases on a routine docket" and

that "MDL courts must be given greater discretion to organize, coordinate and

adjudicate its [sic] proceedings[.]" In re Guidant Corp. Implantable Defibrillators

Prods. Liab. Litig., 496 F.3d 863, 867 (8th Cir. 2007) (quotation omitted). 

Respondents do not dispute that the next collateral estoppel requirement,

finality of the prior judgment, is met. The district court's order was a final judgment

disposing of McCollins' individual claims and the class allegations, and it was not

appealed within the statutory period. See Fed.R.App.P. 4(a)(1)(A).

The third and fourth elements of collateral estoppel are entwined: that the

parties against whom the rule is asserted are the same parties or parties in privity to

those in the prior action and that their interests have been adequately represented. The

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Seventh Circuit concluded that the denial of class certification is binding on unnamed

class members because they were adequately represented in the prior proceeding.

Bridgestone/Firestone, 333 F.3d at 768-69. Rule 23(a)(4)'s adequacy requirement is

met when the class representative is "part of the class and possess[es] the same interest

and suffer[s] the same injury as the [absent] class members." Amchem Prods., Inc.

v. Windsor, 521 U.S. 591, 625-26 (1997) (quotations omitted). Here, the McCollins

class and respondents' class are essentially the same. Both are West Virginians who

purchased Baycol. Both classes rely on the same theory rejected by the district court:

their ability to recover for economic loss despite the absence of a physical injury.

Thus, respondents' interests were aligned with McCollins'. 

Respondents argue that because the district court assumed without deciding that

all 23(a) factors were met in denying class certification previously, its adequacy

finding is a "post hoc judgment" not entitled to a preclusive effect. See Chick Kam

Choo, 486 U.S. at 148. In prohibiting post hoc judgments in Chick Kam Choo, the

Supreme Court clarified that injunctions must be limited to issues "actually" presented

and decided by the federal court, as evidenced by "the state of the record[.]" Id.

(quotation omitted). Adequacy was an "argument[] actually presented" to the district

court in the briefs, id., and "vigorously argued" by counsel. Order Granting

Injunction, slip op. at 15. 

Although respondents argue inadequacy based on McCollins' failure to appeal

the denial of certification, adequacy of representation does not depend on whether the

putative representative appealed. The point of the adequacy inquiry is "to uncover

conflicts of interest between named parties and the class they seek to represent."

Amchem, 521 U.S. at 625-26. Here, there were no conflicts of interest.

 

Finally, respondents argue that the court cannot assert personal jurisdiction over

them absent notice and an opportunity to opt out of the previously proposed class or

to participate in the litigation. These procedural due process requirements apply when

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Contra Gen. Motors, 134 F.3d at 141 (requested injunction would have

required federal court to exercise personal jurisdiction over 5.7 million class members

who had already settled their claims in the state proceeding). 

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absent class members will be bound to a judgment on the merits of their claims. See

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12 (1985); see also Taylor v.

Sturgell, 128 S.Ct. 2161, 2167 (2008) (exempting properly conducted class actions

from the general prohibition on "virtual representation"). In contrast, respondents are

still free to pursue individual claims in state court. As the Seventh Circuit noted, "a

person who opts out [of a certified class] receives the right to go it alone, not to launch

a competing class action." Bridgestone/Firestone, 333 F.3d at 769. Just as unnamed

members of a certified class can challenge the propriety of a settlement, respondents

could also have sought to intervene pursuant to Fed.R.Civ.P. 24 to appeal the district

court's denial of class certification. See United Airlines, Inc. v. McDonald, 432 U.S.

385 (1977); see also Bridgestone/Firestone, 333 F.3d at 768. 

The nature and degree of due process protections necessary to establish

personal jurisdiction depends on context. See Keating v. Neb. Pub. Power Dist., 562

F.3d 923, 928 (8th Cir. 2009); see also Devlin v. Scardelletti, 536 U.S. 1, 9-10 (2002)

("Nonnamed class members . . . may be parties for some purposes and not for

others."). The protections available to respondents in the context of an adverse

certification ruling include their right to adequate representation, their ability to

appeal, and the fact that the decision still allows them to pursue their individual

claims. These safeguards satisfy due process and are sufficient to bind them in

personam to the district court's certification decision. Cf. In re Bayshore Ford Trucks

Sales, Inc., 471 F.3d 1233, 1245 (11th Cir. 2006) (no personal jurisdiction over absent

putative class member where the district court based denial of class certification on

lack of adequate representation).8

 After all, respondents would have been included

in a certified class in this case. "Just as they [would have] receive[d] the fruits of

victory, so an adverse decision is conclusive against them." Bridgestone/Firestone,

333 F.3d at 768. As such, the court had personal jurisdiction over them. 

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Since Bayer filed in McCollins, we reject respondents' argument that the court

lacked subject matter jurisdiction. Bayer did not seek to remove the respondents' case

to federal court, see Syngenta, 537 U.S. at 31-34, but rather to enjoin them, absent

putative class members in this case, from relitigating certification.

III.

Even if all the collateral estoppel requirements are met,"an injunction must also

be equitable in order for a federal court to issue it." Canady, 282 F.3d at 1020. We

review the court's granting of a permissible injunction for an abuse of discretion.

Liles v. Del Campo, 350 F.3d 742, 746 (8th Cir. 2003). The appropriateness of

injunctive relief is based on several factors: "(1) the threat of irreparable harm to the

movant; [sic] (2) the balance between this harm and the injury caused by granting the

injunction, (3) the probability of succeeding on the merits, and (4) the public interest."

Canady, 282 F.3d at 1020. We have previously held that relitigating in state court an

issue previously decided in federal court constitutes irreparable harm, and that the

inability to relitigate the issue is not "a legitimate harm which must be balanced" since

the enjoined party "had one full and fair opportunity to litigate" it in federal court. In

re SDDS, Inc., 97 F.3d 1030, 1041 (8th Cir. 1996). 

Bayer has demonstrated success on the merits by showing that respondents

cannot relitigate the legal conclusions in the McCollins order. Respondents argue that

because their individual claims for damages are so small, as a practical matter they

cannot litigate them without class status. They have no absolute right to litigate their

claims as a class, however, only a right, preserved by the district court's narrowly

tailored injunction, to litigate their own claims. "In addition, the public policy

concerns of finality and repose informing our res judicata jurisprudence strongly

supports the protection of our previous judgment." In re SDDS, 97 F.3d at 1041.

These are particularly compelling concerns in an MDL proceeding involving tens of

thousands of plaintiffs. 

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In sum, the district court did not abuse its discretion or make errors of fact or

law in issuing the injunction. Accordingly, we affirm the judgment of the district

court.

______________________________

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