Friday, July 23, 2010

FYI: 11th Cir Says No CAFA Subject Matter Jurisdiction Unless At Least One Putative Class Member Meets $75k Amount in Controversy

The U.S. Court of Appeals for the Eleventh Circuit recently held that the lower court lacked subject matter jurisdiction to hear Plaintiff's class action suit originated in that court and brought under the Class Action Fairness Act ("CAFA") where the plaintiff failed to allege that at least one class member had an amount in controversy greater than $75,000.  A copy of the opinion is attached. 


The plaintiff filed a putative class action in federal court against DirectTV, Inc. ("DirectTV"), alleging that DirectTV violated Georgia state common law by charging fees to subscribers when they canceled their subscriptions early.  Plaintiff invoked the district court's subject matter jurisdiction under 28 U.S.C. §1332(d)(2), which incorporates CAFA's provisions.  DirectTV moved the district court to compel Plaintiff to submit to arbitration pursuant to the subscriber agreements and, alternatively, to dismiss the claim for damages for failure to state a claim.


The district court denied DirectTV's motion to compel arbitration, but granted its motion to dismiss for failure to state a claim.  Upon DirectTV's appeal, the Eleventh Circuit held that the lower court lacked subject matter jurisdiction under CAFA, vacated its order, and remanded with instructions to dismiss the case.


According to the Eleventh Circuit, a federal court has subject matter jurisdiction over a class action brought under CAFA and originated in federal court if:  1) the "amount in controversy [is] over $5,000,000, obtained by aggregating the claims of the individual class members;  2) there is "minimal diversity" between the parties;  3) the class action is "filed under Federal Rule of Civil Procedure 23";  4) the plaintiff alleges "that there are 100 or more plaintiffs within the proposed class(es)";  and 5) at least one of the plaintiffs alleges "an amount in controversy that satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. §1332(a)."


Addressing the last requirement, the Court reasoned that, while 28 U.S.C. §1332(d) "may have altered § 1332(a) to require only minimal diversity in CAFA actions…there is no evidence of congressional intent in § 1332(d) to obviate § 1332(a)'s $ 75,000 requirement as to at least one plaintiff." 


In the case before it, the Eleventh Circuit held that the plaintiff's complaint adequately alleged the first four elements of a class action under CAFA.  However, no class member alleged an amount in controversy over $75,000 and therefore the plaintiff lacked a "basis for invoking the federal courts' subject matter jurisdiction under CAFA."
Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

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Chicago, Illinois  60602
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