Boyd v. NYCTL 1996-1 Trust, 2017 WL 2589388 (2d Cir. June 15, 2017).
In this summary order, while affirming the judgment of a district court dismissing the plaintiffs’ claims, the Second Circuit found that there was a “reasonable probability” that the plaintiffs’ damages totalled at least $5 million, and the plaintiffs could have invoked CAFA jurisdiction in an earlier filed action.
The plaintiffs, three representatives of a putative class, brought an action alleging harm from the way New York City collected debts arising from unpaid water bills. In 2005, they brought a class action (“Boyd I”) against the defendants asserting Fair Debt Collection Practices Act (“FDCPA”) and state law claims. The district court in Boyd I dismissed the FDCPA claim on summary judgment and declined to exercise supplemental jurisdiction over the state law claims. In 2015, the same three plaintiffs filed the instant suit (“Boyd II”) asserting RICO and state law claims based on the same facts as the prior suit. The plaintiffs asserted jurisdiction both on the basis of the federal RICO claim and CAFA. The district court dismissed the action as barred by res judicata. On appeal, the Second Circuit affirmed.
The plaintiffs argued that the decision in Boyd I was not a final judgment because dismissal was without prejudice, that the defendants waived their right to argue res judicata, and that the issue of federal jurisdiction under CAFA could not have been raised in Boyd I.
First, the plaintiffs attempted to use the dismissal of Boyd I “without prejudice” to evade the bar of res judicata. The Second Circuit, however, rejected the “without prejudice” argument.
The plaintiffs further argued that the defendants waived their res judicata defense by asking the Boyd I court to dismiss the state law claims for lack of jurisdiction. The Second Circuit noted that res judicata generally does not apply when defendants acquiesce to the splitting of claims. The Second Circuit, however, found that the defendants’ motion to dismiss in Boyd I did not constitute acquiescence or waiver. The Second Circuit found that the defendants took the position that the plaintiffs could try to bring their claims in state court, not that they could try again in federal court.
Finally, the plaintiffs argued that they could not have raised CAFA jurisdiction in Boyd I because there was no “reasonable probability” that they could claim at least $5 million in damages, as federal jurisdiction under CAFA requires. The Second Circuit, however, found that the plaintiffs’ initial complaint in Boyd I alleged that the named class members were overcharged by thousands of dollars, that there were thousands of other class members, and that the claims of the named plaintiffs were typical of the claims of the other class members. The Second Circuit therefore ruled that there was a “reasonable probability” that the plaintiffs’ damages totalled at least $5 million, and the plaintiffs thus indeed could have invoked CAFA jurisdiction in Boyd I.
Accordingly, the Second Circuit affirmed the judgment of the district court.
– Kevin Lampone