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CAFA Law Blog

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

Class Actions In ‘Substance’ Fall Within the Ambit of CAFA

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Barbara Williams v. Employers Mutual Casualty Company et al., 2017 WL 117148 (8th Cir. 2017).

In affirming the judgment of a District Court’s order denying plaintiff’s motion to remand, the Eighth Circuit found that an equitable garnishment action against insurers and land owners, although labeled otherwise, is a class action in “substance” for the purpose of CAFA because the garnishment action emerged from a class action filed in state court.

Plaintiff, on behalf of herself and the residents of Autumn Hills Mobile Home Park (“Autumn Hills”), brought a class action in state court against the owner of Autumn Hills, The Collier Organization, Inc. (“Collier”), alleging that Collier supplied the residents of Autumn Hills with contaminated drinking water (hereinafter referred to as the “Original Action”).   Continue Reading

CAFA Does Not Trump Valid Forum Selection Clause

Posted in Case Summaries

Bartels v. Saber Healthcare Group, LLC, 2016 WL 6237811 (E.D.N.C. Oct. 25, 2016)

A District Court in North Carolina remanded this putative class action after finding a forum selection clause, which limited venue to a geographic location that did not encompass a federal district court, effectively waived the right to remove to federal court. The District Court rejected the defendants’ argument that CAFA nonetheless provided jurisdiction by trumping the forum selection clause. Continue Reading

A Removing Defendant Under CAFA Is Not Required To Allege Facts In Its Notice Of Removal Showing The Inapplicability Of The Local Controversy Exception

Posted in Case Summaries

Henry Hernandez v. Sysco Corp., 2017 WL 358021 (N.D. Cal., Jan. 25, 2017)

In this wage and hour class action, while denying the plaintiff’s motion to remand, a District Court in California found that it was the plaintiff’s burden to show that the local controversy requirement applied, not the defendants’ burden to show that it did not, and that the defendants need not allege facts in the notice of removal showing the inapplicability of the local controversy exception.

The plaintiff brought a putative class action in Alameda County Superior Court alleging that the defendants, inter alia, failed to pay minimum wage and overtime compensation, and provide meal and rest periods in violation of the California Labor Code.

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Fraudulent Misjoinder Requires ‘Egregious’ Misjoinder, Rather Than ‘Mere Misjoinder’

Posted in Case Summaries

Tanya Dotson v. Bayer Corporation, 2017 WL 35706 (E.D. Mo. Jan. 4, 2017).

In granting plaintiffs’ motion to remand, a District Court in Missouri found that the doctrine of fraudulent misjoinder did not support subject matter jurisdiction over an action against the manufacturers of a medical device because the joinder of a non-diverse plaintiff was not ‘egregious.’

Plaintiffs brought a putative class action alleging that the defendants manufactured and sold an unsafe medical device, Essure, for permanent birth control. The defendants removed the lawsuit to federal court based on diversity as well as federal question jurisdiction.  Among other arguments, plaintiffs moved to remand due to a lack of complete diversity between the plaintiffs and the defendants. In response, the defendants argued that the non-diverse plaintiffs were fraudulently misjoined.

The Court referred to the Eighth Circuit’s definition of the “fraudulent misjoinder” doctrine, which occurs when a plaintiff sues a diverse defendant in state court and joins a viable claim involving a nondiverse party, even though the plaintiff has no reasonable procedural basis to join them in one action because the claims bear no relation to each other. Importantly, the Court noted that fraudulent misjoinder requires “egregious” misjoinder, rather than “mere misjoinder.” Here, the defendants contended that the non-diverse plaintiffs’ joinder did not comport with the joinder standards of Federal Rule of Civil Procedure 20 because of the factual differences among the plaintiffs.

In response, the plaintiffs noted that the Eighth Circuit had not applied fraudulent misjoinder and, even if it did, that in the instant case there was no egregious misjoinder  The Court agreed, relying on another Essure device case, in which the joinder of numerous plaintiffs alleging injury from a single medical device was deemed not to be ‘egregious misjoinder.’  While acknowledging that there might be differences among the plaintiffs’ claims, the Court found that all claims focused on the same product, arose out of the same development, distribution, marketing, and sales practices for that product, and had common issues of law and fact that were “likely to arise in the litigation.”  The Court therefore concluded that the defendants had not satisfactorily established fraudulent misjoinder.

Accordingly, the Court granted the plaintiffs’ motion to remand.


Ninth Circuit Remands Action Based Upon CAFA’s Local Controversy Exception

Posted in Case Summaries

 Allen v. Boeing Co. 2016 WL 2586334 (9th Cir. May 5, 2016).

The Ninth Circuit found that the plaintiffs’ complaint sufficiently alleged that the plaintiffs sought significant relief from the local defendant.  The plaintiffs therefore satisfied the requirements CAFA’s local controversy exception to divest the federal court of its jurisdiction.  The Ninth Circuit affirmed the District Court’s order remanding the action.

The plaintiffs in this case were more than 108 individuals.  The plaintiffs brought an action in Washington state court alleging that for several decades the defendant Boeing Company (“Boeing”) released toxins into the groundwater around its facility in Auburn, Washington, and that for over a decade the defendant Landau Associates (“Landau”) had been negligent in its investigation, remediation and containment of the hazardous substances.

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Plaintiff’s Unrefuted Evidence Regarding Citizenship Of Putative Class Members Required Remand Under CAFA’S Home-State Exception

Posted in Case Summaries

Reddick v. Global Contact Solutions, LLC, No. 15-425, 2015 WL 5056186 (D. Or. Aug. 26, 2015)

In this wage-payment dispute, the court remanded the case under CAFA’s home-state exception, 28 U.S.C. § 1332(d)(4)(B), based on plaintiff’s unrebutted evidence that over 97.5% of the absentee class members were citizens of the forum state, Oregon.

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Pay Your Class Counsel! The Lodestar Method Is Available to Calculate Attorney’s Fees in Coupon Settlements

Posted in Case Summaries

Levitt v. Sw. Airlines Co. (In re Sw. Airlines Voucher Litig.), 799 F.3d 701 (7th Cir., 2015)

The Seventh Circuit ruled that when the class members receive their relief in their entirety in a settlement due to the class counsel’s efforts, the class counsel should be compensated accordingly. The Seventh Circuit found the CAFA gives the district courts the discretion to apply the lodestar method in calculating their attorney’s fees in coupon settlements.

In August 2010, Southwest Airlines stopped honoring certain in-flight drink vouchers issued to customers who had bought “Business Select” fares. Southwest customers, Adam Levitt and Herbert Malone, brought a putative class action.  The parties reached a settlement to provide replacement drink vouchers to all members of the class, as well as injunctive relief constraining how Southwest could issue vouchers in the future.

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Join Us in Miami for ACI’s Consumer Finance Class Actions & Litigation Conference, January 24–25

Posted in Events


Join us at the ACI’s 27th National Conference on Consumer Finance Class Actions & Litigation, January 24–25 in Miami, Florida. McGlinchey Stafford is proud to be a supporting sponsor of the conference, and the CAFA Law Blog will serve as this year’s conference media partner.

With updated sessions for 2017, the conference will cover topics such as CFPB enforcement trends, CFPB rulemaking updates, trends in residential mortgage class actions, and consumer finance class action litigation and settlement trends, among other topics. ACI created this year’s agenda with the hottest topics in consumer finance and class action litigation in mind, with a particular focus on issues that most threaten consumer financial services providers: “unprecedented regulatory and enforcement scrutiny, mounting litigation, and costly class actions.” Hear from experienced speakers including state and federal regulatory and enforcement officials, in-house counsel, federal and state judges, and industry-leading outside counsel as they provide comprehensive updates on these pressing subjects.

McGlinchey Stafford attorneys Robert N. Driscoll and Mark New will be presenting at the conference on January 24. Bob will participate in the “Residential Mortgage Watch” panel and Mark will speak on “Debt Collection, Loss Mitigation and Credit Reporting.”

Visit the conference website for more information or to register.

No Remand Where Plaintiff Cannot Show to a Legal Certainty that a $5 Million Recovery by Defendant is Impossible

Posted in Case Summaries

Dammann v. Progressive Direct Insurance Company, 2015 WL 9694633 (D. Minn.  Nov. 20, 2015).

A magistrate judge found that when a defendant meets its burden to plausibly show that the amount in controversy exceeds the $5 million jurisdictional threshold under CAFA, the plaintiff must then show to a legal certainty that if the plaintiff prevails in the action, it was impossible to recover $5 million. In this case, the magistrate judge recommended to deny the motion to remand because the plaintiff did not meet that burden here.

The plaintiffs were purchasers of automobile insurance policies from the defendant Progressive Direct Insurance Company. The plaintiffs were Minnesota residents, whereas the defendant was an Ohio corporation.  The Minnesota No-Fault Act requires all Minnesota automobile drivers to obtain insurance plans that provide coverage for $20,000 medical expenses loss and $20,000 for economic loss.  Under the provisions of certain insurance policies sold by the defendant, the defendant applied a $100 deductible to its insureds’ medical-expense coverage and a $200 deductible to its insureds’ economic-loss coverage, so that the insureds who had $20,000 in coverage and incur that amount or more in medical or economic-loss expenses received a benefit payment of only $19,900 or only $19,800, respectively.  The plaintiffs in this case were those who incurred medical expenses of $20,000 or more, but received only $19,900 in benefit payments, which is $100 below the statutory minimum.

The plaintiffs initially filed this class action lawsuit in Minnesota state court, alleging that the defendant violated the Minnesota Consumer Fraud Act (“MCFA”), the Minnesota Deceptive Trade Practices Act (“MDTPA”), the Minnesota Declaratory Judgments Act (“MDJA”), and Minnesota state common law by selling insurance policies with benefits that fell below the statutory minimum. The plaintiffs specifically contended that each member of the putative class was entitled to reimbursement of $100 medical-expense shortages; revenue resulting from the under-payments; refund of premiums; injunctive, declaratory, and equitable relief as necessary; and attorney’s fees.

The defendant removed the action under CAFA. The plaintiffs moved to remand, primarily arguing that the defendant failed to establish that the amount in controversy exceeded the $5 million jurisdictional threshold of CAFA.

The defendant pointed to Raskas v. Johnson & Johnson, 719 F.3d 884 (8th Cir. 2013), in support of its amount in controversy argument.  In Raskas, the plaintiff filed three separate class action suits in Missouri state court against three drug companies, alleging that the companies encouraged consumers to throw out medications after their expiration date despite the defendants’ knowledge that the medications were still effective.  The defendants established the amount in controversy by using the total sales of their respective medications in Missouri during the five-year statute of limitations time period.  The plaintiffs argued that those sales figures were insufficient to satisfy the requirement because they were only seeking to recover damages for medications.  The court rejected the plaintiffs’ argument and held that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they were.  (Editors’ Note: See the CAFA Law Blog analysis of Raskas posted on December 16, 2013).

As in Raskas, the defendant in this case attempted to show possible aggregated damages using all policies sold in Minnesota.  The defendant argued that the plaintiffs’ allegations put at issue 637,258 personal automobile insurance policies sold during the six-year period, which elected a $100 deductible, as well as another 653,483 policies which elected a $200 deductible.  The premiums for each of those policies over the relevant time period were $58,073,024.23, and $20,450,588.49, respectively.  The defendant argued that that because the plaintiffs sought a declaration that the subject policies were illegal and requested disgorgement of premiums, they had put at least a possible $78 million in controversy.

The plaintiffs asserted that the amount in controversy was merely $60,000 plus attorney’s fees given that they only sought the $100 deduction related underpayment multiplied by the 600 individuals that would make up the class. The Magistrate Judge, however, noted that the complaint also sought declaratory judgment that defendant’s practices were illegal, putting the defendant’s sales practices at issue, and had broader implications than the recovery of $100 deductible.

The Magistrate Judge remarked that as the defendant had met its burden to plausibly show that nearly $78 million in insurance premiums may be at issue given the plaintiffs’ request for declaratory relief. The Magistrate Judge, therefore, opined that the plaintiffs now had the burden to show to a legal certainly that it was impossible for them to collect more than $5 million should they prevail in the action.

The plaintiffs failed to meet this burden, the Magistrate Judge therefore recommended to deny the plaintiffs’ motion to remand.

District Court Holds That Amount In Controversy Can Be Proven By A Reasonable Chain Of Logic Flowing From The Allegations Of The Complaint

Posted in Case Summaries, Uncategorized

Clay v. Chobani LLC, 2015 WL 4743891 (S.D. Cal. Aug.10, 2015).

In this action, a District Court declined to remand the action to state court finding that the defendants had satisfied their burden of proof by showing a reasonable chain of logic based on the allegations of the complaint and sufficient evidence to establish that the amount in controversy exceeded $5 million.

The plaintiff, purchaser of Chobani yogurt for personal consumption, brought a putative class action in California Superior Court on behalf of a class of all California retail purchasers of the Chobani Products alleging violation of California’s Unfair Competition Law (“UCL”), False Advertising Law, Consumers Legal Remedies Act (“CLRA”), and negligent misrepresentation.

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