Class Action Fairness Act Blog

CAFA Has No Retroactive Effect: Colorado District Court Says It Has No Original Jurisdiction Under CAFA If Post CAFA Amendment Bringing New Class Claims Relate Back To Pre CAFA Action

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Tue, 09 Feb 2010 06:30:00 -0600

In re Am. Family Mut. Ins. Co. Overtime Pay Litig., 638 F. Supp. 2d 1290 (D. Col. 2009).

In this consolidated action, the Colorado District Court dismissed without prejudice the Rule 23 state law class action claims asserted in the amended complaint filed post CAFA ruling that it related back to the original complaint filed pre CAFA, therefore, the commencement date of the state claims was the date of filing of the original complaint notwithstanding the amendments. In doing so, the Court reiterated that it could not exercise original jurisdiction on the action “commenced” prior to CAFA’s effective date.

On October 20, 2004, Rocky Baldozier and three others, on behalf of themselves and on behalf of other claims adjusters, sued their employer, American Family Mutual Insurance Co., in the district court of Colorado, seeking unpaid overtime pay and related damages under federal (FLSA) and Colorado state wage and overtime law. In August 2004, Robert Schultz brought a similar action in the district court of Illinois under FLSA and Illinois state law. On February 13, 2006, the Judicial Panel on Multidistrict Litigation consolidated these cases and transferred to the district court of Colorado as a single case. Before consolidation of these actions, the Courts had dismissed their state claims and ordered notice to putative class members in their FLSA collective action claims.

Desiring to bring other state law claims, the Baldozier Plaintiffs moved for leave to amend the complaint on September 30, 2005, adding four new Rule 23 state law class action claims under the wage and overtime laws of Wisconsin, Ohio, Minnesota, and Illinois. On November 28, 2005, the Baldozier Plaintiffs were granted leave to file a first amended complaint.

After the Baldozier Plaintiffs filed their first amended complaint, American Family moved to dismiss these four new state claims.

The Baldozier Plaintiffs argued that the Court had original jurisdiction over these state claims pursuant to CAFA.

Declining to exercise original jurisdiction, the Court held that the new state claims arose out of the same conduct alleged in the original complaint, thus, they related back to the original action “commenced” prior to CAFA’s effective date—February 18, 2005. As CAFA has no retroactive effect, the Court dismissed these claims.

In doing so, the Court noted the Tenth Circuit’s opinion in Prime Care of Ne. Kan., LLC v. Humana Ins. Co., 447 F.3d 1284, 1285 (10th Cir. 2006) that the addition of new claims sufficiently distinct from a prior pleading may “commence” a new action under CAFA, if the new claims do not “relate back” to the prior pleading. (Editors’ Note: See the CAFA Law Blog analysis of Prime Care posted on August 16, 2006).

As the original complaint in Baldozier was filed prior to CAFA’s effective date, and the first amended complaint was filed after CAFA’s effective date, the Court determined whether the state claims asserted in the first amended complaint “related back” to the original Complaint.

To answer this issue, the Court relied on Rule 15(C)(1)(B), which provides that an amended complaint relates back to the date of the original complaint when the amendment asserts a claim that arose out of the “conduct, transaction, or occurrence set out--or attempted to be set out--in the original pleading.” The Court found that while the new class claims were pled under different states’ overtime statutes, both the state claims and FLSA claim sought payment of unpaid overtime. Thus, the new state claims arose out of the same conduct alleged in the original complaint, namely, the assertion that American Family improperly refused to pay certain of its claims adjusters’ overtime wages. Accordingly, the Court concluded that the state claims merely added alternative theories of relief rather than wholly distinct claims.

As a result, the plaintiffs will have to re-litigate their state law class action claims in the respective state courts.

CAFA Is Not Applicable To A Previously Filed Suit, Even If Class Certification Is Sought Or Claims Revived For Deceased Plaintiffs After Its Commencement, Says Fifth Circuit

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 08 Feb 2010 10:00:43 -0600

Admiral Ins. Co. v. Abshire, 574 F.3d 267 (5th Cir. 2009)

The U.S. Fifth Circuit recently upheld a district court’s ruling that the plaintiffs did not commence a new suit under CAFA, by seeking class certification in an amended complaint or by reviving claims held by the deceased plaintiffs, in a suit which was filed prior to commencement of CAFA.

Seventeen years back and long before the commencement of CAFA, Abshire and other purchasers of life insurance products, sued the State of Louisiana in the state court alleging that the State’s negligent, intentional, and criminal acts contributed to the failure of the insurance companies. A total of 1,383 plaintiffs were initially named as parties in three petitions, which were later consolidated into a single action.

After CAFA came into effect in 2005, the plaintiffs amended the complaint seeking class certification and attorneys’ fees. In the meantime, the state court also substituted survivors of many deceased plaintiffs.

The State then removed the action to the federal court under CAFA’s subject-matter jurisdiction arguing that the amended complaint and substitution of survivors commenced a new suit for the purpose of CAFA. But the district court remanded the suit back to state court holding that the action was not “commenced” after CAFA’s effective date. The State appealed, but the U.S. Fifth Circuit affirmed the order.

While upholding the district court’s ruling, the Fifth Circuit noted that under Louisiana law, the default rule is that absent special circumstances, a suit is commenced only at the time the original petition is filed in a court of competent jurisdiction. Therefore, the plaintiffs commenced this suit long before CAFA’s effective date, when at least one of the petitions for damages was filed in a Louisiana court competent to hear it. In doing so, the Fifth Circuit, giving effect to the plain meaning of the term “civil action” in § 9 of CAFA, noted that “civil action” is a more extensive and inclusive proceeding which may commence before it becomes a “class action.”

Explaining that special circumstances were absent to hold that the suit commenced post-CAFA, the Fifth Circuitstated that its limited holding in Braud v. Transp. Serv. Co. of Ill., 445 F.3d 801, 803 (5th Cir. 2006) -- that addition of a new defendant commences a new suit as to that defendant for the purpose of CAFA providing a new removal window -- could not be enlarged to the addition of new claims or new plaintiffs to a case when the amendment relates back to the pre-CAFA suit. (Editors’ Note: See the CAFA Law Blog analysis of Braud posted on May 24, 2006). The Fifth Circuit found that amended complaint was not a drastic modification of the case because mere addition of class allegations applied to the class comprising only individuals or successors of individuals who were parties to the suit filed prior to CAFA.

The Fifth Circuit further observed that given CAFA’s non-retroactivity, the relation back doctrine to commencement of a suit was virtually non-existent in this case because the State had notice of all of the plaintiffs’ claims before enforcement of CAFA, except their claims for attorneys’ fees. The Fifth Circuit, however, found that request for attorneys’ fee did not commence a new “civil action” because attorneys’ fees arose out of the same transaction that led to the filing of the original complaint.

Finally, the Fifth Circuit found that even if the relation back test needed to apply, “resurrected” plaintiffs and claims satisfied the test both under Louisiana as well as Federal law. In this regard, the Fifth Circuit observed that the plaintiffs satisfied the Louisiana Supreme Court’s relation back analysis in Giroir v. South Louisiana Medical Center, 475 So. 2d 1040, 1044 (La. 1985), because the amended claims were sufficiently related to old claims and the substituted parties were not wholly new but were survivors of the deceased plaintiffs.

The Fifth Circuit also agreed with the Seventh Circuit’s opinion in Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 750, 752 (7th Cir. 2005), that class members were not new plaintiffs even if they had not previously joined the action as individuals. (Editors’ Note: See the CAFA Law Blog analysis of Schorsch posted on September 4, 2005).

Laws.Com - Where It's At!

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 05 Feb 2010 13:03:51 -0600

Want to network with attorneys around the world, find out what is hot in the legal world, etc., then turn to Laws, a one-stop shop for almost all things law related.

Domicile, Not Residency, Is The Central Question In Determining Citizenship For Diversity Jurisdiction Under CAFA, Says California District Court

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Thu, 04 Feb 2010 08:56:30 -0600

Beauford v. E.W.H. Group Inc., WL 1808468 (E.D. Cal. Jun. 24, 2009).

In this case, the California District Court remanded the action to state court ruling that in absence of diversity of citizenship, it lacked subject matter jurisdiction under CAFA. No surprise there! No diversity, even minimal diversity; no federal court.

Denise Beauford sued E.W.H. Group, who operated a car dealership known as "Bakerfield Mitsubishi," in California state court asserting breach of sales contract claims on behalf of herself and all buyers of E.W.H. Group who had received similar sales contracts.

According to the plaintiff, the plaintiff and the defendant entered into a sales contract regarding a 2005 Kia Amanti, and, as part of the sales contract, the defendant agreed to pay off the loan on the plaintiff’s trade in. The plaintiff alleged, among other things, that the defendant did not pay off the trade in and misrepresented the true history of the Kia Amanti. All of the plaintiff’s causes of action were brought pursuant to California state law.

The plaintiff is a citizen of California and the defendant is incorporated in and has its principle place of business in California.

Asserting that two of the class members were from the state of Texas, E.W.H. Group removed the case to federal court under CAFA. Holding that E.W.H. Group failed to meet its burden to be able to “affirmatively allege” and provide “competent proof” of the actual citizenship of the relevant parties supporting minimal diversity, the Court remanded the action.

In doing so, the Court noted the Ninth Circuit’s opinion in Kanter v. Warner-Lambert Co. 265 F.3d 853, 857 (9th Cir.2001) (which predates CAFA) that the state citizenship of a natural person is determined by her state of domicile, not her state of residence, because a person’s domicile is her permanent home, where she resides with the intention to remain or to which she intends to return, and a person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state.

The Court found that E.W.H. Group’s conclusion that two class members were from Texas rested solely on the declaration by its custodian of record and class members’ Texas drivers licenses which implied they were Texas residents a year to a year and a half before the time in question. The Court observed that E.W.H. Group had not produced competent evidence establishing the permanent homes and intentions of the two class members at the time of removal. The Court, thus, concluded that allegations of residency were insufficient to support diversity jurisdiction, and an allegation of residency cannot be regarded as an allegation of citizenship for the purpose of diversity jurisdiction.

As a result, E.W.H. Group had to drive its Mitsubishi back to state court.

Once There's CAFA, There's Always CAFA: Seventh Circuit Says Jurisdiction Not Ousted By Lack of Class Certification

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Wed, 03 Feb 2010 11:24:53 -0600

Cunningham Charter Corp. v. Learjet, Inc., __ F.3d __, 2010 WL 199627 (7th Cir. Jan. 22, 2010)

We are honored again to bring you another guest column from one of the smartest Chicago lawyers from below the Mason-Dixon line. Our regular, loyal readers know we are referring to none other than Gabriel Crowson, a consumer finance defense attorney of the Howrey firm. Heeeere's, Gabe....

*************************************

In a case of first impression, the Seventh Circuit recently reversed a district court’s ruling that the denial of class certification eliminated jurisdiction under CAFA. Cunningham Charter had sued Learjet in Illinois state court, asserting breach of warranty claims, on behalf of itself and all buyers of Learjets who had received the same warranty (not a bad class to be a part of).

Not wanting to litigate in state court, Learjet removed to federal court under CAFA. Once the case was in federal court, Cunningham Charter filed a Rule 23 motion for class certification. The district court denied the class certification motion and then ruled that the denial meant that there was no longer CAFA jurisdiction and thus remanded the suit back to state court. Learjet filed a petition for appeal to the Seventh Circuit.

In reversing the district court’s remand ruling, the Seventh Circuit held that federal jurisdiction under CAFA does not depend on class certification, joining the Eleventh Circuit’s opinion in Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n.12 (11th Cir. 2009).

In doing so, the Court noted that CAFA applies “to any class action [within the Act’s scope] before or after the entry of a class certification order” and that there is no requirement in CAFA that a class action be certified before the case can be removed. According to the Court, the better interpretation of this language is that jurisdiction does not hinge on class certification. The Court further held that such an interpretation was also a vindication of the general principle that once jurisdiction has been properly invoked, it is not lost by subsequent developments in the suit. As the Court so eloquently put it, a case “should not be shunted between court systems; litigation is not ping-pong.”

The Seventh Circuit’s decision in Cunningham will allow defendants, who have successfully filed CAFA removals, to breathe a sigh of relief. Those defendants can rest assured that the defeat of class certification (or the certification of a smaller class than that originally sought by plaintiffs) will not give plaintiffs the opportunity to seek a remand and re-litigate class certification in state court.

In Louisiana, the Deceased Vote; in New York the Deceased Expand CAFA's Home-State Exception Reach Further.

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Tue, 02 Feb 2010 17:03:44 -0600

Lucker, et al., v. Bayside Cemetary, et al., No. 07-CV-3823; 08-CV-3555; 08-CV-3923 2009 (E.D.N.Y., Sep 30, 2009), 2009 WL 3213079

As many of our loyal readers are aware, the CAFA Law Blog originates from the great State of Louisiana. As many of those same readers will no doubt know, the State is steeped in rich stories of spirituality, mysticism, and chicanery.

We have a bit of a fascination with afterworld down here. What Dat you say; Who Dat you ask?[1]

Well, for instance, have you heard that the state has a football team named the Saints?[2] You might have. Its Quarterback has been elevated to a mystic / saintly status (WWBD?).[3] For years the team was less than stellar, and the local myth was that the Dome (where Saints play its games) was built on a burial ground and was cursed.[4] (Segue)

Ahh, yes. The cemetery plays a crucial role in the State’s lore. As we are sure that our loyal readers are aware, the State, and New Orleans in particular, is famous for cemeteries. There is the famed, Saint Louis No. 1, where the alleged voodoo queen is buried. Then, there are the infamous voters who matriculate from their graves to Louisiana’s poles every election despite the fact that they have long since passed this mortal coil.

The Eastern District of New York has added to the lore of the cemetery (even if it doesn’t deal with Louisiana). The Lucker decision involved representatives of a number of estates bringing a purported class action against a congregation and the cemetery that it had purchased for failing to maintain the representatives’ deceased relatives’ burial plots. The Court held that for CAFA purposes, the legal representative of an estate must assume the state citizenship of the deceased. Applying this rule, the Court dismissed the purported class finding that the discretionary home-state jurisdictional exception applied.

Did we mention that the Saints (the New Orleans Saints, really) are in the Super Bowl? Dat Who!

[1] We here at the CAFA law blog can freely use the word Who Dat, without recourse, or any possible derivative now that the NFL has resolved its position on trademark ownership of that phrase. http://www.nfl.com/superbowl/story?id=09000d5d816224b8&template=with-video-with-comments&confirm=true

[2] http://www.nola.com/saints/

[3] http://www.wwltv.com/sports/Saint-Breesus-79453777.html

[4] See any local hanging out at hole in the wall bar, talking about his “bag” from the 80s (props to “Buddy D”), talking about John Gilliam’s opening kick-off return, Tom Dempsey, Archie Manning, the Dome Patrol, Bobby Hebert, or any of a number of not so fresh QBs that the team sported in its history (Richard Todd, Dave Wilson, Ken Stabler, Wade Wilson, Aaron Brooks, Danny Wuerfful, Billy Joe Tolliver, Steve Walsh).

CAFA Law Blog Wish!

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Wed, 23 Dec 2009 10:58:36 -0600

TO Our Democrat Friends:

Please accept with no obligation, implied or explicit, our best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice or secular practices of your choice, with respect for the religious/secular persuasion and/or traditions of others, or their choice not to practice religious or secular traditions at all. We also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted calendar year 2010, but not without due respect for the calendar of choice of other cultures whose contributions to society have helped make America great. Not to imply that America is necessarily greater than any other country nor the only America in the Western Hemisphere. Also, this wish is made without regard to the race, creed, color, age, physical ability, religious faith or sexual preference of the wishee

TO Our Republican Friends:

MERRY CHRISTMAS AND HAPPY NEW YEAR!

Don't Be Shy. Drop Us a Line.

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 18 Dec 2009 06:30:00 -0600

Just a friendly reminder to our adoring readers—the CAFA Law Blog is designed to be interactive, and to allow you to respond immediately and easily to our posts with questions or comments, through the “Post A Comment/Question” buttons at the bottom of each post. The CAFA Law Blog further invites you to “Contact Us,” through the button found on the top tool bar, with questions or comments, or to submit articles, which you believe may be of interest to CAFA Law Blog or its readers.

The “Word Search” button found in the right hand column menu list, allows you to search CAFA Law Blog’s contents and hundreds of posts through word searches.

So, stop sitting there with that look on your face and start posting your comments and questions.

What do New York City, Cleveland, Philadelphia, Pittsburgh, Chicago and your office computer have in common?

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 14 Dec 2009 06:30:00 -0600

Register for the PLI’s 15^th Annual Consumer Financial Services Institute and choose your location. PLI is offering its annual conference in 5 live locations and on line. During this conference you will:

· Get the latest information on proposed Consumer Financial Protection Agency and regulatory restructuring;

· Identify the activities and industries that have become the focus of State Attorneys General;

· Survey the types of lawsuits being brought against mortgage lenders, credit card issuers and other financial services providers; and

· Explores recent developments in class action, credit reporting and collection, arbitration and bankruptcy.

The 38 member faculty includes leading attorneys in the consumer financial industry and attorneys who hear your cases. Sign up now to attend at www.pli.edu.

What: 15^th Annual Consumer Financial Services Institute

Where and When: New York City (February 18-19, 2010); Cleveland, Philadelphia and Pittsburg groupcast (February 18-19, 2010); Live Webcast (February 18-19, 2010); and Chicago (April 8-9, 2010).

How to Register: Go to www.pli.edu or call 1-800-260-4PLI.

Looking for a Daily Dose of CAFA?

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 11 Dec 2009 06:30:09 -0600

Your smart, sexy editors and analysts at the CAFA Law Blog are just itching to give you a daily dose of CAFA. Think of it as our holiday gift to you. It beats regifting fruit cake.

So, how do you ensure you get a daily dose? Well just read a little further.

With fresh CAFA coming out daily, there’s never been a better time to sign up for our daily delivery service. Just sign up through the “Subscribe By Email” feature found in the right hand column menu list. The “Subscribe By Email” function lets you subscribe to the CAFA Law Blog and receive immediate notice of new posts – sent straight to your email address – containing one-click links directly to those new posts.

If email notice isn’t your thing, you can also have the CAFA Law Blog syndicated or “pushed” to you through an RSS “news-feed” reader on your computer, available through the “Subscribe By RSS” feature found in the right hand column menu list. Either way, its easy. Do it. Do it now.

$5 Million?? That's a Large Threshold . . . Or is it?

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 11 Dec 2009 06:30:00 -0600

Manson v. GMAC Mortgage, LLC, 602 F.Supp.2d 289 (D. Mass. 2009)

The plaintiffs in this case thought there was no way that the amount in controversy could reach $5 Million, I mean, that’s a LOT of change . . . they were wrong.

In this case, the plaintiffs filed a putative class action in state court. The proposed class members were Massachusetts residents and were said to be 1,000 in number. Members of the putative class fall into one of two subclasses. The first subclass consisted of class members whose primary residence was foreclosed by a power of sale in the past 4 years by a defendant that did not possess a written assignment of the underlying mortgage at the time the notice of sale was served. The second subclass consisted of class members who faced a pending foreclosure initiated by a defendant that did not have a written assignment of the underlying mortgage when the notice of sale was served and/or when a right to cure notice was sent.

The case was removed to the District Court of Massachusetts based on CAFA jurisdiction. As all our readers know by now, CAFA provides that federal courts have jurisdiction over class actions based on state law when: (1) there is minimal diversity; (2) the amount in controversy exceeds $5,000,000; and (3) the action involves at least 100 class members. The parties in this matter did not dispute the first and third elements of removal, but disagreed, however, over the amount in controversy.

The court identified the defendant’s burden of demonstrating to a “reasonable probability” that the aggregate amount of the plaintiffs’ class was greater than $5,000,000 at the time of removal. The plaintiffs argued that the primary relief sought was injunctive and declaratory – not monetary. Therefore, according to the plaintiffs’ calculations, they only claimed an amount in controversy of approximately $1.2 Million.

The defendants provided declaration testimony of an in-house litigation analyst who identified: (1) the number of referrals that ultimately resulted in a foreclosure sale; and (2) the number of properties that were sold to third parties. According to the declaration testimony, a total of 3,934 loans were referred for foreclosure in the relevant time period, and that, of the 3,934 referrals, 1,048 resulted in foreclosure sales. At those sales, 48 properties were sold to third parties. The total pay for the 48 properties was $15,000,022.58.

The court, satisfied that the defendants had met their burden of demonstrating to a “reasonable probability” that the amount in controversy exceeded $5,000,000, stated that the plaintiffs must therefore demonstrate that another jurisdictional exception under CAFA applies if they are to succeed on their motion to remand.

After finding that no such exception existed, the court denied the motion to remand.

Sometimes it is all about the numbers . . .

Move Along - Nothing New Here

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Thu, 10 Dec 2009 06:30:00 -0600

Fluke v. Cashcall, Inc., 2009 WL 637461 (E.D. Pa. March 10, 2009)

Yes, CAFA’s amount in controversy requirement is $5,000,000. And no, you cannot get around CAFA jurisdiction by simply stating in your complaint that you are not seeking $5,000,000.

This is no Fluke.

In this case, the plaintiff filed a punitive class action in Pennsylvania state court based on alleged violations of Pennsylvania state law. The claims are based on allegations that the defendant prays on low income, low credit score borrowers by making loans with usurious interest rates and fees.

The class of borrowers that the plaintiff sought to represent are citizens of Pennsylvania who have been, or are currently being, subjected to unlawful interest rates and fees.

The defendant removed the action to federal court on the grounds that the requirements of minimal diversity of jurisdiction and the amount in controversy have been satisfied pursuant to CAFA.

The plaintiff disputed that the damage threshold of $5,000,000 had been met because the plaintiff’s complaint expressly stated that it is not seeking damages in excess of $5,000,000.

The court recognized that a party wishing to establish subject matter jurisdiction has a burden to prove to a legal certaintythat the amount in controversy exceeds the statutory minimum, and that a plaintiff’s pleadings are not dispositive under a legal certaintytest.

The defendant put on proof in the form of an affidavit setting forth specific calculations and figures and concluded that the amount in controversy for the claims of the class exceeds $5,000,000. The plaintiff came forward with no new evidence regarding same, and the court held that the defendant had established to a legal certainty that the amount in controversy meets the “in excess of $5,000,000” jurisdictional threshold under CAFA.

Again, move along, nothing new here. . .

Mobile Phone Content Developer (And Its Counsel) Get Slammed for Taking Two Bites at the Removal Apple

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Wed, 09 Dec 2009 06:30:00 -0600

Walker v. Motricity, Inc., Case No. 09-01316 (N.D. Cal. June 19, 2009)

A cell phone user brought a putative class action against a mobile phone content developer, Motricity, Inc., alleging that Motricity charged cell phone users for unwanted content sent to their mobile phones. For those of you who do not know, mobile content consists of features like customized ring tones, premium text messages and sports score reports.

Motricity removed under CAFA and the plaintiff filed a motion to remand on the ground that Motricity failed to establish its burden to prove, by a preponderance of the evidence, that the $5 million amount in controversy requirement was met.

The Northern District of California agreed, and remanded the case to state court.

Fifteen days later, Motricity removed again, arguing that the second notice of removal was timely under 28 U.S.C. §1446(b) because it was based on “other paper from which it may first be ascertained that the case is one which has become removable.” The “other paper” upon which Motricity relied was an affidavit filed by the plaintiff in an unrelated action in which the plaintiff’s counsel stated that 20% of a different defendant’s revenue came from unauthorized mobile content charges.

Motricity argued that, since it generated $15 million in revenue from mobile content transactions in California, the plaintiff’s counsel’s own estimate of 20% of that amount, plus punitive damages and attorneys’ fees, would amount to $5 million.

In ruling on the plaintiff’s second motion to remand, the Court held that the “other paper” referenced in §1446(b) refers only to “official documents” that are filed in the underlying state court matter—not documents filed in unrelated cases. The Court found that because the attorney’s affidavit was not filed in the underlying state court action, it did not qualify as “other paper” and could not serve as a basis for removal.

In addition, the Court found that even if it was to consider the affidavit, it would not satisfy Motricity’s burden because the affidavit relates to a different content provider, and involves fact specific issues in a different, unrelated case.

Obviously annoyed by Motricity’s “frivolous” second attempt at removal, the Court awarded sanctions against Motricity consisting of attorney’s fees and ordered that “in all future cases where this defendant or these attorneys remove an action under CAFA, they have to file a copy of this order with the court and serve it on opposing counsel.”

Expect a “busy signal” if you attempt to contact Motricity’s counsel for comment!

Can A District Court Have Just a "Little Bit" of CAFA Jurisdiction?

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Tue, 08 Dec 2009 06:30:00 -0600

Rivera v. Washington Mutual Bank, Case No. 09-021 (D.N.J. July 10, 2009)

The U.S. District Court for the District of New Jersey was presented with several Motions to Dismiss an Amended Complaint which the Court described as a “hopelessly muddled, misstated and mangled Amended Complaint” in which jurisdiction was based solely on CAFA. Recognizing the split of authority regarding whether a federal court retains jurisdiction based solely on CAFA if class certification is ultimately denied, the Court determined that, under 28 U.S.C. § 1332(d)(8), it had “provisional jurisdiction” to decide issues bearing on class certification, and that the Court would no longer retain jurisdiction if class certification is later denied. The Court granted the motions to dismiss, and granted leave to the plaintiffs to file a Motion to Amend the Complaint.

Read with Care, Contents of CAFA are Too HOT to Handle!

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 07 Dec 2009 06:30:00 -0600

Gates v. Starbucks Corp., No. 09-02702 (N.D. Ca August 21, 2009)

Another CAFA case, another predictable decision; but what is the real story – that’s what makes this case “H” “O” “T,” hot, hot, hot.

The CAFA formula has been set, leading to hum-drum reading of otherwise scintillating opinions: plaintiff brings purported state class action against former employer after being fired, defendant removes, plaintiff seeks remand, Court denies on basis of CAFA.

This case was no different. The plaintiff challenged removal on the basis that the defendant had not met the jurisdictional amount criteria. The federal court disagreed and maintained jurisdiction. Can you say yawn? We can.

Our readers want the real juice, the meat of the story, the zing that takes this dispute from your average every-day dark roast and adds a little chicory. What caffeinates (is that even a word) this story you ask? The struggle of the downtrodden? Global corporatization? The people v. the Man? Read between the lines, fearless readers.

The real spice in this little ditty is that Starbucks learned that its employees were drinking Dunkin Donuts coffee … on the job – GASP.[1] You’ve all seen the commercials: “America Runs on Dunkin”! What was Starbucks supposed to do? This is all about loss of employee control. They had to throw the bums out on their “grande” bumms. The word on the street is that employees were smuggling Dunkin coffee to work in Starbucks travel mugs, slinking away to dark corners of the store (just out of sight of the Starbucks security cameras), and sipping down their hot black elixir. We cannot print what was happening at the milk frothing machine (what with all of the steam billowing from the creamy hot white … let’s just say that customers were not getting their café-au-laits in a timely manner). Makes one wonder, Sugar, Splenda, or just down and dirty Sweet and Low?

I guess you could say that the district court dunked the plaintiffs’ hopes.

Of course, this brings up another thought: what other punny conclusions can we make from this story? The defendant’s removal arguments were too hot for the plaintiffs to handle? The plaintiffs’ arguments were caught up in the district court’s jurisdictional filter? Of course there is always that the defendants were able to show that the jurisdictional amount was “venti” (that’s large for us plain-speakin’ folks).

Oh well, Starbucks won.

[1] EDITOR’S NOTE – This is NOT what happened, the rest of this post is pure fiction. Yet, since most people don’t read footnotes anyway, we figured we could just bend the facts a little bit in the body of the post to make this a bit more interesting and place this disclaimer here in this likely little read footnote. I mean, how else are we supposed to make amount in controversy disputes interesting? Are we really supposed to talk about how many employees Starbucks could reasonably presume were in the class and what their daily wages were? So please, forgive us for taking liberties with the facts and enjoy the rest of the story.