Brown v. R.J. Reynolds Tobacco Co., No. 08-16158, 2010 WL 2866923 (11th Cir. Fla. Jul 22, 2010).

The Eleventh Circuit concluded that the Rooker- Feldmandoctrine did not bar a federal District Court’s exercise of jurisdiction over products liability, fraud, and breach of warranty claims against tobacco companies, which had been filed individually in state court following decertification of the plaintiffs’ state-court class action, and which had been removed by the tobacco companies under CAFA as the federal plaintiffs were not the state-court losers.

The Editors of the CAFA Law Blog recognize that the involvement of CAFA is tangential in this case, but since this appellate decision is an important example of the interaction of CAFA and the Rooker-Feldman doctrine, we brought it to you anyway.

Two decades ago, six individuals filed a lawsuit–Liggett Grp. Inc. v. Engle, 853 So. 2d 434 (Fla. 3d DCA 2003), in Florida state court against major domestic makers of cigarettes and two industry organizations seeking over $100 billion in both compensatory and punitive damages for injuries allegedly caused by smoking. There were estimated to be 700,000 class members. 

To manage the class action, the trial court developed a trial plan that had three phases. Phase I was a year long trial before a jury, where the jury was asked to only answer in either ‘yes’ or ‘no’ to each question for each of the defendants. The jury answered “yes” to almost every question. In Phase II, the same jury had to determine that the defendants’ conduct was the legal cause of three individual class representatives’ injuries. Here, the jury awarded a lump sum of $145 billion in punitive damages. Before the Phase III could commence, the defendants appealed the jury verdicts in Phases I and II. The appellate court decertified the Engle class, and reversed the compensatory and pecuniary damages.

The Engle class then appealed to the Florida Supreme Court, which continued the class treatment and retained the jury’s Phase I findings other than those on the fraud and intentional infliction of emotional distress claims, as it involved highly individualized determinations. The Florida Supreme Court also found that the ruling on the punitive damages was premature. The Florida Supreme Court ruled that the class members could choose to initiate individual damages actions. The Florida Supreme Court also held that the Phase I common core findings, that it had approved, would have res judicata effect in individual trials.

The plaintiffs then brought this action in the state court seeking to recover compensatory and punitive damages from the defendants. The plaintiffs also asserted those claims that were resolved by the jury in Phase I. 

The defendants removed the action to the federal court under CAFA, and moved for determination of preclusive effects of those claims resolved by the jury in Phase I in the decertified class action.

Before the District Court, the plaintiffs asserted–all the claims resolved by the jury in Phase I–had the res judicata effect and took the position that the only issues left in the case were specific causation, apportionment of damages, comparative fault, compensatory damages, entitlement to punitive damages, and punitive damages. 

The District Court determined that allowing Engle Phase I approved findings to establish elements of the plaintiffs’ causes of action would violate the defendants’ due process rights.

On an interlocutory appeal to the Eleventh Circuit, the plaintiffs contended that under the Rooker-Feldman doctrine specified in Rooker v. Fid. Trust Co., 261 U.S. 114 (1923), the district court lacked jurisdiction to determine whether applying the Florida Supreme Court’s decision about the preclusive effect of the Engle Phase I approved findings would be unconstitutional. The Eleventh Circuit noted that the Rooker-Feldman doctrine is applicable when the federal plaintiff is the state-court loser; in this case, however, the case was filed by the state court winners–the plaintiffs–and not by the state court losers–the defendants. Therefore, the Eleventh Circuit concluded that the Rooker-Feldman doctrine was inapplicable here, specifically when the case was removed to the federal court under CAFA, and only the ordinary preclusion governed the Engle Phase I findings. 

The Eleventh Circuit noted that under the Full Faith and Credit Act, 28 U.S.C. §1738, a federal court must give preclusive effect to a state court judgment to the same extent as would courts in the state in which the judgment was entered. In determining whether the Supreme Court’s order that Phase I had a res judicata effect, the Eleventh Circuit noted that the definition of res judicata, means that a ‘thing adjudicated,’ which can refer specifically to claim preclusion, or it can refer generally to the preclusive effect of earlier litigation. Whereas, claim preclusion bars a subsequent action between the same parties on the same cause of action, and is applicable under Florida law when all the four conditions are present: (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of persons and parties to the action; and (4) identity of quality in persons for or against whom claim is made. By contrast, the Eleventh Circuit observed that issue preclusion operated more narrowly to prevent re-litigation of issues that have already been decided between the parties in an earlier lawsuit.

In Phase I, the same parties as in the present lawsuit litigated common issues relating to the defendants’ conduct and the general health effects of smoking. In Phase I factual issues and not causes of action were decided. Therefore, the Florida Supreme Court’s direction that the approved findings were to have res judicata effect in future trials involving former class members necessarily referred to issue preclusion. Applying the actually adjudicated requirement to this case, the Eleventh Circuit observed that the Phase I approved findings may not be used to establish facts that were not actually decided by the jury. 

In the pre-trial order that was the subject of this interlocutory appeal, the District Court decided that the Phase I approved findings may not be used to establish any element of the plaintiffs’ causes of action. The Eleventh Circuit found Phase I approved findings have to be given preclusive effect; they do establish some facts that are relevant to this litigation.  Otherwise, the Florida Supreme Court’s statement in Engle III that the Phase I approved findings were to have res judicata effect in trials involving former class members would be meaningless. Until the scope of the factual issues decided in the Phase I approved findings is determined, it is premature to address whether those findings by themselves establish any elements of the claims.

Accordingly, the Eleventh Circuit vacated the District Court’s order that was certified for interlocutory appeal, and remanded the case for further proceedings consistent with this opinion.