The CAFA Law Blog is proud to bring you a guest post. Guyon Knight is a student at the Fordham University School of Law. He recently published an outstanding student note in the Fordham Law Review. It is available on SSRN by clicking here. We were so impressed with Guyon’s law review article, we asked him to send us a post about it. So, here is Guyon’s article.
Ask a third-grader these questions, and he would laugh in your face and tell you that 99 can never equal 100. Ask a lawyer from Gibson Dunn and she would laugh in your face, tell you of course they can, and bill you for the privilege.
The third-grade rules of arithmetic can sometimes be suspended in the world of CAFA mass actions. In their simplest form, a mass action involves the “monetary relief claims of 100 or more persons are proposed to be tried jointly.” But nothing in the CAFA universe is ever that simple. Courts have tied themselves in knots considering some of the truly difficult questions of mass action jurisdiction—most notably, what to do if more than 100 plaintiffs are joined to an action, but fewer than 100 satisfy the individual amount-in-controversy requirement. But clever lawyers for both plaintiffs and defendants have capitalized on a far simpler ambiguity in the statute. That clear number 100? It isn’t so clear after all.
Two cases show the problems with counting to 100 in CAFA mass actions. In Tanoh v. Dow Chemical Co., 561 F.3d 945 (9th Cir. 2009), Los Angeles plaintiffs lawyers bunched the essentially identical claims of over 664 West African plantation workers into seven separate suits, none of which featured 100 or more plaintiffs. Undeterred, defendants removed and asked the court to realize that these cases were separate in docket number only. They had a point. The claims—all handled by the same firm—would undoubtedly go through the pretrial process as a single case (and they were all eventually dismissed joined at the hip). But the Ninth Circuit tallied up the names on the left side of the “v” and told the defendants that 100 means 100.
Meanwhile, down in Louisiana, the Fifth Circuit was being asked to do some serious mathematical gymnastics in Louisiana ex rel. Caldwell v. Allstate Insurance Co., 536 F.3d 418 (5th Cir. 2008). No 99 plaintiffs here. Caldwell involved only one plaintiff, the state of Louisiana, suing an alleged cabal of insurance and consulting companies. Unfortunately for the State, one of their claims demanded treble damages for Louisiana insurance policyholders allegedly underpaid by the conspiring corporations. The defendants removed, arguing that the State’s case was either a class action or a mass action in disguise. Thankful for the options, the Fifth Circuit breezily concluded that the individual policyholders were the “real parties in interest,” and thus, presto chango, we have a mass action.
Courts presented with similar questions have sided with the Ninth Circuit in Tanoh and against the Fifth Circuit’s Caldwell decision. But neither outcome is perfect.
The cases that made up Tanoh were a single mass action for all intents and purposes. A court faced with a similarly brazen litigant only has bad choices. Either ignore the realities of the litigation process and apply the statute strictly, or call shenanigans and declare a mass action. The latter approach, though, conflicts with CAFA’s prohibition of creating mass actions out of cases “consolidated or coordinated solely for pretrial proceedings.”
As for Caldwell, the Fifth Circuit saw no distinction between “real parties in interest” and CAFA’s “claims of . . . persons.” But these two terms of art are by no means equivalent. Even though no court has followed Caldwell’s lead and recognized a mass action with only a single plaintiff, at least one has entertained the “real party in interest” inquiry. See Kitazato v. Black Diamond Hospitality Investments, LLC, 2009 WL 3824851, at *3 (D. Haw. Nov. 13, 2009). But following this line of reasoning to its bizarre conclusion could mean that any suit involving a corporation with 100 or more shareholders would qualify as a mass action. See Anwar v. Fairfield Greenwich Ltd., 2009 WL 5103234 (S.D.N.Y. Dec. 23, 2009).
So applying the statute strictly allows litigants to make a mockery of the clear line Congress tried to draw with the number 100. But applying the statute loosely can create mass actions with only a single party. Faced with two bad options, courts ought to opt for the former—respecting the statute, but recognizing its limitations. But what these cases really show is that any hard-and-fast numerosity provision is made to be broken.
Only with CAFA could counting to 100 be so hard.