Ninth Circuit finds that BMW timely removed under CAFA

In Kuxhausen v. BMW Financial Services (9th Cir. Feb. 25, 2013), the Ninth Circuit circuit granted leave to appeal a District Court's Order granting a motion to remand on the ground that removal was untimely under CAFA.  The case was originally filed on August 30, 2011, alleging various claims arising from Retail Installment Sales Contracts issued through one BMW dealership.  On February 9, 2012, the plaintiff amended to include a proposed class of all California-BMW purchasers affected by the same alleged RISC non-disclosures.  BMW removed on March 9, 2012.  The District Court granted a motion to remand on the ground that the motion to remand under CAFA was untimely.

The Court examined each element that must be established for CAFA jursidiction, focusing on the amount in controversy and the timing of the pleading that disclosd the amount:

In Harris, a non-CAFA case, the plaintiffs made a similar demand. They argued that the defendant “should have looked in its files within the first thirty days” to discover that a named defendant whose presence in the suit frustrated complete diversity of citizenship had died, and therefore should have recognized that the case was immediately removable under 28 U.S.C. § 1332(a). Harris, 425 F.3d at 696. Preferring a clear rule, and unwilling to embroil the courts in inquires “into the subjective knowledge of [a] defendant,” we declined to hold that materials outside the complaint start the thirty-day clock. Id. at 695 (quoting Lovern v. Gen. Motors Corp., 121 F.3d 160, 162 (4th Cir. 1997)). Applying that principle here, we conclude that BMW was not obligated to supply information which Kuxhausen had omitted.

However, that does not fully resolve whether the amount in controversy was “stated by the initial pleading.” 28 U.S.C. § 1446(b). The district court also was influenced by the fact that for a 200 member class, the average contract price per vehicle needed only to exceed $25,000 in order to put greater than five million dollars in controversy. Presumably, it thought that sum was a plausible-enough guess for a case involving German luxury automobiles, perhaps doubly so since Kuxhausen’s individual vehicle contract was more than twice that amount. The fact remains, however, that we “don’t charge defendants with notice of removability until they’ve received a paper that gives them enough information to remove.” Durham, 445 F.3d at 1251. This principle helps avoid a “Catch–22” for defendants desirous of a federal forum. By leaving the window for removal open, it forces plaintiffs to assume the costs associated with their own indeterminate pleadings. That is only fair after all, because—even under CAFA—“the burden is on the party removing the case from state court to show the exercise of federal jurisdiction is appropriate.” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010). Thus, because nothing in Kuxhausen’s complaint “indicate[d] that the amount demanded by each putative class member exceed[ed] $25,000,” it fell short of triggering the removal clock under Section 1446(b). Carvalho, 629 F.3d at 886.

Slip op., at 10-11.  In this same discussion, the Court also held that the timing trigger of the 30-day removal period and a defendant's ability to go beyond the pleadings to show CAFA jurisdiction are not linked.  A defendant is not obligated to establish what is not included in the pleadings.​

AT&T Mobility LLC receives some due process love from the Ninth Circuit, this time as a plaintiff

When the Ninth Circuit decided, Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), the immediate reaction from the commentator class was to conclude that it was a substantial setback for plaintiffs and a "pro-defense" decision.  However, a recent decision of the Ninth Circuit suggests that, possibly, a black-and-white reading of Mazza could be inaccurate.  In AT&T Mobility LLC v. AU Optronics Corp. (Feb. 14, 2013), the Ninth Circuit considered whether the District Court erred when it dismissed California anti-competition state law claims based on purchases that occurred outside California.  The Court concluded that, to the extent conspiratorial conduct was sufficiently connected to California, the application of California law would be neither arbitrary nor fundamentally unfair.

The Court explained that allegations of a conspiracy to price fix, occurring in California, were sufficient to render the allegations constitutionally sound:

Nor would the application of California law impermissibly undermine the policies of other states, as Defendants contend. Because the Due Process Clause does nothing but circumscribe the universe of state laws that can be constitutionally applied to a given case, we “need not . . . balance the competing interests of California and [other states].” United Farm Workers of Am., AFL-CIO v. Ariz. Agric. Emp’t Relations Bd., 669 F.2d 1249, 1256 (9th Cir. 1982); see also Allstate, 449 U.S. at 308 n.10 (“[T]he Court has since abandoned the weighing-of-interests requirement.”). Objections based on the interests of other states are more properly raised under a choice of law analysis, or potentially under a challenge predicated on some other provision of the U.S. Constitution. Defendants raised no such arguments before the district court.

Slip op., at 15.

The question, then, is whether the focus on the conspiracy situated in California would change the analysis of Mazza, which turned on the issue of where consumers received allegedly misleading advertisements.  California can certainly articulate a sound basis for its interest in deterring price-fixing conspiracies occurring within its borders.​

In Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, Supreme Court holds that proof of materiality not required to certify securities fraud class

The fraud-on-the-market theory, first accepted by the U.S. Supreme Court in Basic Inc. v. Levinson, 485 U. S. 224 (1988), and recently endorsed in Erica P. John Fund, Inc. v. Halliburton Co., 563 U. S. ___ (2011), presumes that the price of a security traded in an efficient market will reflect all publicly available information about a company.  With that presumption, a buyer of the security may be presumed to have relied on that information in purchasing the security, including misrepresentations in public communications.  In Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds (Feb. 27, 2013), the U.S. Supreme Court took up the question of whether, at the certification stage, materiality must be proven.  Affirming the Ninth Circuit, the majority concluded that materiality need not be proven at the certification stage.

Summarizing the holding of the Court, Justice Ginsburg wrote:

While Connecticut Retirement certainly must prove materiality to prevail on the merits, we hold that such proof is not a prerequisite to class certification. Rule 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be an­swered, on the merits, in favor of the class. Because mate­riality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent. The al­leged misrepresentations and omissions, whether material or immaterial, would be so equally for all investors com­posing the class. As vital, the plaintiff class’s inability to prove materiality would not result in individual questions predominating. Instead, a failure of proof on the issue of materiality would end the case, given that materiality is an essential element of the class members’ securities fraud claims. As to materiality, therefore, the class is entirely cohesive: It will prevail or fail in unison. In no event will the individual circumstances of particular class members bear on the inquiry.

Essentially, Amgen, also the dissenters from today’s decision, would have us put the cart before the horse. To gain certification under Rule 23(b)(3), Amgen and the dissenters urge, Connecticut Retirement must first establish that it will win the fray. But the office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the “metho[d]” best suited to adjudi­cation of the controversy “fairly and efficiently.”

Slip op., at 2-3.  With the heavy tide of anti-class decisions emanating from the U.S. Supreme Court of late, this is an important reminder that certification analysis focuses on common questions, not proof.