Boulanger v. Devlar Energy Marketing, LLC., 2015 WL 7076475 (N.D. Tex. Nov. 11, 2015).

A District Court in Texas found that a non-suited action may fail to satisfy CAFA’s definition of a class action, but it can still satisfy the definition of a mass action, and retained jurisdiction.

The Plaintiffs filed this action in state court in Dallas County Texas against fifty–nine (59) Defendants (many state citizens, e.g. Colorado and Texas) alleging gross negligence claims tied to at least seventeen (17) property and business economic loss claims and at least eleven (11) wrongful death claims.  These claims each arose directly from the explosion that occurred in Quebec, Canada.  The Plaintiffs alleged that on July 6, 2013, seventy-two (72) unattended tanker cars filled with highly volatile crude oil rolled downhill, derailed, and exploded in the town of Lac-Mégantic, Quebec, Canada, and the resulting fire engulfed the town leaving forty-eight (48) dead, many others injured, and numerous businesses damaged.

A month after filing this action, the Court granted stay after plaintiffs voluntarily moved to stay.  Despite the stay, the plaintiffs filed a notice of non-suit, withdrawing their class allegations, which the Court granted.  Following the non-suit order, the plaintiffs took no further action, specifically, they did not file or serve an amended petition reflecting the non-suit of their class allegations.  On September 17, 2015, the defendant Canadian Pacific Railway Company (“CPRC”) removed the action to the federal court under the CAFA.  The plaintiffs moved to remand.

At the very outset, the Court remarked that it must first resolve whether the Plaintiffs’ action met the CAFA’s jurisdictional thresholds for either class actions or mass actions.  As we now know, to qualify for removal as a class action under CAFA, a civil action must: (i) be filed under Rule 23 of the Federal Rules of Civil Procedure or a similar state statue; (ii) have a proposed class containing more than 100 members; (iii) satisfy CAFA’s minimal diversity requirement; and (iv) have a aggregated amount-in-controversy exceeding $5 million.  Here, the parties disputed that this matter was a class action.

The Court noted that the Plaintiffs filed their Original Class Action Petition under Texas Rule of Civil Procedure 42–the state equivalent to Federal Rule of Civil Procedure 23.  However, prior to filing their removal, the Plaintiffs non-suited their class allegations.  The Plaintiffs then argued that the non-suit successfully took their action outside of CAFA’s class action definition, defeating removal jurisdiction.  CPRC countered the Court should disregard the non-suit as an attempt at forum manipulation which was filed with the Court during a stay of the action.  Further, the non-suit was ineffective because the Plaintiffs did not serve an amended petition, so the Court must consider the original petition as the operative pleading for removal purposes.  CPRC also contended that, even if the Court did not disregard the non-suit, CAFA jurisdiction attaches at the time of filing, which was before the non-suit was filed.

The Court remarked that in Texas, any plaintiff has the right to take a non-suit at any time before he has introduced all of his evidence other than rebuttal evidence.  This right to non-suit, the Court continued, is unqualified and absolute so long as: (i) the plaintiff did not use the non-suit to avoid any pending motions for sanctions, attorneys’ fees, or other fees; and (ii) the defendant has not made a claim for affirmative relief.  A stay of a suit, the Court explained, has no effect on this right of the plaintiff to non-suit his action.

Here, the Court concluded that the Plaintiffs exercised their unqualified and absolute right to non-suit their class allegations by filing a notice of non-suit.  They did not file the notice to avoid pending motions for sanction, attorneys’ fees, or other costs, and the Defendants made no claims for affirmative relief.  The Court, therefore, ruled that the Plaintiffs successfully non-suited their class allegations.

Next, the Court noted that CPRC did not remove the action until after the Plaintiffs successfully non-suited the class allegations.  To this CPRC argued that CAFA jurisdiction attaches at the time of filing, so jurisdiction attached before the non-suit.  The Court remarked that if this were the case, even though the Plaintiffs successfully non-suited their class allegations, it would still consider the Original Class Action Petition filed under Texas Rule 42.  The Plaintiffs responded that jurisdiction attaches at the time of removal because whether the action was filed under Rule 23 or similar state statute was a jurisdictional fact determined at the time of removal.

The Court noted that the Fifth Circuit generally follows the time-of-filing rule, but for removal cases, the courts follow the time-of-removal rule.  Under the time-of-removal rule, the courts need to determine whether jurisdiction is present for removal and they consider the claims in the state court petition as they existed at the time of removal.  Because this was a removal case, the Court concluded that the time-of-removal rule applies, and as the non-suit occurred before the removal, it likewise concluded that the action did not constitute a class action since there were no class allegations at the time of the removal.

Next, the Court noted that to qualify as a mass action under the CAFA, a civil action must: (i) consist of monetary relief claims of 100 or more persons to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact; (ii) satisfy CAFA’s minimal diversity requirement; (iii) the amount-in-controversy should exceed $5 million; and (iv) have at least one plaintiff’s claims exceeding $75,000.

Here, the Court noted that the Plaintiffs’ Original Class Action Petition named 111 actual parties seeking recovery.  And, although the Plaintiffs did not explicitly propose a joint trial, the Original Class Action petition set forth all of the Plaintiffs’ claims and the circumstances common to all of them in a single complaint.  The Court remarked that the single complaint also requested separate consideration of each claim’s damage elements.  Requesting a separate damages consideration assumed a joint liability consideration.  Together, the Court concluded that these facts evidenced an implicit proposal for joint trial.

The Court next found that because the Plaintiffs were Canadian, and some of the Defendants were American, minimum diversity existed.  The Court also found that the amount-in-controversy exceeded $5 million. Here, although the Plaintiffs did not allege a specific amount of damages, Plaintiffs alleged eleven (11) wrongful death claims and seventeen (17) property and business economic loss claims, along with claims for survivorship, personal injury, and punitive damages.  Using common sense, the Court remarked that it could see from the face of the pleadings that successful Plaintiffs would, more likely than not, collect over $5 million.

Finally, the Court noted as there were eleven (11) wrongful death claims, common sense also dictated that it was, more likely than not,  at least one of those claims would exceed $75,000.  Accordingly, the Court concluded that it should retain jurisdiction over action because this action satisfied the mass action requirements under CAFA.

– Colleen M. Colton