Cappuccitti v. DirectTV, Inc., No. 09-14107, — F.3d —-, 2010 WL 4027719 (11th Cir. Oct. 15, 2010).  

You have read about it. Pondered it. Questioned it. Scratched your head once or twice in confusion. Dreamed really weird dreams about it (well, I did at least, but that’s for another post) – wondering what the class action landscape would come to if the Cappuccitti decision stood. Rest easy, CAFA Law Blog readers. On Friday, October 15, 2010, the Eleventh Circuit reconsidered the issue and vacated its earlier judgment.

As anyone who ever even considered reading this blog knows, the Eleventh Circuit issued the decision of Cappuccitti v. DirectTV, Inc., 611 F.3d 1252 (11th Cir. 2010) (“Cappuccitti I”) on July 19, 2010, sending the class action world into a state of disarray. It held, inter alia, that for CAFA jurisdiction to apply in the context of a class action, at least one plaintiff must have alleged individual damages in excess of $75,000 in addition to CAFA’s $5,000,000 aggregate requirement under 28 U.S.C. §1332(d)(2) (Editors’ Note: See the CAFA Law Blog analysis of Cappuccitti I posted on July 22, 2010). In reaching this decision, Cappuccitti I appeared to confuse CAFA’s “mass action” requirement for jurisdiction, which does have a $75,000 individual requirement, with CAFA’s “class action” requirement for jurisdiction, which by its plain text does not.

After the Eleventh Circuit issued Cappuccitti I, the class action world entered into a state of disbelief as the established jurisdictional principles under CAFA stood to be turned upside down – and the class action world took notice. The CAFA Law Blog alone published 13 posts analyzing the subject (see here for a complete list). Numerous articles were published in scholarly journals questioning the logic behind Cappuccitti I, including the one penned by our own Anthony Rollo, Hunter Twiford, Richard Freshwater and Stephen Masley in the BNA Class Action Litigation Report (see here). 

Courts that had the opportunity to consider the issue also questioned Cappuccitti I’s logic, either out right rejecting it, as in the case of Gutierrez v. Wells Fargo Bank, N.A., No. C 07-05923 WHA, 2010 WL 3198928 (M.D. Cal. Aug. 10, 2010) (Editors’ Note: See the CAFA Law Blog analysis of Gutierrez posted on August 25, 2010); or calling the decision into serious question, as in the cases of MRI Associates of St. Pete, Inc. v. State Farm Mutual Auto Insurance Company, 2010 WL 3632714 (M.D.Fla. September 14, 2010) (Editors’ Note: See the CAFA Law Blog analysis of MRI Associates posted on September 29, 2010); and Kline v. Earl Stewart Holdings, LLC, No. 10-80912, 2010 WL 3432824 (S.D. Fla. Aug. 30, 2010) (Editors’ Note: See the CAFA Law Blog analysis of Kline posted on October 1, 2010).

As the CAFA Law Blog discussed earlier (see here and here ), both the defendants and plaintiffs in Cappuccitti filed a petition for an en banc rehearing – arguing that the Eleventh Circuit’s decision in Cappuccitti I was incorrect. Both petitions pointed out that not only does Cappuccitti I invent a new jurisdictional requirement that does not exist in the statute, but it also contradicted how courts around the country – including the United States Supreme Court – have interpreted CAFA since its enactment in 2005. Both petitions specifically argued CAFA’s text and legislative history clearly articulate that there is no individual $75,000 amount-in-controversy requirement. 

The plaintiffs also went a step further and argued that removal jurisdiction is not distinct and/or different from original jurisdiction (an argument we proffered here, noting that “we are not aware of any situation in which a federal court could not have original jurisdiction, but would have removal jurisdiction.”). Before the Eleventh Circuit had the opportunity to consider Cappuccitti I en banc, the panel decided to reconsider its prior decision.

In Cappuccitti v. DirectTV, Inc., No. 09-14107, — F.3d —-, 2010 WL 4027719 (11th Cir. Oct. 15, 2010) (“Cappuccitti II”), the panel once again relied on Lowery v. Ala. Power Co., 483 F.3d 1184 (11th Cir. 2007) (Editors’ Note: See the CAFA Law Blog analysis of Lowery posted on May 15, 2007), but this time in its introduction noted that “CAFA’s text does not require at least one plaintiff in a class action to meet the amount in controversy requirement of 28 U.S.C. §1332(a).”

Beginning by analyzing CAFA’s jurisdictional requirements, the court noted that CAFA first required that for jurisdiction to exist over a case, it must be a class action as defined under 28 U.S.C. §1332(d)(1)(B) (see Opinion at 5). No disagreement here. 

The court noted the second step was that the class must consist of at least 100 members for jurisdiction to exist under CAFA. Again, old news to us CAFA readers. 

Finally, and the moment we’ve been waiting for since July 19, 2010 (***drumroll***), the court held that the amount in controversy under CAFA must exceed, in the aggregate, $5,000,000 and that there “is no requirement in a class action brought originally or on removal under CAFA that any individual plaintiff’s claim exceed $75,000.” (see Opinion at 5.)

In reaching this conclusion, and joining in with other circuits across the country, Cappuccitti II recognized that in previous opinions, it implicitly made such a finding when it failed to dismiss earlier CAFA cases where the plaintiffs never claimed individual damages in excess of $75,000. (See Opinion at 6, n.6, citing Miedema v. Maytag Corp., 450 F.3d 1322 (11th Cir. 2006) and Evans v. Walter Indus., Inc., 449 F.3d 1159 (11th Cir. 2006)). 

It also conceded that the plain language of CAFA mandated such a finding. (As noted in our previous posts, the plaintiff asserted he was charged an improper $420 early cancellation fee that, allegedly in violation of Georgia common law, and sought class action status as part of his claim.)

After stating that minimal diversity was the fourth requirement under CAFA, Cappuccitti II concluded with ease that a (i) class action had been filed; (ii) that the putative class exceeded 100; (iii) that damages in the aggregate exceeded $5,000,000; and (iv) that minimal diversity existed (see Order at 6-7). 

Thus, after concluding it held jurisdiction over the case, the Eleventh Circuit finally addressed the arbitration issues that were raised when the case was initially appealed. For those who also practice in the arbitration world, the court ultimately held the arbitration clause was not unconscionable under Georgia law and remanded the case for further proceedings (even though the case had already been transferred to California under the Multiparty, Multiform Trial Jurisdiction Act).

So in short, Cappuccitti I has been vacated by the 11th Circuit and no longer constitutes controlling (or persuasive) law. The new Cappuccitti II opinion issued on October 15, 2010 follows the statute’s plain text and echoes CAFA’s jurisdictional requirements articulated by courts across the country since its enactment in 2005. So, rest easy CAFA readers and scratch your head no more – the world we as we knew it before July 19, 2010 exists once again.