Category Archives: Mass Torts

THE FIFTH CIRCUIT ADOPTS A PRESUMPTION IN FAVOR OF FEDERAL JURISDICTION IN CLASS ACTIONS REMOVED UNDER CAFA

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CAFA extends federal jurisdiction to certain mass action and class action lawsuits where

  • the proposed class is at least one hundred (100) members, minimal diversity exists between the parties,
  • the amount in controversy is greater than $5,000,000, and
  • the primary defendants are not states, state officials, or other government entities. 28 USC §1332(d)(2), (5).

There are, however, exceptions to CAFA jurisdiction that empower a district court to remand a case to state court, particularly local controversies “…that uniquely affect a particular locality to the exclusion of all others”.

Remands of mass actions and class actions defeat the purpose of CAFA removals, and the Fifth Circuit has recently made remands under CAFA-exceptions more difficult. In Arbuckle Mountain Ranch of Texas, Inc. v. Chesapeake Energy Corp., 810 F.3d 335 (5th Cir. 1/7/2016), the Fifth Circuit joined other circuits in establishing a presumption in favor of retaining federal jurisdiction under CAFA. See, 28 USC § 1332(d).

The Fifth Circuit held that:

…When deciding whether an exception to CAFA removal applies, we adopt the general approach from sister circuits recognized in Opelousas. If the applicability of an exception is not shown with reasonable certainty, federal jurisdiction should be retained.”

Arbuckle, 810 F.3d at 338. Based on the ruling in Arbuckle, supra, CAFA jurisdiction is presumed and all doubts about the exercise of CAFA jurisdiction over a case based upon the application of an exception under CAFA must be resolved in favor of the federal court retaining jurisdiction.

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HOW PLAINTIFFS CAN AVOID A CAFA REMOVAL

Mousetrap Ratonera Trappola per topi MausefalleIn Eagle U.S. 2, L.L.C. v. Abraham, 627 Fed. Appx. 351 (5th Cir. 12/11/15), the Fifth Circuit affirmed remand of several mass actions that had less than 100 persons in each suit. Under CAFA, a state court suit may only be removed if it is a “mass action” with 100 or more plaintiffs whose claims are to be consolidated or tried jointly because of similar fact and legal questions common to the plaintiffs’ claims. The plaintiffs’ counsel in Eagle had 1,700 clients with identical claims. He divided up the claims into 77 separate mass actions (averaging 22 plaintiffs in each case), with identical claims by each plaintiff against the defendant.

The defendant asserted that CAFA applied, based upon “piercing the pleadings” in the 77 different lawsuits to satisfy the 100-person per suit requirement of CAFA. The defendant argued that the 77 suits were really one lawsuit, as all 77 complaints filed by the same lawyers make identical claims on behalf of more than 1,700 plaintiffs and that the 100-or-more-person requirement is satisfied because plaintiffs’ counsel broke up their client base into multiple suits in a tactic to prevent the assertion of jurisdiction under CAFA. Eagle U.S. 2, 627 Fed. Appx. at 353.

The Fifth Circuit disagreed and held:

The “100-or-more-persons” cannot be satisfied by piercing the pleadings across multiple state court actions when the plaintiffs have not proposed that those actions be tried jointly or otherwise consolidated.

Id. Because the case did not involve “100-or-more-persons” it is not a “mass action.” Id.

On the surface, the advantages that plaintiffs seek by being in state court would seem to be outweighed by the burden and expense of 77 separate lawsuits in the same state court assigned to multiple judges – as opposed to a single consolidated proceeding. Under Louisiana law, cases cannot be consolidated for pre-trial purposes only. Presumably, defendants could renew the CAFA removal if some or all of the 77 different lawsuits are consolidated for trial in a Louisiana state court.

THE DAIMLER DECISION’S RESTRICTIONS ON GENERAL JURISDICTION

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THE DAIMLER DECISION’S RESTRICTIONS ON GENERAL JURISDICTION PROVE SOLID PROTECTION FOR CORPORATE DEFENDANTS IN FORUMS OUTSIDE OF THEIR CORPORATE HOME – BUT NOT EVERYWHERE

The Supreme Court decision in Daimler AG v. Bauman, 134 S.Ct. 746 (2014) has been interpreted as limiting general personal jurisdiction over a corporate defendant to the state of incorporation or principal place of business of that corporate defendant. See, Smith v. Union Carbide Corp, et al, No. 1422-CCOO457, 2015 WL 191118 (Mo. Jan. 12, 2015); Long v. Patton Hospitality Management, LLC, 2016 WL 760780 (E.D. La. 2016); Namer v. Bank of America, N.A. (2016 WL 1089352 (E.D. La. 2016); Stanford v. DS Corp. of Indiana, 2015 WL 1623895 (W.D. La. 2015) (“[a] corporation is at home in a state when it is either incorporated there or has its principal place of business there”); Helene Cahen, et al v. Toyota Motor Corp., et al, — F. Supp. 3d —-, 2015 WL 7566806 (N.D. Cal. 2015) (Ford Motor Company is not subject to general in personam jurisdiction in California because it was not its home state, and the case was not “exceptional” enough to warrant the exercise of general in personam jurisdiction); Xilinx, Inc. v. Papst Licensing GMBH & Co. KG, 113 F. Supp. 3d 1027 (N.D. Cal. 2015).

Before Daimler, plaintiffs’ counsel forum-shopped mass actions in which hundreds, if not thousands, of plaintiffs would join in a single “destination” lawsuit in a plaintiff-friendly venue based on the loose concept of general jurisdiction. Oftentimes, out-of-state plaintiffs joined in these mass actions in which they were not even injured in the forum state (which would likely support the exercise of specific jurisdiction over an out-of-state corporate defendant). These “destination” mass actions for both out-of-state plaintiffs and out-of-state defendants were severely restricted by the Daimler decision that should be followed as the law of the land in every court considering general in personam jurisdiction as a matter of law under the U.S. Constitution, but is not. See Jeffs v. Anco Insulations, No. 15-L-533 (3rd Judicial Circuit Court, Madison County, IL 11/6/2015) (Ford Motor Corporation’s principal place of business is in Michigan and its state of incorporation is Delaware, but the court found that general jurisdiction existed over Ford in Illinois because it owned real property, had dealers and sold vehicles, and had an agent for service of process in Illinois for almost 100 years); State of West Virginia ex rel Ford Motor Company v. The Honorable Warren R. McGraw, et al, No. 15-1149 (Cir. Ct. Wyoming County, West Virginia, 10/21/2015) (Ford Motor Company found subject to general in personam jurisdiction in West Virginia state courts, despite the ruling in Daimler); Magill v. Ford Motor Company, No. 2015CV32019 (Dist. Ct. Co., December 1, 2015).

Class Certification Denied 366 Patients Potentially Exposed to Hepatitis and HIV by a New Orleans Hospital

Group_Of_PeopleDespite the conventional wisdom that hundreds of plaintiffs suing for the same-type of injury are, by definition, entitled to a class action, the Louisiana Fourth Circuit Court of Appeal recently denied class certification to 366 individuals who claimed a hospital exposed them to HIV and hepatitis. See Doe v. University Healthcare Systems, L.L.C., Nos. 2013-1457-1466, 2014 WL 3360817 (La. App. 4 Cir. July 9, 2014).

In 2010, a Frilot client, Tulane Medical Center, determined its endoscopes were not cleaned and disinfected to the recommended standards for their reuse. An endoscope is a fiber-optic medical instrument used for diagnostic or therapeutic purposes in human organs. Because endoscopes enter body cavities and are repeatedly reused, the United States Center for Disease Control (“CDC”) mandates that they be subjected to high-level disinfection using chemical disinfectants.

Tulane Medical Center discovered that 366 patients underwent some type of endoscopic test in which the endoscope had not been sterilized in accordance with CDC standards. Tulane then notified each of these patients that the potential risk of infection was “minimal to nonexistent” and offered free screening for hepatitis and HIV, along with counseling.

Shortly after this notification was made, multiple class actions against Tulane and others were filed in Civil District Court for Orleans Parish, seeking certification of a class of the individuals (a) who underwent the endoscopic procedures, and sustained emotional distress from notification of potential exposure to infectious disease, but who did not actually contract an infectious disease, and (b) individuals with whom the class members had sexual relations. Plaintiffs’ Class counsel conceded that it was unnecessary to have a subclass of individuals who had actually contracted an infectious disease from the endoscopic procedures (presumably because few, if any, of the 366 persons exposed to the endoscopes contracted any infectious disease).

On July 9, 2014, the Louisiana Fourth Circuit Court of Appeal affirmed the trial court’s denial of class certification for the 366 individuals that received notice of the endoscope problems. Relying on Louisiana principles for class certification (based upon F.R.C.P. 23), the Court affirmed denial of class certification on two fundamental grounds:

• Plaintiffs failed to present sufficient evidence of numerosity. To satisfy the numerosity requirement for a class action, plaintiffs must establish that the members of the class are so numerous that joinder of individual plaintiffs in a single suit is impractical. Plaintiffs argued that the numerosity requirement was met and that joinder was impractical, solely on the basis that the proposed class was comprised of 366 litigants. The appellate court found that there was no presumption of numerosity, and that the undisputed evidence presented at the class certification hearing showed that only 20 of the 366 potential class members had actually filed lawsuits to assert their emotional distress claims.

• The plaintiffs failed to satisfy the predominance requirement, i.e., identifying a question common to the class―one where “the determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 180 L. Ed. 374 (2011)). The court held that the common questions involving proof of causation and emotional distress damages could only be answered on a highly individualized basis, requiring individual “mini-trials” about each plaintiff’s medical, mental, and sexual history, and other possible media for exposure to sexually transmitted diseases. Because causation could not be determined on a class-wide basis, but instead required “mini-trials” based upon plaintiff-specific inquiries, a class action was inappropriate, and plaintiffs failed to meet the “predominance” requirement under class action law.

Louisiana Courts are required to perform a “rigorous analysis” of the mandatory requirements for class certification, and arguably did just that in denying class certification in this case.