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

Remove Now, or Forever Hold Your Peace

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Lee v. Equifax Info. Servs., LLC, 2013 WL 6627755 (N.D. Cal. Dec. 16, 2013).

In this action, the District Court remanded the case finding that when the initial complaint on its face shows enough characteristics sufficient for a federal jurisdiction, the defendant must remove it within 30-days after filing of that complaint.

In this case the District Court remanded the case to the state court based on § 1446(b) according to which the first 30 day removal period is triggered if the case stated by the initial pleading is removable on its face.

The plaintiff brought a class action alleging violation of various sections of the California Consumer Credit Reporting Act (“CCRAA”) by defendant for allowing duplicate account reporting on consumer credit reports and failing to note consumer disputes on consumer credit reports etc.  In her complaint, the plaintiff did not identify a specific amount-in-controversy but did allege that the plaintiff and the class had suffered statutory damages per CCRAA §§ 1785.31(a)(2) and 1785.31(c).

Nearly four months later, the plaintiff filed a second action, separate and independent from the previous action, which was based on the assertions in the defendant’s answer to the first complaint.  The defendant filed a demurrer as to each complaint, and the court instructed the plaintiff to file a single amended complaint clearly indicating which causes of action were asserted both individually and on behalf of the putative class.

The plaintiff filed an amended complaint, and alleged that the class membership in each class exceeded 500 people, but did not identify a specific amount-in-controversy.  The defendant removed the action to the federal court, and the plaintiff filed a motion to remand.

The plaintiff first contended that the defendants’ removal was untimely.  The plaintiff argued that the initial complaint filed in December 18, 2012, triggering the first 30 day period, and the defendant’s removal—filed some nine months later on September 17, 2013—was well beyond the 30 days allotted under § 1446(b).

The District Court noted that § 1446(b) identifies two 30-day periods for removing a case.  The first 30-day removal period is triggered if the case as stated by the initial pleading is removable on its face.  The second 30-day removal period is triggered if the initial pleading does not indicate that the case is removable, and the defendant receives a copy of an amended pleading, motion, order or other paper from which removability may first be ascertained.

Accordingly, the defendant argued that the initial complaint was indeterminate as to removability because it did not contain a class definition, whereas the amended complaint contained an explicit class definition, so removability could be ascertained because the class definition allowed it to determine the critical CAFA removal requirements of minimal diversity, numerosity, and amount in controversy.

The District Court, however, found that, under CAFA, plaintiff’s original complaint was removable on its face because it satisfied the removal requirements.  The District Court explained that the original complaint alleged that plaintiff was a California citizen and defendant was a Georgia corporation, thereby it satisfied CAFA’s diversity requirement.  And, the original complaint alleged that the minimum class membership in each of the three classes was in excess of 500 people which was sufficient to satisfy CAFA’s numerosity requirement.

In addition, the District Court noted that the plaintiff’s allegations in the original complaint about the size of each class together with the claims for statutory damages were sufficient to satisfy CAFA’s amount-in-controversy requirement.  Therefore, the District Court stated that where a statutory maximum was specified, the courts could consider the maximum statutory penalty available in determining whether the jurisdictional amount in controversy requirement is met.

Here, the District Court stated that the plaintiff alleged three causes of action for violation of the CCRAA and for each of them, he sought statutory damages for himself and the class under California Civil Code § 1785.31(a)(2), which provides for punitive statutory damages of not less than $100 nor more than $5,000 for each willful violation as the court deems proper.

The District Court further opined that simple multiplication of $5,000, the maximum statutory penalty under § 1785.31(a)(2), by 1,500, the total minimum number of class members alleged in the original complaint for the three classes, yields $7,500,000.  Therefore, the face of the original complaint satisfied CAFA’s amount in controversy requirement.

Further, the District Court rejected the defendant’s argument that the initial complaint was indeterminate because the defendant failed to explain why a proper class definition was needed to determine removability.  Moreover, the District Court noted that in asserting that the amended complaint was removable under CAFA, defendant did not rely on the class definition provided in the amended pleading to calculate the amount in controversy, it simply multiplied the minimum number of class members alleged in the amended complaint with the maximum statutory damages sought in the amended complaint.

Thus, the District Court stated that because defendant could have determined removability based on the initial complaint and failed to file for removal within 30 days after service of the initial complaint, the defendant’s motion to remove was untimely.  Accordingly, the District Court granted the plaintiff’s motion to remand.