In the latest installment of a long running saga involving the stainless steel drums in Sears Kenmore clothes dryers, the U.S. Court of Appeals for the Seventh Circuit utilized the All Writs Act, 28 U.S.C. 1651(a) (link) to halt class action litigation pending in the U.S. District Court for the North District of California, as well as future class actions involving the same parties, attorneys, and subject matter. The lucid 29-page opinion by Judge Posner – in Thorogood v. Sears, Roebuck & Co., Case No. 10-2407, 2010 U.S. App. Lexis 22807, __ F.3d__(7th Cir. Nov. 2, 2010). “Thorogood III” – highlights how class counsel’s use of far-reaching, burdensome discovery for settlement leverage justifies enjoining a second attempted class action. The latest decision was the third appeal to the Seventh Circuit. It contains important lessons for employment class actions, especially in the wage & hour context where plaintiffs’ counsel often file multiple class actions in different venues. Background. In 2008, the Seventh Circuit reversed a decision granting class certification to a nationwide class of consumers who had purchased Kenmore dryers advertised as having stainless steel drums. On appeal, The Seventh Circuit reversed class certification because the suit would devolve into sorting out multiple state consumer remedies and individual hearings exploring reliance and damages. Thorogood v. Sears Roebuck and Co., 547 F.3d 742 (7th Circuit 2008). After certification was defeated, Sears made a Rule 68 offer of judgment to Thorogood as an individual in the amount of $20,000, inclusive of attorneys fees. The District Court refused to award any attorneys fees, a decision that was upheld by the Seventh Circuit in a second appeal. Thorogood v. Sears Roebuck and Co., 595 F.3d 750 (7th Cir. 2010). Undeterred, plaintiffs class counsel found another lead plaintiff (named Murray) and filed a similar lawsuit in the U.S. District Court for the Northern District of California. Sears removed Murray’s case to federal district court in December 2009. Initially, Judge Claudia Wilkin held that the adverse decision on class certification in Thorogood I precluded class certification in the California action through collateral estoppel. Murray v. Sears, Roebuck & Co., No. 09- CV 5744-CW (N.D. Cal. July 21, 2010). Shortly after, she changed her mind, concluding that the allegations in the California action differed sufficiently to cast doubt on the collateral estoppel defense. She allowed discovery into class allegations to proceed. Class counsel wrote a letter (later appended to the Seventh Circuit’s decision in Thorogood III) which threatened: “The stay on discovery is lifted and Plaintiff may commence discovery on his class claims. Currently, four discovery matters against defendants are pending with the magistrate judge. As you are aware other discovery disputes are in progress. This next stage of litigation will involve Plaintiff’s counsel delving into the full extent of Defendants’ alleged wrongdoing to establish not merely a likelihood to mislead, but Defendants’ intentional fraudulent acts to justify the court in exercising the full extent of its equitable powers and a jury to award punitive damages…..” Translated: “Discovery will cost you so much, you might as well settle now.” Counsel for Sears filed for injunctive relief in the same Illinois federal district court that had originally certified Thorogood I. The District Court denied relief, concluding that raising collateral estoppel defensively provided Sears with an adequate remedy. Sears appealed. Plaintiffs’ attack on jurisdiction failed. Thorogood I had been resolved by the entry of a final judgment with no reservation of jurisdiction, and was no longer pending when Sears asked the district court to enjoin the California copycat litigation. However, Sears’ motion was filed under the All Writs Act, 28 U.S.C. § 1651(a). A party seeking an order under the All Writs Act applies to the court that issued the judgment. No other basis of jurisdiction need be shown. The All-Powerful All Writs Act. The All Writs Act empowers federal courts to enjoin parties from re-litigating issues and to prevent collateral attacks on their judgments. The Seventh Circuit cited In Re March, 988 F.2d 498, 500 (4th Cir. 1993), TBG, Inc. v. Bendis, 36 F.3d 916, 925-27 (10th Cir. 1994), and Wood v. Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1524 (9th Cir. 1983), as examples. The Seventh Circuit observed that the All Writs Act has been interpreted to allow federal courts “to issue such commands . . . as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained.” The extremely broad reach of the All Writs Act extends to persons who, though not parties to the original action or engaged in wrongdoing, are in a position to frustrate the implementation of a court order or the proper administration of justice. Previous cases under the All Writs Act have fact patterns involving more repetitive and vexatious attempts to re-litigate closed issues. The Seventh Circuit in Thorogood III extended the logic to a single revival of a previously defeated class action by the same counsel. Irreparable Harm. The Seventh Circuit framed the issue for consideration as “the only question is whether the district judge abused his discretion in ruling that a plea of collateral estoppel in the California litigation would give Sears adequate relief.” The Court concluded that due to the burdensome, coercive discovery and its cost, there was no adequate remedy short of an injunction. No appeal was available in California because the order allowing class-wide discovery to proceed was interlocutory. Framing the Injunction. The Seventh Circuit recognized it would be challenging to frame the injunction and determine proper parties. It remanded the case to the district judge to wrestle with such details noting that Murray, who was a class member in Thorogood I, and the lawyers who had lost Thorogood I then filed in California, should be among the specific parties to be enjoined. Lessons learned. Collateral estoppel principles were especially strong in Thorogood III because (1) the class as originally certified included half a million dryer purchasers scattered across 29 jurisdictions. Murray, the California plaintiff, had been a class member in Throrogood I albeit not a class representative; (2) The class certification issues were fully and fairly litigated through a Seventh Circuit appeal, a petition for rehearing en banc and denial of certiorari; (3) The same plaintiffs’ counsel filed again and took inconsistent positions (arguing that legal issues across a nationwide class were the same in Thorogood I, then arguing California legal issues were unique in Murray). Such strong equities may not be present in every copycat class action situation. The very issues plaintiffs (and plaintiffs’ counsel) were collaterally estopped from re-litigating in Thorogood III, such as commonality and predominance of individual proof, struck courts differently in California and Illinois. The selection of the initial forum (a choice that plaintiffs’ counsel must make) and defendant’s tactical choices (whether to draw a line in the sand and battle certification in the first forum or settle quickly) are important to whether copycat class actions succeed or fail. However, if the Seventh Circuit’s use of the All Writs Act gains traction, defendants may obtain discovery stays and injunctive relief by returning to the original forum and the court most familiar with the facts – a potentially easier path than raising a collateral estoppel defense in a court less familiar with the case.