The U.S. Court of Appeals for the Ninth Circuit, in an issue of first impression before the Ninth Circuit, recently held that a group of plaintiffs' "petition for coordination" under California rules did not constitute a proposal to try the cases jointly, and therefore the CAFA jurisdictional requirement was not met under the totality of the circumstances.
Distinguishing the Seventh Circuit's ruling in In re Abbott Laboratories, Inc., 698 F.3d 568 (7th Cir. 2012), the Ninth Circuit affirmed the district court's remand to state court, and explained that the Plaintiffs' petition for coordination differed from the plaintiffs' consolidation request in Abbott because Plaintiffs' petition for coordination focused on pretrial matters while the plaintiffs' consolidation request in Abbott specifically sought consolidation "through trial."
A copy of the opinion is available at: http://cdn.ca9.uscourts.gov/datastore/opinions/2013/09/30/13-56310%20web.pdf
Plaintiffs' action was one of twenty-six cases pending before the district court alleging injuries related to the ingestion of propoxyphene, an ingredient found in the Darvocet and Darvon pain medications, as well as in their generic brand counterparts. Drugs containing propoxyphene were taken off the market because of the Food & Drug Administration's safety concerns.
Over forty actions had been filed in California state courts regarding products containing propoxyphene. Defendant-Appellant pharmaceutical company (the "pharmaceutical company") held the rights to the generic formulary of Darvocet and Darvon, and Plaintiffs allege that the pharmaceutical company was involved in all aspects of the creation, distribution, and sale of generic propoxyphene products.
On October 23, 2012, a group of plaintiffs' attorneys responsible for many of the propoxyphene actions filed a petition asking the California Judicial Council to establish a coordinated proceeding for all California propoxyphene actions pursuant to California Code of Civil Procedure section 404.
Section 404.1 provides:
Coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses, and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and, the likelihood of settlement of the actions without further litigation should coordination be denied.
After Plaintiffs' petition for coordination was filed, the pharmaceutical company removed the case to federal district court under CAFA's mass action provision.
The district court found that there was no federal jurisdiction under CAFA because Plaintiffs' petition for coordination did not constitute a proposal to try the cases jointly, and remanded the case back to state court. In distinguishing the Seventh Circuit's decision in In re Abbott Laboratories, Inc., 698 F.3d 568 (7th Cir. 2012), the district court explained that Plaintiffs' petition for coordination differed from the Plaintiffs' consolidation request in Abbott because Plaintiffs' petition focused on pretrial matters while the Plaintiffs' consolidation request in Abbott specifically sought consolidation "through trial."
The pharmaceutical company appealed the district court's remand order.
The issue before the Ninth Circuit was whether the petition seeking coordination of the California propoxyphene actions was a proposal in substance for those actions to be tried jointly under CAFA.
As you may recall, CAFA provides federal district courts with original jurisdiction over "mass actions" if the actions meet all of the statutory requirements. CAFA defines a mass action 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 plaintiffs' claims involve common questions of law or fact, . . .
28 U.S.C. § 1332(d)(11)(B)(i).
The Ninth Circuit's analysis was guided by the well-established premise that the removal statutes are to be strictly construed. See Scimone v. Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013). Courts apply a presumption against removal and construe any uncertainty as to removability in favor of remand. See id.; see also Tanoh v. Dow Chemical Corp., 561 F.3d 945, 953 (9th Cir. 2009); Abrego, 443 F.3d at 685.
The Ninth Circuit examined its decision in Tanoh, where it observed that CAFA's mass action provision is "fairly narrow," Tanoh, 561 F.3d at 953, given that a qualifying mass action will only be present if there is an aggregate amount in controversy of five million dollars or more, at least one plaintiff who is a citizen of a state or foreign state different from that of any defendant, and "monetary relief claims of 100 or more persons [that] are proposed to be tried jointly." Id.; see also 28 U.S.C. § 1332(d).
As you may recall, the Ninth Circuit further ruled in Tanoh that CAFA "includ[es] only actions in which the trial itself would address the claims of at least one hundred plaintiffs" and excludes "any civil action in which . . . (IV) the claims have been consolidated or coordinated solely for pretrial proceedings." 561 F.3d at 954; 28 U.S.C. § 6 13-563101332(d)(11)(B)(ii)(IV). The Ninth Circuit noted that Tanoh makes it clear, consistent with the plain language of CAFA, that the proposal to try claims jointly must come from the plaintiffs. 561 F.3d at 953-54. Further, if the statutory requirements under CAFA are not met, Tanoh rejects the idea that a court can avoid statutory terms merely by recourse to general statements in CAFA's legislative history, or to the theory that plaintiffs should not be able to "game" jurisdictional statutes to remain in state court. Id. at 954.
Tanoh also instructs that plaintiffs are the "masters of their complaint," and do not propose a joint trial simply by structuring their complaints so as to avoid the one hundred-plaintiff threshold. 561 F.3d at 953, 956; see also Anderson v. Bayer Corp., 610 F.3d 390, 393 (7th Cir. 2010); Scimone, 720 F.3d at 883-84.
The Plaintiffs argued, and the district court agreed, that the petition for coordination was not a proposal to try the cases jointly. California Code of Civil Procedure section 404 allows the coordination of "all of the actions for all purposes." The Ninth Circuit found that the Plaintiffs' petition for coordination stopped far short of proposing a joint trial.
The Plaintiffs asked for coordination under section 404, and submitted a Memorandum of Points and Authorities in support of the petition for coordination. In analyzing the memorandum to determine whether the Plaintiffs proposed that claims of 100 or more persons were to be tried jointly, the Ninth Circuit was persuaded that this was not the case.
The Ninth Circuit specifically analyzed pages 6 through 8 of the Plaintiffs' Memorandum of Points and Authorities, which provided an explanation for seeking coordination. The Ninth Circuit concluded that the Memorandum of Points and Authorities sought coordination for discovery matters, which are pretrial proceedings.
The Ninth Circuit found that "it is quite a stretch to discern a request for joint trial when the clear focus of the petition is on pretrial matters" from its reading of the petition for coordination. Specifically, the Ninth Circuit provided that the pharmaceutical company's reliance on the Plaintiffs' reference to inconsistent judgments was questionable because judgments may be rendered outside the confines of a trial.
Moreover, the Court distinguished the case at hand from the Seventh Circuit's decision in Abbott, where Abbott involved a completely different procedure -- i.e., consolidation, as opposed to coordination. See Abbott, 698 F.3d at 570. The plaintiffs' request in that case explicitly and expressly referenced "consolidation of the cases through trial and not solely for pretrial proceedings," thereby removing any question of the plaintiffs' intent. Id. at 571 (footnote reference and internal quotation marks omitted).
The Ninth Circuit also distinguished the present matter from Mississippi ex rel. v. AU Optronics, 701 F.3d 796 (5th Cir. 2012), where the Fifth Circuit concluded that federal jurisdiction existed under CAFA when the State of Mississippi brought an action under the Mississippi Consumer Protection Act and the Mississippi Antitrust Act against defendants who manufactured liquid crystal display panels and harmed consumers by charging artificially inflated prices. See id. at 798-800. The Fifth Circuit concluded that the real parties in interest included the State and the individual consumers who purchased the products. See id. at 802. Because there were more than one hundred consumer claims at issue in the single lawsuit filed by the State, the Fifth Circuit held that CAFA conferred jurisdiction upon the federal court over the "mass action." Id.
Distinguishing the AU Optronics case, the Ninth Circuit concluded that the Plaintiffs here have filed separate lawsuits, none of which have been initiated by the State, so the rationale articulated by the Fifth Circuit was inapposite.
Accordingly, because the Plaintiffs' petition for coordination was not a proposal to try the cases jointly, the Ninth Circuit affirmed the district court's order granting Plaintiffs' motion to remand.
In disagreeing with the majority opinion, the dissent concluded that the majority misinterpreted CAFA. According to the dissent, the petition for coordination sought coordination that could only be achieved through some form of joint trial, and therefore the CAFA requirements were met, and remand to state court was improper.
The dissent's primary objection to the majority opinion was over the import of the coordination motion and the reasons given for it. The dissent categorized the majority's analysis as too focused on the part of the petition mentioning pretrial discovery, and neglecting the part of the petition urging that there be no inconsistent judgments. In doing this, the dissent provided that the majority disregarded that the proviso in CAFA makes clear only that matters consolidated exclusively for pretrial purposes are not properly removed to federal court. The dissent further provided that the majority did not try to argue that the petition for coordination is limited to pretrial matters. Instead, it argued that the petition "stopped far short of proposing a joint trial." Under this classification, the dissent asserted that the majority apparently would require an explicit request for a joint trial, whereas the dissent concluded that the substance of what was done was controlling.
Because the Plaintiffs asked for coordination under section 404, and submitted a memorandum in support of the petition for coordination based upon the danger of inconsistent judgments and conflicting determinations of liability, the dissent concluded these issues could only be addressed through some form of a joint trial.
The dissent concluded that if the natural and probable consequence of coordination of separate actions has an impact indistinguishable from joint trial, then it is sensible to treat such a petition for coordination as a proposal for joint trial within the meaning of Congress's intent under CAFA.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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Email: RWutscher@mwbllp.com
Admitted to practice law in Illinois
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