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CAFA Law Blog

Information, cases and insights regarding the Class Action Fairness Act of 2005

Certain claims carry a presumption as to amount-in-controversy that will lead directly to federal court

Posted in Case Summaries

Robertson v Exxon Mobil Corp., 2015 WL 9592499 (5th Cir. Dec. 31, 2015).

In a personal injury and a property damage action, the Fifth Circuit reversed the district court’s order remanding the action finding that the defendants had by preponderance of evidence shown that at least one plaintiff’s claim exceeded $75,000. Specifically, the Fifth Circuit found that when a plaintiff claims that he/she contracted cancer, or a claims damages for wrongful death, the Fifth Circuit precedent has always held that such claims more likely than not exceeded federal jurisdictional threshold even when the amount-in-controversy is not alleged in the complaint. Continue Reading

Fifth Circuit weighs in on ambiguous class definition

Posted in Case Summaries

Arbuckle Mountain Ranch of Texas Inc v Chesapeake Energy Corporation, Case No. 15-10955, 2016 WL 98128 (5th Cir. Jan 7, 2016). In a 2-1 decision, the Fifth Circuit examined an ambiguous complaint suggesting two class definitions, (one a narrow definition and another containing a broad definition) and held that if the pleadings entirely lean towards a broader definition, it should be assumed that the plaintiff intended to define a broader class.  The Fifth Circuit found that the broader definition defeated CAFA’s local controversy exception, and reversed and remanded. Continue Reading

A Noteworthy Event

Posted in Events

ACI’s Data Breach & Privacy Litigation and Enforcement conference, March 17-18, 2016 at the Union League in Philadelphia. Click here for the pdf of the agenda.

This premiere conference is led by an unparalleled faculty of in-house counsel, federal judges, and the top outside counsel plaintiff and defense litigators and firms. It has networking opportunities galore and features innovative and highly relevant content that will allow you to benchmark your current data breach, TCPA and privacy strategies.

Some of the issues to be discussed this year include:

  • Class Actions: Data Privacy & Security Breach Case Law Trends in Key Jurisdictions and Circuit Court Rulings; New Class Certification Issues; Novel Standing, Causation, Damages, Injury and Actual Harm Nuances; and How the Neiman Marcus and Spokeo Decisions Have and Will Continue to Change the Landscape
  • New Claims Involving the Video Privacy Protection Act and Telephone Consumer Protection Act (TCPA) and Related State Law Claims
  • Federal and State AG Enforcement for Invasion of Privacy, Data Breaches, and Failure to Comply with Notification Statutes: FTC Authority & Litigation, Wyndham Case Implications, Multi-State/ Agency Investigation and Audits, Negotiation, Settlement, Trial, and How the Various Actions Are Proceeding and Being Resolved
  • Shareholder Derivative Lawsuits
  • Business to Business Claims
  • International Data Breaches and resulting litigation and enforcement
  • Attorney/Client Privilege Issues Arising out of Breach Notification

Additional details and registration information are available at http://www.AmericanConference.com/DataBreach or by calling 888-224-2480.

Please mention this code when registering: B00-999-CLB16

Removal Untimely Where State Court Pleading Acknowledges Grounds For Removability Previously Ascertained

Posted in Uncategorized

Addison v. The Netherlands Ins. Co., 2015 WL 461958 (D. Mass. Feb. 4, 2015)

A district court in Massachusetts remanded a case to state court finding that a delay in filing a notice of removal unjustifiable when the complaint, the defendants’ prior filings, and underlying circumstances provided defendants with sufficient grounds to timely ascertain their basis for removal.

The defendants filed a notice of removal almost three years after the 30 day initial period of removability. They contended that the grounds for removability were only first ascertained by a state court order on their motion to dismiss that referenced a decision implying that this present action could be construed as a class action.

The Court noted, however, that the initial filing provided the defendants with information from which it could ascertain the basis for removability. Even though the complaint did not classify the matter as a class action, it specifically sought relief on behalf of the plaintiff “individually and as the representative of a class of similarly-situated persons.” It also attached and referred to a prior, related action, that was a class action, and that provided defendants with citizenship of the class members. The prior action also provided enough information to ascertain the amount in controversy.

Moreover, in their motion to dismiss, the defendants relied extensively on a decision that was directly on point and involved the same plaintiff. That decision held that the plaintiff only had standing to pursue its case as a class representative, which was the basis on which defendants sought dismissal of this present action. Asserting that position necessarily meant that the defendants had, by the time of filing the motion to dismiss, ascertained the basis for their removal of the action. However, rather than remove the action, defendants attempted to dismiss it. The Court noted that defendants’ attempt to remove the action came only after their unavailing effort at dismissing the case, stating: “Now that [defendants] strategy has not succeeded, they seek to rely on the one-sentence order [denying the motion to dismiss] to toll the clock for removal.” Because defendants had the ability to ascertain grounds for removability at the time of filing the complaint, and at latest at the time of filing their motion to dismiss, removal was untimely. Accordingly, the Court granted the plaintiff’s motion to remand.

Calculation of 100 or more does not include unnamed parties

Posted in Case Summaries

Stump v Camp, 2014 WL 582813 (E.D. La. Feb. 13, 2014).

In an action brought by employees of a company who alleged fraud due to an alteration in the plan documents which denied them additional benefits that they were entitled to, the district court remanded the action finding that the under Louisiana law, the spouses cannot be included in the class definition for the purposes of ascertaining numerosity requirement for federal subject matter jurisdiction under CAFA.

The current and former employees of Pamlab, LLC., brought an action in the Twenty-Second Judicial District Court for the Parish of St. Tammy against the defendants Samuel M. Camp, Judith M. Camp, Camline LLC f/k/a/ Pamlab, LLC. The plaintiffs alleged that while they were employed at Pamlab over the past 20 years, they earned points in an “Incentive Points Employee Compensation Plan,” which the plaintiffs characterized as stock. The plaintiffs claimed that they were told that if the company was ever sold, the worker still employed could liquidate their points into cash. According to the plaintiffs, in 2012, Pamlab terminated the points system, but they were informed that plaintiffs could either elect to receive a cash payment based on how many points they formerly held or they could receive the same number of points under the newly adopted 2012 incentive plan.

The plaintiffs contended that they chose to cash in their points because the new plan lasted only until 2017, but the company reserved the right to terminate the plan at any point in time. The plaintiffs claimed that Nestle bought over Pamlab in 2013, but the defendants were already negotiating a sale when the 2012 plan came into force. The plaintiffs felt shortchanged, and hence, filed this action. The defendants removed this case under CAFA, and the plaintiffs moved to remand.

In their motion to remand, the plaintiffs argued that that federal court did not have jurisdiction under CAFA because there were not more than 100 class members, the plaintiffs pointed out that in the defendants’ notice of removal they admitted that there were only 87 Pamlab employees who constituted members of the putative class action. The defendants countered by pointing to the plaintiffs’ complaint where the plaintiffs claimed that there were over 100 potential class members. The defendants contended that the jurisdictional facts are evaluated based on the pleadings at the time of the removal. In the alternative, the defendants argued that the plaintiffs had failed to join indispensable parties, who, when joined, would satisfy the numerosity requirement. The defendants claimed that the Federal Rules of Civil Procedure requires spouses in community property states to be joined because they have interests related to the subject matter of the action.

Here, the district court observed that the plaintiffs’ definition of the proposed class was very specific i.e., all individuals employed by Pamlab, who held points and who elected to receive cash payment for those points by signing a release agreement, and who remained employees until the company was sold. The district court remarked that the class definition did not include spouses who lived in community property, therefore, it could not consider the spouses when assessing the jurisdictional requirements under CAFA. In support of its conclusion, the district court relied on Mississippi ex rel. Hood v. AU Optronics Corp., 134 S.Ct. 736 (2014), where the United States Supreme Court rejected the theory that CAFA’s definition of a mass action included unnamed persons who were real parties in interest. (Editor’s Note: See the CAFA Law Blog analysis of Hood posted on October 8, 2014). The Supreme Court reasoned that the statute says 100 or more persons, not 100 or more named or unnamed real parties in interest. The Supreme Court continued that had Congress intended the later, it easily could have drafted language to that effect. Similarly, here, the district court concluded that if the Congress wanted to include all named and unnamed interested or required parties, it could have included that language, instead, the choose to require 100 or more named or unnamed persons who fell within the definition of the proposed class. Accordingly, the district court concluded that the CAFA definition does not infer an inclusion of the spouses in this case.

The defendants then argued that spouses should be included in assessing CAFA’s numerosity requirement based on the Louisiana’s community property regime – Louisiana Civil Law Treaties: Matrimonial Regimes § 1:1 (3d ed. 2013). The defendants pointed to Louisiana Civil Code Article 2336, which provides that each spouse owns a present undivided one-half interest in the community property. The district court noted that the present case involves a breach of contract claim made by current and former employees of the Defendants. In the complaint, the plaintiffs claimed that the defendants breached their contract by terminating the Incentive Points Employee Compensation Plan. The plaintiffs alleged that the Release Agreement that they signed should be rescinded due to the defendants’ fraud and misrepresentation. The employees who were parties to those employment-related contracts were the only parties who were in privity of contract with the defendants. The district court found no reason to alter this understanding based on the contents of the contracts. The district court concluded that according to Louisiana law, joinder of the spouses in the present case was not mandatory. In addition, the district court remarked that the defendants did not point to any reason why the failure to join the spouses would result in an injustice to those spouses. Accordingly, the district court concluded that under Louisiana law there were only 87 members of the proposed class.

Accordingly, the district court remanded the case to the state court. –JR

More than Declarations are Required for Evidence of CAFA Jurisdiction

Posted in Case Summaries

Emmons v Quest Diagnostics Clinical Labs Inc, 2014 WL 584393 (E.D. Cal. Feb. 12, 2014).

In this action, the federal court refused to accept the defendants’ attempt to establish amount-in-controversy exceeded $5 million through a declaration by one of its employees, finding that the declarations were not enough evidentiary support to retain jurisdiction under CAFA.

Two phlebotomists, on behalf of themselves and others similarly situated, brought this action in the Stanislaus County Superior Court against the defendants seeking overtime wages, unpaid minimum wages, unpaid meal period and rest period premiums. Phlebotomists are those who are trained and certified to draw blood for diagnostic testing. The plaintiffs defined three classes of similarly situated persons: (1) non-Floater Phlebotomists in California; (2) Floater Phlebotomists in California; and (3) non-Floater and Floater Phlebotomists in California who worked for defendants within one year prior to filing of the complaint, until certification.

The defendants removed the action to the federal court under CAFA. Supporting removal, the defendants attached the declaration of Megan Bassler, the Senior Human Resources Generalist, who stated that there were at least 2,000 employees who worked in California as non-Floater Phlebotomists during the 4-year period, and 785 were former employees; at least 180 employees were Floater Phlebotomists, among them 30 were former employees. The defendants indicated that the entire alleged class consisted of at least 2,180 individuals. The plaintiffs sought remand on the grounds that the defendants failed to meet their burden of establishing that the amount-in-controversy exceeded $5 million.

As in many cases, here too, the complaint did not specify an amount of damages, therefore, the defendants again landed with the burden of establishing the amount-in-controversy by preponderance of evidence. The district court noted that in Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007), the Ninth Circuit adopted “legal certainty” standard as the standard of proof in CAFA cases where a state court complaint affirmatively alleges that the amount-in-controversy was less than CAFA’s jurisdictional minimum. (Editor’s Note:  See the CAFA Law Blog analysis of Lowdermilk posted on July 30, 2007). The defendants argued that in Rodriguez v. AT & T Mobility Services, LLC, 728 F.3d 975 (9th Cir. 2013), the Ninth Circuit found that the Supreme Court overruled Lowdermilk in Standard Fire Insurance Company v. Knowles, 133 S.Ct. 1345 (2013) instructing the district courts to look to the potential claims of the absent class members, rather than plaintiff’s complaint. (Editors’ Note: see CAFA law blog analysis of Standard Fire posted on April 12, 2013). The Rodriguez court observed that Lowdermilk reasoned that the initial jurisdictional determination derives from the complaint, while the Standard Fire mandates that courts determine their jurisdiction by aggregating all potential class members’ individual claims.

Under this heightened burden, the district court found that the defendants did not show that the amount-in-controversy exceeded $5 million. The district court explained that here, the defendants contended that the amount-in-controversy exceeded $8,625,000 based on three of the nine allegations of violations of the California Labor Code. The district court noted that in their sixth cause of Action, the plaintiffs alleged that the defendants intentionally and willfully failed to provide the employees with accurate wage statements in accordance with California Labor Code § 226(a). The defendants calculated the value of this claims as $5,565,000 with support from Megan Basler’s declaration. Basler declared that the defendants issued at least 2,100 paychecks in the one-year preceding the complaint, and the defendants assumed that every wage-statement issued over 26 periods was incorrect. Based on that assumption, the defendants argued that the plaintiffs were entitled to recover $50 for the initial incorrect wage statement, $100 for every additional erroneous wage statement, and therefore, each employee would be entitled to receive $2,650 in statutory compensation at minimum. According to the defendants 2,100 paychecks X $2,650 equaled over $5.56 million.

The district court noted that in Garibay v. Archstone Communities LLC, the plaintiff alleged violations of § 226, and the defendant calculations assumed that every single member would be entitled to recover maximum penalties for every single period without providing supporting evidence for that assertion. The Garibay court observed that the only support for the defendants’ calculation of the amount-in-controversy was a declaration by their superior. Accordingly, the Garibay court rejected this evidence as a support for amount-in-controversy. Similarly, the district court in this case relied on other cases where the defendants attempted to establish amount-in-controversy by declarations as opposed to producing solid evidence. The district court concluded that similar to those cases, the defendants here merely speculated without much evidence that the violations of § 226 would result in them paying maximum penalties. The district court ruled that it cannot rely on the defendants’ assertions that the amount-in-controversy was in excess of $5.65 million only in violations of § 226 for the purpose of calculation amount-in-controversy.

Likewise, the district court found that the defendants’ reliance of Basler’s declarations to establish that the violation of § 203 – waiting time penalties – also attracted maximum penalties. The district court refused to accept the defendants’ argument the plaintiffs’ allegations of PAGA violations also helped cross the $5 million threshold.

Accordingly, the district court granted plaintiffs’ request to remand the case to the state court. –JR

Home State Exception Unsuccessful in California

Posted in Case Summaries

Swearingen v Yucatan Foods LP, 2014 WL 553537 (N.D. Cal. Feb. 7, 2014).

In an action brought by the consumers of nationwide class, the district court denied the defendant’s challenge of the federal jurisdiction based on home state exception finding that the choice of law analysis was inappropriate at the pleadings stage, and refused to dismiss the complaint.

These consumers purchased food products from the defendant Yucatan Foods, a food seller, and brought a putative class action contending that the defendant misbranded its guacamole products by using the term “evaporated cane juice” in violation of California’s Sherman Food, Drug and Cosmetics Law and Unfair Competition Law (“UCL”). The defendant moved to dismiss the complaint contending among other things that the plaintiffs cannot plead federal jurisdiction based on class action status.

The defendant argued that plaintiffs failed to plead a claim invoking federal jurisdiction. The plaintiffs had asserted federal jurisdiction pursuant to CAFA, which vests the district courts with jurisdiction over class actions in which the amount-in-controversy exceeds $5 million so long as there is minimal diversity between the parties. The defendant nevertheless, argued that the home state exception should apply, under which the court shall decline jurisdiction when both the primary defendants and 2/3rds of the proposed plaintiff class members are citizens of the forum state.

The district court remarked that ordinarily, the party seeking to invoke federal diversity jurisdiction must bear the burden of establishing that the court may properly exercise such jurisdiction. However, the home state provision i.e., U.S.C. § 1332(d)(4), is an exception to jurisdiction under CAFA and therefore, not part of the prima facie case establishing minimal diversity jurisdiction.

The district court found that on its face, the plaintiffs’ complaint met the jurisdictional requirements of § 1332(d)(2). First, the defendant was a Delaware Corporation with is headquarters in Los Angeles, California. Second, the plaintiffs asserted claims on behalf of over 100 members of a proposed class of consumers throughout the United States, including class members from states other than Delaware or California. The amount-in-controversy was in excess of $5 million in the aggregate. These assertions were unchallenged by the defendant, therefore, were sufficient to establish a prima facie case of minimal diversity jurisdiction under CAFA.

With this established, the district court remarked that the burden was on the defendant to show the home state exception. The defendant pointed to a California appellate decision in Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 214 (1999) reversing the trial court’s certification on a nationwide UCL consumer class on the ground that the UCL was not intended to regulate conduct unconnected to California. The Court, however, noted that in Nat’l Notary Ass’n v. U.S. Notart, No. D038278, 2002 WL 1265555 (Cal. Ct. App. June 7, 2002) which distinguished Norwest on the grounds that the class in Nat’l Notary sought injunctive, not monetary, relief to enforce compliance by the resident defendant for conduct directed from its California headquarters. Irrespective of the holdings in the two cases, the district court remarked that whatever the merits of the defendant’s argument in this case as to the ultimate propriety of a nationwide class, resolution of the question would require detailed choice-of-law analysis not appropriate at the pleadings stage. Accordingly, the district court rejected the defendant’s challenge of the federal jurisdiction based on the CAFA’s home state exception.

Similarly, the district court denied the defendant’s other arguments based on preemption, standing, and for failure to state a claim, and rejected the motion to dismiss. –JR

Amendment after Removal does not divest CAFA Jurisdiction

Posted in Case Summaries

Rivas v Terminix Intl Co., 2013 WL 6443381 (N.D. Cal. Dec. 9, 2013).

In this action, a California federal court reaffirmed the oft-repeated finding that when a class action is properly removed, a subsequent amendment of the complaint to delete class allegations did not divest the district court of its original jurisdiction, and refused to remand the case.

The plaintiff filed this action in the state court asserting six causes action, and each one was brought on behalf of a class, including the Sixth Cause of Action by which the plaintiff alleged a claim under the Private Attorneys General Act. The defendants removed the complaint to the federal court under CAFA. Thereafter, the plaintiff filed a first amended complaint, pleading only one cause of action, the PAGA claim, which was no longer brought on behalf of the class. The plaintiff then moved to remand the case to the state court.

At the very outset, the district court noted that once a putative class action is properly removed, it stays removed. This effectively meant that post filing developments did not defeat the jurisdiction if the jurisdiction was properly invoked as of the time of filing. Here, the district court found that the removal of the initial complaint was proper under CAFA, in light of the defendants’ showing that the parties were minimally diverse, and that the amount-in-controversy exceeded $5 million. Consequently, the district court ruled that the plaintiffs’ subsequent amendment did not divest it of the original jurisdiction.

Accordingly, the district court denied the motion to remand. –JR