Opposition Brief — Free v. Abbott Laboratories, Inc.

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IN THE

FILED

No. 99-391 ~ | OCT 15 1999

OFFICE @E THE OLERM

SUPREME COURT OF THE UNITED STATES

ROBIN FREE and RENEE FREE,

Petitioners,

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB COMPANY

and MEAD JOHNSON & COMPANY

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

RESPONDENTS' BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

Frank Cicero, Jr.

Counsel of Record

Craig A. Knot

KIRKLAND & ELLIS

200 East Randolph Drive

Chicago, IL 60601

(312) 861-2000

William R. D’Armond

KEAN, MILLER, HAWTHORNE,

D’ARMOND, MCCOWAN &

JARMAN LLP

One American Place

22nd Floor

Baton Rouge, LA 70825

Attorneys for Respondent

Abbott Laboratories

October 15, 1999

Max R. Shulman

Counsel of Record

CRAVATH, SWAINE & MOORE

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

(212) 474-1000

Phillip A. Wittman

STONE, PIGMAN, WALTHER,

WITTMANN & HUTCHINSON

546 Carondelet Street

New Orleans, LA 70130-3588

Attorneys for Respondents

Bristol-Myers Squibb Company

and Mead Johnson & Company

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—-.

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COUNTERSTATEMENT OF THE

QUESTION PRESENTED

Where original federal jurisdiction exists, pursuant to

28 U.S.C. § 1332, over the representative plaintiffs in a class

action, may the federal courts exercise supplemental

jurisdiction, pursuant to 28 U.S.C. § 1367, over other putative

class members whose claims form part of the same case or

controversy as the claims of the representative plaintiffs but

would otherwise not fall within 28 U.S.C. § 1332?

STATEMENT PURSUANT TO

SUPREME COURT RULE 29.6

This is to certify that Respondents Abbott Laboratories and

Bristol-Myers Squibb Company have no corporate parents and

that no publicly traded company owns 10% or more of their

stock. Respondent Mead Johnson & Company is a wholly

owned subsidiary of Bristol-Myers Squibb Company.

Se ee ee

Pee Ome

6 ee Pe es

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF THE QUESTION

ee od olde eenseesnincess

STATEMENT PURSUANT TO SUPREME COURT

Ce edeaenhe ii

TABLE OF CONTENTS ..........200c00ceeeees iii

TABLE OF AUTHORITIES ......-..........--. iv

APPENDIX TABLE OF CONTENTS ............ viii

INTRODUCTION ...........0c cece cee eeeeeees |

COUNTERSTATEMENT OF THE CASE......... 3

REASONS FOR DENYING THE WRIT .......... 6

I. THE ABBOTT DECISION HAS ONLY THE

MOST MARGINAL IMPACT ON FEDERAL

JURISDICTION AND, THEREFORE, DOES

NOT CREATE AN ISSUE OF NATIONAL

ss PPT TTITITITT TT TTT Tee 6

Il. THE ABBOTT RESULT WAS CAUSED

BY LOUISIANA’S EXCEPTIONAL

CLASS ACTION ATTORNEY’S FEES

STATUTE, WHICH UNDERSCORES

ABBOTT'S GREATLY LIMITED

GES cecccucccceccccocccccess 9

Ill. THE FIFTH CIRCUIT’S DECISION IN

ABBOTT WAS CORRECT ............0545: 12

PUES cocccocecocccesccacceccceseces 21

TABLE OF AUTHORITIES

Cases

Blake v. Abbott Labs., 894 F. Supp. 327 (E.D.

PEED oébbeuwseeneaseecetuonss

Boos v. Abbott Labs., Civil Action No. 95-

10091-NG (D. Mass. Aug. 18, 1995) .....

Buscher v. Abbott Labs., Civil Action No.

2:94-0422 (S.D. W.Va. Sept. 26, 1994) ...

Caminetti v. United States, 242 U.S. 470

De no cccdusbachedbaanaskbeaidnas

Carlson v. Abbott Labs., Case No. 94-C-378

(E.D. Wis. July 21, 1994) ..............

Channell v. Citicorp Nat'l Serv., Inc., 89 F.3d

POPs HEED bo awcnensasecesesces

Chevron v. Natural Resources Defense

Council, 467 U.S. 837 (1984) ..........

City of Chicago v. Environmental Defense

Fund, 511 U.S. 328 (1994) .............

Connecticut Nat'l Bank v. Germain, 503 U.S.

DUPED atnndanedcnsaduamsabésees

Crooks v. Harrelson, 282 U.S. 55 (1930) ...

DeVincenzi v. Abbott Labs., CV-S-94-

527LDG (RJJ\(D. Nev. Nov. 16, 1994) ...

Duhaime v. John Hancock Mut. Life Ins. Co.,

177 F.R.D. 54 (D. Mass. 1997) .........

Garza v. Nat'l Am. Ins. Co., 807 F. Supp.

Ree

Page(s)

_—

OP DO ae Oy ee eat ie Me

. Pega: eg ae

Gilmer v. Walt Disney Co., 915 F. Supp. 1001

SE CED bo ccantucwhceadnsece

Goldberg v. CPC Int'l Inc., 678 F.2d 1365

(9th Cir.), cert. denied, 459 U.S. 945 (1982) .

Green v. Bock Laundry Mach. Co., 490 U.S.

PE aSicbadeserbiutcaddedéduess

Heilman vy. Abbott Labs., Al-94-122 (D.N.D.

BaD GE, CIBED ion ciccvciccocccssceses

Howard v. Globe Life Ins. Co., 973 F. Supp.

SS es SED -Kcccessdcccececs

Immigration and Naturalization Serv. v.

Phinpathya, 464 U.S. 183 (1984) ........

In re Abbott Labs., 51 F.3d 524 (Sth Cir.

__ PPOVTTTTITETITIT TTT TTT TTT eee

In re Brand Name Prescr. Drugs Antitrust

Litig., 123 F.3d 599 (7th Cir. 1997) ......

Iselin v. United States, 270 U.S. 245 (1926) .

Lambert v. Abbott Labs., Civil Action No. 94-

0677-L(J) (W.D. Ky. May 23, 1995) .....

Lauderdale v. Abbott Labs., Civil Action No.

94-0659-B-C (S.D. Ala. April 4, 1995) ...

Leszczynski v. Allianz Ins., 176 F.R.D. 659

GRADE COUUD cecccceccctcccccsocce

Moore v. Abbott Labs., 900 F. Supp. 26 (S.D.

SE SE nd eseddbkeiebesenadecens

Page(s)

10, 11

Patterson Enterprises, Inc. v.

Bridgestone/Firestone, Inc., 812 F. Supp.

SOG: SP bitdcevessasedencs

Pavelic & LeFlore v. Marvel Entertainment

Group, 493 U.S. 120 (1989) ............

Pennsylvania v. Union Gas Co., 491 U.S. |

(1989)

Russ v. State Farm Mut. Auto. Ins. Co., 961

F. Supp. 808 (E.D. Pa. 1997) ...........

Stromberg Metal Works, Inc. v. Press

Mechanical, Inc., 77 F.3d 928 (7th Cir.

1996)

Supreme Tribe of Ben Hur v. Cauble, 255

U.S. 356 (1921)

Tennessee Valley Auth. v. Hill, 437 U.S. 153

(1978)

United Mine Workers of America v. Gibbs,

383 U.S. 715 (1966)

United States v. X-Citement Video, Inc., 513

U.S. 64 (1994)

West Virginia Univ. Hospitals, Inc. v. Casey,

499 U.S. 83 (1991)

Zahn v. International Paper Co., 414 U.S.

291 (1973)

oeevweoeeeeeneeeeneeeneeneeeeeeeeeee

Page(s)

14, 18

16n.2

17, 18, 19

6,7

19, 20

16, 17

a <2 oe coment

At alg eae =

Vil

Statutes and Rules

POUR. OGRE oc cccsvcvvevccvcccccss

BOBS. BETES occ ccsdvdescovccccvns

PBUBL. OATS oc ccccccvcccvccescvess

4QZUBC. 6 1GGB 2... ccccccccccccccccees

Interstate Class Action Jurisdiction Act of

1999, H.R. 1875, 106th Cong. (1999) ....

Class Action Fairness Act of 1999, S. 353,

106th Cong. (1999) ........--2- eee ees

Fed. R. Civ. BP. 23 onc ccccccccccvccccvees

La. Code Civ. Pro. Art. 595 .........-.555

Mass. Gen. Laws Ch. 93A, § 9(4) .......-.

Page(s)

l1n.1

Vill

APPENDIX

TABLE OF CONTENTS

Lauderdale v. Abbott Labs., Civil Action No.

94-0659-B-C (S.D. Ala. April 4, 1995) ...

Lambert v. Abbott Labs., Civil Action No. 94-

0677-L(J) (W.D. Ky. May 23, 1995) .....

DeVincenzi v. Abbott Labs., CV-S-94-

527LDG (RJJ)\(D. Nev. Nov. 16, 1994) ...

Buscher v. Abbott Labs., Civil Action No.

2:94-0422 (S.D. W.Va. Sept. 26, 1994) ...

Carlson v. Abbott Labs., Case No. 94-C-378

(B.D. Wes. Aily Zi, IDPS) 0. wc ccccccccss

Heilman v. Abbott Labs., A1-94-122 (D.N.D.

Boos v. Abbott Labs., Civil Action No. 95-

10091-NG (D. Mass. Aug. 18, 1995) ....

Interstate Class Action Jurisdiction Act of

1999, H.R. 1875, 106th Cong. (1999) ....

Class Action Fairness Act of 1999, S. 353,

PPE EUEEEED o6nccabencéosectess

Page

he ae tO See ae ete

IN THE

SUPREME COURT OF THE UNITED STATES

ROBIN FREE and RENEE FREE,

Petitioners,

Vv.

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB COMPANY

and MEAD JOHNSON & COMPANY

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

EEE

RESPONDENTS’ BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

Respondents Abbott Laboratories, Bristol-Myers Squibb

Company and Mead Johnson & Company submit this brief in

opposition to the Petition for a Writ of Certiorari in the above-

captioned case.

INTRODUCTION

Petitioners Robin Free and Renee Free portray the Fifth

Circuit’s decision in Jn re Abbott Labs., 51 F.3d 524 (Sth Cir.

1995) (“Abbott”), as a major assault on federalism and a

dramatic expansion of federal jurisdiction. In fact, it is nothing

of the kind. The Abbott decision is solidly grounded in the plain

and unambiguous language of 28 U.S.C. § 1367. Not only was

it correctly decided, but it also will have only the most

marginal of impacts on the federal courts. Petitioners can

identify—and Respondents have found—just a single case,

Abbott itself, that has applied the Fifth Circuit’s analysis to find

federal jurisdiction over a class action where such jurisdiction

otherwise would not have existed. Abbott clearly does not raise

the kind of issue of transcendent national importance that

would justify granting the current petition for a writ of

certiorari. That point is underscored by the fact that Petitioners

did not discover their purported concern for federalism until

four years after the decision they now bring before this Court.

Both in the Fifth Circuit and here, Petitioners have practiced a

strategy of selectively appealing some issues while saving

others for later appeal. That strategy constitutes a far greater

threat to federal judicial resources than anything in the Fifth

Circuit’s Abbott decision.

Abbott’s limited nature is not surprising. Indeed, it is

inherent in the nature of class actions, since most certified

classes are relatively homogenous both in terms of class

members’ underlying claims and their alleged harm. If the

representative plaintiffs have suffered small alleged damages,

so generally have other class members; if the representative

plaintiffs’ alleged damages are large, so too are those of the rest

of the class. It is only in the highly unusual

circumstance—often, as in Abbott itself, having nothing to do

with the damages alleged—that the class becomes “lumpy”,

with some members having larger claims and others having

smaller ones.

Abbott, for example, was but one of 21 indirect purchaser

antitrust class actions that the same group of lawyers who

represent Petitioners brought in 18 different states alleging the

same price fixing conspiracy by the same three Respondent

manufacturers of infant formula. Of those 21 class actions,

Respondents sought to remove nine to federal court. All of the

removed cases, with the sole exception of Abbott, were

remanded to the states where they originated. All 20 class

actions besides Abbott were prosecuted in state court. There

could not be a better demonstration of the singularity of the

Abbott result.

In Abbott, the class became “lumpy” because of an unusual

Louisiana statute that expressly awards all attorney’s fees in a

class action to the representative plaintiffs. La. Code Civ. Pro.

snl Tit le Baal Ot llc ed 2 mth Rm to Me ape a OD: ‘.

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Art. 595 (“Art. 595"). The operation of Art. 595—which exists

in none of the other states where Petitioners’ counsel brought

related indirect purchaser infant formula suits (nor in any other

state that Respondents have found)}—made the Louisiana

representative plaintiffs’ potential recovery substantially larger

than that of any other class members. And that “lumpiness”

derived not from differences in alleged damages, but purely

from the different way that the Louisiana statute affected the

representative plaintiffs.

Although Petitioners assert that the Abbott result

“significantly shifts to federal courts state-law claims that do

not satisfy the jurisdictional minimum” (Petition for a Writ of

Certiorari (“Cert. Pet.”) at 18) and “significantly taxes federal

court resources” (id. at 19), the history of the litigation of

which Abbott is a part proves just the opposite. Abbott is a

singular result. It is, therefore, not a case that justifies this

Court’s review.

COUNTERSTATEMENT OF THE CASE

This petition is the last vestige of a series of lawsuits that

began in early 1991 and alleged that Respondents (and others)

had conspired to fix the price of infant formula sold in the

United States. The first group of suits included: (a) more than

20 class actions filed in federal district courts around the

country (some by the same counsel that represent Petitioners

here) on behalf of direct purchasers of infant formula (primarily

retailers and wholesalers); (b) an action filed in federal district

court in Florida by individual retailers; and (c) an action filed

in federal district court in Florida by the Florida attorney

general. All those cases alleged violations of the Sherman Act.

They were consolidated for pretrial purposes in the United

States District Court for the Northern District of Florida under

the caption Jn re Infant Formula Antitrust Litig., MDL 878, and

were settled in mid-1992. A state court suit by indirect

purchasers (consumers) alleging violations of the California

antitrust statute was settled in early 1993.

After those settlements, one group of lawyers who had

represented some of the plaintiffs in the direct purchaser cases

recruited Nestle Food Company, a competitor of Respondents,

to file suit in the United States District Court for the Central

District of California. That case went to trial in mid-1995 and,

after five weeks, the jury returned a defense verdict, finding

that the conspiracy alleged by the plaintiff—the same

conspiracy that formed the basis for all the lawsuits—did not

exist. In January 1997, the United States Court of Appeals for

the Ninth Circuit affirmed that verdict.

Another group of lawyers from the direct purchaser

cases—who are now Petitioners’ counsel in this case—chose

a different path but also ended up on the losing end of a jury

verdict. Those lawyers sued Respondents in 18 states alleging,

on behalf of purported statewide classes of indirect purchasers,

that the same antitrust conspiracy alleged in the direct

purchaser cases violated state antitrust and consumer protection

statutes. In the fall of 1995, the first and only of those indirect

purchaser lawsuits was tried to a jury in Wichita, Kansas, and,

after 4 nine week trial, the jury returned a verdict of no

conspiracy.

Of the other state indirect purchaser cases, defense motions

to dismiss the complaint were granted in whole or in part in ten

of them and four of seven plaintiffs’ motions to certify a class

were denied. By mid-1997, the parties had agreed to settle all

the suits—including this one—that were still pending in trial

courts or on appeal.

Petitioners’ counsel filed the current lawsuit in Louisiana

state court on October 14, 1993. Respondents removed the case

to the United States District Court for the Middle District of

Louisiana on November 26, 1993, and, on April 5, 1994, the

district court remanded it to state court. In ordering remand, the

district court ruled that federal jurisdiction existed over the

representative plaintiffs pursuant to 28 U.S.C. § 1332 and over

the absent class members pursuant to 28 U.S.C. § 1367.

Nonetheless, the court declined, pursuant to 28 U.S.C.

§ 1367(c), to exercise supplemental jurisdiction over the absent

class members and abstained from exercising diversity

jurisdiction over the representative plaintiffs.

Respondents sought review of the district court’s remand

order in the United States Court of Appeals for the Fifth Circuit

both by direct appeal and by petition for a writ of mandamus.

On April 24, 1995, the Fifth Circuit reversed, holding that

federal jurisdiction existed, pursuant to 28 U.S.C. § 1332, over

the representative plaintiffs and, pursuant to 28 U.S.C. § 1367,

over the absent class members, that it was error for the district

court to abstain from exercising diversity jurisdiction over the

representative plaintiffs, and that it was an abuse of discretion

to decline supplemental jurisdiction over the absent class

members. On September 1, 1995, the Fifth Circuit denied

rehearing and rehearing en banc.

At that time, if Petitioners truly believed that the Fifth

Circuit’s ruling was an assault on federalism and an affront to

federal jurisdiction, they could have sought review in this Court

by petition for writ of certiorari. It would have been particularly

appropriate at that time to do so since it was important for

Petitioners to know the proper court in which their Louisiana

claims were to be litigated. That is because the Louisiana case

was then one of more than 20 related indirect purchaser

lawsuits that were currently pending and were, in all likelihood,

either going to be tried seriatim or settled together.

Instead, Petitioners elected to return to the United States

District Court for the Middle District of Louisiana and litigate

their claims there. It was four years later—(1) after that court

had refused final approval of the settlement of the Louisiana

case, (2) after it had granted Respondents’ motion to dismiss

for failure to state a claim, (3) after Petitioners had appealed to

the Fifth Circuit a second time, unsuccessfully re-raising

jurisdictional arguments already rejected by the earlier

appellate panel, (4) after the Fifth Circuit had certified state

antitrust issues to the Louisiana Supreme Court, (5) after the

Louisiana Supreme Court had refused to accept that

certification, (6) after the Fifth Circuit had then affirmed the

district court’s dismissal of the case, and (7) after all other

related lawsuits had long since been either won by Respondents

or settled by the parties—that Petitioners sought, as a way to

resurrect the Louisiana action, review of the ruling on remand

that the Fifth Circuit had made back in 1995.

REASONS FOR DENYING THE WRIT

I. THE ABBOTT DECISION HAS ONLY THE

MOST MARGINAL IMPACT ON FEDERAL

JURISDICTION AND, THEREFORE, DOES

NOT CREATE AN ISSUE OF NATIONAL

IMPORTANCE.

There is only one case—Abbott itself—in which a court

has applied the Abbott ruling to find federal jurisdiction over a

class action where such jurisdiction would not otherwise have

existed. Although Petitioners assert that some federal courts

have “followed” the Abbott result and others have “expressly

rejected” it (Cert. Pet. at 8), the fact is that in none of the cases

cited by Respondents has the Abbott decision been the reason

a federal court has asserted federal jurisdiction over a class

whose claims, in the absence of Abbott, would not have fallen

within 28 U.S.C. § 1332. Indeed, Petitioners cannot point to

even one of the 20 other indirect purchaser infant formula

antitrust class actions that their counsel brought in state courts

around the country where federal jurisdiction was held to exist

on the basis of the Abbott ruling.

Abbott’s exceedingly limited applicability is demonstrated

by the very cases that Petitioners describe as “following” the

Abbott decision. In the first of those cases, Stromberg Metal

Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir.

1996) (Cert. Pet. at 10), Judge Easterbrook did state that “[w]e

follow Abbott Laboratories, which has strong support from the

statutory text [of 28 U.S.C. § 1367]”. Jd. at 930. Stromberg,

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however, unlike Abbott, was not a class action. It involved only

two plaintiffs, one whose claims exceeded the amount in

controversy requirement of 28 U.S.C. § 1332 and one whose

did not. It was not a case that raised the same sorts of issues

that arise in the class action context, where there can be many

smal! claims. Nor was it a case that supports Petitioners’

argument that Abbott will throw open the doors of the federal

courts to a plethora of class actions that should be prosecuted

in the state courts. Wholly apart from Abbott’s analysis of 28

U.S.C. § 1367, Stromberg involved precisely the kind of

situation that pendent or supplemental jurisdiction has always

been understood to cover. As Judge Easterbrook explained:

“The two plaintiffs are affiliated corporations under

common control. The claims arose out of the same

construction project. According to the complaint, the

defendants pursued a single course of action . . . . [Factual

and legal issues are identical. This strikes us as exactly the

sort of case in which pendent-party jurisdiction is

appropriate. It is two for the price of one: to decide either

plaintiff's claim is to decide both, and neither private

interests nor judicial economy would be promoted by

resolving Stromberg’s claim in federal court while

trundling Comfort Control off to state court to get a second

opinion.”

Id. at 932.

In Channell v. Citicorp Nat'l Serv., Inc., 89 F. 3d 379 (7th

Cir. 1996) (Cert. Pet. at 19), Judge Easterbrook held that

federal jurisdiction existed, pursuant to 28 U.S.C. § 1367, over

a state law counterclaim that had been asserted by a defendant

against a class whose suit “rest[ed] on the federal-question

jurisdiction of 28 U.S.C. § 1331". Jd. at 384. Thus, Channell,

like Stromberg, also does not implicate the class action

floodgates risk that Petitioners purport to find in Abbott.

Petitioners’ other Seventh Circuit case, Jn re Brand Name

Prescr. Drugs Antitrust Litig., 123 F.3d 599 (7th Cir. 1997)

(Cert. Pet. at l 0), also demonstrates Abbott’s limited impact. In jurisdiction was based on a ruling that any punitive damages

et ore! Chief —— Posner mentioned in passing that the award would constitute a common fund).

eventh Circuit “signified our a ith”

gn greement with” Abbott, id. Thus, as the cases cited by Petitioners themselves

at 607, but went on to hold that since none of the representative

plaintiffs there satisfied the amount in controversy requirement

of 28 U.S.C. § 1332, the Abbott ruling necessarily led to the |

conclusion that federal jurisdiction did not exist over a state

law class action that had been removed to federal court. /d. at | ll. THE ABBOTT RESULT WAS CAUSED BY

607-09. Judge Posner found that neither the $500 penalty under LOUISIANA’S EXCEPTIONAL CLASS ACTION

Alabama law for each instance of injury nor the state plaintiffs’ ATTORNEY’S FEES STATUTE, WHICH

request for punitive damages nor the cost to the defendants of UNDERSCORES ABBOTT'S GREATLY LIMITED

a with the injunction that the plaintiffs sought would APPLICABILITY.

result i " isfyi |

n any class member’s satisfying the amount in Under Art. 595, “{t]he court may allow the representative

controversy requirement. /d. The Brand Name Prescr. Drugs arties their reasonable expenses of litigation, includin

case, therefore, demonstrates the limited nature of the Abbott yoatmarst 's fees, when as a result of the aa action a fund is

demonstrate, Abbott is a decision of greatly restricted

applicability. It fails to raise an issue of national importance

sufficient to justify this Court’s granting the writ.

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ruling.

: ee : made available, or a recovery or compromise is made which is

. The district court decisions that Petitioners cite are no beneficial to the class”. (Emphasis added.) The Fifth Circuit in

different. In Duhaime v. John Hancock Mut. Life Ins. Co., 177 | Abbott held that “(t]he plain text of the first sentence of 595

F.R.D. 54, 60 (D. Mass. 1997) (Cert. Pet. at 14 n.1), there was awards the fees to the ‘representative parties,”” as a result of

federal question jurisdiction under 28 U.S.C. § 1331, and the . which “the individual claims of the class representatives

court exercised pendent jurisdiction over certain state law fraud met the requisite jurisdictional amount” under 28 U.S.C.

claims. That, of course, is classic pendent claim jurisdiction | § 1332. 51 F.3d at 526-27. The court went on to hold that, in

under United Mine Workers of America v. Gibbs, 383 U.S. 715 | such a situation, diversity jurisdiction exists, pursuant to

(1966), and the Duhaime court, therefore, expressly identified | 28 U.S.C. § 1332, over the representative plaintiffs’ claims and

supplemental jurisdiction exists, pursuant to 28 U.S.C. § 1367,

over the claims of absent class members that fail to satisfy the

jurisdictional amount. /d. at 529.

The important point for present purposes is that the only

its citation to Abbott as an “{a]lternative[]”. Jd. See also

Leszczynski v. Allianz Ins., 176 F.R.D. 659 (S.D. Fla. 1997)

(Cert. Pet. at 14 n.1) (Abbott citation dictum because diversity

jurisdiction existed as to one claim and the court exercised

0b me ed

Gibbs-type pendent jurisdiction over two other claims reason caren icabill

apy the same parties); Howard v. Globe Life Ins. Co., 973 of = propa comeng cecetien entetanatie

. Supp. 1412, 1415-16 (N.D. Fla. 1996) (Cert. Pet. at 14 n.1) ) effect (unchallenged here) of Art. 595 on diversity jurisdiction

ederal Jurisdiction lacking over a class asserting state law . over the representative laintiffs Art. 595 created a “lumpy”

pe ge because “no single plaintiff's claim satisfies the class—a highly noe situation—where the pote

ount in controv uirement”); Gi ] aims

Co.,915 F. Supp. 1001, 1013-14 (WD. Atk 1996) (Cert Per Se nataiadeadaddnamdamean

—_ ' eg class. Respondents have found no statute in any other state that,

at 14 n.1) (Abbott citation dictum because federal diversity like Art. 595, awards attorney’s fees to the representative

plaintiffs in a class action. Thus, “lumpiness” derived from that

kind of statute is confined to class actions originating in

Louisiana state court and, therefore, does not present an issue

of transcendent national importance sufficient to justify review

by this Court.

The same conclusion arises, as discussed supra at 6-9,

from a survey of the cases cited by Petitioners that “follow”

Abbott. In none of those cases was federal jurisdiction

dependent upon the existence of a “lumpy” class. Abbott stands

alone in that respect.

The greatly limited nature of Abbott is further apparent

from an analysis of the 20 indirect purchaser infant formula

class actions filed by Petitioners’ counsel in states other than

Louisiana. None of those other infant formula cases had a

“lumpy” class. In none of them was there a state statute

anything like Art. 595. In fact, each of the eight times that

Respondents sought to remove one of the cases, it was

remanded to the state court from which it came.

Thus, in Lauderdale v. Abbott Labs., Civil Action No. 94-

0659-B-C (S.D. Ala. April 4, 1995) (Appendix (“App.”) at la-

6a), the court ordered the action remanded because

Respondents failed to show that any class member satisfied the

amount in controversy requirement. In Lambert v. Abbott

Labs., Civil Action No. 94-0677-L(J) (W.D. Ky. May 23,

1995) (App. at 7a-15a), DeVincenzi v. Abbott Labs., CV-S-94-

527-LDG (RJJ) (D. Nev. Nov. 16, 1994) (App. at 16a-21a),

Blake v. Abbott Labs., 894 F. Supp. 327 (E.D. Tenn. 1995),

Buscher v. Abbott Labs., Civil Action No. 2:94-0422 (S.D.

W.Va. Sept. 26, 1994) (App. at 22a-23a), and Car/son v. Abbott

Labs., Case No. 94-C-378 (E.D. Wis. July 21, 1994)

(App. at 24a-29a), Respondents did not even assert diversity

jurisdiction as a ground for removal; they relied solely on a

claim of federal question jurisdiction, which was rejected by

the court in each case. In Moore v. Abbott Labs., 900 F. Supp.

26 (S.D. Miss. 1995), and Heilman v. Abbott Labs., A1-94-122

(D.N.D. April 17, 1995) (App. at 30a-31a), the court remanded

on the ground that Respondents failed to establish either

diversity or federal question jurisdiction. In none of the other

12 cases did Respondents seek to remove on any ground. !

The lesson of these cases is, once again, Abbott’s highly

unusual nature and its correspondingly limited applicability. No

state of which Respondents are aware has a statute like Art.

595. In no indirect purchaser infant formula case except

Abbott—and in no other case of any kind that Respondents

have found—has Abbott been necessary to confer federal

jurisdiction over a class where, in the absence of Abbott, federal

jurisdiction would not have existed.

Petitioners’ assertion that Abbott will have a “substantial

impact on [federal court] resources” and will “greatly increase

the number of state-law cases in federal courts” (Cert. Pet.

at 18) is disproved by the facts. Abbott is a singular result. At

most, it will lead to a few drops of additional federal litigation,

not to the flood that Petitioners purport to foresee.

' Respondents did successfully remove one other state indirect

purchaser infant formula class action—a case that was filed in

Massachusetts state court by counsel other than those representing

Petitioners. See Boos v. Abbott Labs., Civil Action No. 95-10091-NG (D.

Mass. Aug. 18, 1995) (App. at 32a-43a). There, the court held that the

financial impact on Respondents of the declaratory relief sought by the class

was sufficient to satisfy the amount in controversy requirement of 28 U.S.C.

§ 1332. App. at 41a-42a. In dictum, the court also stated that removal was

consistent with the ruling in Abbott. App. at 35a-41a. In doing so, the court

expressed the view that Mass. Gen. Laws ch. 93A, § 9(4), was “not at all

unlike” Art. 595. App. at 38a. That, however, is not correct. The

Massachusetts statute merely awards attorney’s fees in a successful antitrust

case to “the petitioner”; unlike Art. 595, it does not expressly attribute

attorney’s fees in all class actions to the representative plaintiffs. Statutes

like the one in Massachusetts are generally construed to require a pro rata

allocation of attorney’s fees to ail class members for purposes of calculating

the amount in controversy. See, e.g., Goldberg v. CPC Int'l Inc., 678 F.2d

1365, 1367 (9th Cir.), cert. denied, 459 U.S. 945 (1982).

Ill. THE FIFTH CIRCUIT’S DECISION IN ABBOTT

WAS CORRECT

In Zahn v. Internationa! Paper Co., 414 U.S. 291 (1973),

this Court ruled that each class member in a class action “must

satisfy the jurisdictional amount” and that any class member

who fails to do so “must be dismissed from the case”. /d. at

301. As a result, the Court affirmed a lower court ruling that

exercised jurisdiction, pursuant to 28 U.S.C. § 1332, over only

those class members whose claims exceeded the amount in

controversy requirement and dismissed the other members of

the class. /d. at 292, 301.

Seventeen years later, Congress enacted 28 U.S.C. § 1367.

Pursuant to the new statute, a district court that has “original

jurisdiction” over some plaintiffs may exercise “supplemental

jurisdiction” over any other plaintiffs who have “claims that are

so related to claims in the action within such original

jurisdiction that they form part of the same case or

controversy”. It is quite straight forward to apply 28 U.S.C.

§ 1367 to the facts of Zahn. As this Court held, the district

court there did have (and properly exercised) “original

jurisdiction”, pursuant to 28 U.S.C. § 1332, over those class

members who satisfied the jurisdictional amount (even though

other members of the class had to be dismissed from the case).

With the district court having “original jurisdiction” over some

plaintiffs, 28 U.S.C. § 1367 allows it to exercise “supplemental

jurisdiction” over the remainder of the class, because their

claims obviously “are so related to claims in the action within

such original jurisdiction that they form part of the same case

or controversy”.

That is precisely what the Fifth Circuit held in Abbott, 51

F.3d at 529, and—based upon the plain and unambiguous

language of 28 U.S.C. § 1367— it is manifestly correct. The

Fifth Circuit suppoiied its conclusion by pointing out that,

although there are specifically enumerated exceptions in 28

U.S.C. § 1367(b) to a district court’s ability to exercise

supplemental jurisdiction, class actions are not among them. /d.

at 527. That is also manifestly correct.

Especially where a statute prescribes exceptions by express

reference to particular Federal Rules of Civil Procedure, the

fact that the list fails to include Rule 23 necessarily means that

Rule 23 is not among the exceptions. The absence from the list

of Rule 23 cannot be altered by the courts. In the words of this

Court in Iselin v. United States, 270 U.S. 245, 251 (1926)

(emphasis added), to add Rule 23 to the list of exceptions in 28

U.S.C. § 1367 would be “not a construction of a statute, but, in

effect, an enlargement of it by the court, so that what was

omitted, presumably by inadvertence, may be included within

its scope. To supply omissions transcends the judicial

function.” See also Tennessee Valley Auth. v. Hill, 437 U.S.

153, 188 (1978) (a statute’s failure to include an item in a list

of specific exemptions “mean{s] that under the maxim

expressio unius est exclusio alterius, we must presume that”

Congress did not intend the item to be exempted).

This Court has uniformly rejected interpretations that have

inserted new references or requirements into statutes—as

would be necessary if Rule 23 were to be read into 28 U.S.C.

§ 1367. That approach “would be to add a material element to

the [statute], and thereby to create, not to expound, a provision

of law”. Crooks v. Harrelson, 282 U.S. 55, 58 (1930). If

applying the plain language of section 1367 leads to an

“objectionable” result, “in such case the remedy lies with the

lawmaking authority, and not with the courts”. Jd. at 60. Where

Congress has acted “in plain terms, as it has done here, it is not

within the province of the court to modify the law by

construction”. Jd. at 61. As this Court pointedly stated in

Caminetti v. United States, 242 U.S. 470, 485 (1917) (citations

omitted; emphasis added):

“It is elementary that the meaning of a statute must, in the

first instance, be sought in the language in which the act is

framed, and if that is plain, and if the law is within the

constitutional authority of the Jawmaking body which

passed it, the sole function of the courts is to enforce it

according to its terms.”

Petitioners assert (incorrectly) that, in this case, that

approach will! to an expansion in federal jurisdiction and

an enlargement o. the federal courts’ case load. Even if this

were true, that “is no reason why the courts should refuse to

enforce [section 1367] according to its terms”. Caminetti v.

United States, 242 U.S. at 490. “Such considerations are more

appropriately addressed to the legislative branch of the

government, which alone had authority to enact and may, if it

sees fit, amend the law.” Jd. at 490-91. This Court has sternly

cautioned that:

“{I]jn our constitutional system the commitment to the

separation of powers is too fundamental for us to pre-empt

congressional action by judicially decreeing what accords

with ‘common sense and the public weal.’ Our

Constitution vests such responsibilities in the political

branches.”

Tennessee Valley Auth. v. Hill, 437 U.S. at 195. In short, the

“task” of the courts “is to apply the [statutory] text, not to

improve upon it”. Pavelic & LeFlore v. Marvel Entertainment

Group, 493 U.S. 120, 126 (1989). That is what the Fifth Circuit

in Abbott did.

Moreover, legislative consideration of issues like those

raised by Petitioners is actually going on at this time. Congress

has before it legislation that would amend the diversity statute,

28 U.S.C. § 1332, in a way that would expand federal

jurisdiction over class actions filed in state courts beyond

anything about which Petitioners complain here. On September

23, 1999, the House of Representatives passed the Interstate

Class Action Jurisdiction Act of 1999, H.R. 1875, 106th Cong.,

which would amend section 1332 to extend federal jurisdiction

to cover class actions in which, subject to certain exceptions,

there is partial diversity of citizenship between any class

member and any defendant and the aggregate amount in

controversy exceeds $1 million. 145 Cong. Rec. H8563-05.7

The House bill has been transmitted to the Senate, which

has a similar bill with an amount in controversy requirement

of $75,000, S.353, pending in committee. The current

congressional debate on this matter is yet another reason why

the Court should deny the writ and give the political branches

an opportunity to act.

Petitioners argue, as they did below, that legislative history

shows that the Fifth Circuit’s reading of 28 U.S.C. § 1367 is

inconsistent with the intent of Congress. But where, as here, the

statute is clear and unambiguous on its face, it is the language

of the statute—not the legislative history—that establishes

congressional intent. Indeed, the very same argument was made

and rejected in West Virginia Univ. Hospitals, Inc. v. Casey,

499 U.S. 83, 98-99 (1991) (emphasis added), where the Court

stated, in a passage particularly pertinent to this case, that:

“The best evidence of [congressional] purpose is the

statutory text adopted by both Houses of Congress and

submitted to the President. Where that contains a phrase

that is unambiguous—that has a clearly accepted meaning

in both legislative and judicial practice—we do not permit

it to be expanded or contracted by the statements of

individual legislators or committees during the course of

the enactment process.”

In West Virginia Univ. Hospitals, :t was asserted—as it is

here—that Congress “would have” included an item in a list

prescribed in 42 U.S.C. § 1988 “had it thought about it”, but

“Congress simply forgot”. Jd. at 100. Even if true, this

Court held—in language dispositive of Petitioners’ identical

argument—that supplying the missing item “profoundly

mistakes our role”. Jd.

2 The text of H.R. 1875 can be found in App. at 44a-5la.

3 The text of S. 353 can be found in App. at 52a-62a.

The Court’s approach in West Virginia Univ. Hospitals is

consistent with a long line of cases. As the Court explained in

Immigration and Naturalization Serv. v. Phinpathya, 464 U.S.

183, 189 (1984) (internal quotation marks and citations

omitted):

“This Court has noted on numerous occasions that in all

ca -s involving statutory construction, our starting point

must be the language employed by Congress, . . . and we

assume that the legislative purpose is expressed by the

ordinary meaning of the words used.”

Similarly, in City of Chicago v. Environmental Defense Fund,

511 U.S. 328, 337 (1994), the Court rejected an appeal to

legislative history because “it is the statute, and not the

Committee Report, which is the authoritative expression of the

law”. The Court made the same point in Tennessee Valley Auth.

v. Hill, 437 U.S. at 185 n.29, where it stated that “[wJhen

confronted with a statute which is plain and unambiguous on its

face, we ordinarily do not look to legislative history as a guide

to its meaning”; in such a situation “it is not necessary to look

beyond the words of the statute”.4

This Court’s decision in United States v. X-Citement

Video, Inc., 513 U.S. 64, 69 (1994), which was expressly relied

upon by the Fifth Circuit in Abbott, 51 F.3d at 529, makes the

4 See also Pennsylvania v. Union Gas Co., 491 U.S. 1, 29-30 (1989)

(Scalia, J., concurring in part and dissenting in part) (the Court’s “task” is

not “to plumb the intent of the particular Congress that enacted a particular

provision”; “[iJt is our task, as I see it, not to enter the minds of the

Members of Congress—who need have nothing in mind in order for their

votes to be both lawful and effective—but rather to give fair and reasonable

meaning to the text of the United States Code, adopted by various

Congresses at various times”); Caminetti v. United States, 242 U.S. at 490

(“it has been so often affirmed as to become a recognized rule, when words

are free from doubt they must be taken as the final expression of the

legislative intent, and are not to be added to or subtracted from by

considerations drawn from titles or designating names or reports

accompanying their introduction, or from any extraneous source”).

OS OC ON. Fs oe, ee ee pet at

oe en I! Te -~

point that a court is justified in ignoring the unambiguous

language of a statute only if a plain reading would “produce

results that were not merely odd, but positively absurd”. See

also Green v. Bock Laundry Mach. Co., 490 U.S. 504, 527

(1989) (Scalia, J., concurring in the judgment) (the Court may

look beyond the plain language of “a statute which, if

interpreted literally, produces an absurd, and perhaps

unconstitutional, result’); Crooks v. Harrelson, 282 U.S. at 59-

60 (only in the “rare and exceptional circumstances” where

applying “the literal terms of a statute” would “lead[] to absurd

results” can the Court “justify a departure from the letter of the

law”); Caminetti v. United States, 242 U.S. at 490 (the plain

language of a statute “is the sole evidence of the ultimate

legislative intent” unless it “lead{[s] to absurd »r wholly

impractical consequences”’).

That is certainly not the case with regard to the statutory

language of 28 U.S.C. § 1367 as read by the Fifth Circuit in

Abbott. Justice Brennan’s dissent in Zahn (joined by

Justices Douglas and Marshall), 414 U.S. at 302-12, forcefully

explicates the reasons why federal supplemental jurisdiction

should be permitted over class members who do not satisfy the

amount in controversy requirement whenever original federal

jurisdiction exists over the representative plaintiffs.> A number

of commentators share the same view. See Abbott, 51 F.3d at

529 (citing commentators). See also Russ v. State Farm Mut.

Auto. Ins. Co., 961 F. Supp. 808, 819 (E.D. Pa. 1997) (adopting

the Fifth Circuit’s literal reading of 28 U.S.C. § 1367 “would

not be absurd; arguably it would be sensible”).

5 See id., 414 U.S. at 308-09 (Brennan, J., dissenting) (“Not only does

the practical desirability of sustaining ancillary jurisdiction bring Rule

23(b)(3) class actions within the logic of our decisions, but the Court has

long since recognized that fact, and has sustained ancillary jurisdiction over

the nonappearing members in a class action who do not meet the

requirements of traditional rule of complete diversity”).

Petitioners claim that the fact that some courts disagree

with Abbott “lends credence to the argument that Section 1367

is ambiguous and therefore that reference to legislative history

is appropriate”. Cert. Pet. at 21. But that is a mere bootstrap.

Those contrary decisions cannot change the plain language of

the statute. Petitioners’ argument actually puts the cart before

the horse. It presumes ambiguity where the statutory text might

be perfectly clear. It makes the whole analysis a self-fulfilling

prophecy—i.e., it takes the position that “because I disagree

with others, there must therefore be ambiguity”. That is not

correct. Before resort can be made to legislative history, there

has to be a showing that ambiguity does indeed exist in the

language of the statute itself. Chevron v. Natural Resources

Defense Council, 467 U.S. 837, 843 (1984).

As this Court stated in Connecticut Nat'l] Bank v. Germain,

503 U.S. 249, 253-54 (1992) (internal quotation marks and

citations omitted; emphasis added), in language that provides

the clear rule of decision here:

“{I]n interpreting a statute a court should always turn first

to one, cardinal canon before all others. We have stated

time and again that courts must presume that a legislature

Says in a statute what it means and means in a statute what

it says there. When the words of a statute are

unambiguous, then, this first canon is also the last:

judicial inquiry is complete.”

See also Pavelic & LeFlore v. Marvel Entertainment Group,

493 U.S. at 123 (internal quotation marks and citations

omitted) (“with a statute, when we find the terms .. .

unambiguous, judicial inquiry is complete”).

There is no ambiguity in the language of 28 U.S.C. § 1367.

As Judge Pollak conceded in Russ v. State Farm Mut. Auto. Ins.

Co., 961 F. Supp. at 811, 813, section 1367 “parsed literally”

and “on its face” does confer supplemental jurisdiction over

absent class members so long as original federal jurisdiction

nt Pee eS ee ee en eee

exists over the representative plaintiffs.° See also Patterson

Enterprises, Inc. v. Bridgestone/Firestone, Inc., 812 F. Supp.

1152, 1154-55 (D. Kan. 1993) (“the plain meaning of the

language of [28 U.S.C. § 1367] has the effect of overruling

Zahn’’; “the legislative history is not useful in interpreting the

unambiguous provisions of this statute as they relate to a case

such as this one’); Garza v. National Am. Ins. Co., 807

F. Supp. 1256, 1258 (M.D. La. 1992) (“this Court finds that the

Congress said what it meant and that the Congress meant what

it said—the language of § 1367 unavoidably overrules these

pre-§ 1367 cases in those instances where the requirements of

§ 1367(a) are fulfilled and the exceptions of § 1367(b) are

inapplicable”).

Finally, extending supplemental jurisdiction to absent class

members whose claims fall below the amount in controversy

specified in 28 U.S.C. § 1332 raises no greater federalism

concern and causes no greater expansion of federal jurisdiction

than extending supplemental jurisdiction to absent class

members who fail the diversity of citizenship requirement that

is also specified in 28 U.S.C. § 1332. Yet that is what this

Court did in Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356

(1921), even though the result implicated a limiting policy of

federal diversity jurisdiction that is no less important than the

amount in controversy. As Justice Brennan pointedly

commented in his dissent in Zahn:

“Particularly in view of the constitutional background on

which the statutory diversi. requirements are written, it is

difficult to understand why the practical approach the

“would not be absurd; arguably it would be sensible", id. at 819, Judge

Pollak then improperly went on to review the legislative history, which led

him to decide not to follow the plain and unambiguous language of the

statute. Hence, the Russ decision, although disagreeing with Abbott, hardly

supports--indeed, it directly refutes--the notion that 28 U.S.C. § 1367 is

ambiguous.

Court took in Supreme Tribe of Ben-Hur must be

abandoned where the purely statutory ‘matter in

controversy’ requirement is concerned.”

414 U.S. at 309 (Brennan, J., dissenting; citations omitted).

With the enactment of 28 U.S.C. § 1367, the “practical

approach” of Supreme Tribe of Ben Hur now does apply to the

amount in controversy requirement as well. That result is

compelled by the statute’s plain language, and there is no

constitutional or policy reason why it should be otherwise.

a Oe ee ee ee ee ee oe ee eS eS eee

ot ae ete

CONCLUSION

For the reasons described above, the petition for a writ of

certiorari should be denied.

October 15, 1999.

Frank Cicero, Jr.

Counsel of Record

Craig A. Knot

KIRKLAND & ELLIS

200 East Randolph Drive

Chicago, IL 60601

(312) 861-2000

William R. D’ Armond

KEAN, MILLER,

HAWTHORNE, D’ARMOND,

MCCOWAN & JARMAN

LLP

One American Place

22nd Floor

Baton Rouge, LA 70825

Attorneys for Respondent

Abbott Laboratories

Respectfully submitted,

Max R. Shulman

Counsel of Record

CRAVATH, SWAINE & MOORE

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

(212) 474-1000

Phillip A. Wittmann

STONE, PIGMAN, WALTHER,

WITTMANN & HUTCHINSON

546 Carondelet Street

New Orleans, LA 70130-3588

(504) 581-3200

Attorneys for Respondents

Bristol-Myers Squibb

Company and Mead

Johnson & Company

APPENDIX

IN THE

UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

KAREN LAUDERDALE. SUING ON BEHALF OF HERSELF

INDIVIDUALLY AND ON BEHALF OF PERSONS SIMILARLY

SITUATED.

Plaintiffs

ABBOT LABORATORIES. ET AL..

Defendants

Civil Action No. 94-0659-B-C

i _

ORDER

This matter is before the court on the plaintiff's motion to

remand (tab 11). After consideration of the parties’ arguments,

the motion is GRANTED.

FACTS

The plaintiff, Karen Lauderdale, initially brought this

action in the Circuit Court of Mobile County pursuant to

Alabama Rule of Civil Procedure 23, which covers class

actions. In her complaint, the plaintiff alleges that the

defendants conspired to fix the price of infant formula in

Alabama from January 1980 to December 1992, and seeks a

declaratory judgment that the defendants engaged in the alleged

conspiracy, as well as recovery for a violation of §6-5-60, Code

of Alabama (1975), which allows anyone injured by an

unlawful trust to recover $500 for each instance of injury in

addition to actual damages. Lach member of the class seeks up

to $49,000.00, exclusive of interest and costs.

DISCUSSION

Despite the defendants’ suggestions to the contrary, it 1s

well established in this circuit that the burden on a motion to

remand rests with the removing party. Gaitor v. Peninsular &

Occidental SS’ Co., 287 F.2d 252, 253 (Sth Cir. 1961). To

satisfy their burden, the defendants must show that “it does not

appear to a legal certainty that [the plaintiff's] claim ts really

for less than the jurisdictional amount.” Opelika Nursing

Home Inc. v. Richardson, 448 ¥ 2d 658, 663 (Sth Cir. 1971).

In other words, “if by a reasonable probability it appears that

there is an amount in controversy exceeding the jurisdictional

amount, calculated pursuant to some realistic formula, the

defendants have met their burden.” Mutual First, Inc. v.

O Charley's of Gulfport, Inc., 72\ F Supp. 281, 282 (S.D. Ala.

1989). In addition, the defendants must overcome the narrow

construction this court is required to apply to its diversity

jurisdiction. City of Indianapolis v. Chase National Bank, 314

U.S. 63, 76-77 (1941).

The defendants contend that each prospective plaintiff

meets the jurisdictional requirement, but the argument is

unconvincing. Given the fact that at this point no one can say

how many times each prospective plaintiff purchased infant

formula supplied by the defendants, there is simply no “realistic

formula” to be applied to determine if each class member meets

the jurisdictional amount. For example, grandparents who took

care of a grandchild a few times a year during the period at

issue (and purchased formula on those occasions) would

certainly qualify as class members, but would also likely fall far

short of the $50,000.00 damage requirement. Since there is no

way to know at this point, and jurisdiction cannot be based

upon speculation,’ the defendants’ argument on this issue fails.

The defendants’ primary and best argument focuses on

whether the class members’ claims can be aggregated to meet

the jurisdictional amount.” The claims may be aggregated to

satisfy the amount in controversy only if the class members are

“enforc| ing] a single title or mght in which they have a common

and undivided interest”, as opposed to “separate and distinct

demands”. Zahn v. International Paper Co., 414 U.S. 291, 294

(1973) (quoting Troy Bank v. G.A. Whitehead & Co., 222 U.S.

39, 40-41 (1911)); see also Snyder v. Harris, 394 U.S. 332

(1969). While this standard has been applied in a number of

cases, no bright dividing line has emerged; as one district court

aptly observed, “the case law on aggregation is more

susceptible to clever manipulation by counsel than it is to

reasoned analysis.” Nat. Organization for Women v. Mutual of

Omaha Ins., 612 F.Supp. 100, 105 (D.D.C. 1985).

A variety of tests have been used to put the admonitions of

Zahn and Snyder into effect. The Sixth Circuit has observed

that “{a}n identifying characteristic of a common and undivided

interest is that if one plaintiff cannot or does not collect his

share, the shares of the remaining plaintiffs are increased”,

Sellers v. O'Connell, 70) F.2d 575, 579 (6th Cir. 1983), while

the Seventh Circuit has held that a common and undivided

interest exists “where only the class as a whole is entitled to the

relief requested.” Bassett v. Toyota Motor Credit Corp., 818

F.Supp. 1462, 1467 (S.D. Ala. 1992) (citing Griffith v. Seaitite

Corp., 903 F.2d 495, 498 (7th Cir. 1990)). Along the same

lines, the former Fifth Circuit held that “if plaintiffs’ mnghts are

not affected by the rights of the co-plaintiffs then there can be

no aggregation.” Eagle Star Ins. Co. v. Maltes, 313 F.2d 778,

' See Vicksburg, S & R.R Co. v. Nattin, 58 F.2d 979, 980 (Sth Cir.

1932).

* The representative plaintiff implicitly concedes that, if the claims

may be aggregated, the jurisdictional amount has been met.

781 (Sth Cir. 1963). All of these approaches suggest the claims

here should not be aggregated, since each individual plainuff

would only be entitled to a sum based on the amount they

themselves were overcharged, but are individually entitled to

that sum, regardless of the claims of their co-plaintiffs.

The Nat. Organization for Women Court, summarizing a

number of related cases. came up with the following three

general rules.

First, many of the cases that permit aggregation were

federal question cases in which the court may have been

stretching to find a way to provide 2 federal forum to

vindicate federal rights. (cites omitted). Second, the cases

that allow aggregation often speak of the presence of some

fund to which a plaintiff class is seeking access. (cites

omitted). Finally, they often involve an attempt to enforce

a right that belongs to a group. (cites omitted).

Nat. Organization for Women, 612 F.Supp. at 107.

This case clearly fails the first and third rules (since there is no

federal question and the right at issue belongs to each

individual plaintiff rather than the class, as the Alabama statute

makes clear)’ , and at least arguably fails the second one (since

no settled fund is at stake or openly sought by the plaintiffs).“

’ See Code of Alabama 1975 § 6-5-60 (“Any person, firm, or

corporation injured or damaged by an unlawful trust, combine or monopoly,

or its effect, direct or indirect, may, in each instance of such injury or

damage, recover the sum of $500 and all actual damages. . .”).

* In the aggregation cases cited by the defendants for the proposition

that a common fund is at stake here, each class of plaintiffs were seeking the

establishment of such a fund. See Berman v. Narragansett Racing

Association, 414 F.2d 311, 315 (1st Cir. 1969) (“plaintiffs make no specific

claims for individual payments”) ; Hughes v. Const. Co., Inc. v. Rheem Mfg.

Co., 487 F.Supp. 345, 350 (N.D. Miss. 1980) (plaintiff stated in complaint

that “the damages to be recovered will be in the form of this common fund

for all class members”). In this case, by contrast, the plaintiffs are not

attempting to set up a fund, but rather » ¢ pursuing individual claims.

In addition, several courts have held that, when there is a

separate contract between each individual plaintiff and the

defendant, the claims arising from those contracts are separate

and distinct and cannot be aggregated to meet the jurisdictional

amount. Fennell v. Ohio Casualty Ins. Co., 1993 U.S. Dist.

LEXIS 5295, *5 (M.D. Fla. 1993) ; Averdick v. Republic

Financial Services. Inc., 803 F.Supp. 37 (E.D. Ky. 1921);

Indianer v. Franklin Life Ins. Co., 113 F.R.D. 595 (S.D. Fla.

1986). Each separate purchase of infant formula by each

individual plaintiff in this case constitutes a separate contract,

which forms the theoretical basis of each plaintiff's claim. See

Uniform Commercial Code § 2-106 (defining contract for sale

as “both a present sale of goods and a contract to sell goods at

a future time”). This fact also suggests that each claim is

independent.”

Finally, there is little that separates this case from Snyder

and Zahn, the cases which established the principle at issue. In

Snyder, which addressed two related district court class action

cases, the first plaintiff sued a company’s board of directors on

the grounds that they had sold their shares in the company for

far above the fair market value, and asked that the excess be

distributed among the shareholders. In the companion case, the

plaintiffs alleged that the defendant gas company had

overcharged its customers, and sought to retrieve the

overcharged amount. The Supreme Court held that both claims

were separate and distinct. In Zahn, a group of landowners sued

the defendant paper company for allegedly polluting Lake

Champlain, on which the plaintiffs’ property stood. once again,

despite the seemingly shared interest, the Supreme Court found

that the claims could not be aggregated. Nothing in the

defendants’ brief distinguishes those decisions from the one

* Moreover, it provides an additional ground for distinguishing

Berman, 414 F.2d at 315, in which no individual contractual rights were

alleged.

before this court, or explains why a common fund was not at

stake there, but somehow is at stake here.

Bearing in mind the earlier admonition about the

manipulability of the cited tests, it remains significant that each

one points against aggregation. Combined with the fact that the

defendants bear the burden on the issue, and the strict

construction the court must give to its diversity jurisdiction, the

consistency of results dictates that the plaintiffs’ motion should

be, and therefore is, GRANTED. It is so ORDERED.

DONE this the 4th day of April, 1995.

/s/ Charles R. Butler, Jr.

CHIEF DISTRICT JUDGE

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

JAY and CICELY LAMBERT, GLENN and ROSSANA

WHITE, GUS G. and STEVINE DALEURE, and

MICHAEL C. and JO ELLEN WILSON,

Plaintiffs,

Vv.

ABBOTT LABORATORIES, 'NC., and BRISTOL-MYERS

SQUIBB, and MEAD JOHNSON & COMPANY,

DEFENDANTS,

Defendants.

Civil Action No. 94-0677-L(J)

MEMORANDUM OPINION

Plaintiffs brought the present action on behalf of those

who, from January 1980 through December 1992, have

indirectly purchased infant formula within the Commonwealth

of Kentucky from named defendants. In their complaint,

plaintiffs alleged that defendants’ conduct constituted a restraint

of trade or commerce in violation of the Kentucky Consumer

Protection Act, K.R.S. § 367.175, and Kentucky common law.

They also alleged that defendants’ actions constituted an unfair

trade practice in violation of the Kentucky Consumer

Protection Act, K.R.S. § 367.170. Plaintiffs originally filed this

suit in Jefferson Circuit Court, Division Fifteen, in Louisville,

Kentucky. In Novernber 1994, defendants removed the suit to

this court on the grounds of federal question and diversity

jurisdiction. (Dkt. 1.) Plaintiffs then moved to remand under 28

U.S.C. § 1447(c) based on lack of subject matter jurisdiction.

(Dkt. 5.) For the reasons that follow, plaintiffs’ motion to

remand will be granted.

The Supreme Court, in Caterpillar, Inc. v. Williams, 482

U.S. 386, 391-92, 107 S.Ct. 2425, 2429 (1987), provided a

“jurisdictional framework governing removal of federal

question cases from state into federal courts.” The Caterpillar

Court wrote:

Only state-court actions that originally could have

been filed in federal court may be removed to federal

court by the defendant. Absent diversity of

citizenship, federal-question jurisdiction is required.

The presence or absence of federal-question

jurisdiction is governed by the “well-pleaded

complaint rule,” which provides that federal

jurisdiction exists only when a federal question is

presented on the face of the plaintiff's properly

pleaded complaint. The rule makes the plaintiff the

master of the claim; he or she may avoid federal

jurisdiction by exclusive reliance on state law.

Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429 (footnote

omitted). Under the “well-pleaded complaint” rule, plaintiffs

are the “masters” of their complaint, and the “fact that the

wrong asserted could be addressed under either state or federal

law does not ordinarily diminish” the plaintiffs’ right to choose

a state law cause of action. Alexander v. Electronic Data

Systems Corporation, 13 F.3d 940, 943 (6th Cir. 1994).

An exception to the well pleaded complaint rule exists

when plaintiffs “artificially plead” their complaint “in order to

avoid federal jurisdiction of claims that are federal in nature”.

Her Majesty the Queen In Right of the Province of Ontario v.

City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989) (citing

Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 397

n.2, 101 S.Ct. 2424, 2427 n.2 (1981); 14A C. Wright, A. Miller

and E. Cooper, Federal Practice and Procedure § 3722 at 270

(1985)). Pursuant to the “artful pleading” doctrine, a court

“may recharacterize a plaintiffs claims as federal if ‘the

particular conduct complained of [is] governed exclusively by

federal law.’ Redwood Theatres v. Festival Enterprises, Inc.,

908 F.2d 477, 479 (9th Cir. 1990) (quoting Hunter v. United

Van Lines, 746 F.2d 635, 640 (9th Cir. 1984), cert. denied, 474

U.S. 863, 106 S.Ct. 180 (1985)). The Supreme Court has

applied the artful pleading doctrine when a state claim is

completely preempted by federal law, Caterpillar, 482 U.S. at

393, 107 S.Ct. at 2430, or when a state claim has already been

decided in a previous federal suit, Moitie, 452 U.S. at 397 n.2,

101 S.Ct. at 2427 n.2.

In their motion to remand, plaintiffs argue that under the

“well-pleaded complaint” rule, they are entitled to plead a state

law cause of action. In response, defendants contend that the

allegations in the complaint are “cognizable solely under

federal antitrust law.” They state that under the “artful

pleading” doctrine, removal is proper. Defendants rely on

Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101

S.Ct. 2424 (1981), In re Wiring Device Antitrust Litigation,

498 F.Supp. 79 (E.D.N.Y. 1980), and Mechanical Rubber &

Supply Co. v. American Saw and Mfg. Co., 747 F.Supp. 1292

(C.D.Ill. 1990) for the proposition that removal to federal court

was warranted. In Moitie, plaintiffs’ antitrust claims were

dismissed on their merits in a federal district court. After the

claims were dismissed, plaintiffs filed a state court action based

on the same facts as the one previously filed in federal court.

Defendants removed the claims to federal court, where the

district court again dismissed plaintiffs’ claim under the

doctrine of res judicata. Approving the district court's decision,

the Supreme Court provided:

10a

We agree that at least some of the claims had a

sufficient federal character to support removal. . . .

After “an extensive review and analysis of” the

origins and substance of the two complaints, [the

district court] found, and the Court of Appeals

expressly agreed, that respondents had attempted to

avoid removal jurisdiction by “artful|ly]” casting their

“essentially federal law claims” as state law claims.

We will not question here that factual finding.

Moitie. 452 U.S. at 397 n.2, 101 S.Ct. 2427 n.2 (emphasis

added).

Moitie is distinguishable from the present suit. In City of

Detroit, the Sixth Circuit wrote: “[C]ourts applying Moitie have

made it quite clear that it applies only to the removal of state

claims barred by a prior federal judgment.” City of Detroit,

874 F.2d at 342 (emphasis added). Unlike the plaintiffs in

Moitie, plaintiffs in the present suit have not previously sued

defendants in federal court. Further, the Supreme Court did not

expressly hold that removal was proper; instead, the Court, in

a footnote, stated that it would not “question” the “factual

finding” of the district court. The narrow Moitie exception is

inapplicable, and removal will not be granted on these grounds.

See Redwood Theatres, Inc. v. Festival Enterprises, Inc., 908

F.2d 477, 480 (9th Cir. 1990); Sullivan v. First Affiliated

Securities, Inc., 813 F.2d 1368, 1376 (9th Cir. 1987), cert.

denied, 484 U.S. 850, 108 S.Ct. 150 (1987).

Defendants’ reliance on Jn re Wiring Device and

Mechanical Rubber & Supply must also fail. In both of these

cases, a federal district court allowed defendants to remove

state antitrust actions to federal court. The court does not

believe that federal question jurisdiction should be interpreted

as broadly as the Wiring Device or Mechanical Rubber &

lla

Supply Courts understood it to be.' The court cannot ignore the

most recent opinions cited by plaintiffs: Free, et al vy. Abbott

Labs, et al., Civil Action No. 93-971-A (M.D. La. April 5

1994); Carlson v. Abbott Labs, et al., Case No. 94-C378 (E.D.

Wisc. July 21, 1994); DeVincenzi, et al v. Abbott Labs. et al.

Case No. 94-527-LDG (D.Nev. November 14, 1994): Buscher,

et al v. Abbott Labs, et al., Civil Action No, 2:94-0422

(S.D.W.Va. Sept. 26, 1994); and Blake v. Abbott Labs, et al..

Civ. Action No. 3:94-CV-286 (E.D.Tenn. March 2. 1995).

These cases involved the same question as the present one, i.e.

whether state antitrust law creates federal question jurisdiction.

Each federal district court held that no federal question

jurisdiction was created and remanded the suits to state court.

These cases indicate that state antitrust law does not invoke

federal question jurisdiction and that removal is improper.’

' In Corporate Travel Consultants, Inc. v. United Airlines, Inc., 799

F.Supp. 58 (E.D.Ill. 1992), the Mechanical Rubber & Supply decision was

criticized as being overly broad by a federal district court in Illinois. In a

footnote, the United Airlines Court wrote:

Mechanical Rubber & Supply Co. v. American Saw & Mfg. Co., 747

F.Supp. 1292 (C.D.II1. 1990) . . . is not persuasive. Acknowledging

that it relies upon no law, because it can find none and the defendant

cites none, and that the federal antitrust laws do not preempt the state

antitrust laws, the district court nonetheless concludes that plaintiff's

complaint is federal in nature. /d at 1296. The court states that

“federal antitrust laws apply to acts affecting or occurring in the flow

of commerce and that the Illinois antitrust laws apply to acts affecting

intrastate commerce,” because IIlinois would not extend its antitrust

laws to burden interstate commerce. /d. Because the Supreme Court

has indicated that little of the artful pleading exception exists beyond

preemption, this court does not believe that it would be wise to adopt

the broad rule stated by the district court in Mechanical Rubber.

United Airlines, 799 F. Supp. at 60 n. |

* Defendants do not distinguish the cases cited by plaintiffs; rather,

citing Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 10

, Inc. v. ’ S. 394, 101 S.Ct.

2424 (1981), they argue that they were all wrongly decided.

l2a

Further, plaintiffs’ state antitrust claims are not preempted

by federal law. Complete preemption exists when “the

preemptive force of a statute is so ‘extraordinary’ that it

‘converts an ordinary state common-law complaint into one

stating a federal claim for purposes of the well-pleaded

complaint rule.” Caterpillar, 482 U.S. at 393, 107 S.Ct. at

2430. In other words, a court will find complete.preemption if

“federal law has entirely preempted the field in question.” City

of Detroit, 874 F.2d at 342. State claims are preempted and

“therefore removable to federal court only when there is a

‘clearly manifested’ intent by Congress.” /d.

Here, Congress has not intended for federal antitrust to

preempt state antitrust law. In California v. ARC America

Corporation, 490 U.S. 93, 102, 109 S. Ct. 1661, 1665 (1989),

the Supreme Court explained that “Congress intended the

federal antitrust laws to supplement, not displace, state antitrust

remedies.” Further in City of Detroit, the Sixth Circuit stated

that only three instances exist in which the Supreme Court has

found complete preemption: (1) in relation to section 301 of the

Labor Management Relations Act of 1947, 29 U.S.C. § 185; (2)

concerning the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. §§ 1001-1461; and (3) concerning Indian

rights. City of Detroit, 874 F.2d at 342 (citations omitted).

Defendants cannot remove the case based on preemption.

Defendants also maintain that removal is proper because

Kentucky antitrust law applies only to conspiracies that are

predominantly intrastate, as opposed to interstate. They argue

that the facts alleged in plaintiffs’ complaint encompasses a

conspiracy that transpired throughout the entire United States,

and must be exclusively considered under federal law. K.R.S.

§ 367.175(1) provides:

Every contract, combination in the form of trust and

otherwise, or conspiracy, in restraint of trade or

commerce in this Commonwealth shall be unlawful.

l3a

Ky. Rev. Stat. Ann. § 367.175(1) (Baldwin 1993). Kentucky

courts have not stated whether the Kentucky General Assembly

intended to restrict K.R.S. § 367.175 to predominantly

intrastate commerce. The court will leave the interpretation of

K.R.S. § 367.175 to a Kentucky court. See /n re Sugar Antitrust

Litigation. , 588 F.2d 1270, 1273 (9th Cir. 1978), cert. denied.

441 U.S. 932, 99 S.Ct. 2052 (1979).

Initially, defendants stated that removal was proper based

on diversity jurisdiction. However, it appears that defendants

conceded that removal cannot be established on these grounds.

For federal diversity jurisdiction to apply in a class action, each

class member must meet the required jurisdictional amount.

Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1063 (1969). In their

complaint, plaintiffs alleged, in good faith, that the individual

damages for each plaintiff will not amount to $50,000.

Defendants failed to show that the amount for each plaintiff is

more than that amount. Removal is improper based on diversity

jurisdiction.

Plaintiffs’ motion to remand the present suit to the

Jefferson Circuit Court in Louisville, Kentucky will be granted.

An appropriate order accompanies this memorandum opinion.

Dated: _ 5/23/95

/s/ Edward H. Johnstone

Edward H. Johnstone, Senior Judge

United States District Court

l4a

fe ____________i_i_ii_#__—____¥sHHeHs

IN THE

UNITED STATES District COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

JAY and CICELY LAMBERT, GLENN and ROSSANA

WHITE, GUS G. and STEVINE DALEURE, and

MICHAEL C. and JO ELLEN WILSON,

Plaintiffs,

ABBOTT LABORATORIES, INC., and BRISTOL-MYERS

SQUIBB, and MEAD JOHNSON & COMPANY,

DEFENDANTS,

Defendants.

Civil Action No. 94-0677-L(J)

eeee———————————————————

ORDER

For the reasons stated in a memorandum opinion this day

entered, IT IS ORDERED:

(1) Plaintiffs’ motion to remand the present action is

GRANTED. (Dkt. 5.)

(2) The entire matter shall be TRANSFERRED to the

Jefferson Circuit Court in Louisville, Kentucky.

(3) The clerk of this court is directed to transmit the entire

record in the case to the clerk of the Jefferson Circuit Court in

Louisville, Kentucky for all further proceedings.

1Sa

(4) Plaintiffs’ motion for attorneys fees and costs incurred

in opposing removal is DENIED. (Dkt. 9.)

Dated: _ 5/23/95

/s/ ward H. Johnstone

Edward H. Johnstone, Senior Judge

United States District Court

l6a

—————————————————————————

IN THE

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

LAUREL A. DEVINCENZI, INDIVIDUALLY AND ON BEHALF OF

ALL OTHERS SIMILARLY SITUATED WITHIN THE STATE OF

NEVADA,

Plaintiff

Vv.

ABBOT LABORATORIES, BRISTOL-MYERS SQUIBB CO., AND

MEAD JOHNSON & CoO..,

Defendants.

CV-S-94-527-LDG (RJJ)

—_—__ee.?.?k »—___—_—_———

MEMORANDUM DECISION

On April, 27, 1994, plaintiff filed a class action in the

District Court of Washoe County, Nevada, charging defendants

with conspiracy to “raise, fix, maintain and stabilize at

artificially high levels the wholesale prices of infant formula

sold in the United States, including the State of Nevada “in

violation of the Nevada Unfair Trade Practices Act (“UTPA”),

Nev. Rev. Stat. §598 para. 010 et seq. (Complaint Para. 29).

On June 14, 1994, defendants alleging federal question

jurisdiction removed the case to the United States District

Court pursuant to Title 28, U.S.C. §§1441 and 1446. After

removal, defendants moved to dismiss the Complaint for lack

of standing under /Ilinois Brick Co. v. Illinois, 431 U.S. 720,

728-29 (1977). Plaintiff countermoved to remand to state court.

17a

Defendants contend that the Nevada UTPA does not apply

to price-fixing conspiracies that are predominantly interstate in

nature, rather the Complaint states a federal cause of action

under the Sherman Act. Title 15, U.S.C., §§ 1. et seq.

Defendants argue that plaintiffs’ “artfully pled” Complaint

should not defeat federal jurisdiction.

Plaintiff responds that the “artful pleading” doctrine is

inapplicable to this case. Since it is an exception to the well

pleaded complaint rule, it is applied in only two circumstances:

(1) when the complete federal preemption doctrine ousts state

courts of jurisdiction to consider the claim and (2) the res

judicata exception which prohibits litigation of the same claim,

between the same parties in state court after it has been litigated

in a federal court. Plaintiff contends that neither of the

exceptions apply to the instant case and their choice of a forum

must be respected. Plaintiff further argues that this Court

should not consider defendants’ claim that the Nevada

legislature did not intend for the Nevada UTPA to apply to

indirect purchasers for the reason that the nonexistence of a

state cause of action is insufficient to bottom federal question

removal.

Plaintiffs Motion to Remand is GRANTED. Defendants’

Motion to Dismiss is DENIED.

DISCUSSION

The Artful Pleading Doctrine

The artful pleading doctrine was developed as an excention

to the well pleaded complaint rule. Simply stated, this rule

provides that a “party who brings a su** is master to decide

what law he will rely upon.” The Fair v. Kohler Die &

Specialty Co., 228 U.S. 22, 25 (1913). In the circumstance of

parallel claims (state and federal) , the party may select the

jurisdiction under which he wishes to proceed.

The Ninth Circuit explained in Redwood Theatres v.

Festival Enterprises, 908 F.2d 477 (9th Cir. 1990) , limitations

SO wate a ee oe

on the well pleaded complaint rule. Generally a party seeking

removal must identify the federal question appearing on the

face of the complaint. If the federal question is not so apparent,

the party seeking removal may rely on the “artful pleading

doctrine” which is a narrow exception to the straightforward

rules of removal jurisdiction.” Sullivan v. First Affiliated

Securities, 813 F.2d 1368, 1372 (9th Cir.), cert. denied, 484

U.S. 850 (1983).

The only two recognized applications of the “artful

pleading rule” are when “the particular conduct complained of

[is] governed exclusively by federal law.” Hunter v. United Van

Lines, 746 F.2d 635 at 640 (9th Cir. 1984), cert. denied. 474

U.S. 863 (1985) and when a state claim is found to be an

artfully pleaded federal claim which was previously before

federal court and dismissed (res judicata defense) Salveson v.

Western Bankcard Ass'n, 73\ F.2d 1423, 1432 (9th Cir. 1984).

The “artful pleading doctrine” is narrowly construed out of

considerations of federalism, Sullivan, 813 F.2d at 1376. and

the party invoking the removal statute bears the burden of

establishing federal jurisdiction.

In the instant case neither of the exceptions to the well

pleaded complaint rule applies. These plaintiffs framed their

complaint under the Nevada UTPA and have never filed a

parallel complaint in federal court. As to the second exception,

the Supreme Court has expressly ruled that state antitrust

indirect purchaser statutes are not preempted by federal law.

California v. ARC America Corp., 490 U.S. 93, 102 (1989).

Defendants’ argument that the actions complained of involve

predominately interstate transactions that affect interstate

commerce with only incidental affect in Nevada or any other

state was rejected by the Redwood court citing Exxon Corp. v.

Governor of Md., 437 U.S. 117, 128 (1978). Nor does this

Court find persuasive defendants’ contention that since indirect

purchasers do not have standing to sue under the Sherman Act,

the Nevada UTPA would be given a similar construction by the

19a

Nevada State court. The federalism concerns expressed by this

Circuit in Sullivan, supra, lead this Court to conclude that it is

the province of the Nevada state courts to construe the intent of

the Nevada Legislature in enacting the Nevada UTPA. This

conclusion is particularly appropriate since removal jurisdiction

does not turn upon whether a plaintiff has a valid state law

claim but rather whether plaintiff has artfully pled a federal law

claim. Jn re Sugar Antitrust Litig, 588 F.2d 1270 (9th Cir.

1978).

CONCLUSION

Defendants’ motion praying that this Court retain

jurisdiction and dismiss the complaint is DENIED. Plaintiff's

motion that this action be remanded to the District Court of

Washoe County is GRANTED.

IT IS SO ORDERED.

/s/ ___ Mary Johnson Lowe

MARY JOHNSON LOWE

Senior U.S District Judge

20a

eel ——————————————————

IN THE

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

LAUREL A. DEVINCENZI, INDIVIDUALLY AND ON BEHALF OF

ALL OTHERS SIMILARLY SITUATED WITHIN THE STATE OF

NEVADA,

Plaintiff.

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB CO., AND

MEAD JOHNSON & Co..

Defendants.

CV-S-94-527-LDG (RJJ)

ORDER

After having considered the pleadings and submissions of

counsel, this Court finds that plaintiff's complaint presents no

federal question within the meaning of Title 28, U.S.C.

§1441(b). Accordingly, it is ORDERED, that pursuant to

Title 28, U.S.C. §1441(c), this civil action be, and the same

hereby is, REMANDED to the District Court of Washoe

County, Nevada.

The Office of the Clerk is hereby directed to send copies

of this Order and the Opinion on which it is based to counsel of

record herein.

2la

Dated this 14 day of November, 1994.

/s/ ____Mary Johnson Lowe

MARY JOHNSON LOWE

Senior U.S District Judge

22a

=—oo———————————————————————————

IN THE

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF WEST VIRGINIA

CHARLESTON DIVISION

DEBORAH JANE BUSCHER, INDIVIDUALLY AND ON BEHALF

OF ALL OTHERS SIMILARLY SITUATED WITHIN THE STATE OF

WEST VIRGINIA,

Plaintiff.

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB CO., AND

MEAD JOHNSON & Co..,

Defendants.

Civil Action No. 2:94-0422

ORDER

On August 25, 1994, came the plaintiff, by her counsel,

and the defendants, by their counsel, for a hearing on plaintiff's

motion to remand. Having considered the pleadings filed by the

parties and the arguments of counsel, this Court finds that the

plaintiff's complaint presents no federal question within the

meaning of 28 U.S.C. §1441(b). Accordingly, it is ORDERED,

pursuant to 28 U.S.C. §1447(c), that this civil action be, and the

same hereby is, remanded to the Circuit Court of Kanawha

County, West Virginia.

The Clerk is directed to send copies of this order to counsel of

record herein.

23a

DATED: September 26, 1994

/s/ Dennis R. Knapp

DENNIS R. KNAPP, JUDGE

24a

y—————————————

IN THE

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

RICHARD R. CARLSON,

Plaintiff.

ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB CO... AND

MEAD JOHNSON & COMPANY,

Defendants.

Case No. 94-C-378

—eeeEeEeEeEEeeEeEeEeEEEEE——————————————————————

DECISION AND ORDER

This matter comes before Court on plaintiff Richard

R. Carlson’s (“Carlson”) motion to remand the above action to

Milwaukee County Circuit Court. On March 2, 1994, Carlson

filed a class action suit in state court alleging that the

defendants Abbott Laboratories, Bristol-Myers Squibb

Company and Mead Johnson & Company (collectively,

“defendants”) have violated state antitrust laws in connection

with the marketing and selling of infant baby formula.’ On

April 7, 1994, the defendants filed their notice of removal

pursuant to 28 U.S.C., §§ 1446 and 1331 invoking this Court’s

' There are currently pending twenty-six individual and class-actions

concerning violations of the Sherman Act, 15 U.S.C. §§ | ef seg. These

actions have all been consolidated in the United States District Court for the

Northern District of Florida. /n re Infant Formula Antitrust Litigation, MDL

Docket No. 878.

25a

jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1441. For the

reasons set forth below, Carlson’s motion to remand is granted.

ANALYSIS

The issue here is whether Carlson's state law claims are

actually “artfully plead” federal antitrust claims allowing this

Court to retain jurisdiction. Defendants claim that Carlson is

seeking to “deprive defendants of their right to have federal

claims heard in federal court.” (Memorandum at |). Carlson

counters that as “master of the claim”, he can avoid federal

jurisdiction by exclusive reliance on state law. (Memorandum

at 3-4, citing, Caterpillar, Inc. v. Williams, 482 U.S. 386, 392

(1987). Thus, in accord with the so called “well-pleaded

complaint” rule as defined by the Seventh Circuit: “plaintiff

picks a theory (state or federal); the theory prescribes the

appropriate court, which decides the case (including the

defenses).” Bartholet v. Reishauer A.G., 953 F.2d 1073, 1075

(7th Cir. 1992). The parties agree that there are exceptions to

this general rule: (1) where “the preemptive force of a statute

is so ‘extraordinary’ that it ‘converts an ordinary state common-

law complaint into one stating a federal claim for purposes of

the well-pleaded complaint rule.’” Caterpillar, supra at 393,

and (2) where the plaintiff attempts to avoid the res judicata

effect of an adverse judgment on a federal claim by repleading

the claim under state law. Federated Dep't Stores, Inc. v.

Moitie, 452 U.S. 394 (1981). Despite defendants’ authority and

argument, neither situation is present here.

The core of the defendants’ argument with respect to the

artful pleading exception is that because Carlson’s state law

antitrust claims concern interstate commercial activity and not

solely intrastate activity, they are clearly federal in nature.

Defendants argue that Wisconsin Supreme Court precedent

demonstrates that Wisconsin’s antitrust laws do not reach

interstate activity and therefore, Carlson is improperly trying to

have federal claims heard in state court. Carlson’s purpose in

using artful pleading is to escape the Supreme Court precedent

26a

of Jilinois Brick Co. v. Illinois, 431 U.S. 720 (1977) and

Hanover Shoe v. United Shoe Mach. Corp., 392 U.S. 481

(1968).’ Numerous “artful pleading” cases are cited in support

of this proposition. Oglesby v. RCA Corporation, 752 F.2d 272

(7th Cir. 1985); Local 92], of Chicago & Cent. States Joint

Bd., etc. v. Estate of Schmidt, 684 F.Supp. 601 (W.D. Wis.

1988); Federated Department Stores, Inc. v. Moitie, 452 U.S.

394 (1981); and Jn re Wiring Device Antitrust Litigation, 498

F.Supp. 79 (E.D.N.Y. 1980). However, only Wiring Device is

on all fours with this case.’

The Seventh Circuit's decision in Oglesby is inapposite

because the plaintiff attempted to assert a breach of contract

claim in order to overcome certain filing limitations of the

Labor Management Relations Act (LMRA), 29 U.S.C. § 185.

Because plaintiff's complaint referred to “statutory rights and

privileges” located in federal law, and because his employment

was governed by a collective bargaining agreement, the

Seventh Circuit upheld the district court’s conclusion that the

State claims were “artfully plead” federal claims under the

LMRA. In Local 92], of Chicago & Cent. States Joint Bd., etc.,

the Honorable John C. Shabaz reached a similar conclusion

because the state claims were “inextricably dependent” upon

certain obligations “which . . . are governed by a collective

bargaining agreement which is subject to § 301.” /d. at 605.‘

> Both cases make clear that only direct purchasers (not indirect

purchascs like Carlson) suffer an injury within the meaning of Section 4 of

the Claywon Act, 15 U.S.C. § 15.

* Another case, not cited by the defendants, Mechanical Rubber &

Supply Co. v. American Saw and Manufacturing Co., 747 F.Supp. 1292

(C.D.I11. 1990) is equally on point. Nevertheless, for the reasons set forth

infra, the Court declines to follow either Wiring Device or Mechanical

Rubber.

* In addition, these cases concerned labor disputes over which federal

law reigns supreme. Avco Corporation v. Aero Lodge No. 735, etc., 390

U.S. 557 (1968). The Supreme Court recently made clear that no such total

preemption exists with respect to the antitrust laws. California v. ARC

27a

Both of these cases are “artful pleading” cases where the

rlaintiffs, like Carlson, attempt to avoid federal jurisdiction

from the outset. By contrast, Moitie, 452 U.S. 394 (1981), upon

which the defendants also rely, is a res judicata case. There the

plaintiffs had already lost in federal court and subsequently

filed an “artfully plead” state court complaint. Moitie is not

relevant because res ;»dicata is not a defense in this case.

Carlson has conceded that his “claim under the federal antitrust

laws is [ ] clearly foreclosed by Supreme Court precedent .. . .”

(Memorandum at |). Accordingly, if this Court were to retain

jurisdiction, dismissal would be on the merits, not because of

the doctrine of res judicata.

As mentioned above. the only cases squarely on point are

Wiring Device and Mechanical Rubber.’ In those cases, the

respective courts denied the motions to remand after

considering the merits of the state antitrust claims. “[{S]ince

South Carolina has itself limited the application of its state

antitrust statutes to intrastate commerce, the true nature of

plaintiff s complaint is federal.” Wiring Device at 83. “[{T]his

Court believes that Illinois courts would not extend the

application of its antitrust law so that it would burden interstate

commerce.” Mechanical Rubber at 1296.° This Court declines

to follow these cases for the following reasons. First, such a

ruling gives short shrift to the oft-stated principle that the

plaintiff is “master of the claim.” If it is such a matter of settled

law that Carlson’s state claims are without merit, not only will

America Corp. 490 U.S. 93 (1989).

* In Free v. Abbott Laboratories, et al., 93-97\-A (April 5, 1994), the

identical issue was decided by The Honorable John V. Parker, Chief Judge

for the Middle District of Louisiana, in accord with this Court's decision.

(See attachment to Carlson's Memorandum).

* The Honorable John F. Grady of the Northern District of Illinois

recently rejected as unwise the “broad rule” of Mechanical Rubber.

Corporate Travel Consultants, Inc. v. United Airlines, Inc., 799 F Supp. 58,

60 (N.D.Ill. 1992).

28a

dismissal be a swift and relatively simple matter. but Carlson

risks being sanctioned under Wis. Stat. 802.05.’ However. if

dismissal is not so certain, this Court’s retention of jurisdiction

would improperly preclude Carlson from having the claim of

his choice heard in the court of his choice. Second. assuming

for the moment that the weight of Wisconsin authority is indeed

contrary to Carlson's claim, retention of jurisdiction improperly

precludes him from presenting to the state court compelling

reasons for the reversal of that authority. Therefore, the merits

of Carlson's claims should be heard by a Wisconsin court.

Further, comity and a recognition of the federal judiciary’s

limited role, preclude the exercise of jurisdiction over these

claims solely because they might be dismissed by a state court.

Lastly, even if Carlson’s claims may be summarily

dismissed in state court, they are not automatically transformed

into federal claims for purposes of 28 U.S.C. §§ 1331 and

1441. As previously indicated, Carlson has no claim under the

federal antitrust laws. Accordingly, Carlson’s motion to remand

Case No. 94-C-378 to the Circuit Court for Milwaukee County

is granted.

” This section, the equivalent to Fed. R. Civ. P. 11, provides for an

award of sanctions if a pleading is “not well-grounded in fact or warranted

by existing law or a good faith argument for the extension, modification or

reversal of existing law.”

29a

NOW THEREFORE, BASED ON THE FOREGOING,

IT IS HEREBY ORDERED THAT:

Plaintiff Richard R. Carlson’s motion to remand is

GRANTED and Case No. 94-C-378 is hereby REMANDED

to the Circuit Court of Milwaukee County.

Dated at Milwaukee, Wisconsin, this 21st day of July, 1994.

SO ORDERED,

/s/

HON. RUDOLPH T. RANDA

U.S. District Judge

30a

IN THE

UNITED STATES DISTRICT COURT

DISTRICT OF NORTH DAKOTA

SOUTHWESTERN DIVISION

LISA HEILMAN AND MARYLOU LEINTZ, ON THEIR OWN

BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY

SITUATED WITHIN THE STATE OF NORTH DAKOTA

Plaintiffs,

ABBOTT LABORATORIES, INC., BRISTOL-MYERS SQUIBB CO.,

AND MEAD JOHNSON & Co..

Defendants.

A1-94-122

—_—_—_—_—_—_—_—_—_—..2:. n— — eee

MEMORANDUM AND ORDER

Defendants removed this case from State Court on the

basis of diversity and on the claim that the complaint sets out

an antitrust cause having validity only under Federal statutes.

Plaintiffs counter by pointing out that the complaint

specifically seeks only state law remedy, if any there be, and

that the amount in controversy does not exceed $50,000.00 and

the diversity jurisdiction predicate is not met.

The memorandum opinion of United States District Judge

Leon Jordan in the identical Tennessee case analyzing the

merits of the matter is a well reasoned presentation. At first

blush this case appears to be a prime example leading to the

feeling of many legislators for the need for tort reform. It

3la

appears to have been initially sued out in Federal Court as a

class action, compromised and settled, (with, the court

suspects, the law firms benefitting greatly and the class

members in minuscule amounts). Once settled in Federal Court,

plaintiffs proceeded to file in State Courts, seeking class

certification. Defendants seek to remove into Federal Court,

where one assumes a motion to dismiss will be made on a res

adjudicata theory.

Plaintiffs seek remand to State Court, pointing with glee to

the carefully crafted pleading which would appear to make

removal not appropriate. | agree with Judge Jordan. !f the

plaintiffs say that they raise no Federal issue nor the dollar

threshold for diversity, then remand is proper. If there is no

state law upon which the plaintiffs can premise a cause of

action, as defendants allege, then the very competent state court

jurists can determine and will grant an appropriate motion for

dismissal.

Plaintiff's motion for remand is granted. (11)

SO ORDERED

Dated this 17th day of April, 1995

/s/ Patrick A. Conmy

Patrick A. Conmy, District Judge

United States District Court

32a

iE OOO

IN THE

UNITED STATES DISTRICT COURT

DISTRICT MASSACHUSETTS

APR'L Boos

Plaintiff,

ABBOTT LABORATORIES, INC, ET AL.,

Defendants.

August 18, 1995

Civil Action No. 95-10091-NG

N,N

ORDER

—————————————————————

COHEN, M.J.

Plaintiff's Motion to Remand (# 03) was referred to this

court for disposition. See Docket Entry # 10.' After hearing,

Plaintiff's Motion to Remand (# 03) is denied for the reasons

set forth more fully below.

A. RELEVANT FACTS

Plaintiff April Boos (hereinafter “Boos”) originally

brought this action in Suffolk Superior Court in both her

individual and representative capacities on behalf of the

' This court has the power to rule and enter a final order on a motion

to remand, inasmuch as allowing or denying a motion to remand is a non-

case-dispositive matter within the meaning of Section 636((b) | MA) of Title

28. See In Re Foster, 52 F.2d 343 (Fed. Cir. 1995) (Table

Disposition—Text Available on LEXIS and WESTLAW).

33a

plaintiff class. She alleges that defendants Abbott Laboratories,

Inc., Bristol-Meyers Squibb Co., Mead Johnson & Co. and

American Home Products Corp. (hereinafter referred to

collectively as “defendants”) engaged in unfair or deceptive

methods of competition in violation of Massachusetts General

Laws, Chapter 93A, Section 2, and engaged in restraint of trade

in violation of Massachusetts common law.

On January 13, 1995, defendants filed a Notice of Removal

to this Court pursuant to 28 U.S.C. Sections 1441 and 1446,

asserting jurisdiction under Sections 1331 (federal question)’

and 1332 (diversity). On February 10, Boos filed her Plaintiff's

Motion to Remand (# 03) the case to state court under

28 U.S.C. 1447(c). Boos contends that neither federal question

jurisdiction nor diversity jurisdiction had been established by

defendants.

B. DIVERSITY JURISDICTION

In filing her motion to remand, plaintiff essentially

contends that—no one single claim for relief urged by plaintiff,

as representative of the class which she seeks to represent,

and/or by individual members of the class—exceeds $50,000.’

On account of this, she says that, for want of the appropriate

amount in controversy, federal diversity jurisdiction is

inappropriate under the rationale and holding set forth in

Zahn v. International Paper Co., 414 U.S. 291 (1973).*

? Insofar as defendants sought removal on the basis of a federal

question, defendants essentially alleged that plaintiffs common law restraint

of trade count was, in realty, a claim invoking federal antitrust law.

> Insofar as defendants sought removal on the basis of diversity,

defendants essentially alleged that, among other things, judgment in favor

of the plaintiff would have a financial impact upon defendants in excess of

$50,000 and that plaintiff's demand for attorney’s fees under Chapter 93

clearly brought the jurisdictional amount above $50,000.

* Defendants do not challenge this factual assertion insofar as plaintiff

(named and class members) seek monetary relief by the nature of the claims

34a

Defendants, on the other hand, say that—notwithstanding

the fact that neither plaintiff (nor any particular member of the

putative classes seeks compensable damages in excess of

$50,000—the amount in controversy element is satisfied for

two reasons: First, plaintiff seeks, among other things, an award

of attorneys’ fees which, no doubt, will exceed $50,000;° and

second, since plaintiff seeks a declaration that defendants’

practices constitute “deceptive” and “unfair” practices within

the meaning of c. 93A, the practical pecuniary impact on each

of the defendants clearly exceeds $50,000.

1. AMOUNT IN CONTROVERSY INCLUDING

ATTORNEY’S FEES

In her Complaint, plaintiff demands, among other things,

reasonable attorney’s fees under the provisions of c. 93A.

Defendants contend, and plaintiff concedes, that if plaintiff is

successful in her c. 93A claim, reasonable attorneys’ fees will

clearly exceed $50,000.

The generally accepted rule is that attorneys’ fees may be

included in an assessment of the amount in controversy for

purposes of determining diversity jurisdiction when they are

either permitted under a statute or provided for by contract.

Missouri State Life Insurance Co. v. Jones, 290 U.S. 199, 202.

54 S.Ct. 133, 78 L.Ed. 267 (1933); Velez v. Crown Life Ins.

Co., 599 F.2d 471 (1st Cir. 1979); Department of Recreation v.

World Boxing Ass'n, 942 F. 2d 84, 89-90 (Ist Cir. 1991);

1 Moore’s Federal Practice § 0.99[2] (2d ed. 1985).

Plaintiff contends, however, relying specifically upon a

1982 holding in Goldberg v. CPC Intern, Inc., 678 F.2d 1365,

1367 (9th Cir.), cert. denied, 459 U.S. 945 (1982), that since

set forth in the complaint. No individual plaintiff or member of the plaintiff

class would receive monetary relief—that is, compensable damages—even

approaching $50,000.

* Plaintiff does not gainsay the position of the defendants that

attorney’s fees, if recoverable, will exceed $50,000.

35a

plaintiff's complaint contains class allegations, consideration

of attorneys’ fees in determining the amount in controversy

offends the holding and rationale of Zahn, supra.°

In this court’s view, however, the Goldberg court, and

others which have echoed similar conclusions, are wrong on

two counts.

(a) First, in suggesting that looking to attorneys’ fees in

determining the amount in controversy was contrary to the

rationale of Zahn, that Court seemed to believe that that

exercise required an “aggregation” of class claims.’ But it does

® There that Court observed—

CPC tries to avoid Zahn’s implications by arguing, correctly, that

attorney's fees can be taken into account in determining the amount in

controversy if a statute authorizes fees to a successful litigant. Missouri

State Life Insurance Co. v. Jones, 290 U.S. 199, 202, 54 S. Ct. 133, 78

L. Ed. 267 (1933); Stokes v. Reeves, 245 F.2d 700, 702 (9th Cir.

1957). Cal. Bus. & Prof.Code § 16750(a) authorizes attorneys’ fees.

CPC next contends that the potential attorneys’ fees should be

attributed to the named plaintiffs only, rather than pro rata to each

class member, or, in the alternative, that the potential fees should be

attributed to the class as a whole and treated as a common fund. Thus

the amount in controversy requirement would be met because either

the named plaintiffs will each meet the jurisdictional amount, or the

entire class will.

We find that acceptance of either of CPC’s theories would

conflict with the policy of Zahn v. International Paper Co., in which

the Supreme Court reaffirmed that the “matter in controversy”

requirement must be satisfied by each member of the plaintiff class.

Plaintiffs whose claims fall short cannot satisfy the requirement by

aggregation of claims. CPC’s theories would seriously undermine and

are contrary to the rule expressed by the Supreme Court in Zahn. Thus

we conclude that the potential attorneys’ fees do not satisfy the

jurisdictional amount for this cause of action, and that there is,

therefore, no federal jurisdiction.

’ “Plaintiffs whose claims fall short cannot satisfy the requirement by

aggregation of claims.” /d. at 1367.

36a

not appear that was the case there, and it certainly is not the

case here.

In a more recent decision discussing the role of attorney’s

fees in determining the amount in controversy within the

context of a complaint containing class allegations, the Fifth

Circuit has observed (Free v. Abbott Laboratories. $1 F.2d 524

(Sth Cir. 1995))}—

The court found it had diversity jurisdiction over the

named plaintiffs’ claims even though each named and

unnamed plaintiff claimed only $20,000, less than the

$50,000 minimum for diversity jurisdiction. 28 U.S.C.

§ 1332(a). The district court found that Louisiana law

attributed all of a class’s attorney’s fees to the named

plaintiffs. It held that the claim of the named plaintiffs for

$20,000—once swelled by attorney’s fees—met the

$50,000 amount-in-controversy requirement.

Plaintiffs argue that Louisiana statutes distribute the

fees pro rata to all members of the class, with the result

that none meets the amount-in-controversy requirement.

The distribution of attorney’s fees centers on two

Louisiana statutes. The first, Article 595 of the Louisiana

Code of Civil Procedure, provides:

The court may allow the representative parties

their reasonable expenses of litigation, including

attorney’s fees, when as a result of the class action a

fund is made available, or a recovery or compromise

is had which is beneficial, to the class . . .

***

Official Revision Comments

(a) It is intended, in the first paragraph, that the

reasonable expenses of litigation allowed the

successful representative parties is to be paid out of

the fund or benefits made available by their efforts.

37a

The second key Louisiana statute is Section 51:137 of

the Louisiana Revised Statutes, which provides:

Any person who is injured in his business or property

by any person by reason of any act or thing forbidden

by this Part may sue in any court of competent

jurisdiction and shall recover threefold the damages

sustained by him, the cost of suit, and a reasonable

attorney's fee.

Article 595, plaintiffs contend, supports their

argument that the fees are to be distributed among all class

members. See, e.g., White v. Board of Trustees, 276 So. 2d

714, 719 (La. Ct. App.) (deducting pro rata shares of an

Article 595 attorney’s fee from the awards due to each

plaintiff), writ ref'd, 279 So. 2d 694 (La. 1973).

We disagree. Defendants pay attorney’s fees and

damages. The plain text of the first sentence of 595 awards"

the fees to the “representative parties”. (The language

allowing the “representative parties” their fees is echoed in

Comment (a).)

Finally, plaintiffs argue that construing Article 595 to

attribute the fees to the named plaintiffs—rather than to

distribute them among all the plaintiffs—renders the

statute unconstitutional. The argument continues that the

federal courts have generally held that Zahn forbids

attributing the fees of class members to class

representatives. The only circuit court to speak to this

question held that attributing a class’s attorney’s fees only

to the named plaintiffs instead of pro rata to each member

of the class “would conflict with the policy of Zahn.”

Goldberg v. CPC Int'l. Inc., 678 F.2d 1365, 1367 (9th

Cir.), cert. denied, 459 U.S. 945, 74 L. Ed. 2d 202, 103 S.

Ct. 259 (1982). Many district courts have followed

Goldberg. But Goldberg’s reading of Zahn sheds little light

on the distinct policy choices behind Louisiana’s decision

regarding rights of recovery by class members. That a state

38a

chooses a set of rules that result in an award in excess of

$50,000 frustrates no policy of Zahn. Simply put, under the

law of Louisiana the class representatives were entitled to

fees. Their rights of recovery were not created by a judge’s

summing the discrete rights of class members. The district

court applied the law of Louisiana. Because it did so, we

are persuaded that the individual claims of the class

representatives met the requisite jurisdictional amount.

(Emphasis added.)

This case is clearly controlled by Free, and permitting the

claim to proceed in this court against the named plaintiff does

no violence whatsoever to Zahn.

In this case, plaintiff demands attorney's fees under the

provisions of c. 93A, § 9(4). That statute, not at all unlike the

Louisiana statute referred to in Free, awards attorney’s fees

(upon the successful prosecution of ac. 93A claim) to the

named party plaintiff. That statute provides, in pertinent part:

(4) If the court finds in any civil action commenced

hereunder that there has been a violation of section two,

the petitioner shall, in addition to other relief provided for

by this section and irrespective of the amount in

controversy, be awarded reasonable attorney's fees... .

(Emphasis added.)

In this case, it is clear that “aggregation” is not required to

make out attorney’s fees in excess of $50,000. At the hearing

before this court, counsel for plaintiff conceded that to fairly

prosecute the claims set forth in the complaint, wholly apart

from attorney’s fees which could be fairly associated with class

matters, attorney’s fees would exceed $50,000. That is to say,

even if this case was brought as a single plaintiff case sans

class allegations, the attorney’s fees would be essentially the

same, and certainly in excess of $50,000. To say, as plaintiff

* Excepting minor additional attorney's fees relating solel

to the

establishment of class matters. . .

39a

seemingly says, that the rule of Zahn requires that—in

circumstances such as those presented here—attorney’s fees be

totally disregarded if a named plaintiff's claim is piggybacked

with class allegations, is to turn Zahn into a jurisdictional

sword rather than the jurisdictional shield intended. It cannot be

gainsaid that, had plaintiff brought her claims against the

defendants solely on her own behalf, removal jurisdiction on

behest of the defendants was and is clearly warranted. Zahn

cannot be fairly read to mean that a plaintiff may defeat that

established right to removal simply by expediently penning

class claims in a complaint.

(b) Secondly, in suggesting that looking to attorney's fees

to make out the requisite amount in controversy “. . . would

seriously undermine and are contrary to the rule expressed by

the Supreme Court in Zahn{,]” and thus concluding that subject

matter jurisdiction was wanting, the Goldberg court

misconstrued the actual holding—not to mention the supporting

rationale—in Zahn.

In Zahn, a number of named plaintiffs, on behalf of

themselves and a class which they sought to represent, filed a

common law nuisance case against the defendant in the district

court. The claims of each of the named plaintiffs exceeded the

jurisdictional amount required by 28 U.S.C. § 1332.° None of

the claims of the class members could have exceeded that

jurisdictional amount. Plaintiffs in that case invoked subject

matter jurisdiction on the grounds of diversity. Inasmuch as the

claims of the named plaintiffs exceeded the jurisdictional

amount, the district judge concluded that subject matter existed

as to those claims brought against the defendant. But inasmuch

as the claims of the class members did not exceed the

jurisdictional amount, the district judge declined to certify the

class—concluding that the class members could not aggregate

their respective individual claims to satisfy the jurisdictional

* At that time, the jurisdictional amount required was $10,000. Since

then, of course, it has been increased to $50.000.

40a

amount. On a petition for certiorari. the Supreme Court

affirmed the decision of the district court—rejecting the

assertion of petitioners in that case that the district court could

assume “ancillary” jurisdiction over the claims of the class

members.

The actual holding therefore was not. as Suggested by the

Goldberg court, that subject matter jurisdiction was lacking for

the entire case, but only as to the claims of the putative class

members whose claims did not (individually) exceed the

jurisdictional amount. It bears repeating that, notwithstanding

the conclusion by the district judge in Zahn that none of the

putative class members’ claims would exceed the jurisdictional

amount, the district judge nevertheless retained jurisdiction

over the claims of the named plaintiffs against the defendants,

and dismissed the class claims, and the class claims only, for

want of subject matter jurisdiction.

Free, supra"’—that the named plaintiff's entitlement to

attorney's fees in excess of $50,000 satisfies the amount in

controversy element of diversity jurisdiction,'' and that so

holding does not do violence to either the letter or spirit of the

° On another matter not dealing exclusively with the attorney fee

calculation as used in the amount in controversy calculi, the Free court

discussed the effect of the Judicial Improvements Act of 1990, 28 U.S.C.

Section 1367. Defendants seemingly urge that that Act overrules the holding

in Zahn, and, not surprisingly, plaintiff urges that it did not— relying on the

authority, among others, of Mayo v. Key Financial Services, Inc. 812 F

Supp. 277 (D.Mass. 1993).

Because of this court’s disposition of the matter as set forth in the text

herein, there is no occasion to enter that thorny thicket except to say that

given this court's disposition herein, the tables may well be turned in later

" Plaintiff does not suggest that the other required elements of

diversity jurisdiction are lacking.

4la

holding in Zahn; indeed, so holding in this case is clearly

consistent with the actual holding in Zahn.

2. AMOUNT IN CONTROVERSY INCLUDING

FINANCIAL IMPACT ON DEFENDANTS

Under settled law, in a case in which the complainant, in

addition to seeking compensatory damages. also seeks a

declaration of rights, it is appropriate to assess the amount in

controversy by looking to the consequences of that declaration

to a defendant. EF. g., Beacon Construction Co. v. Matco Electric

Co., 521 F.2d 392, 399 (2d Cir. 1975) (considering both

damages and value of declaratory judgment, because “the

amount in controversy is not necessarily the money judgment

sought or recovered, but rather the value of the consequences

which may result from the litigation”) (emphasis added), citing

Smith v. Adams, 130 U.S. 167, 175 (1889). Work v. U.S. Trade,

Inc, 747 F. Supp. 1184 (E.D.Va. 1990) (considering

declaratory judgment claim together with $45,000 damages

claim to satisfy $50,000 amount in controversy requirement); '”

'* Albeit in dicta, our Court of Appeals has, at least on three

occasions, indicated that it was prepared to measure the amount in

controversy—in cases in which injunctive or declaratory relief was

sought—by the value of the consequences which may result from the

litigation. See e.g., Williams v. Kleppe, 539 F.2d 803, 804-05 n.1 (ist Cir.

1976) (“. . . more realistically, we can rely on the extent of the claimed

pecuniary bunden on defendants were plaintiffs to prevail.”);

Commonwealth of Massachusetts v. United States Veterans Ass'n, 541 F.2d

119, 122 n. 3 (ist Cir. 1976) (“Since the pecuniary burden on the VA would

probably be in excess of $10,000 should the Commonwealth prevail, we

think that the jurisdictional amount requirement is satisfied”); Berman v.

Narragansett Racing Ass'n, 414 F.2d 311 (ist Cir. 1969), cert. denied, 396

U.S. 1037 (1970).

Plaintiff suggests that other holdings in this district are to the contrary,

citing, primarily, Hairston v. Home Loan and Investment Bank, 814 F Supp.

180, 182 (D.Mass. 1993). In that case, however, the district judge (Tauro,

C.J.) did not reject the notion that the amount in controversy could and

should be measured in terms of the consequences which might result from

the litigation. To the contrary, accepting that position, the district judge

42a

14A Wright, Miller & C . Federal i Proced

§3725, pp. 431-32 (1985)." In ila,

a declaration of rights, it is appropriate to look at, among other

things, the“... . possibility of detrimental effect on sales and

loss of goodwill” by party seeking diversity jurisdiction. See

McCain Foods Lid v. Puerto Rico Supplies, Inc., 766 F

Supp. 58, 60 (D.P.R. 1991). |

In this case, it would blink reality to assume that the

declaratory relief which plaintiff seeks would have a financial

impact on each of the named defendants of less than $50,000.

Among other things, plaintiff alleges that the defendants. and

each of them, engaged in “unfair and deceptive practices” for

more than twelve years, “grossly overcharg[ing]” consumers in

that the defendants, and each of them, engaged in price gouging

It is thus clear that, inasmuch as plaintiff seeks, among

other things, a declaration that the defendants have engaged in

‘unfair and deceptive practices” for the last twelve years, more

or less, in violation of the provisions of Chapter 934A, the real

Stakes, the real amount in controversy, for the defendants.

indeed, each of the defendants, clearly exceeds $50,000.

C. DISPOSITION

For the reasons stated above, this court finds and concludes

that the named plaintiff s claims against each of the defendants

” The authors deem a “defendant's viewpoint int” approach when

declaratory or mjunctive relief is sought the “most desirab le method of

computation .. .”. /d at 432.

* A fe

$10 million.

lony, punishable by a fine (for corporations) not exceeding

43a

satisfies the amount in controversy provisions of 28 U.S.C.

§ 1332, and that, therefore, the case was properly removed to

this court.’ Accordingly, insofar as plaintiff seeks to remand

the named plaintiff's claims to the state court. that motion is

denied. '*

/s/ Laurence P. Cohen

UNITED STATES MAGISTRATE JUDGE

'* Inasmuch as this court finds that diversity jurisdiction exists, there

is no occasion to address the other grounds asserted by defendants for

removal jurisdiction, save to say that, insofar as plaintiff, in Count 2, alleges

common law restraint of trade, it appears that the “artful pleading” doctrine

referred to in defendants’ oppositions to the motion to remand might well

apply if plaintiff, in making out a case of so-called common law restraint of

trade, asks the court to interpret the common law consistent with the

holdings in cases interpreting the federal antitrust acts.

state of limbo. But that is not an anomaly— it was precisely the same case

as Zahn, the main authority upon which plaintiff relies.

As indicated above, Section 1.(b), p. 8, the district court, in Zahn, did

not dismiss the case for want of subject matter jurisdiction. Instead, it

retained jurisdiction over the claims of the named plaintiffs vis a vis the

defendants, and dismissed the class claims. And that holding was left

undisturbed by the United States Court of Appeals for the Second Circuit

and the Supreme Court of the United States.

At the present time, of course, the only matter before this court is

plaintiff s motion to remand. The validity—the viability—of the class claims

is not a matter before this court, and it is one which must be left for another

day—a day, perhaps, when, as indicated elsewhere, n. 10, p. 9, above, the

parties may engage in a role reversal vis a vis their respective positions as

to the meaning of the Judicial Improvements Act of 1990, 28 U.S.C.

Section 1367.

44a

106TH CONGRESS

1ST SESSION H.R. 1875

AN ACT

To amend title 28, United States Code, to allow the

application of the principles of Federal diversity jurisdiction to

interstate class actions.

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND REFERENCE.

(a) SHORT TITLE - This Act may be cited as the

‘Interstate Class Action Jurisdiction Act of 1999”.

(b) REFERENCE - Whenever in this Act reference is made

to an amendment to, or repeal of, a section or other provision,

the reference shall be considered to be made to a section or

other provision of title 28, United States Code.

SECTION 2. FINDINGS.

The Congress finds that—

(1) as recently noted by the United States Court of Appeals

for the Third Circuit, interstate class actions are ‘the paradigm

for Federal diversity jurisdiction because, in a constitutional

sense, they implicate interstate commerce, invite discrimination

by a local State, and tend to attract bias against business

enterprises’ ;

45a

(2) most such cases, however, fall outside the scope of

current Federal diversity jurisdiction statutes:

(3) that exclusion is an unintended technicality, inasmuch

as those statutes were enacted by Congress before the rise of

the modern class action and therefore without recognition that

interstate class actions typically are substantial controversies of

the type for which diversity jurisdiction was designed;

(4) Congress is constitutionally empowered to amend the

current Federal diversity jurisdiction statutes to permit most

interstate class actions to be brought in or removed to Federal

district courts; and

(5) in order to ensure that interstate class actions are

adjudicated in a fair, consistent, and efficient manner and to

correct the unintended, technical exclusion of such cases from

the scope of Federal diversity jurisdiction, it is appropriate for

Congress to amend the Federal diversity jurisdiction and related

Statutes to allow more interstate class actions to be brought in

or removed to Federal court.

SECTION 3. JURISDICTION OF DISTRICT COURTS.

(a) EXPANSION OF FEDERAL JURISDICTION-

Section 1332 ((28 USCA 1332)) is amended by redesignating

subsections (b), (c), and (d) as subsections (c), (d), and (e),

respectively, and by inserting after subsection (a) the following:

“(b) (1) The district courts shall have original

jurisdiction of any civil action which is brought as a class

action and in which—

“(A) any member of a proposed plaintiff class is

a citizen of a State different from any defendant;

“(B) any member of a proposed plaintiff class is

a foreign state and any defendant is a citizen of a

State; or

46a

| “(Cc ) any member of a proposed plaintiff class is

a citizen of a State and any defendant is a citizen or

subject of a foreign state.

As used in this paragraph, the term ‘foreign state” has

~~ —— given that term in section 1603(a) ((28 USCA

)).

“(2) (A) The district courts shall not exercise

jurisdiction over a civil action described in paragraph

(1) if the action is—

“(i) an intrastate case:

“(1i) a limited scope case: or

“(ili) a State action case.

“(B) For purposes of subparagraph (A)—

“(i) the term ‘intrastate case’ means a class

action in which the record indicates that—

“(I) the claims asserted therein will be

governed primarily by the laws of the State

in which the action was originally filed; and

“(II) the substantial majority of the

members of all proposed plaintiff classes,

and the primary defendants, are citizens of

the State in which the action was originally

filed;

“(ii) the term limited scope case, means a

class action in which the record indicates that all

matters in controversy, asserted by all members

of all proposed plaintiff classes do not in the

aggregate exceed the sum or value of $1,000,000,

exclusive of interest and costs, or a class action in

which the number of members of all proposed

plaintiff classes in the aggregate is less than 100:

and

47a

“(iii) the term ‘State action case’ means a

class action in which the primary defendants are

States, State officials, or other governmental

entities against whom the district court may be

foreclosed from ordering relief.

“(3) Paragraph (1) shall not apply to any claim

concerning a covered security as that term is defined

in section 16(f)(3) of the Securities Act of 1933 ((15

USCA 77p)) and section 28(f)(5)(E) of the Securities

Exchange Act of 1934 ((15 USCA 78bb)).

“(4) Paragraph (1) shall not apply to any class

action solely involving a claim that relates to—

“(A) the internal affairs or governance of a

corporation or other form of business enterprise

and that arises under or by virtue of the laws of

the State in which such corporation or business

enterprise is incorporated or organized; or

“(B) the rights, duties (including fiduciary

duties), and obligations relating to or created by

or pursuant to any security (as defined under

section 2(a)(1) of the Securities Act of 1933 ((15

USCA 77b)) and the regulations issued

thereunder).”.

(b) CONFORMING AMENDMENT- Section 1332(c) ((28

USCA 1332)) (as redesignated by this section) is amended by

inserting after ‘Federal courts’ the following: ‘pursuant to

subsection (a) of this section’.

((28 USCA 1332)), as amended by this section, is further

amended by adding at the end the following:

“(f) For purposes of subsection (b), a member of a

proposed class shall be deemed to be a citizen of a State

different from a defendant corporation only if that member is

48a

a citizen of a State different from all States of which the

defendant corporation is deemed a citizen.”

SECTION 4. REMOVAL OF CLASS ACTIONS.

(a) IN GENERAL - Chapter 89 [FN1] is amended by

adding after section 1452 ((28 USCA 1452)) the following:

“Sec. 1453. Removal of class actions

“(a) IN GENERAL - A class action may be removed

to a district court of the United States in accordance with

this chapter, but without regard to whether any defendant

is a citizen of the State in which the action is brought,

except that such action may be removed—

“(1) by any defendant without the consent of all

defendants; or

“(2) by any plaintiff class member who is not a

named or representative class member of the action

for which removal is sought, without the consent of

all members of such class.

“(b) WHEN REMOVABLE - This section shall apply

to any class action before or after the entry of any order

certifying a class, except that a plaintiff class member who

is not a named or representative class member of the action

may not seek removal of the action before an order

certifying a class of which the plaintiff is a class member

has been entered.

“(c) PROCEDURE FOR REMOVAL - The

provisions of section 1446(a) ((28 USCA 1446)) relating

to a defendant removing a case shall apply to a plaintiff

removing a case under this section. With respect to the

application of subsection (b) of such section, the

requirement relating to the 30-day filing period shall be

met if a plaintiff class member who is not a named or

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representative class member of the action for which

removal is sought files notice of removal no later than 30

days after receipt by such class member, through service or

otherwise, of the initial written notice of the class action

provided at the court’s direction.

“(d) EXCEPTIONS—

“(1) COVERED SECURITIES - This section

shall not apply to any claim concerning a covered

security as that term is defined in section 16(f)(3) of

the Securities Act of 1933 ((15 USCA 77p)) and

section 28(f)(5)(E) of the Securities Exchange Act of

1934 ((15 USCA 78bb)).

“(2) INTERNAL GOVERNANCE OF

BUSINESS ENTITIES - This section shall not apply

to any class action solely involving a claim that relates

to—

“(A) the internal affairs or governance of a

corporation or other form of business enterprise

and that arises under or by virtue of the laws of

the State in which such corporation or business

enterprise is incorporated or organized; or

“(B) the rights, duties (including fiduciary

duties), and obligations relating to or created by

or pursuant to any security (as defined under

section 2(a)(1) of the Securities Act of 1933 ((15

USCA 77b)) and the regulations issued

thereunder).”.

(b) REMOVAL LIMITATIONS - Section 1446(b) ((28

USCA 1446)) is amended in the second sentence—

(1) by inserting ‘, by exercising due diligence’ after

‘ascertained’; and

(2) by inserting ‘(A)’ after ‘section 1332’.

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- The table of sections for chapter 89 is amended by adding

after the item relating to section 1452 the following:

“1453. Removal of class actions.”

(d) APPLICATION OF SUBSTANTIVE STATE LAW -

Nothing in this section or the amendments made by this section

shall alter the substantive law applicable to an action to which

the amendments made by section 3 of this Act apply.

(e) PROCEDURE AFTER REMOVAL - Section 1447

((28 USCA 1447)) is amended by adding at the end the

following new subsection:

“(f) If, after removal, the court determines that no aspect of

an action that is subject to its jurisdiction solely under the

provisions of section 1332(b) ((28 USCA 1332)) may be

maintained as a class action under Rule 23 of the Federal Rules

of Civil Procedure, it shall dismiss the action. An action

dismissed pursuant to this subsection may be amended and

filed again in a State court, but any such refiled action may be

removed again if it is an action of which the district courts of

the United States have original jurisdiction. In any action that

is dismissed pursuant to this subsection and that is refiled by

any of the named plaintiffs therein in the same State court

venue in which the dismissed action was originally filed, the

limitations periods on all reasserted claims shall be deemed

tolled for the period during which the dismissed class action

was pending. The limitations periods on any claims that were

asserted in a class action dismissed pursuant to this subsection

that are subsequently asserted in an individual action shall be

deemed tolled for the period during which the dismissed class

action was pending.”

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SECTION 5. APPLICABILITY.

The amendments made by this Act shall apply to any

action commenced on or after the date of the enactment of this

Act.

SECTION 6. GAO STUDY.

The Comptroller General of the United States shall, by not

later than 1 year after the date of the enactment of this Act,

conduct a study of the impact of the amendments made by this

Act on the workload of the Federal courts and report to the

Congress on the results of the study.

Passed the House of Representatives September 23, 1999.

Attest:

Clerk

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106TH CONGRESS

1ST SESSION S. 3 §3

To provide for class action reform, and for other purposes.

IN THE SENATE OF THE UNITED STATES

February 3, 1999

Mr. GRASSLEY (for himself, Mr. KOHL, and Mr.

THURMOND) introduced the following bill; which was read

twice and referred to the Committee on the Judiciary

A BILL

To provide for class action reform, and for other purposes.

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Class Action Fairness Act of

1999”.

SEC. 2. NOTIFICATION REQUIREMENT OF CLASS

ACTION CERTIFICATION OR SETTLEMENT.

(a) INGENERAL - Part V of title 28, United States Code,

is amended by inserting after chapter 113 the following new

chapter:

“CHAPTER 114—CLASS ACTIONS

“Sec.

“1711. Definitions.

“1712. Application.

“1713. Notification of class action certifications and

settlements.

“1714. Limitation on attorney’s fees in class actions.

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“Sec. 1711. Definitions

“In this chapter the term—

(1) ‘class’ means a group of persons that comprise parties

to a civil action brought by | or more representative persons;

“(2) ‘class action’ means a civil action filed pursuant to

rule 23 of the Federal Rules of Civil Procedure or similar State

rules of procedure authorizing an action to be brought by | or

more representative persons on behalf of a class;

(3) ‘class certification order’ means an order issued by a

court approving the treatment of a civil action as a class action;

(4) ‘class member’ means a person that falls within the

definition of the class;

(5) ‘class counsel’ means the attorneys representing the

class in a class action;

“(6) ‘Plaintiff class action’ means a class action in which

class members are plaintiffs; and

“(7) ‘proposed settlement’ means a settlement agreement

between or among the parties in a class action that is subject to

court approval before the settlement becomes binding on the

parties.

“Sec. 1712. Application

“This chapter shall apply to—

“(1) all plaintiff class actions filed in Federal court; and

“(2) all plaintiff class actions filed in State court in

which—

“(A) any class member resides outside the State in which

the action is filed; and

“(B) the transaction or occurrence that gave rise to the

class action occurred in more than | State.

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“Sec. 1713. Notification of class action certifications and

settlements

“(a) Not later than 10 days after a proposed settlement in

a class action is filed in court, class counsel shall serve the

State attorney general of each State in which a class member

resides and the Attorney General of the United States as if such

attorneys general and the Department of Justice were parties in

the class action with—

“(1) a copy of the complaint and any materials filed

with the complaint and any amended complaints (except

such materials shall not be required to be served if such

materials are made electronically available through the

Internet and such service includes notice of how to

electronically access such material);

“(2) notice of any scheduled judicial hearing in the

class action;

“(3) any proposed or final notification to class

members of—

“(A)(i) the members’ rights to request exclusion

from the class action; or

“(ii) if no right to request exclusion exists, a

statement that no such right exists; and

“(B) a proposed settlement of a class action;

“(4) any proposed or final class action settlement;

“(S) any settlement oor other agreement

contemporaneously made between class counsel and

counsel for the defendants;

“(6) any final judgment or notice of dismissal;

“(7)(A) if feasible the names of class members who

reside in each State attorney general's respective State and

55a

the estimated proportionate claim of such members to the

entire settlement; or

“(B) if the provision of information under

subparagraph (A) is not feasible, a reasonable estimate of

the number of class members residing in each attorney

general's State and the estimated proportionate claim of

such members to the entire settlement; and

“(8) any written judicial opinion relating to the

materials described under paragraphs (3) through (6).

“(b) A hearing to consider final approval of a proposed

settlement may not be held earlier than 120 days after the date

on which the State attorneys general and the Attorney General

of the United States are served notice under subsection (a).

“(c) Any court with jurisdiction over a plaintiff class action

shall require that—

“(1) any written notice provided to the class through

the mail or publication in printed media contain a short

summary written in plain, easily understood language,

describing—

“(A) the subject matter of the class action;

“(B) the legal consequences of being a member of

the class action;

“(C) the ability of a class member to seek

removal of the class action to Federal court if—

“(i) the action is filed in a State court; and

“(ii) Federal jurisdiction would apply to such

action under section 1332(d);

“(D) if the notice is informing class members of

a proposed settlement agreement—

“(i) the benefits that will accrue to the class

due to the settlement;

56a

“(ii) the rights that class members will lose

or waive through the settlement;

“(iii) obligations that will be imposed on the

defen” dants by the settlement:

“(iv) the dollar amount of any attorney’s fee

class counsel will be seeking, or if not possible,

a good faith estimate of the dollar amount of any

attorney's fee class counsel will be seeking; and

“(v) an explanation of how any attorney's fee

will be calculated and funded; and

“(E) any other material matter; and

“(2) any notice provided through television or radio to

inform the class members of the right of each member to

be excluded from a class action or a proposed settlement,

if such right exists, shall, in plain, easily understood

language—

“(A) describe the persons who may potentially

become class members in the class action; and

“(B) explain that the failure of a person falling

within the definition of the class to exercise such

person’s right to be excluded from a class action will

result in the person’s inclusion in the class action.

“(d) Compliance with this section shall not provide

immunity to any party from any legal action under Federal or

State law, including actions for malpractice or fraud.

“(e)(1) A class member may refuse to comply with and

may choose not to be bound by a settlement agreement or

consent decree in a class action if the class member resides in

a State where the State attorney general has not been provided

notice and materials under subsection (a).

“(2) The rights created by this subsection shall apply only

to class members or any person acting on a class member’s

57a

behalf, and shall not be construed to limit any other rights

affecting a class member's participation in the settlement.

“(f) Nothing in this section shall be construed to impose

any obligations, duties, or responsibilities upon State attorneys

general or the Attorney General of the United States.

“Sec. 1714. Limitation on attorney’s fees in class actions

“(a) In any class action, the total attorney’s fees and

expenses awarded by the court to counsel for the plaintiff class

may not exceed a reasonable percentage of the amount of—

“(1) any damages and prejudgment interest actually

paid to the class;

“(2) any future financial benefits to the class based on

the cessation of alleged improper conduct by the

defendants; and

“(3) costs actually incurred by all defendants in

complying with the terms of an injunctive order or

settlement agreement.

“(b) Notwithstanding subsection (a), to the extent that the

law permits, the court may award attorney's fees and expenses

to counsel for the plaintiff class based on a reasonable lodestar

calculation.”.

(b) TECHNICAL AND CONFORMING AMENDMENT -

The table of chapters for part V of title 28, United States Code,

is amended by inserting after the item relating to chapter 113

the following:

I i ceeeebucns 1711".

SEC. 3. DIVERSITY JURISDICTION FOR CLASS

ACTIONS.

Section 1332 of title 28, United States Code, is amended—

(1) by redesignating subsection (d) as subsection (e); and

58a

(2) by inserting after subsection (c) the following:

“(d)(1) In this subsection, the terms ‘class’, ‘class

action’, and ‘class certification order’ have the

meanings given such terms under section 1711.

“(2) The district courts shall have original

jurisdiction of any civil action where the matter in

controversy exceeds the sum or value of $75,000,

exclusive of interest and costs, and is a class action in

which—

“(A) any member of a class of plaintiffs is a

citizen of a State different from any defendant;

“(B) any member of a class of plaintiffs is a

foreign state or a citizen or subject of a foreign

state and any defendant is a citizen of a State; or

“(C) any member of a class of plaintiffs is a

citizen of a State and any defendant is a foreign

State or a citizen or subject of a foreign state.

“(3) The district court shall abstain from hearing

a civil action described under paragraph (2) if—

“(A)(i) the substantial majority of the

members of the proposed plaintiff class are

citizens of a single State of which the primary

defendants are also citizens; and

“(ii) the claims asserted will be governed

primarily by the laws of that State; or

“(B) the primary defendants are States, State

officials, or other governmental entities against

whom the district court may be foreclosed from

ordering relief.

“(4) In any class action, the claims of the

individual members of any class shall be aggregated

to determine whether the matter in controversy

59a

exceeds the sum or value of $75,000, exclusive of

interest and costs.

“(5) This subsection shall apply to any class

action before or after the entry of a class certification

order by the court.

“(6)(A) A district court shall dismiss, or, if after

removal, strike the class allegations and remand, any

civil action if—

“(i) the action is subject to the jurisdiction of

the court solely under this subsection; and

(ii) the court determines the action may not

proceed as a class action based on a failure to

satisfy the conditions of rule 23 of the Federal

Rules of Civil Procedure.

“(B) Nothing in subparagraph (A) shall prohibit

plaintiffs from filing an amended class action in

Federal or State court.

“(C) Upon dismissal or remand, the period of

limitations for any claim that was asserted in an action

on behalf of any named or unnamed member of any

proposed class shall be deemed tolled to the full

extent provided under Federal law.

“(7) Paragraph (2) shall not apply to any class

action, regardless of which forum any such action may

be filed in, involving any claim relating to—

“(A) the internal affairs or governance of a

corporation or other form of entity or business

association arising under or by virtue of the statutory,

common, or other laws of the State in which such

corporation, entity, or business association is

incorporated (in the case of a corporation) or

organized (in the case of any other entity); or

60a

“(B) the rights, duties (including fiduciary

duties), and obligations relating to or created by or

pursuant to any security (as defined under section

2(a)(1) ((1S USCA 77b)) of the Securities Act of 1933

or the rules and regulations adopted under such

Act).”.

SEC. 4. REMOVAL OF CLASS ACTIONS TO FEDERAL

COURT.

(a) INGENERAL- Chapter 89 of title 28, United States

Code, is amended by adding after section 1452 ((28 USCA

1452)) [FNI] the following: “Sec. 1453. Removal of class

actions

“(a) In this section, the terms ‘class’, ‘class action’,

and ‘class member’ have the meanings given such terms

under section 1711.

“(b) A class action may be removed to a district court

of the United States in accordance with this chapter, except

that such action may be removed—

“(1) by any defendant without the consent of all

defendants; or

“(2) by any plaintiff class member who is not a

named or representative class member without the

consent of all members of such class.

“(c) This section shall apply to any class action before

or after the entry of any order certifying a class.

“(d) The provisions of section 1446 ((28 USCA

1446)) relating to a defendant removing a case shall apply

to a plaintiff removing a case under this section, except

that in the application of subsection (b) of such section the

requirement relating to the 30-day filing period shall be

met if a plaintiff class member files notice of removal

within 30 days after receipt by such class member, through

6la

service or otherwise, of the initial written notice of the

class action.

“(e) This section shall not apply to any class action,

regardless of which forum any such action may be filed in,

involving any claim relating to—

“(1) the internal affairs or governance of a

corporation or other form of entity or business

association arising under or by virtue of the statutory,

common, or other laws of the State in which such

corporation, entity, or business association is

incorporated (in the case of a corporation) or

organized (in the case of any other entity); or

(2) the rights, duties (including fiduciary duties),

and obligations relating to or created by or pursuant to

any security (as defined under section 2(a)(1) ((15

USCA 77b)) of the Securities Act of 1933 or the rules

and regulations adopted under such Act).”.

(b) REMOVAL LIMITATION - Section 1446(b) of title

28, United States Code, is amended in the second sentence by

inserting “(a)” after “section 1332”.

- The table of sections for chapter 89 of title 28, United States

Code, is amended by adding after the item relating to section

1452 ((28 USCA 1452)) the following:

“1453. Removal of class actions.”.

SEC. 5. REPRESENTATIONS AND SANCTIONS

UNDER RUL«é ii OF THE FEDERAL RULES OF CIVIL

PROCEDURE.

Rule 11(c) of the Federal Rules of Civil Procedure is

amended—

(1) in the first sentence by striking “may, subject to the

conditions stated below,” and inserting “shall”;

62a

(2) in paragraph (2) by striking the first and second

sentences and inserting “A sanction imposed for violation of

this rule may consist of reasonable attorneys’ fees and other

expenses incurred as a result of the violation, directives of a

nonmonetary nature, or an order to pay penalty into court or to

a party.”’; and

(3) in paragraph (2)(A) by inserting before the period

“although such sanctions may be awarded against a party's

attorneys’.

SEC. 6. EFFECTIVE DATE.

The amendments made by this Act shall apply to any civil

action commenced on or after the date of enactment of this Act.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.