The UCL Practitioner

New Seventh Circuit CAFA opinion: Springman v. AIG Marketing

In Springman v. AIG Marketing, Inc., ___ F.3d ___ (7th Cir. Apr. 15, 2008), the Seventh Circuit noted a split among the circuits respecting whether post-removal activity can re-"commence" a case for CAFA removal purposes. Slip op. at 3. This question frequently came up in cases filed before CAFA's effective date of February 18, 2005. According to the opinion, "[t]he outlier is the Ninth Circuit." Id. at 3 (citing McAtee v. Capital One, F.S.B., 479 F.3d 1143, 1145-48 (9th Cir.2007)) (see this post for more on McAtee).

On the Ninth Circuit's view, a plaintiff can defeat removal by first filing a complaint that does not include a claim or a defendant that would trigger the Act's right of removal and later substituting a claim or defendant that would have triggered the right. Suppose that with the Act's effective date looming, the plaintiff had not completed even a minimal pre-complaint investigation. Under the Ninth Circuit's view, the plaintiff could sue Donald Duck for violating a Chicago noise ordinance and then at his leisure amend the complaint to substitute a proper claim against a proper defendant, and the new defendant would not be able to remove.

But even the cases that reject the Ninth Circuit's position forbid removal if the new claim or defendant (new in the sense of having been added after the effective date of the Class Action Fairness Act) "relates back" to the original claim or the original defendant. It would not do so in the Donald Duck case, although that would not faze the Ninth Circuit, which considers relation back important only when necessary to avoid a statute of limitations defense, since, if successful, the defense kills the plaintiff's claim rather than just forcing it to be litigated in a different court system. McAtee v. Capital One, F.S.B., supra, 479 F.3d at 1147.

Id. at 4 (emphasis added). The tone of this passage evinces a remarkable lack of respect for the Ninth Circuit judges who authored the McAtee opinion. It makes you wonder whether briefs filed by lawyers in that court are read with any respect, if the published opinions of other federal appellate judges are not. I also do not think that an analogy that assumes a breach of counsel's professional ethical duties has any place in a federal appellate court opinion.

It is important to remember that in McAtee, the Ninth Circuit was considering the effect of substitutions of named defendants for "fictitious" defendants, which are permitted by California Code of Civil Procedure section 474. Fictitious defendants are usually named "Doe," but section 474 allows them to be "designated ... by any name," including, presumably, "Donald Duck." Defendants with fictitious names are included in virtually all civil complaints filed in California state courts. Fictitious names are particularly useful when the client just brought you the case, the statute of limitations is about to run, and you've had time to identify only one of several potentially liable defendants. California law does not give plaintiffs unlimited "leisure" to substitute the true name for the fictitious name, but the unique California "Doe" procedure certainly justifies the outcome in McAtee — even applying what the Seventh Circuit calls the "majority view." That is because, in McAtee, the plaintiff appears to have acted diligently in naming the "Doe" defendant.

In Springman, the Seventh Circuit held that amending the complaint to substitute one named defendant for another "commenced" a new action for CAFA purposes because, under either federal or state law (there, Illinois law), the amendment would not "relate back" to the original filing date. Id. at 4-10. The "relation back" doctrine would not apply because of the plaintiff's "protracted and inexplicable delay" — he waited three years after learning he had sued the wrong entity — "in changing defendants." Id. at 6-7. Hence, the new defendant may remove the action to federal court under CAFA and the district court correctly denied the remand motion. Id., passim.

"Impact of CAFA on the Federal Courts: Fourth Interim Report"

The Federal Judicial Center's Impact of CAFA on the Federal Courts: Fourth Interim Report to the Judicial Conference Advisory Committee on Civil Rules (April 2008) is now available online.

Other reports and interim reports on CAFA's impact on the federal courts are collected at this link. Articles on class actions in the federal courts generally are collected at this link.

[Via ClassActionBlawg.com, The Complex Litigator]

New Ninth Circuit CAFA decision: Lussier v. Dollar Tree Stores, Inc.

In Lussier v. Dollar Tree Stores, Inc., ___ F.3d ___ (9th Cir. Mar. 7, 2008), the defendant removed the case under CAFA. The district court granted plaintiffs' motion to remand but denied their motion for attorneys' fees. Plaintiffs appealed. The Ninth Circuit affirmed, holding that in the early period after CAFA went into effect, when an action was "commenced" for CAFA removal purposes was an unsettled question. Therefore, the defendant's arguments in support of removal were not objectively unreasonable (even though the arguments "were losers"). Slip op. at 2208. [Via Federal Civil Practice Bulletin]

A collection of recent articles on CAFA

On November 30 and December 1, 2007, the University of Pennslyvania Law Review conducted a symposium entitled "Fairness to Whom? Perspectives on the Class Action Fairness Act of 2005." The papers presented at the symposium will appear in a forthcoming issue of the Review. Meanwhile, draft copies of a number of the papers are available at this link, and they sound very interesting:

• The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View by Stephen B. Burbank

• CAFA Judicata: A Tale of Waste and Politics by Kevin M. Clermont & Theodore Eisenberg

• CAFA and the Revenge of the Mistrusted Lawyer by Howard M. Erichson

• Erie Doctrine Repealed by Congress? by Geoffrey C. Hazard, Jr.

• Class Action Settlements Under Attack by Samuel Issacharoff & Richard A. Nagareda

• The Impact of the Class Action Fairness Act on the Federal Courts: An Empirical Analysis of Filings and Removals by Emery G. Lee III & Thomas E. Willging

• Assessing CAFA's Stated Jurisdictional Policy by Richard L. Marcus

• The Class Action Fairness Act in Perspective: The Old and the New in Federal Jurisdictional Reform by Edward A. Purcell, Jr.

• Normative Lessons on American Federalism From The Class Action Rule of 1966 to the Class Action Fairness Act of 2005: The Political Safeguards of Translocalism and Transnationalism by Judith Resnik

• The Public Role in Private Governance: Some Reflections on CAFA's Early Experience by William B. Rubenstein

• The Role of Choice of Law in National Class Actions by Linda Silberman

• Federal Jurisdiction and Due Process in the Era of the Nationwide Class Action by Tobias Barrington Wolff

New unpublished Fourth Circuit CAFA opinion: Lanier v. Norfolk Southern Corp.

In a new unpublished opinion, Lanier v. Norfolk Southern Corp., 2007 WL 4270847 (4th Cir. Dec. 05, 2007), the Fourth Circuit denied a motion to remand under CAFA and refused to consider the plaintiffs' argument that the "local controversy exception" applied because that argument was raised for the first time on appeal. Slip op. at 7 n.2. [Via Federal Civil Practice Bulletin.]

Several new UCL and class action decisions

A bunch of new UCL and class action decisions have been handed down over the past week and a half:

• Schultz v. Neovi Data Corp., ___ Cal.App.4th ___ (June 15, 2007) (Fourth Appellate District, Division Three) (a Mervyn's "grant and hold" case on remand to the Court of Appeal)

• Linear Technologies Corp. v. Applied Materials, Inc., ___ Cal.App.4th ___ (June 18, 2007) (Sixth Appellate District) (a UCL competitor action)

• Gatton v. T-Mobile USA, Inc., ___ Cal.App.4th ___ (June 22, 2007) (First Appellate District, Division Five) (another case invalidating a no-class-action arbitration clause)

• In re: Ocwen Loan Servicing, LLC Mortgage Servicing Litigation, ___ F.3d ___ (7th Cir. June 22, 2007) (the Seventh Circuit mentions the UCL again, and the CLRA, too, and warns lawyers not to file "a hideous sprawling mess" of a complaint)

• Lott v. Pfizer, Inc., ___ F.3d ___ (7th Cir. June 25, 2007) (addresses CAFA and the right to recover attorneys' fees after improper removal; see this post on the Seventh Circuit's prior opinion in the same case)

• McAdams v. Monier, Inc., ___ Cal.App.4th ___ (May 30, 2007, modified June 25, 2007) (Third Appellate District) (court just issued an order modifying the original opinion; an interesting change in wording re "restitution" "reliance")

• Juarez v. Arcadia Financial., Ltd., ___ Cal.App.4th ___ (June 26, 2007) (Fourth Appellate District, Division One) (probably the most interesting of the bunch; addresses UCL remedies)

I've had limited time to read or analyze these decisions. Time permitting, I will post more about them later on.

"Managing Class Action Litigation: A Pocket Guide for Judges"

In 2005, the Federal Judicial Center published "Managing Class Action Litigation: A Pocket Guide for Judges" (pdf). The preface states that "[t]his pocket guide is designed to help federal judges manage the increased number of class action cases expected as a result of the Class Action Fairness Act of 2005." The guide makes for interesting reading.

CAFA law review article: "The Consumer Class Action Bill of Rights: A Policy and Political Mistake"

The April 2007 issue of the Hastings Law Journal contains an essay by Professor Laurens Walker of the University of Virginia School of Law: "The Consumer Class Action Bill of Rights: A Policy and Political Mistake," 58 Hastings L.J. 849 (2007). Here is the abstract:

This Article discusses the significance of the Consumer Class Action Bill of Rights, found in section 3 of the 2005 Class Action Fairness Act. The author argues that this section is the most significant provision of the law. In addition to expounding upon the notice provision of the Bill of Rights Section, the Article explores the possible responses that public officials could make. Additionally, the author predicts a strong degree of public participation in class action settlements, especially by the Attorneys General of the states. The Article also considers the Act's substantive regulation of settlement terms, including "coupon settlements," as well as general prohibitions on negative settlements and geographic discrimination. The author examines the public and private enforcement models and discusses the comparative efficiency of public versus private enforcement. Lastly, the Article considers the jurisdictional provisions found in sections 4 and 5 of the Class Action Fairness Act, particularly the changes to minimal diversity and the facilitation of removal to federal court.

Using a comparative study of class actions in federal and state court, the author predicts that jurisdictional provisions will result in the litigation of most major class actions in federal court, but with little impact on the outcome of these cases. The author finds that the Bill of Rights view toward public enforcement is a costly policy and political mistake, and a better solution would have been found in providing for more robust private enforcement.

[Via Federal Civil Practice Bulletin]

New Fifth Circuit CAFA case: Preston v. Tenet Healthsystems Memorial Medical Center, Inc.

In Preston v. Tenet Healthsystems Memorial Medical Center, Inc., ___ F.3d ___ (5th Cir. Apr. 25, 2007), the Fifth Circuit examined the term "citizen" for purposes of CAFA's "home state" and "local controversy" exceptions: "The underlying facts of this lawsuit and the reason for the parties contesting the citizenship issue emanate from a common origin of circumstances: the unmerciful devastation caused by Hurricane Katrina." Slip op. at 18.

The Fifth Circuit talked at length about the kinds of evidence that can be used to prove citizenship for CAFA purposes. It then affirmed the district court's remand order:

We recognize that Congress crafted CAFA to exclude only a narrow category of truly localized controversies, and the exceptions provide a statutory vehicle for the district courts to ferret out the “controversy that uniquely affects a particular locality to the exclusion of all others.” Evans [v. Walter Indust., Inc.], 449 F.3d [1159,] 1164 [(11th Cir. 1996)]. This particular Hurricane Katrina case symbolizes a quintessential example of Congress’ intent to carve-out exceptions to CAFA’s expansive grant of federal jurisdiction when our courts confront a truly localized controversy. Based on the medical records, affidavits, and attending factual circumstances, we determine that the district court did not clearly err in finding that one-third of the class members were citizens of Louisiana at the time of filing suit. Accordingly, we affirm the district court’s judgment.

Id. at 30. (Via Decision of the Day.)

New Eleventh Circuit CAFA case: Lowery v. Alabama Power Co.

In Lowery v. Alabama Power Co., ___ F.3d ___ (11th Cir. Apr. 11, 2007), the Eleventh Circuit "unravel[s] some of the mysteries of CAFA’s cryptic text." (Slip op. at 2.) The 77-page opinion addresses four issues:

The defendants’ appeals require us to address four distinct issues, and we address each in turn in the parts of this opinion that follow. In part II, we consider whether the removal of an action under CAFA by a defendant added as a party after CAFA’s effective date removes the claims against all of the defendants in the action – including those claims brought before the effective date. Part III dissects CAFA’s “mass action” provisions to identify the requirements for subject matter jurisdiction created by those provisions. In part IV, we set forth the applicable burden of proof in establishing subject matter jurisdiction in a removed case in which damages are unspecified, and we identify the party that bears this burden under CAFA. In part V, we determine what a district court may consider in reviewing the propriety of removal that is timely challenged by a motion to remand. This inquiry requires us to examine the significance of the existing removal procedures under 28 U.S.C. § 1446 – which are incorporated, in part, by CAFA – as well as the propriety of post-removal discovery on the issue of jurisdiction. Part VI applies the relevant legal principles to the instant case. Finally, part VII briefly concludes.

Slip op. at 13-14. The Court summarizes its holdings as follows:

A brief summary of our conclusions is warranted. First, we hold that any one defendant authorized under CAFA to remove the plaintiffs’ claims against that defendant to federal court may remove the action as a whole, regardless of whether other defendants in the action would be authorized to remove their claims.

Second, we hold that CAFA sets forth at least four threshold requirements for a federal court to have subject matter jurisdiction over a removed mass action. Where the parties are minimally diverse, the action consists of 100 plaintiffs or more, the plaintiffs’ claims share common questions of law or fact, and the potential aggregate value of all the claims exceeds $5,000,000, the action may be removed to federal court as a mass action.

Third, we hold that the defendants are not entitled to remand to the district court for limited jurisdictional discovery, nor may the district court conduct such discovery on its own initiative.

Moving to the merits, we hold that the defendants here are unable to meet their burden of establishing the requirements for federal jurisdiction over a mass action, because they are unable to establish that the plaintiffs’ claims are potentially valued at more than $5,000,000. Tracking § 1446(b), we note that the defendants’ notice of removal contained no document clearly indicating that the aggregate value of the plaintiffs’ claims exceeds that amount and, as such, they are unable to establish federal jurisdiction by a preponderance of the evidence.

In sum, though our reasoning diverges substantially from that of the district court, the disposition of this case remains the same. Remanding this action to state court was the appropriate course. The district court’s order is accordingly AFFIRMED.

Slip op. at 76-77. Consumer Law & Policy Blog has more on the decision.

Two more Ninth Circuit CAFA decisions: Lowdermilk v. United States Bank, NA and McAtee v. Capital One, F.S.B.

The Ninth Circuit has handed down three CAFA decisions since March 2, 2007. I've already discussed one of the three, Progressive West Ins. Co. v. Preciado, ___ F.3d ___, 2007 WL 725717 (9th Cir. Mar. 6, 2007), at this post. Here are the two others:

• In Lowdermilk v. United States Bank, NA, ___ F.3d ___ (9th Cir. Mar. 2, 2007), the court addressed the burden of proof that applies when the plaintiff's complaint expressly pleads less than the CAFA jurisdictional amount, yet the defendant removes anyway, asserting that the amount-in-controversy requisite has been met. The court preserved the rule that the plaintiff is the master of his or her complaint, and held that "the party seeking removal must prove 'with legal certainty' that the amount in controvery is satisfied, notwithstanding the prayer for relief in the complaint." Slip op. at 2. Judge Kleinfeld filed a dissenting opinion.

• In McAtee v. Capital One, F.S.B., ___ F.3d ___ (9th Cir. Mar. 16, 2007), the court addressed an issue very similar to the one raised in Progressive West. Both cases addressed what kinds of amendments to the complaint "commence" a new action for CAFA purposes. In McAtee, the court held that amending the complaint to substitute a named defendant in place of a "Doe" defendant under California Code of Civil Procedure section 474 does not "commence" a new action under CAFA. The McAtee opinion spends a lot of time explaining Progressive West, decided ten days earlier. This is a good thing, because Progressive West was very unclear in my opinion, especially its analysis of the "relation back" doctrine. Essentially, McAtee explains that under Progressive West, an action filed in California state court is "commenced" for CAFA purposes when the original complaint is filed, regardless of any subsequent amendment and regardless of whether the subsequent amendment "relates back" under California law or not. This holding creates a split among the Circuits. The earliest Circuit court opinions to address this question held that a new action is "commenced" only if the amendment in question does not "relate back" under the law of the state where the action was filed. See, e.g., Phillips v. Ford Motor Co., 435 F.3d 785 (7th Cir. 2006) (discussed in this post); Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755 (7th Cir. 2006) (discussed in this post). In the Ninth Circuit, under McAtee and Progressive West, the "relation back" doctrine is wholly irrelevant.

New Ninth Circuit CAFA decision: Progressive West Ins. Co. v. Preciado

In Progressive West Ins. Co. v. Preciado, ___ F.3d ___ (9th Cir. Mar. 6, 2007), plaintiff Progressive West filed a breach of contract action against one of its insureds. On February 17, 2005, the day before CAFA went into effect, the insured filed a cross-complaint for violation of the UCL. The original cross-complaint pleaded the UCL claim as a non-class, representative action. In approximately August 2006, the insured filed an amended cross-complaint that added formal class allegations to the UCL claim. Thereafter, Progressive West removed the action to federal court, asserting CAFA jurisdiction. The district court granted the insured's motion to remand, and the Ninth Circuit affirmed.

The opinion contains two holdings of note. First, the court held that the filing of the original, representative UCL cross-complaint on February 17, 2005 "commenced" the action for CAFA purposes — not the later filing of the amended cross-complaint with the formal class allegations. Slip op. at 3-4. Second, the court held that even if CAFA applied, Progressive West still could not remove the action to federal court because it was not the "defendant":

CAFA does not alter the longstanding rule ... that precludes plaintiff/cross-defendants from removing class actions to federal court. For this reason, Progressive would lack statutory authority to remove the action pursuant to CAFA even if the action had commenced after CAFA’s effective date.

Slip op. at 9-10. Interestingly, this same lawsuit resulted in a published California Court of Appeal opinion at the end of 2005, Progressive West Ins. Co. v. Superior Court (Preciado), 135 Cal.App.4th 263 (2005), in which the Court of Appeal held that the trial court properly overruled Progressive West's demurrer to the UCL claim. The amended complaint with the class action allegations must have been filed after that opinion issued. My original post on that opinion is here.

Recent Eleventh Circuit CAFA decision: Main Drug, Inc. v. Aetna U.S. Healthcare, Inc. and

In Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., ___ F.3d ___ (11th Cir. Jan. 16, 2007), the plaintiffs filed suit in state court, the defendants removed the action under CAFA, the district court denied the motion to remand, and the plaintiffs filed a notice of appeal. The Eleventh Circuit dismissed the appeal for lack of jurisdiction, holding that it would be "too much of a stretch" to interpret a notice of appeal as a petition for permission to appeal under CAFA (28 U.S.C. §1453(c)(1)), which is the required procedure for seeking appellate review of a CAFA remand order. One judge on the panel was a Ninth Circuit judge sitting by designation.

[Via Federal Civil Practice Bulletin]

New Ninth Circuit CAFA decision: Serrano v. 180 Connect, Inc.

On Thursday, in Serrano v. 180 Connect, Inc., ___ F.3d ___ (9th Cir. Feb. 22, 2007), the Ninth Circuit held that the party seeking remand bears the burden of proving the "home state" and "local controvery" exceptions to CAFA removal jurisdiction. In so holding, the court discussed Lao v. Wickes Furniture Co., 455 F.Supp.2d 1045 (C.D. Cal. 2006), a decision that generated a lot of attention, including this Daily Journal article (subscription) (see also this blog post).

In Lao, District Judge Stephen G. Larsen held that CAFA's "home state" and "local controversy" exceptions are not "exceptions" at all but rather "integral component[s] of the removal provisions themselves." Lao, slip op. at 20. The Ninth Circuit disagreed:

We are not persuaded by Lao's reasoning because it is inconsistent with the statute. As noted above, §§ 1332(d)(4)(A) and (B) require federal courts – although they have jurisdiction under § 1332(d)(2) – to “decline to exercise jurisdiction” when the criteria set forth in those provisions are met. Subsections (d)(4)(A) and (B) are not part of the prima facie elements of jurisdiction ... but, instead, are exceptions to jurisdiction.

Serrano, slip op. at 13-14. The Ninth Circuit went on to conclude that the party seeking remand bears the burden of proving the "home state" and "local controversy" exceptions, just like any other exceptions to federal removal jurisdiction. Id. at 14-17.

"Two Years on, Class-Action Law Brings Unclear Effects"

Friday's Daily Journal had this article (subscription) on the Class Action Fairness Act two years after it was enacted. Among other things, the article discusses the split in authority among federal courts over who bears the burden of proving that the "home state" and "local controversy" exceptions to CAFA removal jurisdiction are present:

The Class Action Fairness Act has created confusion over who has the burden of proof to show why a case filed in state court should or should not be moved to federal court.

Three federal circuits - the New Orleans-based 5th Circuit, the Chicago-based 7th Circuit and the Atlanta-based 11th Circuit - have ruled that the burden falls on plaintiffs. But Los Angeles U.S. District Judge Stephen G. Larson, who has been on the bench less than a year, took a contrary view in an October ruling that quickly became the buzz of the class-action bar.

The New York-based 2nd Circuit has agreed with Larson's reasoning, leading some lawyers to say that the Supreme Court will be forced to resolve the conflict among courts.

"It's the first question in CAFA that's leading to a circuit split and important enough for Supreme Court review," Cabraser said.

Larson did not mince words in criticizing how the law was drafted.

"[It is] a statute in which some major terms are left undefined, certain of the provisions of which have been aptly described as 'bewildering' or 'clumsily crafted' and whose legislative history is ... of questionable interpretive value," he wrote in Lao v. Wickes Furniture Company, 06-448 (C.D. Cal.).

The plaintiffs, former and current sales representatives at Wickes Furniture Company Inc. showrooms, filed suit in San Bernardino County Superior Court in April, citing employment-law violations. The defendants sought to remove the case to federal court, but Larson declined their request, ruling that they had failed to prove that the Class Action Fairness Act applied because a majority of the plaintiffs and the primary defendant are from California.

An appeal to the 9th Circuit is in progress. Lawyers on both sides declined comment.

The full cite for Judge Larson's ruling, in which he found that CAFA's "home state" and "local controversy" exceptions are not "exceptions" at all but rather "integral component[s] of the removal provisions themselves," is Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045 (C.D. Cal. 2006) (slip op. at 20) (link via CAFA Law Blog). Consumer Law & Policy Blog had a lengthy discussion of the decision in October.

Another Second Circuit CAFA opinion: Fears v. Wilhelmina Model Agency, Inc.

In Fears v. Wilhelmina Model Agency, Inc., ___ F.3d ___ (2d Cir. Jan. 4, 2007), the Second Circuit affirmed an order granting final approval of an antitrust class action settlement, but reversed the order's distribution plan and attorneys' fees award, remanding for further consideration. The district court had awarded, as attorneys' fees, a percentage of the claims made from the settlement fund, rather than a percentage of the entire fund generated as a result of the litigation. Slip op. at 14-15. As authority for doing so, the district court cited the PSLRA and CAFA, reasoning that both statutes evinced congressional intent to curtail attorneys' fees awards in class action cases. Id. at 15.

The Second Circuit reversed. It rejected the notion that anything about either the PSLRA or CAFA suggested that attorneys' fees should be limited in class action cases generally:

The fee restrictions described in the PSLRA do not apply in any context other than securities class actions, and, even if they did, it is not clear how they would apply. The statute speaks in terms of a percentage of damages “actually paid to the class.” But the entire fund created by the efforts of counsel presumably is “paid to the class,” even if some of the funds are distributed under the Cy Pres Doctrine. The PSLRA would not allow for the computation of fees on the basis of such non-damages items as discounts on coupons received in settlement. A key consideration required by the PSLRA “is the result actually achieved for class members, a basic consideration in any case in which fees are sought on the basis of a benefit achieved for class members.” Advisory Comm. Notes to Fed. R. Civ. P. 23, 2003 Amendments. Arguably, the entire Settlement Fund is a “benefit achieved for class members.”

The District Court’s reliance on the CAFA is also misplaced. The CAFA recites as its purpose the following: “To amend the procedures that apply to consideration of interstate class actions to assure fairer outcomes for class members and defendants, and for other purposes.” Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4 (2005). However, the only mention of fees to be allowed to class counsel deals with the award of fees in coupon settlement cases. See 28 U.S.C. § 1712(a)–(c).

Slip op. at 23-24.

New Second Circuit CAFA opinion: Blockbuster, Inc. v. Galeno

In Blockbuster, Inc. v. Galeno, ___ F.3d ___ (2d Cir. Dec. 26, 2006), the Second Circuit held that CAFA did not change the ordinary rule that the removing party bears the burden of proving federal jurisdiction:

An old proverb teaches that "Heaven suits the back to the burden." The Concise Oxford Dictionary of Proverbs 94 (J.A. Simpson ed., 1982). It is well-settled that the party asserting federal jurisdiction bears the burden of establishing jurisdiction. R. G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir. 1979). So in this case we may correctly say that the law suits the back to the burden. Under this rule, Blockbuster ought to shoulder the burden because it removed the action to federal court from state court. See DiTolla v. Doral Dental IPA of New York, No. 06-2324, 2006 WL 3335125, *3-4 (2d Cir. Nov. 17, 2006) (ruling simply that CAFA has not changed the traditional rule that the party asserting federal jurisdiction bears the burden of establishing jurisdiction).

....

.... Blockbuster must show that it appears to a "reasonable probability" that the aggregate claims of the plaintiff class are in excess of $5 million. Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 296 (2d Cir. 2000); 28 U.S.C. § 1332(d)(2), (6).

Slip op. at 10-11, 13. [Via Consumer Law & Policy Blog.]

Loyola of Los Angeles Law Review CAFA symposium

The September 2006 issue of the Loyola of Los Angeles Law Review is a symposium of mostly student-written articles on CAFA. There are some interesting titles and the full text of each article is available online.

New Eighth Circuit CAFA decision: Saab v. Home Depot U.S.A., Inc.

In Saab v. Home Depot U.S.A., Inc., ___ F.3d ___ (8th Cir. Nov. 22, 2006), the Eighth Circuit held that the CAFA provision permitting interlocutory appeals from remand orders (28 U.S.C. section 1453(c)(1)) "does not permit us to accept an appeal from the denial of a motion to remand when a class action has been removed to federal court on the basis of traditional diversity jurisdiction, § 1332(a)":

Saab urges us to interpret § 1453(c)(1) expansively and to give federal courts of appeal the jurisdiction to review the grant or denial of a motion to remand any class action. This argument does not differentiate between class actions removed pursuant to § 1332(a) (traditional diversity jurisdiction) or § 1332(d) (CAFA diversity jurisdiction). We reject this contention.

Slip op. at 2. [Hat Tip: Consumer Law & Policy Blog]

New Second Circuit CAFA decision: DiTolla v. Doral Dental

In DiTolla v. Doral Dental IPA of New York, Inc., ___ F.3d ___ (Nov. 17, 2006), the Second Circuit addressed CAFA's requirement that appeals be decided within 60 days after "filing":

CAFA’s 60-day clock for rendering judgment starts running on the day that the Court’s order granting permission to appeal is filed. In so holding, we join several of our sister circuits. See Hart v. FedEx Ground Package System Inc., 457 F.3d 675, 678 (7th Cir. 2006); Evans v. Walter Industries, Inc., 449 F.3d 1159, 1162-63 (11th Cir. 2006); Patterson v. Dean Morris, L.L.P., 444 F.3d 365 (5th Cir. 2006); Bush v. Cheap Tickets, Inc., 425 F.3d 683, 685-86 (9th Cir. 2005).

Slip op. at 6-7. Next, the court held that CAFA did not alter the rule that the party seeking removal bears the burden of establishing jurisdiction:

It is well-settled that, prior to CAFA’s enactment, “[t]he party asserting federal jurisdiction [bore] the burden of proving that the case [was] properly in federal court.” Gilman v. BHC Sec., 104 F.3d 1418, 1421 (2d Cir. 1997) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). It is an issue of first impression in this Court whether CAFA has changed this traditional rule. Substantially for the reasons articulated by the District Court, we join three of our sister circuits and hold that it has not. See Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29 (11th Cir. 2006); Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005).

Slip op. at 7. Finally, the court construed CAFA's "amount in controversy" provision in the context of an accounting claim. It determined that the amount of the fund of which the accounting was sought was not "in controversy," as that term is used in CAFA:

[Plaintiff's] complaint does not even purport to suggest the value of, much less lay claim to, the [fund]. It seeks only an accounting, the results of which are presently unknown. For that reason, no one can say how much money may be ultimately claimed by [plaintiff]. .... [W]e may infer that if the accounting were to reveal such potential fraud, [plaintiff] and the putative class would stand to gain court-ordered restitution or a settlement. We cannot say beyond mere speculation, however, whether those damages, if they are awarded, would be more than $5 million. [Defendant] has thus failed to demonstrate that the claim here satisfies CAFA’s jurisdictional amount in controversy.

Slip op. at 10, 12. [Hat tip: Consumer Law & Policy Blog]

New Seventh Circuit CAFA decision: Santamarina v. Sears, Roebuck & Co.

In Santamaria v. Sears, Roebuck & Co., ___ F.3d ___ (7th Cir. Oct. 19, 2006), the Seventh Circuit (Judge Posner) affirmed an order remanding a pre-CAFA action to California state court, where it was originally filed. The case was MDL'd to the Northern District of Illinois after a federal judge in California denied plaintiffs' motion to remand. On reconsideration, the federal judge in Illinois remanded the case back to California state court, and the defendant appealed to the Seventh Circuit. The Seventh Circuit held that the federal judge in Illinois had the power to reconsider the California judge's ruling, then held that filing an amended complaint adding two new class representatives as plaintiffs did not "kick off a new action" for CAFA purposes. In reaching the latter conclusion, the Court interpreted California law governing whether a later-filed action "relates back" to the original filing date (a rule that comes up mainly in the context of statute of limitations analyses). [Hat tip: How Appealing.]

UPDATE: For more on the Santamaria decision, see this post at Consumer Law and Policy Blog.

New Third Circuit CAFA opinion also holds that "less" is "more": Morgan v. Gay

On Monday, the Third Circuit joined the Ninth, Tenth and Eleventh Circuits in holding that "less" is "more" when it comes to CAFA's appellate filing deadline. Morgan v. Gay, ___ F.3d ___ (3d Cir. Oct. 16, 2006). [Hat tip: How Appealing]

UPDATE: Consumer Law & Policy Blog has an interesting and more detailed discussion of the Morgan decision.

UPDATE: The Legal Intelligencer reports that "Less Means More: 3rd Circuit Fixes Congressional Typo."

Federal Judicial Center report on CAFA

On September 7, 2006, the Federal Judicial Center issued a report entitled "The Impact of the Class Action Fairness Act of 2005: Second Interim Report to the Judicial Conference Advisory Committee on Civil Rules." According to the introduction:

[T]he Federal Judicial Center has undertaken a long-term study of the impact of the Class Action Fairness Act of 2005 (CAFA) on the resources of the federal courts. The following report presents preliminary data on the number, frequency, and types of class action filing and removal activity in the federal district courts between July 1, 2001, through June 30, 2005.

Consumer Law & Policy Blog provides a more detailed summary of the report.

"'Less' is 'More'? Textualism, Intentionalism, and a Better Solution to the Class Action Fairness Act's Appellate Deadline Riddle"

This article was recently posted at SSRN:

Steinman, Adam, "'Less' is 'More'? Textualism, Intentionalism, and a Better Solution to the Class Action Fairness Act's Appellate Deadline Riddle" (August 25, 2006). University of Cincinnati Public Law Research Paper No. 06-13.

The full text is available for download here. My own blog posts on the recent federal decisions on the "less is more" issue are here, here, and here.

[Hat tip: How Appealing]

New Seventh Circuit CAFA opinion: Hart v. FedEx Ground Package System, Inc.

In Hart v. FedEx Ground Package System, Inc., ___ F.3d ___ (7th Cir. Aug. 9, 2006), the Seventh Circuit addressed two of CAFA's mandatory exceptions to federal jurisdiction, the "local controversy" exception and the "home-state controversy" exception. The court held that, while the defendant bears the burden of proving that CAFA's initial requisites to jurisdiction have been met, the plaintiff bears the burden of proving that an exception applies. In so holding, the court followed recent decisions of the Fifth and Eleventh Circuits, Frazier v. Pioneer Americas LLC, No. 06-30434, 2006 WL 1843629 (5th Cir. July 6, 2006) and Evans v. Walter Industries, Inc., 449 F.3d 1159, 1165 (11th Cir. 2006). The court also held that "plaintiffs have the right, through appropriate discovery, to explore the facts relevant to the court’s jurisdiction as the case progresses." (Slip op. at 13.) [Hat tip: CAFA Law Blog]

More CAFA-related law review articles

CAFA Law Blog has compiled a lengthy list of law review articles related to the Class Action "Fairness" Act.

New Eleventh Circuit CAFA decision: Miedema v. Maytag Corp.

In Miedema v. Maytag Corp., ___ F.3d ___ (June 5, 2006), the Eleventh Circuit agreed with the Ninth Circuit that "less" is "more," and held that the seven-day period to file an application for permission to appeal a CAFA remand order is a deadline, not a waiting period: "[T]o read [the statute] literally would create an absurd result: there would be a front-end waiting period (an application filed 6 days after entry of a remand order would be premature), but there would be no back-end limit (an application filed 600 days after a remand order would not be untimely)." (Slip op. at 6-7.) My prior coverage of the Ninth Circuit's "less is more" decision, Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140 (9th Cir. 2006), is here and here.

The Eleventh Circuit also held that CAFA does not alter the rule that the defendant bears the burden of proving that jurisdiction exists, or the rule that removal stautes should be strictly construed and any doubts resolved in favor of remand. (Slip op. at 8-14.) The court then affirmed the district court's remand order, holding that the defendant had not proven the requisite amount in controversy by a preponderance of the evidence. (Slip op. at 14-19.) [Hat tip: How Appealing.]

Spring/Summer 2006 issue of Competition

The Spring/Summer 2006 issue of Competition: The Journal of the Antitrust and Unfair Competition Law Section of the State Bar of California is now out. It has two articles of interest relating to CAFA:

• Thomas S. Hixson, "The Class Action Fairness Act of 2005: One Year Later"
• Lisa Saveri, "Implications of the Class Action Fairness Act for Antitrust Cases: From Filing Through Trial"

Ninth Circuit denies en banc rehearing in CAFA "less is more" case: Amalgamated v. Laidlaw

Yesterday, the Ninth Circuit denied en banc rehearing of its "less is more" opinion, Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140 (9th Cir. 2006). The order denying rehearing is here. It is an interesting order because it includes not only a six-judge dissent, but also an introductory explanation (presumably authored by the original panel) further justifying the conclusion that CAFA's language and legislative history compel the result that the 7-day time period to file a petition for permission to appeal from an order granting or denying remand is a deadline, not a waiting period. My original post on Amalgamated is here.

New Fifth Circuit CAFA decision: Braud v. Transport Service Co.

Federal Civil Practice Bulletin has more on the Fifth Circuit's decision in Braud v. Transport Service Co., ___ F.3d ___ (5th Cir. Apr. 6, 2006).

New Ninth Circuit CAFA decision: Abrego v. Dow Chemical

Yesterday, the Ninth Circuit issued a new CAFA decision, Abrego v. Dow Chemical Co., ___ F.3d ___ (9th Cir. Apr. 4, 2006). Its key holdings are (1) CAFA did not alter the burden of proving that federal removal jurisdiction is appropriate; the defendant retains that burden (slip op. at 16-23); (2) for a "mass action" to be subject to removal, at least one plaintiff's claims must individually meet the $75,000 jurisdictional requirement (slip op. at 23-32); and (3) the district court has discretion to deny jurisdictional discovery; CAFA does not require that such discovery be permitted (slip op. at 32-38). The decision addresses the "bewildering" (slip op. at 23) language of CAFA in some detail and is worth a read.

"The Unfairness of the Class Action Fairness Act"

The March 2006 issue of Los Angeles Lawyer had this interesting article (pdf file of entire issue; scroll to page 52), which harshly criticized CAFA. [Hat tip: Federal Civil Practice Bulletin.]

New CAFA decision: Patterson v. Dean Morris

In Patterson v. Dean Morris, LLP, ___ F.3d ___ (Mar. 22, 2006), the Fifth Circuit held (with one judge dissenting) that the statutory time limit for the federal courts of appeals to rule on a discretionary appeal from an order granting or denying remand under CAFA (60 days) does not begin to run until leave to appeal is granted. [Hat tip: How Appealing]

The Fifth Circuit also followed a recent Ninth Circuit holding that the losing party's 7-day time limit to file a petition for permission to appeal is 7 court days, not 7 calendar days. Slip op. at 7 n.1 (citing Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140, 1146 (9th Cir. 2006)). The Ninth Circuit so held in Amalgamated even though the statute says that the petition "must be made to the court of appeals not less than seven days after entry of the order," suggesting that the 7 days is a waiting period, not a deadline. 28 U.S.C. § 1453(c)(1) (emphasis added). The court explained that "there is no apparent logical reason for the choice of the word 'less' in the statute" and that "use of the word 'less' is, in fact, illogical and contrary to the stated purpose of the provision." Amalgamated, 435 F.3d 1140 (slip op. at 1093-94).

Another new Seventh Circuit CAFA case: Knudsen v. Liberty Mutual

On January 27, 2006, the Seventh Circuit issued another CAFA opinion, this time holding that "a novel claim tacked on to an existing case commences new litigation for purposes of the Class Action Fairness Act." Knudsen v. Liberty Mutual Ins. Co., ___ F.3d ___ (7th Cir. Jan. 27, 2006). The defendant's previous effort to remove this case to federal court under CAFA failed. See Knudsen v. Liberty Mutual Ins. Co., 411 F.3d 805 (7th Cir. 2005). The latest opinion is noteworthy because I believe it is the first one in which a case originally filed before CAFA's effective date was successfully removed based on post-CAFA activity in the trial court. [Hat tip: How Appealing.]

New Seventh Circuit CAFA case: Phillips v. Ford Motor Co.

The Seventh Circuit has probably issued more CAFA decisions than any other Circuit, and they are certainly more interesting. Last week, in Phillips v. Ford Motor Co., ___ F.3d ___ (7th Cir. Jan. 30, 2006), the Seventh Circuit held that substituting representative plaintiffs in a pending putative class action does not "commence" a new suit and permit removal under CAFA:

Substitution of unnamed class members for named plaintiffs who fall out of the case because of settlement or other reasons is common and normally an unexceptionable ("routine") feature of class action litigation. [Citations.] But there is a potential complication here: the plaintiff class ... has not been certified ....

Strictly speaking, if no motion to certify has been filed (perhaps if it has been filed but not acted upon), the case is not yet a class action and so a dismissal of the named plaintiffs' claims should end the case. If the case is later restarted with a new plaintiff, it is a new commencement, a new suit. But the courts ... are not so strict. Unless jurisdiction never attached, ... or the attempt to substitute comes long after the claims of the named plaintiffs were dismissed, substitution for the named plaintiffs is allowed. [Citations.]

The courts thus disregard the jurisdictional void that is created when the named plaintiffs' claims are dismissed and, shortly afterwards, surrogates step forward to replace the named plaintiffs.

(Slip op. at 3, 4.) The Court held that the determinative question is whether, under state law, such an amendment "relates back" for statute of limitations purposes. If it does, then no new action has been "commenced" under CAFA.

A recent Court of Appeal decision, Shapell Industries, Inc. v. Superior Court, 132 Cal.App.4th 1101 (2005), is a prime example of a (non-CAFA) case in which the "jurisdictional void" was disregarded. The Shapell court also noted the "unusual procedural scenario" presented when the representative plaintiff's claims are dismissed prior to certification, yet allowed amendment to substitute a new representative plaintiff. (My original post on Shapell is here.)

Congratulations, Jan!

Speaking of my former partners, I want to extend a long-overdue congratulations to my former partner Jan T. Chilton, also of Severson & Werson. On November 8, Jan presented oral argument before the United States Supreme Court in one of the first cases to be argued before Chief Justice John Roberts. And on December 7, in his first opinion for the Court, Chief Justice Roberts handed Jan a complete and total win.