Kitazato v. Black Diamond Hospitality Investments, LLC, Slip Copy, 2009 WL 3209298 (D. Hawaii, Oct 06, 2009)(NO. CIV.09-00271DAE-LEK)

The magistrate judge recommended the United States District Court of Hawaii rule that since the mass action concerns the direct claims of individual plaintiffs, it cannot retain jurisdiction unless the removing defendants can establish the numerosity requirement – over 100 plaintiffs’ presence in the case, along with a specific monetary relief in the complaint.

The Society to Protect Diamond Hawaii (“Plaintiff Society”), and its members – the plaintiffs in this case – alleged that in 1988, the defendant Diamond Resort Corporation (“DRC”) developed a resort located on the Island of Maui – now known as the Diamond Hawaii Resort and Spa (“the Resort”), and the undivided real estate and joint membership interests in the Resort were sold by DRC to 1,400 Japanese persons or entities including the plaintiffs. The plaintiffs also sued various managers, investment companies, and others. The naming of all of the defendants and a description of who they are would be boring and unnecessary for class action purposes. Consequently, we won’t waste your time or ours.

Suffice to say, the plaintiffs brought an action in the Hawaii state court alleging that all the defendants violated the Hawaii Revised Statutes Chapter 414D (Hawaii Non-Profit Corporations Act).

The defendants removed the case to the United States District Court of Hawaii. When the complaint was filed, some but not all of the defendants in this action were served; the removing defendants, however, were served only after the first amended complaint was filed in the state court.

The removing defendants opposed the plaintiffs’ motion to remand invoking the District Court’s original jurisdiction under 28 U.S.C. § 1332(d) on the basis that the plaintiffs’ case constituted a removable mass action. The term ‘mass action’ means any civil action in which the monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact. 

The removing defendants argued that the numerosity requirement was met based on the Plaintiff Society’s purported representation of approximately 490 Resort Owners. The Magistrate Judge  disagreed primarily because mass actions simply concern the direct claims of individual plaintiffs without regard to any putative plaintiff class as is typical in a class action; and records did not even suggest that the purported 490 other Resort Owners appeared or otherwise made direct claims in this action. And secondly because, even assuming that the numerosity requirement regarding a mass action could be satisfied by including claimants that were not direct participants in the case, the removing defendants never showed that there were more than 100 claimants.

Significantly, the District Court found that on the face of the first amended complaint, there was no reference or mention at all that the plaintiffs were seeking a monetary relief. The Magistrate Judge noted that the plaintiffs merely sought an accounting of the defendants’ finances, declaratory and injunctive reliefs. Therefore, the Magistrate Judge concluded that the removing defendants failed to show that this action satisfied the monetary claim requirement for a mass action under CAFA.

The Magistrate Judge also rejected the removing defendants’ argument that the plaintiffs had waived their right to remand by engaging in post-removal affirmative relief litigation in this District Court. In doing so, the Magistrate Judge concluded that pursuant to 28 U.S.C. § 1447(c), the district court’s subject matter jurisdiction could not be waived, and the plaintiffs’ post-removal filings had no bearing on whether this District Court had subject matter jurisdiction pursuant to CAFA.