CAFA Class Action Defense CAFA Case-Morgan v. Gay: Class Action Fairness Act (CAFA) Must Be Read As Intended Rather Than Literally Third Circuit Holds

Third Circuit Joins 11th and 9th Circuits in Holding that “Not Less Than 7 Days” in § 1453(c) of CAFA (Class Action Fairness Act of 2005) Must be Read as “Not More Than 7 Days”

Plaintiffs filed a putative class action in New Jersey state court. Defense attorneys removed the action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court granted plaintiffs’ remand motion on the ground that it lacked removal jurisdiction. Seven days later defense attorneys filed a petition with the Third Circuit for leave to appeal pursuant to 28 U.S.C. § 1453(c), which provides that the circuit court may accept such appeals “if application is made to the court of appeals not less than 7 days after entry of the order.” Morgan v. Gay, 466 F.3d 276, 277 (3rd Cir. 2006) (quoting § 1453(c)(1)). As a matter of first impression, the Third Circuit considered whether § 1453(c)(1) “should be interpreted by this Court to mean ‘not more than 7 days after entry of the order.'” Id. Like sister circuits, the Court of Appeals held that the statute should be read as Congress intended rather than honoring the strict language of a plainly typographical error. The Circuit Court summarized at page 277: “Because the uncontested legislative intent behind § 1453(c) was to impose a seven-day deadline for appeals, we conclude that the statute as written contains a typographical error and should be read to mean ‘not more than 7 days.'”

Certification of Class Actions Class Action Court Decisions Removal & Remand Uncategorized

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

Class Action Defense Cases-In re New York Bancorp: New York Federal Court Grants Defense Motion To Dismiss Securities Class Action And Rejects Plaintiffs’ Meritorious Remand Motion As Untimely

Court Holds Allegations in Securities Class Action Fail to Meet Heightened Pleadings Requirements Mandated by FRCP Rule 9(b) and the PSLRA (Private Securities Litigation Reform Act of 1995), and Denies Plaintiffs Request To Rule on its Year-Old Remand Motion as Untimely

Plaintiff investors filed separate putative class actions against New York Community Bancorp (NYCB) and several of its officers alleging violations of federal securities laws by making materially false and misleading statements to investors. In re New York Community Bancorp, Inc., Securities Litig., 448 F.Supp.2d 466, 469 (E.D.N.Y. 2006). The federal court eventually consolidated 11 such class action lawsuits, and appointed lead plaintiff and lead counsel. Following the filing of a Consolidated and Amended Class Action Complaint, defense attorneys filed a motion to dismiss and certain plaintiffs filed a motion for reconsideration of the consolidation order. Id. The district court denied the motion for reconsideration and granted the defense motion to dismiss.

The amended class action complaint alleged violations of the Securities and Exchange Act of 1934 (“Exchange Act”) and the Securities Act of 1933 (“Securities Act”) on behalf of NYCB shareholders. In re New York Comm. Bancorp, at 469. NYCB went through a period of substantial earnings growth and acquired several financial institutions, building “a unique and profitable core lending business comprised of multi-family mortgage loans.” Id., at 470. Over time, however, market conditions changed and NYCB expanded into a ” risky, but common, leveraging strategy involving mortgage-backed securities known as the ‘carry trade.'” Id. The complaint alleged that NYCB diverted increasingly large sums away from conservative investments and to carry trade investments, but continually held itself out as a risk-adverse, conservative community bank. Id., at 471. The court summarized the material allegations of the complaint as follows: “In particular, the Plaintiffs allege that the Defendants: (1) falsely represented that NYCB was uniquely able to thrive in an environment of rising interest rates and that its business prospects remained strong; (2) highlighted a false strategy of deleveraging following the acquisition of Roslyn; and (3) failed to adequately disclose the extent of the risks of the carry trade activity.” Id.

The court first addressed the motion for reconsideration, which additionally sought to reinstate a motion that the plaintiffs had filed more than a year earlier to remand to state court one of the class action lawsuits. In re New York Comm. Bancorp, at 474. Plaintiffs had filed their class action in state court, and the defense removed the lawsuit to federal court. Plaintiffs filed a motion to remand arguing that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) prohibits removal of cases based exclusively on the Securities Act. When the federal court consolidated the 11 securities class actions, it did not specifically address the remand motion but the practical effect of the court’s ruling was to deny the motion. Id., at 475. In evaluating the plaintiffs’ motion, the district court concluded that even though claim of improper removal appears to have merit, id., the fact remained that plaintiffs’ motion was too late, id., at 475-76.

Class Action Court Decisions PSLRA/SLUSA Class Actions 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

Class Action Defense Cases-Goin v. Bass Pro: Defense Removal Of Class Action To Federal Court Improper Because Lawsuit Arose Under Workers’ Compensation Law

Tennessee Federal Court Grants Motion to Remand Because 28 U.S.C. § 1445(c) Prohibits Removal of Actions “Arising Under the Workmen’s Compensation Laws”

Following a work-related injury, a store manager retained a lawyer to negotiate a workers’ compensation settlement with her employer. She maintains that her employer retaliated and ultimately fired her. Her attorney filed a putative class action in state court against her employer alleging “reprisal and/or retaliatory discharge for asserting workers’ compensation rights.” Going v. Bass Pro Outdoor World, LLC, 437 F.Supp.2d 762, 764 (W.D. Tenn. 2006). Defense attorneys removed the class action to federal court on grounds of diversity; plaintiff’s lawyer moved to remand the lawsuit on the grounds that 28 U.S.C. § 1445(c) prohibited removal. Id. The district court rejected defense arguments and remanded the class action to state court.

The district court explained that the general rules governing removal under 28 U.S.C. § 1441 do not apply to actions “arising under the workmen’s compensation laws,” as such actions are specifically exempted from removal under § 1445(c). Goin, at 765-66. The question, then, is whether plaintiff’s lawsuit “‘arises under’ the [state’s] workers’ compensation laws, which in turn hinges upon the legal source of the cause of action at issue.” Id., at 766. The controlling authority for this inquiry is the Sixth Circuit opinion in Harper v. AutoAlliance Int’l, Inc., 392 F.3d 195 (6th Cir. 2004).

Employment Law Class Actions 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

Everett v. Verizon-Class Action Defense Cases: Defense Failed To Establish Amount In Controversy For Removal Of Class Action To Federal Court Because Neither Disgorgement Nor Punitive Damage Claims May Be Aggregated Sixth Circuit Holds

Court of Appeals Reverses District Court Denial of Motion to Remand Because Defense Failed to Satisfy $75,000 Amount-In-Controversy Requirement Under 28 U.S.C. § 1332, and Holds as Matter of First Impression in Sixth Circuit that Punitive Damages may not be Aggregated to Meet Threshold

After plaintiffs filed a putative class action in state court against several cellular telephone companies arising out of the allegedly false representation that customers “would not be charged for unanswered phone calls or those that generated a busy signal,” and praying for “an unspecified amount of compensatory damages, injunctive relief, restitution, [and] disgorgement,” defense attorneys removed the action to federal court on the basis of diversity jurisdiction. Everett v. Verizon Wireless, Inc., 460 F.3d 818 (6th Cir. 2006). Plaintiffs moved to remand the action to state court on the ground that the defense had not satisfied its burden of establishing that the $75,000 amount-in-controversy requirement, but the district court denied the motion holding that “the size of the disgorgement claim met this threshold.” Id., at 821. Eventually, the federal action involved but a single class representative and a single defendant, and the district court granted a defense motion for summary judgment as to the claims remaining against it. Plaintiff appealed only the district court’s remand order, not the ruling on the merits. Id. The Circuit Court agreed with plaintiff’s argument and reversed.

Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases-Kolari v. New York-Presbyterian Hospital: Federal District Court Erred In Exercising Supplemental Jurisdiction And Dismissing Class Action State-Law Claims Second Circuit Holds

Second Circuit Holds that Once District Court Granted Defense Motion to Dismiss Federal Claims that Provided Federal Jurisdiction it Should have Remanded State-Law Class Action Claims to State Court Rather than Dismissing Them with Prejudice

Plaintiffs filed a putative class action against asserting various federal and state-law claims based on allegedly inflated heath care treatment rates. The defense moved to dismiss the class action complaint in its entirety. The district court granted the defense motion, and plaintiffs appealed the dismissal of three of their state-law class action claims arguing that (1) the court should have remanded the claims to state court once it disposed of the federal class action claims, and (2) even if the court should have retained jurisdiction, it erred in dismissing the state-law claims. Kolari v. New York-Presbyterian Hosp., 455 F.3d 118 (2d Cir. 2006). Because the Second Circuit agreed with the first argument advanced by plaintiffs, if did not reach the latter argument. Id., at 119.

Class Action Court Decisions 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