Defendants who are defending multiple class actions involving the same issue in different jurisdictions can sometimes be faced with a quandary when they want to settle. They might reach a settlement agreement with plaintiffs’ counsel in one of the cases, but until that settlement is final, which typically takes months, they may have to continue litigating the other cases. And, in the meantime, cross their fingers that the other cases do not undermine the settlement. One option some federal courts have used to prevent other litigation from derailing a settlement is to issue an injunction, after preliminary approval, that bars the class members from prosecuting other litigation in state court on the same issue. The Seventh Circuit, however, held last week that such an injunction violated the Anti-Injunction Act, in Adkins v. Nestle Purina Petcare Co., No. 14-3436, 2015 U.S. App. LEXIS 3270 (7th Cir. Mar. 2, 2015).

The Anti-Injunction Act bars a federal court from enjoining state court proceedings “except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. Where a class action settlement reaches a final judgment, an injunction may well be appropriate, as the Seventh Circuit explained. But here, where the settlement process would take months to complete, and the state court class action was heading towards trial, the parties relied on the “necessary in aid of its jurisdiction” exception to the Anti-Injunction Act. In finding this exception inapplicable, Judge Easterbrook wrote that the word “jurisdiction” meant “adjudicatory competence,” or, in other words, that a court “has been designated by statute as an appropriate forum for a dispute of a given sort . . . . .” Id. at *6. The opinion further explained that “[p]arallel state and federal litigation is common” and “[t]he first to reach final decision can affect the other,” but “the potential effect of one suit on the other does not justify an injunction.” Id. at *7. The Seventh Circuit also cited the word “necessary” in the statute and dictum in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011) to the effect that when in doubt injunctions should not be issued. Id. at *10-11. It noted that other courts had reached contrary results but did not discuss those opinions.

Adkins may be taking an unduly narrow view of the terms “jurisdiction” and “necessary.” The word “jurisdiction” has different meanings in different contexts. If “jurisdiction” means only that the federal court has statutory authority to hear a case, which Adkins seems to suggest, it is difficult to conceive of circumstances in which state courts could interfere with that. Either the federal court has jurisdiction or it does not, and that is a federal question that the state court has nothing to do with. But the “necessary in aid of jurisdiction” exception cannot be a dead letter. Congress likely intended to allow federal courts to enjoin state courts to prevent them from interfering with federal courts’ authority (not merely statutory jurisdiction) in some respects. Adkins seems to acknowledge that, at least if there were inconsistent orders by the federal and state systems, the “necessary in aid of its jurisdiction” exception might apply (and it has been found applicable in “in rem” cases).

Other than arguing that Adkins was wrongly decided (if you are in another circuit, or in the Supreme Court), what can a defendant do in this scenario? Asking the state court for a stay would be an option (and perhaps trying to appeal the ruling on that issue, if possible). But where there is a “race to res judicata” that might fail. Another option would be to try to speed up the federal settlement – speed up the issuance of the notice, shorten the opt-out period, and hold the fairness hearing as soon as possible. Not easy, but it might work. There is no real reason why class members need a long period after getting a class action notice in the mail (or by e-mail) to send back a form. Perhaps a federal court could even issue a judgment that would be effective as a final judgment (and thereby permit an injunction against other proceedings), but be subject to reopening if the settlement process failed? It may take some creativity to work around this decision and achieve the objective of a final resolution sooner with lower litigation costs.

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Photo of Wystan Ackerman Wystan Ackerman

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class…

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class actions involving homeowners’ insurance coverage and market conduct/claim-handling practices. He has been prominently involved in high-profile property insurance litigation concerning the September 11th catastrophe and Hurricane Katrina, and Chinese-made drywall. Based in the insurance capital of Hartford, Connecticut, Wystan writes the blog Insurance Class Actions Insider, which was selected by Lexis Nexis as a top insurance blog for 2011.

Wystan grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state. He always had strong interests in history, politics and baseball and his heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox). Wystan says it was his early fascination with Lincoln that drove him to practice law. As a high school senior, he was one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified his interest in law and government. He went on to Bowdoin College, where he wrote for the Bowdoin Orient and majored in government. After Bowdoin, he went on to Columbia Law School. He also interned in the chambers of then-Judge Sonia Sotomayor on the Second Circuit. Wystan graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole.

When Wystan’s not at his desk, flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation he often can be found watching “Dora the Explorer” or reading or playing whiffleball with his young daughter, helping his wife with her business, Option Realty, reading a book about history or politics, or watching the Boston Red Sox.

Read Wystan’s rc.com bio.