Downing v. Riceland Foods, Inc., 2014 WL 1316776 (E.D. Mo. Mar. 31, 2014).

In an action filed by a group on behalf of all persons and entities that provided or paid for common benefit services or expenses for the defendant in prior Multi-District Litigation, the District Court took judicial notice that the MDL consisted of over 5,000 plaintiffs, and therefore denied the defendant’s motion to dismiss for lack of jurisdiction under CAFA.

In 2006, the USDA announced that the rice supply in the United States had been contaminated by Bayer’s genetically modified rice.  Thousands of rice producers and non-producers filed suit against various Bayer entities in the federal and state court.  The judicial panel on multidistrict litigation transferred all pending federal cases to the District Court.  Over the next several years, the leadership group and various other attorneys and firms invested considerable time and resources into these cases, providing substantial benefits to other plaintiffs in the litigation.

In the MDL case, the District Court ordered that a common benefit trust fund (the “Fund”) be established to compensate the attorneys for services rendered on behalf of all the plaintiffs.  This order required that a portion of any recovery obtained by plaintiffs in the federal court be set aside and contributed to the Fund.  Defendant Riceland Foods, Inc. was a plaintiff in both Arkansas state court and as part of the federal MDL; however, it did not consent to contribute to the Fund in its state court cases.  The leadership group brought a class action against Riceland alleging that it benefited at the expense of the class by using common benefit services during its state court claims and asserted claims for unjust enrichment and quantum meruit.  The leadership group filed a motion to amend the class action complaint to include additional claims, and Riceland filed a motion to dismiss the complaint asserting that the District Court lacked subject matter jurisdiction because CAFA’s 100-plaintiff threshold had not been met.

The plaintiffs brought the class action claim on behalf of all person or entities that provided or paid for common benefit services, materials, and/or related expense items.  The District Court remarked that there were approximately 5,000 plaintiffs in the MDL, therefore, it would take judicial notice that the number of potential class members exceeded 100.

The defendant contended that the class must be fewer than 100 members because any rice producer that settled with Bayer necessarily released all claims against it, including those brought in this action.  The District Court observed that a release in contract-based affirmative defence and an affirmative defence does not strip a court of its subject matter jurisdiction.  In addition, the District Court remarked that the defendant did not provide any evidence–even when excluding producers who signed releases–that the number of proposed class members was less than 100.

Accordingly the District Court ruled that the defendant failed to carry its burden of showing that there were fewer than 100 plaintiffs in the proposed class, and denied the motion to dismiss under CAFA.