Ninth Circuit Thwarts Plaintiffs’ Efforts to Evade Removal Under CAFA

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. with Rachel A. Canfield,  Shook, Hardy & Bacon, L.L.P.

Addressing a question of first impression, the U.S. Court of Appeals for the Ninth Circuit Court of Appeals, sitting en banc, weighed into an issue that has split the circuit courts involving the invocation of federal mass-action jurisdiction. Corber v. Xanodyne Pharmaceuticals, Inc.¸ Nos.13-56306 & 13-56310, — F.3d —-, 2014 WL 6436154 (9th Cir. Nov. 18, 2014). This is just one in a series of recent federal decisions limiting plaintiffs’ efforts to avoid federal class or mass action jurisdiction.

To prevent class-action abuse, the Class Action Fairness Act of 2005 (“CAFA”) expands federal jurisdiction over certain class or mass actions that fall within its purview. Corber, 2014 WL 6436154, at *11. In pertinent part, CAFA defines mass actions as any civil action in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiff’s claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i).

Treated as companion cases, Romo v. Teva Pharmaceuticals USA, Inc., and Corber v. Xanodyne Pharmaceuticals, Inc., were two of twenty-six cases pending before the district court, and more than forty actions filed in California state courts, alleging injuries due to the ingestion of an ingredient found in certain pain relief drugs. Corber, 2014 WL 6436154, at *7. A number of the actions were brought by one group of plaintiffs’ attorneys who sought to obtain coordination of the actions pursuant to section 404 of the California Code of Civil Procedure, which permits coordination of civil actions containing a common question of fact or law if one judge hearing all of the actions for all purposes will promote the ends of justice. Id. at *8-9. In an attempt to obtain coordination in state court and evade federal jurisdiction, these plaintiffs’ attorneys superficially segmented the cases to involve fewer than 100 plaintiffs and crafted the petitions for coordination absent an express proposal that the actions be jointly tried.

Defendants sought to invoke the district court’s original jurisdiction under CAFA’s mass action provision. Id. at *9. Initially, the district court found that the petitions for coordination were not proposals to jointly try the cases because they did not expressly propose that the cases be jointly tried, and a divided Ninth Circuit panel affirmed the remand orders. Later, though, a majority of unrecused judges granted rehearing en banc. Id. at *10-11. On rehearing, the Ninth Circuit squarely disposed of plaintiffs’ attempt to circumvent CAFA’s “100 or more persons” requirement, reasoning that, although each action contained less than 100 people, the test was satisfied when the actions were considered in the aggregate. Id. at *7, n.1. Washington Legal Foundation had filed an amicus brief supporting the appellants.

Central to the Ninth Circuit’s decision were section 404’s “one judge” “for all purposes” language and the absence of any limiting language in the petitions—Plaintiffs’ petitions for coordination did not explicitly request a joint trial, nor did the petitions limit the request for coordination to pretrial matters, only. Id. at *12-14. Taking care not to disturb the well-settled principle that the plaintiff is the master of his complaint, the Ninth Circuit reconciled any apparent tension by applying that same rational to petitions for coordination. Corber, 2014 WL 6436154, at *12-13. The court declined to create a blanket form-over-substance rule requiring an express proposal for joint trial, and instead chose to “hold plaintiff’s responsible for what they have said and done.” Id. at *13, 16. Notably, the court looked not only to the language of the petitions, but also to the totality of the circumstances, considering the array of reasons Plaintiffs listed in favor of coordination which, according to the Court, indicated Plaintiffs truly sought coordination for purposes of trial. Id. at *7, 13-18.

In support, the Ninth Circuit also regarded the Seventh Circuit’s decision in In re Abbott Laboratories, 698 F.3d 568 (7th Cir. 2012), and the Eighth Circuit’s decision in Atwell v. Boston Scientific, 740 F.3d 1160, 1163 (8th Cir. 2013), both of which essentially concluded the plaintiffs’ respective petitions for consolidation amounted to implicit proposals for joint trial, because, despite the absence of an explicit request for joint trial, those petitions requested consolidation beyond pretrial matters. Corber, 2014 WL 6436154, at *16-17.

Following this rationale and looking to the totality of the circumstances, the Ninth Circuit concluded that Plaintiffs’ section 404 petitions to coordinate actions “for all purposes” and to address common issues of fact or law were tantamount to a proposal that the actions be jointly tried and subject to federal mass action jurisdiction. Corber, 2014 WL 6436154, at *18.

Somewhat disconcerting, the court was reluctant to denounce avoidance tactics, altogether, and recognized plaintiffs may implement strategies to circumvent CAFA’s reach in certain circumstances. Id. at *13. The court suggested, but declined to reach whether, the result would have been different had Plaintiffs included language limiting their petitions to “pretrial” proceedings. Id. at *16. The breadth of this decision remains to be seen.

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