No. 01-896

In the Supreme Court of the United States

FORD MOTOR COMPANY ANDCITIBANK (SOUTH DAKOTA), N.A., PETITIONERS

v.

JOHN B. MCCAULEY, ET AL.

ON WRIT OF CERTIORARITO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

THEODORE B. OLSONSolicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.Assistant Attorney General

PAUL D. CLEMENTDeputy Solicitor General

BARBARA MCDOWELLAssistant to the Solicitor

General

BARBARA C. BIDDLETHOMAS M. BONDY

Attorneys

Department of JusticeWashington, D.C. 20530-0001(202) 514-2217

(I)

QUESTION PRESENTED

Whether the cost to the defendant of complying withan injunction sought by a plaintiffs’ class may satisfythe amount-in-controversy requirements of the diver-sity jurisdiction statute, where such compliance wouldcost the defendant more than the $75,000 jurisdictionalamount whether it covered the entire class or anysingle member of the class.

(III)

TABLE OF CONTENTS

Page

Interest of the United States ...................................................... 1Statement ........................................................................................ 2Summary of argument .................................................................. 6Argument:

The amount-in-controversy requirement of 28 U.S.C.1332 is satisfied in a class action seeking injunctive re-lief if the cost to the defendant of providing relief to anyclass member would exceed $75,000 ..................................... 10I. In a conventional lawsuit, the amount in controversy

is correctly measured by either the value of an injunc-tion to the plaintiff or the cost of an injunction to thedefendant .............................................................................. 10A. The text of the diversity jurisdiction statute does

not confine the amount-in-controversy analysis tothe plaintiff ’s perspective .......................................... 10

B. The purposes of the diversity jurisdiction statuteare advanced by measuring the amount in con-troversy from either party’s perspective ............... 13

C. This Court has measured the amount in contro-versy from either party’s perspective, and thetrend among lower courts and commentatorsfavors that approach ................................................... 17

II. There is no basis for adopting a different rule in theclass action context ........................................................... 19

A. Measuring the amount in controversy by thebenefit or cost of an injunction running to oneclass member assures that aggregation neitherexpands nor contracts the jurisdiction of thefederal courts ............................................................... 20

IV

TABLE OF CONTENTS—Continued: PageB. Measuring the amount in controversy in a class

action by the cost of an injunction to the defend-ant promotes fairness and judicial economy .......... 26

Conclusion ....................................................................................... 29

TABLE OF AUTHORITIES

Cases:

Bank of the United States v. Deveaux, 9 U.S.(5 Cranch) 61 (1809) ............................................................... 13, 26

Berman v. Narragansett Racing Ass’n, 414 F.2d 311(1st Cir. 1969) ......................................................................... 19

Brand Name Prescription Drugs Antitrust Litig., In re,123 F.3d 599 (7th Cir. 1997), cert. denied, 522 U.S. 1153(1998) ..................................................................... 8, 12, 20, 22, 25

Burford v. Sun Oil Co., 319 U.S. 315 (1943) ..................... 26Carson v. Dunham, 121 U.S. 421 (1887) ........................... 16Devlin v. Scardelletti, No. 01-417 (Mar. 26, 2002) ........... 2Ericsson GE Mobile Communications, Inc. v. Motorola

Communications & Elec., Inc., 120 F.3d 216 (11th Cir.1997) ......................................................................................... 19

Gilman v. BHC Sec., Inc., 104 F.3d 1418 (2d Cir.1997) ......................................................................................... 6

Glenwood Light & Water Co. v. Mutual Light, Heat& Power Co., 239 U.S. 121 (1915) ....................................... 17

Government Employees Ins. Co. v. Lally, 327 F.2d 568(4th Cir. 1964) ......................................................................... 19

Horton v. Liberty Mut. Ins., 367 U.S. 348 (1961) ............. 13Hunt v. New York Cotton Exch., 205 U.S. 322

(1907) ........................................................................................ 18Hunt v. Washington State Apple Adver. Comm’n, 432

U.S. 333 (1977) ........................................................................ 18Lexecon Inc. v. Milberg Weiss Bershad Hynes &

Lerach, 523 U.S. 26 (1998).................................................... 28Market Co. v. Hoffman, 101 U.S. 112 (1880) .................... 17, 25

V

Cases—Continued: Page

Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304(1816) ........................................................................................ 13

McCarty v. Amoco Pipeline Co., 595 F.2d 389 (7th Cir.1979) ......................................................................................... 12, 19

McNutt v. General Motors Acceptance Corp., 298 U.S.178 (1936) ................................................................................. 18

Mississippi & Missouri R.R. v. Ward, 67 U.S. 485(1862) ........................................................................................ 18

Oklahoma Retail Grocers Ass’n v. Wal-Mart Stores,Inc., 605 F.2d 1155 (10th Cir. 1979) ................................... 19

Rhone-Poulenc Rorer Inc., In re, 51 F.3d 1293 (3d Cir.),cert. denied, 516 U.S. 867 (1995) ......................................... 27

Ridder Bros. v. Blethen, 142 F.2d 395 (9th Cir. 1944) .... 19Ronzio v. Denver & Rio Grande Western R.R., 116

F.2d 604 (10th Cir. 1940) ...................................................... 18-19Rosmer v. Pfizer Inc., 263 F.3d 110 (4th Cir. 2001),

petition for cert. pending, No. 01-1390 .............................. 21Saint Paul Mercury Indem. Co. v. Red Cab Co., 303

U.S. 283 (1938) ........................................................................ 15Sanchez v. Monumental Life Ins. Co., 102 F.3d 398

(9th Cir. 1996) ......................................................................... 19Smith v. Adams, 130 U.S. 167 (1889) ................................. 18Smith v. Washington, 593 F.2d 1097 (D.C. Cir.

1978) ......................................................................................... 19Snow v. Ford Motor Co., 561 F.2d 787 (9th Cir. 1977) .... 5Snyder v. Harris, 394 U.S. 332 (1969) ...... 6, 8,19-20, 21, 23, 25Zahn v. International Paper Co., 414 U.S. 291

(1973) ................................................................. 6, 8, 20, 21, 22, 25

Constitution, statutes and rules:

U.S. Const. Art. III .................................................................. 13Act of Feb. 25, 1879, ch. 99, § 4, 20 Stat. 321 ........................ 17Judiciary Act of 1789, ch. 20, § 11, 1 Stat. 78 ....................... 1128 U.S.C. 1291 ........................................................................... 428 U.S.C. 1331 ........................................................................... 11

VI

Statutes and rules—Continued: Page

28 U.S.C. 1332 ( 1994 & Supp. V 1999) .... 1, 2, 3, 5, 8, 10, 11, 2428 U.S.C. 1332(a) (1994 & Supp. V 1999) ............................. 728 U.S.C. 1367 ........................................................................... 2128 U.S.C. 1367(a) ...................................................................... 2128 U.S.C. 1404(a) ...................................................................... 2828 U.S.C. 1407 ........................................................................... 3, 2828 U.S.C. 1441 ........................................................................... 1528 U.S.C. 1446(b) ...................................................................... 1628 U.S.C. 1447(d) ...................................................................... 4Fed. R. Civ. P.:

Rule 1 ....................................................................................... 27Rule 23 ................................................................................. 2, 23, 27Rule 23(b)(2) ................................................................... 3, 23, 25Rule 23(b)(3) ........................................................................... 3, 23Rule 23(f ) ................................................................................ 27

Miscellaneous:

ALI, Complex Litigation: Statutory Recommen-dations and Analysis (1994) .............................................. 29

Thomas E. Baker, The History and Tradition of theAmount in Controversy Requirement: A Proposal to“Up the Ante” in Diversity Jurisdiction, 102 F.R.D.299 (1985) ................................................................................. 14

Erwin Chemerinsky, Federal Jurisdiction (2d ed.1994) ......................................................................................... 12, 19

Henry J. Friendly, Federal Jurisdiction: A GeneralView (1973) .............................................................................. 27

Deborah R. Hensler et al., Class Action Dilemmas:Pursuing Public Goals for Private Gain (2000) .............. 27

Brittain S. McInnis, The $75,000.01 Question: What Is theValue of Injunctive Relief ?, 6 Geo. Mason L. Rev. 1013(1998) ................................................................................ 11, 16, 27

15 Moore’s Federal Practice (3d ed. 1998) ................... 14, 15, 19Thomas D. Rowe, Jr. & Kenneth D. Sibley, Beyond

Diversity: Federal Multiparty, Multiforum Juris-diction, 135 U. Pa. L. Rev. 7 (1986) .................................... 29

VII

Miscellaneous—Continued: Page

S. Rep. No. 1830, 85th Cong., 2d Sess. Pt. 1 (1958) ............. 14S. Rep. No. 366, 104th Cong., 2d Sess. (1996) ...................... 15The Federal Courts Improvement Act: Hearing on

S. 1101 Before the Subcomm. on Administrative Over-sight and the Courts of the Senate Comm. on theJudiciary), 104th Cong., 1st Sess. (1995) .......................... 26, 27

Charles A. Wright et al., Federal Practice andProcedure:

Vol. 7A (1986) ..................................................................... 24Vol. 14B (1998) ................................................................... 15

(1)

In the Supreme Court of the United States

No. 01-896

FORD MOTOR COMPANY ANDCITIBANK (SOUTH DAKOTA), N.A., PETITIONERS

v.

JOHN B. MCCAULEY, ET AL.

ON WRIT OF CERTIORARITO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The diversity jurisdiction statute, 28 U.S.C. 1332,confers upon the federal district courts jurisdiction overcases in which “the matter in controversy exceeds thesum or value of $75,000, exclusive of interest and costs,”and the parties are citizens of different States or citi-zens of a State and citizens of a foreign country. Con-gress established the amount-in-controversy require-ment in the Judiciary Act of 1789, and adjusted theamount on several subsequent occasions, to confinediversity jurisdiction to relatively significant cases.Congress has not, however, directed that the amount incontroversy be assessed only from the perspective ofthe plaintiff. To the contrary, the general statutory

2

text focuses on the “value” of “the matter in contro-versy,” and allows that value to be considered from theperspective of either party.

The United States has a significant interest in aninterpretation of the amount-in-controversy require-ment that, in cases seeking equitable relief, measuresthat amount either by the benefit to the plaintiff or thecost to the defendant, whichever is greater. In classactions, such as this one, the requirement is satisfied ifthe defendant’s cost of providing injunctive relief to anyclass member exceeds $75,000. Such an understandingof the amount-in-controversy requirement serves Con-gress’s purpose of assuring a neutral national forum forthe adjudication of all substantial disputes betweenpersons of diverse citizenship. In addition, such aninterpretation avoids creating incentives to file pre-emptive suits in federal court and tensions between 28U.S.C. 1332 and Federal Rule of Civil Procedure 23.More broadly, the rules governing class actions haveenormous consequences for the federal courts andinterstate commerce, and the United States has pre-viously participated as an amicus curiae in such cases.See, e.g., Devlin v. Scardelletti, No. 01-417 (argued Mar.26, 2002).

STATEMENT

1. In early 1993, petitioners Ford Motor Company(Ford) and Citibank (South Dakota), N.A. (Citibank),issued a credit card that offered cardholders theopportunity to save on the purchase or lease of a newFord vehicle. Under the program, cardholders earned a5% rebate on each purchase made using the credit card,redeemable on the purchase or lease of certain Fordvehicles. Cardholders could accrue a maximum of $700in rebates per year (representing $14,000 in purchases)

3

over a five-year period, for a maximum possible rebateof $3500. On December 31, 1997, less than five yearsafter the program’s inception, Ford and Citibank termi-nated the rebate accrual feature of the credit card. Pet.App. 3a.

2. After the termination of the rebate program,cardholders filed suits against Ford, and in some in-stances also against Citibank, in state courts inWashington, Oregon, California, Illinois, Alabama, andNew York. They alleged that Ford and Citibank mis-represented or withheld information about the natureand duration of the program and wrongfully dis-continued it. Ford and Citibank removed the cases tofederal district court on the basis of diversity juris-diction. Pursuant to 28 U.S.C. 1407, the Judicial Panelon Multidistrict Litigation transferred the cases to theUnited States District Court for the Western Districtof Washington for coordinated pretrial proceedings.Pet. App. 3a.

The district court consolidated the cases. Theplaintiffs (respondents here) filed a consolidated com-plaint in that court on behalf of a nationwide class ofnearly six million Ford/Citibank cardholders. Theconsolidated complaint asserted state-law causes ofaction for breach of contract, unjust enrichment, andviolation of state consumer protection statutes. Con-solidated Complaint 8-13. As relief, the complaintsought compensatory damages, punitive damages, andan injunction ordering “specific performance of theRebate Program.” Id. at 13. The complaint pleadeddiversity jurisdiction under 28 U.S.C. 1332. Consoli-dated Complaint 3; see Pet. App. 3a-4a.

The plaintiffs moved for class certification underRule 23(b)(2) and (3) of the Federal Rules of CivilProcedure. The district court, however, did not rule on

4

that request. Instead, acting on its own motion, thecourt held that it lacked subject-matter jurisdictionover the case, reasoning that the $75,000 amount-in-controversy requirement of the diversity jurisdictionstatute was not satisfied. The court dismissed theconsolidated complaint and remanded the underlyingcases to their state courts of origin. Pet. App. 4a-5a,23a-33a.

3. The United States Court of Appeals for the NinthCircuit affirmed in part and dismissed in part. Thecourt dismissed as unappealable petitioners’ challengeto the district court’s remand order, see 28 U.S.C.1447(d), but upheld the district court’s conclusion thatdiversity jurisdiction did not exist with respect torespondents’ consolidated complaint. Pet. App. 13a-20a.1

1 The court of appeals held that it had appellate jurisdiction

under 28 U.S.C. 1291 to review the district court’s order dis-missing the consolidated complaint, apparently on the ground thatthe dismissal of the complaint, without leave to amend, was tanta-mount to a “dismissal of the action.” Pet. App. 6a. If, however, theconsolidated complaint is viewed as being in the same “action” asthe removed state-court complaints, the district court did notdismiss the action, but instead remanded it, which is not anappealable decision. 28 U.S.C. 1447(d). It would be questionable inthat circumstance whether the court of appeals had jurisdiction toreview the dismissal order. If, however, the consolidated com-plaint is viewed as being in a separate “action” from the removedstate-court complaints, the district court could have dismissed thataction, while remanding the separate actions commenced by thestate court complaints. The court of appeals’ exercise of appellatejurisdiction would seem permissible in that circumstance, althoughit is less clear that petitioners would be the property parties toappeal the dismissal of the consolidated complaint filed againstthem. Respondents did not dispute appellate jurisdiction in theirbrief in opposition in this Court.

5

In examining the question of diversity jurisdictionunder Section 1332, the court of appeals observed that“the sole jurisdictional question is whether the mini-mum amount in controversy required to maintain adiversity suit in federal court is present.” The courtnoted that the diverse citizenship of the parties was notcontested. Pet. App. 6a.

First, the court of appeals concluded that the plain-tiffs’ claim for compensatory damages did not satisfythe amount-in-controversy requirement of Section 1332.The court noted that “Ford and Citibank do not contendthat any plaintiff has an individual damages claimexceeding $75,000.” Nor did Ford and Citibank contendthat the plaintiffs were asserting “a common and un-divided interest in a claim for damages” that couldsatisfy the amount-in-controversy requirement. Pet.App. 6a-7a.

Second, the court of appeals held that the plaintiffs’claim for an injunction could not satisfy the amount-in-controversy requirement. The court noted that thelower courts have taken different approaches to mea-suring the amount in controversy with respect to claimsfor injunctive relief: some courts apply a “plaintiff-viewpoint” approach, which considers only the value ofthe requested injunction to the plaintiff, while othercourts apply an “either viewpoint” approach, which alsoconsiders the defendant’s cost of complying with therequested injunction. Pet. App. 7a-8a.

The court of appeals noted that, although the NinthCircuit had applied the “either viewpoint” approach inearlier cases, it had not done so in a class action. SeePet. App. 8a (citing Snow v. Ford Motor Co., 561 F.2d787, 790 (9th Cir. 1977)). The court reasoned that ap-plying the “either viewpoint” approach in a class actionwould violate the rule against aggregation of claims

6

articulated in Snyder v. Harris, 394 U.S. 332 (1969), andZahn v. International Paper Co., 414 U.S. 291 (1973),because “plaintiffs with minimal damages could dodgethe non-aggregation rule by praying for an injunction.”Pet. App. 9a. Accordingly, although Ford and Citibankmaintained that compliance with the requested injunc-tion would cost them more than $75,000, the courtconcluded that the amount-in-controversy requirementwas not satisfied. Id. at 10a.

The court of appeals recognized that the rule againstaggregation is not violated when plaintiffs have “a com-mon and undivided interest” in their claim for relief.The court concluded, however, that the plaintiffs, who“charged purchases and accrued rebates individually,not as a group,” did not have a “common and undividedinterest in accruing rebates under the program.” Pet.App. 10a.

Finally, the court of appeals held that the plaintiffs’claim for punitive damages did not satisfy the amount-in-controversy requirement. The court reasoned that“punitive damages asserted on behalf of a [putative]class may not be aggregated for jurisdictional purposeswhere, as here, the underlying cause of action assertedon behalf of the class is not based upon a title or right inwhich the plaintiffs share, and as to which they claim, acommon interest.” Pet. App. 17a (quoting Gilman v.BHC Sec., Inc., 104 F.3d 1418, 1431 (2d Cir. 1997)).2

SUMMARY OF ARGUMENT

I. Congress has authorized federal district courts toexercise jurisdiction over “all civil actions” between

2 This Court granted the writ of certiorari only with respect toQuestion 1 in the petition, which concerns the claim for injunctiverelief, and not with respect to Question 2, which concerns the claimfor punitive damages.

7

parties of diverse citizenship “where the matter incontroversy exceeds the sum or value of $75,000,exclusive of interest and costs.” 28 U.S.C. 1332(a) (1994& Supp. V (1999). The text of the diversity jurisdictionstatute focuses on the “value” of “the matter incontroversy.” Nothing in the statute confines theanalysis of that value to the plaintiff ’s perspective whena case seeks injunctive or other equitable relief that theplaintiff and defendant value differently. To the con-trary, the text is most naturally understood as allowingthe amount in controversy to be measured from eitherparty’s perspective in such cases. It is thus sufficientthat either the benefit of an injunction to the plaintiff orthe cost of an injunction to the defendant exceeds$75,000.

Such a rule advances Congress’s purpose of providinga neutral national forum for the resolution of all sub-stantial disputes involving diverse parties. A case isequally substantial whether the potential benefit to theplaintiff exceeds $75,000 or the potential cost to thedefendant exceeds $75,000. Such a rule also accordswith Congress’s purpose, expressed in the removalstatute, of assuring out-of-state plaintiffs and out-of-state defendants comparable access to federal court. Itenables either party to seek a federal forum when itsown stake in the case exceeds the jurisdictional amount.For such reasons, a number of lower courts and com-mentators agree that the amount in controversy shouldbe valued from either party’s perspective.

II. Nothing in the procedural rules permitting classactions requires abandoning the “either perspective”rule in such actions. Although the court below has longapplied the “either perspective” rule in single-plaintiff,single-defendant suits, it concluded that precedents of

8

this Court precluded application of the rule in classsuits. That view is mistaken.

In class actions seeking injunctive relief, the amountin controversy is appropriately measured by the benefitor cost of an injunction running from one plaintiff to onedefendant. See In re Brand Name Prescription DrugsAntitrust Litig., 123 F.3d 599, 610 (7th Cir. 1997)(Posner, C.J.), cert. denied, 522 U.S. 1153 (1998). Suchan analysis, by separately considering the value of eachplaintiff’s claim against each defendant, assures thatthe procedural class action device neither expandsnor contracts the scope of the diversity jurisdictionauthorized in 28 U.S.C. 1332. A court may exercisediversity jurisdiction over a class action if, but only if, itcould have exercised diversity jurisdiction over in-dividual actions by each class member.

The court below concluded that assessing the amountin controversy from the defendant’s perspective some-how ran afoul of the non-aggregation principle ofSnyder v. Harris, 394 U.S. 332 (1969), and Zahn v.International Paper Co., 414 U.S. 291, 294 (1973). Butthe “either perspective” rule is consistent with Snyderand Zahn. Those cases hold that plaintiffs cannotcreate diversity jurisdiction by using the class actiondevice to aggregate claims that would not independ-ently satisfy the amount-in-controversy requirement.Whether a federal court may exercise diversity juris-diction over a class action thus turns on whether afederal court could exercise diversity jurisdiction over atraditional single-plaintiff, single-defendant actionasserting the same claims. The appropriate applicationof the “either perspective” rule in the class actioncontext is to ask whether the value of the requestedinjunction would be worth more than $75,000 to eitherthe plaintiff or defendant in a single-plaintiff, single-

9

defendant action. By refusing to apply the “either per-spective” rule in class actions, the court below allowsplaintiffs, by bringing their claims in a class action, todivest federal jurisdiction that would exist in anindividual action. That result is inconsistent with thespirit of Snyder and Zahn and the principle that theFederal Rules should not alter the reach of juris-dictional statutes.

Allowing class actions involving diverse parties to beadjudicated in federal court when the amount-in-controversy requirement is satisfied from either side’sperspective offers several practical advantages. As inindividual actions, diversity jurisdiction assuages con-cerns about state court bias against out-of-state partiesand provides a nationally uniform set of proceduralrules to assure the fair, speedy, and inexpensive re-solution of cases. In class actions, moreover, partiesmay benefit from the federal courts’ greater resourcesand expertise with regard to complex litigation, theavailability of a mechanism for the transfer of relatedcases to a single district court for coordinated orconsolidated pretrial proceedings, and other incentivesfor efficient adjudication.

10

ARGUMENT

THE AMOUNT-IN-CONTROVERSY REQUIREMENT OF

28 U.S.C. 1332 IS SATISFIED IN A CLASS ACTION

SEEKING INJUNCTIVE RELIEF IF THE COST TO THE

DEFENDANT OF PROVIDING RELIEF TO ANY CLASS

MEMBER WOULD EXCEED $75,000

I. IN A CONVENTIONAL LAWSUIT, THE AMOUNT

IN CONTROVERSY IS CORRECTLY MEASURED

BY EITHER THE VALUE OF AN INJUNCTION TO

THE PLAINTIFF OR THE COST OF AN INJUNC-

TION TO THE DEFENDANT

In assessing whether the amount-in-controversy re-quirement of 28 U.S.C. 1332 is satisfied in a case seek-ing injunctive relief, a federal court should consider notonly the value of the relief to the plaintiff, but also thecost of the relief to the defendant. If the amountexceeds $75,000 from either the plaintiff’s or the defen-dant’s perspective, the amount-in-controversy require-ment is satisfied. That “either perspective” approach isconsistent with the statutory text, advances the statu-tory purposes of providing a neutral national forum forall significant disputes involving diverse parties,promotes fairness between plaintiffs and defendantswith respect to access to the federal courts, and avoidsartificial incentives to file declaratory judgment actionsin order to secure a federal forum.

A. The Text of the Diversity Jurisdiction Statute Does

Not Confine the Amount-in-Controversy Analysis to

the Plaintiff’s Perspective

The diversity jurisdiction statute, 28 U.S.C. 1332,provides that “[t]he district courts shall have originaljurisdiction of all civil actions where the matter in con-

11

troversy exceeds the sum or value of $75,000, exclusiveof interest and costs,” and the parties are of diversecitizenship. Since the establishment of the lowerfederal courts in the Judiciary Act of 1789, their divers-ity jurisdiction has been conditioned on satisfaction ofan amount-in-controversy requirement. Although thatamount has increased over time from $500 in 1798 to$75,000 today, the text of requirement has otherwiseremained essentially unchanged. See Judiciary Actof 1789, ch. 20, § 11, 1 Stat. 78 (“the circuit courts shallhave original cognizance, concurrent with the courts ofthe several States, of all suits of a civil nature at com-mon law or in equity, where the matter in dispute ex-ceeds, exclusive of costs, the sum or value of fivehundred dollars”).3

Nothing in the text of Section 1332 or its statutorypredecessors states, or even suggests, that “the sum orvalue” of “the matter in controversy” is to be measuredonly from the perspective of the plaintiff. The generalstatutory language directs attention to the “value” of“the matter in controversy,” rather than to the per-spective of one party or the other. The text is mostnaturally understood as authorizing the exercise ofdiversity jurisdiction whenever the “matter in contro-versy” exceeds $75,000 from either the plaintiff’s or thedefendant’s perspective. See Brittain S. McInnis, The$75,000.01 Question: What Is the Value of InjunctiveRelief?, 6 Geo. Mason L. Rev. 1013, 1031 (1998) (observ-ing that “the either viewpoint rule mirrors the flexi-bility inherent in the statute’s language”).

3 For many years, 28 U.S.C. 1331, the general federal-question

jurisdiction statute, contained a similar amount-in-controversyrequirement. Some of the cases cited in the text involve thatrequirement.

12

It would seem artificial to place the “value” of “thematter in controversy” at anything less than theamount at stake for either the plaintiff or the defen-dant, whichever is greater. Suppose, for example, thata homeowner sues to enjoin an energy company fromrunning a pipeline across a portion of the homeowner’sproperty. The benefit to the homeowner of excludingthe pipeline might not approach $75,000, although theexpense to the energy company of rerouting the pipe-line might easily exceed $75,000. In such a case, theamount in controversy for purposes of Section 1332 ismost sensibly measured from the perspective of eitherparty, “because the amount in controversy in a lawsuitexceeds [the jurisdictional amount] if either the plaintiffor defendant will have to pay that amount.” ErwinChemerinsky, Federal Jurisdiction § 5.3, at 292 (2d ed.1994); see McCarty v. Amoco Pipeline Co., 595 F.2d 389(7th Cir. 1979) (applying “either perspective” approachon similar facts).4

In some cases, either party to a dispute could haveinitiated the suit, especially in light of the DeclaratoryJudgment Act. Such cases underscore the arbitrarinessof valuing the dispute only from the perspective ofwhichever party actually did so. As the Court hasobserved in a related context, “[n]o matter which partybrings it into court, the controversy remains the same;it involves the same amount of money and is to be

4 The “either perspective” rule makes particular sense because,as a practical matter, the value of the injunction to the plaintiff willreflect the cost of compliance to the defendant. If liability isestablished, a rational plaintiff would agree to settle the matter for“a shade less than the cost that the injunction would impose on thedefendant.” In re Brand Name Prescription Drugs AntitrustLitig., 123 F.3d 599, 609 (7th Cir. 1997), cert. denied, 522 U.S. 1153(1998).

13

adjudicated and determined under the same rules.”Horton v. Liberty Mutual Ins., 367 U.S. 348, 354 (1961).A rule valuing the matter in controversy solely fromthe perspective of the plaintiff would create an artificialincentive to sue for potential defendants who favor afederal forum, and could even prompt a race to thecourthouse. In the pipeline example, the defendantcould guarantee a federal forum only by promptly filinga declaratory judgment action in district court. A rulethat values the matter in controversy from the per-spective of either party maintains the parity between aparty’s right to initiate a lawsuit in federal court and itsright to remove, and so eliminates the incentive to suefirst.

B. The Purposes of the Diversity Jurisdiction Statute

Are Advanced by Measuring the Amount in Con-

troversy from Either Party’s Perspective

Congress enacted the diversity jurisdiction statute toprovide citizens of different States, or citizens of a Stateand citizens of a foreign country, an alternative nationalforum to resolve their disputes. The statute, likeArticle III of the Constitution, reflects the Framers’concerns about the actual or perceived partiality ofstate courts to local interests. See, e.g., Martin v.Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 347 (1816) (ob-serving that diversity jurisdiction rests on the pre-sumption that “state attachments, state prejudices,state jealousies, and state interests, might sometimesobstruct, or control, or be supposed to obstruct orcontrol, the regular administration of justice”); Bank ofthe United States v. Deveaux, 9 U.S. (5 Cranch) 61, 87(1809).

Congress included the amount-in-controversy re-quirement in the original diversity jurisdiction statute,

14

and subsequently adjusted the amount, in order toreserve the federal courts’ diversity jurisdiction forrelatively substantial cases in monetary terms. See 15Moore’s Federal Practice § 102.109[3], at 102-199 (3ded. 1998) (“[T]he jurisdictional-amount requirement re-flects a congressional judgment that federal judicialresources should be devoted only to those diversitycases in which the financial stakes rise to a pre-determined level.”).5 Thus, when Congress raised thejurisdictional amount in 1958 from $3000 to $10,000, theSenate Judiciary Committee explained that “theamount should be fixed at a sum of money that willmake jurisdiction available in all substantial con-troversies where other elements of Federal jurisdictionare present.” S. Rep. No. 1830, 85th Cong., 2d Sess. 3-4(1958) (emphasis added). The Committee added that“[t]he jurisdictional amount should not be so high as toconvert the Federal courts into courts of big businessnor so low as to fritter away their time in the trial ofpetty controversies.” Id. at 4. Similarly, whenCongress increased the jurisdictional amount in 1996from $50,000 to $75,000, the Senate Judiciary Com-mittee, after noting “the importance of balancing theneed to assist the Federal judiciary in reducing itsincreasing caseload with the needs of those making useof our Federal courts,” concluded that “[t]he adjust-ment of the jurisdictional amount provides claims withsubstantial amounts at issue access to a Federal

5 Congress has understood the requirement as serving both to

preserve the role of the state courts and, in the modern era, toavoid overburdening the federal courts. See, e.g., Thomas E.Baker, The History and Tradition of the Amount in ControversyRequirement: A Proposal to “Up the Ante” in Diversity Juris-diction, 102 F.R.D. 299, 302-318 (1985).

15

forum.” S. Rep. No. 366, 104th Cong., 2d Sess. 29-30(1996).

The purpose of the diversity jurisdiction statute,including its amount-in-controversy requirement, isthus to provide a neutral national forum for the adjudi-cation of substantial controversies involving diverseparties. That purpose is fully served only when thefederal courts are open to cases satisfying the juris-dictional amount from the perspective of either party.After all, “the matter in controversy” is equally“substantial” whether the potential benefit to theplaintiff is more than $75,000 or the potential cost to thedefendant is more than $75,000. As a leading treatisehas observed, “the purpose of a jurisdictional amount incontroversy requirement—to keep trivial cases awayfrom the federal court system—is satisfied when thecase is worth a large sum of money to either party.”14B Charles A. Wright et al., Federal Practice andProcedure § 3703, at 124 (1998); accord 15 Moore’sFederal Practice, supra, § 102.109[3], at 102-199.

In addition, measuring the amount in controversyfrom the perspective of either party promotes thesymmetry that Congress has sought to achieve be-tween out-of-state plaintiffs and out-of-state defendantswith respect to access to federal court in diversitycases. Congress could have left it solely to the plaintiff,as the master of its complaint, to decide whether asubstantial dispute between diverse parties would beadjudicated in state or federal court. Instead, begin-ning with the Judiciary Act of 1789, Congress gave out-of-state defendants (and sometimes all defendants) theright to remove such cases to federal court. See 28U.S.C. 1441; Saint Paul Mercury Indem. Co. v. RedCab Co., 303 U.S. 283, 286-287 (1938) (discussing historyof removal statute). The removal statute clearly indi-

16

cates concern for the out-of-state defendant, whootherwise would have no control over the forum. Yet, ifthe amount in controversy were measured only fromthe plaintiff’s perspective, a defendant could not re-move the case to federal court, even though the defen-dant stood to lose more than the jurisdictional amountfrom an adverse state court judgment. That would beso even in those cases where either party might haveinitiated a suit, so that it is merely fortuitous whichparty is the plaintiff and which is the defendant.

The “either perspective” rule also has practical ad-vantages. Under a “plaintiff only” rule, plaintiffs coulddemonstrate the value of the case from their own per-spective, and thus based on information available tothem; defendants, however, could demonstrate thevalue of the case only from their adversary’s per-spective, and thus based on information that might notbe available to them early in the case when removalmust occur. See 28 U.S.C. 1446(b) (time limits forremoval); see also McInnis, supra, 6 Geo. Mason L. Revat 1023 (suggesting that valuing the amount in con-troversy from either party’s perspective avoids “forcingcourts to accept a one-sided, and hence distorted,assessment of the value of a claim”). Forcing defen-dants to rely on information outside their possession isparticularly problematic in the removal context, inwhich the removing defendant bears the burden ofestablishing jurisdiction. Carson v. Dunham, 121 U.S.421, 425 (1887). In addition, it may be easier in somecases to value the injunction from the defendant’s per-spective. While the value of the injunction from aplaintiff’s perspective may involve difficult valuationproblems (e.g., what is the value of not having a pipelineunder your land?), the defendant’s costs of compliancemay be relatively concrete.

17

C. This Court Has Measured the Amount in Controversy

from Either Party’s Perspective, and the Trend

Among Lower Courts and Commentators Favors That

Approach

This Court has recognized that, in cases seekinginjunctive or other equitable relief, “the matter in con-troversy” may have a different value to the plaintiff andthe defendant. In Glenwood Light & Water Co. v.Mutual Light, Heat & Power Co., 239 U.S. 121, 124-125(1915), for example, the plaintiff sought an injunctionthat would have required the defendant to relocate itsutility poles and wires—relief that would haveproduced a benefit to the plaintiff exceeding the $3000jurisdictional amount, but which would have cost thedefendant no more than $500. Although the Court heldin that case that the amount-in-controversy require-ment was satisfied based on the value to the plaintiff ofobtaining the requested injunction, see id. at 124, theCourt has not held that the requirement cannot also besatisfied based on the value to the defendant of de-feating the injunction.

Indeed, in Market Co. v. Hoffman, 101 U.S. 112(1879), this Court considered the amount in controversyfrom the defendant’s perspective in applying an 1879statute that, in terms similar to those of the diversityjurisdiction statute, authorized appeals to this Courtfrom the Supreme Court of the District of Columbia “inany case where the matter in dispute, exclusive ofcosts, exceeds the value of twenty-five hundreddollars.” Act of Feb. 25, 1879, ch. 99, § 4, 20 Stat. 321.In that case, 206 persons who occupied stalls in thedefendant’s market successfully sued to enjoin thedefendant from selling the stalls to a third party. TheCourt concluded that the $2500 amount-in-controversy

18

requirement was satisfied because “the sale which thecompany proposed to make, and the court belowenjoined, would have realized to the company morethan $60,000.” 101 U.S. at 113.

In many subsequent cases, the Court has describedthe amount-in-controversy inquiry for federal jurisdic-tion in terms that would permit consideration of thevalue of the case from either party’s perspective. Thus,in Hunt v. Washington State Apple Advertising Com-mission, 432 U.S. 333 (1977), the Court observed that,“[i]n actions seeking declaratory or injunctive relief, itis well established that the amount in controversy ismeasured by the value of the object of the litigation,”id. at 347, without suggesting that only the value to theplaintiff is to be considered. See, e.g., McNutt v.General Motors Acceptance Corp., 298 U.S. 178, 181(1936) (“jurisdiction is to be tested by the value of theobject or right to be protected against interference”);Hunt v. New York Cotton Exch., 205 U.S. 322, 336(1907) (“jurisdiction is determinable by the objectsought to be accomplished”); Mississippi & MissouriR.R. v. Ward, 67 U.S. (2 Black) 485, 492 (1862) (“theremoval of the obstruction [a bridge] is the matter ofcontroversy, and the value of the object must govern”).The Court has gone so far as to observe, albeit in dicta,that “the pecuniary value of the matter in dispute maybe determined * * * by the pecuniary result to one ofthe parties immediately from the judgment.” Smith v.Adams, 130 U.S. 167, 175 (1889).

A number of lower courts have recognized that, incases seeking injunctive or other equitable relief, “thetest for determining the amount in controversy is thepecuniary result to either party which the judgmentwould directly produce.” Ronzio v. Denver & RioGrande Western R.R., 116 F.2d 604, 606 (10th Cir.

19

1940); see, e.g., Sanchez v. Monumental Life Ins. Co.,102 F.3d 398, 405 (9th Cir. 1996); Oklahoma RetailGrocers Ass’n v. Wal-Mart Stores, Inc., 605 F.2d 1155,1159-1160 (10th Cir. 1979); McCarty, 595 F.2d at 393-395; Smith v. Washington, 593 F.2d 1097, 1100 & n.6(D.C. Cir. 1978); Berman v. Narragansett RacingAss’n, 414 F.2d 311, 314 (1st Cir. 1969); GovernmentEmployees Ins. Co., v. Lally, 327 F.2d 568, 569 (4th Cir.1964); Ridder Bros. v. Blethen, 142 F.2d 395, 398-399(9th Cir. 1944); cf. Ericsson GE Mobile Communi-cations, Inc. v. Motorola Communications & Elec.,Inc., 120 F.3d 216, 220 & n.15 (11th Cir. 1997) (recogniz-ing that “there are persuasive arguments to supportthe adoption of the either-viewpoint rule” but adheringto contrary circuit precedent). The leading commenta-tors, as well, have suggested that the amount incontroversy is more appropriately measured from theperspective of either party in cases seeking injunctiverelief. See, e.g., 14B Wright et al., supra, § 3703, at 125(observing that the “either perspective” rule “seems tobe the appropriate one”); 15 Moore’s Federal Practice,supra, § 102.109[3], at 102-199; Chemerinsky, supra,§ 5.3, at 292 (observing that “the trend seems to be” inthe direction of the “either perspective” rule).

II. THERE IS NO BASIS FOR ADOPTING A DIF-

FERENT RULE IN THE CLASS ACTION CON-

TEXT

The court below has applied the “either perspective”rule in conventional single-plaintiff, single-defendantcases for decades. See, e.g., Ridder Bros., 142 F.2d at399. Nonetheless, the court concluded that applicationof the “either perspective” rule was foreclosed in theclass action context by this Court’s decisions in Snyder

20

v. Harris, 394 U.S. 331 (1969), and Zahn v. Inter-national Paper Co, 414 U.S. 291 (1973). On thecontrary, the “either perspective” rule, properly ap-plied, is more consistent with Snyder and Zahn thanthe court’s own approach.

A. Measuring the Amount in Controversy by the Benefit or

Cost of an Injunction Running to One Class Member

Assures that Aggregation Neither Expands nor

Contracts the Jurisdiction of the Federal Courts

In a case seeking injunctive or other equitable reliefwith respect to the class as a whole, the amount-in-controversy analysis should turn on whether, in ahypothetical suit between one plaintiff and one defen-dant, the cost to the plaintiff of obtaining the relief orthe cost to the defendant of providing it would exceedthe jurisdictional amount. See In re Brand NamePrescription Drugs Antitrust Litig., 123 F.3d 599, 610(7th Cir. 1997) (Posner, C.J.) (to measure the amount incontroversy from the defendant’s perspective in a classaction seeking injunctive relief, “[t]he test * * * is thecost to each defendant of an injunction running in favorof one plaintiff”), cert. denied, 522 U.S. 1153 (1998).That analysis assures that aggregation of claimsthrough the procedural device of a class action does notdeprive parties of the access to federal court to whichthey would be entitled if the claims were broughtindividually. It likewise assures that aggregation ofclaims does not provide parties with access to federalcourt to which they would otherwise not be entitled.

1. Applying the “either perspective” rule to classactions by considering the value of an injunction run-ning from one plaintiff to one defendant in a hypotheti-cal individual suit comports with the “nonaggregationrule” of Snyder and Zahn. In those cases, the Court

21

held that class members could not aggregate their“separate and distinct claims” for damages in order tosatisfy the jurisdictional amount. Thus, the class actionin Snyder could not proceed in federal court at all,because no class member’s individual claim exceededthe jurisdictional amount, whereas the class action inZahn could proceed only as to those class memberswhose individual claims exceeded that amount. TheCourt explained that allowing aggregation of claimsthat could not have been brought in federal courtseparately would “seriously undercut the purpose ofthe jurisdictional amount requirement.” Snyder, 394U.S. at 340; accord Zahn, 414 U.S. at 301.6

As the Seventh Circuit explained, the “nonaggrega-tion rule” is not violated when the amount-in-con-troversy analysis focuses on the benefit or cost of aninjunction running from one defendant to plaintiff, be-cause “each plaintiff’s claim [is] held separate from each

6 The lower courts are divided over whether Zahn’s require-

ment of dismissal of class members’ claims that do not satisfy thejurisdictional amount survives Congress’s subsequent enactmentof the supplemental jurisdiction statute, 28 U.S.C. 1367. SeeRosmer v. Pfizer Inc., 263 F.3d 110, 114 (4th Cir. 2001) (notingcontroversy), petition for cert. pending, No. 01-1390 (filed Mar. 14,2002). Section 1367(a) provides, subject to specified exceptions,that

[I]n any civil action of which the district courts have originaljurisdiction, the district courts shall have supplemental juris-diction over all other claims that are so related to claims in theaction within such original jurisdiction that they form part ofthe same case or controversy under Article III of the UnitedStates Constitution. Such supplemental jurisdiction shall in-clude claims that involve the joinder or intervention of ad-ditional parties.

28 U.S.C. 1367(a).

22

other plaintiff’s claim from both the plaintiff’s and thedefendant’s standpoint.” Brand Name, 123 F.3d at 610.Each such claim must satisfy the jurisdictional amount,either from the plaintiff’s perspective or the defen-dant’s perspective, in order to come within the federalcourts’ diversity jurisdiction. Thus, no plaintiff and nodefendant would be entering federal court by “rid[ing]on another’s coattails.” Zahn, 414 U.S. at 301.

2. Such an application of the “either perspective”rule not only ensures, consistent with Snyder andZahn, that the class action device does not create juris-diction by allowing claims that could not be adjudicatedindividually in federal court to be adjudicated collec-tively. It also avoids the converse problem by ensuringthat plaintiffs cannot defeat jurisdiction by aggregat-ing, through the class action device, claims that could bebrought individually in federal court.

If, for example, a plaintiff brought an individual suitseeking injunctive relief, which would result in a benefitof $25,000 to the plaintiff but a cost of $100,000 to thedefendant, the amount-in-controversy requirementwould be satisfied. In the Ninth Circuit, however, ifthat same plaintiff sought the same relief on behalf of aclass of 100 similarly situated individuals, federal jur-isdiction would be lacking, because the “either per-spective” rule could not be applied in a class action andeach plaintiff stood to gain only $25,000. There is noplausible reason why the decision to file a class suitrather than an individual suit (or 100 separate in-dividual suits) should defeat federal jurisdiction.7

7 The logic of the Ninth Circuit’s approach would suggest that

the consolidation of 100 separately filed actions, each one properlyin federal court, would require the dismissal of the action for lack

23

Such a result is incompatible with the reasoning ofSnyder and Zahn, as well as with the broader principlethat federal procedural rules should not trump statu-tory provisions. Just as the class action device shouldnot be understood to expand Congress’s grant of di-versity jurisdiction, as the Court recognized in Snyderand Zahn, the class action device should not be under-stood to contract Congress’s grant of diversity jurisdic-tion. Indeed, the Court in Snyder expressly rejectedthe notion that anything in Rule 23 could have altered“the scope of the congressionally enacted grant ofjurisdiction to the district courts.” 394 U.S. at 336. TheCourt noted that any contrary understanding of Rule23 “would clearly conflict with the command of Rule 82that ‘[t]hese rules shall not be construed to extend orlimit the jurisdiction of United States district courts.’ ”Id. at 337 (quoting Fed. R. Civ. P. 82) (emphasis added).

Indeed, Rule 23(b)(2), one of the provisions on whichrespondents relied in seeking class certification in thiscase, specifically provides for class actions when adefendant “has acted or refused to act on groundsgenerally applicable to the class, thereby making appro-priate final injunctive relief or corresponding declara-tory relief with respect to the class as a whole.” InRule 23(b)(2) class actions, in contrast to Rule 23(b)(3)class actions based only on a common question of lawand fact, the court is not required to find that “a classaction is superior to other available methods for the fairand efficient adjudication of the controversy.” Theabsence of such a requirement under Rule 23(b)(2)indicates that the drafters of the Rules understood thata class action ordinarily would be the optimal means of

of jurisdiction. See Pet. App. 8a (“logic would dictate that [the rulefor class actions] should apply to all multi-party complaints”).

24

adjudicating claims for injunctive and declaratory reliefwith respect to a class as a whole. See 7A Charles A.Wright et al., Federal Practice and Procedure § 1775,at 447 (1986) (observing that “[c]lass action treatment isparticularly useful in this situation because it willdetermine the propriety of the behavior of the partyopposing the class in a single action”). It would becontrary to that understanding to construe the amount-in-controversy requirement in a manner that couldallow such claims in federal court when they arepursued individually, but not in a class action.

Here, for example, suppose that one respondent filedsuit against petitioners, seeking the same relief thatwas sought in the consolidated complaint, including aninjunction requiring petitioners to reestablish therebate program. See Consolidated Complaint 13 (re-questing “specific performance of the Rebate Programto plaintiffs and class members”). Such a suit wouldsatisfy the amount-in-controversy of Section 1332, pro-vided that the cost to each petitioner of complying withthe injunction exceeded $75,000, and thus could be filedin or removed to federal court. The mere fact thatrespondents chose to sue collectively, rather than in-dividually, should not operate to defeat federal juris-diction.

3. It will often be appropriate in a class action toconsider the defendant’s cost of compliance with therequested injunction for an additional reason. InSnyder and Zahn, the Court contrasted the plaintiffs’claims for individual damages in those cases withplaintiffs’ claims in other cases for the establishment ofa common fund. The Court observed that, “when sev-eral plaintiffs unite to enforce a single title or right, inwhich they have a common and undivided interest, it isenough if their interests collectively equal the juris-

25

dictional amount.” Zahn, 414 U.S. at 294; accordSnyder, 394 U.S. at 335.

The distinction articulated in Snyder and Zahn isalso applicable to many claims for injunctive and otherequitable relief. As the Seventh Circuit explained, inanalyzing a class claim for injunctive relief, as in analyz-ing a class claim for damages, a court must determine“whether each plaintiff is asserting an individual rightor, rather a right to an undivided interest in some-thing.” Brand Name, 123 F.3d at 610. Thus, if the classwould have “a common and undivided interest,” Zahn,414 U.S. at 294, in the injunction, the amount-in-con-troversy inquiry turns on the defendant’s total costs ofcompliance. See Market Co., 101 U.S. at 113 (con-sidering defendant’s total cost of compliance with in-junction providing common relief to multiple plaintiffs),Because Rule 23(b)(2) authorizes class actions seekinginjunctive relief against a defendant who “has acted torefused to act on grounds generally applicable to theclass,” much of the injunctive relief sought in classactions may be of the “common and undivided” variety.Of course, because of the “common and undivided”nature of such an injunction, the cost to the defendantof an injunction running to the class would be the samein many (but not all) cases as the cost of an identicalinjunction running to one plaintiff.

Arguably, the injunction sought in this case, whichwould require petitioners to reestablish the rebateprogram so that all class members could resumeaccruing rebates, would enforce a common and undi-vided interest. In any event, however, because the costof providing the requested relief to any one plaintiffexceeds the $75,000 jurisdictional amount, the Courtneed not definitively characterize the relief soughthere.

26

B. Measuring the Amount in Controversy in a Class

Action by the Cost of an Injunction to the Defendant

Promotes Fairness and Judicial Economy

A rule that enables class actions to be filed in, orremoved to, federal court based on the amount in con-troversy to either side provides several practicaladvantages.

First, in class actions, as in other cases, diversityjurisdiction assures the parties of a neutral nationalforum. To be sure, some have questioned whether statecourt bias against out-of-state parties continues to existin the modern era. See, e.g., Burford v. Sun Oil Co., 319U.S. 315, 336 (1943) (Frankfurter, J., dissenting). Con-cerns about such bias nonetheless persist among out-of-state parties, especially defendants, with experiencelitigating in state courts. See, e.g., The Federal CourtsImprovement Act: Hearing on S. 1101 Before the Sub-comm. on Administrative Oversight and the Courts ofthe Senate Comm. on the Judiciary, 104th Cong., 1stSess. 48 (1995) (Senate Judiciary Hearing) (spokes-person for American Bar Association observes that,“while it has been suggested that there are no moreprejudices” against out-of-state litigants, “trial lawyersknow different”); id. at 56 (spokesperson for DefenseResearch Institute observes that “[o]ur members, whooften represent controversial or unpopular defendants,can confirm from personal experience that bias stillexists” against out-of-state parties). The Constitutionand diversity jurisdiction statute view with “indulgencethe possible fears and apprehensions of suitors” withoutregard to the actual extent of local bias. Bank of theUnited States v. Deveaux, 9 U.S. (5 Cranch) at 87.

Those concerns may be exacerbated in the context ofa class action. In that context, a defendant may face the

27

aggregation of literally thousands of actions as well asunique pressures to settle before a final determinationon the merits. See In re Rhone-Poulenc Rorer Inc., 51F.3d 1293, 1298 (7th Cir.), cert. denied, 516 U.S. 867(1995); Henry J. Friendly, Federal Jurisdiction: AGeneral View 120 (1973).

Second, aside from any question of bias against out-of-state parties, a state court may not have the sameexpertise or the same resources as a federal court forhanding class actions and other complex cases. SeeDeborah R. Hensler et al., Class Action Dilemmas:Pursuing Public Goals for Private Gain 481-482 (2000)(noting arguments that “state court judges, who histori-cally have had far fewer resources at their commend,are ill-equipped to provide the kind of close attentionthat class actions require”); McInnis, supra, 6 Geo.Mason L. Rev. at 1027 (noting the perception that“federal courts, with more experienced judges and lesscrowded dockets, are better positioned to decidecomplex cases”).

In federal court, moreover, the parties have thebenefit of the federal Judicial Code, the Federal Rulesof Civil Procedure, and the Federal Rules of Evidence,which provide uniform national rules for the “just,speedy, and inexpensive determination of everyaction.” Fed. R. Civ. P. 1. See Senate Judiciary Hear-ing 57 (spokesperson for Defense Research Institutenotes that “multi-state litigation relating to similarclaims” benefits from “the procedural consistencyprovided by the Federal Rules of Evidence and FederalRules of Civil Procedure”). For example, under recentamendments to Federal Rule of Civil Procedure 23,federal court litigants enjoy relatively liberal rulespermitting interlocutory appeals of orders granting ordenying class certification. See Fed. R. Civ. P. 23(f).

28

As a result of the perceived advantages of a federalforum, the trend in recent legislative proposals hasbeen to expand access to the federal courts in classactions that involve significant financial risk for thedefendant. See Br. in Opp. App. 1a-24a, 25a-45a.

Third, federal jurisdiction provides particular effi-ciencies where, as here, several similar suits arepending against the same defendant. If such cases canbe filed in or removed to federal court, they can also betransferred to a single district court for consolidated orcoordinated pretrial proceedings. See 28 U.S.C. 1407;see also 28 U.S.C. 1404(a) (allowing a case to be trans-ferred, “[f]or the convenience of the parties and wit-nesses, in the interest of justice” to any other district“where it might have been brought”); cf. Lexecon Inc.v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26(1998) (court to which related case is transferred under28 U.S.C. 1407 cannot invoke 28 U.S.C. 1404(a) toassign case to itself for trial). Such transfers reduce thecosts and other burdens of overlapping litigation. Forexample, when a single federal court is overseeingdiscovery, parties will not be subject to multiple, andpotentially conflicting, discovery schedules, rulings, andobligations. The opportunities for a comprehensivesettlement of the dispute are also enhanced when allinterested parties are before one court.

Finally, although 28 U.S.C. 1407 does not provide fora consolidated or coordinated trial, parties may have anincentive, once related cases have been transferred to asingle district court for pretrial proceedings, to con-solidate the case for trial. Here, for example, respon-dents elected, after the transfer to the Western Districtof Washington, to file a single consolidated complaint.As commentators have observed, “[b]eyond the sheereconomy of not having to litigate the same matters

29

twice, consolidation of related proceedings can reducesuch problems as inconsistent outcomes, whipsawing(from the ability of defendants in separate litigations topoint to a nonparty as the one truly liable), anduncoordinated scrambles for the assets of a limitedfund.” Thomas D. Rowe Jr. & Kenneth D. Sibley,Beyond Diversity: Federal Multiparty, MultiforumJurisdiction, 135 U. Pa. L. Rev. 7, 14-15 (1986) (quotedin ALI, Complex Litigation: Statutory Recommenda-tions and Analysis 16 (1994)).

CONCLUSION

The judgment of the court of appeals should bereversed.

Respectfully submitted.

THEODORE B. OLSONSolicitor General

ROBERT D. MCCALLUM, JR.Assistant Attorney General

PAUL D. CLEMENTDeputy Solicitor General

BARBARA MCDOWELLAssistant to the Solicitor

General

BARBARA C. BIDDLETHOMAS M. BONDY

Attorneys

MAY 2002