Court Opinion

ID: 185376
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:17+00
Date Added: 2024-06-11T12:37:00.938894
License: Public Domain

247 F.3d 260 (D.C. Cir. 2001)
Walter J. Thomas, et al., Appellantsv.Colin L. Powell, Secretary of the  Department of State, et al., Appellees
No. 00-5022
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 18, 2001Decided April 27, 2001

Appeal from the United States District Court  for the District of Columbia (86cv02850)
G. Arthur Robbins argued the cause for appellants.  On  the briefs was David G. Whitworth, Jr.
Henry F. Schuelke, III argued the cause for appellees. With him on the brief were S. Robert Sutton, Henry Morris,  Jr., and Marc L. Fleischaker.
Before:  Edwards, Chief Judge, Sentelle and Randolph,  Circuit Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Dissenting opinion filed by Circuit Judge Sentelle.
Randolph, Circuit Judge:

1
The Anti-Injunction Act forbids  federal courts from granting injunctions "to stay proceedings  in a State court," with three exceptions.  28 U.S.C.  2283. One of the exceptions permits a federal court to enjoin state  proceedings when "necessary ... to protect or effectuate its  judgments."  28 U.S.C.  2283.  The scope of this "relitigation exception" is the central issue in this case.

2
Walter J. Thomas cites the Anti-Injunction Act as the  reason why the district court erred in issuing an injunction  barring him and his co-plaintiffs from prosecuting a lawsuit in  the Superior Court for the District of Columbia.  We shall  assume, without deciding, that the District of Columbia is a  "State" within  2283's meaning.  A lawsuit Thomas and  others brought in the Superior Court complains about the  performance of their attorneys in a class action filed in the  United States District Court for the District of Columbia in  1986.  Much of the history is recounted in Thomas v. Albright, 139 F.3d 227 (D.C. Cir. 1998).  The federal action  began when Thomas and another plaintiff filed a complaint in  district court seeking certification as a class action and alleging that the Department of State discriminated against black  Foreign Service Officers.  See id. at 229.  After six years of  discovery, an amended complaint allowing 30 additional individuals to intervene, the addition of still more class representatives and lengthy settlement negotiations, attorneys for  parties signed a consent decree resolving the case and agreeing that the district court should certify the class and approve  the settlement pursuant to Rule 23(b)(2) of the Federal Rules  of Civil Procedure.  See Thomas, 139 F.3d at 229.  By this  point, however, the relationship between class counsel and  Thomas and several other class representatives had frayed.

3
At a hearing on January 31, 1996, Thomas complained at  length that several of the named class action plaintiffs had neither been informed of, nor agreed with the impending  settlement.  One month earlier, in December 1995, Thomas  had retained another attorney--Barbara B. Hutchinson--to  represent his interests.  On March 20, 1996, the district court  held a preliminary fairness hearing.  The new attorney representing Thomas and Allen Latimer (a co-plaintiff in the  Superior Court action) argued that because her clients disagreed with parts of the proposed settlement, the court could  and should modify it.  An attorney representing Odie Fields,  Mary Cynthia Smoot, and Alfred Neal (the remaining coplaintiffs in the Superior Court action) argued against the  consent decree and urged the district court to reject it. Thomas personally asked the court not to give preliminary  approval to the proposed settlement.  Despite Thomas's plea,  the court tentatively approved the settlement and ordered  notice to be given to the 359 putative class members, of which  34 wrote to the court supporting the settlement, while 55  wrote in opposition to it.  See Thomas, 139 F.3d at 230.  On  July 15 and 23, 1996, the court held an additional fairness  hearing.  Attorneys for Thomas and other class members  again urged the court to modify or to reject the settlement.

4
In its final judgment, the district court concluded that the  settlement was fair and reasonable, but the court added a  provision permitting nine class members to opt out of the  settlement.  See id.  On appeal, we held that the district  court had abused its discretion in allowing these class members to opt out.  We also concluded that the overall class  settlement was fair.  See id. at 233.  Five of the class  members then sued the class counsel for professional negligence in the Superior Court of the District of Columbia.  On  a motion by the class counsel defendants, the district court  enjoined these class members from pursuing their suit.  See  Thomas v. Albright, 77 F. Supp. 2d 114, 124 (D.D.C. 1999).

5
Thomas and his co-plaintiffs think the Anti-Injunction Act  barred the injunction and that the relitigation exception does  not apply.  The exception rests on the idea that federal courts  should not be forced to rely on state court application of res  judicata or estoppel principles to protect federal court judgments and decrees.  See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988);  Toucey v. New York Life Ins. Co.,  314 U.S. 118, 146 (1941) (Reed, J., dissenting).  Although the  attorney-defendants in the Superior Court action case were  not parties to the concluded federal action, traditional preclusion principles may nonetheless bar Thomas and his coplaintiffs from prosecuting that action against them.  See  Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5 (1979); Ethnic Employees of the Library of Congress v. Boorstin, 751 F.2d 1405, 1409 (D.C. Cir. 1985);  Restatement (Second) of  Judgments  29 (1980).  The doctrine of collateral estoppel,  or as it is now commonly called "issue preclusion," see Restatement, supra, at 1, provides that "once an issue is actually  and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits  based on a different cause of action involving a party to the  prior litigation."  Montana v. United States, 440 U.S. 147,  153 (1979);  see McLaughlin v. Bradlee, 803 F.2d 1197, 120102 & n.1 (D.C. Cir. 1986);  Otherson v. Department of Justice,  711 F.2d 267, 273 (D.C. Cir. 1983).  The relitigation exception  to the Anti-Injunction Act therefore permits federal courts to  enjoin state court adjudication of those "claims or issues ...  [that] ... actually have been decided by the federal court." Chick Kam Choo v. Exxon Corp., 486 U.S. at 148.

6
Even if a federal court had not decided all the issues raised  in the state court action, the relitigation exception could still  apply.  Assume, for instance, that issues not decided in the  federal action would be resolved in plaintiff's favor in the  state court.  If the plaintiff still could not prevail because an  essential element of his state cause of action had already been  determined against him in the federal suit, the relitigation  exception would permit an injunction against the state proceedings.  See, e.g., Next Level Communications v. DSC  Communications Corp., 179 F.3d 244, 256-57 (5th Cir. 1999)  (enjoining entire state court action where state court would  be required to decide issues already litigated in federal  court);  see also United States v. District of Columbia, 654 F.2d 802, 809-10 (D.C. Cir. 1981) (finding that relitigation  exception permits federal courts to enjoin state proceedings  that raise a different cause of action, but still threaten judgment in federal proceeding).  In this case, we must  therefore compare the complaint in the Superior Court to the  record in the class action in order to determine whether, in  order for the plaintiff to succeed in Superior Court, that court  will have to rule upon an issue or claim already decided by  the federal district court or the court of appeals.  See Chick  Kam Choo, 486 U.S. at 148.

7
In their Superior Court complaint, Thomas and his coplaintiffs alleged the following:

8
1. The class action attorneys breached a duty of undivided  loyalty to Thomas by " 'selling out' and betraying [the Plaintiffs] ... when they entered into [a] secret agreement" to  settle the case without seeking Thomas's approval first.  See  Complaint for Professional Negligence p 28, Thomas v. Akin,  Gump, Strauss, Hauer & Feld, L.L.C., No. 99ca1898 (D.C.  Super. Ct. filed Mar. 19, 1999);  see also id. p p 37, 46, 55, 64  (making same allegations for Thomas's co-plaintiffs).

9
2. The class action attorneys failed to disclose the alleged  conflict of interest created by acting as class counsel and  failed to inform Thomas of the negotiating position they  would take with the State Department.  See id. p 29;  see also  id. p p 38, 47, 56, 65 (making same allegations for Thomas's  co-plaintiffs).

10
3. The class action attorneys failed to follow Thomas's  "express instructions regarding the certification of the class  action as a Rule 23(b)(3), which would have provided for him  to 'opt-out' of the class in order to receive his full measure of  damages...."  Id. p 26;  see also id. p p 35, 44, 53, 62 (making  same allegation for Thomas's co-plaintiffs).

11
Thomas and his co-plaintiffs claimed that because of these  alleged breaches of duty, they lost their federal cause of  action and the potential damages they might have derived  from it.  See id. p 31;  see also id. p p 40, 49, 58, 66 (making  same allegations for Thomas's co-plaintiffs).  They also alleged that they suffered damages by having to retain separate counsel and spend additional time and money dealing  with the federal lawsuit.  See id. p p 30, 39, 48, 57, 65.

12
As to the first two of these claims there can be no doubt  that the district court's injunction falls within the exception to  the Anti-Injunction Act.  Before approving the class action  settlement, the district court performed its duty of determining whether the "settlement is fair, adequate, and reasonable  and is not the product of collusion between the parties." Pigford v. Glickman, 206 F.3d 1212, 1215 (D.C. Cir. 2000)  (internal quotations omitted).  The court found that the "settlement was clearly negotiated at arm's length and presents  no danger of collusion" between the parties.  See Thomas v.  Christopher, 169 F.R.D. 224, 239 (D.D.C. 1996).  The court  further found that class counsel "fairly and adequately protected the interests of the class."  Id.  While the Superior  Court complaint alleges that the class action attorneys "sold  out" their clients, that they engaged in collusive secret negotiations to the detriment of their clients, the district court  squarely decided otherwise.  The Superior Court plaintiffs  may not relitigate these matters and an injunction preventing  them from doing so in the Superior Court was in order.

13
The third claim set forth above rests partly on the retainer  agreement between Thomas and the class action attorneys, an  agreement Thomas says imposed additional duties on the  class action attorneys.1  Thomas's complaint pointed to this  language in the agreement:

14
In the event there is any offer of settlement that would compromise and resolve all the plaintiffs' claims in Walter J. Thomas v. Shultz, C.A. No. 86-2850, the Client hereby agrees to abide by the wishes of the majority of the plaintiffs with respect to the acceptance or rejection of the settlement offer.

15
Compl. p 9.

16
His claim regarding the retainer agreement is part of a  larger argument about whether the class action attorneys  committed professional negligence.  In the District of Colum  bia, a legal malpractice plaintiff is required to demonstrate  duty, breach, causation, and harm.  "As with any tort action,  legal malpractice liability is predicated on a finding that the  injury was proximately caused by the breach of duty."  Dalo  v. Kivitz, 596 A.2d 35, 41 (D.C. 1991).  For the sake of  argument we shall assume that Thomas (and his co-plaintiffs)  would be able to make his case in the Superior Court that the  class action attorneys had a duty and breached it.  Thomas  would still have to prove that he suffered a harm as a result. According to the complaint, his harm or injury consisted in  his loss of the ability to pursue a potentially lucrative individual claim for damages.  See Compl. p 31.  In explaining his  theory of damages to us he adds that had "Conflicted Counsel  timely informed the Named Class Representatives of the  conflict, or withdrawn pursuant to the retainer agreements,  the Named Class Representatives would have earlier engaged  independent counsel to protect their personal interests." Brief of Appellants at 17.

17
This separate counsel would have protected Thomas's personal interests, he thinks, by having the class action certified  with opt-out provisions allowing for individual suits.  In other  words, if the class action had been certified under Federal  Rule of Civil Procedure 23(b)(3), rather than Rule 23(b)(2),  Thomas and his co-plaintiffs would have been able to opt-out  and pursue individual actions (in which they suppose they  would have done better). See Compl. p p 13-14.  To prove  this case in the Superior Court, the plaintiffs would have to  establish that they were damaged because the class should  have been certified under Rule 23(b)(3).  See Macktal v.  Garde, 111 F. Supp. 2d 18, 21 (D.D.C. 2000) (to prove  malpractice, must establish that plaintiff had a valid claim); Niosi v. Aiello, 69 A.2d 57, 60 (D.C. 1949) (same).  But that  necessarily would entail relitigating an issue already decided  in the federal courts.

18
In Thomas v. Albright, 139 F.3d at 235, we rejected the  district court's decision to create a hybrid class certified  under Rule 23(b)(2) with an opt-out clause.  See Thomas, 139 F.3d at 230.2  The district court had made no findings that  the class was appropriately certified under Rule 23(b)(3);  but  the court had "made all the factual findings necessary to show  that a hybrid class was not appropriate."  Thomas, 139 F.3d  at 235.  We found it unnecessary to remand the case to the  district court because "the dissidents do not allege any alternative basis that, if proved, would enable the district court  upon remand to permit them to opt out."  Id. at 237.  In our  view the claims of the dissident plaintiffs--Thomas and the  others--were not "different in kind from those of other class  members."  Id. at 236.  We thus held that the class was  properly certified under Rule 23(b)(2) with no opt-outs. Thomas's malpractice action could survive only if that holding  were relitigated and found to be incorrect.

19
The only other claim Thomas might have is that the alleged  defects in representation damaged him to the extent that he  had to hire outside counsel to represent him in the fairness  disputes.  See Compl. p p 30, 39, 48, 57, 64.  Under District of  Columbia law, one can sue to recover the cost of retaining  additional counsel in response to a lawyer's malpractice.  See  Knight v. Furlow, 533 A.2d 1232, 1235 (D.C. 1989).  But that  narrow claim is undercut by Thomas's own litigation posture  here, which is that he wanted the opportunity to bring in  individual counsel earlier in the process.  It is senseless to  suppose that damages resulted from failing to bring in individual counsel to advance the losing claim that the class  should be certified either as a hybrid class or a Rule 23(b)(3)  class.  As we have held, that claim could prevail if and only if  Thomas were permitted to relitigate the issues already decided in the class action.

20
We therefore conclude that if the Anti-Injunction Act  applies to the District of Columbia, the relitigation exception  to the Act permitted the district court to enjoin Thomas and  his co-plaintiffs from pursuing their complaint in the Superior  Court.  Since Thomas has not argued that the court abused  its discretion in issuing the injunction, we have no reason to  question the court's judgment that the balance of interests,  both public and private, weighed in favor of issuing the  injunction.  See Thomas, 77 F. Supp. 2d at 123-24.

21
Affirmed.

Notes:

1
  Though the Superior Court complaint does not make this  distinction, the retainer agreement is between the class action  attorneys and Thomas alone.

2
  Our conclusion in Thomas that there was no basis for certifying a hybrid class necessarily meant that there was no basis for  certifying a class under Rule 23(b)(3).  Though the case considered  the propriety of a hybrid class action--which is different from a  pure (b)(3) class action--we explicitly concluded that no plaintiff's  claim was sufficiently atypical to justify permitting class members  to opt out, which is the key characteristic of both hybrid and (b)(3)  class actions.  See Thomas, 139 F.3d at 236.  If an opt out right  could not be justified, there would be no reason to certify the class  action under 23(b)(3) rather than 23(b)(1) or (2).  See 1 Herbert  Newberg & Alba Conte, Newberg on Class Actions  4.20 (3d ed.  1992) (arguing that Rule 23 requires a court to certify a class action  as a (b)(3) class action only if it cannot be certified under (b)(1) or  (2)).  Moreover, a hybrid class action is certified under both (b)(2)  and (b)(3).  See Thomas, 139 F.3d at 234;  Eubanks v. Billington,  110 F.3d 87, 96 (D.C. Cir. 1997).  By finding that a hybrid class  action was unjustified, we necessarily found that the claims did not  meet (b)(3)'s criteria for an opt out class action.  See Thomas, 139 F.3d at 235 (noting that the district court did not make findings  necessary for a (b)(3) class action and then noting that "[t]o the  contrary, the court made all the factual findings to show that a  hybrid class was not appropriate").  We therefore disagree with the  dissent that the federal proceedings left open the question whether  the class could be certified under Rule 23(b)(3).

Sentelle, Circuit Judge, dissenting:

22
The decision reached  by the majority in this case depends upon the proposition that  all issues that could be raised in the malpractice action  brought by Walter J. Thomas and his co-plaintiffs were  precluded by the disposition of the class action.  While this is  almost true, I do not think it is entirely so.

23
In their complaint before the District of Columbia Superior  Court, the plaintiffs allege that their counsel entered into a  consent decree certifying the class pursuant to Rule 23(b)(2),  "[c]ontrary to the express instructions and wishes of the  Plaintiffs."  The plaintiffs further allege that their attorneys  breached a fiduciary duty because the plaintiffs "had rejected  any compromise or settlement which would result in a certification of the class pursuant to Rule 23(b)(2), rather than  23(b)(3), which would allow the individual Plaintiffs to 'optout' of the class in order to maintain their individual causes of  action."  It would appear that Thomas and his co-plaintiffs  are stating, or attempting to state, a cause of action depending upon the propositions that class counsel had an individual  duty to the plaintiffs and that the plaintiffs had instructed  counsel not to agree to the (b)(2) certification.  These propositions raise factual issues that should be resolved by the D.C.  Superior Court.

24
When the district court approved the settlement in the  underlying action and certified the class under Rule 23(b)(2),  it noted that "Plaintiffs moved for certification under Rule  23(b)(2)."  Thomas v. Christopher, 169 F.R.D. 224, 239  (D.D.C. 1996).  Similarly, on appeal, this Court stated that  "[c]lass counsel repeatedly requested certification pursuant to  (b)(2), [and] the consent decree stated that the parties agreed  to certification pursuant to (b)(2)."  Thomas v. Albright, 139 F.3d 227, 235 (D.C. Cir. 1998).  Indeed, the consent decree  barred the district court from "modifying the terms of the  agreement."  Id. at 233.  Although the plaintiffs argued for  the right to opt out of the settlement during the fairness  hearings and again on appeal, they did so within the confines  of Rule 23(b)(2).  Their arguments would have been unnecessary if their counsel had negotiated for a Rule 23(b)(3)  certification.

25
The majority mistakenly asserts that in order to prevail in  their Superior Court case, "the plaintiffs would have to  establish that they were damaged because the class should  have been certified under Rule 23(b)(3)."  Slip Op. at 265. Rather, to prevail, the plaintiffs simply would have to establish that the class could have been certified under Rule  23(b)(3).1  That question has never been litigated.

26
Although the plaintiffs were represented separately during  the fairness hearings, they contend that they essentially were  not represented at the table when counsel negotiated with the  State Department.  If they had been adequately represented,  then their views on opting out surely would have been  expressed in the precertification negotiations.  If the plaintiffs had instructed counsel not to agree to a 23(b)(2) certification and if counsel had an individual duty to the plaintiffs (two  very big "ifs"), then, as the plaintiffs allege, counsel may have  violated its fiduciary duty by (1) not telling them about the  conflict between the interests of the plaintiffs and the class as a whole and (2) not advocating the plaintiffs' position in the  negotiations.  These issues were not addressed by the district  court in its initial decision or by this Court on appeal.  In  fact, these issues could not have been litigated because the  consent decree negotiated by counsel locked the district court  in to certifying the class pursuant to Rule 23(b)(2).  See  Thomas, 139 F.3d at 233.

27
The majority assumes, without deciding, that the District of  Columbia is a "State" within the meaning of the Anti-Injunction Act, 28 U.S.C.  2283, suggesting that the scope of the  Act's relitigation exception "is the central issue in this case,"  Slip Op. at 261.  In this case, the Court need not assume, much  less decide, that the Act applies to D.C.2  The scope of the  relitigation exception is not the central issue in this case. With or without the Anti-Injunction Act, the United States  District Court cannot enjoin the ongoing litigation in the  Superior Court without some legal basis for doing so.  Here,  as I understand the appellees' complaint, the basis is that the  issues involved in the Superior Court case have been heretofore litigated in the federal litigation.  It may be that the  appellees should ultimately prevail, but in my view it should  be achieved after the litigation of what appear to me to be  open issues in the Superior Court.

28
A court cannot issue a permanent injunction without first  finding that the applicant has demonstrated actual success on  the merits.  See Amoco Production Co. v. Village of Gambell,  480 U.S. 531, 546 n.12 (1987).  Here, to establish success on  the merits, counsel must show that Thomas and his co plaintiffs are collaterally estopped from asserting the issues  raised in their malpractice claims.  The plaintiffs have not  actually litigated the issues I discuss above, nor has any court  decided those issues.  Whether we apply the Anti-Injunction  Act or the general law governing issue preclusion, our analysis is the same, and the district court plainly erred when it  enjoined the D.C. Superior Court.  Compare Chick Kam  Choo v. Exxon Corp., 486 U.S. 140, 149 (1988) (holding that  for the Act's relitigation exception to apply the party moving  for an injunction must show that the issue "was itself actually  litigated and decided by the District Court"), with Davis v.  Davis, 663 A.2d 499, 501 (D.C. 1995) (explaining that issue  preclusion applies when "the issue is actually litigated and  ... determined by a valid, final judgment on the merits").

29
The majority may be correct that Thomas and his coplaintiffs suffered no harm, but that seems to me a merits  question and not a preclusion one.  That is, if the injunction is  lifted, it may well be that the Superior Court can rule that  there is no harm, and therefore no cause of action, but I  believe that is for the Superior Court to determine and not  for us.  Like my colleagues, I agree that Thomas and his coplaintiffs' malpractice claim is very shaky.  Unlike my colleagues, however, I believe that ruling is not for this Court to  make.

30
For these reasons, I respectfully dissent.

Notes:

1
  I disagree with the majority's analysis of the rules governing  class actions.  The majority states that "no plaintiff's claim was  sufficiently atypical to justify permitting class members to opt out,  which is the key characteristic of ... (b)(3) class actions."  Slip Op.  at 265 n.2.  Rule 23(a) unequivocally states that one prerequisite to  any class action is that the representative parties' claims are  "typical of the claims ... of the class."  Fed. R. Civ. P. 23(a). Specifically, a 23(b)(3) class action is justified whenever "the court  finds that the questions of law or fact common to the members of  the class predominate over any questions affecting only individual  members, and that a class action is superior to other available  methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3).  The district court undoubtedly could have  certified the Thomas class under 23(b)(3), even though--and, perhaps, because--the plaintiffs' claims were "no different in kind from  those of other class members." 139 F.3d at 236.  Nevertheless,  because the consent decree compelled the district court to certify  the class under 23(b)(2), it had no reason to confront this question. Cf. Eubanks v. Billington, 110 F.3d 87, 96 (D.C. Cir. 1997) (refusing  to address whether "full (b)(3) protections" should be afforded to  the plaintiffs because "the plaintiffs did not seek certification as ...  a (b)(3) ... class").

2
  As I have noted before, some sections of the Court Reform  Act, Pub. L. No. 91-358, 84 Stat. 473 (1970), require D.C. courts "to  be treated as state courts, others do not."  United States v. Mills,  964 F.2d 1186, 1198 (D.C. Cir. 1992) (en banc) (Sentelle, J., dissenting).  "Congress has not, for example, plainly extended the prohibition upon the issuance of federal injunctions staying state court  proceedings, see 28 U.S.C.  2283, to District proceedings."  Id.  Indeed, whether D.C. courts are protected by  2283 is a valid  question that has not been resolved.  There is no reason to suggest  that the Anti-Injunction Act plays any role in the outcome of this  case.