Marple v. T-Mobile Cent., LLC, No. 10-CV-00954-NKL, 10-CV-00957, 10-CV-00960, 10-CV-00955, 10-CV-00958, 10-CV-00961, 10-CV-00956, 10-CV-00959, 10-CV-00962, 2011 WL 300162 (W.D. Mo. Jan 27, 2011).
In this case, a District Court in Missouri remanded ten class actions to state court holding that the plaintiffs had a colorable basis for filing ten separate class actions in reaction to the defendant’s discrete state lawsuits, and this is not an instance of avoiding federal jurisdiction at will.
T-Mobile Central, LLC filed ten petitions in Missouri state courts seeking judicial declarations requiring municipalities to refund to T-Mobile certain tax payments made by T-Mobile under protest. For each of those ten lawsuits filed by T-Mobile, the plaintiffs filed corresponding class actions in state court asserting that T-Mobile billed its customers for a “City License Tax” without disclosing that it was not required to pass on such tax to its customers or that it sought to recoup the tax money through its ten lawsuits because it considered the municipal taxes illegal.
In each of those corresponding class actions, the plaintiffs alleged unjust enrichment, breach of contract, and a violation of the Missouri Merchandising Practices Act.
After T-Mobile removed these actions to federal court, the District Court, sua sponte,consolidated these ten actions for pretrial proceedings. The plaintiffs in all the ten actions filed motions to remand arguing that the damages sought in the ten class actions were below the $5 million threshold set by CAFA, which the District Court granted.
T-Mobile did not contest the plaintiffs’ assertions regarding the amount at issue in the ten class actions; instead it called on the Court to aggregate the amounts across the ten class actions, which it argued should be construed here as a single class action. To support this contention, T-Mobile relied on a teleological interpretation of CAFA and a Sixth Circuit case, Freeman v. Blue Ridge Paper Prods., Inc., 551 F.3d 405, 406-09 (6th Cir. 2008). (Editors’ Note: See the CAFA Law Blog analysis of Freeman published on February 17, 2009).
T-Mobile began its argument by citing the legislative history to analyze CAFA’s purposes. The Court, however, remarked that only upon a finding of ambiguity is a court permitted to analyze extrinsic evidence of Congressional intent, such as the legislative history.
First, the Court, applied the plain meaning of CAFA text, 28 U.S.C. § 1332(d)(1)(B) defining the term “class action”, and stated that the plaintiffs had filed ten separate class actions under Missouri State law authorizing an action to be brought by 1 or more representative persons as a class action. The Court remarked that its order consolidating these ten actions for pretrial proceedings did not alter the fact that those actions were filed as ten class actions.
The Court stated that by a plain reading of the statutory text, the claims of the individual class members in “any class action” shall be aggregated to determine whether the matter in controversy exceeds the sum of $5 million. Thus, by the statutory definition of “class action,” the plaintiffs’ claims must be aggregated only within each of the ten class actions.
Freeman looked to the purposes of CAFA to interpret an exception to the plain meaning of the text. The Court, however, observed that Freeman was distinguishable because it explicitly stated that its “holding is limited to the situation where there is no colorable basis for dividing up the sought-for retrospective relief into separate time periods, other than to frustrate CAFA.”
In Freeman, 300 landowners brought a claim for water pollution against a paper mill. The identical plaintiffs filed a total of six lawsuits against the defendant for sequential six-month periods, limiting damages in each suit to less than $4.9 million. Here, in contrast, the plaintiffs filed one suit in response for each suit filed by T-Mobile, and the damages sought correspond to the damages sought by T-Mobile in each of its ten suits. Moreover, the class of the plaintiffs was not identical in each suit, but changed with the customers who paid the City Licensing Tax to T-Mobile during the relevant time periods corresponding with the T-Mobile lawsuits.
Freeman explained its teleological approach to the CAFA by reasoning that “Congress’s obvious purpose in passing the statute–to allow defendants to defend large interstate class actions in federal court–can be avoided almost at will, as long as state law permits suits to be broken up on some basis.” Freeman cited purposive language in the Congressional findings accompanying CAFA, which states that “CAFA was clearly designed to prevent plaintiffs from artificially structuring their suits to avoid federal jurisdiction. The class action lawsuits are an important and valuable part of the legal system because they allow aggregation of claims so that a defendant faces only a single action. Furthermore, CAFA states that there have been abuses of the class action device, including that state and local courts are keeping cases of national importance out of Federal court.”
The Court noted that not all federal circuits have shared Freeman’s concern with plaintiffs’ avoidance of federal jurisdiction under the CAFA. Johnson v. Advance America, 549 F.3d 932, 937 (4th Cir. 2008) reasoned that although the plaintiffs have restricted the scope of their allegations so as to avoid federal jurisdiction under CAFA, the plaintiffs, as masters of their complaint, can choose to circumscribe their class definition in this way.
The Court observed that none of Freeman’s concerns arise when plaintiffs file class action lawsuits in response to a defendant’s own corresponding lawsuits. This is not an instance in which federal jurisdiction can be avoided at will, or where state and local courts have conspired to keep cases of national importance out of federal court. Where plaintiffs file discrete state lawsuits in reaction to a defendant’s discrete state lawsuits, the defendant cannot then claim that state courts are keeping cases of national importance out of federal courts. Further, here, the plaintiffs’ claims implicated state concerns more so than national concerns.
Unlike in Freeman, here, the plaintiffs had at least a colorable basis for filing ten separate class actions against T-Mobile. Accordingly, the Court remanded these actions to the Jackson County, Missouri Circuit Court.