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

Often litigants want to have their cake and eat it, too.  For example, in an individual tort case, a plaintiff may want the right to try to ring the bell with punitive damages, and yet she also wants to stay in state court to take advantage of perceived procedural or other advantages offered by the state court system.  Thus, there is a tension between maximizing recoveries and limiting the amount at issue to something below the $75,000 jurisdictional minimum for federal court.

But when you are straddling the pleading fence, you sometimes can injure yourself.  In Green v. The Dial Corporation, 2011 WL 5335412 (E.D. Mo. Nov. 4, 2011), the plaintiff alleged that she suffered personal injuries to "her skin and all of the anatomical structures thereof" from using one of Dial's body washes.  The complaint prayed for "more than TWENTY FIVE THOUSAND DOLLARS ($25,000) but which sum when aggregated with sums prayed for in all other counts herein does not exceed SEVENTY FIVE THOUSAND DOLLARS ($75,000), for punitive damages, expenses and her costs, together with such other further relief as this Court shall deem appropriate under the circumstances."  Id. at *1.

Dial removed the case to federal court, arguing that the wording of the complaint makes it obvious that the plaintiff is seeking punitive damages in addition to less than $75,000 in compensatory damages, thus making the amount at issue over the jurisdictional minimum.  The plaintiff resisted, claiming that what she intended her complaint to mean was that she only sought less than $75,000.

The court -- applying precedent that the plaintiff is the master of her own complaint -- decided to allow the plaintiff to go back to state court, with a catch:  the court would tolerate no funny business whereby the plaintiff, once released back to state court, would seek punitive damages on top of $75,000. 

Thus, the court made its remand order conditional on plaintiff -- and her lawyer -- signing and submitting to the federal court a "binding affidavit" attesting to the fact that "Plaintiff does not and will not seek or accept damages in excess of $75,000, exclusive of interests and costs in this case."  In other words, plaintiff could return to state court, but only upon finally establishing once and for all that she would not ever obtain more than $75,000 in the lawsuit.

This Dial opinion can come in handy when plaintiffs have engaged in cagy pleading and seek remand to state court.  Which reminds me of the advertising campaign from the 1970s:  "Aren't you glad you use Dial?  Don't you wish everyone did?"

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This is not a mass torts or consumer class action case, but it bears noting because the issue arises often in such cases.

Regular readers will recall that, in January, the Seventh Circuit held that a district court did not lose jurisdiction over a case that had been removed to federal court pursuant to CAFA, even though the district court subsequently determined that the case could not proceed as a class action.  See Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806-07 (7th Cir. 2010).  Yesterday the Ninth Circuit adopted the same approach in an employment law case asserting a class action against employers for their failure to provide meal periods, rest periods, timely and accurate wage statements, and wages due at termination.  United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers Int'l Union v. Shell Oil Co., No. 10-55269, Slip op. (9th Cir. Apr. 21, 2010). 

In United Steel, the case had been removed to federal court pursuant to CAFA.  The trial court adjudicated plaintiffs' motion to certify two classes, ultimately holding that the classes would be unmanagable and that class adjudication was not "superior" as required by Rule 23(b)(3).  The trial court remanded the case to state court, reasoning that its denial of class certification was "not a post-removal change of a jurisdictional fact, but rather a legal conclusion that CAFA jurisdiction never existed."  Slip op. at 6028.

The Ninth Circuit reversed, relying on the Seventh Circuit's reasoning in Cunningham Charter.  The Ninth Circuit thus held that "a putative class action, once properly removed, stays removed," and that the federal jurisdictional question under CAFA is measured as of when the suit is filed, not when the class is certified:

Had Congress intended that a properly removed class action be remanded if a class is not eventually certified, it could have said so.  We think it more likely that Congress intended that the usual and long-standing principles apply -- post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing. 

Slip op. at 6031.

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The Class Action Fairness Act allows for the removal of "any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of procedure."  But what happens where, once the case is removed to federal court, the federal judge determines the case cannot properly be a class action?  Should it be remanded to state court?

The Seventh Circuit recently answered this question with a resounding "no," thereby joining the First and Eleventh Circuits in concluding that "federal jurisdiction under the Class Action Fairness Act does not depend on certification."  Cunningham Charter Corp. v. Learjet, Inc., 2010 WL 199627, at *2 (7th Cir.  Jan. 22, 2010).

The court's conclusion is supported by the text of CAFA, which confers jursidiction on actions filed as class actions.  And it also is supported by the purpose of the statute, which is to prevent multistate class actions from being trapped in state court:

For if a state happened to have different criteria for certifying a class from those of Rule 23, the result of a remand because of the federal court's refusal to certify the class could be that the case would continue as a class action in state court.  That result would be contrary to the Act's purpose of relaxing the requirement of complete diversity of citizenship so that class actions involving incomplete diversity can be litigated in federal court.

Our conclusion vindicates the general principle that jurisdiction once properly obtained is not lost by developments after a suit is filed, such as a change in the state of which a party is a citizen that destroys diversity.

Id. 

As a result of Cunningham Charter, a defendant in a CAFA -removed case need not fear that it will be thrust back into state court once it wins on the issue of class certification.  At least in the Seventh Circuit.

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