Ninth Circuit Endorses Gaming of Class Action Fairness Act & Creates Circuit Split

9thCirCross-posted at WLF’s contributor page

Congress adopted the Class Action Fairness Act (CAFA) in 2005 in response to concerns that plaintiffs’ lawyers were gaming the system to prevent removal of class action lawsuits from state to federal court, thereby ensuring that their cases would be heard by sympathetic judges.  CAFA provides state-court defendants the option of removing cases to federal court in situations where the suit is both substantial and involves numerous plaintiffs, and where minimal diversity of citizenship exists.

Since CAFA’s passage, the plaintiffs’ bar has worked to circumvent the law and keep their mass lawsuits in state courts.  A disappointing September 24 U.S. Court of Appeals for the Ninth Circuit decision reflects how those efforts have borne fruit.  But the decision has a silver lining: a dissenting judge on the three-judge panel explained that the decision directly conflicts with a decision from the U.S. Court of Appeals for the Seventh Circuit, inferring the need for Supreme Court review to resolve the conflict.  Moreover, the dissenting judge had the remarkably good sense to cite directly to the amicus brief that Washington Legal Foundation filed in the case, adopting the narrower of two rationales that WLF had urged.

At issue in the Ninth Circuit case, Romo v. Teva Pharmaceuticals USA, Inc., are the product liability claims of more than 1,500 individuals alleged to have suffered injuries after taking medications containing the active ingredient propoxyphene—a drug that was widely marketed in this country between 1957 and 2010.  The claims were all initially filed (by a single set of lawyers) in state court in California.  The plaintiffs named as defendants nearly a dozen pharmaceutical manufacturers and wholesalers, including one California-based wholesaler whose presence defeated complete diversity of citizenship.  The defendants nonetheless removed the claims to federal court under CAFA’s “mass action” provision, which permits defendants to move cases from state to federal court if there are more than 100 plaintiffs and certain other conditions are met. Continue reading “Ninth Circuit Endorses Gaming of Class Action Fairness Act & Creates Circuit Split”