Header graphic for print

CAFA Law Blog

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

ACI’s 2nd National Forum on Data Breach & Privacy Litigation and Enforcement, September 29-30

Posted in Events


ACI’s 2nd National Forum on Data Breach & Privacy Litigation and Enforcement

September 29 – 30, 2016

The Carlton Hotel, New York


Gain insight and learn from the nation’s leading jurists, in house counsel from companies across the country, and top plaintiff and defense litigators who are in the trenches daily.

ACI’s 26th National Conference on Consumer Finance Class Actions & Litigation, July 28-29

Posted in Events


ACI’s 26th National Conference on Consumer Finance Class Actions & Litigation

July 28-29, 2016

The Omni Chicago Hotel

Chicago, IL


Consumer financial services companies are facing unprecedented regulatory and enforcement scrutiny, mounting litigation, and costly class actions. That is why it is essential that in-house and outside counsel attend the ACI’s 26th National Conference on Consumer Finance Class Actions & Litigation on July 28-29, 2016 in Chicago, IL. to learn and master the latest enforcement actions and regulatory initiatives, and the most effective defense and settlement strategies.

Defendant’s Unreasonable Amount in Controversy Calculation Warranted Remand to State Court

Posted in Case Summaries

Sloan v. Soul Circus, Inc., 2015 WL 9272838 (D.D.C. Dec. 18, 2015).

The district court remanded the action after the defendant based its amount in controversy calculation on a misinterpretation of the plaintiff’s class definition.  The district court found that under the Dart framework, the defendant failed to show by a preponderance of the evidence that the amount in controversy exceeded CAFA’s jurisdictional threshold.

The plaintiff, Melanie Sloan, filed this lawsuit against the defendant Soul Circus, Inc. in the Superior Court of the District of Columbia on behalf of herself and a class of all District of Columbia residents who purchased UniverSoul Circus tickets because of alleged false and misleading claims.  The plaintiff alleged that the defendant violated six subsections of the District of Columbia Consumer Protection Procedures Act (“CPPA”) and sought CPPA statutory remedies; treble damages or $1,500 per violation, whichever was greater; attorney’s fees; punitive damages; and injunction against the Circus’ practices; and any other relief that the Court deemed proper.

The defendant removed the action, citing the parties’ complete diversity of citizenship and an amount in controversy $75,000.  The defendant also based removal on CAFA.  The defendant then moved to dismiss the plaintiff’s claims.

Arguing that the defendant failed to meet its burden to prove a sufficient amount in controversy, the plaintiff moved to remand.  While the motions were still pending, the plaintiff moved for class certification.

At the very outset, the District Court noted that in Dart Cherokee Basin Operating v. Owens, 135 S.Ct. 547 (2014), the Supreme Court articulated a two phase framework for adjudicating the amount in controversy.  In the first phase, the defendant’s amount in controversy should be accepted when not contested by the plaintiff or questioned by the court.  If the amount in controversy is contested, then in the second phase, the court should by a preponderance of the evidence determine that the amount in controversy exceeds the jurisdictional threshold.  (Editors’ Note: See the CAFA Law Blog analysis of Dart Cherokee posted on August 26, 2014).

The District Court remarked that in class actions, an additional consideration applies to the amount in controversy analysis: class action plaintiffs’ claims are generally not aggregated to establish the amount in controversy for diversity jurisdiction.  This principle, the District Court noted, extended to CPPA private attorney general actions brought on behalf of the class.

Here, the District Court noted that a prevailing CPPA plaintiff may recover treble damages or $1,500 per violation, whichever is greater.  The defendant asserted that an alleged violation occurred every time the plaintiff viewed, received, or was otherwise exposed to the defendant’s communications with the D.C. residents.  Further, the defendant stated that by multiplying the estimated number of class members who purchased tickets (2,667) by the number of violations per ticket purchaser (6) and the amount of damages per violation ($1500), the result was $24,003,000 in total damages.  The plaintiff argued against the defendant’s conclusions and stated that the defendant incorrectly assumed that each of its communications in the past three years was a violation, as not all of the communications were necessarily unlawful under the CPPA.  Second, the plaintiff noted that the defendant failed to cite legal authority supporting the proposition that a consumer’s mere observation of a merchant’s communications can trigger CPPA statutory damages.

The District Court agreed with the plaintiff’s view, observing that it is true that a person can violate the CPPA whether or not any consumer is in fact misled, deceived or damaged thereby.  But the CPPA specifies that, for claims brought by testers and nonprofit organizations, damages claims may seek relief from the use of a trade practice when that trade practice involves consumer goods or services that the consumer tester or nonprofit organization purchased or received.  The District Court explained that the statute implies, therefore, that CPPA statutory damages awards flow from a purchase or receipt of consumer goods or service–not the mere observation of a merchant’s unlawful communication.

The District Court, therefore, rejected the defendant’s assumption that a CPPA violation occurred every time the plaintiff viewed, received, or was otherwise exposed to one of the defendant’s advertisements.  Because the defendant’s claims about the plaintiff’s statutory damages were speculative and unsupported, the District Court concluded that the defendant failed establish that the plaintiff’s total statutory damages by a preponderance of the evidence exceeded $75,000.

The District Court next noted that the Dart framework applicable in the CAFA context to amount in controversy requires the defendant to make a mere showing that the claims of the entire class collectively exceeds $5 million.

In the removal context, the District Court noted that two additional procedural differences existed between cases invoking CAFA jurisdiction and cases invoking plain diversity jurisdiction.  First, Dart eliminated cases the antiremoval presumption typically applied in diversity cases, second, Congress eliminated in CAFA cases the one-year deadline to remove typically applied to diversity cases.  Despite these new considerations, the District Court remarked that the Dart framework still placed the burden to establish federal court jurisdiction on the party seeking removal.

Here, the plaintiff proposed a class including all resident of the District who, in the last three years, purchased tickets to the defendant’s shows because of the Circus’s unlawful trade practices.  Elsewhere in her complaint, the plaintiff alleged that the Circus’s unlawful trade practices took the form of communications that must meet at least seven conditions: (1) they must be District of Columbia residents; (2) they must have viewed a Circus communication; (3) the Circus communication they viewed must have been one that the plaintiff alleged was unlawful, (4) the class members must have bought Circus tickets, (5) they must have bought those tickets in the three years before the plaintiff filed her complaint, (6) they must have bought those tickets after viewing the allegedly unlawful communication, and (7) they must have bought those tickets because of the allegedly unlawful communication.

The District Court found that the defendant failed to address the nuances of the plaintiff’s class definition; instead, it defined the claims it aggregated based on the number of ticket purchasers from the District of Columbia in the three-year period referenced in the complaint.  The defendant, using location data it had for 46% of the ticket purchasers during the three-year period, asserted that it sold at least 11,470 tickets to the District residents.  Because the defendant’s records showed that the average purchaser bought 4.3 tickets, the defendant divided 11,470 by 4.2 to obtain a minimum potential class size of 2,667 members.  From there, the defendant multiplied 2,667 by six (the number of CPPA violations the defendant assumed that the plaintiff alleged for each ticket purchase), and then again by $1,500 (the statutory damages per violation) to obtain an aggregate amount in controversy of $24,003,000.

The District Court stated that because the defendant did not incorporate all of the elements of the plaintiff’s class definition, the calculation was unreasonable from the very beginning.  Accordingly, the District Court remanded the action to the state court and dismissed the other motions as moot.

Amend and Try Again: Plaintiff Granted Leave to Amend to Clarify Citizenship of Class Members for Purposes of Removal under CAFA

Posted in Case Summaries

Turner v. Corinthian International Parking Services, Inc., 2015 WL 7768841 (N.D. Cal. Dec. 3, 2015).

A district court granted the plaintiff a chance to amend the complaint to clarify on the citizenship of the class members to ascertain whether the case was removable under CAFA.  In doing so, the Court relied on the Ninth Circuit’s recent ruling in Benko, which deviated from the earlier stance that “once a CAFA always a CAFA.”

The plaintiff brought this putative wage and hour class action against the defendant Corinthian International Parking Services, Inc. in the Superior Court of California, Alameda.  The plaintiff asserted seven causes of action arising under California law, including claims for unpaid overtime, unpaid mean period premiums, unpaid rest period premiums, failure to pay minimum wage, failure to timely pay final wages, unreimbursed business expenses, and unfair business practices.  The plaintiff sought compensatory damages, statutory damages, penalties, interest, attorney’s fees, and costs.  The defendant removed the action under CAFA, and the plaintiff moved to remand.

The plaintiff argued that the jurisdiction of the federal court under CAFA failed for three reasons: (1) the defendant failed to establish the diversity of citizenship; (2) the defendant failed to established that the amount in controversy exceeded $5 million; and (iii) both the local controversy exception and the home state exception to the CAFA jurisdiction applied in this case.

In the Notice of Removal, the defendant alleged that at least one proposed class member was not a citizen of California.  The plaintiff contended that this allegation was insufficient to establish diversity because the defendant did not allege the actual citizenship of the relevant parties.  Moreover, the plaintiff contended that diversity was impossible because the proposed class only included California citizens.  Specifically, the plaintiff noted that the complaint defined the proposed class to consist of only California based employees who were employed by the defendant in the state of California.  According to the plaintiff, by operation of the class definition, persons domiciled in another state were not included in the proposed class.

The defendant argued that the plaintiff misconstrued the class definition, and that the class of California based employees was not necessarily limited to California citizens.  According to the defendant, the class definition said nothing about the employees’ domicile.  Therefore, former employees currently domiciled in another state would still be part of the proposed putative class.

The Court observed that as the defendant was a citizen of California.  Diversity, therefore, would depend on the construction of the plaintiff’s proposed class definition.  In his reply brief, the plaintiff insisted that the proposed class was explicitly limited to all California based individuals, meaning those individuals who were currently based or domiciled in California.  Relying on Johnson v. Advance America, 549 F.3d 932 (4th Cir. 2008), the plaintiff asserted that any individuals who were not California citizens were not putative class members.  The Court remarked that the challenge for the plaintiff, however, was that his complaint failed to limit the putative class as explicitly in Johnson.

Further, the Court stated that although post removal amendments to the pleadings cannot affect whether a case is removable, the Ninth Circuit in Benko v. Quality Loan Services Corp., 789 1111 (9th Cir. 2015) held that the plaintiffs should be permitted to amend the complaint after the removal to clarify issues pertaining to federal jurisdiction under CAFA.

Here, the Court observed that the pleadings did not expressly allege that non-California citizens were excluded from the class definition.  Therefore, based on the record presented, the Court could not remand the action for lack of diversity.  Nonetheless, the Court stated that the plaintiff should be afforded the opportunity to amend the pleadings to clarify the putative class definition.

Accordingly, the Court denied the plaintiff’s motion to remand without prejudice to the plaintiff’s ability to renew the motion after filing the amended complaint.

Because the Court’s finding with regard to diversity was dispositive, the Court did not examine the amount in controversy.

A Noteworthy Event: ACI’s 2nd National Forum on Data Breach & Privacy Litigation and Enforcement

Posted in Events

Mark your calendars for a noteworthy event this fall: ACI’s 2nd National Forum on Data Breach & Privacy Litigation and Enforcement conference, September 29-30, 2016 at the Carlton Hotel on Madison Avenue in New York City. Click here for the PDF of the agenda.

This 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
  • Telephone Consumer Protection Act (TCPA) and related case law claims
  • Attorney/client privilege issues arising out of breach notification
  • Cyber & data risk insurance and related litigation issues and coverage disputes including the Travelers decision
  • Ransomware litigation: data breach notification issues, key jurisdictional differences, and cyber coverage issues
  • Business to business litigation: vendor litigation, service provider litigation, and examining the ecosystem of payment card breaches
  • Global impact of data breaches: finalization of the General Data Protection Regulation and managing cross border information
  • Information governance and data management
  • Big data: opportunity, challenges, and regulatory scrutiny

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-CLB17

A Noteworthy Event – ACI’s National Conference on Consumer Finance Class Actions & Litigation

Posted in Events

Between the recent SCOTUS decisions and the CFPB’s flurry of activity, including the proposed rule on arbitration, it is clear that the consumer finance landscape is in the midst of a massive upheaval.

Join the nation’s leading consumer finance attorneys at ACI’s 26th National Conference on Consumer Finance Class Actions & Litigation and be a part of the conversation as to where the industry is headed in the coming months.

Dates and registration:

Click here to register online or call (888) 224-2480.

Thursday, July 28 – Friday, July 29, 2016

The Omni Chicago Hotel, Chicago, IL

10% off conference rate with code: D10-999-CLB16 Continue Reading

A Noteworthy Event – March 17-18, 2016

Posted in Events

Retail data breaches continue to evolve and bring new litigation and trends in the Data Breach and Privacy Litigation context. Business to business claims, vendor lawsuits, litigation between issuing banks and retailers post-breach, the ecosystem of payment card breaches, and Genesco decision implications are just some of the topics analyzed and discussed in greater detail. Click here for the pdf of the agenda. Continue Reading

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