Finally! An Appellate Decision Recognizes the Distinction Between
CAFA's Minimal Diversity Jurisdiction and Traditional Complete
Diversity Jurisdiction.
Class Action Fairness Act Blog Podcast
Download the MP3 file of this posting. Saab v. Home Depot U.S.A.,
WL0249463601, No. 06-8014 (8th Cir. November 22, 2006) Automotive
engineering versus mega home improvement? Nope, but this one might
be just as interesting, in a perverse sort of way that only our
brilliant CAFA aficionados would appreciate. The Eighth Circuit
differentiates between traditional complete diversity jurisdiction
and CA...
read more
Download the MP3 file of this posting. Saab v. Home Depot U.S.A.,
WL0249463601, No. 06-8014 (8th Cir. November 22, 2006) Automotive
engineering versus mega home improvement? Nope, but this one might
be just as interesting, in a perverse sort of way that only our
brilliant CAFA aficionados would appreciate. The Eighth Circuit
differentiates between traditional complete diversity jurisdiction
and CAFA’s new minimal diversity jurisdiction in the context of
appealing a remand related decision.The Eighth Circuit handed down
a short opinion regarding the appeal provisions of CAFA and whether
they are applicable to cases removed to federal court under
traditional, complete diversity jurisdiction. This may be an
important appellate court decision because it draws a distinction
between complete diversity jurisdiction and minimal diversity
jurisdiction under CAFA, where other courts have tended to blur
this distinction, particularly in the context of jurisdictional
burden of proof. On November 22, 2006, United States Circuit Judge
Bright, writing for the Eighth Circuit Court of Appeals, handed
down a short opinion regarding CAFA. The Judge did not state the
facts of this case, filed in Missouri state court by David Saab on
behalf of himself and others against Home Depot. We can only
imagine that the plaintiff had some terrible experience with a Do
It Yourself project. The judge simply stated that Home Depot
removed the class action to district court arguing that the parties
were diverse and the amount in controversy exceeded $75,000.00. The
removal notice listed traditional, complete diversity jurisdiction
as the ground for removal under 28 U.S.C. § 1332(a). The district
court agreed with Home Depot and denied Saab’s motion to remand
the case back to Missouri state court. Saab petitioned the Eighth
Circuit to accept his appeal pursuant to 28 U.S.C. § 1453(c)(1),
enacted under CAFA. The Eighth Circuit determined, however, that
CAFA’s appeal provision does not permit an appeal from the denial
of a motion to remand when the class action has been removed to
federal court on the basis of traditional, complete diversity
jurisdiction under Section 1332(a). Saab argued that CAFA’s §
1453 should be viewed expansively to give federal courts of appeal
jurisdiction to review the grant or denial of a motion to remand in
ANY class action. The Eighth Circuit stated that this argument does
not differentiate between class actions removed pursuant to 1332(a)
– complete diversity jurisdiction, or 1332(d) – CAFA’s
minimal diversity jurisdiction. (Editors' Note: The Eighth Circuit
here differentiated between the provisions governing complete
diversity jurisdiction and CAFA’s minimal diversity jurisdiction,
whereas other courts of appeal have broadly applied Section 1332(a)
jurisprudence and precedent to 1332(d) minimum jurisdiction
questions under CAFA in a manner that the Editors believe leads to
incorrect results since the objectives behind the two types of
jurisdiction are opposite. The objective behind complete diversity
jurisdiction is to limit access to the federal courts, and the
objective behind minimal diversity jurisdiction is to expand
access.) Finally, the Eighth Circuit joined with the Fifth Circuit
in Patterson v. Morris and Wallace v. Louisiana Citizens Property
Insurance Corp., in its holding. (Editors' Note: See the CAFA Law
Blog analysis of Patterson posted on June 5, 2006 and the CAFA Law
Blog analysis of Wallace posted on May 22, 2006). The court stated
that it must limit § 1453(c)’s appellate review provisions to
only those class actions brought under CAFA. According to the
Court, that reading is consistent with the legislative history of
CAFA, which includes the observation that “new sub-section
1453(c) provides discretionary appellate review of remand orders
under this legislation, but also imposes time limits.” (emphasis
in original). The Eighth Circuit then dismissed the plaintiff’s
petition for permission to appeal. No doubt that the plaintiff felt
pretty lowe when his appeal was dismissed.
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Thu February 08 2007
Download the MP3 file of this posting. Saab v. Home Depot U.S.A.,
WL0249463601, No. 06-8014 (8th Cir. November 22, 2006) Automotive
engineering versus...
read more
Download the MP3 file of this posting. Saab v. Home Depot U.S.A.,
WL0249463601, No. 06-8014 (8th Cir. November 22, 2006) Automotive
engineering versus mega home improvement? Nope, but this one might
be just as interesting, in a perverse sort of way that only our
brilliant CAFA aficionados would appreciate. The Eighth Circuit
differentiates between traditional complete diversity jurisdiction
and CA...
read more
Download the MP3 file of this posting. Saab v. Home Depot U.S.A.,
WL0249463601, No. 06-8014 (8th Cir. November 22, 2006) Automotive
engineering versus mega home improvement? Nope, but this one might
be just as interesting, in a perverse sort of way that only our
brilliant CAFA aficionados would appreciate. The Eighth Circuit
differentiates between traditional complete diversity jurisdiction
and CAFA’s new minimal diversity jurisdiction in the context of
appealing a remand related decision.The Eighth Circuit handed down
a short opinion regarding the appeal provisions of CAFA and whether
they are applicable to cases removed to federal court under
traditional, complete diversity jurisdiction. This may be an
important appellate court decision because it draws a distinction
between complete diversity jurisdiction and minimal diversity
jurisdiction under CAFA, where other courts have tended to blur
this distinction, particularly in the context of jurisdictional
burden of proof. On November 22, 2006, United States Circuit Judge
Bright, writing for the Eighth Circuit Court of Appeals, handed
down a short opinion regarding CAFA. The Judge did not state the
facts of this case, filed in Missouri state court by David Saab on
behalf of himself and others against Home Depot. We can only
imagine that the plaintiff had some terrible experience with a Do
It Yourself project. The judge simply stated that Home Depot
removed the class action to district court arguing that the parties
were diverse and the amount in controversy exceeded $75,000.00. The
removal notice listed traditional, complete diversity jurisdiction
as the ground for removal under 28 U.S.C. § 1332(a). The district
court agreed with Home Depot and denied Saab’s motion to remand
the case back to Missouri state court. Saab petitioned the Eighth
Circuit to accept his appeal pursuant to 28 U.S.C. § 1453(c)(1),
enacted under CAFA. The Eighth Circuit determined, however, that
CAFA’s appeal provision does not permit an appeal from the denial
of a motion to remand when the class action has been removed to
federal court on the basis of traditional, complete diversity
jurisdiction under Section 1332(a). Saab argued that CAFA’s §
1453 should be viewed expansively to give federal courts of appeal
jurisdiction to review the grant or denial of a motion to remand in
ANY class action. The Eighth Circuit stated that this argument does
not differentiate between class actions removed pursuant to 1332(a)
– complete diversity jurisdiction, or 1332(d) – CAFA’s
minimal diversity jurisdiction. (Editors' Note: The Eighth Circuit
here differentiated between the provisions governing complete
diversity jurisdiction and CAFA’s minimal diversity jurisdiction,
whereas other courts of appeal have broadly applied Section 1332(a)
jurisprudence and precedent to 1332(d) minimum jurisdiction
questions under CAFA in a manner that the Editors believe leads to
incorrect results since the objectives behind the two types of
jurisdiction are opposite. The objective behind complete diversity
jurisdiction is to limit access to the federal courts, and the
objective behind minimal diversity jurisdiction is to expand
access.) Finally, the Eighth Circuit joined with the Fifth Circuit
in Patterson v. Morris and Wallace v. Louisiana Citizens Property
Insurance Corp., in its holding. (Editors' Note: See the CAFA Law
Blog analysis of Patterson posted on June 5, 2006 and the CAFA Law
Blog analysis of Wallace posted on May 22, 2006). The court stated
that it must limit § 1453(c)’s appellate review provisions to
only those class actions brought under CAFA. According to the
Court, that reading is consistent with the legislative history of
CAFA, which includes the observation that “new sub-section
1453(c) provides discretionary appellate review of remand orders
under this legislation, but also imposes time limits.” (emphasis
in original). The Eighth Circuit then dismissed the plaintiff’s
petition for permission to appeal. No doubt that the plaintiff felt
pretty lowe when his appeal was dismissed.
read less
Thu January 25 2007
Download the MP3 file of this posting. Blockbuster v. Galeno, 2006
WL 3775326, Docket No. 05-8019 (2d Cir. Dec. 26, 2006). On March
23, 2006, the Unit...
read more
Download the MP3 file of this posting. Blockbuster v. Galeno, 2006
WL 3775326, Docket No. 05-8019 (2d Cir. Dec. 26, 2006). On March
23, 2006, the United States Court of Appeals for the Second Circuit
handed down a summary order remanding this case against Blockbuster
back to state court, in order to meet CAFA’s 60 day time limit to
render decision under 1453(c)(2). The summary order can be found...
read more
Download the MP3 file of this posting. Blockbuster v. Galeno, 2006
WL 3775326, Docket No. 05-8019 (2d Cir. Dec. 26, 2006). On March
23, 2006, the United States Court of Appeals for the Second Circuit
handed down a summary order remanding this case against Blockbuster
back to state court, in order to meet CAFA’s 60 day time limit to
render decision under 1453(c)(2). The summary order can be found at
Galeno v. Blockbuster, Inc., 171 Fed. Appx. 904 (2d Cir. 2006). On
December 26, 2006, Circuit Judge Cardamone, writing for the Second
Circuit, handed down an opinion explaining its reasoning behind the
summary order.The case was originally filed as a class action in
New York State Supreme Court on February 15, 2005 by Michael L.
Galeno and other Plaintiffs against Blockbuster regarding
Blockbuster’s “No Late Fee” program. The plaintiffs alleged
deceptive business practice under New York law along with unjust
enrichment under common law. The court noted that Blockbuster’s
conduct resulted in a suit being brought by 47 Attorneys General
and the District of Columbia which resulted in settlement and
closing of the program by March 15, 2005. The no late fee program
began on January 1, 2005, and it was widely advertised by
Blockbuster. Under the program, Blockbuster no longer charged
customers late fees for keeping rented videos past their due date,
but instead automatically converted the rental to a sale of the
video on the eighth day past the video’s original due date. The
customer was billed for the selling price of the video minus the
initial rental fee already paid. If the customer returned the video
within 30 days after the sale date, Blockbuster refunded the sales
price minus a $1.25 restocking fee. The complaint alleged that the
advertising was deceptive because it omitted the material fact that
customers would be charged a sale fee. Blockbuster included some
information on its website, but allegedly did not make the details
clear. Also, Blockbuster allegedly omitted pertinent details from
its store signage and television advertising. The plaintiff alleged
this advertising program violated New York General Business Law.
The plaintiff claimed that there were thousands of members of the
class with statutory damages of $50 dollars per customer.
Blockbuster removed the action to federal court on April 1, 2005
asserting diversity jurisdiction under both complete diversity and
minimal diversity based on CAFA. The plaintiffs moved for remand on
the ground that the federal court lacked jurisdiction because
Blockbuster could not satisfy the CAFA amount in controversy of $5
million. Blockbuster filed under seal a declaration by its senior
vice president and corporate controller, James Howell. The
declaration described the total amount of restocking fees and
converted sales incurred by New York customers from January 1, 2005
to May 19, 2005. Blockbuster also asserted that CAFA changed the
traditional rule applied in the complete diversity context, that
the party seeking removal to federal court bears the burden of
establishing jurisdiction, citing Yeroushalmi v. Blockbuster, Inc.,
No. 05-225, 2005 WL 2083008 (C.D. Cal. July 11, 2005) (implicitly
overruled by Abrego v. Dow Chemical Company). (Editors' Note: See
the CAFA Law Blog analysis of Yeroushalmi posted on November 28,
2005 and the CAFA Law Blog analysis of Abrego posted on May 25,
2006). On July 13, 2005, the district court issued a brief order
denying the motion to remand stating “I’m in substantial
agreement with [the Yeroushalmi court].” The court did not,
however, explain the basis on which it found subject matter
jurisdiction. The plaintiff filed a motion for permission to appeal
the district court’s ruling, which the Second Circuit granted.
The Second Circuit issued the summary order on March 23, 2006, and
vacated and remanded the order of the district court with
instructions that the district court explain its calculation of the
reasonably probable damages. On this appeal, the issue before the
Second Circuit was which party bears the threshold burden of proof
of demonstrating the existence of minimal diversity jurisdiction
under CAFA upon removal. (Editors' Note: To see the CAFA Law Blog
view of the issues, see the law review article by CAFA Law Blog
Editors Hunter Twiford, Anthony Rollo and John Rouse entitled
“CAFA’s New ‘Minimal Diversity’ Standard For Interstate
Class Actions Creates A Presumption That Jurisdiction Exists, With
The Burden Of Proof Assigned To The Party Opposing
Jurisdiction.”). The court began by outlining CAFA’s new
jurisdictional provisions. Next, the court turned to the case at
hand to see if the requirements of CAFA were met, but paused first
to discuss the burden of proof. Naturally, the parties took
separate sides as to the burden of proof question. Blockbuster
pointed to CAFA’s legislative history for the answer. The appeals
court stated that the district court was wrong in following the
Yeroushalmi case. The Court also cited DiTolla v. Doral Dental, a
prior ruling of the Second Circuit holding CAFA did not change the
burden of proof. (Editors' Note: See the CAFA Law Blog analysis of
Doral Dental posted on December 28, 2006). The judge conceded that
Congress displayed an aim in CAFA to broaden certain aspects of
federal jurisdiction for interstate class actions, but that
Congress also must have appreciated the law regarding removal as
noted in Brill. (Editors' Note: See the CAFA Law Blog analysis of
Brill posted on November 2, 2005). CAFA’s Senate Judiciary
Committee Report was of minimal value to the Court because, it
says, the Report was issued ten days after the enactment of CAFA.
The court cited Abrego and Miedema for the propositions that
Congress has to explicitly overrule precedent and committee reports
cannot serve as an independent statutory source. (Editors' Note:
See the CAFA Law Blog analysis of Miedema posted on August 22,
2006. See also the CAFA Law Blog critique of the Miedema decision
posted on August 22, 2006). The court followed Abrego, Evans, Brill
[In that order, the Ninth, Eleventh and Seventh] noting that every
circuit court that has considered the issue has reached the same
conclusion. (Editors' Note: See the CAFA Law Blog analysis of Evans
posted on May 25, 2006 and the critique of Evans posted on May 26,
2006)] The Court did note that a plaintiff seeking remand bears the
burden to show the applicability of CAFA’s abstention exceptions,
once the threshold subject matter jurisdiction has been
established. (Editors' Note: the court cited Hart, Frazier and
Evans for this authority. See the CAFA Law Blog analysis of Hart
posted on August 21, 2006 and the analysis of Frazier posted on
August 17, 2006). After the court’s review of the burden of proof
standard, the court returned to determine if minimal diversity was
met. The named plaintiff was a resident of New York along with
thousands of New York customers identified in the complaint.
Blockbuster is a citizen of Delaware and Texas. The court quickly
determined the minimal diversity of citizenship requirement was
met. Next, as to the $5 million requirement, the Second Circuit
determined that the district court had not made any findings and
offered no explanation as to how it calculated the amount in
controversy. Therefore, the Circuit Court could not properly review
the district court’s ruling on the issue. The Second Circuit
remanded for the district court to explain its calculation of
damages. (Editors' Note: For a critique of the Second Circuit’s
ruling on the burden of proof issue, see our new analysis
describing why the Editors believe that Blockbuster and other
Courts’ reliance on the publication date of the Senate Judiciary
Committee Report as a ground to discredit that Report leads to an
incorrect conclusion. Our new analysis will be posted tomorrow.
Tune in tomorrow. Same Bat time. Same Bat channel.) Don't forget.
Please be kind and rewind.
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Thu August 31 2006
Download the MP3 file of this posting. Lanier v. Norfolk Southern
Corporation, 2006 WL 1878984, No. 1:05-3476-MBS (D.S.C. July 6,
2006) You could almo...
read more
Download the MP3 file of this posting. Lanier v. Norfolk Southern
Corporation, 2006 WL 1878984, No. 1:05-3476-MBS (D.S.C. July 6,
2006) You could almost hear the district judge shout, "All aboard!"
The South Carolina District Court let the defendants ride the CAFA
train into federal court, and then derailed the plaintiff’s case
on a motion to dismiss, stopping only to address the burden of
proof...
read more
Download the MP3 file of this posting. Lanier v. Norfolk Southern
Corporation, 2006 WL 1878984, No. 1:05-3476-MBS (D.S.C. July 6,
2006) You could almost hear the district judge shout, "All aboard!"
The South Carolina District Court let the defendants ride the CAFA
train into federal court, and then derailed the plaintiff’s case
on a motion to dismiss, stopping only to address the burden of
proof issue. On July 6, 2006, United States District Judge Margaret
B. Seymour issued an opinion and order not only retaining federal
court jurisdiction under CAFA, but also dismissing the
plaintiffs’ complaint. The plaintiff filed the action in South
Carolina state court on December 9, 2005 seeking to certify a class
of individuals who were laid off or discharged from Avondale Mills
facilities in Graniteville, South Carolina after a train derailment
which released chlorine gas damaged the mill facility. The chlorine
gas damaged the property and equipment, and it interrupted
production capacity thereby causing a reduction in employment
levels. The plaintiffs alleged that the defendants’ negligence
resulted in the derailment, subsequent release of chlorine gas, the
disruption of the facilities, and the reduction in work force. The
defendants removed the action to federal court pursuant to CAFA.
The plaintiff, wanting off of the train headed to federal court,
responded with a motion to remand. The defendants, wanting to punch
the plaintiffs' ticket, also filed a motion to dismiss the
plaintiffs' complaint. Judge Seymour examined each motion in turn.
First, the remand motion focused solely on CAFA. The defendants
argued that the burden of proof, under CAFA, shifts to the
plaintiff to demonstrate that removal is improvident. The court
disagreed and noted that the Seventh Circuit in Brill, the Ninth
Circuit in Abrego and the Eleventh Circuit in Miedema had all
rejected the argument. Specifically, the court quoted Miedema for
its proposition that “a committee report cannot serve as an
independent statutory source having the force of law.” (Editors'
Note: See the CAFA Law Blog's analysis of Brill posted on November
2, 2005, the CAFA Law Blog analysis of Abrego posted on May 25,
2006, the CAFA Law Blog analysis and critique of Miedema posted on
August 22, 2005, and a discussion and Law Review article by the
Editors that disagrees with these holdings entitled “CAFA’s New
Minimal Diversity Standard For Interstate Class Actions Creates A
Presumption That Jurisdiction Exists, With The Burden Of Proof
Assigned To The Party Opposing Jurisdiction” here). The Court did
find, however, that the defendants carried the burden noting that
“once the proponent of jurisdiction has set out the amount in
controversy, only a legal certainty that the judgment will be less
forecloses federal jurisdiction.” The court also made short work
of the minimal diversity requirement holding that the Plaintiff was
from South Carolina and the defendants were Virginia corporations.
The remand motion was denied. Thereafter, the court granted the
defendants’ motion to dismiss on the ground that the plaintiff
could not allege a cause of action for negligence on the basis of
purely economic loss. The plaintiff was asserting the indirect
damages from the train derailment as economic loss. The court held
that there were policy reasons that limit tort liability for this
exact type of indirect economic loss. Even though the federal court
retained jurisdiction, in the same opinion it dismissed the case.
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