Dart hits bullseye, SCOTUS throws out evidentiary requirement in notice of removal

The United States Supreme Court held on Monday that a defendant seeking removal under CAFA need only allege the jurisdictional amount in its notice of removal.  Gone are the days when a defendant must quickly muster an affidavit or other evidence to include in a notice of removal to prove the jurisdictional amount-in-controversy under CAFA.

This case began when the District of Kansas remanded back to state court a class action concerning allegedly deficient royalty payments.  See Owens v. Dart Cherokee Basin Operating Co., No. 12-4157, 2013 WL 2237740 (D. Kan. May 21, 2013).  (We covered the history of this case here and here).  In Dart’s removal papers, it stated that the three requirements of CAFA had been met, and more specifically with regard to the amount-in-controversy, Dart stated the putative class members’ claims totaled more than $8.2 million.  Owens moved to remand the case to state court, asserting that Dart’s removal was deficient as a matter of law because it did not include evidence proving the amount-in-controversy exceeded $5 million.  In opposing Owens’s motion to remand, Dart submitted a declaration by one of its executive officers, who estimated the amount-in-controversy to be in excess of $11 million dollars.  Importantly, Owens did not challenge Dart’s submission.  Nonetheless, the district court granted Owens’s motion to remand, finding that under binding Tenth Circuit precedent, evidence outside of the petition and notice of removal is not permitted to determine the amount-in-controversy.  The district court also erroneously based its decision, in part, on a purported “presumption” against removal.

The Court vacated the Tenth Circuit’s decision and remanded the case for further proceedings.  In so holding, the Court held that a defendant seeking to remove a case to federal court must only file a notice of removal that contains “a short and plain statement of the grounds for removal.”  The Court further noted that the party seeking to invoke federal court jurisdiction is responsible for establishing the amount-in-controversy.  Relying on the Federal Courts Jurisdiction and Venue Clarification Act of 2011, the Court explained the procedure for when a plaintiff challenges the defendant’s assertion of the amount-in-controversy:

[D]efendants do not need to prove to a legal certainty that the amount in controversy requirement has been met.  Rather, defendants may simply allege or assert that the jurisdictional threshold has been met.  Discovery may be taken with regard to that question.  In case of a dispute, the district court must make  findings of jurisdictional fact to which the preponderance standard applies.

Finally, the Court held that there is no anti-removal presumption for cases invoking CAFA, which “Congress enacted to facilitate adjudication of certain class actions in federal court.”

In practice, this decision means that in most cases, a short and sweet allegation that the amount-in-controversy has been met in the notice of removal is sufficient.  The evidentiary proofs regarding the amount-in-controversy will come later, once the case is in federal court and the defendant is opposing plaintiff’s motion to remand.

    Rule 68 offers in the 8th & 10th Circuits

    Yesterday, the 11th Circuit held that a putative class representative’s claim is not mooted by an unaccepted Rule 68 offer of judgment.  See Stein v. Buccaneers LP, No. 13-15417 (11th Cir. Dec. 1, 2014).

    Just in time for the holidays, here’s a summary of the Rule 68 legal landscape in the 8th and 10th Circuits:

    8th Circuit.  There’s no Eighth Circuit decision squarely on point.  The district courts have reached opposite conclusions:

    • Goans Acquisition, Inc. v. Merchant Solutions, LLC, 2013 WL 5408460 (W.D. Mo. Sept. 26, 2013) (following the 7th Circuit’s decision in Damasco)
    • March v. Medicredit, Inc., 2013 WL 6265070 (E.D. Mo. Dec 04, 2013) (finding that pre-certification offer does not moot a named plaintiff’s claim);
    • Sandusky Wellness Center, LLC v. Medtox Scientific, Inc., 2013 WL 3771397, at *2 (D. Minn. July 18, 2013) (same);
    • Jenkins v. General Collection Co., 246 F.R.D. 600, 602–03 (D. Neb. 2007) (same);
    • Liles v. Am. Corrective Counseling Servs., Inc., 201 F.R.D. 452, 455 (S.D. Iowa 2001) (same).

    10th Circuit.  A Rule 68 offer won’t moot the claim of a named plaintiff who “timely” seeks class certification.  See Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1250 (10th Cir. 2011) (“[A] named plaintiff in a proposed class action for monetary relief may proceed to seek timely class certification where an unaccepted offer of judgment is tendered in satisfaction of the plaintiff’s individual claim before the court can reasonably be expected to rule on the class certification motion.”).

      MO Supreme Court strikes down punitive-damages cap

      Since 2005, Missouri has statutorily limited punitive damage awards to the greater of $500,000 or five times the net amount of the judgment awarded to plaintiff.  See Mo. Rev. Stat. 510.265.

      In September 2014, however, the Missouri Supreme Court in Lewellen v. Franklin, 441 S.W.3d 136 (Mo. 2014) held that this punitive-damages cap violates a plaintiff’s constitutional right to a trial by jury.

      The Court’s analysis was straightforward:

      1. Any change in the right to a jury determination of damages as it existed in 1820 violates the Missouri Constitution.
      2. In 1820, there existed a right to a jury determination of the amount of punitive damages.
      3. A statutory cap on punitive damages “necessarily changes and impairs” that right.
      4. Therefore, the punitive-damages cap under Mo. Rev. Stat. 510.265 is unconstitutional.

      The Court also distinguished between Missouri’s statutory punitive-damages cap and the US Constitution’s Due Process limitations on punitive damages, noting that courts have a duty to conduct a fact-specific inquiry under the Due Process clause (which trumps the Missouri Constitution under the Supremacy Clause) to prevent grossly excessive or arbitrary awards.  A statutory cap, on the other hand, is not based on the facts of a case; it caps the punitive damages award regardless of the facts and circumstances of a particular case.

        Top reasons the JPML has denied centralization of products liability and sales/marketing cases

        Since May 2011, here are the most-cited reasons the JPML has denied Section 1407 centralization of products liability and sales/marketing cases:

        The limited number of parties and involved counsel make informal cooperation practicable and preferable to formal centralization.

        • MDL 2509 – IN RE: SEMPRIS MEMBERSHIP PROGRAM MARKETING AND SALES PRACTICES LITIGATION, 2/18/14 Order Denying Transfer (“Various mechanisms are available to minimize or eliminate the possibility of duplicative discovery even without an MDL.  In these circumstances, informal cooperation among the relatively few involved counsel and coordination among the involved courts are, in our judgment, preferable to formal centralization.”)
        • MDL 2366 – IN RE: LOUISIANA-PACIFIC CORP. TRIMBOARD SIDING MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, 6/11/12 Order Denying Transfer (denying transfer of five actions, in part, because “plaintiffs in some of the actions share counsel, and defendant is represented by the same counsel in all actions”)
        • MDL 2340 – IN RE: FRESH DAIRY PRODUCTS ANTITRUST LITIGATION, 4/17/12 Order Denying Transfer (“Plaintiffs in the consolidated actions share counsel, and at least some defendants (including, for example, National Milk Producers Association and Dairy Farmers of America, Inc.) are represented by the same law firms in both movants’ action and the consolidated actions.  Given the limited number of actions, we believe that informal cooperation among the involved attorneys is quite practicable.”)
        • MDL 2310 – IN RE: TRILEGIANT MEMBERSHIP PROGRAM MARKETING AND SALES PRACTICES LITIGATION, 12/9/11 Order Denying Transfer (denying centralization of six actions, in part, because “[t]he relatively few involved counsel also weighs against centralization, and should facilitate informal coordination and cooperation across the actions”)
        • MDL 2300 – IN RE: PLAVIX PRODUCTS LIABILITY LITIGATION, 12/14/11 Order Denying Transfer (denying centralization of 12 actions, in part, due to the “limited number of actions and relatively few involved counsel”)
        • MDL 2237 – IN RE: CHILEAN NITRATE PRODUCTS LIABILITY LITIGATION, 5/20/11 Order Denying Transfer (denying centralization of two actions, in part, because “plaintiffs in both actions are represented by one law firm, and another law firm represents SQMNA in both actions.  In these circumstances, informal cooperation among the involved attorneys is both practicable and preferable.  . . .  [Defendant] represents that it has already offered to coordinate discovery, and that it is agreeable to the use of depositions of its witnesses in both actions.”)
        • MDL 2230 – IN RE: QUAKER OATS TRANS-FAT MARKETING AND SALES PRACTICES LITIGATION (denying centralization 4/8/11) (noting that the litigation involves a single defendant and one firm represents the plaintiffs in 4 of 5 actions)
        • MDL ____ – In re: Boehringer Ingelheim Pharm., Inc., Fair Labor Standards Act Litig., 763 F. Supp. 2d 1377, 1378-79 (J.P.M.L. 2011) (denying centralization of four actions in which plaintiffs in three actions shared counsel and, in all actions, the common defendant was represented by the same law firm, concluding that “alternatives to formal centralization, such as voluntary cooperation among the few involved counsel and courts, appear[ed] viable”).
        • MDL _____ – In re Rite Aid Corp. Wage and Hour Emp’t Practices Litig., 655 F. Supp. 2d 1376, 1377 (J.P.M.L. 2009) (denying centralization where plaintiffs in four of six actions shared counsel)

        Common factual questions are not sufficiently complex or numerous.

        • MDL 2456 – IN RE: KASHI COMPANY MARKETING AND SALES PRACTICES LITIGATION, 8/6/13 Order Denying Transfer (noting that JPML has repeatedly concluded that common factual questions are not sufficiently complex or numerous in food product sales and marketing litigation)
        • MDL 2392 – IN RE: WAGGIN’ TRAIN CHICKEN JERKY PET TREAT PRODUCTS LIABILITY LITIGATION, 9/28/12 Order Denying Transfer (“Although all actions share some factual issues regarding whether chicken jerky dog treats were contaminated by a common source in China, we are unconvinced, on the record before us, that those issues are sufficiently complex or numerous to warrant the creation of an MDL.”)
        • MDL 2374 – IN RE: HONEY PRODUCTION MARKETING AND SALES PRACTICES LITIGATION, 8/2/12 Order Denying Transfer (“Although the actions share some common factual questions regarding the filtration of pollen from honey products, these questions do not appear sufficiently complex or numerous to justify Section 1407 transfer at this time.”)
        • MDL 2348 – IN RE: CREST SENSITIVITY TREATMENT & PROTECTION TOOTHPASTE MARKETING AND SALES PRACTICES LITIGATION, 6/11/12 Order Denying Transfer (“Although the three actions share some factual issues regarding whether P&G deceptively marketed its Crest Sensitivity Treatment and Protection toothpaste,1 we are unconvinced, on the record before us, that those issues are sufficiently complex to warrant the creation of an MDL.”)
        • MDL 2310 – IN RE: TRILEGIANT MEMBERSHIP PROGRAM MARKETING AND SALES PRACTICES LITIGATION, 12/9/11 Order Denying Transfer (denying centralization of six actions, in part, because “[t]he movants have not convinced us that any common factual questions are sufficiently complex or numerous to justify Section 1407 transfer at this time.  . . .   Although all actions contain allegations of the same basic scheme concerning post–transaction internet marketing and enrollment in membership programs, the differences among the actions will reduce any efficiencies to be gained from centralization. Plaintiffs’ motion encompasses cases against different defendants and alleging varied RICO enterprises. Much of the pretrial proceedings, therefore, likely will vary across the actions, including discovery targeted to the unique defendants in each action and issues, such as arbitration agreements, specific to those defendants.”)
        • MDL 2306 – IN RE: SKINNYGIRL MARGARITA BEVERAGE MARKETING AND SALES PRACTICES LITIGATION, 12/14/11 Order Denying Transfer (denying centralization of six actions, in part, because “[t]hese putative nationwide class actions may share some factual questions regarding the defendants’ marketing practices, but the central allegation that Skinnygirl Margarita beverage was marketed as being all natural despite some level of sodium benzoate appears to be undisputed, and plaintiffs have failed to detail how pretrial proceedings would benefit from centralization. Consequently, the common material disputed facts may be limited in number.”)
        • MDL 2248 – IN RE: NUTELLA MARKETING AND SALES PRACTICES LITIGATION, 8/16/11 Order Denying Transfer (“The actions may share some factual questions regarding the common defendant’s marketing practices, but these questions do not appear complicated.  Indeed, the parties have not convinced us that any common factual questions are sufficiently complex or numerous to justify Section 1407 transfer at this time. Cooperation among the parties and deference among the courts should minimize the possibility of duplicative discovery and inconsistent pretrial rulings.”) (citing In re: General Mills, Inc., Yoplus Yogurt Prods. Mktg. and Sales Practices Litig., 716 F. Supp. 2d 1371 (J.P.M.L. 2010) (denying motion for centralization of four actions pending in four districts); In re: DirectBuy, Inc., Mktg. and Sales Practices Litig., 682 F. Supp. 2d 1349, 1351 (J.P.M.L. 2010) (same))
        • MDL ___ – In re AriZona Beverage Co. Products Mktg. and Sales Practices Litig., 609 F. Supp. 2d 1369 (J.P.M.L. 2009).

        The actions involve dissimilar legal or factual issues.

        • MDL 2544 – IN RE: HEALTHEXTRAS INSURANCE MARKETING AND SALES PRACTICES LITIGATION, 6/6/14 Order Denying Transfer (key legal issue is whether insurance policies were issued properly under state law, and the relevant state laws vary)
        • MDL 2453 – IN RE: ADDERALL XR MARKETING, SALES PRACTICES AND ANTITRUST LITIGATION, 8/6/13 Order Denying Transfer (denying transfer because the three putative statewide classes do not overlap and the claims are based on different state antitrust and consumer-protection laws; therefore, low likelihood of conflicting pretrial rulings)
        • MDL 2447 – IN RE: MAYBELLINE NEW YORK AND L’ORÉAL PARIS COSMETIC PRODUCTS MARKETING AND SALES PRACTICES LITIGATION, 6/6/13 Order Denying Transfer (“Although all four actions involve allegations that defendants’ lip products do not remain on wearers’ lips for the durations advertised, those products are not the same across all actions. In the Southern District of New York and Northern District of Californian actions, the involved lip products are Maybelline’s SuperStay 10HR Stain Gloss and SuperStay 14HR Lipstick. In the Southern District of California and Eastern District of California actions, the involved product is SuperStay 24HR Lip Color. In addition, two of the actions implicate products not found in any other action. Specifically, the Northern District of California action involves allegations concerning certain mascara products, and the Eastern District of California action involves allegations concerning a foundation product.”)
        • MDL 2374 – IN RE: HONEY PRODUCTION MARKETING AND SALES PRACTICES LITIGATION, 8/2/12 Order Denying Transfer (“In contrast, the differences among the actions are both significant and numerous. The actions involve different defendants, marketing different honey products, and involve different state regulations subject to different legal challenges by the defendants. Plaintiffs have not alleged any conspiracy, collaboration, or other industry-wide conduct by the defendants that would justify centralizing actions naming different honey retailers and producers as defendants.”)
        • MDL 2339 – IN RE: TEAMSTER CAR HAULER PRODUCT LIABILITY LITIGATION, 4/17/12 Order Denying Transfer (denying centralization of eleven personal-injury actions involving allegedly defective trailers, in part, because “the defects alleged and injuries suffered vary among these actions, and various additional defendants are named based on different theories of liability”)
        • MDL 2321 – IN RE: YELLOW BRASS PLUMBING COMPONENT PRODUCTS LIABILITY LITIGATION, 2/9/12 Order Denying Transfer (denying centralization of 13 actions involving brass plumbing component, in part, because “the dissimilarity of numerous claims convince us that the significant inconvenience to the parties and practical case management challenges presented by centralization outweigh its benefits”)
        • MDL 2306 – IN RE: SKINNYGIRL MARGARITA BEVERAGE MARKETING AND SALES PRACTICES LITIGATION, 12/14/11 Order Denying Transfer (denying centralization of six actions; “centralization may not prevent either conflicting or multiple rulings, because plaintiffs bring their claims under the laws of different states. Under some state laws, the state of mind or reliance by individual purchasers may be a critical factor; in others it may not. These issues would not involve common discovery.”)

        Alternatives to centralization are preferable (e.g., 1404 transfer; dismissal or stay under the first-to-file doctrine; agreement to voluntarily dismiss actions in favor of one district, etc.)

        • Centralization under Section 1407 “should be the last solution after considered review of all other options.”  In re Best Buy Co., Inc., California Song-Beverly Credit Card Act Litig., 804 F. Supp. 2d 1376, 1378 (J.P.M.L. 2011).  These other options include “Section 1404 transfer; dismissal or stay under the first-to-file doctrine; agreement by plaintiffs to voluntarily dismiss their actions in favor of one district; and cooperation and coordination among the parties and the various transferor courts.”  See MDL 2397 – IN RE: GERBER PROBIOTIC PRODUCTS MARKETING AND SALES PRACTICES LITIGATION, 10/16/12 Order Denying Transfer.
        • MDL 2512 – IN RE: TRIVIA NATURAL SWEETENER MARKETING AND SALES PRACTICES LITIGATION, 2/12/14 Order Denying Transfer (denying 1407 centralization, given likelihood that litigation would would proceed in District of Hawaii based on the first-to-file rule)
        • MDL 2392 – IN RE: WAGGIN’ TRAIN CHICKEN JERKY PET TREAT PRODUCTS LIABILITY LITIGATION, 9/28/12 Order Denying Transfer (“Various mechanisms are available to minimize or eliminate the possibility of duplicative discovery even without an MDL. In these circumstances, informal cooperation among counsel and coordination among the involved courts are, in our judgment, preferable to formal centralization. Notices of deposition can be filed in all related actions; the parties can stipulate that any discovery relevant to more than one action can be used in all those actions; or the involved courts may direct the parties to coordinate their pretrial activities.”); MDL 2348 – IN RE: CREST SENSITIVITY TREATMENT & PROTECTION TOOTHPASTE MARKETING AND SALES PRACTICES LITIGATION, 6/11/12 Order Denying Transfer (same)
        • MDL 2374 – IN RE: HONEY PRODUCTION MARKETING AND SALES PRACTICES LITIGATION, 8/2/12 Order Denying Transfer (“Available alternatives to centralization may minimize whatever possibilities exist of duplicative discovery or inconsistent pretrial rulings.”)
        • MDL 2237 – IN RE: CHILEAN NITRATE PRODUCTS LIABILITY LITIGATION, 5/20/11 Order Denying Transfer (denying transfer, in part, because “[defendant] represents that it has already offered to coordinate discovery, and that it is agreeable to the use of depositions of its witnesses in both actions”)

        Transfer under 28 U.S.C. 1404 would be preferable.

        • MDL 2469 – IN RE: CAPATRITI BRAND OLIVE OIL MARKETING AND SALES PRACTICES LITIGATION, 8/6/13 Order Denying Transfer
        • MDL 2397 – IN RE: GERBER PROBIOTIC PRODUCTS MARKETING AND SALES PRACTICES LITIGATION, 10/16/12 Order Denying Transfer (detailed discussion of the advantage of section 1404 transfer over section 1407 transfer)
        • MDL 2392 – IN RE: WAGGIN’ TRAIN CHICKEN JERKY PET TREAT PRODUCTS LIABILITY LITIGATION, 9/28/12 Order Denying Transfer
        • In re Republic Western Ins. Co. Ins. Coverage Litig., 206 F. Supp. 2d 1364, 1365 (J.P.M.L. 2002)

        Actions were at widely varying procedural stages.

        • MDL 2366 – IN RE: LOUISIANA-PACIFIC CORP. TRIMBOARD SIDING MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, 6/11/12 Order Denying Transfer (denying transfer of five actions primarily because “such a significant procedural disparity among the subject actions”)
        • MDL 2339 – IN RE: TEAMSTER CAR HAULER PRODUCT LIABILITY LITIGATION, 4/17/12 Order Denying Transfer (“centralization is not warranted here, as some of the actions have been pending in state or federal court for several years, and several are procedurally so far advanced that discovery is completed or nearly completed”)
        • MDL 2321 – IN RE: YELLOW BRASS PLUMBING COMPONENT PRODUCTS LIABILITY LITIGATION, 2/9/12 Order Denying Transfer (denying centralization of 13 actions involving brass plumbing component, in part, due to “the relatively advanced progress of the District of Arizona Richards action”)
        • MDL 2300 – IN RE: PLAVIX PRODUCTS LIABILITY LITIGATION, 12/14/11 Order Denying Transfer (denying centralization of 12 actions, in part, because 10 actions were commenced four to five years before the other 2 actions and “[m]oving defendants themselves acknowledge that they have completed all document production in the constituent District of New Jersey actions (approximately 3.5 million pages); the parties have served and responded to other written discovery; and most, if not all, depositions of the plaintiffs have been completed.”)
        • In re Ambulatory Pain Pump-Chondrolysis Prods. Liab. Litig., 709 F. Supp. 2d 1375, 1378 (J.P.M.L. 2010) (denying centralization of 102 personal injury actions, in part because the actions were at “widely varying procedural stages”)).

         Too few actions to warrant consolidation.

        • MDL 2340 – IN RE: FRESH DAIRY PRODUCTS ANTITRUST LITIGATION, 4/17/12 Order Denying Transfer (“there are, as a practical matter, really only two actions in this docket, as the three Northern District of California actions have been consolidated”)
        • MDL 2292 – IN RE: HIGHWAY ACCIDENT IN FULTON COUNTY, OHIO, ON AUGUST 2, 2009, 12/13/11 Order Denying Transfer (denying centralization of two actions)
        • MDL 2237 – IN RE: CHILEAN NITRATE PRODUCTS LIABILITY LITIGATION, 5/20/11 Order Denying Transfer (denying centralization of two actions, in part, because “[t]here are . . . only two actions at issue”) (citing In re Transocean Ltd. Secs. Litig., 753 F. Supp. 2d 1373, 1374 (J.P.M.L. 2010) (“As we have stated in the past, where only a minimal number of actions are involved, the moving party generally bears a heavier burden of demonstrating the need for centralization.”))

        Plaintiffs in one action moved for preliminary approval of a proposed nationwide settlement.

        • MDL 2468 – IN RE: PILOT FLYING J FUEL REBATE CONTRACT LITIGATION, 8/8/13 Order Denying Transfer (denying transfer; noting that “[t]he Eastern District of Arkansas recently granted preliminary approval of a proposed nationwide class settlement, and final approval of the settlement will be considered in a few months.  Centralization at this time could delay settlement proceedings.”)
        • MDL 2341 – IN RE: BUILDING PRODUCTS OF CANADA CORP. ORGANIC SHINGLES PRODUCTS LIABILITY LITIGATION, 4/17/12 Order Denying Transfer (denying centralization because Plaintiffs in one action “filed a motion for preliminary approval of class action settlement, which defendants represent would cover all claims in the actions before the Panel”)
        • In re Power Balance, LLC, Mktg. & Sales Practices Litig., 777 F. Supp. 2d 1345, 1346 (J.P.M.L. 2011) (noting that “[c]entralization at this time could delay the [preliminary settlement] proceedings as well as entail additional expense for the litigants and the courts to establish an MDL proceeding with little benefit”)
        • In re Toyota Motor Corp. Prius HID Headlamp Prods. Liab. Litig., 754 F. Supp. 2d 1380, 1381 (J.P.M.L. 2010)

        Some of the actions are (or will be) proceeding to arbitration.

        • MDL 2321 – IN RE: YELLOW BRASS PLUMBING COMPONENT PRODUCTS LIABILITY LITIGATION, 2/9/12 Order Denying Transfer (denying centralization of 13 actions involving brass plumbing component, in part, given that “that one of the actions is being arbitrated and others could proceed to arbitration”)

         All defendants uniformly oppose centralization.

        • MDL 2306 – IN RE: SKINNYGIRL MARGARITA BEVERAGE MARKETING AND SALES PRACTICES LITIGATION, 12/14/11 Order Denying Transfer (denying centralization of six actions, in part, because “all defendants uniformly oppose centralization [] a factor which is quite influential where other factors do not strongly favor centralization”)

        Localized, intervening causation issues thwart efficiencies of centralization.

        • MDL 2444 –  IN RE: SPRAY POLYURETHANE FOAM INSULATION PRODUCTS LIABILITY LITIGATION, 6/6/13 Order Denying Transfer (denying transfer of eight actions primarily because “individualized facts concerning the chemical composition of the different products, the training and practices of each installer, and the circumstances of installation at each residence will predominate over the common factual issues alleged by plaintiffs”)
        • MDL 2321 – IN RE: YELLOW BRASS PLUMBING COMPONENT PRODUCTS LIABILITY LITIGATION, 2/9/12 Order Denying Transfer (denying centralization of 13 actions involving brass plumbing component, in part, because “significant localized intervening causation issues are expected to be at play (i.e., the applicable standards according to which the fittings were made, the thickness of the product, manufacturing conditions, proper installation/training, local water quality, compliance with local building codes, etc.) in each action”)

        Proponents of centralization lacked specifics at the JPML hearing.

        • MDL 2381 – IN RE: INTUITIVE SURGICAL, INC., DA VINCI ROBOTIC SURGICAL SYSTEM PRODUCTS LIABILITY LITIGATION, 8/3/12 (“Throughout the briefing process, and when questioned at oral argument, the parties seeking centralization made only vague generalizations about the specific nature of any common questions of fact, where discovery and pretrial proceedings will overlap, and how many cases are expected to be filed.”)

        Not practical to centralize actions involving certain claims and remand the remaining actions.

        • MDL 2393 – IN RE: UPONOR, INC., F1960 PLUMBING FITTINGS PRODUCTS LIABILITY LITIGATION, 9/27/12 Order Denying Transfer (“The exceedingly general language that the homeowners employ in most actions to describe the defective components at issue makes it impossible in most cases to transfer “F1960 claims” and then separate and remand, pursuant to Section 1407(a), non-F1960 claims.”)

        Trade secrets militate against centralizing competitors.

        • MDL 2444 –  IN RE: SPRAY POLYURETHANE FOAM INSULATION PRODUCTS LIABILITY LITIGATION, 6/6/13 Order Denying Transfer (“placing direct competitor manufacturer defendants into the same litigation would require protecting trade secret and confidential information from disclosure to all parties and complicate case management”)

        Prospect of future filings not given much weight in centralization decision.

        • MDL 2459 – IN RE: LIPITOR MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, 8/8/13 Order Denying Transfer (”Although plaintiffs suggest that the number of Lipitor cases is likely to expand considerably, we are disinclined to take into account the mere possibility of future filings in our centralization calculus.)

        Litigation already resolved through arbitration; no remaining “pretrial activities” to warrant centralization.

        • MDL 2538 – IN RE: CLEARTALK-ZTE ARBITRATION LITIGATION, 6/6/14 Order Denying Transfer

         

          Dealing with premature motions for class certification (filed to avoid Rule 68 offers)

          Filing an bare-bones motion for class certification alongside the class-action complaint is one tactic to avoid the mooting effect of a Rule 68 offer. But what are defendants and the courts supposed to do with such a motion and its flimsy thread-bare recitals of the Rule 23 requirements?

          Federal judges do not like motions lingering on their dockets longer than six months; it hurts their stats and gets reported to Washington.  See, e.g., Singer v. Illinois State Petroleum Corp., 2013 wl 2384314, at *2 (N.D. Ill. May 24, 2013) (“[T]his Court is unwilling to contemplate the prospect of shattering its unbroken record of more than three decades of reporting no ‘stale’ pending motions in its statutorily-required September 30 report where, as here, such purported staleness is occasioned by lawyer-caused delays rather than by this Court’s failing to act on a live motion.”).

          Instead of agreeing to an arbitrarily fast six-month class-cert discovery and briefing schedule – all to avoid the prospect of a “stale” class certification motion – here are some better options:

          Immediately dismiss the class-cert motion without prejudice to refiling later.

          • Physicians Healthsource, Inc. v. Purdue Pharma L.P., 2013 WL 4782378, *1 (D.Conn. Sep 06, 2013) (“[I]t does not follow that an initial, under-developed motion—like the one at bar—must linger on the docket while the court awaits the filing of a later, fully-developed motion following discovery . . . .  To the extent that class allegations are preserved from mootness by the filing of a premature motion for certification, they are no less preserved by an order denying that motion without prejudice to renewal before final judgment.”)
          • 3081 Main Street, LLC v. Business Owners Liability Team LLC, 2012 WL 4755048, *1 (D.Conn. Sep 24, 2012) (“[T]here is nothing to be gained by formally staying plaintiff’s current, underdeveloped motion while the court awaits the filing of a later, fully-developed motion. An order denying certification, much like an order granting certification, is ‘inherently tentative’ and the court ‘remains free to modify it in light of subsequent developments in the litigation.’ Therefore, plaintiff’s motion for class certification is denied without prejudice to renewal after discovery.”) (citations omitted)

          Withdraw the motion and stipulate that defendant will not “pick off” the named plaintiff.  

          • Kurgan v. Chiro One Wellness Centers LLC, 2014 WL 642092 (N.D.Ill. Feb 19, 2014) (noting that in the Seventh Circuit, often “motions are withdrawn shortly after the initial status hearing because defendants are willing to enter into a stipulation that they will not attempt to ‘pick off’ the named plaintiff in an early settlement”)

           

            Where’s the (Kosher) Beef? The Eighth Circuit Discusses Article III Standing

            Do consumers who buy kosher products for non-religious reasons have a legitimate “beef” with the manufacturer if the product turns out not to be kosher?

            In Wallace v. ConAgra Foods, Inc., 747 F.3d 1025 (8th Cir. 2014) the plaintiffs brought a putative nationwide class action alleging that food-industry conglomerate ConAgra violated various consumer protection laws by labeling their Hebrew National franks (hot dogs) as “Made with Premium Cuts of 100% Kosher Beef.” The plaintiffs alleged that the kosher inspection process was “defective and unreliable” because of the company’s manufacturing quotas.  The district court granted ConAgra’s motion to dismiss based on a lack of subject matter jurisdiction, agreeing that the plaintiff’s claims were “barred”  because “the determination of whether a product is in fact ‘kosher’ [is] intrinsically religious in nature.” Id. at 1028.

            The 8th Circuit, however, disagreed and vacated the district court’s dismissal because it held that the plaintiffs actually lacked Article III standing, under the foundational principle that the court “must make every effort to avoid deciding novel constitutional questions.”

            In its Article III analysis, the court focused on the requirement that the alleged injury must be a “particularized, actual injury-in-fact” and stated that “[i]n the context of defective products, it is not enough for a plaintiff allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect.” Id. at *4 (internal quotations and citations omitted) (emphasis in original). The plaintiffs however, admitted in their Complaint that they “could not possibly tell” if the packages that they had purchased were not kosher beef. Id. at 1033.  Accordingly, “[w]ithout any particularized reason to think the consumers’ own packages of Hebrew National beef actually exhibited the alleged non-kosher defect, the consumers lack Article III standing to sue ConAgra.” Id. at *4.

            After concluding that the court did not have subject matter jurisdiction, the court ended up remanding the case back to state court instead of dismissing the case without prejudice, as is the court’s typical practice.  Id. at 1033.  Our colleagues Frank Cruz-Alvarez and Talia Zucker recently commented that the Eighth Circuit improperly applied 28 U.S.C § 1447(c) into the Class Action Fairness Act, which grants federal courts original jurisdiction of class actions.  Given how often Article III standing arises in Eighth Circuit opinions, this may not be the last we hear on the issue.

              10th Circuit rejects a “death by discovery” approach when determining the threshold question of whether the parties agreed to arbitration

              If there is one topic that has captured the attention of federal courts around the country in the past few years, it’s the applicability of mandatory arbitration in putative class actions. (Indeed, during our humble blog’s brief existence, we have covered the issue numerous times, most notably here, here and here).  A recent decision from the Tenth Circuit may provide the most entertaining and candid examination of the procedure district courts should take in answering that question.

              In Howard v. Ferrellgas Partners, L.P.Case No. 13-3061, 2014 WL 1363963 (10th Cir. Apr. 8, 2014), the court admonished all parties involved when it reversed an order from the District of Kansas denying arbitration after a year and a half of discovery on the issue of whether arbitration even applied to the parties dispute.  The time spent on discovery appeared to baffle Judge Gorsuch, who writing for the court, noted that the case seemed to rest on a simple factual premise: Mr. Howard called Ferrellgas to order propane to heat his home; Ferrellgas agreed to sell him some.  Was a final and complete oral contract formed during that initial phone call? Or did Ferrellgas subsequently modify their agreement by delivering a contract with the disputed arbitration clause?

              The court noted that the Federal Arbitration Act (FAA) directs “district courts to proceed summarily to [a] trial of the relevant facts” when it’s not clear whether the parties opted for arbitration because “the object is always to decide quickly … so the parties can get on with the merits of their dispute.”  The Tenth Circuit held that the district court’s Kafka-esque procedure of discovery and motion practice was error because “[p]arties should not have to endure years of waiting and exhaust legions of photocopiers in discovery and motions practice merely to learn where their dispute will be heard.  The [FAA] requires courts [to] process the venue question quickly so the parties can get on with the merits of their dispute in the right forum.  It calls for a summary trial – not death by discovery.”

              This opinion is also worth reading for its analysis of Kansas contract law, and for particular import to class action practitioners in our area is whether a subsequent writing can modify an oral contract.  If the parties had orally agreed to a on-going purchase agreement with no mention of any written terms, then under Kansas law, the introduction of a subsequent mandatory arbitration clause could only modify the parties’ pre-existing oral agreement with the express consent of the other party.  Ensuring that consent could save you from litigating the procedural quagmire the parties faced in Howard.

                Artfully pleaded MMPA claim cannot escape preemption

                Plaintiff’s lawsuit was essentially about octane.

                She claimed that an unfair practice occurs every time a consumer buys higher octane fuel from single-hose gas pump and incidentally receives a residual amount of lower octane fuel lingering in the hose from a prior fueling.octane-ratings

                In her single-count MMPA lawsuit, Plaintiff sought money and an injunction on behalf of a class of Missouri consumers who bought higher grade gasoline from the Defendants (retail-gas-station operators).

                Preemption posed a problem for Plaintiff. The federal Petroleum Marketing Practices Act expressly preempts state-law requirements regarding labeling and marketing of gasoline octane rating that are not “the same as” the PMPA’s requirements.

                Although Plaintiff carefully omitted the word “octane” in her class-action complaint, Judge Kays held that federal law preempted her MMPA claim:

                Although Plaintiff has successfully avoided using the word “octane” anywhere in the Complaint, it does not change the fact that the essence of her MMPA claim is inextricably connected with octane disclosures or labeling. To begin, the Court notes there is no meaningful difference between a gasoline’s “grade/brand” and its octane rating. A gasoline’s grade/brand is indistinguishable from octane levels; its “grade” is synonymous with its octane rating. … [I]n conducting a preemption analysis, a court is not required to accept a plaintiff’s artful pleading when it is clear from the totality of her allegations that her claim falls within a preempted area.

                Johnson v. MFA Petroleum Co., 2014 WL 1292453, at *6 (W.D. Mo. Mar. 28, 2014).

                Bottom line, Plaintiff’s claim was expressly and impliedly preempted because it would force Defendants to make additional disclosures regarding the pump’s inability to dispense the full amount of the selected grade or to remove octane disclosures altogether.   And that, of course, would impose a state-law requirement that is not the same as the PMPA’s requirements.

                  Class Certification denied by E.D. Mo. in purported pipeline leak based on lack of ascertainability, predominance of individual inquiries

                  One of the implicit requirements of Rule 23 is that a class should not be certified unless it is “ascertainable;” thus, if a court is required to engage in fact-intensive individualized analysis to identify class members, certification is not appropriate.  While we recently blogged about two thoughtful opinions coming from the Third Circuit, decisions in our home Circuits have not been as plentiful.

                  Judge Henry E. Autrey of the Eastern District of Missouri, however, recently highlighted the  requirement and its affect on the other Rule 23 requirements in Henke v. Arco Midcon, LLC, No. 4:10CV86 HEA, 2014 WL 982777 (E.D. Mo. Mar. 12, 2014).  In Henke, the plaintiffs alleged that their land was contaminated from oil leaks from a decades old petroleum pipeline that had been reconditioned to carry fiber optic cable.  The problem for the plaintiffs was that there were several additional active and inactive petroleum pipelines running across their property; and although plaintiffs’ experts indicated there was some contamination on their property – they did not opine as to the source of the contamination or that the contamination arose from the defendants’ abandoned pipeline.

                  In its analysis, the court observed that plaintiff’s proposed class definition was inadequate not only because it raised “the potential need for fact-intensive individualized analysis to identify class members” but also because it raised issues of Article III standing, as plaintiffs could not sufficiently establish that they had suffered an injury-in-fact, much less that they were members or the class they purported to represent.  Id. at *5-6.  The court then examined how the injury and causation inquiry negatively impacted plaintiff’s ability to satisfy commonality, due to the individual nature of each class member’s real property interest.

                  Furthermore, the court also rejected plaintiff’s attempt to characterize the requested environmental remediation as injunctive under Rule 23(b)(2).  The court held that the proposed class lacked the required “cohesiveness” required under Rule 23(b)(2) for injunctive relief because of the individualized differences in the level of contamination, the source of the contamination, and how it affected each individual class member precluded any possibility that an injunction “could be sufficiently specific to provide a group-wide remedy.”  Id. at *12.  Likewise, the court held that predominance was not met not only due to the multitude of individual differences between class member properties, but also “the lack of any single, operative event or conduct that may have ’caused’ injury to each individual plaintiff.”  Id. at *16.  The court also found that “issue certification” under Rule 23(c)(4) was not an option, adopting the approach espoused by the Fifth Circuit in Castano v. American Tobacco Company, 84 F.3d 734 (5th Cir. 1996).

                  The entire decision is well worth reading for its in-depth analysis of the intersection of ascertainability and Rule 23’s explicit requirements. For another perspective on the decision, especially how the individualized injury inquiry affects typicality check out this post by Andrew Trask at Class Action Countermeasures.

                    Proposed Hybrid Rule 23 / FLSA Wage-Hour Class Settlement Denied

                    We have written a few posts about the challenges inherent in obtaining judicial approval of proposed class settlements here at the Missouri and Kansas Class Action Law Blog, and this latest order issued by Judge Kays denying a proposed hybrid wage-and-hour settlement outlines many of those concerns that counsel should be mindful of when negotiating and finalizing a proposed class settlement that will pass judicial scrutiny. (HT to our former colleague Eric Dirks who tipped us off about this order earlier this week – look for a guest post from him in the coming weeks).

                    In Stewart v. USA Tank Sales and Erection Co., No. 12-05136-CV-SW-DGK, 2014 WL 836212 (W.D. Mo. March 4, 2014), the plaintiffs brought a seemingly straight-forward wage-and-hour claim, alleging that their employer failed to pay them overtime; the wrinkle being that it was a “hybrid” class where plaintiffs bring a claim under both the federal Fair Labor Standards Act (FLSA) and under the state minimum wage law (here, the Missouri Minimum Wage and Maximum Hour Law, or MMWMHL).  As all of you savvy readers know, the class certification standards for these statutes are different, which ultimately became a problem down the road.

                    According to the order, the proposed settlement was negotiated with the assistance of a mediator within six months of the filing of the complain; informal discovery was exchanged, but there was no substantive motion practice.  While this sounds admirable and efficient, Judge Kays ultimately rejected the proposed agreement for a number of reasons:

                    • Allowing Defendant to Serve as Claims Administrator with reversion provision “problematic” and “conflict of interest”

                    The  proposed settlement contained a reversion provision under which all settlement money not claimed by class members reverted back to an employer.  While these are not uncommon, they have been criticized because it could be evidence of potential collusion resulting in significant fees to plaintiffs’ counsel, especially if claim rates are low, resulting in limited benefits to the class. Id. at *6. While not objectionable in and of itself, the court found that the defendant’s role as claims administrator was a “patent conflict of interest” because the defendant “will have a financial incentive to deny class members’ claims.”  Id.  at *9.

                    • Settlement Claim Form did not allow class members who wished to participate in FLSA settlement the opportunity to opt-out of Rule 23 state law settlement
                    This is where the hybrid Rule 23 / FLSA class became a potential landmine – the proposed claim form allowed class members to opt-out of both settlements, or “do nothing” to participate in the Rule 23 state law settlement, but not “opt-in” to the FLSA class.  The court found it problematic that the proposed settlement did not make any provision for a class member who wanted to participate in the FLSA settlement, but chose to opt-out of the state law settlement.  Id. at *7.  While the problem was likely academic, the court did not think it was fair that for a class member to receive a full share of the state law settlement, the class member also had to opt-in to the FLSA settlement as well.
                    • Claim Provision for Rule 23 state law settlement unnecessary

                    Because all class members were current or former employees, and given relatively small class (~260) the court questioned whether “claims” needed to be made at all for the Rule 23 state law class, because the defendant could ensure “maximum participation” by mailing a settlement check directly to each class member.  Id.

                    • Proposed class representative awards not supported by record

                    The parties proposed class representative incentive awards of $17,000 and $25,000, or approximately 4-6 times the average class member benefit.  The court found that a typical enhancment payment was between “$500 and $10,000″ depending on the work performed.  The court concluded that there was nothing in the record to support such an award.

                    • Attorney’s Fee award problematic 

                    As a final matter, the court was concerned about the attorney fee award, where counsel was guaranteed its proposed fee “regardless of how many class claims are paid or how much the individual class members receive.”  Id. at *8.  The court was also concerned that plaintiff’s counsel proposed fee award had a “clear sailing” provision, which it called “prima facie evidence of simultaneous negotiations of merit relief and fees, which is a practice fraught with serious ethical concerns” justifying additional judicial scrutiny.  Id. (citation omitted).

                    While none of these factors individually would probably torpedo a proposed class settlement, the court noted that their “collective presence is a red-flag for potential collusion” which ultimately prevented judicial approval.