Broadway Grill Inc v Visa Inc., 2016 WL 5390415 (N.D. Cal. Sept. 27, 2016).
Plaintiff Broadway Grill, Inc. (“Broadway”) brought an action against defendants Visa Inc., Visa International Service Association, and Visa U.S.A. Inc. (collectively, “Visa”), based on alleged antitrust violations in setting of interchange fees that were imposed on merchants who accepted Visa-branded credit cards.
Visa removed the action to the United States District Court, Northern District of California (the “District Court”), and Broadway moved to remand, which the District Court denied. In so doing, the District Court remarked the class definition could possibly include non-California citizens. Broadway’s complaint defined the class to include all California individuals, businesses, and other entities who accepted Visa-Branded Cases in California. Because of this definition, the District Court concluded there was minimal diversity among the parties and federal jurisdiction under the Class Action Fairness Act (“CAFA”).
Broadway then sought leave to amend its complaint to clarify the putative class was limited to California citizens, as opposed to all California individuals.
Broadway’s motion raised two issues: (i) whether the court should grant leave to amend the complaint; and (ii) whether the court should consider the amended class definition in determining federal jurisdiction and remand on that basis.
As to leave to amend, the District Court concluded the case was at a very early stage, and there was no bad faith or undue delay by Broadway. Therefore, Visa would not be unfairly disadvantaged or deprived of the opportunity to present facts or evidence because of the amendment. Accordingly, the District Court granted Broadway’s motion for leave to amend the complaint.
As to the renewed motion to remand, the District Court observed that post removal amendments to the pleadings cannot affect whether a case is removable, because the propriety of the removal is determined solely based on the pleadings filed in the state court. However, in Benko v. Quality Loan Serv. Corp., 789 F.3d 1111 (9th Cir. 2015), the Ninth Circuit held that in the context of CAFA, the plaintiffs should be permitted to amend the complaint after removal to clarify issues pertaining to federal jurisdiction under CAFA. (Editor’s Note: See the CAFA Law Blog analysis of Benko posted on March 29, 2017).
The District Court found the proposed clarifications in this case fell squarely within the Ninth Circuit’s holding in Benko; that where a defendant removes a case to the federal court under CAFA, and the plaintiff amends the complaint to explain the nature of the action for the purposes of jurisdictional analysis, the federal court may consider the amended complaint to determine whether remand to the state court is appropriate.
The District Court remarked Broadway’s original class definition was ambiguous, but it was susceptible to Broadway’s asserted interpretation the class was limited to California citizens, and the amendments only clarified that the putative class definition was based on citizenship.
Since the Visa defendants were all citizens of California, and after amendment, all members of Broadway’s class were California citizens as well, there was no minimal diversity among the parties post amendment.
Accordingly, the District Court remanded the action to the state court.