Sears Class Action Defense Case-Santamarina v. Sears: Seventh Circuits Holds Class Action Not Removable By Defense Because Under California Law Amendments To Class Action Complaint Related Back To Original Filing

Error in Refusing to Remand Class Action is not Jurisdictional Error but Defense Improperly Removed Class Action under CAFA (Class Action Fairness Act of 2005) Because Amendments to Complaint Related Back Original Filing Which Predated CAFA’s Effective Date

In January 2005, prior to the effect date of the Class Action Fairness Act of 2005 (CAFA), plaintiff filed a barebones class action in California state court against Sears alleging false representations that certain Craftsman tools are made in the U.S. when they are manufactured abroad. Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571 (7th Cir. 2006). Defense attorneys demurred, and plaintiff’s lawyer filed an amended complaint after CAFA became effective. The defense then removed the class action to federal court arguing that the amended complaint did not relate back and was therefore removable under CAFA. The California federal court denied plaintiff’s motion for remand and plaintiff did not appeal that ruling. However, after the Judicial Panel on Multidistrict Litigation (MDL) transferred the case to Illinois, plaintiff asked the district court to reconsider the California court’s ruling. The Illinois federal court held that the defense removal had been improper and remanded the class action to California state court. Id. Sears appealed, and the Seventh Circuit Court of Appeals affirmed.

Sears first argued that the Illinois federal court should not have reconsidered the ruling of the California federal court. Santamarina, at 571-72. The Seventh Circuit disagreed, explaining that a court has inherent power to reconsider prior rulings in the same lawsuit, even the rulings of a different judge, “if there is a compelling reason, such as a change in, or clarification of, law that makes clear that the earlier ruling was erroneous.” Id., at 572. The Circuit Court reasoned at page 572, “Not to reconsider in such circumstances would condemn the parties to the unedifying prospect of continued litigation when they knew that a possibly critical ruling was in error and, unless it became moot in the course of the proceedings, would compel a reversal of the final judgment at the end of the case.” The Court of Appeals was critical of plaintiff’s delay in seeking reconsideration “almost 15 months since the case was removed to the federal court and 13 months since it was transferred to Chicago,” but held that “some latitude” was warranted because the class action was removed and remand denied “only a few months after the promulgation of the Class Action Fairness Act.” Id.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Moniz v. Bayer-Class Action Defense Cases: Defense Removal Of Class Action To Federal Court Proper Under CAFA (Class Action Fairness Act of 2005) Because Of Post-CAFA Amendment To Class Action Complaint Massachusetts Federal Court Holds

Massachusetts Federal Court Agrees With Defense that Post-CAFA Amendment of Class Action Complaint Rendered Suit Removable But Rejects Defense Claim that CAFA Shifts Burden of Proof to Plaintiff to Prove Remand is Warranted

Plaintiff filed a putative class action in Massachusetts state court against Bayer, Crompton Corporation and Uniroyal Chemical on February 10, 2005, alleging a conspiracy to fix prices on certain rubber and urethane products. Plaintiff amended the complaint in May 2005, and defense attorneys consented to the filing of a second amended class action complaint on February 6, 2006. Defense attorneys then removed the action to federal court on February 10, 2006, under the Class Action Fairness Act of 2005 (CAFA). Moniz v. Bayer A.G., 447 F.Supp.2d 31, 32-33 (D.Mass. 2006). Plaintiff filed a motion to remand the action to state court.

CAFA became effective on February 18, 2005. As a preliminarily matter, the federal court rejected the defense claim that CAFA shifted the burden of proof to the plaintiff to demonstrate that remand is warranted. Moniz, at 33-34. As the district court explained at page 34, “the clear majority of courts that have addressed the issue have held that, even where CAFA applies, the burden of proof on a motion to remand remains with the removing party because the text of the statute says nothing about changing that long-standing rule.”

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Tmesys v. Eufaula-Class Action Defense Cases: Circuit Court Has Jurisdiction To Review District Court Order Remanding Class Action To State Court Based On Finding That CAFA (Class Action Fairness Act) Does Not Apply Eleventh Circuit Holds

As a Matter of First Impression, Eleventh Circuit Holds that Jurisdiction Exists to Review District Court Order Based on Finding that Class Action Fairness Act of 2005 (CAFA) does not Apply and Agrees with District Court Decision to Remand Class Action to State Court Plaintiff filed a putative class action in Alabama state court against health insurer alleging breach of contract. Defense attorneys removed the action to federal court based on the Class Action Fairness Act of 2005 (CAFA).

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

FedEx Class Action Defense Case-Hart v. FedEx: CAFA (Class Action Fairness Act) Shifts Burden Of Persuasion From Defense To Plaintiff To Establish Exceptions To Federal Court Jurisdiction Seventh Circuit Holds

As a Matter of First Impression in Seventh Circuit, Court Holds that Class Action Fairness Act of 2005 (CAFA) Shifts Burden to Plaintiff to Establish Exceptions to Federal Court Jurisdiction

After plaintiff filed a putative labor law class action against FedEx in Pennsylvania state court, defense attorneys removed the case to federal court under CAFA (Class Action Fairness Act of 2005). The Judicial Panel on Multidistrict Litigation transferred the class action to the Northern District of Indiana, and plaintiff moved to remand the case to Pennsylvania state court under the “local controversy” or “home-state controversy” exceptions to federal court jurisdiction under CAFA. The district court denied the motion on the ground that plaintiff had failed to meet his burden of establishing that the exceptions applied. Plaintiff appealed the order, and the Seventh Circuit held that CAFA shifted the burden to plaintiff and affirmed. Hart v. FedEx Ground Package System Inc., 457 F.3d 675, 676-77 (7th Cir. 2006).

Plaintiff’s class action alleged the FedEx delivery drivers were misclassified as “independent contractors.” Hart, at 676. The complaint alleged that “greater than two-thirds of the members of the plaintiff class, if not all of the members of the plaintiff class, are citizens of Pennsylvania.” Id., at 677. FedEx removed the lawsuit to federal court under CAFA alleging in the notice of removal that “[u]pon information and belief, some of the proposed class members are not residents of Pennsylvania,” id. Absent CAFA, diversity jurisdiction would not exist. Id., at 676. Plaintiff sought to remand the action under CAFA’s “local controversy” and “home-state controversy” exceptions, see § 1332(d)(4)(B), and urged that under _Brill v. Countrywide Home Loans_¸ 427 F.3d 446 (7th Cir. 2005), FedEx bore the burden of establishing jurisdiction under CAFA and “also that none of the mandatory exclusions from CAFA jurisdiction found in § 1332(d)(4) applied,” id., at 677.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

In re Intel-Class Action Defense Cases: Defense Keeps Class Action Removed Under CAFA (Class Action Fairness Act) In Federal Court Because Amount In Controversy Exceeds $5 Million

Federal District Court Denies Motion for Reconsideration of Order Denying Motion to Remand Class Action to State Court Because Defense Established Jurisdiction Under Class Action Fairness Act (CAFA).

Plaintiff filed a putative antitrust class action against Intel Corporation in state court, which the defense removed to federal court under CAFA (Class Action Fairness Act). The district court denied plaintiff’s motion to remand the class action to state court, and plaintiff moved for reconsideration. In re Intel Corp. Microprocessor Antitrust Litig., 436 F.Supp.2d 687 (D. Del. 2006). The district court explained that it refused to remand the lawsuit to state court because the defense “had carried its burden of proving that federal jurisdiction exists” because the defense “carr[ied] its burden of setting out the amount in controversy” and plaintiff did not “establish to a legal certainty that the amount in controversy was less than the statutorily required $5,000,000.” Id., at 688. Plaintiff’s motion for reconsideration argued that the district court erred by (1) failing to consider his evidence concerning the amount in controversy, and (2) accepting Intel’s estimate which was based on the cost of the computer as a whole rather than the cost of the microprocessor itself. Id., at 689. The district court denied plaintiff’s motion.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases-Eufaula Drugs v. Tmesys: Defense Removal Of Class Action Improper Because CAFA (Class Action Fairness Act of 2005) Inapplicable And Insufficient Amount In Controversy Alabama Federal Court Holds

Federal Court Remands Putative Class Action Over Defense Objection Because at Least One Member of Class Must Satisfy Jurisdictional Requirement for Damages and Because Under Alabama State Law Class Action was Commenced Prior to CAFA Even Though Summons Issued After CAFA’s Effective Date Issues regarding removal and remand, and regarding federal court jurisdiction under the Class Action Fairness Action of 2005 (CAFA), have been covered in several separate articles. On May 22, 2006, an Alabama federal court remanded to state court a putative class action over defense claims that the court had either diversity jurisdiction or jurisdiction under CAFA.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases: Knudsen v. Liberty Mutual

Changing Class Definition in Class Action Does Not Constitute New Case Permitting Removal Under CAFA (Class Action Fairness Act) Seventh Circuit Holds

Congress enacted CAFA (Class Action Fairness Act of 2005) for the purpose of expanding defense access to federal courts in class action cases. CAFA applies only to class actions filed after its effective date (February 18, 2005), but federal courts have held that certain pleading amendments – such as adding a new party-defendant – constitutes the commencement of a “new case” thus permitting removal by defense attorneys to federal court. Class action defendants often benefit if they can remove the case to federal court, and many have tested the limits of CAFA by removing class action cases on the grounds that different actions by the plaintiffs’ lawyer commenced a new suit.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases–Miedema v. Maytag: Defense Bears Burden Under Class Action Fairness Act of 2005 (CAFA) To Establish Subject Matter Jurisdiction

CAFA (Class Action Fairness Act of 2005) Requires Defendant Prove Subject Matter Jurisdiction Supporting Removal Eleventh Circuit Holds Removal under CAFA (Class Action Fairness Act of 2005) continues to raise basic questions. On June 5, 2006, the Court of Appeals for the Eleventh Circuit addressed several of these questions in Miedema v. Maytag Corporation, ___ F.3d ___, 2006 WL 1519630 (11thCir. 2006). The main issue presented was whether CAFA shifted the burden of proof to the plaintiff to establish that remand was proper.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

CAFA (CLASS ACTION FAIRNESS ACT OF 2005)

Class action litigation is rampant in the United States, and defending against a class action lawsuit is both expensive and time-consuming. In enacting CAFA (Class Action Fairness Act of 2005), Congress acknowledged that class actions are an important and valuable part of the legal system “when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.” However, Congress also recognized that the abusive use of class actions has harmed the public, harmed businesses, and undermined public respect for the judicial system.

In particular, Congress was concerned that many class actions benefited plaintiffs’ counsel more than the public. “Class members often receive little or no benefit from class actions, and are sometimes harmed,” whereas “[plaintiffs’] counsel are awarded large fees, while leaving class members with coupons or other awards of little or no value.” Moreover, certain plaintiffs receive unjustifiable awards at the expense of other class members.

Congress was also concerned that by manipulation of diversity jurisdiction plaintiffs’ counsel had managed to keep cases of “national importance” in state court, and that state courts would “sometimes act[] in ways that demonstrate bias against out-of-State defendants” and enter judgments that would “impose their view of the law on other States and bind the rights of the residents of those States.”

Congress therefore enacted the Class Action Fairness Act (“CAFA”) for several purposes. When a proposed class action settlement awards coupons to class members, then CAFA requires that the federal district court expressly find that the settlement is fair, reasonable and adequate. The federal court also cannot approve such a settlement if attorney fees awarded to class counsel result in a net monetary loss to the class unless the court expressly finds that the monetary loss is substantially outweighed by nonmonetary benefits to the class. CAFA also specifies the calculation of contingent and other attorney fee awards when the proposed class action settlement involves providing coupons to class members. Finally, CAFA prohibits class settlements that give greater benefits to some class members because they are geographically nearer to the court. To ensure the fairness of proposed class settlements, CAFA requires that notice of proposed settlements be served on the appropriate State and Federal officials, and forbids the court from approving such settlements less than 90 das after service of such notice.

Class Action Fairness Act (CAFA) Uncategorized

Class Action Defense Cases–Evans v. Walter Industries: Plaintiff Bears Burden Under Class Action Fairness Act of 2005 (CAFA) Of Establishing Local Controversy Exception To Removal of Class Action

CAFA (Class Action Fairness Act of 2005) Places Burden of Proof on Plaintiff to Establish Local Controversy Exception to Removal Eleventh Circuit Holds CAFA contains several provisions that still require judicial interpretation. On May 22, 2006, the Eleventh Circuit considered as a matter of first impression for any Circuit Court of Appeals “the specific question of which party should bear the burden of proof on CAFA’s local controversy exception.” Evans v.

Class Action Court Decisions Class Action Fairness Act (CAFA) Class Actions In The News Removal & Remand Uncategorized