Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-56806/USCOURTS-ca9-13-56806-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

THE PEOPLE OF THE STATE OF

CALIFORNIA,

Plaintiff-Appellee,

v.

INTELLIGENDER, LLC,

Defendant-Appellant.

No. 13-56806

D.C. No.

2:10-cv-04210-

ABC-VBK

OPINION

Appeal from the United States District Court

for the Central District of California

Audrey B. Collins, District Judge, Presiding

Argued and Submitted

August 4, 2014—Pasadena, California

Filed November 7, 2014

Before: Stephen Reinhardt, Kim McLane Wardlaw,

and Consuelo M. Callahan, Circuit Judges.

Opinion by Judge Wardlaw

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2 STATE OF CALIFORNIA V. INTELLIGENDER

SUMMARY*

Class Action Fairness Act / Res Judicata

The panel affirmed the district court’s denial of

IntelliGender, LLC’s motion to enjoin an entire enforcement

action brought by the State of California under the State’s

Unfair Competition and False AdvertisingLaws, but reversed

the denial of IntelliGender’s motion to enjoin only the State’s

restitution claims in the State’s action seeking relief for some

individuals who were bound by a Class Action Fairness Act

class action settlement concerning a nationwide class of

disappointed purchasers of the IntelliGender Prediction Test,

which purported to predict a fetus’s gender.

The panel held that the district court correctly denied

IntelliGender’s motion to enjoin the State’s enforcement

action in its entirety. The panel held that a Class Action

Fairness Act (“CAFA”) class action, though approved by the

district court, did not act as res judicata against the State in its

sovereign capacity, even though many of the same claims

were included in both the CAFA action and the enforcement

action. The panel further held that because the State action

was brought on behalf of the people, it implicated the public’s

interest as well as private interests, and therefore the remedial

provisions swept much more deeply.

The panel held that the district court erred in denying

IntelliGender’s motion to enjoin the State’s claims for

restitution because the State’s action, insofar as it sought

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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STATE OF CALIFORNIA V. INTELLIGENDER 3

restitution for individual members of the settlement class,

could be enjoined under the district court’s continuing

jurisdiction to enforce and administer the class action

settlement. The panel held that the State, having chosen not

to participate in the CAFA action, was precluded from

seeking the same relief sought in the CAFA class action by

operation of the principles of res judicata.

COUNSEL

Douglas J. Collodel (argued), Sedgwick LLP, Los Angeles,

California; Paul JeffreyRiehle, Nora Wetzel, Sedgwick LLP,

San Francisco, California, for Defendant-Appellant.

Kristine A. Lorenz (argued), San Diego City Attorney’s

Office, San Diego, California, for Plaintiff-Appellee.

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4 STATE OF CALIFORNIA V. INTELLIGENDER

OPINION

WARDLAW, Circuit Judge:

This case sits squarely at the intersection of the Class

Action Fairness Act (“CAFA”) and a sovereign’s right to

bring an enforcement action to protect its citizens from

unscrupulous, fraudulent, or harmful business practices. The

district court approved a CAFA settlement between a

nationwide certified class of disappointed purchasers of the

IntelliGender Prediction Test and defendant IntelliGender,

which sold and advertised the Test as an accurate predictor of

a fetus’s gender using the mother’s urine sample.

Subsequently, the People of the State of California filed an

enforcement action against IntelliGender under the State’s

Unfair Competition and False Advertising Laws, largely

based on the same claims asserted in the CAFA class action. 

The State seeks civil penalties, injunctive relief, and

restitution for some individuals who were bound by the

CAFA class action settlement. IntelliGender initially moved

for an injunction against the State’s entire action, which the

district court denied. IntelliGender next moved for an

injunction against only the State’s restitution claims, positing

that the State’s action undermines the finality of the CAFA

settlement, which the court also denied. Because the State’s

action is designed to vindicate broader governmental interests

than the class action, the settlement agreement in the CAFA

class action does not create privity sufficient to warrant

enjoining the entire action. While we recognize the State’s

strong interest in protecting its citizens through enforcement

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STATE OF CALIFORNIA V. INTELLIGENDER 5

actions, we note that CAFA expressly provides that the

defendant in a class action must provide notice to the

appropriate state official of any proposed settlement,

presumably so that the state may comment upon or object to

the settlement’s approval, if the State believes the terms

inadequately protect state citizens. Here, the appropriate

State officials were notified, but they chose not to participate

in the settlement approval process. The State cannot now

obtain a duplicate recovery in the form of restitution on

behalf of those individual citizens who are bound by the

bargained for restitution in the CAFA class settlement. 

Accordingly we affirm the district court’s denial of the

motion to enjoin the entire State action, but reverse its denial

of the motion to enjoin only restitution claims.

I.

A.

Earlier this year, the Supreme Court explained:

Congress enacted CAFA in order to amend

the procedures that apply to consideration of

interstate class actions. In doing so, Congress

recognized that class action lawsuits are an

important and valuable part of the legal

system. It was concerned, however, that

certain requirements of federal diversity

jurisdiction, 28 U.S.C. § 1332, had functioned

to keep cases of national importance in state

courts rather than federal courts.

Miss. ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736,

739 (2014) (citations omitted) (internal quotation marks

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6 STATE OF CALIFORNIA V. INTELLIGENDER

omitted). The Senate stated its concerns more bluntly:

“[M]ost class actions are currently adjudicated in state courts,

where the governing rules are applied inconsistently

(frequently in a manner that contravenes basic fairness and

due process considerations) and where there is often

inadequate supervision over litigation procedures and

proposed settlements.” S. Rep. No. 109-14, at 4 (2005), 2005

WL 627977, at *5. In an effort to curb these perceived

abuses, Congress loosened the requirements for diversity

jurisdiction by adding 28 U.S.C. § 1332(d)(2), which

“replaced the ordinary requirement of complete diversity of

citizenship among all plaintiffs and defendants, with a

requirement of minimal diversity.” AU Optronics, 134 S. Ct.

at 740 (citation omitted). Under CAFA, therefore, a federal

court may exercise jurisdiction so long as “any member of a

class of plaintiffs is a citizen of a State different from any

defendant” and the amount in controversyexceeds $5 million. 

28 U.S.C. § 1332(d)(2).

Complementing the expansion of federal jurisdiction to

ensure uniformity and fairness is CAFA’s class action

settlement notice requirement, 28 U.S.C. § 1715, which was

intended to “provide a check against inequitable settlements.” 

S. Rep. No. 109-14, at 35 (2005), 2005 WL 627977, at *34;

see In re Uponor, Inc., F1807 Plumbing Fittings Prods. Liab.

Litig., 716 F.3d 1057, 1064–65 (8th Cir. 2013). Section 1715

requires notice of a proposed settlement to be served on the

“appropriate” federal and state officials—typically the

Attorney General of the United States and “the person in the

State who has the primary regulatory or supervisory

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STATE OF CALIFORNIA V. INTELLIGENDER 7

responsibility with respect to the defendant.” 28 U.S.C.

§ 1715(a). In addition, § 1715 prohibits a court from ordering

final approval of a proposed settlement until 90 days after the

appropriate government officials were notified. Id.

§ 1715(d). The statute is equally clear that it shall not “be

construed to expand the authority of, or impose any

obligations, duties, or responsibilities upon, Federal or State

officials.” Id. § 1715(f). These requirements are intended to

give states a role in ensuring that citizens are equitably

compensated in class action settlements, but states are free

not to participate, leaving that task to the courts, which

ultimately retain discretion to approve or disapprove any

settlement, regardless of a state’s intervention.

Aside from securing compensation for citizens, state

enforcement actions serve other interests such as protecting

citizens from future harm, and these interests might not be

served by intervention in ongoing settlement proceedings. 

Thus, although the role of potential objector to a proposed

settlement under CAFA serves important interests, a

sovereign’s ability to bring enforcement actions against

private parties that violate the law serves equally if not more

important public interests. Nothing in CAFA’s notification

requirements could be read to interfere with the power of

states or the federal government to bring enforcement actions.

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8 STATE OF CALIFORNIA V. INTELLIGENDER

B.

California’s Business and Professions Code prohibits

false advertising under § 175001and creates causes of action

for unfair competition under §§ 17203-04.2

California’s unfair competition law (UCL)

(§ 17200 et seq.) defines “unfair competition”

1 Section 17500 provides: “It is unlawful for any person, firm,

corporation or association, or any employee thereof with intent directly or

indirectly to dispose of real or personal property or to perform services,

professional or otherwise, or anything of any nature whatsoever or to

induce the public to enter into any obligation relating thereto, to make or

disseminate or cause to be made or disseminated before the public in this

state, or to make or disseminate or cause to be made or disseminated from

this state before the public in any state, in any newspaper or other

publication, or any advertising device, or by public outcry or

proclamation, or in any other manner or means whatever, including over

the Internet, any statement, concerning that real or personal property or

those services, professional or otherwise, or concerning any circumstance

or matter of fact connected with the proposed performance or disposition

thereof, which is untrue or misleading, and which is known, or which by

the exercise of reasonable care should be known, to be untrue or

misleading, or for any person, firm, or corporation to so make or

disseminate or cause to be so made or disseminated any such statement as

part of a plan or scheme with the intent not to sell that personal property

or those services, professional or otherwise, so advertised at the price

stated therein, or as so advertised. Any violation of the provisions of this

section is a misdemeanor punishable by imprisonment in the county jail

not exceeding six months, or by a fine not exceeding two thousand five

hundred dollars ($2,500), or by both that imprisonment and fine.”

2

 Section 17200 defines unfair competition as “any unlawful, unfair or

fraudulent business act or practice and unfair, deceptive, untrue or

misleading advertising and any act prohibited by Chapter 1 (commencing

with Section 17500) of Part 3 of Division 7 of the Business and

Professions Code.”

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STATE OF CALIFORNIA V. INTELLIGENDER 9

to mean and include “any unlawful, unfair or

fraudulent business act or practice and unfair,

deceptive, untrue or misleading advertising

and any act prohibited by [the false

advertising law(§ 17500 et seq.) ].” 

(§ 17200.) The UCL’s purpose is to protect

both consumers and competitors bypromoting

fair competition in commercial markets for

goods and services.

Kasky v. Nike, Inc., 45 P.3d 243, 249 (Cal. 2002); see

Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1137

(C.D. Cal. 2005) (“The goal of both the UCL and the [false

advertising law (FAL)] is the protection of consumers.”); see

also Hauk v. JP Morgan Chase Bank, 552 F.3d 1114, 1122

(9th Cir. 2009) (noting that the “broad scope” of California’s

UCL “allows for violations of other laws to be treated as

unfair competition that is independently actionable” (internal

quotation marks omitted)).

Under the enforcement provisions of the UCL, public

prosecutors as well as any “person who has suffered injury in

fact and has lost money or property as a result of the unfair

competition” may bring an action. Cal. Bus. & Prof. Code

§ 17204. Section 17535 allows those same parties to bring

suit for violations of the FAL.

3 But not all suits are created

equal. A public prosecutor bringing an action under the UCL

may seek civil penalties, permanent injunctive relief, and

resitution, whereas suits brought by private individuals are

3

“Business and Professions Code section 17535, which pertains to

certain forms of misleading advertising, provides essentially the same

remedies as the UCL under Business and Professions Code section

17203.” State v. Altus Fin., S.A., 36 Cal. 4th 1284, 1306 n.9 (2005).

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10 STATE OF CALIFORNIA V. INTELLIGENDER

limited to injunctive relief and restitution. Id. § 17203

(allowing courts to make such orders as “may be necessary to

restore to any person in interest any money or property . . .

which may have been acquired by means of such unfair

competition”);4id. § 17204 (allowing private individuals or

public prosecutors to seek injunctive relief); id. § 17206

(allowing only public prosecutors to seek civil penalties); see

Kasky, 45 P.3d at 249 (“In a suit under the UCL, a public

prosecutor may collect civil penalties, but a private plaintiff’s

remedies are generally limited to injunctive relief and

restitution.” (internal quotation marks omitted)). Indeed,

“[t]he voters restricted private enforcement of the UCL in

2004, by approving Proposition 64 . . . . Accordingly, to bring

a UCL action, a private plaintiff must be able to show

economic injury caused by unfair competition.” Yanting

Zhang v. Superior Court, 304 P.3d 163, 168 (Cal. 2013). 

Despite the importance of private enforcement of the UCL

and FAL, such private suits do not and cannot substitute for

public enforcement actions, which serve as a far greater

deterrent and thus a greater protection. See People v. Pac.

Land Research Co., 569 P.2d 125, 129 (1977) (“[A]n action

by the People lacks the fundamental attributes of a consumer

class action filed by a private party. The Attorney General or

other governmental official who files the action is ordinarily

not a member of the class, his role as a protector of the public

may be inconsistent with the welfare of the class . . . .”).

4 Section 17203 permits either a public prosecutor or an individual to

seek restitution, so long as the restitution sought goes to the individual

who lost money or property as a result of the unfair competition. See, e.g.,

Rubio v. RushCard, No. No. 1:13–cv–1470 AWI–GSA, 2014 WL

2718804 (E.D. Cal., June 16, 2014).

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STATE OF CALIFORNIA V. INTELLIGENDER 11

C.

IntelliGender, LLC owns and manufactures the

IntelliGender Prediction Test. It advertises on its website:

“IntelliGender’s Gender Prediction Test is an affordable,

simple-to-use urine test that provides immediate gender

results in the privacy and comfort of the home. In minutes,

the IntelliGender Gender Prediction Test indicates your

gender result based upon an easy to read color match. Green

indicates boy and orange indicates girl!” INTELLIGENDER,

http://www.intelligender.com (last visited Aug. 13, 2014). 

On June 7, 2010, Julie Gram filed a nationwide class action

against IntelliGender in federal district court, invoking

CAFA’s jurisdiction under 28 U.S.C. § 1332(D)(2)(A). On 

April 23, 2012, the district court issued an order granting final

approval in Gram v. IntelliGenderto a class action settlement

between IntelliGender and a certified class composed of “all

individuals who personally purchased a Test between

November 1, 2006 and January 31, 2011, in the United States

and personally used the Test.” The court found that

IntelliGender provided notice of the proposed settlement to

the appropriate state and federal officials pursuant to

28 U.S.C. § 1715, that the ninety day period for comment or

objection had elapsed, and that no objections or comments

were received. The Gram complaint alleged numerous

causes of action, including violations of California’s UCL

and FAL, as well as the California Consumers Legal

Remedies Act. Through the settlement agreement,

IntelliGender agreed to pay $10.00 for each approved claim

submitted by a class member and to make a cy pres donation

of $40,000 worth of product. In addition, it agreed to change

its website’s advertising as well as the Test’s product insert

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12 STATE OF CALIFORNIA V. INTELLIGENDER

and box.

5

 To receive the $10.00 restitution payment, a class

member must submit a valid claim form, which requires her

to swear under penalty of perjury that the Test result was

inaccurate as to her child’s gender.

D.

On November 9, 2012, the People of the State of

California, by and through the San Diego City Attorney, filed

an action in California state court against IntelliGender, LLC

and its owners for violations of California’s UCL and FAL. 

The State sought to “enjoin [IntelliGender] from engaging in

unfair competition and untrue or misleading advertising . . .

[and sought] to obtain civil penalties, restitution, and other

remedies for the Defendants’ violations of law.”

IntelliGender removed the action to the Federal District

Court for the Southern District of California. The district

court subsequently granted IntelliGender’s motion to change

venue to the Central District of California pursuant to

28 U.S.C. § 1404(a) over the objection of the State. The case

was assigned to Judge AudreyCollins, who had presided over

the related Gram v. IntelliGender CAFA class action.

On August 26, 2013, IntelliGender moved in the Gram

action for a permanent or preliminary injunction to enforce

the court’s final order and judgment by enjoining the State

5 Changes to the product website included clarifying that the “Nobel

Prize winning chemist [who] was added to the research team,” was

actually “a graduate student” who was merely “part of a 1996 Nobel Prize

winning research team in chemistry.” INTELLIGENDER,

http://www.intelligender.com/about-intelligender.html (last visited Aug.

21, 2014). The company also agreed to add a disclaimer “that the Test is

not (and is not required to be) FDA approved.”

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STATE OF CALIFORNIA V. INTELLIGENDER 13

from prosecuting the enforcement action. It argued that an

injunction was “necessary in aid of preserving the Court’s

jurisdiction pursuant to the All Writs Act, 28 U.S.C. § 1651,”

because allowing the State’s suit to go forward would

undermine the ability of the district court to enforce its final

order and judgment in the Gram class action. On September

19, 2013, the district court remanded the State’s enforcement

action to the Superior Court for the County of San Diego

reasoning, in part, that it was brought in the State’s sovereign

capacity to protect its citizenry from unscrupulous business

practices. The following day, the district court denied

IntelliGender’s request for injunctive relief against the State’s

enforcement action.

IntelliGender next moved in the Gram action for an

injunction against the State’s restitution claims only. 

IntelliGender argued that insofar as the State sought

restitution on behalf of members of the settlement class, such

relief should be enjoined because allowing the claims to go

forward would amount to a double recovery and run afoul of

the doctrine of res judicata. In short, allowing the restitution

claims to proceed would undermine the finality of the class

action settlement. On October 16, 2013, the district court

also denied this motion.

II.

“Whether an injunction may issue under the AntiInjunction Act is a question of law reviewed de novo.” 

California v. Randtron, 284 F.3d 969, 974 (9th Cir. 2002). If

an injunction falls within the purview of the Anti-Injunction

Act, then we review for abuse of discretion the district court’s

decision whether to grant the injunction. Id.

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14 STATE OF CALIFORNIA V. INTELLIGENDER

The Anti-Injunction Act, 28 U.S.C. § 2283, limits the All

Writs Act by prohibiting federal courts from enjoining state

court actions except in three narrow circumstances. One of

these, the “relitigation exception,” allows a court to issue an

injunction where necessary “to protect or effectuate the

federal court’s judgments.” Randtron, 284 F.3d at 974. That

exception “empowers a district court to issue injunctions to

enforce judgments and to reinforce the effects of the doctrines

of res judicata and collateral estoppel.” Leon v. IDX Sys.

Corp., 464 F.3d 951, 961 (9th Cir. 2006) (internal quotation

marks omitted). “Res judicata applies when the earlier suit:

(1) reached a final judgment on the merits; (2) involved the

same cause of action or claim; and (3) involved identical

parties or privies.” Id. at 962.6

There is no doubt that the first two elements are met with

respect to both of IntelliGender’s motions. First, the district

court entered a final judgment in the Gram class action. 

Second, the Gram class action included the same causes of

action or claims now brought by the State of California. 

Specifically, the State alleges causes of action for:

(1) violation of California Business and Professions Code

§ 17500 for untrue or misleading statements to the public

about services based on the company’s statements about its

product, including that it has “[p]roven over 90% accurate in

laboratory tests,” and (2) violation of Business and

Professions Code § 17200 for unfair competition based on

their violation of § 17500 and commission of theft by false

6 Because the case was briefed and argued both to us and the district

court on the assumption that federal res judicata law controls, we decide

the appeal on that basis. We reserve for future decision, however, the

question whether state or federal law ultimately is applicable to the issues

in question.

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STATE OF CALIFORNIA V. INTELLIGENDER 15

pretenses in violation of Penal Code §§ 484 and 532. The

Gram class action also included claims against IntelliGender

based upon California’s UCL and FAL.

The third element, whether sufficient privity exists

between the State and the class members to warrant the

application of res judicata, is the crux of this case. See United

States v. Bhatia, 545 F.3d 757, 759 (9th Cir. 2008) (noting

that the doctrine of res judicata “require[s] privity between

parties”). “Privity is a legal conclusion designating a person

so identified in interest with a party to former litigation that

he represents precisely the same right in respect to the subject

matter involved.” Id. (internal quotation marks omitted). 

And, as the Supreme Court recently cautioned, “issuing an

injunction under the relitigation exception is resorting to

heavy artillery. For that reason, every benefit of the doubt

goes toward the state court; an injunction can issue only if

preclusion is clear beyond peradventure.” Smith v. Bayer

Corp., 131 S. Ct. 2368, 2375–76 (2011) (footnote omitted)

(citation omitted).

A.

The district court correctly denied IntelliGender’s motion

to enjoin the State’s enforcement action in its entirety.

7

 The

7

IntelliGender initially argued that this is not a State enforcement action

because it was brought by the City of San Diego. IntelliGender

misapprehends that it was the City of San Diego that filed the action on

behalf of the People of the State of California, and it is therefore a state

enforcement action rather than an action brought by the City for individual

relief. Nonetheless, IntelliGender pursues this line of argument in its reply

brief, asserting that under California Government Code § 72193 the City

lacks authority to bring a lawsuit on behalf of the people of the State of

California because the City’s reach is limited to the local level. The clear

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16 STATE OF CALIFORNIA V. INTELLIGENDER

court reasoned that Intelligender had not met its burden of

showing that the CAFA class action settlement could bind the

State in its sovereign capacity, where it asserted both public

and private interests. IntelliGender failed to carry that burden

because it is an impossible one to bear.

In Herman v. South Carolina National Bank, 140 F.3d

1413 (11th Cir. 1998), the Eleventh Circuit held that the

federal government’s enforcement action seeking to vindicate

both private and public concerns was not barred by the prior

settlement of a private class action on those same claims. 

Relying on several Supreme Court cases, the Eleventh Circuit

explained that “[t]hese ERISA cases are consistent with the

well-established general principle that the government is not

bound by private litigation when the government’s action

seeks to enforce a federal statute that implicates both public

and private interests.” Id. at 1425; see Hathorn v. Lovorn,

457 U.S. 255, 268 n.23 (1982) (holding that giving a state

court authority to adjudicate Voting Rights Act § 5 issues

arising in disputes between private parties does not “frustrate

the Attorney General’s enforcement of the Act” because

“[t]he Attorney General is not bound by the resolution of § 5

issues in cases to which he was not a party,” and, more

broadly, “[c]ommon notions of collateral estoppel suggest

that the state proceedings similarly would not bind other

interested persons who did not participate in them”). The

Eleventh Circuit reasoned that Congress granted the Secretary

of Labor an independent right to sue and seek redress for

statutory text ofCalifornia Business and Professions Code § 17535, which

provides, “[a]ctions for injunction under this section may be prosecuted

by the Attorney General or any . . . city attorney . . . in this state in the

name of the people of the State of California,” precludes IntelliGender’s

novel argument.

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STATE OF CALIFORNIA V. INTELLIGENDER 17

ERISA violations because such plans affect the national

public interest. Herman, 140 F.3d at 1423. As such, the

Secretary’s action was not barred by the actions of private

plaintiffs who sought to redress individual grievances, even

when the Secretary’s action also sought to recoup plan losses. 

Id.; see Wilmington Shipping Co. v. New Eng. Life Ins.,

496 F.3d 326, 340 (4th Cir. 2007) (agreeing with “a number

of our sister circuits [that] have held that, in light of the

overarchingnational interest in ensuring the financial stability

of pension plans and the inability of private plaintiffs to

adequately represent this interest, the Secretary of Labor is

not bound by the results reached by private litigants in ERISA

suits”). We agree that a CAFA class action settlement,

though approved by the district court, does not act as res

judicata against the State in its sovereign capacity, even

though many of the same claims are included in both actions. 

Because the State action is brought on behalf of the people,

it implicates the public’s interest as well as private interests,

and therefore the remedial provisions sweep much more

broadly.

For example, California Business and Professions Code

§ 17206(a) specifically provides that individuals who engage

in unfair competition “shall be liable for a civil penalty not to

exceed two thousand five hundred dollars ($2,500) for each

violation . . . .” In this action, the State requested penalties of

$2,500 for “each and every untrue or misleading statement

made or caused to be made by [IntelliGender] to each

potential or actual consumer, as proven at trial, in an amount

not less than five million dollars” pursuant to § 17536 as well

as civil penalties in the amount of $2,500 for every violation

of § 17200 pursuant to § 17206. Section 17204 also allows

public prosecutors to seek injunctive relief, and § 17203

permits public prosecutors to seek restitution for all

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18 STATE OF CALIFORNIA V. INTELLIGENDER

individuals who purchased the product, not only those who

used it and received an incorrect result.

The cases relied upon by IntelliGender for its contrary

arguments actually undercut its position. In Leon v. IDX

Systems Corp., for example, we found privity and enjoined

the Department of Labor’s (“DOL”) action against a company

because “[w]hen the Secretary of Labor is suing for

employee-specific rights of precisely the sort plaintiff has

already pursued then the requisite closeness of the interests

for privity is present.” Leon, 464 F.3d at 962 (alterations

omitted) (citation omitted)(internal quotationmarks omitted). 

Leon had sued his employer after being placed on unpaid

leave, alleging violations of the anti-retaliation provision of

the False Claims Act, Title VII, the Americans with

Disabilities Act, and state laws. Id. at 955. He also filed a

complaint with the DOL. Id. After the district court

dismissed all of Leon’s claims with prejudice because he had

“despoiled evidence,” his employer moved the district court

to enjoin, on res judicata grounds, the DOL’s action as well. 

Id. The district court denied the motion to enjoin, and we

reversed, reasoning that the district court had erred in not

finding privity between Leon and the DOL. Id. at 961–62. 

Because the DOL’s action arose under the whistleblowerprotection provision of the Sarbanes-Oxley Act, the only

remedies available were “individual compensatoryremedies.” 

Id. at 962. On that basis, we concluded that “the private

nature of the remedy sought by the DOL demonstrates that

the agency is in privity with Leon.” Id. at 963. Similarly, in

Chao v. A–One Medical Services, Inc., 346 F.3d 908, 923

(9th Cir. 2003), we affirmed the grant of injunctive relief

because the Secretary of Labor was not trying to “vindicate

broader governmental interests by, for example, seeking an

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STATE OF CALIFORNIA V. INTELLIGENDER 19

injunction,” but was instead trying to recoup plaintiff’s

personal economic loss.

Finally, IntelliGender’s argument that the State’s

enforcement action should be enjoined because of its failure

to object to the proposed settlement after receiving CAFA’s

required notice is simply incorrect. The three district court

cases cited by IntelliGender in support of its position stand

for little more than the proposition that the failure to object

can be considered in assessing the fairness of a proposed class

action settlement—precisely what the CAFA notification

requirements were designed to accomplish. The notification

requirement, by its own terms, does not “impose any

obligations, duties, or responsibilities upon, Federal or State

officials.” 28 U.S.C. § 1715(f). IntelliGender’s arguments to

the contrary are unavailing, contradict the plain text of the

statute, and would undermine CAFA’s purpose.

B.

Whether the district court erred in denying IntelliGender’s

motion to enjoin the State’s claims for restitution is an

entirely separate question. The same considerations of

CAFA’s purpose and the importance of state enforcement

actions once again govern our analysis, but this time lead to

a different result: the State’s action, insofar as it seeks

restitution for individual members of the Gram settlement

class, may be enjoined under its continuing jurisdiction to

enforce and administer the Gram class action settlement. 

“[I]t goes without saying that the courts can and should

preclude double recovery by an individual.” EEOC v. Waffle

House, Inc., 534 U.S. 279, 297 (2002) (internal quotation

marks omitted). To the extent that the State seeks restitution

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20 STATE OF CALIFORNIA V. INTELLIGENDER

for individual members of the Gram certified class, it may be

enjoined from doing so.

When a government entity sues for the same relief that

“plaintiff [has] already pursued then the requisite closeness

of interests for privity is present.” Leon, 464 F.3d at 962

(emphasis added) (citation omitted) (internal quotation marks

omitted); see also Chao, 346 F.3d at 923 (enjoining an action

by the Secretary of Labor because it sought simply to recoup

plaintiff’s personal economic loss rather than “vindicate

broader governmental interests by, for example, seeking an

injunction”). Sufficient privity exists between Gram class

members and the State with respect to claims for restitution. 

The district court’s suggestion that privity did not exist8relied

upon two mistaken premises: that the individuals on whose

behalf restitution was sought are different from the certified

class and that the amounts sought are different. The former

is factually incorrect, and the latter has no bearing on the

question of privity.

In its order denying the motion to enjoin claims for

restitution only, the court relied upon the fact that “the class

certified in this case is limited only to those who purchased

Defendant’s product and received an inaccurate result,

whereas the People are seeking restitution on behalf of all

California purchasers of the product—regardless of the

8

It is unclear whether the district court’s erroneous findings led it to

conclude that an injunction in this case would be barred under the AntiInjunction Act, or whether it thought it could issue an injunction but chose

in its discretion not to do so. For example, the district court stated both,

“Defendant has not met its burden of demonstrating that an injunction is

warranted in this case,” and “the restitution claim asserted in the People’s

Action is different . . . such that the settlement here should not preclude

the People’s claim for restitution.”

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STATE OF CALIFORNIA V. INTELLIGENDER 21

results they received from the product.” This is incorrect. In

its approval of the class settlement in Gram, the district court

“certifie[d] this Action for settlement purposes as a

nationwide class action on the behalf of the following: all

individuals who personally purchased a Test between

November 1, 2006 and January 31, 2011, in the United States

and personally used the Test.” While only those individuals

who obtained an incorrect Test result are eligible for

compensation under the terms of the settlement, this does not

negate the fact that the certified class covered anyone who

purchased and used the Test—substantially the same

individuals for whom the State now seeks restitution. That

compensation was limited to those who obtained an incorrect

result is a reflection of the bargaining and compromise

inherent in settling disputes. Individual Gram class members

who bought a Test and used it but did not obtain an incorrect

result remain bound by the settlement, even though they will

not receive any compensation. If the State wished to secure

compensation for those class members, it had an opportunity

to do so by intervening after receiving notice of the proposed

settlement pursuant to 18 U.S.C. § 1715(a). This is the

method CAFA established for states to seek equitable

compensation for class members. The State chose not to use

its authority, and the settlement was approved. Compensation

is res judicata.

The district court’s reliance upon the different amount of

restitution sought9in denying the motion is also misplaced. 

It is irrelevant for questions of privity and merely confirms

9

IntelliGender settled for $10.00 per claimant who submitted a claim

form swearing that she received an inaccurate result, while the State

sought restitution of the full purchase price, $30.00, for every individual

who purchased the test.

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22 STATE OF CALIFORNIA V. INTELLIGENDER

that the State is essentially seeking a double (or at least

better) recovery. Indeed, even the district court “agree[d]”

with the State’s conclusion that some individuals who

received restitution in this case would be ineligible for

recovery in the Gram action. Moreover, as our decision in

Leon confirms, the appropriate inquiry is not what relief was

ultimately granted, but whether the government is suing for

the same relief already pursued by the plaintiff. 464 F.3d at

962 (emphasis added). Here, the class pursued restitution,

and the government now seeks the same. Because the

requirements of res judicata have been met with respect to

the claims for restitution, an injunction may issue under the

Anti-Injunction Act. See Randtron, 284 F.3d at 974

(“Whether an injunction may issue under the Anti-Injunction

Act is a question of law reviewed de novo.”).

“However, the fact that an injunction may issue under the

Act does not mean that it must issue.” Quackenbush v.

Allstate Ins. Co., 121 F.3d 1372, 1377 (9th Cir. 1997). “The

decision whether to issue an injunction that does not violate

the Act is reviewed for an abuse of discretion.” Id.; see

Randtron, 284 F.3d at 974. “A district court abuses its

discretion when it rests its conclusions on clearly erroneous

factual findings or on incorrect legal standards.” 

Quackenbush, 121 F.3d at 1377. Although the decision to

grant an injunction is discretionary, discretionarydecisions of

district courts must be “exercised not arbitrarily or willfully,

but with regard to what is right and equitable under the

circumstances and the law, and directed by the reason and

conscience of the judge to a just result.” Langnes v. Green,

282 U.S. 531, 541 (1931).

As discussed, supra, the district court rested its

conclusion that an injunction was not warranted on a clearly

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STATE OF CALIFORNIA V. INTELLIGENDER 23

erroneous factual finding—that the classes were not the

same—and a mistaken belief that the amount of restitution

sought affects the propriety of issuing an injunction. This

alone is enough to conclude that the district court abused its

discretion in failing to grant the injunction. These errors are

compounded, and our conviction that the district court abused

its discretion strengthened, when we examine “what is right

and equitable under the circumstances and the law.” Id.

It is axiomatic that final, court-approved settlements

preclude class members from seeking the same relief for the

same claims a second time. “A fundamental precept of

common-law adjudication, embodied in the related doctrines

of collateral estoppel and res judicata, is that a right, question

or fact distinctly put in issue and directly determined by a

court of competent jurisdiction . . . cannot be disputed in a

subsequent suit between the same parties or their privies

. . . .” Montana v. United States, 440 U.S. 147, 153 (1979)

(internal quotation marks omitted). Absent such a guarantee,

defendants would have little incentive to agree to any

settlement, and plaintiffs would be left with no leverage. As

the Court explained, “[t]o preclude parties from contesting

matters that they have had a full and fair opportunity to

litigate protects their adversaries from the expense and

vexation attending multiple lawsuits, conserves judicial

resources, and fosters reliance on judicial action by

minimizing the possibility of inconsistent decisions.” Id. at

153–54; see Taylor v. Sturgell, 553 U.S. 880, 892 (2008)

(quoting the same). Allowing the State’s claims for

restitution to go forward in state court would undermine this

central guarantee of our legal system and undercut CAFA’s

purpose of increasing the fairness and consistency of class

action settlements.

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24 STATE OF CALIFORNIA V. INTELLIGENDER

The Court has recognized that “class actions raise special

problems of relitigation,” which Congress sought to address

in part through passage of CAFA. Bayer, 131 S. Ct. at 2381. 

Although in Bayer, the Court examined the issue of

relitigation of class certification,10the principles it espoused

are applicable to other questions of relitigation. The Court

noted that Congress’s chosen remedy, CAFA, “does not

involve departing from the usual rules of preclusion.” Id. at

2382. Rather, CAFA functions to prohibit relitigation by

“enabl[ing] defendants to remove to federal court any sizable

class action involving minimal diversity of citizenship.” Id.

Once removal takes place, the consolidation of multiple

overlapping suits allows one legal standard to govern the

case. “Congress’s decision to address the relitigation

concerns associated with class actions through the mechanism

of removal provides yet another reason for federal courts to

adhere in this context to longstanding principles of

preclusion.” Id.

Allowing the State’s claims for restitution to advance

would undermine those “longstanding principles of

preclusion,” which we and other courts have recognized time

and again under the basic rule that when the government

seeks individual relief on behalf of an already defeated

litigant, res judicata usually applies. See Wright & Miller,

Fed. Prac. & Proc. Juris. § 4458.1 & nn. 26–29 (2d ed. 2014)

(collecting cases and noting “class-action proceedings may

preclude the government from pursuing independent

10 Bayer also addressed a case in which the original action had been filed

prior to CAFA’s enactment, leading the Court to conclude: “CAFA may

be cold comfort to Bayer with respect to suits like this one beginning

before its enactment.” 131 S. Ct. at 2382.

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STATE OF CALIFORNIA V. INTELLIGENDER 25

proceedings that seek only to win advantages for the same

class”).

In In re American Investors Life Insurance Co. Annuity

Marketing and Sales Practices Litigation, No. 05-MD-1712,

2013 WL 3463503 (E.D. Pa. July 10, 2013), the district court

confronted a factual situation similar to the one presented

here. That court granted the defendant companies’ request

for an injunction to prevent the State Attorney General from

seeking restitution for individuals under Pennsylvania’s

Consumer Protection Law. The individuals on whose behalf

the Attorney General sought restitution were members of a

settlement class that had already entered into an agreement

with the defendant companies. The court, relying upon

Supreme Court and Third Circuit EEOC cases, concluded that

allowing the Attorney General to move forward with

individual restitution claims would undermine the settlement

agreement.11Id. at *8. The court also noted that the Attorney

11 Relatedly, in New Mexico v. Capital One Bank, 980 F. Supp. 2d 1346

(2013), the district court “barred [the NewMexico AttorneyGeneral] from

bringing a claim for compensation on behalf of the consumers who were

class members in the [previously settled class] action.” Id. at 1356. The

posture of that case was different than here because the defendants moved

to dismiss the Attorney General’s claims rather than enjoin them pursuant

to the All Writs Act, but the reasoning with respect to privity and

preventing a “double recovery” for class members bound by the settlement

is the same. Id. The court also explicitly noted, “the Tenth Circuit has not

yet ruled on the issue of privity between citizens who have already

litigated their claims and state agencies which seek to vindicate the

citizens’ rights in subsequent actions.” Id. at 1352 n.3. Another

Pennsylvania district court noted similar considerations in its approval of

a nationwide class action settlement and concluded, “the AGs may

continue to bring claims belonging to their respective states, such as state

criminal and regulatory actions. However, the AGs are precluded from

bringing claims in a de facto or de jure representative capacity on behalf

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26 STATE OF CALIFORNIA V. INTELLIGENDER

General could pursue other remedies, including injunctions

and civil penalties. Id. These considerations are equally

present here. As in American Investors, the “claims for

restitution are in effect post-negotiation ‘collateral attacks’ on

the settlement,” which “would undeniably deter similar

settlements in the future.” Id. Moreover, allowing such

claims to go forward undermines CAFA by in effect sending

the same claims CAFA envisioned as removable back to be

“adjudicated in state courts, where the governing rules are

applied inconsistently.” S. Rep. No. 109-14, at 4 (2005),

2005 WL 627977, at *5.

Our decision does not deprive the State of the ability to

protect its citizens—quite the contrary. As explained, supra,

the State may seek civil penalties and broad injunctive relief

against IntelliGender. In addition, CAFA’s notification

requirement, § 1715, safeguards the State’s ability to

participate, comment, or object during the Rule 23 class

action settlement approval process, fulfilling CAFA’s

purpose to “provide a check against inequitable settlements.” 

Uponor, 716 F.3d at 1064 (quoting the Senate Report on

CAFA). Here, IntelliGender provided notice to the

appropriate parties, including the Attorney General of the

United States and the CAFA coordinator for the Office of the

Attorney General of California. Having chosen not to

participate, the State is precluded from seeking the same

relief sought in the CAFA class action. This is so not because

§ 1715 imposes any obligation on the State, but by operation

of principles of res judicata. Indeed, while § 1715 does not

of the plaintiffs in this class action, because doing so would allow Class

members to double recover.” Esslinger v. HSBC Bank Nevada, N.A.,

CIV.A. No. 10-3213, 2012 WL 5866074, *7 n.2 (E.D. Pa. Nov. 20, 2012)

(internal quotation marks omitted).

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STATE OF CALIFORNIA V. INTELLIGENDER 27

impose any obligations, responsibilities, or duties on the

State, § 1715(f) also makes clear that it does not “expand the

authority of” the State, for example, by excepting the State

from longstanding principles of res judicata.

III.

For the foregoing reasons, we affirm the district court’s

order denying the injunction of the State’s action writ large,

but we reverse the district court’s order denying the

injunction with respect to restitution and enjoin those claims. 

Each party shall bear its own costs.

AFFIRMED in part; REVERSED in part.

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