Yeroushalmi v. Blockbuster, Inc., No. 05-2550 (C.D. Cal. July 11, 2005).
Blockbuster’s January, 2005 “no more late fees” and “end of late fees” policy quickly became the subject of a California statewide class action filed by Ronit Yeroushalmi in Los Angeles Superior Court on March 4, 2005. Yeroushalmi alleged that the total amount at issue fell short of the $5 million minimum amount in controversy set by the Class Action Fairness Act of 2005. U. S. District Judge A. Howard Matz, the federal judge assigned to the case when Blockbuster timely removed the state court action on April 6, 2005, assessed Yeroushalmi’s attempted limitation of the amount in controversy (she claimed less than $75,000 sought by any individual plaintiff and less than $5,000,000 damages in the aggregate under CAFA) as “a clear attempt to avoid federal jurisdiction.”
Judge Matz found that Blockbuster was correct on two scores: first, that CAFA shifted the burden of proof in the remand to Yeroushalmi, as the party seeking remand; and second, that CAFA allows aggregation of claims to assess whether the amount in controversy reaches the $5 million minimum under CAFA. The court, noting CAFA’s silence on the burden of proof issue, looked to and considered CAFA’s legislative history, especially Congress’ concerns that pre-CAFA diversity jurisdiction had operated to keep most interstate class actions out of federal court. The court noted that “the courts previously placed the burden on the removing defendants to establish [federal] jurisdiction,” and wrote, “It is clear that Congress intended CAFA to undo . . . these policies and rules.”
CAFA also altered the Ninth Circuit’s traditional rejection of the “either viewpoint rule,” the court noted, adding that CAFA allows courts to look at the amount in controversy from the defendant’s perspective as well as the plaintiff’s, so any wiggle room in tallying up the amount in controversy was construed in favor of Blockbuster. “In light of the Senate Judiciary Committee Report, it is proper for the Court to ‘err’ in favor of inclusion and to find that the amount in controversy requirement has been met,” wrote Judge Matz in denying plaintiff’s remand motion. The opinion notes that it is not intended for publication.
(Editors’ Note: After this case was decided and after the analysis of this case was posted, this case was overruled by the United States Ninth Circuit Court of Appeals in Abrego v. Dow Chemical Co., 443 F.3d 676 (9th Cir. 2006). See the CAFA Law Blog analysis of Abrego posted on May 25, 2006).