Friday, March 9, 2012
In State of Nevada v. Bank of America, No. 12-15005 (Mar. 2, 2012), the Ninth Circuit held that the district court did not have subject matter jurisdiction under either the Class Action Fairness Act or Section 1331 (under Grable & Sons):
The State of Nevada . . .filed this parens patriae lawsuit against Bank of America . . . in Clark County [Nevada] District Court. Nevada alleges that Bank of America misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of the Nevada Deceptive Trade Practices Act, Nev. Rev. Stat. §§ 598.0903-.0999. Nevada also alleges that Bank of America violated an existing consent judgment (“Consent Judgment”) in a prior case between Nevada and several of Bank of America’s subsidiaries, entered in Clark County District Court.
Bank of America removed this action to federal district court, asserting federal subject matter jurisdiction as either a “class action” or “mass action” under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), and as arising under federal law, 28 U.S.C. § 1331. Denying Nevada’s motion to remand, the federal district court concluded that it has jurisdiction over this action as a CAFA “class action,” but not as a “mass action,” and that it also has federal question jurisdiction because resolving the state claims will require an interpretation of federal law.
We granted Nevada’s request for leave to appeal the district court’s denial of its motion to remand pursuant to 28 U.S.C. § 1453(c)(1). We conclude that because parens patriae actions are not removable under CAFA, and the action does not otherwise satisfy CAFA’s “mass action” requirements, the district court lacks jurisdiction under CAFA. We also exercise our interlocutory appellate jurisdiction under 28 U.S.C. § 1453(c) to review the district court’s determination that it has federal question jurisdiction because the complaint references the federal Home Affordable Mortgage Program and the Fair Debt Collection Practices Act. We conclude that the district court lacks federal question jurisdiction [citing Grable & Sons]. Because there is no basis for federal subject matter jurisdiction, this case must be remanded to Nevada state court.
Tuesday, February 28, 2012
Lots of coverage on Kiobel v. Royal Dutch Petroleum, which is being argued today:
- Kenneth Anderson (Volokh Conspiracy)
- Lyle Denniston (SCOTUSblog)
- Jonathan Hafetz (ABA Preview)
- Julian Ku (Point of Law)
- Juan Mendez (Opinio Juris)
- David Savage (Los Angeles Times)
- Nina Totenberg (NPR)
- Peter Weiss (New York Times)
- David Weissbrodt (Point of Law)
- Stephen Wermiel (SCOTUSblog)
One issue that isn’t squarely raised by the questions presented is whether the Alien Tort Statute applies to claims brought by one alien against another (as in Kiobel). Amanda Frost’s Academic Round-up for SCOTUSblog covers an essay by Anthony Bellia and Bradford Clark, which argues that the Alien Tort Statute applies only to claims brought by an alien against a U.S. citizen. Marco Simons has a response on Concurring Opinions.
Wednesday, January 18, 2012
Today the Supreme Court issued a unanimous decision in Mims v. Arrow Financial Services LLC (covered earlier here), which considers whether federal-question jurisdiction exists under 28 U. S. C. §1331 for claims brought against telemarketers under the Telephone Consumer Protection Act of 1991 (TCPA). The provision of the TCPA that created a private cause of action refers to actions that would be brought in state court. See 47 U. S. C. §227(b)(3) (“A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State . . . an action based on a violation of this subsection . . . .”).
In an opinion by Justice Ginsburg, the Supreme Court holds that federal-question jurisdiction is proper under §1331. From the opinion [Slip Op. at 2]:
The question presented is whether Congress’ provision for private actions to enforce the TCPA renders state courts the exclusive arbiters of such actions. We have long recognized that “[a] suit arises under the law that creates the cause of action.” American Well Works Co. v. Layne & Bowler Co., 241 U. S. 257, 260 (1916). Beyond doubt, the TCPA is a federal law that both creates the claim Mims has brought and supplies the substantive rules that will govern the case. We find no convincing reason to read into the TCPA’s permissive grant of jurisdiction to state courts any barrier to the U. S. district courts’ exercise of the general federal-question jurisdiction they have possessed since 1875.
In particular, Justice Ginsburg notes [Slip Op. at 11]: “Title 47 U. S. C. §227(b)(3) does not state that a private plaintiff may bring an action under the TCPA ‘only’ in state court, or ‘exclusively’ in state court.”
Friday, December 9, 2011
With apologies to Schoolhouse Rock for the title of this post, President Obama has signed the Federal Courts Jurisdiction and Venue Clarification Act of 2011, covered earlier here. The law contains many significant provisions regarding federal diversity jurisdiction, removal and remand, and venue. If you’re keeping score, it amends 28 U.S.C. §§ 1332, 1391, 1404, 1441, 1446, and 1453; repeals 28 U.S.C. § 1392; and enacts new code sections 28 U.S.C. §§ 1390 and 1455.
Sunday, December 4, 2011
This week Congress passed the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (H.R. 394), although it is still awaiting the President's signature. It’s a very important piece of legislation that will be significant for academics and practitioners alike.
Prawfsblawg’s Howard Wasserman (Florida International) has posted a summary of the final bill that was circulated by Arthur Hellman (Pittsburgh). If you want to keep tabs on the bill, check out the Bill Summary & Status here.
Saturday, September 3, 2011
Yesterday a panel of the U.S. Court of Appeals for the Eighth Circuit issued a 2-1 decision that appears to create (or at least deepen) a circuit split over the citizenship of national banks for purposes of diversity jurisdiction. The case is Wells Fargo Bank, N.A. v. WMR e-PIN LLC, No. 09-3800, 2011 WL 3862589 (Sept. 2, 2011).
Here’s some background: Under 28 U.S.C. § 1348, “[a]ll national banking associations shall . . . be deemed citizens of the States in which they are respectively located.” In Wachovia Bank v. Schmidt, 546 U.S. 303 (2006), the Supreme Court rejected the notion that such a national bank is “located” in every state where it has a branch office, holding instead that a “a national bank, for § 1348 purposes, is a citizen of the State in which its main office, as set forth in its articles of association, is located.” Id. at 307.
The Wachovia decision acknowledged but did not directly confront the question of whether, for purposes of diversity jurisdiction, a national bank is also a citizen of the state where it has its principal place of business (PPB). See id.at 317 n.9. That question could be significant if the bank’s PPB is in a different state than the “main office” listed in its article of association. That’s precisely the issue in Wells Fargo. The party opposite Wells Fargo was a California citizen, and it argued that diversity jurisdiction was lacking because Wells Fargo’s PPB is in California, even though the “main office” set forth in its articles of association is in South Dakota.
The majority opinion in Wells Fargo, authored by Judge Wollman, concludes that a national bank is not a citizen of the state where it’s PPB is located for purposes of diversity jurisdiction. Judge Wollman acknowledges that this holding is contrary to decisions from other circuits such as Horton v. Bank One, 387 F.3d 426 (5th Cir. 2004), and Firstar Bank v. Faul, 253 F.3d 982 (7th Cir.2001), although he asserts that the Seventh Circuit changed course on this issue in Hicklin Engineering v Bartell, 439 F.3d 346 (7th Cir. 2006).
Judge Murphy dissents, arguing that a national bank like Wells Fargo can be a citizen of two states: the state of its PPB and the state where its main office, as listed in its articles of association, is located.
(Hat Tip: How Appealing)
Monday, July 11, 2011
The Ninth Circuit’s recent decision in Westwood Apex v. Contreras (No. 11-55362), 2011 WL 1744960, considers which kinds of defendants may remove a class action to federal court under the Class Action Fairness Act’s removal provision (28 U.S.C. § 1453(b)). The opinion by Judge Milan Smith begins:
The Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat. 4, confers federal jurisdiction over class action lawsuits where the amount in controversy exceeds $5,000,000 and the adversaries are minimally diverse. When a class action satisfying these conditions is filed in state court, Section 5 of CAFA provides that “such action may be removed by any defendant without the consent of all defendants.” 28 U.S.C. § 1453(b). In this appeal, we address whether CAFA Section 5, 28 U.S.C. § 1453(b), allows a party joined to an action as a defendant to a counterclaim (an additional counterclaim defendant) to remove the case to federal court. We hold that § 1453(b) does not permit additional counterclaim defendants to remove an action to federal court, and we affirm the district court’s decision to remand this case to state court.
The court explains:
Wednesday, July 6, 2011
Last week the Supreme Court granted certiorari in Mims v. Arrow Financial Services LLC (No. 10-1195), which presents the question: Did Congress divest the federal district courts of their federal-question jurisdiction under 28 U.S.C. § 1331 over private actions brought under the Telephone Consumer Protection Act?
SCOTUSblog’s case file is available here, which contains links to the Eleventh Circuit’s opinion below and the cert-stage briefs.
Tuesday, June 21, 2011
Professor Jennifer Johnson (Lewis & Clark) has posted on SSRN a draft of her article, Securities Class Actions in State Court, which is forthcoming in the University of Cincinnati Law Review. Here’s the abstract:
Over the past two decades, Congress has gradually usurped the power of state regulators to enforce state securities laws and the power of state courts to adjudicate securities disputes. This Paper evaluates the impact of Congressional preemption and preclusion upon state court securities class actions. Utilizing a proprietary database, the Paper presents and analyzes a comprehensive dataset of 1500 class actions filed in state courts from 1996-2010. The Paper first examines the permissible space for state securities class actions in light of Congressional preclusion and preemption embodied in the 1998 Securities Litigation Uniform Standards Act (SLUSA) and Class Action Fairness Act of 2005 (CAFA). The Paper then presents the state class action filing data detailing the numbers, classifications, and jurisdictions of state class action cases that now occupy the state forums. First, as expected, the data indicates that there are few traditional stock-drop securities class actions litigated in state court today. Second, in spite of the debate over the impact of SLUSA and CAFA on 1933 Act claims, very few plaintiffs attempt to litigate these matters in state court. Finally, the number of state court class actions involving merger and acquisition (M&A) transactions is skyrocketing and now surpasses such claims filed in federal court. Moreover, various class counsel file their M & A complaints in multiple jurisdictions. The increasingly large number of multi-forum M&A class action suits burden the defendants and their counsel, the judiciary and even plaintiffs’ lawyers themselves. The paper concludes that absent effective state co-ordination, further Congressional preemption is possible, if not likely.
Tuesday, May 24, 2011
Last week the U.S. Court of Appeals for the Fifth Circuit issued a decision in In Re Crystal Power Co., Ltd. (No. 11-40115). In March the same panel had issued a writ of mandamus instructing the district court to remand the case to state court (2011 WL 944371). The more recent decision (2011 WL 1833874) withdraws that order and denies the mandamus petition. With some very robust footnotes omitted, Judge Patrick Higginbotham writes:
We are now persuaded that the petition does not meet the stringent demands of the All Writs Act for extraordinary relief. Supreme Court precedent does not ordinarily allow mandamus review of district court decisions that, while not immediately appealable, can be reviewed at some juncture. The Court has instructed that our review of an erroneous refusal to remand must await appeal from a final judgment, even when this forces the parties to submit to proceedings before a tribunal that lacks competent jurisdiction over their dispute. To the same end, the Court has advised that the ordinary costs of trial and appeal are not a sufficient burden to warrant mandamus relief.
Three questions remain. First, whether a zone of review under the All Writs Act remains for cases where post-judgment review of an interlocutory order is an illusion—where the promise of review at some later time is not meaningful. Second, whether mandamus may remain available when delay would cause greater hardship than the normal cost of trying a case to judgment. Third, whether the precedent of this circuit can be defended on these grounds.
Since Crystal Power has not proffered any reason why post-judgment review would be ineffective or why the cost of delay would be atypical, we can leave these questions to another day.
In footnote 5, Judge Higginbotham notes that Supreme Court decisions on the propriety of mandamus relief in this situation "cast a heavy shadow on certain case law of this circuit. See, e.g., In re Hot-Hed, Inc., 477 F.3d 320, 322 (5th Cir. 2007) (granting mandamus where district court’s denial of remand was based on clearly erroneous assertion of federal question jurisdiction); In re Dutile, 935 F.2d 61, 63–64 (5th Cir. 1991) (granting mandamus where district court denied remand on an explicitly non-removable claim). Adding to the confusion, other circuits have held that when a district court denies a motion to dismiss for lack of subject-matter jurisdiction, rather than a motion to remand, mandamus relief may be available. See, e.g., Bell v. Sellevold, 713 F.2d 1396, 1402–05 (8th Cir. 1983); First Jersey Sec., Inc. v. Bergen, 605 F.2d 690, 700–02 (3d Cir. 1979); United States v. Boe, 543 F.2d 151, 157–61 (C.C.P.A. 1976); BancOhio Corp. v. Fox, 516 F.2d 29, 32–33 (6th Cir. 1975); Erie Bank v. U.S. Dist. Ct. for the Dist. of Colo., 362 F.2d 539, 540–41 (10th Cir. 1966)."
Monday, March 21, 2011
In a decision issued earlier this month, the Eighth Circuit considered the deadline for seeking a remand to state court based on the “Local Controversy” exception to jurisdiction under the Class Action Fairness Act (CAFA). See 28 U.S.C. § 1332(d)(4). The case is Graphic Communications v. CVS Caremark, No. 11-1067 (Mar. 11, 2011), 2011 WL 855672, 2011 U.S. App. LEXIS 4747. The defendant argued that the plaintiffs' remand motion, filed more than three months after removal to federal court, was untimely under 28 U.S.C. § 1447(c), which provides: “A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal.”
The unanimous opinion, authored by Judge Kermit Edward Bye, reasoned that the Local Controversy exception “operates as an abstention doctrine, which does not divest the district court of subject matter jurisdiction.” But the court also held that the applicability of CAFA’s Local Controversy exception “was not a ‘defect’ within the meaning of section 1447(c).” Therefore, § 1447(c)’s 30-day deadline did not apply either.
So what is the deadline? The court explained: “[T]he mere fact that the statutory time limitation on raising motions to remand does not apply does not mean that non-1447(c) remands are necessarily authorized at any time. Indeed, we do not believe the applicable time limitation for the instant motion to remand is equivalent to the anytime-before-judgment (or even on appeal) standard applicable for subject matter jurisdiction.” Instead, a motion to remand based on the local controversy exception must be “brought within a reasonable time frame,” which is the standard “for remands not covered by § 1447(c).” The Eighth Circuit sent the case back to the district court to resolve whether the plaintiffs had filed their remand motion within a “reasonable time frame.”
(Hat Tip: Scott Dodson)
Monday, February 28, 2011
We covered earlier the Fourth Circuit’s en banc decision in Barbour v. International Union, which perpetuated a circuit split over how to calculate removal deadlines in multiple-defendant cases. That same week, the Ninth Circuit weighed in on the other side of the divide. The decision is Destfino v. Reiswig, 2011 WL 182241, 2011 U.S. App. LEXIS 1375. Per Chief Judge Kozinski:
We adopt the later-served rule as the wiser and more equitable approach. This rule doesn't go so far as to give already-served defendants a new thirty-day period to remove whenever a new defendant is served, as that could give a defendant more than the statutorily prescribed thirty days to remove. See 28 U.S.C. § 1446(b). Rather, we hold that each defendant is entitled to thirty days to exercise his removal rights after being served. Because [the later-served defendant] removed the case within thirty days from when it was served, the removal was timely.
(Hat Tip: Benjamin Roesch)
Tuesday, February 8, 2011
In its recent decision Barbour v. International Union (2011 WL 242131, 2011 U.S. App. LEXIS 1695), the en banc Fourth Circuit splits 7-5 over how to apply federal removal requirements when faced with “the defendants-served-on-different-days dilemma.” At issue in Barbour are 28 U.S.C. § 1446(b)'s 30-day deadline for removing a state-court case to federal court, and the “rule of unanimity,” which requires that all defendants join in the removal.
The en banc majority in Barbour adopts what it calls the “McKinney Intermediate Rule” (named for an earlier Fourth Circuit decision). From Judge Hamilton's opinion:
“[T]he McKinney Intermediate Rule requires a notice of removal to be filed within the first-served defendant's thirty-day window, but gives later-served defendants thirty days from the date they were served to join the notice of removal.” (emphasis added)
As the Barbour majority acknowledges, this approach conflicts with decisions from several other circuits that use the “Last-Served Defendant Rule,” which allows “each defendant, upon formal service of process, thirty days to file a notice of removal pursuant to § 1446(b).” E.g., Bailey v. Janssen Phramaceutica, Inc., 536 F.3d 1202, 1209 (11th Cir. 2008) (emphasis added). In Barbour, five Fourth Circuit judges (in an opinion authored by Judge Agee) would have followed the Last-Served Defendant Rule.
The Barbour majority recognizes that its rejection of the Last-Served Defendant Rule could deprive later-served defendants of any opportunity to remove a case when an earlier-served defendant misses its 30-day deadline. But it reasons that an earlier-served defendant who fails to remove within the 30-day deadline has, essentially, consented to remain in state court. That consent forecloses removal. As the majority explains: “If the first-served defendant decides not to remove, later-served defendants are not deprived of any rights under § 1446(b), because § 1446(b) does not prevent them from removing the case; rather, it is the rule of unanimity that does.”
So viewed, what later-served defendants are actually losing under the Fourth Circuit approach is “an opportunity to persuade earlier-served defendants to join a notice of removal.” To this point, the majority responds that “it is difficult to believe that Congress intended to protect this power of persuasion when it enacted § 1446(b).”
(Hat Tips: Tom Rowe & Shaun Shaughnessy)
Monday, January 31, 2011
Professor Kevin Walsh (Richmond) has posted on SSRN his essay, The Ghost that Slayed the Mandate. Here’s the abstract:
Virginia v. Sebelius is a federal lawsuit in which Virginia seeks the invalidation of President Obama’s signature legislative initiative of healthcare reform. Virginia seeks declaratory and injunctive relief to vindicate a state statute declaring that no Virginia resident shall be required to buy health insurance. To defend this state law from the preemptive effect of federal law, Virginia contends that the federal legislation’s individual mandate to buy health insurance is unconstitutional. Virginia’s lawsuit is one of the most closely followed and politically salient federal cases in recent times. Yet neither the federal government nor any other legal commentator has previously identified the way in which the very features of the case that contribute to its political salience also require that it be dismissed for lack of statutory subject-matter jurisdiction. The Supreme Court has placed limits on statutory subject-matter jurisdiction over declaratory judgment actions in which a state seeks a declaration that a state statute is not preempted by federal law - precisely the relief sought in Virginia v. Sebelius. These limits insulate federal courts from the strong political forces surrounding lawsuits that seek federal court validation of state nullification statutes. This Essay identifies these heretofore neglected limits, shows why they demand dismissal of Virginia v. Sebelius, and explains why it is appropriate for federal courts to be closed to this type of suit.
(Hat Tip: PrawfsBlawg)
Monday, October 18, 2010
This summer we covered (and critiqued) the Eleventh Circuit’s decision in Cappuccitti v. DirecTV, Inc., 611 F.3d 1252 (11th Cir. July 19, 2010), which had interpreted the jurisdictional provisions of the Class Action Fairness Act (CAFA). The July decision held that CAFA jurisdiction is available only if at least one class member’s claim exceeds the $75,000 threshold required for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a). On Friday, the Eleventh Circuit panel reversed itself:
"Subsequent reflection has led us to conclude that our interpretation was incorrect. Specifically, CAFA’s text does not require at least one plaintiff in a class action to meet the amount in controversy requirement of 28 U.S.C. § 1332(a)."
The new decision is available here, on Westlaw at 2010 WL 4027719, and on Lexis at 2010 U.S. App. LEXIS 21348.
(Hat Tip: Scott Dodson)
Thursday, September 2, 2010
Earlier this summer, Paul Ceglia filed a lawsuit in a Buffalo, New York state court claiming he’s entitled to an 84% stake in Facebook. Mark Zuckerberg, the defendant and Facebook CEO, removed the case to U.S. District Court for the Western District of New York on diversity grounds. Zuckerberg contends that he’s a citizen of California and the plaintiff is a citizen of New York.
Last month the plaintiff filed a motion to remand the case, arguing that Zuckerberg is still domiciled in New York, thus destroying diversity of citizenship. Zuckerberg filed his opposition to remand this week.
Zuckerberg’s citizenship for diversity purposes has already been the subject of a published federal court decision. In ConnectU LLC v. Zuckerberg, 482 F. Supp. 2d 3 (D. Mass. 2007) (Hat Tip: Kevin Clermont), the court held that as of September 2, 2004, Zuckerberg was still domiciled with his parents in New York. That decision was reversed on other grounds.
Wednesday, August 25, 2010
Professor Gwynne Skinner (Willamette University College of Law) has posted "When Customary International Law Violations 'Arise Under the Laws of the United States'" on SSRN. It will be published in the Brooklyn Journal of International Law.
The abstract states:
Monday, July 26, 2010
Last week the Eleventh Circuit issued a very significant (though a bit puzzling) decision on the 2005 Class Action Fairness Act (CAFA). The case is Cappuccitti v. DirecTV, Inc., No. 09-14107, ___ F.3d ___, 2010 U.S. App. LEXIS 14724, 2010 WL 2803093 (11th Cir. July 19, 2010), covered earlier here. One of CAFA’s most significant changes was an amendment to the diversity jurisdiction statute, codified at 28 U.S.C. § 1332(d), to authorize federal diversity jurisdiction over class actions for which there is (a) minimal diversity between the parties, and (b) an aggregate amount in controversy in excess of $5,000,000. Neither party in Cappuccitti disputed that federal subject matter jurisdiction was proper under § 1332(d); DirecTV's appeal challenged only the district court’s refusal to compel arbitration. But the Eleventh Circuit raised the jurisdictional issue sua sponte and dismissed the case entirely. It held that even if a class action’s aggregate amount-in-controversy exceeds $5,000,000, CAFA jurisdiction applies only if at least one class member’s claim exceeds the $75,000 threshold that applies for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a).
It is difficult to see how this result follows from CAFA’s text. CAFA’s § 1332(d) created a new category of diversity jurisdiction over class actions that is distinct from the general form of diversity jurisdiction set forth in § 1332(a). The only situation where the two overlap is for so-called “mass actions” -- cases that are not class actions but nonetheless include more than 100 plaintiffs with related claims. Section 1332(d)(11) provides that such “mass actions” can trigger CAFA jurisdiction, but only for plaintiffs whose claims exceed § 1332(a)’s $75,000 threshold. See 28 U.S.C. § 1332(d)(11)(B)(i). Cappuccitti, however, is a true class action brought pursuant to Federal Rule of Civil Procedure 23. So § 1332(d)(11)’s provisions for “mass actions” don’t apply, leaving no textual basis for incorporating § 1332(a)’s $75,000 threshold into § 1332(d).
Thus, § 1332(d)’s plain text provides that as long as a class action’s aggregate amount in controversy exceeds $5 million, it doesn’t matter whether any individual class member’s claim exceeds $75,000 (or any other amount). CAFA’s legislative history confirms that this was exactly what Congress intended. According to the Senate Judiciary Committee’s report (S. Rep. 109-14), CAFA responded to “the nonsensical result under which a citizen can bring a ‘federal case’ by claiming $75,001 in damages for a simple slip-and-fall case against a party from another state, while a class action involving 25 million people living in all fifty states and alleging claims against a manufacturer that are collectively worth $15 billion must usually be heard in state court (because each individual class member's claim is for less than $75,000).” [S. Rep. 109-14, at p.11 (emphasis added)]. In further critiquing the pre-CAFA approach to diversity jurisdiction over class actions, the Senate Report explained [at p.69]:
[T]he process of assessing whether a class action complies with the current jurisdictional amount requirement is also often “an expensive and time consuming process,” requiring discovery on the nature and value of the named plaintiffs' claims. As noted previously, in some federal Circuits, the jurisdictional amount requirement in a class action is satisfied by showing that any member of the proposed class is asserting damages in excess of $75,000, and in other Circuits, the question is whether each and every member of the putative class has individually an amount in controversy exceeding $75,000. Again, this time-consuming issue, often requiring significant amounts of record review and fact-finding, is litigated very frequently in the many class actions that are removed to federal court under current law. [CAFA] will make the resolution of class action jurisdictional issues easier -- not harder. . . . [I]t will be much easier to determine whether the amount in controversy presented by a purported class as a whole (that is, in the aggregate) exceeds $5 million than it is to assess the value of the claim presented by each and every individual class member, as is required by the current diversity jurisdictional statute.
[S. Rep. 109-14, at p.11 (emphasis added)].
My purpose here is not to defend CAFA. One can certainly question whether, as a policy matter, federal diversity jurisdiction should have been expanded to cover these kinds of class actions. And CAFA does contain several instances of problematic drafting (see, e.g., here and here). But the issue addressed in Cappuccitti is not one of them. The court’s holding is very hard to square with CAFA’s text and purpose.
Friday, July 23, 2010
This week the Eleventh Circuit issued a decision interpreting 28 U.S.C. § 1332(d), the new form of diversity jurisdiction created by the 2005 Class Action Fairness Act (CAFA). In Cappuccitti v. DirecTV, Inc., No. 09-14107, ___ F.3d ___, 2010 WL 2803093, 2010 U.S. App. LEXIS 14724 (11th Cir. July 19, 2010), the court holds that even if the class action’s aggregate amount-in-controversy exceeds § 1332(d)’s $5,000,000 requirement, CAFA diversity jurisdiction is available only if at least one class member’s claim exceeds the $75,000 threshold required for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a). From the opinion:
We hold that in a CAFA action originally filed in federal court, at least one of the plaintiffs must allege an amount in controversy that satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. § 1332(a). . . . If we held that § 1332(a)'s $75,000 requirement for an individual defendant did not apply to § 1332(d)(2) cases, we would be expanding federal court jurisdiction beyond Congress's authorization. We would essentially transform federal courts hearing originally-filed CAFA cases into small claims courts, where plaintiffs could bring five-dollar claims by alleging gargantuan class sizes to meet the $5,000,000 aggregate amount requirement. While Congress intended to expand federal jurisdiction over class actions when it enacted CAFA, surely this could not have been the result it intended.
(Hat Tip: Jay Tidmarsh)
Tuesday, June 29, 2010
SCOTUS cert. grant in Henderson v. Shinseki: Once more into the jurisdictional-vs.-nonjurisdictional breach
The Supreme Court has been struggling in recent years to distinguish "jurisdictional" requirements from "nonjurisdictional" ones, in a line of cases that includes Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), Bowles v. Russell, 551 U.S. 205 (2007), John R. Sand & Gravel Co. v. United States, 552 U. S. 130 (2008), and Reed Elsevier v. Muchnick, 130 S. Ct. 1237 (2010). As covered here, the topic came up again in last week’s decision in Morrison v. Australia National Bank. The Court looks to tackle the issue once more in a case for which it granted certiorari yesterday: Henderson v. Shinseki (No. 09-1036). The question presented is:
Section 7266(a) of Title 38, U.S.C., establishes a 120-day time limit for a veteran to seek judicial review of a final agency decision denying the veteran's claim for disability benefits. Before the decision below, the Federal Circuit in two en banc decisions held that Section 7266(a) constitutes a statute of limitations subject to the doctrine of equitable tolling under this Court's decision in Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990). In the divided en banc decision below, however, the Federal Circuit held that this Court's decision in Bowles v. Russell, 551 U.S. 205 (2007), superseded Irwin and rendered Section 7266(a) jurisdictional and not subject to equitable tolling.
The question presented is whether the time limit in Section 7266(a) constitutes a statute of limitations subject to the doctrine of equitable tolling, or whether the time limit is jurisdictional and therefore bars application of that doctrine.
The lower court decision is at 589 F.3d 1201, and the Supreme Court docket is here.