Can Plaintiffs Gerrymander Mass Actions To Avoid Federal Jurisdiction?

Keywords: class action fairness act, CAFA, mass action

The Class Action Fairness Act of 2005 ("CAFA") provides that defendants may remove certain mass actions—cases that are proposed to be tried jointly—so long as the aggregate amount at stake is at least $5 million and there are 100 or more plaintiffs in the case. 28 U.S.C. § 1332(d)(11). But what if plaintiffs' counsel try to avoid removal by splitting up a 100-plaintiff mass action into two smaller mass actions?

That was the situation facing Carnival. After a cruise ship ran aground off the coast of Italy, plaintiffs' lawyers filed a mass action in state court on behalf of 39 plaintiffs. When an additional 65 plaintiffs indicated an intent to join that action—which would nudge it across the 100-plaintiff threshold for removal under CAFA—the plaintiffs voluntarily dismissed that action. The plaintiffs then re-filed two new mass actions in state court: one on behalf of 56 plaintiffs, and one on behalf of 48 plaintiffs. The two suits appeared to turn on common questions of law or fact, and otherwise seemed to satisfy CAFA's mass-action removal provisions if taken together. So Carnival removed them to federal court.

The federal district court, however, granted the plaintiffs' motion to remand. And the Eleventh Circuit recently affirmed. Scimone v. Carnival Corp. (pdf), No. 13-12291.

The Eleventh Circuit concluded that "the plain language of CAFA" deprived the district court of "subject-matter jurisdiction over the plaintiffs' two separate actions unless they proposed to try 100 or more persons' claims jointly." But the plaintiffs asserted that they intended to try the two batches of related claims in two separate trials. CAFA itself bars the defendant from creating jurisdiction by proposing a single joint trial. And the state trial judge hadn't consolidated the two actions. That was enough to require a remand, the Eleventh Circuit reasoned, even though the plaintiffs were clearly engaged in jurisdictional maneuvering in splitting up the plaintiffs between two mass actions. For example, some plaintiffs who were traveling on the cruise on the same ticket were split up between the two actions. The idea that the plaintiffs would really try their claims separately is hard to swallow.

The Eleventh Circuit isn't alone in taking a literalist approach. Three other circuits have also allowed plaintiffs' lawyers to avoid the removal of 100-plaintiff mass actions by splitting up their clients among...