Liberty Mutual Fire Insurance Company v EZ-Flo International Inc., et al., Case No. 17-228 (C.D. Cal. May 3, 2017).
In granting the plaintiffs’ motion to remand holding that the purported mass action was not brought by 100 or more plaintiffs, a District Court in California found that the language “100 or more persons” in mass action provision of CAFA does not refer to “100 or more named or unnamed real parties in interest,” but rather to the actual named plaintiffs in the suit.
The plaintiffs, insurance companies acting as subrogees of their insureds, brought claims against the defendant concerning defects in the defendant’s water supply lines, which were used to transport water from a water supply pipe to a plumbing fixture. In the first action, two insurance companies acted as subrogees of one insured, and in a second action the other insurance-company plaintiffs acted as subrogees of 111 homeowners. The Superior Court consolidated both cases but did not clarify whether the consolidation was for pretrial purposes only. In January 2017, the plaintiffs filed their Second Amended Complaint (“SAC”), seeking monetary relief as subrogees for 145 homeowners for claims totaling $6,588,979.71.
The defendant removed the action to the federal court pursuant to CAFA. The plaintiffs moved to remand, which the District Court granted.
The District Court noted that a mass action removed pursuant to CAFA must involve the claims of “100 or more persons” who proposed to have their claims tried jointly in state court. The District Court further noted that the Supreme Court recently interpreted this language in Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736 (2014), where it resolved a circuit split as to whether in suits brought by states, unnamed parties in interest should count toward the “100 persons” requirement in CAFA. In Mississippi, the Supreme Court held that the language “100 or more persons” does not refer to “100 or more named or unnamed real parties in interest,” but rather to the actual plaintiffs in the suit. (Editors’ Note: See the CAFA Law Blog analysis of Mississippi ex rel. posted on October 8, 2014).
The parties, in the instant case, disputed whether Mississippi mandated remand here. The plaintiffs argued that the suit did not involve “100 or more persons” because there were only twenty-six named insurance-company plaintiffs. The defendant argued that, unlike Mississippi, there were more than 100 named persons, the insureds, on whose behalf the claims had been filed by the insurance companies.
The District Court acknowledged that the Mississippi defendants had argued that unnamed real parties in interest should be counted towards the 100-person requirement, whereas, the defendant in the instant case argued that named real parties in interest should count. The District Court, however, found that the bulk of the Mississippi decision applied to the instant case. The Mississippi Court clearly held that the phrase “100 or more persons” referred to actual plaintiffs in a case, and “plaintiffs” referred to those who brought a civil suit or commenced an action. The District Court thus found that in the instant case, the only “plaintiffs” were the twenty-six insurance companies whose names appeared on the face of the SAC above the word “Plaintiffs.” The District Court opined that to conclude otherwise would flout the Supreme Court’s holding and ignore its thorough textual analysis. The District Court explained that while the insureds in this case were named, that did not make them named plaintiffs that should be included in the CAFA calculus.
The defendant devoted much of its opposition to subrogation law. The District Court, however, found that other courts had held that if a subrogee had paid an entire loss suffered by an insured, it was the only real party in interest and the only party that might sue in its own name.
The District Court thus held that because the insureds were not included as actual plaintiffs on the face of the SAC, they should not be included in the “100 or more persons” requirement, and accordingly, granted the plaintiffs’ motion to remand.
-Melissa M. Grand