Kline v. Earl Stewart Holdings, LLC, No. 10-80912, 2010 WL 3432824 (S.D. Fla. Aug. 30, 2010).
When I was 9 or so, my mother told me (for the umpteenth time), “Clean up your room.” After a few hours, she came upstairs to check on the progress. Noticing that I had yet to lift a finger, she asked whether I had anything to say for myself. Being something of a smartass even then (some things never change), I quipped, “As a minor, I am prohibited from owning property – so it’s really not my room; it’s yours.” It was at that point that my parents realized that I would probably become a lawyer and their hopes of having a doctor in the family were dashed. It was also at that point my mother practiced a bit of corporal punishment, including making me pick my own switch off the tree (that’s humiliating, by the way), following which, I cleaned “her” room. Why is this story important? Well, the Florida district court in Kline v. Earl Stewart Holdings, LLC, No. 10-80912, 2010 WL 3432824 (S.D. Fla. Aug. 30, 2010) recently made a similarly small distinction to distance itself from the infamous Cappuccitti case to avoid having to apply it. And in this instance, perhaps the distinction was correct – or at least, the outcome was correct, even though the logic utilized to arrive at the decision may have been flawed.
The Kline case began life as a class action in state court against a Toyota dealership in which the plaintiffs asserted the dealership was aware of (now famous) alleged defective acceleration systems in the vehicles it sold. After removing the case to federal court under the Class Action Fairness Act of 2005, the defendants filed a motion to transfer venue, as the Judicial Panel on Multidistrict Litigation had previously transferred similar cases to the Central District of California. See In Re: Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, MDL No. 2151. Unsurprisingly, the plaintiffs opposed, and also filed a motion to dismiss and/or remand the case back to state court. One of the arguments made by plaintiffs was that the district court lacked subject matter jurisdiction, as none of the plaintiffs in the class action alleged damages exceeding $75,000. “Huh??? CAFA doesn’t have such a requirement,” you say. “But wait – this case is in the Eleventh Circuit,” we respond, because, as our readers know, the Cappuccitti decision, which has occupied so many of our waking hours, was recently issued out of that circuit, and consitituted a major departure from the beaten path.
In denying the motion to dismiss/remand, the district court, as it sits in the Eleventh Circuit, paid lip service to Cappuccitti v. DIRECTV, Inc., — F.3 —, 2010 WL 2803093 (11th Cir. July 19, 2010). [Editor’s Note: see the CAFA Law Blog post on the decision here. And see the article by Anthony Rollo, Hunter Twiford, Richard Freshwater and Stephen Masley in the BNA Class Action Litigation Report here.] As our readers will recall (we’ve certainly said it enough), Cappuccitti held that in order to have original federal jurisdiction under CAFA, at least one of the plaintiffs must have alleged damages over $75,000, in addition to the $5 million aggregate requirement under CAFA. The district court noted that the panel in Cappuccitti limited its decision to actions actually filed in state court, not those removed to state court. In its mind, while a federal court may not have jurisdiction in an originally filed action, it could have jurisdiction in the context of removal. With this reasoning, it denied the motion to dismiss/remand.
While the district court’s statement was, we believe, correct regarding the ultimate holding of Cappuccitti (we continue to believe the Cappuccitti decision wrongly interpreted CAFA and look forward to the Eleventh Circuit conducting an en banc review), we are compelled to note that we are not aware of any situation in which a federal court could not have original jurisdiction, but would have removal jurisdiction. In short, our 9-year-old self would have been really proud of the district court, but our mother would probably would have given it a severe beating – uh, we mean, spanking.