Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

Your second small plate:  Fraudulent Joinder.

In Demarcet v. General Nutrition Corp., 2012 WL 525479 (W.D. La. Feb. 15, 2012), the plaintiff claimed to have suffered personal injuries after ingesting "Mega Men Sport," which he had bought at a GNC store.  Plaintiff wanted to avoid federal court, so in order to destroy diversity, plaintiff needed to sue a Louisiana resident like himself.  GNC, however, was a resident of another state.  So what to do?

I know!  Let's also sue the poor GNC store clerk who sold plaintiff the product!

Yes, that's what plaintiff's counsel did.  And you can only imagine the trauma that poor hourly store clerk endured thinking that he might be held personally liable simply for selling a product for his employer.

As you can imagine, GNC removed the case to federal court, arguing that plaintiff's joinder of the employee was improper because there could be no cause of action against the employee under Louisiana law.  In Louisiana, an employee cannot be held individually liable to a customer unless he has a personal duty to the customer that he breaches.  The Louisiana Supreme Court has articulated a four-part test:  (1) the employer must owe a duty of care to the customer, (2) the employer must have delegated this duty of care to the particular employee, (3) the employee must have breached that duty of care through his own personal fault, and (4) the duty must be personal to him and not delegated to another employee; personal liability cannot be imposed simply because of his "general administrative responsibility for performance of some function of the employment."   Id. at *3 (citation omitted).

The plaintiff moved to remand the case to state court, and the federal court allowed limited discovery to be taken on the issue of the employee's duty.  Analyzing the parties' evidentiary presentations, the court held that the employee had been improperly joined and that diversity jurisdiction thus was proper in the federal court:

The record establishes that defendant Lejeune was a GNC sales associate who was neither trained nor expected to extend warnings to customers regarding the potential risks posed by a product.  As with all GNC sales associates, Lejeune was merely provided GNC information along with the Mega Man Sport label to answer questions or explain products to customers.  GNC never advised Lejeune that he had a duty to inform customers as to how to properly take a supplement and never told him that consumers of Mega Man Sport should drink a lot of liquids when taking the product.  The Mega Man Sport label does not contain any warning regarding the amount of liquids a person should consume when taking the product. . . . [T]he Court finds that Chase Lejeune was improperly joined.

Id. at *4.

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The Ninth Circuit gave a St. Patrick's Day present to the Franciscan Order last week, affirming dismissal of a suit against it for allegedly aiding and abetting the Ustasha Regime steal the property of holocaust survivors in Yugoslavia.  See Alperin v. The Franciscan Order, No. 09-17761, Slip op. (9th Cir. Mar. 17, 2011).  In Alperin, the heirs of holocaust survivors had sued various defendants, claiming that they had helped the Nazi-installed Ustasha Regime commit genocide and loot the property of holocaust survivors.  The District Court had dismissed the claims as presenting non-justiciable political questions, and the Ninth Circuit had affirmed -- at least for the claims involving genocide.  It reasoned that the "garden-variety legal and equitable claims for the recovery of property" didn't fall into the political question doctrine, and remanded those claims to the District Court.  Alperin v. Vatican Bank, 410 F.3d 532, 548 (9th Cir. 2005).

On remand, plaintiffs were given a chance to replead.  They pled claims under the Alien Tort Statute as the sole basis for jurisdiction.  The District Court concluded that the property-based ATS claims did not present violations of the law of nations because the Ninth Circuit had directed that the associated human rights claims presented non-justiciable political questions.  Plaintiffs then sought leave to amend to drop some foreign plaintiffs so that they could assert diversity jurisdiction, but the court denied their request.

On appeal, the Ninth Circuit -- in an unpublished opinion -- rejected plaintiffs' argument that they had pled the violation of the law of nations by pleading "brigandage."  The court reasoned:

We agree with the district court that the plaintiffs failed to allege an offense cognizable under the ATS.  Black's Law Dictionary 219 (9th ed. 2009) defines brigandage as "plundering and banditry carried out by bands of robbers."  We have found no authority holding that such conduct violates a "specific, universal and obligatory" norm of international character.  Moreover, even if we define brigandage broadly, as plaintiffs do, to include organized robbery by a governmental entity, plaintiffs' claim presents a non-justiciable political question.

Slip op. at 2.

The court also refused to substitute its judgment for the district court's on the question of whether the judgment below should be reopened so that plaintiffs could drop parties and assert diversity jurisdiction.  It held that the district court did not abuse its discretion in concluding that plaintiffs made a tactical decision to rely exclusively on the ATS and now must live with it.

The decision in Alperin II, although it is unpublished, is instructive on how difficult it is to plead a cause of action exclusively for property loss under the Alien Tort Statute where piracy is not involved.

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Regular readers know that both the Seventh Circuit and the Ninth Circuit recently held that the denial of class certification does not divest a federal court of CAFA jurisdiction over a matter.

Recently, the Seventh Circuit was confronted with a similar question:  Does the plaintiff's post-removal amendment of the complaint to drop the class allegations divest the court of CAFA jurisdiction?  Unsurprisingly, the court concluded "no," for roughly the same reasons that had supported its prior opinion.

In In re Burlington Northern Santa Fe Railway Co., No. 09-8023, Slip op. (7th Cir. May 19, 2010), the plaintiffs had sued a railroad in a putative class action, claiming that the railroad's failure to inspect and maintain a railroad trestle caused the town to flood in July 2007, damaging their property.  Defendant removed the suit.  Plaintiffs moved to remand, and the district court denied the motion, finding that it had jurisdiction under CAFA.  Plaintiffs then amended their complaint to drop the class allegations, and the district court then allowed remand, finding that removing the class action allegations defeated CAFA jurisdiction.  The defendant appealed.

The Seventh Circuit reversed, explaining:

[J]urisdiction under CAFA is secure even though, after removal, the plaintiffs amended their complaint to eliminate the class allegations.  The well-established general rule is that jurisdiction is determined at the time of removal, and nothing filed after removal affects jurisdiction.  CAFA is, at base, an extension of diversity jurisdiction.  Even in cases originally filed in federal court, later changes that compromise diversity do not destroy diversity jurisdiction. . . . [R]emoval cases present concerns about forum manipulation that counsel against allowing a plaintiff's post-removal amendments to affect jurisdiction.

* * *

Given our decision in Cunningham, the limited question this appeal presents is whether CAFA jurisdiction also continues when the post-removal change is not the district court's denial of class certification, but is instead the plaintiff's decision not to pursue class certification. . . .  [A]llowing plaintiffs to amend away CAFA jurisdiction after removal would present a significant risk of forum manipulation.  CAFA's legislative history reflects an awareness of the latter concern, citing the existing rule that "jurisdiction cannot be 'ousted' by later events," and explaining that if the rule were otherwise, "plaintiffs who believed the tide was turning against them could simply always amend their complaint months (or even years) into the litigation to require remand to state court."

Slip op. at 3-5 (citations omitted).

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