Over the past few years, the Supreme Court has heard several cases involving class action procedure, including China Agritech, Inc. v. Resh; CalPERS v. ANZ Securities, Inc.; and Microsoft Corp. v. Baker. Today, the Supreme Court continued this trend, granting review to decide whether Rule 23(f)’s 14-day deadline to file a petition for permission to appeal an order granting or denying class certification is subject to equitable exceptions. Nutraceutical Corp. v. Lambert, No. 17-1094.
We have repeatedly discussed in this space the ongoing debate among the federal courts about ascertainability—a red-hot topic in class action litigation these days. (For a more detailed look at our views on the ascertainability doctrine, see the amicus brief (pdf) that we filed on behalf of the National Association of Manufacturers in support of a pending cert petition.) That topic—and the debate among the lower courts—shows no sign of slowing down, as evidenced by new decisions issued by the Second, Sixth, and Third Circuits over the past two months. The central takeaway from these decisions is that while ascertainability is not a panacea for defendants facing consumer class actions, the doctrine (or variations on the ascertainability theme) should help defeat class actions in many circuits when class members cannot be identified without individualized inquiries.
Hundreds of lower courts have interpreted and applied the Supreme Court’s decision in Spokeo, Inc. v. Robins over the past ten months. We will provide a more comprehensive report on the post-Spokeo landscape in the near future, but the overarching takeaway is that the majority of federal courts of appeals have faithfully applied Spokeo’s core holdings that “Article III standing requires a concrete injury even in the context of a statutory violation,” and that a plaintiff does not “automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Nonetheless, a handful of other decisions have been receptive to arguments by the plaintiffs’ bar that Spokeo did not make a difference in the law of standing, and that the bare allegation that a statutory right has been violated, without more, remains enough to open the federal courthouse doors to “no-injury” class actions.
Two recent decisions by the Seventh and Third Circuits illustrate these contrasting approaches.
Can you have a class action if class members can’t reliably be found? That question is at the heart of the debate over ascertainability—one that has divided the federal courts. Earlier this week, the Ninth Circuit weighed in, holding in Briseno v. ConAgra Foods, Inc. (pdf) that plaintiffs need not demonstrate “an administratively feasible way to identify class members [as] a prerequisite to class certification.”
That conclusion is disappointing.
Over the past few years, a number of plaintiffs’ lawyers have attempted—with some success—to circumvent the “mass action” provisions in the Class Action Fairness Act of 2005 (“CAFA”), which allow defendants to remove to federal court certain cases raising “claims of 100 or more persons that are proposed to be tried jointly.” 28 U.S.C. § 1332(d)(11)(B)(i). Although these lawyers represent 100-plus clients with substantively identical claims, they subdivide their mass actions into multiple parallel cases, often with just under 100 plaintiffs each. And to avoid the “proposed to be tried jointly” language of CAFA, they remain coy about—or sometimes deny—any intention to try the cases jointly. Instead, they toe up to the joint trial line by seeking to have the cases treated together for as many purposes as possible short of directly calling for a joint trial. But an en banc decision by the Ninth Circuit earlier this week represents a welcome step towards limiting such efforts to evade federal jurisdiction.
That en banc decision springs from a pair of cases we discussed last December: Romo v. Teva Phamaceuticals USA, Inc., and its companion case, Corber v. Xanodyne Pharmaceuticals, Inc.—in which a divided panel approved the remand of 40 just-under-100-plaintiff cases as to which plaintiffs had invoked a California state-law procedure that allows for coordination of complex civil actions “for all purposes.” Although the plaintiffs did not limit their coordination request to pretrial proceedings, the panel majority held that that the plaintiffs’ request was insufficient to trigger removal, effectively requiring that plaintiffs expressly request a single joint trial before defendants may remove a mass action under CAFA. Judge Gould dissented; in his view, the practical result of plaintiffs’ proposal for coordination was dispositive—rather than whether plaintiffs had used the magic words of asking for a joint trial.
As we noted in a blog post last February, the Ninth Circuit had granted rehearing en banc in both Romo and Corber to resolve the circuit split that the panel had created with the Seventh Circuit’s decision in In re Abbott Laboratories, Inc. and the Eighth Circuit’s decision in Atwell v. Boston Scientific Corp.
This week, the en banc Court (pdf)—adopting a pragmatic approach to what counts as a “joint trial” for purposes of CAFA—held that the defendants had properly removed the cases. Writing for the Court this time, Judge Gould agreed with the Seventh and Eighth Circuits that a proposal for a joint trial may be made implicitly as well as explicitly. The Court explained that although a rule requiring the plaintiffs to invoke the magic words “joint trial” “would be easy to administer,” the problem with that rule is that it “would ignore the real substance” of plaintiffs’ proposals and how the mass actions were likely to be litigated in practice. And the Court observed that, as a practical matter, plaintiffs’ request to coordinate all of the cases “for all purposes”—and their arguments before the state court that coordination was needed to avoid “the danger of inconsistent judgments and conflicting determinations of liability”—was a request for a joint trial.
That holding is good news for defendants facing mass actions in the Ninth Circuit. That said, we would have liked to see the Ninth Circuit go further to curb the attempts by plaintiffs’ lawyers to circumvent CAFA. Amici argued in Romo/Corber—as we have also contended—that the Supreme Court’s admonition in Standard Fire Insurance Co. v. Knowles not to “exalt form over substance” in assessing CAFA jurisdiction forecloses plaintiffs’ lawyers from gerrymandering their 100-plus clients into parallel smaller actions.
Equally troubling, the Ninth Circuit left open the possibility that plaintiffs may be able to evade CAFA by asserting that their request for coordination is “intended to be solely for pre-trial purposes.” In our view, that distinction is likely to prove illusory in practice: Even if plaintiffs never formally move to coordinate or consolidate parallel cases all the way through trial, the cases would still effectively be tried jointly because the judgment in the first action might well have preclusive effect on the trials in any subsequent actions, which surely would be presided over by the same judge and involve similar witnesses and evidence. As the Seventh and Eighth Circuits have made clear in Abbott Labs and Atwell, even a single-plaintiff trial may qualify as a joint trial if the intent is to use it as a bellwether trial on liability or for preclusive effect in subsequent trials.
The fight over this issue is far from over: Plaintiffs’ lawyers will continue to subdivide their mass actions artificially to avoid federal jurisdiction, and defendants will seek to convince federal courts that such slicing-and-dicing is improper under CAFA. Nonetheless, the Ninth Circuit’s willingness to take—as the court of appeals itself said—a more “realistic” view of mass actions is a step in the right direction.
In nearly nine years on the books, the Class Action Fairness Act of 2005 (“CAFA”) has generated a host of decisions interpreting its provisions. Because the state of the law on CAFA—and class actions in general—is in constant flux, practitioners should certainly make use of online resources (like this blog) to stay up to date. But sometimes what’s needed is a desktop reference that places at one’s fingertips the answers to how to remove a case under CAFA—or how to resist that removal. To fill that need, the ABA’s Section of Litigation recently issued The Class Action Fairness Act: Law and Strategy, edited by Gregory C. Cook.
[Readers should be aware that we received a free review copy of the book.]
This book, dedicated solely to CAFA, provides a thorough analysis of the statute’s provisions and the key judicial decisions interpreting it. In addition, the book offers a number of practical tips for both plaintiffs’ and defense lawyers.
The book opens with a broad overview of CAFA and its expansion of federal jurisdiction over class actions and mass actions. The jurisdictional changes brought about by CAFA are neatly summarized at the close of the introduction in a quick reference chart, which presents a side-by-side comparison of federal diversity and removal jurisdiction over class actions before and after the enactment of CAFA.
Practitioners will also want to bookmark the series of flowcharts preceding the introduction—“CAFA At A Glance”—which were created by Arizona lawyer Kathryn Honecker. Offering visual step-by-step guidance in navigating through the thicket of CAFA’s jurisdictional provisions, including the often thorny “Local Controversy” and “Home State” exceptions to federal jurisdiction, these charts should help orient practitioners—particularly those not already well versed in the minutiae of CAFA—in the right direction.
Also well worth a read is the detailed chapter on CAFA’s legislative history, authored by Scott Nelson of Public Citizen Litigation Group—a respected appellate advocate who routinely represents plaintiffs (and often is one of our opponents in litigation and public policy debates). He chronicles the efforts of five Congresses—and the lively debates outside of Congress—that culminated in CAFA’s enactment in 2005. Nelson identifies the problem that Congress ultimately focused on in adopting CAFA: the willingness of certain state courts to certify virtually any proposed class and to tolerate abuses of the class-action device (and of analogous procedures like mass actions and representative proceedings). These “magnet” jurisdictions attracted nationwide or multistate class actions against businesses. The chapter details the inside baseball of the legislative process as CAFA evolved into an intricate framework of requirements for establishing and exceptions to federal jurisdiction over class and mass actions. A condensed version of this history is presented as a handy timeline at the conclusion of the chapter.
The remaining chapters, too, are worthwhile for class-action practitioners (and other CAFA aficionados). They break down each of CAFA’s provisions, ranging from the $5 million amount-in-controversy requirement to the separate provisions for mass actions to the notice requirements for proposed class action settlements. Practitioners can jumpstart their research process by consulting the relevant chapter or chapters as they confront CAFA-related issues.
In short, The Class Action Fairness Act: Law and Strategy has without a doubt earned a place on our bookshelves. We look forward to the next edition.