August 12, 2008
On August 1, 2008, the United States Court of Appeals for the Seventh Circuit decided an issue of first impression and held that the determination of whether an action is a "mass action" under the Class Action Fairness Act of 2005 ("CAFA") can be made at any stage of the proceedings, including when the suit is first filed. Bullard v. Burlington Northern Santa Fe Railway Co., No. 08-8011, 2008 WL 2941359 (7th Cir., Aug. 1, 2008). This decision clarifies the broad reach of federal jurisdiction under CAFA for mass actions brought on behalf of a large group of plaintiffs. In addition, by holding that a "mass action" determination can be made very early on in a litigation, Bullard provides a potential trap for unwary defendants who must remove a suit within thirty days of being put on notice that the claims of 100 or more plaintiffs may be jointly tried.
Congress enacted CAFA in reaction to various abuses of the class action device in the state courts, particularly in cases involving out-of-state defendants and interstate classes. CAFA thus created a new, specialized form of diversity jurisdiction for significant interstate class actions, and the statute also provided a means to remove these actions from the state courts to the federal courts. See 28 U.S.C. §§ 1332(d) (jurisdiction), 1452 (removal).
Notably, under CAFA, "a mass action shall be deemed to be a class action." 28 U.S.C. § 1332(d)(11)(A). And a "mass action" is defined 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" and also meet minimum amount-in-controversy and diversity requirements. Id. at § 1332(d)(11)(B)(i). But CAFA does not indicate at what stage of the proceedings an action may be identified as a "mass action," thus permitting removal to federal court. May it be at the time of filing the complaint, so that a case can be removed at the outset? Or must it be later, on the eve of trial, when a final pretrial order or equivalent document specifies the number of parties whose claims are "proposed to be tried jointly"? This was the question squarely presented in Bullard.
In October 2007, Virda Bell Bullard and 143 other residents or former residents of Somerville, Texas, sued the Burlington Northern Santa Fe Railway Company and several other companies that allegedly either designed, manufactured, transported, or used chemicals that had escaped from a wood treatment facility in Somerville. In the suit, filed in an Illinois state court, the 144 plaintiffs alleged that the release of chemicals had caused soil, ground water, and air contamination, thereby resulting in various physical injuries (including death) and damage to property.
Burlington Northern and the other defendants removed the suit to federal court under CAFA’s "mass action" provision, arguing that the 144 plaintiffs’ claims were to be tried jointly and involved common questions of law or fact. In seeking a remand to the Illinois state court, the plaintiffs denied that the suit was a "mass action"– they claimed to have found a "loophole" in CAFA and pointed out that the complaint never actually proposed a trial. Rather, "they’d be happy to win by summary judgment or settlement." Accordingly, argued the plaintiffs, theirs was not a "mass action" because a proposal to hold a large trial does not come until long after filing the complaint. The district court rejected plaintiffs’ argument and declined to remand the case.
On interlocutory review, the Seventh Circuit acknowledged that the construction of CAFA’s "mass action" provision is a "novel [issue]. It has not been addressed in this or any other circuit." In an opinion authored by Judge Easterbrook, the court focused on the plain language of CAFA’s "mass action" provision, as well as the common-sense notion that "plaintiffs who want to litigate in state courts will devise close substitutes [to class actions] that escape the statute’s application." The court explained that a "mass action" is a "class-action substitute" that is similar in both theory and practice to a traditional class action: Not all the plaintiffs will actively participate, a few will take the lead, "and as a practical matter counsel will dominate." Accordingly, the provision allowing removal of "mass actions" should be interpreted consistently with the provision allowing removal of a "class action."
The court held that a suit may become a "mass action" at any time — whether at the time of filing the complaint or long after. By way of example, the court explained that 15 suits with 10 plaintiffs each could eventually be consolidated for trial, and at that point could qualify as a "mass action." "But nothing in [CAFA] says that the eve of trial is the only time when a ‘mass action’ can be detected." In Bullard, 144 plaintiffs had filed one complaint that rested on common questions of law and fact, and "one complaint implicitly proposed one trial…. It does not matter whether a trial covering 100 or more plaintiffs actually ensues; the statutory question is whether one has been proposed."
The court noted that clever plaintiffs’ lawyers could not evade a "mass action" determination (and thereby avoid removal or compel remand) simply by proposing to try the claims of fewer than 100 of the plaintiffs. "A trial of 10 exemplary plaintiffs, followed by application of issue or claim preclusion to 134 more plaintiffs without another trial, is one in which the claims of 100 or more persons are being tried jointly."
Following Bullard, a defendant facing a single state-court suit brought by more than 100 plaintiffs should consider whether CAFA’s minimum amount-in-controversy and diversity requirements have been met — if so, the case could be removed immediately. The defendant should also consider, however, whether the plaintiffs’ claims are legally or factually related. Bullard expressly left open the possibility that "[a] state whose rules allowed the joinder of unrelated parties and claims could pose a different question about the applicability of [CAFA’s ‘mass action’ provision]."
In addition, under Bullard, a defendant facing multiple related lawsuits — none of which independently totals more than 100 plaintiffs — may also be able remove the cases to federal court as soon as it is "proposed" that plaintiffs will try their cases jointly. This could be in a pre-trial order or, potentially, much earlier, so defendants should be vigilant in spotting "proposed" joint trials at the earliest opportunity. Nonetheless, CAFA expressly provides that "the term ‘mass action’ shall not include any civil action in which … the claims are joined upon motion of a defendant." In other words, a defendant may not manufacture a "mass action" and compel removal simply by moving to consolidate several related suits.
Defendants should also take note that Bullard’s interpretation of CAFA may create some risks. Perhaps most important, the federal removal statute requires a defendant to file its notice of removal "within thirty days" after the defendant’s receipt of any document "from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b). Accordingly, under Bullard, this thirty-day clock could start running at the very outset of a case if it is possible to "ascertain" from the complaint that a joint trial is "proposed" on behalf of more than 100 plaintiffs.
The Seventh Circuit’s recent decision in Bullard should have important implications for large, multi-party suits in the courts of the states within that Circuit (Illinois, Indiana, and Wisconsin). And because Bullard decided an issue of first impression, other federal circuits may also follow suit in adopting Bullard’s sensible reading of CAFA’s "mass action" provision.
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