Smith v. Bayer Corporation
In Smith v. Bayer Corporation, the Supreme Court examined whether a federal court’s decision not to certify a class action is binding on would-be members of the never-certified class who later seek to bring a class action in state court under different procedural rules.
The underlying case is a proposed class action in West Virginia state court brought by West Virginia consumers who seek to recover the money they wasted on buying the prescription drug Baycol, which was withdrawn from the market after it proved unsafe for the purposes for which it was sold. The class asserts claims of fraud and breach of warranty as well as violation of West Virginia’s consumer protection laws. Bayer, however, persuaded a federal court in Minnesota to issue an injunction against the West Virginia class action because the federal court had previously refused to certify a class under federal rules in a similar case brought by a different plaintiff. The court held that its ruling bound the West Virginia plaintiffs even though they were not parties to the federal case, never had notice or an opportunity to be heard in the case, and were never given the chance to opt out of the case. The federal court also brushed aside the fact that the legal issue it decided (whether to certify a class under the Federal Rules of Civil Procedure) is not even the same issue as the issue presented by the West Virginia state-court case (whether to certify a class under West Virginia law).
The Supreme Court heard arguments in the case on January 18, 2011. On June 16, 2011, the Court unanimously ruled in our favor, holding that federal courts that reject a plaintiff’s proposed class action may not enjoin different plaintiffs from bringing similar claims as a class in state court under state law standards.