Federal Court Dismisses University of Illinois Class Action Sua Sponte for Lack of Federal Subject Matter Jurisdiction
It's not often that a federal judge dismisses a class action sua sponte. Ordinarily, a defendant who is served with even the most frivolous complaint must go to the trouble of hiring a lawyer to research and draft a motion to dismiss the case. That's why it's such a breath of fresh air to read Judge Milton I. Shadur's opinion in Radke v. University of Illinois at Urbana-Champaign, 2009 WL 3617462 (N.D. Ill. Nov. 2, 2009). There, Judge Shadur preaches the importance of federal judges taking a first look at newly-filed complaints to ensure that federal jurisdiction is proper, and sua sponte dismissing complaints where jurisdiction clearly does not lie. Id. at *2.
Ironically, the complaint that Judge Shadur dismissed in Radke is a clone of the complaint that formed the basis of last month's Specious Complaint Contest on this blog, which was won by Brian Perryman three days ago. It's the same lawyers. Same class definition. Same counts. Just a different plaintiff. (Of course, this suggests that counsel may have been engaged in judge shopping, i.e., filing multiple class actions in the same court to see who they are assigned to, and then subsequently dropping those assigned to judges they deem less favorable. If so, Judge Shadur's sua sponte dismissal must have been quite a shock to plaintiffs' counsel.)
Brian, who won our contest, had expressed some doubt about the jurisdiction argument he included in his outline of the contest's hypothetical motion to dismiss, but I had determined to leave that argument in because it seemed correct to me. Obviously, Judge Shadur agreed that there was no federal jurisdiction.
The facts in Radke are simple enough to recap: The Chicago Tribune had run some stories about a so-called "clout list" that the University allegedly used to admit students who otherwise did not meet the school's grade or testing standards. Plaintiff alleged that had he and the class known of these practices, they never would have paid $40 to submit an application to attend the school. Plaintiff was a disgruntled student who had been denied admission to the University. He brought a class action alleging breach of contract, fraud, unjust enrichment, denial of due process and equal protection, and the need for an accounting. The class was defined as:
All . . . applicants to the University of Illinois at Urbana-Champaign [not on the "clout list"] who, during the time period of 1999 until August 2009, applied for admission to the University, paid an application fee to defendants in consideration of admission to the University and were subsequently denied admission to the University.
Judge Shadur held that this putative class action could not, on its face, meet the jurisdictional prerequisites of the Class Action Fairness Act, including its $5 million amount-in-controversy threshold. The court noted at the outset the fundamental flaw with the class definition: it was extraordinarily overbroad. Even under the facts pled in the complaint, it was clear that some two-thirds of the class as defined by counsel would not have been admitted even without the use of a clout list. Thus, they had suffered no injury and had no standing to sue. Id. at *1. And it was clear that the number of allegedly improper admissions involved only a small percentage of the 7,000 annual admissions to the school, so that at $40 per application it was "patently absurd to claim that the boxcar figure of $5 million" would come into play, as CAFA requires.
Moreover, by going back ten years to 1999, the class included many people "who are too long in the tooth for current admission, so that a Rule 23(b)(2) class that provides only injunctive or declaratory relief would not be appropriate." Addiitionally, for those who were suing for damages under Rule 23(b)(3), the court noted that there obviously could be no class because individual issues predominated:
Just think of the individualized hearings required to evaluate each applicant to determine whether he or she would or would not have been admitted on the merits -- a decision that always legitimately involves subjective criteria, even when impermissible political considerations are taken out of the picture.
Id. at *2.
Ultimately, the court dismissed the complaint for lack of federal subject matter jurisdiction under CAFA, although the dismissal was without prejudice for plaintiff to: (1) replead an equal protection claim that could meet the Rule 8 pleading standards, as interpreted by Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), or (2) assert the state law claims in state court.
Radke is an excellent example of a court taking a hard look at a class that never could be certified and refusing to let putative class allegations obfuscate the fact that CAFA's amount in controversy requirement obviously cannot be met. One can only hope that more courts will, sua sponte, act with such swiftness and precision to prevent defendants from unnecessarily incurring legal defense and discovery fees.