Harvey v. Blockbuster, Inc., No. 05-1606, 2005 WL 186936 (D.N.J. Aug. 8, 2005).
This federal district court decision from New Jersey holds that a consumer action pursued by the state’s Attorney General is not a “class action” under the Class Action Fairness Act. The opinion by U. S. District Judge Mary L. Cooper makes some key points regarding the interplay between CAFA and consumer suits pursued by state officials.
Here, New Jersey Attorney General Peter C. Harvey and New Jersy Acting Director of Consumer Affairs Jeffrey C. Burstein sued Blockbuster in state court on the day of CAFA’s enactment, claiming that Blockbuster violated the New Jersey Consumer Fraud Act by failing to properly disclose the terms of the company’s “End of Late Fees” policy. Blockbuster then removed the action to federal court under CAFA, and argued against remand on the grounds that the case was essentially a class action on behalf of the state’s citizen consumers. Blockbuster also contended that Congress intended that CAFA cover consumer actions pursued by states’ attorneys general, by rejecting an exception that would have excluded them from the new law’s coverage. Both parties stipulated that there was no federal question jurisdiction under Section 1331.
The court rejected both of Blockbuster’s arguments, holding that the suit is not a class action under CAFA, and specifically under 28 U.S.C. 1332(d), since the state invoked its power parens patriae, rather than serving in a representative capacity for a class of citizens. Since a state or its alter ego is not a “citizen” for diversity purposes, the action also fails to meet minimum diversity requirements, Judge Cooper explained. “This is not an action between citizens of different states; rather, it is between a state and a citizen of another state.”
Judge Cooper, in her memorandum opinion, relied extensively on the Legislative History of CAFA regarding representative actions brought by state attorneys general not being class actions under CAFA. She also denied the plaintiffs’ motion for attorneys fees and costs, finding that Blockbuster had made a good faith argument in its removal, since the case law regarding Section 1332(d)was lacking at the time of removal.