Wednesday, April 5, 2006
New Class Action Law Does Not Shift Burden to Plaintiffs on Issue of Removal Jurisdiction, Ninth Circuit Judges Rule
By a MetNews Staff Writer
Legislation designed to shift many large-scale law suits, including but not limited to large class actions, into federal court does not alter the prior rule that defendants bear the burden of showing that removal from state to federal court is proper, the Ninth U.S. Circuit Court of Appeals ruled late yesterday.
The court rejected Dow Chemical Company’s interlocutory appeal from U.S. District Judge Gary Klausner’s order remanding a suit by 160 Panamanian banana workers to Superior Court. The workers claim that they suffered “sterility and other serious injuries” after being exposed to a pesticide called DBCP, sold under the brand names Nemagon and Fumazone.
The substance has been banned in the United States since 1979, but the plaintiffs claim it has continued to be used in Panama despite its harmful qualities.
Dow sought to move the case to federal court under the Class Action Fairness Act of 2005. Among other things, the act provides that an action for damages involving more than 100 plaintiffs as to whom there are common issues of law or fact—called a “mass action”—is removable to federal court as to “those whose claims in a mass action satisfy the jurisdictional amount requirements under” other provisions of federal law, including the $75,000 jurisdictional threshold.
For a mass action to be removable, the law further provides, the aggregate amount in controversy must exceed $5 million and the parties must be “minimal diversity” of citizenship between the parties.
Klausner ruled that Dow failed to prove that there were 100 plaintiffs whose claims could be tried jointly under federal jurisdictional requirements, so that removal under CAFA was improper.
In a per curiam opinion, Ninth Circuit Judges M. Margaret McKeown and Marsha Berzon and Senior U.S. District Judge Samuel P. King of the District of Hawaii agreed with Klausner.
While the statute is “muddled,” the judges said, there is nothing in it indicating that plaintiffs must prove that CAFA jurisdiction does not exist. Nor was the judge required to allow limited jurisdictional discovery, the panel concluded, citing the deference normally shown the district court with respect to discovery issues.
The case was argued on appeal by Howard B. Miller of Girardi & Keese for the plaintiffs and Michael L. Brem of Houston, Texas for Dow.
The case is Abrego v Dow Chemical Co., 06-55109.
Copyright 2006, Metropolitan News Company