Commercial Litigation and Arbitration

Class Action Fairness Act — Mass Actions

The Eleventh Circuit exhaustively analyzed the mass action provisions of CAFA in Lowery v. Alabama Power Co., 2007 U.S. App. LEXIS 8289 (11th Cir. 2007). Its key holdings:

[1] One Defendant Removes Entire Action as to All Defendants. ‛[I]n light of the plain language of CAFA, removal under the statute encompasses all the claims in the 'action' as a whole, not simply the claims against a removing defendant.“ Thus, the removal notice filed by a single defendant who is eligible to remove (here, because it was added after the enactment of CAFA) removes the entire action as to all defendants.

[2] CAFA’s Mass Action Provisions Defy a Plain Language Interpretation. Excellent quote: ‛CAFA's mass action provisions present an opaque, baroque maze of interlocking cross-references that defy easy interpretation, even though they are contained in a single paragraph of the amended diversity statute, 28 U.S.C. § 1332(d)(11), and are comprised of but four sub-paragraphs, only two of which are relevant for our purposes.“ On something of the same theme, the author of the opinion, Judge Tjoflat, also paraphrases one of his prior dissents as ‛noting that courts had found multiple ‘plain meanings’ in the same language of 28 U.S.C. § 1367, while still other courts had found ambiguity.“

[3] The Four Requirements of a Mass Action. ‛These requirements are: (1) an amount in controversy requirement of an aggregate of $ 5,000,000 in claims; (2) a diversity requirement of minimal diversity; (3) a numerosity requirement that the action involve the monetary claims of 100 or more plaintiffs; and (4) a commonality requirement that the plaintiffs' claims involve common questions of law or fact.“

[4] The Claims of Every Plaintiff Need Not Satisfy the $75,000 Threshold. ‛[W]e need not decide today whether the $ 75,000 provision might yet create an additional threshold requirement that the party bearing the burden of establishing the court's jurisdiction must establish at the outset, i.e., that the claims of at least one of the plaintiffs exceed $ 75,000. See 28 U.S.C. § 1332(d)(11)(B)(i). We need only decide what the $ 75,000 provision does not do— namely, supplant the Act's plainly expressed $ 5,000,000 aggregate requirement by requiring a per-plaintiff minimum threshold requirement that ultimately requires a showing of claims worth $ 7,500,000 in the aggregate.“

[5] The Burden of Proving the Jurisdictional Amount Falls on Defendant, and the Preponderance Standard Governs. ‛CAFA does not shift the burden of proof in removal actions.... [W]here damages are unspecified, the removing party bears the burden of establishing the jurisdictional amount by a preponderance of the evidence.“

[6] Only the Pleadings and Other Papers on which Removal Is Predicated May Be Considered in Determining Whether the Burden of Proving Jurisdiction Has Been Satisfied. ‛[T]he removal-remand scheme set forth in 28 U.S.C. §§ 1446(b) and 1447(c) requires that a court review the propriety of removal on the basis of the removing documents. If the jurisdictional amount is either stated clearly on the face of the documents before the court, or readily deducible from them, then the court has jurisdiction. If not, the court must remand. Under this approach, jurisdiction is either evident from the removing documents or remand is appropriate.“

[7] Discovery into the Jurisdictional Amount Is Impermissible. ‛Post-removal discovery for the purpose of establishing jurisdiction in diversity cases cannot be squared with the delicate balance struck by Federal Rules of Civil Procedure 8(a) and 11 and the policy and assumptions that flow from and underlie them.“ In other words, Rule 8(a) requires almost nothing of the plaintiff, and if the defendant removes but requests discovery, that request may be construed as an admission that the removal papers violated Rule 11 for want of a factual basis: "The defendants' request for discovery is tantamount to an admission that the defendants do not have a factual basis for believing that jurisdiction exists." There’s a thought to give one pause.

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