Connie Curts, et al v. Nestle Purina Petcare Company, et al

Filing

Filed opinion of the court by Judge Easterbrook. REVERSED. The district court's injunction is stayed. Curts and the Missouri court are free to proceed. But our mandate will issue in the ordinary course, to preserve the parties' entitlement to seek rehearing. Frank H. Easterbrook, Circuit Judge; Ilana Diamond Rovner, Circuit Judge and Diane S. Sykes, Circuit Judge. [6644741-1] [6644741] [14-3436]

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In the

United States Court of Appeals
For the Seventh Circuit
____________________  
No.  14-­‐‑3436  
DENNIS  ADKINS,  et  al.,  

CONNIE  CURTS,  

Plaintiffs-­‐‑Appellees,  
and  
Intervening  Plaintiff-­‐‑Appellant,  
v.  

NESTLÉ   PURINA   PETCARE   COMPANY   and   WAGGIN’   TRAIN,  
LLC,  
Defendants-­‐‑Appellees.  
____________________  
Appeal  from  the  United  States  District  Court  for  the  
Northern  District  of  Illinois,  Eastern  Division.  
No.  12  C  2871  —  Robert  W.  Gettleman,  Judge.  

____________________  

ARGUED  FEBRUARY  24,  2015  —  DECIDED  MARCH  2,  2015  
____________________  
Before  EASTERBROOK,  ROVNER,  and  SYKES,  Circuit  Judges.  
EASTERBROOK,  Circuit  Judge.  Plaintiffs  contend  in  this  suit,  
which   the   district   court   has   certified   as   a   nationwide   class  
action,   that   Nestlé   and   Waggin’   Train   sold   dog   treats   that  
injured   the   dogs.   The   parties   have   reached   a   settlement,   to  

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which   the   district   court   has   given   tentative   approval   pend-­‐‑
ing  a  fairness  hearing  under  Fed.  R.  Civ.  P.  23(e).  That  hear-­‐‑
ing   has   been   scheduled   for   June   23,   2015.   The   order   tenta-­‐‑
tively  approving  the  settlement  has  one  non-­‐‑tentative  provi-­‐‑
sion:  It  enjoins  all  class  members  from  prosecuting  litigation  
about  the  dog  treats  in  any  other  forum.  
One  case  affected  by  this  injunction  has  been  pending  for  
two   years   in   Missouri,   and   it   was   certified   as   a   statewide  
class  action  before  the  federal  suit  was  certified  as  a  national  
class   action.   It   was   on   a   schedule   leading   to   a   trial   in   May  
2015  when  the  injunction  stopped  it  cold.  Connie  Curts,  the  
certified   representative   of   the   Missouri   class,   intervened   to  
protest   the   federal   injunction.†   She   contends   in   this   appeal  
that  the  district  court  has  violated  28  U.S.C.  §2283,  the  Anti-­‐‑
Injunction  Act,  which  provides:  “A  court  of  the  United  States  
may   not   grant   an   injunction   to   stay   proceedings   in   a   State  
court  except  as  expressly  authorized  by  Act  of  Congress,  or  
where  necessary  in  aid  of  its  jurisdiction,  or  to  protect  or  ef-­‐‑
fectuate  its  judgments.”  
The   parties   (the   representatives   of   the   federal   class   plus  
Nestlé   and   Waggin’   Train)   contend   that   the   injunction   is  
“necessary  in  aid  of  [the  district  court’s]  jurisdiction”.  Curts  

†  At  least  she  tried  to  intervene.  The  district  judge  denied  the  motion  

with  a  brief  oral  statement.  We  have  directed  district  courts  to  allow  in-­‐‑
tervention   under   circumstances   such   as   these.   See,   e.g.,   Crawford   v.  
Equifax   Payment   Services,   Inc.,   201   F.3d   877,   881   (7th   Cir.   2000);   Robert   F.  
Booth  Trust  v.  Crowley,  687  F.3d  314  (7th  Cir.  2012).  The  district  court  did  
not  mention  either  of  these  decisions  (or  any  other  case,  for  that  matter).  
Still,   the   error   is   not   fatal,   given   Devlin   v.   Scardelletti,   536   U.S.   1   (2002),  
and  United  States  v.  Kirschenbaum,  156  F.3d  784,  794  (7th  Cir.  1998)  (a  non-­‐‑
party  bound  by  an  injunction  is  entitled  to  appeal).  

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maintains,  to  the  contrary,  that  only  federal  actions  in  rem—
that   is,   suits   about   the   disposition   of   specific   property—
come  within  the  scope  of  the  “aid  of  jurisdiction”  exception,  
because   only   then   could   a   state   court’s   action   override   the  
federal   tribunal   by   moving   or   destroying   the   property   on  
which  federal  authority  depends.  
But  when  we  sought  to  learn  the  district  court’s  view  of  
this  subject,  we  were  stymied.  The  district  judge  has  not  ex-­‐‑
plained  why  he  entered  the  injunction.  There  are  some  hints,  
but   nothing   more.   That   won’t   do.   Rule   65(d)(1)(A)   of   the  
Federal   Rules   of   Civil   Procedure   provides   that   every   order  
issuing  an  injunction  must  “state  the  reasons  why  it  issued”.  
At   oral   argument,   counsel   for   Nestlé   insisted   that   the  
judge   had   provided   reasons   and   referred   us   to   six   pages   of  
the   transcript   of   a   hearing   at   which   the   settlement   was   dis-­‐‑
cussed.   According   to   counsel,   the   district   judge   found   that  
continuation  of  the  Missouri  action  “has  a  great  potential  of  
tanking   the   entire   settlement”.   We’ll   return   to   the   question  
whether  this  has  anything  to  do  with  “jurisdiction.”  For  the  
moment,   it   is   enough   to   observe   that   Nestlé’s   lawyer   was  
quoting  a  statement  by  Morton  Denlow,  a  retired  magistrate  
judge   who   in   a   private   capacity   had   mediated   the   negotia-­‐‑
tions,  not  a  statement  by  the  district  judge.  
And  if  we  understand  the  judge  as  sharing  Mr.  Denlow’s  
view,  that  would  not  satisfy  Rule  65(d)(1)(A).  Before  issuing  
an   injunction,   a   judge   must   identify   the   appropriate   legal  
standard  and  make  the  findings  of  law  and  fact  required  by  
that   standard.   “A   plaintiff   seeking   a   preliminary   injunction  
must  establish  that  he  is  likely  to  succeed  on  the  merits,  that  
he  is  likely  to  suffer  irreparable  harm  in  the  absence  of  pre-­‐‑
liminary  relief,  that  the  balance  of  equities  tips  in  his  favor,  

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and   that   an   injunction   is   in   the   public   interest.”   Winter   v.  
Natural  Resources  Defense  Council,  Inc.,  555  U.S.  7,  20  (2008).  
The  district  judge  did  not  discuss  these  subjects,  and  alt-­‐‑
hough  Mr.  Denlow’s  statement  may  be  relevant  it  is  not  con-­‐‑
clusive   on   any   of   them.   Take   irreparable   injury:   It   is   estab-­‐‑
lished   that   the   costs   of   ongoing   litigation   (the   result   if   the  
settlement  collapses)  are  not  irreparable  injury.  See,  e.g.,  Pe-­‐‑
troleum  Exploration,  Inc.  v.  Public  Service  Commission,  304  U.S.  
209,  222  (1938);  Renegotiation  Board  v.  Bannercraft  Clothing  Co.,  
415   U.S.   1,   24   (1974);   FTC   v.   Standard   Oil   Co.,   449   U.S.   232,  
244   (1980).   More:   an   injunction   that   halts   state   litigation   is  
permissible  only  if  it  satisfies  §2283  in  addition  to  the  tradi-­‐‑
tional  factors  that  Winter  catalogs.  The  district  judge  was  si-­‐‑
lent  about  everything  that  matters.  
The   immediate   question   we   must   resolve,   therefore,   is  
whether  to  vacate  the  injunction  and  remand  for  further  pro-­‐‑
ceedings,  or  to  reverse  outright.  We  think  the  latter  step  ap-­‐‑
propriate,   for   two   reasons:   first,   the   final   hearing   is   sched-­‐‑
uled   for   June,   and   further   proceedings   in   the   district   court  
(potentially   followed   by   another   appeal)   could   leave   the  
state   litigation   in   limbo   until   then,   disrupting   the   state   case  
almost  as  effectively  as  an  injunction;  second,  in  supporting  
this  injunction  the  parties  do  not  even  contend  that  it  is  “nec-­‐‑
essary”   in   aid   of   the   district   court’s   “jurisdiction.”   Instead  
the  parties  contend  that,  if  the  Missouri  case  proceeds  to  fi-­‐‑
nal  decision  before  June  23,  then  their  settlement  must  be  re-­‐‑
negotiated   and   may   well   collapse.   We   take   that   as   a   given.  
Still,   what   has   that   to   do   with   the   federal   court’s   “jurisdic-­‐‑
tion”?  And  why  is  preserving  a  particular  settlement  “neces-­‐‑
sary”  to  federal  jurisdiction?  

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Many   decisions   by   the   Supreme   Court   over   the   last   30  
years   tell   us   that   “jurisdiction”   means   adjudicatory   compe-­‐‑
tence.   See,   e.g.,   Reed   Elsevier,   Inc.   v.   Muchnick,   559   U.S.   154  
(2010);   Union   Pacific   R.R.   v.   Brotherhood   of   Locomotive   Engi-­‐‑
neers,   558   U.S.   67   (2009);   Zipes   v.   Trans   World   Airlines,   Inc.,  
455  U.S.  385  (1982).  See  also  Minn-­‐‑Chem,  Inc.  v.  Agrium  Inc.,  
683  F.3d  845  (7th  Cir.  2012)  (en  banc).  These  opinions  show  
that  there  is  a  fundamental  difference  between  “jurisdiction”  
and  the  many  procedural  or  substantive  rules  that  determine  
how   cases   are   resolved.   A   court   has   “jurisdiction”   when   it  
has  been  designated  by  statute  as  an  appropriate  forum  for  a  
dispute  of  a  given  sort;  other  rules  are  non-­‐‑jurisdictional.  
No   one   doubts   that   the   district   court   has   subject-­‐‑matter  
jurisdiction  over  this  litigation,  and  no  one  contends  that  tri-­‐‑
al   or   judgment   in   the   Missouri   litigation   could   imperil   the  
district  court’s  ability  and  authority  to  adjudicate  the  federal  
suit.   If   the   settlement   collapses,   the   court’s   adjudicatory  
competence  remains.  A  need  to  adjudicate  a  suit  on  the  mer-­‐‑
its  after  settlement  negotiations  fail  does  not  undermine  the  
nature  or  extent  of  a  court’s  jurisdiction.  Yet  if  the  Missouri  
case  cannot  diminish  federal  jurisdiction,  §2283  precludes  an  
injunction  until  the  federal  case  reaches  a  final  decision.  (Af-­‐‑
ter   a   final   decision,   an   injunction   could   be   appropriate   to  
protect   the   federal   judgment,   although   class   members   who  
opt  out  would  remain  entitled  to  pursue  their  own  suits.)  
Parallel   state   and   federal   litigation   is   common.   The   first  
to   reach   final   decision   can   affect   the   other,   either   through  
rules   of   claim   and   issue   preclusion   (res   judicata   and   collat-­‐‑
eral  estoppel)  or  through  effects  such  as  reducing  the  scope  
of  a  class  from  50  to  49  states.  Yet  the  potential  effect  of  one  
suit  on  the  other  does  not  justify  an  injunction.  

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We  have  never  viewed  parallel  in  personam  actions  as  interfering  
with  the  jurisdiction  of  either  court;  as  we  stated  in  Kline  v.  Burke  
Construction  Co.,  260  U.S.  226  (1922):  
[A]n   action   brought   to   enforce   [a   personal   liability]   does   not  
tend  to  impair  or  defeat  the  jurisdiction  of  the  court  in  which  a  
prior  action  for  the  same  cause  is  pending.  Each  court  is  free  
to  proceed  in  its  own  way  and  in  its  own  time,  without  ref-­‐‑
erence   to   the   proceedings   in   the   other   court.   Whenever   a  
judgment  is  rendered  in  one  of  the  courts  and  pleaded  in  the  
other,  the  effect  of  that  judgment  is  to  be  determined  by  the  
application  of  the  principles  of  res  adjudicata  …  .”  Id.,  at  230  
(emphasis  added).  
No   case   of   this   Court   has   ever   held   that   an   injunction   to   “pre-­‐‑
serve”   a   case   or   controversy   fits   within   the   “necessary   in   aid   of  
its  jurisdiction”  exception  [to  §2283];  neither  have  the  parties  di-­‐‑
rected  us  to  any  other  federal-­‐‑court  decisions  so  holding.  

Vendo  Co.  v.  Lektro-­‐‑Vend  Corp.,  433  U.S.  623,  642  (1977)  (plu-­‐‑
rality  opinion).  More  recently,  Sprint  Communications,  Inc.  v.  
Jacobs,  134  S.  Ct.  584  (2013),  held  that  parallel  state  and  fed-­‐‑
eral  proceedings  do  not  justify  abstention  by  a  federal  court.  
The   Court   thought   that   both   should   be   allowed   to   proceed,  
subject  only  to  the  equitable  power  of  each  tribunal  to  defer  
its   own   proceedings   in   deference   to   a   case   that   is   farther  
along.   Nothing   in   Sprint   or   any   other   decision   of   the   Su-­‐‑
preme  Court  suggests  that  the  court  presiding  over  the  case  
likely  to  reach  judgment  second  can  jump  the  queue  by  en-­‐‑
joining  the  suit  that  is  likely  to  reach  decision  first.  Our  opin-­‐‑
ion  in  Zurich  American  Insurance  Co.  v.  Superior  Court  of  Cali-­‐‑
fornia,   326   F.3d   816,   825–27   (7th   Cir.   2002),   dealt   with   just  
such   a   situation   and   held   that   the   prospect   of   a   state   court  
reaching  decision  first,  making  federal  decision  unnecessary  
(or   the   federal   case   harder   to   adjudicate),   does   not   justify   a  
federal  injunction  against  the  state  litigation.  

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We  therefore  need  not  address  Curts’s  argument  that  on-­‐‑
ly   in   rem   proceedings   can   satisfy   the   “aid   of   jurisdiction”  
clause  in  §2283.  We  can  imagine  extreme  situations  in  which  
a   state   could   imperil   a   federal   court’s   adjudicatory   power  
over  in  personam  actions.  For  example,  suppose  a  state  court  
were  to  bar  a  necessary  witness  from  attending  a  federal  trial  
or   deposition;   a   federal   injunction   (or   a   writ   of   habeas   cor-­‐‑
pus)  might  be  an  authorized  response.  Winkler  v.  Eli  Lilly  &  
Co.,   101   F.3d   1196,   1202   (7th   Cir.   1996),   concludes   that   the  
“aid  of  jurisdiction”  clause  may  be  invoked  when  an  incon-­‐‑
sistent   decision   by   a   state   court   would   “render   the   exercise  
of  the  federal  court’s  jurisdiction  nugatory.”  
The  panel  in  Winkler  thought  that  this  might  occur  when  
the   federal   litigation   sought   an   injunction   (as   in   school   de-­‐‑
segregation   litigation);   an   order   by   the   state   court   to   do  
something   different   from   what   the   federal   litigation   sought  
could   undermine   federal   authority   as   a   practical   matter.  
(Winkler  itself  entailed  incompatible  state  and  federal  orders  
about   discovery   management.)   But   nothing   of   the   sort   has  
occurred   here.   Curts   wants   to   litigate   her   own   suit   in   Mis-­‐‑
souri,  not  to  stop  the  federal  court  from  adjudicating  the  suit  
pending  before  it,  and  the  parties  do  not  contend  that  there  
is  a  significant  prospect  of  inconsistent  injunctions  affecting  
defendants’  future  conduct.  (Should  that  possibility  be  real-­‐‑
ized,  it  can  be  dealt  with.)  
No  matter  what  one  makes  of  the  word  “jurisdiction”  in  
§2283,  an  injunction  is  proper  only  when  “necessary”  to  pro-­‐‑
tect  federal  jurisdiction.  The  parties  argue  that  closing  down  
the  Missouri  case  would  be  prudent,  beneficial,  helpful,  and  
so  on;  the  unstated  premise  is  that  §2283  allows  whatever  a  
federal   court   thinks   is   good   litigation   management.   But  

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that’s  not  what  “necessary”  means.  The  Supreme  Court  told  
us  recently:  
The  statute  …  “is  a  necessary  concomitant  of  the  Framers’  deci-­‐‑
sion   to   authorize,   and   Congress’   decision   to   implement,   a   dual  
system  of  federal  and  state  courts.”  And  the  Act’s  core  message  
is  one  of  respect  for  state  courts.  The  Act  broadly  commands  that  
those   tribunals   “shall   remain   free   from   interference   by   federal  
courts.”   That   edict   is   subject   to   only   “three   specifically   defined  
exceptions.”   And   those   exceptions,   though   designed   for   im-­‐‑
portant   purposes,   “are   narrow   and   are   ‘not   [to]   be   enlarged   by  
loose   statutory   construction.’”   Indeed,   “[a]ny   doubts   as   to   the  
propriety  of  a  federal  injunction  against  state  court  proceedings  
should  be  resolved  in  favor  of  permitting  the  state  courts  to  pro-­‐‑
ceed.”  

Smith  v.  Bayer  Corp.,  131  S.  Ct.  2368,  2375  (2011)  (internal  cita-­‐‑
tions   omitted).   One   reason   why   doubts   must   be   resolved  
against  a  federal  injunction  is  the  word  “necessary”.  Section  
2283   leaves   only   limited   opportunities   for   federal   interven-­‐‑
tion.   In   the   main   §2283   commits   to   the   state   court   the   ques-­‐‑
tion  whether  it  would  be  prudent,  beneficial,  or  helpful  to  let  
the  federal  case  go  first.  
According   to   the   parties,   In   re   VMS   Securities   Litigation,  
103   F.3d   1317   (7th   Cir.   1996),   shows   that   the   district   court’s  
injunction  is  proper.  Not  at  all.  In  VMS  Securities  the  district  
court   issued   an   injunction   to   protect   the   final   decision   in   a  
class  suit.  That  step  was  authorized  by  the  relitigation  excep-­‐‑
tion   to   §2283.   What   is   more,   the   parties   had   failed   to   raise  
§2283  in  the  district  court,  and  we  held  that  this  forfeited  any  
entitlement   to   rely   on   it   in   the   court   of   appeals.   103   F.3d   at  
1326.  Nothing  in  VMS  Securities  supports  the  propriety  of  an  
injunction  while  the  federal  case  remains  in  process.  

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Although  the  parties  and  Curts  debate  the  significance  of  
many   decisions   outside   the   Seventh   Circuit,   those   opinions  
are  so  various  that  it  would  not  be  helpful  to  catalog  them.  It  
is  enough  to  say  that,  to  the  extent  any  of  them  supports  in-­‐‑
junctive   relief   before   the   settlement   of   a   federal   class   action  
has  become  final,  it  fails  to  discuss  the  Supreme  Court’s  un-­‐‑
derstanding   of   “jurisdiction”   and   predates   its   reminder   in  
Bayer  that  doubts  must  be  resolved  in  favor  of  allowing  state  
courts  to  proceed  with  litigation  pending  there.  
Curts  and  the  parties  have  locked  horns  on  a  number  of  
additional   questions,   such   as   whether   it   is   appropriate   to  
certify   a   national   class   (as   opposed   to   a   number   of   state-­‐‑
specific   classes),   whether   the   plaintiffs   are   adequate   repre-­‐‑
sentatives   of   a   national   class,   and   whether   the   settlement  
ought   to   be   approved.   Our   jurisdiction   under   28   U.S.C.  
§1292(a)   is   limited   to   the   injunction,   however.   Whatever  
scope  remains  for  pendent  appellate  jurisdiction  after  Swint  
v.   Chambers   County   Comm’n,   514   U.S.   35,   43–51   (1995),   and  
Clinton   v.   Jones,   520   U.S.   681,   707   n.41   (1997),   this   is   not   an  
appropriate   occasion   for   its   exercise.   Disputes   about   class  
certification  and  the  terms  of  the  settlement  are  independent  
of  the  injunction  against  state  litigation.  Anyone  dissatisfied  
with  the  district  court’s  final  disposition  is  free  to  seek  appel-­‐‑
late  review;  we  will  not  try  to  resolve  issues  still  under  con-­‐‑
sideration  in  the  district  court.  
Effective   immediately,   the   district   court’s   injunction   is  
stayed.  Curts  and  the  Missouri  court  are  free  to  proceed.  But  
our   mandate   will   issue   in   the   ordinary   course,   to   preserve  
the  parties’  entitlement  to  seek  rehearing.  
REVERSED