## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 09

- 8046 & 09

- 8047 S ANDRA B ERG Q UIST, Plai nt i f f

- Res pond e nt, v. M ANN B RACKEN, LLP, a nd FIA C ARD S ERVICES, N .A ., D efend a nts-P etitio ners .

Pe titions fo r Le av e toA pp eal from the United S t ates Di strictC our tfo r the No rthernDi stricto f Illino is, Eas tern Di v isi on. No . 09 C5056

—H arry D . L einenw eber, Ju dge
.
S UB MI TT ED D ECE MBE R 22, 2009

— D ECI DE D J AN UA RY 26, 2010

Befo re E A S T E RB R OO K, C hief Judg e, a nd B AUERa nd R OV NER, C ircu it Judges . E A S T E RB R OO K, C hie

f Judg e . S andra Ber gqui st bor ro w ed m oney o n a c re ditcard is su ed by FI A Card S er vi ces ( f o r m er l y k nown a s M BN A A m er i ca n Ba nk )
. The b an k hi r ed M an n Br ac k en, a l aw fi r m , t o c o l l ec t th e deb t. M an n B racken in v oked the arb itration clause of the cred it- card contr act. The N ati onalA rbi tr ation Fo rum r endered an2 N os. 09

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aw ar d ag ain st B er gq u ist, a n d a st at e c ou rtin Illin ois e nt e r e d a j ud g men te nf o r c i ngtha ta wa r d. Ber g qui st beli ev es tha t th e N at i o na l Arb i tr at i o n F o r um an d M an n B ra c ke n se c re tly are u n d er co m m on co n tr ol, whi chi ft r ue c o ul d v i ti at e th e awar d ( that woul d de pen d on w he th er th e arbitrators w ere ch osen an d com p en sated ). S he a sk ed th e st at e j udg e to set asi de th e j udg m en t en f or ci ng the award; witho ut sa yi ng wh y, th e j ud ge did so , and the ca se w as dism i sse d w i thout prej ud i ce. Berg quis t al so fi l ed an i nd ependent sui t s eek i ng r el i efo n b ehal fo f a cl ass o fal l per sons w hose d isp u tes have bee n arbi tr ate d by the N ati onalA rbi tr atio n Fo rum wh en M ann Brack en r epres ented the cr ed ito r. Bef or e the st ate cou rt cou ld act, de fend an ts rem oved i t to fed eral court un de r t he Cl a s s Act i o n F a i r ne s s Act o f 2 0 0 5 , 28 U
. S. C. §§ 133 2(d ), 14 53. Th e prop osed class i nc lud es m ore than 100 p er sons, the defe nd ants i ncl ud e ci ti zens ofst ate s o t he r tha n I l l i no i s ( F I A i s a n a t i onalb a nkwi t h i t s h e a dqu arters in D elaw are, an d M an n B racken has p artn ers in m an y s tat es) , and the noti ce o fr em ova l as ser ts that th e st ak es e xc ee d $ 5 m i l l i o n. The dis tr i ct c ourtdi d not fi nd fau lt w i th any o fthes e j uri sdic ti onalal l ega ti ons. But it rem anded the case noneth el es s, co nc l udi ng th at the Rooke r - Fe l dm an do ct r i ne preve nts federa l adj ud i cati on o fany cl aim t h at se eks to i nv al idat e j udg m en ts e nt er ed by s ta te c o ur ts
. M an n Bracke n and FIA C ar d Ser vi ces fi l ed peti ti ons f or appell ate r evi ew un der § 1453 ( c)
. W e g ra nt tho se peti ti ons and, because the papers al re ady o n fi l e co ver t h e e s s e n t i a l a r g ume nt s , w e r e s o l v e th e a p p e a l s s u m-N os. 09

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- 8047 3

m ar ily. T h e a b se n c e o f cla ss ce rt ifica tio n i s n o ob st ac le to j uri sdic ti on i n ei therthe dist ri ct c ourto r thi s co urt. S ee Cunni ngh am Char t e r C o rp. v. Le ar j e tInc . , N o. 09

- 8042 (7th C ir. J an . 22, 2010 ). The Rooke r - Feldman doctr i ne ta kes i ts nam e fro m Roo ke rv . F i de l i ty Tr u s tCo
. , 26 3 U. S
. 41 3 ( 19 23 ) , a nd D is tr ict of Colu m b i a Cour tof

Appe al s v. Fe l dm an , 460 U
. S. 462 (1983). T hos e d ec i si o ns ho l d tha t o nl y the S upr eme Co ur t o fthe U n ite d Sta te s m ay s e t a s i d e a st at e c ou rt ’s d ec isio n in c i v i l l i t i g a t i o n. T he l a c ko fa nyc i v i l a na l og t o 2 8 U. S
. C. §224 1 or §225 4 m eans that f edera l dist ri ct j ud ge s m ay note nt e r t a i n c o l l a t e r a l a t t a c k s o n s t a t e j ud g e s ’ de c i s i ons. I fa s t a t e c o ur tf a i l s t o r e c t i fy a n i nj ur y tha tp r e dates th e st at e l i ti g at i o n, the n a fede r als ui t ab o uttho se e xtr aju d icia l ev en ts is p o s s i b le

— though i t m ay be b l ock ed b y do c t r i ne s o fi s s ue o r c l a i m pr e c l us i o n. S e e 2 8 U. S
. C. §173 8. But i fthe sta te cour t’ s deci si on ca uses the federa l p lai nt iff’ s inj ury, then review i s li m ited to th e state’s o wn a pp e l l a t e j ud i c i a r y , wi t h t he po s s ib i l i t y o f r e v i e w by the S up re m e Cour t o nce the st ate has m ad e i ts fi nal deci si on. 28 U
. S. C. §1 25 7(a)
. S ee Exxon M ob i l Corp. v. Sa ud i B a sic Ind ustries C o rp . , 544 U
. S. 280 (2005); G A SH Ass oc i at e s v. Ros e m ont, 995 F.2d 726 ( 7th Cir. 1993). The pe ti ti o ns f o r l ea ve t o ap p eal ques ti o n whe th erthe Rooke r - Fe l dm an doctr i ne appli es to proce edi ngs under t he Cl a s s Ac t i o n F a i r ne s s Ac t
. I tdo e s . T he Ac te xp a nd s f ede r alj ur i sdi ct i o n t o c o ve r l ar ge-s ta k es c l as s ac ti o ns w i th m i ni m al di ver si ty ofci ti zenshi p. I t a m ends §13 32, whi chc r ea te s j ur i sdi ct i o n in di ve r si tyc as es , wi th o ut changi ng the n atur e ofthatj uri sdic ti on t o perm i t co l l ate ra l4 N os. 09

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re vi ew o fst ate
- cour t deci si ons. N ot h i ng i n the 2005 A ct so m uch as hi nts a t a l l owing f edera l di str i ct j u d ges to r ev i ew st at e- co ur t dec i si o ns

— oth er th an th e interlocut ory ste ps tak en i n the sam e ca se b efo re i ts re m ova l, a pow er that the fe d er al c ourtenj oys no m att erthe sour ce o f au th o r i tyf o r r emov al

. The Rooke r - Fe l dm an doctr i ne was or i gi nal l y s tat ed as a l i m i tat i on o n f edera l

- questi on j uri sdi ct i o n un der 28 U. S
. C. § § 13 31 a nd 1 34 3; t o day no o ne do ubt s th ati t i s equa l l y a ppl icabl e to di ve r si tyl i ti g at i o n. Se e Ex xon M obil , 54 4 U.S
. at29 1; D owns v. We s tphal, 78 F. 3d 1252 , 12 56 ( 7th Ci r. 19 96)
. I t therefor e app l i es as wel l t o s ui ts i n whi chfede r alj ur i sdi ct i o n r es ts o n the 20 05 Act ’ s ex te ns i o n o fdi ve r si tyj ur i sdi ct i o n. The probl em w i th the dist ri ct cour t’ s deci si on i s not that i t appl i es the Rooke r - Fe l dm an do c t r i ne t o a s ui tr em ove d und er§1 453, but that the doct ri ne does n ot ap ply to Ber g qui st ’ s cl ai m . S he i s no l o ng era stat e- co ur t l o se r ; the st at e j udi ci ary i ts el fv ac at ed i ts de ci si o n e nf o r ci ngthe arbi tr at i o n a war d. The s ta te co ur t’ s o r derdi smi ss i ngthe ac ti o n wi th o utpr ej udi ce r es to r es th e par ti es t o the posi ti on they o ccupie d bef or e F I A Card S er vi ces fi l ed su i t. Any i nj ur y c o m es fr o m the a w ard i ts el f, a nd the Rooke r - Fe l dm an doctr i ne does notapply to arbi tr al awards. Feder al as wellas st ate co urt s are em pow er ed to r evi ew and e nf o r c e , o r s e ta s i de , de c i s i o ns r e nd e r e d b y p r i vate arbi tr ato rs . S ee 9 U.S
. C. §§ 1– 16
. A nd wh en i nj uri es c re at ed by th e p ro c es s o f arb it r a t ion are red re ss ab le in dam age s, fede ra l co urts ar e co m petent to act

— provi ded that the div e r s i tya nd a mou nt
- in- contr ove rs y r equi re m ents ar e m et. S ee Va d e n v . Di s c o v e rBank, 1 29 S. Ct. 12 62 ( 2009 ) ( disc ussi ng how the j uri sdic ti onalr ule s workf ordi sputes th at en tail arbitration).N os. 09

- 8046 & 09

- 8047 5 The di st r i ctc o ur t r ec o g nized tha t th e Rooke r - Fe l dm an doctr i ne does notapplyto Berg quis t’ s cl ai m . I t r em anded the s uitnoneth eles s be cause Bergqui st see ks re l i efo n behal fo fper sons w ho l osti n sta te cour t w h en j ud ges confi rm ed ar b itralawards adver se to thei r i nter est s. B er gq u ist w an ts th os e d ec isio n s va c at ed , w h ich w o u ld i nde ed be i nc o m pat ibl e wi ththe Rooke r-Fe l dm an doctr i ne. The di st ri ct j ud ge thought that onl y a st ate cour t co ul d r e s o l v e the wh o l e di s pu t e , s o i tr e man ded the whol e ca se. Feder al l aw does notper m i t a di strict j ud ge to r emand th e co m pl et e l i ti g at i o n j us t be cause por ti o ns bel ong in state co urt. J ud ges m ust e xerci se the j uri sdi ct i o n th ey ha ve be en g i ve n an d m ay no t ado pt co m m o nl aw r ule s that pr eferst ate o ve r f edera l adj ud i cati on ofcl a i ms t ha t a r e wi t hi n t he j ur i s di c t i o n de fi ne d b y Congre ss. S ee Therm tron P rod uc ts, In c. v . Herm a nsd o rfer, 42 3 U
. S. 336 (1976). I f som e pa rts o f a s ingle suit are wi th i n fede r alj ur i sdi cti on, whi l e o th er s ar e no t, the n the f edera l co urt m ust r eso l ve the e l em ents w i thi n fed er al j uri sdic ti on and r em and th e rest

— unle ss the b al ance c an be handl ed und erthe supp l em entalj u risdict i on. S ee 28 U. S
. C. § § 1 3 6 7 ( c ) ( 3 ) , 1 4 4 1 ( c )
. S e e al so Car l s b ad Te ch nol ogy, Inc . v. HIF Bi o, Inc . , 1 29 S
. Ct
. 1 86 2 (2009); C ar negi e -M e l l on U niversi ty v . C o hill, 4 84 U. S
. 3 43 ( 19 88 )
. Be ca us e o fthe Rooke r - Fe l dm an doctrine , the bal ance o fthi s s uitcannot be r es o l ved i n fede r alc o ur t, b utthe ne ed to r emand so m e o f it d oe s n ot en ta il a p ow er to rem an d all. The di st r i ctj udg e m ayha ve bee n thi nk i nga l o ngthe l i nes o fC o lo rad o R iverabs tenti on. S ee C o lo rad o R iver Wa ter C o nserv a tio n D istrict v. U nited Sta tes , 424 U
. S . 8 0 0 ( 1976 ).6 N os. 09

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- 8047 T h e C ou rth eld in C o lo rad o R i verth at, w h en a st at e is co nduc tinga n in rem pro cedure that the federa l tr ibunal cannot re pli cate , a dist ri ct j ud ge shoul d absta i n so that al l part i es and cl ai m s wil l be bef or e t h e state cour t. T h e is su e in C o lo rad o R iverwas w ate r ri ghts i n an ap p ropr i at i o n state
. Co l o r ado ha s a pr o ce dur e f o r a dj udi ca ting com peti ng cl ai m s t o the s am e flow s, and, bec ause al l oca ti on i s a zer o- sum gam e ( a cour t cannot in cre ase th e a m ou n t o fw at er in a d ra in ag e s ys te m ), on ly a sin gle f o r u m c a n a v o i d th e r i s ko fi n c o n s i s t e n td e c i si o ns abou t r igh ts in the w ater. C o lo rad o R iverabs tenti on i s no t a g oo d fi t f orBerg quis t’ s co m pla i nt, noto nl y because cre dit

- car d-debt arbi tr ati on i s no t a n al l

- or-n one proc ee d in g for all b or ro w er s, b u t also b ec au se Illin ois do es no t g ua r an te e th ats i m i l arc l ai m s th r o ug ho utthe sta te w i l l be ass i gned to a si ngl e j ud ge. The p ot en tial f ori n c on sis tency i n al l owing a federa l j ud ge to consi der o ne g r o up o fb o r r o wer s’ a r g um en ts , whi l e a di f f er en t g r o up l i ti g ate s i n s ta te c o ur t, i s no wor se tha n the p oten tial for incon sisten cy ifone grou p of borrow ers s ue s i n Ro c k f o r d a nd a no t he r i n S pr i ng fi e l d. Actua l l y i ti s n o tc l e a r tha tthe di s t r i c tj ud g e n e e ds to r emand an y clai m s in this suit. T rue , the fed era l cou rt l acks j uri sdic ti on t o vacat e a s tate co urt’ s j ud gm ents. But t h e r e wo u l d b e n o o c c a s i o n f o r s u c h a r e me d y i ft he cl as s wer e su i tabl y de fi ne d. The r e ar e at l ea stthr ee po te nti al subcl ass es ofper sons w hose debts w er e dete rm i ned by t he Na t i o na l Arb i t r a t i o n F o r um wh e n M a nnBr a c ken re prese nted the c re d i tor : ( 1) per sons w ho l osti n sta te cour t ( aw ar d co nfi rm ed), ( 2) per sons w ho won i n sta te cour t ( aw ar d s et asi de), and ( 3) perso ns w ho ha ve nei ther w on norl ost( because , f orexam ple , the cre dit orN os. 09

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n ev er as ke d a c ou rtto co n firm th e a w ar d , or a s u it en d ed w ith ou t a co n c lu siv e re so lu tio n ). B er gq u is t i s in the thi rd subcl ass , wh i l e o nl y th e fi rs t pr ese nts a R o o k erFe l dm an p ro bl em . Federalcourts d o not c er ti fy “ acr oss - theboar d” cl ass es; the nam ed pla i nti f f’s cl ai m m ust be t y pi c a l o fthe c l a i ms he l d b y p e r s o ns b e i ngr e pr e s e nt e d. Fed

. R. Civ. P. 23(a)( 3); Gen e r al Tel ephon e Co. o f the Sou t hwe s tv. Fa l co n , 4 5 7 U. S
. 1 4 7 ( 1 9 8 2 )
. Be r g qu i st does not hav e a clai m typ ical of state-cou rt l o s e rs (subc lass 1), so a cl ass defi ni ti on noto n l y c an but al so shoul d be l i m i te d i n a way tha t av o i ds an y Rooke r - Fe l dm an p r o b l e m, a nd thu s a v o i ds a n e e d f o r e v e n a p a r t i a l r e man d. T he district cou rt need s to de term ine w h e th er m ore than 10 0 per sons w oul d be i n a pr oper l y defi ned cl ass wi thBe r g qui sta s th e r epr es en ta ti ve, a nd whe th erthe am ount i n contr ove rs y e xceeds $5 m i l l i on. Val uati on may b e di f fi c ul t, b e c a us e t he pe r s o ns i n s ub c l a s s e s 2 a nd 3 hav e no t ( y e t ) l o s t a ny t hi ng . Ev e n i f a c o ur t we r e t o deem awards by the N at ionalA rbi tr ati on F or um ta i nted by a c o nfl i cto fi nt er es t, thi s woul d n ot aff ec t th e am ount that the bo rr owers owe ; it w oul d j ust co m pli cate the banks’ tas ks of re du ci ng thei r cl ai m s t o j ud gm ent. The di st r i ctc o ur t has y et t o c o ns i derBe r g qui st ’ s ar g um ent that the st ake s o fthi s di spute ar e l ess than $5 m illi o n . Th e jud gm en t is va c at ed , an d th e c as e is r emande d so th at th e di st r i ct co ur t can de te r m i ne w hetherthe j uri sdic ti onalr equi re m en ts ofthe 2005 A ct have been m et and, i ftheyhave bee n, f orthe cer ti fi cati on ofan a pp ro pri ate cl ass and deci si on o n the m er i ts.

1- 26- 10