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CAFA Law Blog

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

Red Light Means Stop! District Court Finds CAFA’s Amount in Controversy Is Sufficiently Demonstrated in Removal of Traffic Violation Fine Case

Posted in Case Summaries

Hung v. American Traffic Solutions, Inc., 2014 WL 1689303 (E.D. Mo. April 29, 2014).

In an action brought on behalf of citizens of Missouri who had paid traffic violation fees, a district court in Missouri found that the allegations in the complaint were sufficient to satisfy the jurisdictional threshold considering that there were thousands of violations, and each violator paid a fine of $100.

The plaintiffs brought a putative class action in the Circuit Court for the City of St. Louis, Missouri.  The complaint stated that the defendant American Traffic Solutions, Inc. contracted with the City of St. Louis (the “City”) to aid enforcement of City Ordinance 66868 (“Ordinance”).  The Ordinance authorizes installation and use of traffic cameras to detect certain red light traffic violations.  The plaintiffs claimed that by contracting with the City to help enforce the Ordinance, the defendant violated Article I, Section 10 of the Missouri Constitution and the Missouri Merchandising Practices Act.  The plaintiffs alleged that the red light Ordinance impermissibly placed the burden on the accused to rebut a presumption of guilt, which is ultimately based on the registered owner of the vehicle, rather than the driver.  The defendant removed the action under CAFA, and the plaintiffs moved to remand.

The only dispute between the parties was whether the defendant satisfied CAFA’s amount-in-controversy requirement.  The defendant contended that the amount-in-controversy exceeded $5 million, based on the face of the petition and on the declaration of the defendant’s Senior Account Manager Damon Cross.  The defendant argued that in assessing the amount-in-controversy, the Court should consider the value of punitive damages, attorney fees, and injunctive relief sought by the plaintiffs.  The plaintiffs in turn claimed that the defendant merely speculated as to the amount-in-controversy, and had failed to offer any evidence of its suggestion that punitive damages and attorney fees would drive the amount-in-controversy over $5 million.

The District Court found that the defendant had demonstrated amount-in-controversy requirement by a preponderance of the evidence.  The District Court remarked that a plain reading of the petition alone showed that the amount-in-controversy exceeded $5 million.  Specifically, the District Court stated that the plaintiffs asserted that a $100 fine was typically assessed against those accused of red light violations.  The plaintiffs also asserted that the class and sub–class collectively contained thousands of members who paid fines for violating the Ordinance.  Further, the plaintiffs contended that the defendant issued several thousand red light camera violations per month.  The District Court remarked that assuming that the defendant issued 2,000 violations per month, and only half of those violations resulted in payment of the $100 fine, the amount-in-controversy would still be $6 million dollars for the most recent five years of the Ordinance’s enforcement.

The plaintiffs argued that the defendant’s hypothetical was speculative and insufficient to warrant jurisdiction.  The District Court disagreed.  Citing Hartis v. Chicago Title Insurance Company, 694 F.3d 935, 944–46 (8th Cir.2012), the Court explained that the Eighth Circuit had engaged in a similar analysis to conclude the removing party met CAFA’s amount-in-controversy requirement.  In Hartis, the plaintiff class of consumers sought to recover against the defendant title insurance company for allegedly overcharging for recording fees in many transactions.  In assessing the amount-in-controversy, the Eighth Circuit first noted the average amount allegedly overcharged was $12.  The plaintiff class alleged the defendant engaged in transactions in 17 states.  In fact, the plaintiffs had claimed that in Missouri alone, the defendant engaged in 71,000 transactions. Using the Missouri data, the Eighth Circuit estimated that the defendant engaged in a total of 1,207,000 relevant transactions.  Given the plaintiff class alleged “many” of the total transactions involved overcharged fees, the Eighth Circuit found that, even construing the term “many” as “one-half,” the amount-in-controversy would exceed $7.2 million.

In light of Hartis, the Hung Court concluded that the defendant’s hypothetical was compelling.  In addition, the Court noted that in his declaration, Cross stated, from January 1, 2009 through December 31, 2013, the City issued over 280,000 violation notices, which were paid in full or in part, based on automated traffic control systems.  The District Court remarked that given the standard fee of $100 per violation, the amount-in-controversy would be as much as $28 million, half of which would be $14 million.  Considering the five year period that the plaintiffs claimed, the amount-in-controversy would be as high as $35 million.

Finding that the defendants had adequately established the amount-in-controversy threshold under CAFA, the District Court denied the plaintiffs’ motion to remand.

A Class Action By Any Other Name is Still a Class Action

Posted in Case Summaries

Williams v. Employees Mut. Cas. Co., 2014 WL 1375470 (E.D. Mo. April 8, 2014).

In a garnishment action to collect insurance proceeds brought by a lone plaintiff, the District Court found that it satisfied the requirements of CAFA removal because an action to collect insurance proceeds brought by the class representative was in substance a class action.

The plaintiff Barbara Williams filed this action in the Circuit Court for Lincoln County, Missouri.  The action was filed on behalf of a previously certified class to recover a $82,037,000 judgment obtained in a separate state court action styled Williams v. The Collier Organization (hereinafter referred to as the “Original Lawsuit”). Continue Reading

District Court Concludes that Plaintiff Failed to Plead Sufficient Facts to Establish Jurisdiction Under CAFA

Posted in Case Summaries

Hirmez v. GNC Holdings, Inc., 2014 U.S. Dist. LEXIS 72096 (S.D. Cal. May 27, 2014)

A California district court dismissed a class action complaint for lack of subject matter jurisdiction. The court determined that the complaint contained insufficient factual allegations to establish not only the plaintiff’s citizenship, but also that the amount in controversy exceeded CAFA’s jurisdictional minimum.

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District Court Reconsiders Remand Order in Light of Rodriguez v. AT&T Mobility Servs. LLC

Posted in Case Summaries

Deaver v. BBVA Compass Consulting And Benefits, Inc., 2014 U.S. Dist. Lexis 72074 (N.D. Cal. May 27, 2014)

The U.S. District Court for the Northern District of California (the “Northern District”) reconsidered its remand order in light of the Ninth Circuit’s ruling in Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975 (2013). In originally remanding the case, the court relied on the “legal certainty” test promulgated by Lowdermilk v. United States Bank National Association, 479 F.3d 994 (9th Cir. 2007). Because the Rodriguez court overruled Lowdermilk and held that a defendant removing an action under CAFA need only establish the amount in controversy by a preponderance of the evidence, the court re-evaluated whether the removing defendants satisfied the amount in controversy requirement under CAFA.

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Plaintiffs’ Real Estate Transactions Cannot Be Considered for Purposes of Joinder Under Rule 20(a)

Posted in Case Summaries

Padron v. Onewest Bank, 2014 WL 1364901 (C.D. Cal. April 7, 2014).

In this action, the District Court declined to exercise jurisdiction under CAFA because the plaintiffs could not show that all of their claims were a result of the same transaction, occurrence, or series of transactions or occurrences.

One hundred and twenty-one plaintiffs joined together in this action against the defendants, OneWest Bank, FSB, and various mortgage servicers, trustees, and an appraiser, in Los Angeles County Superior Court.  Plaintiffs filed various claims alleging that the defendants were no longer acting as conventional money lenders, but instead morphed in to an enterprise engaged in systematic fraud upon its borrowers.  The defendants removed the action to federal court invoking mass action jurisdiction under CAFA.

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Amount in Controversy adds up quickly even with individual claims of $32

Posted in Case Summaries

Hoffman v Country Life, 2013 WL 6095471 (D.N.J. Nov. 20, 2013).

In this consumer fraud action, the District Court thwarted the plaintiff’s attempt to circumvent the CAFA’s class members’ definition by arguing that the amount-in-controversy should be limited to his solo purchase of a product, and retained subject matter jurisdiction.

The plaintiff brought this putative consumer fraud class action lawsuit in the New Jersey State court against the defendant Country Life, LLC, for allegedly making “false and misrepresented claims of product efficacy” about a dietary supplement known as the “Omega 3 Mood.”  The plaintiff alleged that the defendant promoted, marketed, and sold Omega 3 Mood nationwide by making unsubstantiated representations that the product was scientifically formulated to support brain health, emotional health, and mood.  The plaintiff, a New Jersey citizen, alleged that he purchased Omega 3 Mood based on his exposure to the defendant’s allegedly false marketing claims regarding the product, but it did not deliver the benefits as promised by the defendants.  According to the defendant, he and other purchasers of Omega 3 Mood, have sustained ascertainable loss in the amount of the difference between the price paid for the product and the represented value of the product.

The defendant removed the action on the basis of the diversity jurisdiction under CAFA.  The plaintiff moved to remand the action to the state court.

In this case, the plaintiff neither contested the class size or the minimal diversity requirement.  The plaintiff, however, maintained that the action lacked the requisite amount-in-controversy because, according to him, the action could not be certified as a class action in the District Court of New Jersey and therefore, only his individual damages, based on the purchase of a $32 product, was in controversy.  In short, the plaintiff argued that rather than a potential class action, the District Court had before it a case that involved an individual purchase of a single $32 product, which provided no basis for diversity jurisdiction under § 1332.

The District Court remarked that the plaintiff’s argument was perplexing because, his case concerned the fraudulent marketing and distribution of significant quantities of Omega 3 Mood to consumers throughout the nation, including the state of New Jersey.  The District Court observed that according to the complaint, at least, this was exactly the type of case that CAFA intended to address.  However, the plaintiff’s motion papers characterized this case as no more than an individual consumer fraud action based on the plaintiff’s single $32 purchase and thus, no more than $100 at stake (assuming a treble damages award).

The District Court explained that the confusion arose from the fallacy in the plaintiff’s argument.  In the plaintiff’s view, the nature of a putative class action lawsuit somehow changes the moment the suit is removed from the state court to the federal court.  According to the plaintiff, the class action could not certified under Rule 23 in the light of his dual role as class counsel and class representative, which the Third Circuit held created a conflict of interest in Kramer v. Scientific Control Corp., 534 F.2d 1085 (3d Cir. 1976).  The District Court rejected the plaintiff’s argument finding that neither the act of removing the lawsuit to the federal court, nor the plaintiff’s argument that the class could not be certified had any bearing on the question of whether the federal court had subject matter jurisdiction.

Next, the District Court found that the plaintiff’s argument also failed because, CAFA itself expressly defines “class members” for the purposes of the jurisdictional calculation to include those persons, who fell within the definition of the proposed or certified class.  Under the circumstances, the District Court found that the plaintiff ability to satisfy the class certification requirements were not before the court.  Therefore, all that the defendant was required to do was establish to a legal certainty that the individual claims of all proposed class members aggregated to more than $5 million.

Here, the plaintiff brought a suit requesting treble damages under the New Jersey Consumer Fraud Act.  The plaintiff proposed a class that consisted of all nationwide purchasers of Omega 3 Mood for the four-year period preceding the filing of the suit.  The defendant produced declarations showing that they sold product at prices of $31.99 and $59.99.  The defendant had shipped 165,000 units of the product.  Based on the plaintiff’s allegation that the customers received little to no value for the product purchased, the District Court found that the defendant rightly calculated the amount-in-controversy by multiplying the total units sold by the actual selling price.  According to this, the value was $5,860,665, which did not include taxes of shipping costs.

Accordingly, the District Court concluded that the defendant established with a legal certainty that the amount-in-controversy exceeded the jurisdictional threshold, and refused to remand the case to the New Jersey state court.

District Court Holds Denial of Class Certification Deprives Action of CAFA Jurisdiction

Posted in Uncategorized

Karhu v. Vital Pharmaceuticals, Inc., 2014 WL 1274119 (S.D. Fla. March 27, 2014).

A district court in Florida dismissed this action finding that it lacked subject matter jurisdiction after denial of a motion for class certification.  The court explained that the denial of certification meant that the plaintiff’s action was, from the beginning, inappropriate for class treatment, and hence, it could not exercise jurisdiction under CAFA.

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New York Record Company’s Unpaid Interns Must Stay in Federal Court Following Removal Pursuant to CAFA Jurisdiction

Posted in Uncategorized

Henry v. Warner Music Group Corp., 2014 WL 1224575 (S.D.N.Y. March 24, 2014).

In an action filed by an interns seeking unpaid wages, the District Court retained jurisdiction over the case finding, among many things, that the plaintiff had not demonstrated that more than two-thirds of the putuative class members were citizens of New York.  The District Court ruled that the local controversy or the home state exceptions were not established to divest it of subject matter jurisdiction over the case and the other requirements for CAFA jurisdiction were met.

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Court Can Take Judicial Notice of Prior Multi District Litigation to Find Number of Plaintiffs Satisfied for CAFA Jursidiction

Posted in Uncategorized

Downing v. Riceland Foods, Inc., 2014 WL 1316776 (E.D. Mo. Mar. 31, 2014).

In an action filed by a group on behalf of all persons and entities that provided or paid for common benefit services or expenses for the defendant in prior Multi-District Litigation, the District Court took judicial notice that the MDL consisted of over 5,000 plaintiffs, and therefore denied the defendant’s motion to dismiss for lack of jurisdiction under CAFA.

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Single Event Exception Includes Multiple Events Caused by a Significant Occurance

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Rainbow Gun Club, Inc. v. Denbury Resources, Inc., 2014 WL 869504 (W.D. La. March 5, 2014).

In this action, the District Court affirmed a remand order finding that CAFA’s local “single event exception” can include mass actions involving manifestation of multiple events caused by a significant occurrence.

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