Class Action Fairness Act Blog

Pinching Pennies? Click Here to Save Up to 20% on Your Cell Phone Bill!

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

Amezcua v. Cellco Partnership, 2009 WL 1190553 (N.D. Cal. May 4, 2009)

Is that extra $20 per paycheck from the president’s stimulus plan not stretching as far as you hoped? Are you still looking for a way to cut back on expenses?

Fortunately for you, loyal CAFA Law Blog readers, we’ve uncovered a way for you to save up to 20% on your next cell phone bill: make sure you’re not paying for a Snoop Dogg ringtone or a sleepy kitten wallpaper that you didn’t authorize to be downloaded to your cell phone.

In this case, the plaintiff filed a class action suit in the Santa Clara, California Superior Court against her mobile content provider, alleging that she was billed for unwanted mobile content that she had not authorized to be downloaded to her cell phone, including “music ringtones, wallpapers, games and news.” The plaintiff didn’t plead a specific dollar amount of damages but did ask for “compensatory and punitive damages, costs and attorneys’ fees, pre- and post-judgment interest.”

The mobile content provider removed the case to the federal district court for the Northern District of California under CAFA. This didn’t sit well with the plaintiff, and she sought a remand “on the ground that [the mobile content provider had] not carried its burden to establish that the aggregate amount in controversy exceed[ed] $5 million.”

The mobile content provider argued three reasons why the amount in controversy exceeded the $5 million jurisdictional threshold for federal district courts.

First, the mobile content provider argued that the amount in controversy should include “its entire revenue” of approximately $29.3 million. WRONG. The issue was the extent of the unauthorized charges, not the mobile content provider’s entire revenue.

Second, the mobile content provider argued “that the plaintiff’s request for punitive damages and attorneys’ fees” should be included in the amount in controversy. WRONG AGAIN. This court already rejected this argument because “the speculative nature of the compensatory damages prevented meaningful reference to punitive damages or fees.”

Finally, the mobile content provider argued that since the “industry wide . . . average amount of unauthorized charges [was] approximately 20%,” that amount should be multiplied by the content provider’s entire revenue of $29.3 million to derive an amount in controversy of $5,860,000. STILL WRONG. Even though the court acknowledged this method of calculation was “sound,” it rejected it nonetheless because “the statement . . . [was] not competent evidence of the extent of the fraud in the mobile content industry, let alone in the billing practices of [the mobile content provider].”

At the end of the day, the content provider could not establish the requisite amount in controversy. The plaintiff got her remand, but the court’s opinion did not indicate if she got to keep the Snoop Dogg ringtone or the sleepy kitten wallpaper.

By: Michael Rahmn

Hey Baby, Wanna Twitter My Tweeter?

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

That’s right, you heard me. Our tweeter is twittering just for you. In case you missed it, CAFA Law Blog has plunged itself into that simultaneously celebrated and maligned web-sensation that is Twitter.

Now you can follow us daily for updates on recent court decisions, law review articles and commentary on all things CAFA.

If you’re lucky, you might even find out what we had for lunch, what just made us ROFLOL, or whether or not Tall Army Guy is “so over it.”

Just go to www.twitter.com/cafalawblog to sign up. Come get you some. You know you want it.

Come See the Softer Side of CAFA!

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

Jones v. Sears Roebuck and Co., Slip Copy, 2008 WL 4844717 (4th Cir.(W.Va.) Nov 10, 2008) (Not selected for publication in the Federal Reporter)

When you think of Sears, perhaps you think of a store that…carries a softer side. Or perhaps Ty Pennington screaming into his giant megaphone “REMOVE THAT CASE UNDER CAFA!!” (or something like that) comes to mind. Well in this case, Sears asserted anything but a softer side, arguing that CAFA jurisdiction must exist under an amended complaint asserting new causes of action, and not the original complaint – filed before Congress enacted CAFA. Apparently, Sears used Ty Pennington’s megaphone, because the Fourth Circuit heard its argument loud and clear.

In 2003, the plaintiffs filed a state class action lawsuit against Sears Roebuck and Co. alleging three counts relating to Sears credit cards: Unconscionability, statutory damages for violations of the West Virginia Consumer Credit Protection Act, and equitable relief under the West Virginia Consumer Credit Protection Act. Sears filed a Motion to Dismiss, alleging that there existed no case or controversy, which the court granted. Jones v. Sears, Roebuck & Co., No. 03-C-1011-B, Slip Op. at 6 (W. Va. Cir. Ct. Dec. 15, 2005) (the “2003 Case”).

Subsequently in 2006, the plaintiffs filed an “amended class action complaint” against Sears, adding Sears Holding Corp. and Citibank as defendants (the “2006 Case”). This time, the complaint contained the original three counts articulated in the 2003 Case, but also asserted: (1) violations of the Federal Trade Commission consent decree, and (2) all the above claims on behalf of a subclass limited to West Virginia residents with Sears credit cards. Because the 2006 Case asserted damages of $350 Million and diversity jurisdiction existed, Sears removed the case to federal court under CAFA.

On their appeal to the Fourth Circuit, the plaintiffs argued that the District Court never had jurisdiction under CAFA, and therefore lacked jurisdiction to grant a motion to dismiss. The plaintiffs asserted that the 2006 Case “related back” to the 2003 Case, which was filed before CAFA was enacted. (CAFA was enacted February 18, 2005. See Pub. L. No. 109-2, § 9, 119 Stat. 14 (2005)).

The Fourth Circuit looked to state law to determine whether an amended complaint commences a new action. The standard used in West Virginia (and many other states) is that an amended complaint relates back when it “ar[ises] out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading.” W. Va. R. Civ. P. 15(c)(2).

The Fourth Circuit determined that the two new counts contained in the 2006 Case presented new claims premised on conduct and occurrences readily distinct from the allegations contained within the 2003 Case, and the 2006 Case did not relate back. As such, the Fourth Circuit held jurisdiction under CAFA was proper, and thus affirmed the lower court’s dismissal.

Are You Bad with Math? In the World of CAFA, Being an Attorney Is No Excuse.

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

Migis v. Autozone, Inc., Slip Copy, 2009 WL 223711 (D.Or., Jan 29, 2009)(NO. CIV. 08-1394-KI)

Walking through my office, I often find humor watching my fellow attorneys using their fingers to make sure they added four plus three correctly (and for those of you who started counting in your head, and then on your fingers, the answer is seven…I think). And that evening when I begin filling out my billable hour sheet, I find myself doing the same thing. Let’s face it. As attorneys, there is a reason we chose not to enter the engineering profession: We stink when it comes to the field of mathematics. That, however, is no excuse when attempting to remove under CAFA.

In this case, the plaintiff’s counsel stated in his complaint that “the aggregate total of the claims plead herein do not exceed five million dollars.” During the hearing on a motion for class certification, the plaintiff’s counsel multiplied his damages figures by minutes (114,643) instead of hours (1,910), resulting in a damages figure well beyond the requisite five million required for removal under CAFA. Oops.

Shortly after the judge issued a sanction order against the defendant’s counsel for “knowingly and willfully” violating the court’s discovery orders, the defendant’s counsel filed a notice of removal under CAFA, relying on the damages calculation used by the plaintiff’s counsel during the oral argument for class certification. I suppose that is a good strategy…when you are about to be sanctioned by a state trial court judge, see if you can remove to federal court.

The District Court in Oregon, however, was not buying that argument. The court noted that “[t]he party seeking removal must show ‘to a legal certainty that the amount in controversy exceeds the statutory minimum’ when a plaintiff specifically pleads that damages are less than $5,000,000 in the Complaint.” Quoting from Lowdermilk v. United States Bank Nat’l Assoc., 479 F.3d 994, 999 (9th Cir. 2007). (Editors’ Note: See the CAFA Law Blog analysis of Lowdermilk posted on July 30, 2007).

The judge noted that when the math was performed correctly using hours instead of minutes, the damages calculation came out to $1,451,402. And with that number, the judge remanded the case back to state court.

So next time you attempt to remove under CAFA, learn the important lesson that comes from this case: Make sure to use both your fingers and your toes when calculating damages for removal under CAFA. You may look a little weird to that associate walking past your office, but at least you will know your calculations are correct.

Evidence = Good; Half Insect/Half Man = Bad

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

Summerhill v. Terminix, No. 4:08-cv-00659, 2008 WL 4809448, (E.D.Ark. October 30, 2008)

Having problems stopping people from trying to go from one place to another instantly? Your friends keep turning into half man, half insect creatures? No? Of course not, stopping plaintiffs from removing their case using the exceptions to the CAFA grant of federal jurisdiction is easy as fly.

In this case, Judge Goldblum held that while remand from federal court back to state court under the CAFA jurisdiction exceptions is technically possible, plaintiffs claiming these exceptions are applicable bear the burden to demonstrate that their case meets the requirements of these exceptions.

Of course, here, the plaintiffs did not so much provide evidence to support their claims as they simply asserted that the exceptions should apply because, well, they just should. Forgetting to include something like evidence in your pleadings is the type of mistake anyone could make.

Judge Goldblum was sympathetic to this mistake, shaking his mandibles sadly at the plaintiffs, and reminisced about a similar mistake he had made trying to instantly go from one place to another. But, despite this camaraderie, evidence is in fact required to invoke the exceptions to CAFA’s grant of federal jurisdiction.

The plaintiffs first tried to invoke the “Local Controversy” exception, codified at §1332(d)(4)(A), which essentially attempts to preclude federal jurisdiction when the class action claim is local and there are not any similar or identical class actions filed against any of the defendants or on behalf of the plaintiffs in the three years before filing.

The first problem the plaintiffs ran into was that the defendants provided examples of several other similar class actions filed recently against them.

The second problem the plaintiffs ran into was that the fact that the court held that just because all of the plaintiffs owned property in Arkansas, that does not prove that the requisite two thirds of the class were state residents. Rather, the plaintiffs must demonstrate that the persons who contracted with Terminix remained Arkansas citizens after the time of contracting.

Unfortunately for the plaintiffs, it was at this point that Judge Goldblum realized that they had all contracted with Terminix for insect removal. This disturbed Jeff Goldblum highly, causing him to pound his gavels loudly and fly around the courtroom, buzzing with anger, for several minutes.

The third problem the plaintiffs ran into was that none of the defendants from whom they sought significant relief were Arkansas citizens. Terminix, Inc. was the only Arkansas citizen but had sold all of its pest control contracts to Terminix International, who was not an Arkansas citizen, over nine years earlier. Consequently, the plaintiffs were unable to show that they would be able to recover significant relief from Terminix, Inc. because all claims against them were likely to be time barred.

The plaintiffs also tried to invoke the “Home-State Controversy Exception,” codified at §1332(d)(4)(b). The problem with this is that it also requires that two thirds of the proposed plaintiff class be citizens of the state in which the action was originally filed. Here, the court has already outlined why this requirement was not satisfied. Judge Goldblum issued a particularly strong caution against repeating failed experiments without significantly modifying your strategy. Here, he advised they include evidence.

But the plaintiffs also did not satisfy this requirement because they did not prove that the primary defendants were also citizens of the state. Here, none of the named defendants other than Terminix, Inc. were from Arkansas so the exception would have failed even if the class was at least two thirds Arkansas citizens.

In summary, the plaintiffs have the burden to demonstrate that the requirements of the jurisdiction exceptions in CAFA have been satisfied through evidence. Defense attorneys should aggressively push plaintiffs to satisfy each requirement in order to prevent instant teleportation to state court. Judge Goldblum cautions plaintiffs from engaging in repeated attempts to instantly remove without first providing evidence, and that repeated attempts could have negative transformational effects on the success of their case.

By: Robert Savoie

The Biggest CAFA Losers! What Have You Done Today To Make CAFA Proud?

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

For the following cases, the answer – not very much, certainly not enough to be worthy of an individual post.

That right, its time for our “Not Worthy” of a post category for this quarter. The following is a collection of cases that only mention CAFA and do not qualify for an individual post check them out in your spare time and determine which one is the biggest CAFA loser! Click here to listen to the Biggest Loser theme song.

Eufaula Drugs, Inc. v. TDI Managed Care Services, Inc., Slip Copy, 2009 WL 653029 (M.D.Ala., Mar 12, 2009)(NO. 2:05-CV-293MEF)

In re Avandia Marketing, Sales Practices and Products Liability Litigation, Slip Copy, 2009 WL 498936 (E.D.Pa., Feb 25, 2009)(NO. MDL 1871, 07-MD-1871)

Adams v. Monumental General Cas. Co., Slip Copy, 2009 WL 383625 (M.D.Ga., Feb 12, 2009)(NO. 4:05-CV-132 (CDL))

Bishop's Property & Investments, LLC v. Protective Life Ins. Co., Slip Copy, 2009 WL 362116 (M.D.Ga., Feb 10, 2009)(NO. 4:05-CV-126 (CDL))

Besag v. Custom Decorators, Inc., Slip Copy, 2009 WL 330934 (N.D.Cal., Feb 10, 2009)(NO. CV08-05463 JSW)

Feldman v. Travelers Indem. Co., Slip Copy, 2009 WL 277503 (E.D.Ark., Feb 04, 2009)(NO. 4:08CV0004140JMM)

TS&C Investments, L.L.C. v. Beusa Energy, Inc., Slip Copy, 2009 WL 259675 (W.D.La., Feb 02, 2009)(NO. CIV.A. 07-2103)

McAndrew v. Nolen, Slip Copy, 2009 WL 259735 (N.D.Fla., Feb 04, 2009)(NO. 3:08CV294/MCR/MD)

Obregon v. Dole Food Co., Inc., Not Reported in F.Supp.2d, 2009 WL 249881 (C.D.Cal., Jan 29, 2009)(NO. CV 09-186CASVBKX)

Brown v. SBC Communications, Inc., Slip Copy, 2009 WL 260770 (S.D.Ill., Feb 04, 2009)(NO. 05-CV-777-JPG)

Seventh Circuit Opinion Shows That "Commencement" Issue Still Litigated Several Years After CAFA Became Law

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 03 Jul 2009 09:46:01 -0600

Marshall v. H&R Block Tax Services, Inc., 564 F.3d 826 (7th Cir. 2009)

We are delighted to present a Guest Post from one of our original CAFA analysts. Our Guest Poster today is Gabe Crowson from Howrey, LLP’s Chicago office. Welcome Back, Gabe

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Avid followers of CAFA Law Blog recall that glorious day back in February 2005 when former President Bush (#43) signed CAFA into law as part of the tort reform fad that had swept the country. Well, even if it was not a nationwide fad, those corporate defense lawyers lucky enough to practice in “Judicial Hellhole” jurisdictions, such as Madison County, Illinois, Civil District Court in New Orleans, or any state court in Mississippi, certainly paid attention.

I paid attention too. Not because I was eager to start filing a bunch of federal court removal papers pontificating on the Congress’s intent in passing CAFA, but instead because I had been conscripted by Tony Rollo of scouring every single court decision that mentioned CAFA (even if it was just in passing) to see if it was worthy of the CAFA Law Blog. Now that was quite a chore – not just because Rollo wanted those cases cited in every brief we filed, irrespective of whether CAFA was implicated – but because nearly every corporate defendant in the country was trying to figure out some crafty way to make their way to federal court under CAFA.

As a result, courts had to start fashioning a whole new body of case law on what it means for a case to “commence” for purposes of CAFA, so that it could be removed to federal court. Generally speaking, the courts imposed a high threshold and required some kind of significant development in the case, such as a completely new cause of action or addition of a new party that would not “relate back” to the original complaint for purposes of the statute of limitations.

One would think that, with the passage of time, the “commencement” issue would become an afterthought (or at least just the subject of spirited debate at weekly CAFA blog meetings).

Justice Posner’s recent opinion on behalf of the Seventh Circuit in Marshall v. H&R Block, however, demonstrates that plaintiff and defense lawyers need to keep CAFA in mind when litigating any class action, even those that were filed before February 2005.

In Marshall, the original complaint had been filed in Madison County Circuit Court in January 2002 – a full three years before CAFA reared its head. In August 2003, the state court certified a defendant class and a nearly nationwide class of Block customers. Several years later (and after CAFA was around), in November 2006, H&R Block moved to decertify the defendant class and the nationwide plaintiff class. The briefing on the motion to decertify was completed in April 2008 and a hearing held in June 2008 (litigation moves quite slowly in Madison County). The state court agreed with H&R Block that the defendant class should be decertified and also that the number of states for the plaintiffs class should be reduced.

H&R Block Services – the company that asked for the decertification order – then removed to federal court, claiming that the order commenced a new case under CAFA because the only defendant left in the case was now jointly and severally liable for the liability of all the entities that had previously been covered by the defendant class. The district court thought that this was quite a novel commencement argument and granted the plaintiffs’ remand motion, but the Seventh Circuit disagreed.

The Court held that the change in liability did not relate back to the original complaint and thus commenced a new case under CAFA. According to the Court, it was of no moment that the change in liability was the result of something that the defendants had requested. Nor did it matter to the Court that there was no formal amendment to the complaint.

The lesson from Marshall is that litigants need to remain on the look-out for CAFA removal possibilities, even for those class actions that were filed before CAFA and still remand pending. And defense lawyers should not cavalierly rule out removal just because the triggering event was something that the defendant caused.

Live Tweets from ACI09 National Advanced Forum on Employment Discrimination Claims and Class Actions

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Sun, 28 Jun 2009 21:00:00 -0600

Follow this CafaLawBlog page for the latest live tweets from American Conference Institute's National Advanced Forum on Employment Discrimination Claims and Class Actions.

Or add this RSS Feed to your RSS reader.

The Essential Advanced Defense Forum that Will Shape Your Life

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 22 Jun 2009 13:24:07 -0600

Okay, may be it will not shape your life, but it will shape the future of ERISA strategies for leading litigators and in-house counsel.

If you register by or before July 17, you can save$700 off the conference price ($1495 instead of $2195) by quoting “discount code CAFA”

American Conference Institute’s Premier Forum on Defending and Managing ERISA LITIGATION will take place on October 19-20 at the Helmsley Park Lane Hotel in New York City. Click here to go ACI's site which contains the agenda.

The event features a faculty of leading outside litigators and 28 senior in-house counsel from:

ACE INA * Aetna * AIG * Aon * AT&T * Bayer * Boeing * Bristol-Myers Squibb * Chubb * Crawford & Co. * CSC * Con Edison * Fidelity * Goodyear * Honeywell * International Paper * JCPenney * Lowe’s * MetLife * Pitney Bowes * Procter & Gamble * Sunoco * TJUH * Unum * Wachovia * Wells Fargo * W.R. Grace

Plus, 21 federal judges from district courts located in 8 circuits will help you convey ERISA complexities to a court. HEAR FROM:

Hon. Janet Bond Arterton Hon. Julian Abele Cook, Jr.

Hon. Patrick J. Duggan Hon. Fernando J. Gaitan, Jr.

Hon. Kim R. Gibson Hon. Robert C. Jones

Hon. Algenon L. Marbley Hon. Larry J. McKinney

Hon. Stephen J. Murphy, III Hon. Rebecca R. Pallmeyer

Hon. Denise Page Hood Hon. Peter G. Sheridan

Hon. Alexander Williams, Jr. Hon. Raymond L. Erickson

Hon. Robert J. Johnston Hon. Stephen Wm. Smith

Hon. Roger B. Cosbey Hon. Janice M. Stewart

Hon. Lisa P. Lenihan Hon. Viktor V. Pohorelsky

Hon. Robert E. Payne

To register: www.AmericanConference.com/ERISA or call 888-224-2480.
If you register by or before July 17, you can save $700 off the conference tuition price ($1495 instead of $2195) by quoting “discount code CAFA”

Luck Runs Out for Irish, Twice: Flood Victims' Case Removed to Federal Court under CAFA because Defined Class was Entire Town.

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 22 Jun 2009 09:43:58 -0600

Irish v. BNSF Railway Co., No. 08-CV-496-SLC, 2009 WL 276519 (W.D. Wis. Feb. 4, 2009).

Note to all those dreaming of one day bringing a class action lawsuit of your own: don’t bring suit on behalf of your entire town unless you want the case removed to Federal Court.

In Irish, the plaintiffsfiled a class action suit against BNSF Railway Company for allegedly failing to “design, construct, and maintain the railway bridge and bridge trestle”, which would have presumably prevented flooding. The plaintiffs are seeking damages resulting from a flood in the summer 2007, which they claim was man-made and preventable (yes, they claimed that the flood was man-made, not the cause of the flood).

The plaintiffs included 53 plaintiffs in their suit, but also claimed that “at least another 25 households have been affected”, bringing the total to 74. The defendants immediately filed to remove to federal jurisdiction under CAFA. After the defendants filed, the plaintiffs objected to the motion, but only on the issue of the plaintiff class exceeding 100 persons.

The plaintiffs asserted that the defendants failed to prove the “Geography Test”, - as in “class, draw a map of Ireland and put a big star where Dublin should be” - claiming that not all the “possible” plaintiffs lived “upstream and/or tributary to” the drainage area of the flood.

Well, that argument didn’t go down nearly as smooth as a pint of Guinness with the court. The District Judge did not even address this assertion, noting that use of the words “at least” would have alone been enough to meet the 100 person requirement. After all, shouldn’t the Irish be used to being surrounded by water (maybe they should have just dyed the water green and kicked off St. Patty’s day, round 2)?

As if having your entire town flooded wasn’t unlucky enough: picture rooftops sticking out of the water like four-leaf-clover-shaped marshmallows in a bowl of milk, or just click here or here.

The court, using analysis from Cunningham Charter Corp. v. Learjet, Inc., 2008 WL 3823710, noted that class membership, under CAFA, is not merely the plaintiffs named in the suit, but the persons (named or unnamed) who fall within the definition of the proposed class. (Editors’ Note: See the CAFA Law Blog analysis of Cunningham Charter posted on October 24, 2008). Thus, the test is always whether 100 or more people fall within the class proposed by the plaintiffs in their complaint, which, using the defendant’s numbers, total around 369. The class, as stated in the lawsuit, basically included the whole town: Bagley, Wisconsin, population 335 as of July, 2007.

So, to all other potential flood victims out there, when you bring your class action lawsuit, make sure to define your class so that no more than 99 people could fit within that definition (and don’t use words like “at least” when referring to potential new plaintiffs). Basically, don’t bring a class action on behalf of your entire town. As soon as a class action is removed to federal court, plaintiffs lose any power they once had to seek to avoid federal jurisdiction by defining a proposed class in particular ways. Looks like the plaintiff Irish’s quest for that pot of gold at the end the proverbial rainbow (that would be BNSF’s deep pockets: $1.8 billion in profits in 2008) will be taking a detour through Federal court.

By: Caleb Trotter

Outdated Addresses Come Back to Haunt Plaintiffs Seeking Remand on Local Controversy Exception

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Fri, 19 Jun 2009 10:10:54 -0600

Leathermon v. Grandview Memorial Gardens, Inc., No. 4:07-CV-137-SEB-WGH, 2009 WL 301923 (S.D. Ind. Jan. 22, 2009).

One important thing to keep in mind before you try to prove that greater than two-thirds of your plaintiff class are citizens of the State in which you filed: don’t use addresses that are forty years old! Common sense, I know, but the plaintiffs in Leathermon attempted to use the addresses of their plaintiff class members that were on file at the time the underlying contracts to the suit were entered into – twenty, thirty, and forty years prior.

Leathermon involved a class action suit brought by persons who had purchased “burial, final disposition, and internment services, and cemetery goods and merchandise, including vaults, crypts, markers, bases and monuments” at the defendant’s cemetery. Ghoulish, I know.

The complaint, without much detail, alleged that operators of the cemetery “failed to perform burials in accordance with the terms and conditions of the cemetery contracts to *and I quote* ensure proper preservation of the remains.” Alrighty, then.

Now, because the court didn’t explain exactly what had gone wrong, allow me to give an illustration via an old joke:

A grieving widow is at the funeral home, waiting to see her deceased husband presented in his casket.

Upon sight, she immediately breaks down in tears.

Asked what could be done to console her, she sobbed “He’s wearing a black suit; it was his dying wish to be buried in a blue suit.”

Wanting to accommodate the grief-stricken woman, the funeral home director promised to fix the problem.

The next day, the day of the funeral, the widow saw her husband adorned in a smart, navy blue suit.

She was overjoyed.

Asked how he was able to find such a nice suit so quickly, the funeral director xplained that another widow had complained that her deceased husband was clad in a blue suit, when he had requested black.

“After that”, continued the director, “it was a simple matter of switching the heads.”

Now that I think about it, that would be at least marginally upsetting.

Imagine Donnie from The Big Lebowski suing Walter and The Dude for spreading his ashes, not in the Pacific Ocean, but all over The Dude’s shirt/beard. Well that would have to be Donnie’s relatives, but I digress…

The problem for the plaintiffs in Leathermon came after the case was removed to federal court under CAFA, when they attempted to remand to state court under the “local controversy exception”. This exception only applies when greater than two-thirds of all the proposed plaintiff class members are citizens of the State in which the action was originally filed. Now, it seems obvious that most people suing a funeral home would be closely related to the people that had died and were subsequently “improperly preserved”, whatever that means. Because people are usually buried where they lived, it seems like a relatively low burden to overcome for the plaintiffs.

However, with the burden of proof squarely on their shoulders, the plaintiff’s attorneys presented evidence at the remand hearing of the addresses of the plaintiff class members, which all turned out to be at least 20 years old. So, despite the fact that 94.87% of the addresses were local (state of Indiana), the court explained that this was insufficient evidence because they could not “assum[e] the class members’ residence[s] remained the same.”

The court even goes as far as admitting that “this class action lawsuit indisputably appears to be local in character”, but CAFA has strict and clear guidelines that must be met before an action can be remanded back to state court. The plaintiffs had to prove that this was a local controversy; all they had to do was dig up the updated addresses from their plaintiff class. Epic fail. Plaintiff’s motion ~~buried~~ denied.

By: Caleb Trotter

Toto We're Not in Kansas Anymore! Federal Court is Not Powerful Enough to Stop a "Rural" Southern Louisiana State Action - Even with CAFA's Help!

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

Vallier v. American Fidelity Assurance Company, Slip Copy, 2008 WL 4330028 (D. Kan., Sep. 16, 2008)(No. 08-2267-JAR)

Plaintiff, Verle Vallier, filed a putative class action seeking damages from American Fidelity Assurance Company (AFA) for breach of contract with fraudulent intent, fraud and bad faith, claiming that AFA changed the “actual charges” policy language in its disease cancer expense policy.

Defendant, however moved to stay this action pending the approval of a Louisiana state law class action encompassing the same claims as plaintiff sued on in this case (Guidry, et al. v. American Public Life Insurance Co., et al., Case No. 2008-3465 (14^th Judicial District, Parish of Calcasieu, La. July 10, 2008) . AFA claims that once the Louisiana state law settlement has been approved, it will preclude plaintiff’s class action suit.

Plaintiff, not wanting anything to do with the “rural southern Louisiana” class action, while clicking his heels three times and stating “there’s no place like home,” moved the Kansas Federal Court to exercise its inherent powers under the All Writs Act (28 U.S.C. §1651(a)) to enjoin AFA from participating in the Guidry settlement to protect and preserve the specific federal jurisdiction that congress intended federal district courts to have when it enacted CAFA.

Plaintiff claims that in passing CAFA Congress was (1) reserving to the federal courts exclusive jurisdiction over all multi-state class action claims and (2) imposing mandatory procedures governing the resolution of all multi-state claims. Plaintiff also accused the defendants of purposefully conspiring to deprive federal courts of their jurisdiction over this multi-state class action by hand picking a rural state forum (Louisiana) and participating in a settlement there.

Defendants rejected the suggestion that the proposed settlement of the Louisiana class action was in any way unfair, stating that it was negotiated at arms-length by a “Special Master” (possibly the all knowing Wizard of OZ – “pay not attention to the man behind the curtain”).

The court, denying plaintiff’s emergency motion to enjoin the state court proceeding, held that CAFA does not mandate that class actions of any variety be filed in federal court, it simply expands a federal court’s jurisdiction over class actions; and CAFA’s restriction on settlements only applies to class action cases pending in federal court.

Maybe plaintiff should have listened to the munchkins and followed the yellow brick road to Louisiana State Court to raise his objections there!

Insurance Dispute Gets Remanded Because Plaintiff Chiropractic Outfit Ain't Got No Class (Allegations).

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Wed, 17 Jun 2009 06:30:00 -0600

Chiropractic Neurodiagnostic, P.C. v. Allstate Insurance Co., No. 08-2319, 2009 WL 210866 (E.D. NY 01/26/2009).

What happens when the plaintiff files a “class action” lawsuit touting withheld payments in excess of “One Million Dollars,” but then admits it’s not really a class-action suit and that the plaintiff is only seeking “in excess of” $35,000.00? That’s right, folks, it’s back to state court for this cheap, no-class lawsuit!

[Note: You should imagine that this entire post is being read in the voice of Donald Trump. Or Donald Duck, whatever cracks your back.]

The plaintiff, Chiropractic Neurodiagnostic, P.C. (isn’t that quite a mouthful!), filed what looked like a classy lawsuit against the defendant, Allstate Insurance Company, in New York state court. The plaintiff alleged claims for fraud, breach of contract, and unjust enrichment related to the defendant’s allegedly improper decisions not to pay the plaintiff—and others—for diagnostic testing that the plaintiff had performed on defendant’s insureds, on the grounds of “lack of medical necessity.” The plaintiff alleged that it was the assignee of the policies of the insureds, and so had a right to payment under those policies.

The caption of the lawsuit was very classy: “CHIROPRACTIC NEURODIAGNOSTIC, P.C., a New York corporation, on behalf of itself and all other entities and individuals that are assignees of claims for the payment of diagnostic testing no-fault benefits similarly situated, versus ALLSATE INSURANCE COMPANY.” That looks like class to me, my friend!

The defendant removed this superficially classy lawsuit to the United States District Court for the Eastern District of New York, asserting that the action was removable pursuant to the Class Action Fairness Act (“CAFA”) and ordinary diversity jurisdiction.

Once in federal court, however, the plaintiff’s classy façade simply fell apart. The complaint went downhill after the classy caption, and the rest of the lawsuit didn’t contain any “substantive class action allegations” whatsoever, revealing its total and complete lack of class. The plaintiff even admitted that it had never intended to prosecute the case as a class action, despite the classy caption. The court, finding this to be very unclassy, granted the defendant’s motion to strike the plaintiff’s class allegations.

Now revealed to be just another no-class lawsuit, the defendants’ CAFA basis for removal got rejected even faster than the plaintiff’s alleged invoices. Citing a number of cases that held that the denial of class certification necessarily results in an absence of CAFA jurisdiction (Editors’ Note: See the CAFA Law Blog analysis of Ronat v. Martha Stewart Living Omnimedia, Inc., posted on December 29, 2008), the court found that the action was not a “class action” within the meaning of CAFA, and so CAFA did not provide a basis for jurisdiction.

But, insisted the defendant, there is diversity jurisdiction! The complaint alleges that the defendants wrongfully kept back more than “One Million dollars,” and the parties are completely diverse. Surely, there is ordinary diversity jurisdiction?

Not so, said the court. For, although the plaintiff referenced “One Million dollars” in the allegations of the complaint, the plaintiff only sought damages “in excess of” $35,000. Moreover, even though the lawsuit attempted to seek attorney’s fees and punitive damages, the court found that the plaintiff’s claims were purely in the nature of an insurance-contract dispute. That meant that, under New York state law, the plaintiff couldn’t get punitives and couldn’t get attorneys fees.

That is, first the court said the lawsuit had no class (allegations), and then the court said the lawsuit had no money (at issue). Things were looking pretty tough for this lawsuit’s chances of staying in the bigtime---federal court.

Since there was nothing else in the pleadings to indicate that even a measly $75,000 was in play, the court therefore held that the defendant had failed to show the necessary amount in controversy for diversity removal, and so there was no ordinary diversity jurisdiction, either.

Thus diminished, and with its pretensions of classiness in tatters, the plaintiff’s lawsuit was remanded back to New York state court.

So, the defendant may have won the war—the lawsuit shrank from a classy “One Million dollar” action down to a no-class $35,000 individual suit—but it definitely lost the removal battle.

And that just shows how important it is to keep it expensive, and keep it classy.

--Lucky Day

CAFA Removal Epic: An Elegant and Moving Example of the Three-Act Play

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Tue, 16 Jun 2009 06:30:00 -0600

Harris v. Sagamore Insurance Company, No. 08-109, 2008 WL 4816471 (E.D.Ark. Nov. 3, 2008).

Sometimes life imitates art. In the classical view, the structure of narrative is properly divided into three acts. This analysis may be traced back to Aristotle’s Poetics, wherein that great thinker propounded that the structure of narrative is properly divided into beginning, middle, and end:

“These principles being established, let us now discuss the proper structure of the Plot . . . . A whole is that which has a beginning, a middle, and an end. A beginning is that which does not itself follow anything by causal necessity, but after which something naturally is or comes to be. An end, on the contrary, is that which itself naturally follows some other thing, either by necessity, or as a rule, but has nothing following it. A middle is that which follows something as some other thing follows it. A well constructed plot, therefore, must neither begin nor end at haphazard, but conform to these principles.”

So, then, our CAFA removal epic now comes to completion, with Harris v. Sagamore Insurance Co. as the third and final act (following on the two acts of Toller v. Sagamore Ins. Co., see the CAFA LawBlog analysis of Toller II, posted on July 22, 2008 and the analysis of Toller I, posted on February 11, 2008.

The careful reader may discern herein both an elegant example of the classical three-act play, and an instructive lesson on the potential CAFA consequences of a request for injunctive relief. The tale is presented here in its traditional lyric form, but commentary has been added as appropriate, in italics, to provide a modern-day interpretation of this epic tale.

ACT ONE: In which “Toller,” Sagamore, and the Oracle are introduced.

As has been told at length elsewhere (Editors’ Note, See the CAFA Law Blog analysis of Toller I, posted on February 11, 2008 ), our Protagonist, in disguise as “Gwendolyn Toller,” did don the mantle of Heroine of the People [class representative] and issued challenge against our Antagonist, one Sagamore Insurance Company [defendant].

“Toller” sought to bring Sagamore to justice for the alleged failure to abide by the law of the her home country [in particular, an Arkansas statute that purportedly required Sagamore either to obtain from its automobile insureds a waiver of certain “no-fault coverages” or else to provide them with a statutory minimum coverage].

“Toller” chose as the field of battle her home country [Arkansas state court], and she asked the gods of the home country for two prizes if she should be the victor in the contest: One, a bag of gold for “Toller” and her people--but not so much gold that the battle might be carried into foreign lands! [damages, not to exceed “$4,999,999,” one dollar short of CAFA jurisdiction]; and Two, a command that Sagamore should go forth and do right and no more trespass against the laws of her home country [injunctive relief, ordering compliance with the insurance statute].

Crafty Sagamore, however, did pray to the gods of the foreign lands that the battle be taken thenceforth [removed to federal court]. And so “Toller” and Sagamore did come before the Oracle [the United States District Court for the Eastern District of Arkansas], and “Toller” did ask that the Oracle let the contest return to her home country [moved for remand to state court]. The Oracle asked that each make their offering.

“Toller” did state that she herself sought so little gold that she was beneath the notice of the Oracle [less than $75,000 individual amount in controversy] and swore a grave and heavy oath that her people would not together take so much gold as to incur the Oracle’s scrutiny [the petition limited damages for the class to no more than $4,999,999]. Sagamore responded, however, saying that “Toller” did in fact seek much gold for herself [more than $75,000] and for her people as well, because the acts that “Toller” sought to command would cost Sagamore much gold [pointing out that the putative class numbered more than 30,000 and that the suit sought injunctive relief requiring statutory minimal coverage of several thousand dollars for each of the class, a theoretical 1.5 billion worth of policy-limit coverage].

The Oracle thought much upon their offerings.

In its wisdom, the Oracle did see that Sagamore protested too loudly over the cost of the acts commanded [policy limits did not provide the correct measure of amount in controversy for the injunctive relief, because it was not feasible that all policyholders would have policy-limits claims in the future]. But the Oracle saw also that Sagamore still had some right of complaint [the injunctive relief would certainly cost Sagamore some amount of money in the future due to the extra coverage, above and beyond the expressly limited damages]. However, the Oracle wisely judged that neither “Toller” nor Sagamore brought worthy offerings [neither party offered competent evidence].

The Oracle did hold its judgment and ask new offerings of “Toller” and Sagamore [asked the parties to produce “summary judgment”-type evidence].

So ended Act One.

ACT TWO: In which the Oracle favors Sagamore, and “Toller” falls on her sword rather than do battle in foreign lands.

“Toller” and Sagamore did come again before the Oracle, bearing new offerings that they hoped would be more pleasing [evidence]. The Oracle once again sat in judgment. (Editors’ Note: See the CAFA Law Blog analysis of Toller II, posted on July 22, 2008).

The Oracle carefully considered Sagamore’s renewed contention that “Toller” sought much gold for herself [more than $75,000 individual damages] and the offering of proof, and saw that Sagamore’s contention was false. Though “Toller” did seek some gold, yet she did not seek so much as to be worthy of the Oracle’s notice [the evidence revealed that the individual damages would not exceed $41,000, and there was no reasonable possibility of an attorney’s fee award for the individual claims that would bring the total individual recovery to $75,000]. The Oracle did reject this offering of Sagamore.

O, but “Toller’s” claims for her people! [the class damages] How heavy would be the burden on Sagamore of “Toller’s” requested commands! [the injunctive relief] The Oracle saw that, though the burden to Sagamore itself might not be so heavy as to bring the battle to foreign lands [the expected cost to Sagamore of the additional coverage required by the injunction would be substantial, but would not reach $5,000,000, assuming historical claims-payout rates on similar policies and the exact size of the class], yet were “Toller’s” people to purchase such justice and such commands from others, the burden would be so heavy, that the Oracle must take notice! [the market rate for premiums for the total amount coverage required by the injunction would be in excess of $10,000,000, so the CAFA amount in controversy was met by that standard of valuation]

Yea, and even though “Toller” had vowed not to take too much gold for her people [limited the class claim for damages to no more than $4,999,999], yet the commands she asked were too burdensome to ignore [the expected value of the requested injunctive relief was more than the jurisdictional requirement of $5,000,000 because of the value of the coverage when considered in terms of the market rate for premiums for that coverage].

Therefore the Oracle did pronounce that the battle would take place in the foreign lands, in the Oracle’s Arena [the federal court had jurisdiction under CAFA, so the motion to remand was denied and the case would stay in federal court].

“Toller” did shake with fear and shame--she would not do battle in foreign lands, under the eye of the Oracle! No, she cast herself immediately upon her sword rather than fight in the foreign Arena [filed a motion for dismissal of the action without prejudice, pursuant to Rule 41(a)(2)].

The Oracle graciously allowed her spirit to depart and cross over the river Styx [the motion to dismiss was granted].

ACT THREE: In which “Gwendolyn Toller” returns from across the Styx, “Toller” casts aside her disguise and reveals her true form to be that of “Latonya Harris,” and Harris sways the Oracle with her renewed entreaty.

And lo, a new Heroine of the People [class representative] did arise, and did issue new challenge to Sagamore! And her challenge was the same as “Toller’s” had been and yet different also!

“Latonya Harris,” the new Heroine did call herself, and Harris once more claimed gold from Sagamore for her people.

As had “Toller,” Harris took the solemn vow to take only so much gold, and no more [again expressly limited the class claims to $4,999,999], but Harris forsook the request for a command that Sagamore should not trespass against the law of her home country [did not seek injunctive relief].

Yet crafty Sagamore did once again pray to the gods of the foreign lands, and that prayer was again heard [removed the new suit to federal court]. The Oracle would decide the matter once again [new removal, new motion to remand].

However, when Harris did come before the Oracle in the Arena, the Oracle saw through to the truth of her spirit, and the Oracle perceived that here was “Toller” come again, returned from across the Styx [the court expressly noted that the Harris lawsuit was “round two of an effort to pursue a class action against Sagamore, with the same allegations and same plaintiff’s lawyers”].

The Oracle therefore gazed upon Harris, and considered her new offering. The Oracle saw that Harris had forsaken her request that Sagamore comply with the law of her home country, which acts the Oracle had known to be too heavy to ignore [the court noted that the request for injunctive relief, which had led to a finding of CAFA jurisdiction in Toller II, had been dropped].

Crafty Harris! By falling on her sword and feigning death in the guise of “Toller,” Harris had stripped from her challenge that which the Oracle could not ignore [the plaintiff’s lawyers running the suit got a do-over on tailoring their allegations to avoid federal court].

And now, returning, her challenge did not stir the Oracle to bring her challenge into the Arena! [removing the request for injunctive relief eliminated the previously-determined basis for CAFA jurisdiction]

The Oracle looked upon Harris, once called “Toller,” and looked upon Sagamore, and the Oracle did sigh loudly.

The Oracle perceived that, though Harris had limited the gold she sought for herself and her people, yet crafty Harris might try to enlarge her challenge when she returned to her home country, and so obtain much gold after all!

Therefore, the Oracle did issue a doom upon Harris that she not increase her demands once she returned to her home country, and the Oracle did proclaim faith in the gods Harris’s home country that such trickery would not be rewarded. [“We note the potential availability of judicial estoppel arguments by the defendants should the plaintiffs in the future change legal positions in an attempt to achieve an award in excess of $5 million. . . . [T]his Court is convinced that the Supreme Court of Arkansas would not permit a plaintiff to recover damages for the class as a whole in excess of $4,999,999. . . . The plaintiff has made her choice, and the plaintiffs in state court who choose not to opt out of the class must live with it.”]

Having laid such a doom upon Harris, the Oracle did find that Harris’s challenge did not belong in the Arena [no CAFA jurisdiction].

Therefore the Oracle bid Harris and Sagamore depart the Oracle’s Arena, back to Harris’ home country, to do further battle over her challenge [the action was remanded to state court].

And Harris did depart the Arena gladly, with shouts of joy, and proclamations of the justice that she would win from the gods of her home country!

But Sagamore did depart the Arena but reluctantly, and with bowed head, for Sagamore had greatly desired the joy of battle in the Arena, and Sagamore did not hold the gods of Harris’s home country in esteem.

And each, as they departed, unsheathed their swords for the battle that would take place in Harris’s home country . . .

So ends Act Three, and with it, our epic.

--Lucky Day

Twitter, A Discount, and Learning All You Can About Employment Discrimination Claims and Class Actions.

cafalawblog@mcglinchey.com (McGlinchey Stafford PLLC) — Mon, 15 Jun 2009 10:32:57 -0600

The world famous, and CAFA Law Blog favorite, American Conference Institute is offering a $200.00 discount to attend its National Advanced Forum on Employment Discrimination Claims and Class Action Seminar. At this price you can’t afford not to go. Plus, a CAFA Law Blog Editor will be tweeting live from the conference @cafalawblog!

The event promises to bring together top private practice lawyers from the plaintiff and defense bar, seasoned judges, in house counsel, and a special keynote address from the EEOC. The seminar will feature topics on recent legislation, class action considerations, ethics, and retaliation claims among others. As a special bonus, a CAFA Law Blog Editor will be in attendance and signing autographs! It doesn’t get any better.

What: American Conference Institute’s National Advanced Forum on Employment Discrimination Claims and Class Actions.

When: June 29 & 30, 2009.

Where: Sheraton Fisherman’s Wharf, San Francisco, California.

ACT NOW and sign up at www.americanconference.com/discrimination. At sign up reference “THE CAFA LAW BLOG DISCOUNT”