Amicus Curiae Brief — Ford Motor Co. v. McCauley

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No. 01-896 | Suvcme Conn, C5 a |

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Supreme Court of the Gnited States

FORD MOTOR COMPANY and

CITIBANK (SOUTH DAKOTA), N.A.

Petitioners,

v.

JOHN B. McCAULEY, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF FOR TRIAL LAWYERS FOR PUBLIC JUSTICE AS

AMICUS CURIAE SUPPORTING RESPONDENTS

ARTHUR BRYANT ROGER L. MANDEL

TRIAL LAWYERS FOR Counsel of Record

PUBLIC JUSTICE, P.C. MARC R. STANLEY

One Kaiser Plaza STANLEY, MANDEL & IOLA, L.L.P.

Suite 275 3100 Monticello Ave., Suite 750

Oakland, CA 94612 Dallas, TX 75205

(510) 622-8150 (214) 443-4300

MICHAEL QUIRK MARK A. CHAVEZ

TRIAL LAWYERS FOR KARIN KRAMER

PUBLIC JUSTICE, P.C. CHAVEZ & GERTLER, L.L.P.

1717 Massachusetts Ave.,N.W. 42 Miller Avenue

Suite 800 Mill Valley, CA 94941

Washington, DC 20036 (415) 381-5599

(202) 797-8600

BEST AVAILABLE COPY

TABLE OF CONTENTS

ee E i

TABLE OF CITED AUTHORITIES .........c cece eeeeees ill

INTEREST OF AMICUS CURIAE ....... ccc ccececeeteeeeeeeeees l

SUMMARY OF ARGUMENT 0000... cccceseeeeseteeeeeeeenees l

STITT ihatciaalattendeitiadaiapiatliaenicemenennnnsnensenencennnanennent 4

II.

THIS COURT'S PRECEDENTS AND

FUNDAMENTAL CONSTITUTIONAL

PRINCIPLES MANDATE STRICT

CONSTRUCTION OF THE AMOUNT

IN CONTROVERSY REQUIREMENT ................... 4

IF A DEFENDANT'S COSTS OF

COMPLYING WITH AN INJUNCTION

CAN BE USED TO SATISFY THE

AMOUNT IN CONTROVERSY

REQUIREMENT IN A CLASS ACTION,

THE COST TO THE DEFENDANT

HAS TO EXCEED $75,000 PER

CLASS MEMBER TO DO SO....000..cccccccceeeseeeeeees 7

Requiring the Defendant's Costs to Exceed

$75,000 Per Class Member is the Only

Approach Consistent with Snyder and Zahn............ 8

Page

B. A Majority of Lower Courts Have Purported

to Reject the Use of the Defendant's Viewpoint

in Class Action Cases, But Their Decisions

Actually Constitute Examples of the Proper

Application of the Defendant's Viewpoint

Pursuant to Snyder and Zahn ........ccccccceseeesseeeeseeees 16

od The Approach Advocated by Petitioners

and Amici Would Severely Damage

Significant Federal and State Interests................... 19

Ill. ©UNDER NO CIRCUMSTANCES

SHOULD A DEFENDANT'S CLERICAL

OR MINISTERIAL COSTS OF

COMPLIANCE WITH AN INJUNCTION

COUNT TOWARDS THE AMOUNT

IN CONTROVERSY REQUIREMENT............... 22

IV. PETITIONERS' ATTEMPT TO BRING

THIS CASE UNDER THE "COMMON

AND UNDIVIDED INTEREST" EXCEPTION

TO THE NONAGGREGATON RULE

SHOULD BE REJECTED BY THE COURT.......25

CONCLUSION ...0.ce.cescesccoscocscoesccssocesceocessceoes wa 30

F CITED AUT IES

Cases Page(s)

Berman v. Narragansett Racing Ass'n,

| 26

In Re Brand Name Prescription Drugs Anti-

Trust Litig., 123 F.3d 599 (7th Cir. 1997) ... 9-13, 15, 22, 23

Clark v. Paul Gray, Inc., 306 U.S. 583 (1939) ......ccccccceeee 7

Del Vecchio v. Conseco, Inc.,

ea 11

Eagle v. American Tel. & Tel. Co.,

a 27

In Re Ford Motor Co./Citibank

(South Daketa), N.A.,

264 F.3d 952 (9th Cir. 2001) .........ccccceeeeeeeeeeees 17, 27, 28, 30

Gilman v. BHC Sec., Inc.,

TED 26, 27

Hoffman v. Vulcan Materials Co.,

19 F. Supp. 2d 475 (M.D.N.C. 1998) .........:ccccceee 11, 16, 27

Hunt v. Washington State Apple Adver. Comm'n,

ace 16

iV

Cases Page(s)

Indianapolis v. Chase Nat'l Bank,

I ee ictancenieniaicrninisenininiatintanniceniaiiidtiiaitiinniid 5

Kanter v. Warner-Lambert Co..,

265 F.3d 853 (9th Cir. 2001) ...........0000000.. 17, 18, 20, 28, 29

Littleton v. Shelter Ins. Cos.,

SI ty 12

Lonnquist v. J.C. Penney Co.,

I eT I, iii hia natnter eine 17

Massachusetts State Pharm. Ass'n v. Federal

Prescription Serv., Inc., 431 F.2d 130 (8th Cir. 1970)......17

Melnick v. Microsoft Corp., 2000 WL 761013

Es GU GPU ccincseesissinsorsiictensesiiiageailinitesiasianiiiideidastieapiansiigte 13

Packard v. Provident Nat'l Bank,

994 F.2d 1039 (3d Cir. 1993)...............cccceeeceeeeeeeees 17, 27, 28

Rodgers v. General Elec. Capital Corp.,

1998 WL 128675 (N.D. Ill. 1998) .................cccsrcccerceseeees 11

Sherwood v. Microsoft Corp.,

91 F. Supp. 2d 1196 (M.D. Tenn. 2000)..........00....0.0.004. 6, 13

Smiley v. Citibank (South Dakota), N.A.,

863 F. Supp. 1156 (C.D. Cal. 1993) ................ 14, 15, 18, 29

4 a aS

Cases Page(s)

Snow v. Ford Motor Co..,

561 F.2d 787 (9th Cir. 1977) ..................00000000e 17, 18, 20, 28

Snyder v. Harris,

ee ee Fe eR nticccictceniecnsenmnices 6-9, 16-18, 24, 25, 28

Stromberg Metal Works, Inc. v. Press Mechanical, Inc.,

EE, PUT winitcininstcecncendndeecininummianastenmeins 10

Troy Bank v. G.A. Whitehead & Co.,

TIS RRR IC Renee ee ener NE ro 7

Zahn v. Int'l Paper Co.,

re ek Ce ee ireniencneimeiemmenicion 8-12, 16-19, 24

Constitution

eh GIN, Sile cenenccnencneenertenennenenenenatnmennennns 5

ee GE GE, cxrensemecsnnnenennnenenitininenneiamnmenentnnaiies 5

Statutes

Se is UP iit cicastcsnincnennrnenemnsuntteiinmnmnahiatatiniennaeasenttiiens 18

i TENT Un TTI T taicnarntanneinndnitcniattenemmnnnnenneninecinnsenaennmeneentiniein 10

Se Sk Us Ui dil nciciasaritetanepncentintianmnintinniteninmnapanniniaeniiens 7

le Ss ie fe ittentnicentinniteannieiaitanmecianmemnmnnntenmnmentens 7

vi

Other Authorities Page(s)

D.R. Hensler, Class Action Dilemmas Pursuing

Public Goals for Private Gain, Executive Summary

(Rand Institute for Civil Justice 1999)...

Nat'l Consumer Law Center, Unfair and Deceptive

Acts and Practices § 8.6.1 (Sth ed. 2001) ............cccccceeeeeees

Nat'l Consumer Law Center, Unfair and Deceptive

Acts and Practices § 8.6.2.1 (Sth ed. 2001) ...............cc00000

Nat'l Consumer Law Center, Unfair and Deceptive

Acts and Practices § 8.6.2.2 (Sth ed. 2001) ...............ccc0000

IN TOF S

Trial Lawyers for Public Justice ("TLPJ") is a

national public interest law firm that specializes in precedent-

setting and socially significant civil litigation.’ Significantly,

it is the only national public interest law firm that both

prosecutes a broad range of class actions and has a special

project dedicated to fighting class action abuse. TLPJ

believes that Petitioners’ attempt to expand the federal courts'

diversity jurisdiction over class actions would violate

fundamental constitutional principles, conflict with numerous

decisions of this Court, endanger victims' rights, and increase

the likelihood of class action abuse. Thus, it submits this

brief.

SUMMARY OF A T

Petitioners and their supporters urge this Court to

radically alter its diversity jurisdiction jurisprudence in two

respects: (1) to assert jurisdiction for the first time over state

law class actions in which all the members of the proposed

class assert only claims for modest amounts against the

defendants, and (2) more fundamentally, to change its 150

year old policy of strictly construing diversity jurisdiction in

deference to states’ interests and the overwhelming case load

of federal courts to an approach of liberally construing

diversity jurisdiction in order to save major corporations

from the alleged infirmity of state court class action practice.

This Court should firmly reject this radical request.

Looking to Congress' multiple amendments to the

' This Brief was authored solely by the amicus and counsel listed on the

cover; no part was authored by counsel for a party. No one other than the

amicus or its counsel made any monetary contributions to the preparation

or submission of this brief. All parties have consented to the filing of this

amicus curiae brief pursuant to letters filed with the Clerk of the Court.

diversity jurisdiction statute to raise the jurisdictional

amount, this Court long ago surmised a Congressional intent

to limit federal courts to hearing only truly significant state

law cases between diverse parties. The Court also long ago

noted diversity jurisdiction's inherent infringement on states'

constitutional right to enact statutes for the benefit of their

citizens and to adjudicate disputes arising out of those

statutes in their own courts.

Based thereon, this Court has always construed

diversity jurisdiction narrowly, consistently holding that

multiple plaintiffs asserting separate and distinct claims

which do not exceed the jurisdictional amount may not

aggregate those claims in order to exceed the jurisdictional

amount. In other words, separate and distinct state law

claims for amounts too insignificant to qualify for federal

court adjudication remain so even when joined together with

enough other claims that the total amount at stake for the

defendant would exceed the jurisdictional minimum.

Large corporate defendants have long tried to avoid

this nonaggregation doctrine by claiming that a

disproportionate share of the total damages or relief

requested by all of the joint plaintiffs could be recovered by

any one of them in an individual suit, such that each and

every plaintiff allegedly would satisfy the jurisdictional

amount. They tried this initially with attorneys’ fees and

punitive damages, but the lower courts overwhelmingly

rejected their tactic. Now, they try it with injunctive relief.

More specifically, Petitioners ask this Court to hold

that the amount in controversy is satisfied if the injunctive

relief sought by the named plaintiff in the context of a class

action suit would cost more than $75,000 if sought by any

one class member in a _ hypothetical individual suit.

Petitioners’ approach has serious and fatal flaws.

Initially, it ignores the reality of the class action suit

pending before a district court in favor of a hypothetical

individual suit in which the plaintiff asks for classwide,

rather than individual, injunctive relief. Further, it ignores

the fact that the cost of providing classwide injunctive relief

is equally attributable to all members of the proposed class,

not 100% to just one plaintiff and 0% to the rest.

More fundamentally, Petitioners’ approach constitutes

a major violation of the nonaggregation rule. It grants

diversity jurisdiction over state law class actions which, in

reality, constitute nothing more than the joinder of multiple

very small individual suits. Accordingly, virtually any state

law class action seeking injunctive relief on behalf of a

significant class would satisfy the jurisdictional amount,

threatening to deluge the already overburdened federal courts

with a plethora of purely state law class actions.

Beyond infringing on __ states’ constitutional

prerogatives and drastically burdening federal court dockets,

Petitioners' proposed standard would gut state consumer

protection statutes, as many plaintiffs would forego seeking

injunctive relief in order to keep their suits in state courts.

Given these consequences, this Court should refuse to

radically alter its diversity jurisdiction jurisprudence at the

behest of large companies seeking only to gain an

advantageous forum in which to defend against the claims of

millions of ordinary consumers.

This Court's precedents dictate an approach far

different from that advanced by Petitioners and their amici.

To state it simply, if the defendant's cost of complying with a

proposed injunction can satisfy the amount in controversy

requirement, it can only do so if it exceeds $75,000 per class

member. .

Furthermore, in cases where an injunction serves as

an alternative to monetary damages, the maximum amount of

recoverable damages per class member constitutes the

amount in controversy for each class member, rather than the

higher cost per class member to the defendant of compliance

with the injunction. This is because the parties in such cases

will always agree to settle for the maximum recoverable

monetary damages in lieu of more expensive injunctive

relief.

Petitioners also argue that purely clerical or

ministerial costs of compliance with an injunction should be

included in the calculation of the amount in controversy.

That argument fundamentally clashes with _ the

nonaggregation rule, however, and it would bring virtually

every state law class action of any size ~eeking either

injunctive relief or monetary damages into the _ ‘eral courts.

Finally, Petitioners alternatively seek 1 {all into an

exception to the nonaggregation doctrine for c ies in which

two or more plaintiffs unite to enforce a single \ «e¢ or right in

which they have a common and undivided interest. Because

individual relief could be granted in this case to any class

member without providing relief to all class members,

plaintiffs below assert separate and distinct rights, not a

single right in a common and undivided interest.

ARGUMENT

I. THIS COURT'S PRECEDENTS AND

~ FUNDAMENTAL CONSTITUTIONAL

PRINCIPLES MANDATE STRICT

CONSTRUCTION OF THE AMOUNT IN

CONTROVERSY REQUIREMENT.

A number of Petitioners' amici devote considerable

time to detailing the supposed evils of class action practice in

state courts and the supposed virtue of federal class action

practice. See, eg., Brief of Amicus Curiae National

Association of Manufacturers in Support of Petitioners at 20-

28; Brief of the Product Liability Advisory Council as

Amicus Curiae in Support of Petitioners at 2-3 & 8-16. They

do so for the purpose of persuading this Court that it would

be desirable to shift a vast number of class actions from state

to federal court.

Petitioners thus unabashedly call for this Court t set

aside over 150 years of its jurisprudence narrowly cons ing

diversity jurisdiction. In /ndianapolis v. Chase Nat'l Bank,

314 U.S. 63, 76-7 (1941), this Court succinctly summarized

that jurisprudence and the good reasons for it:

The dominant note in_ the _ successive

enactments of Congress relating to diversity

jurisdiction is one of jealous restriction, of

avoiding offense to state sensibilities, and of

relieving the federal courts of the

overwhelming burden of ‘business _ that

intrinsically belongs in state courts’ in order to

keep them free for their distinctive federal

business. [citations omitted]. ‘The policy of

the statute (conferring diversity upon the

district courts) calls for its strict construction.

The power reserved to the states, under the

Constitution (Amendment 10), to provide for

the determination of controversies in their

courts, may be restricted only by the action of

Congress in conformity to the judiciary

section of the Constitution (Article 3). ...Due

regard for the rightful independence of state

governments, which should actuate federal

courts, requires that they scrupulously confine

their own jurisdiction to the precise limits

which the statute has defined.’ [citation

omitted]. In defining the boundaries of

diversity jurisdiction, this Court must be

mindful of this guiding Congressional policy.

The deference to state governments and courts v ich

requires the strict construction of the diversity statute does

not represent mere lip service to abstract principles of

federalism. Rather, it derives from the very real and concrete

right and desire of states to pass laws for the benefit of their

citizens and have them interpreted and implemented by their

own courts which have the requisite familiarity and expertise

to interpret them in accordance with legislative intent. See,

e.g., Sherwood v. Microsoft Corp., 91 F. Supp. 2d 1196, 1204

(M.D. Tenn. 2000) ("The state courts have an independent

interest in the construction and the enforcement of

Tennessee's anti-trust and consumer protection statutes.

Absent a clear basis for federal jurisdiction, a Tennessee state

court is the appropriate forum for such decisions.").

The other basis for the strict construction of the

diversity statute--the desire not to further burden already

overburdened federal courts with a wave of new state law

cases--is equally concrete. As this Court noted in Snyder v.

Harris, significant changes to the "amount in controversy"

jurisprudence or to the aggregation doctrine could result in a

"most noticeable" expansion of the federal case load in class

actions brought on the basis of diversity of citizenship. 394

U.S. 332, 340 (1969).

In fact, that comment by the Court in 1969 constitutes

a drastic understatement today. According to a Rand

Institute Study, a reasonable estimate is that nearly 60% of

reported class action decisions arose in state courts from

1995 to 1996. D.R. Hensler, Class Action Dilemmas

Pursuing Public Goals for Private Gain, Executive Summary

at 6 (Rand Institute for Civil Justice 1999). This represents

thousands of class actions that would be shifted from state to

federal court if Petitioners and their amici have their way.

As part of its strict construction of the diversity

statute, this Court long ago held that when two or more

plaintiffs asserting separate and distinct rights of recovery

join together in a single suit for convenience and economy

they may not add their claims together to meet the

jurisdictional minimum, but rather each must assert claims in

the requisite jurisdictional amount. Troy Bank v. G.A.

Whitehead & Co., 222 U.S. 39, 40 (1911). Only one year

after the adoption of the Federal Rules of Civil Procedure,

this Court applied this principle to class actions brought

under Rule 23. Clark v. Paul Gray, Inc., 306 U.S. 583

(1939). These holdings comport with’ Rule 82's command

that the Federal Rules of Civil Procedure, including their

various joinder provisions, such as Rule 23, shall not be

construed to extend or limit federal jurisdiction. Fed. R. Civ.

P. 82. See Snyder, 394 U.S. at 337.

Contrary to the principles underlying the

nonaggregation rule, Petitioners and their supporters ask this

Court to adopt a liberal construction of the diversity statute

without regard to its history and purpose based instead on

their own preference for a federal forum, a parochial interest

that has no place in judicial construction of a statute. This

Court should decline Petitioners’ invitation to discard its

long-standing conservative diversity jurisdiction

jurisprudence and resolve any doubt about the proper extent

of diversity jurisdiction against, not for, its expansion.

Il. IF A DEFENDANT'S COSTS OF COMPLYING

WITH AN INJUNCTION CAN BE USED TO

SATISFY THE AMOUNT IN CONTROVERSY

REQUIREMENT IN A CLASS ACTION, THE

COST TO THE DEFENDAN 7 HAS TO EXCEED

$75,000 PER CLASS MEMBER TO DO SO.

If this Court holds that the either viewpoint rule can

be used to determine the amount in controversy in a class

action in which class members assert separate and distinct

claims for injunctive relief, TLPJ urges the Court to make

clear exactly when the defendant's costs of compliance with

the injunction will satisfy the amount in controversy

quirement. Specifically, the Court should hold that the cost

to the defendant must exceed $75,000 for each and every

named plaintiff and absent class member, such that the total

cost of compliance divided by the total number of class

members exceeds $75,000.

A. Requiring the Defendant's Costs to Exceed $75,000

Per Class Member is the Only Approach Consistent

With Snyder and Zahn.

In Snyder v. Harris, this Court held that, under the

nonaggregation rule, the separate and distinct claims of all

the members of a proposed class may not be added together

to meet the required jurisdictional amount where none of the

named plaintiffs or absent class members individually would

have a claim that exceeds the required jurisdictional amount.

394 U.S. at 339-41. Subsequently, in Zahn v. Int'l Paper Co.,

this Court held that each named plaintiff and absent member

of a proposed class must satisfy the jurisdictional amount in

order for diversity jurisdiction to exist. 414 U.S. 291, 301

(1973).”

The necessary consequence of this rule is that a

federal court may have jurisdiction over a suit brought by a

plaintiff individually but not have jurisdiction over a suit

> In that case, the claims of each of the named plaintiffs satisfied the

jurisdictional amount (as presumably did the claims of the vast majority

of the proposed class), but the district court found that not every

individual member of the class had suffered damages in excess of the

jurisdictional amount. 414 U.S. at 292.

asserting the exact same claims brought by the exact same

plaintiff as a named plaintiff on behalf of a proposed class.

As the Seventh Circuit explained in Jn Re Brand Name

Prescription Drugs Anti-Trust Litig., 123 F.3d 599, 609 (7th

Cir. 1997) ("Brand Name"):

But it is implicit in the rule that forbids

aggregation of class members’ separate claims

that it will sometimes be more difficult for a

defendant desiring to remove a diversity case

to federal court to establish the minimum

amount of controversy in a multiplaintiff case

than in a much smaller single-plaintiff case.

Indeed, under Snyder and Zahn, a federal district

court would not have jurisdiction over a 100-member

proposed class action in which the named plaintiff and 98

absent members of the class had separate and distinct caims

of $100,000 each and one absent class member had a claim

of $74,999. This principle applies equally to class actions in

which class members assert separate and distinct claims for

injunctive relief, and Petitioners’ entire appeal constitutes

nothing more than a creative attempt to avoid its

consequenices.

Specifically, Petitioners and their supporters argue

that if a defendant's cost of compliance with an injunction as

to any one named plaintiff or absent class member would

exceed $75,000, considered as if that one plaintiff had

brought an individual suit seeking classwide injunctive relief,

then the jurisdictional amount is met. Brief for Petitioners at

18; Brief for the United States as Amicus Curiae Supporting

Petitioners at 25. They took this proposed standard from the

Seventh Circuit's opinion in Brand Name, 123 F.3d at 610:

Whatever the form of relief sought, each

plaintiff's claim must be held separate from

10

each other plaintiff's claim from both the

plaintiff's and the defendant's standpoint. The

defendant in such a case is deemed to face

multiple claims for injunctive relief, each of

which must be separately evaluated. [citation

omitted]. ... The test, we repeat, is the cost to

each defendant of an injunction running in

favor of one _ plaintiff; otherwise the

nonaggregation rule would be violated.

What Petitioners and their supporters studiously avoid

acknowledging, however, is that the Seventh Circuit

articulated this standard in light of its prior holding that the

enactment of the Judicial Improvements Act of 1990, 28

U.S.C. § 1367, had overruled Zahn, such that if at least one

named plaintiff satisfies the jurisdictional minimum, "...the

other named plaintiffs and the unnamed class members can,

by virtue of the supplemental jurisdiction conferred on the

federal district courts by 28 U.S.C. § 1367, piggyback on that

plaintiff's claim ...[e]ven though their own claims are for less

than the jurisdictional minimum amount." Brand Name, 123

F.3d at 607 (citing Stromberg Metal Works, Inc. v. Press

Mechanical, Inc., 77 F.3d 928, 930-33 (7th Cir. 1996)).

In this light, the Seventh Circuit's articulation of the

rule makes at least some sense. If only one named plaintiff

-must satisfy the jurisdictional minimum, a court could look to

see if the cost of providing injunctive relief to just that one

plaintiff would exceed $75,000 if it were sought by that

named plaintiff in an individual suit. The court would have

supplemental jurisdiction over the remaining named plaintiffs

and absent class members without regard to whether the cost

of injunctive relief would exceed $75,000 for each and every

one of them in the class context.’

In this case, Petitioners have stipulated that they do

not seek to have this Court revisit Zahn, but rather that they

merely ask this Court to apply Zahn to class claims for

injunctive relief. Reply Brief for Petitioners in Support of

Certiorari at 5. Accordingly, the standard for ascertaining the

amount in controversy from the defendant's viewpoint

articulated in Brand Name cannot govern in this case in

which the continued vitality of Zahn has not been challenged.

As set forth above, under Zahn, the amount in

controversy must be satisfied as to each and every named

plaintiff and absent class member. Crucially, this must be

done in the context of the actual class action suit before the

district court and the classwide injunctive relief sought in that

suit, not based upon a hypothetical and highly unlikely suit in

which an individual class member seeks classwide injunctive

relief, as Petitioners and their supporters urge.

The facts of this case convincingly demonstrate this

proposition. The named plaintiffs sought specific

performance of their contracts providing for the rebate

program. Should Petitioners choose to accomplish that by

reinstating the original rebate program, no competent

* See Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977-8 (7th Cir. 2000)

("That means, for Del Vecchio, that the amount in controversy from the

defendants’ point of view is the amount they risk paying him, not the

amount they might have to pay the entire class.") (emphasis in original);

Hoffman v. Vulcan Materials Co., 19 F. Supp. 2d 475, 482 (M.D.N.C.

1998) ("The plaintiffs have each requested in excess of $30,000 in

damages in addition to an injunction. Therefore, if defendant can show

that the injunction is worth more than $45,000 to any one plaintiff, then

plaintiffs’ motion to remand must be denied.") (emphasis added); Rodgers

v. General Electric Capital Corp., 1998 WL 128675 at 4 (N.D. Ill. 1998)

("Accordingly, we must consider the cost to GECC of complying with an

injunction running in favor of Rodgers alone.") (emphasis added).

12

economist or accountant would attribute the entire fixed cost

of reinstating the program to one class member alone and

attribute no portion of the fixed cost. of reinstatement to all

the other class members. Rather, he or she would divide the

total fixed cost of reinstatement by the total number of class

members and attribute to each class member that class

member's proportionate share of the fixed cost.

_ That proportionate share attributable to each class

member constitutes the amount in controversy for each class

member under Zahn. Simply put, the proper method for

calculating the amount in controversy for each named

plaintiff and absent class member asserting separate and

distinct claims for injunctive relief is to take the total cost to

the defendant of compliance with the injunction and divide it

by the number of members in the proposed class. Only if that

results in a quotient that exceeds $75,000 has the plaintiff or

removing defendant met the Zahn requirement that the cost

of compliance with the injunction must exceed $75,000 as to

each and every named plaintiff and absent class member.

Even under the Seventh Circuit's approach in Brand

Name of determining only the amount in controversy as to

one named plaintiff, the amount in controversy should be

measured in the context of the actual class action case

pending before the court, not in a hypothetical individual suit

in which the named plaintiff inexplicably seeks classwide

injunctive relief. In the context of that class action, a

competent economist or accountant would, likewise, attribute

to the named plaintiff an amourt in controversy equal only to

that named plaintiff's proportionate share of the defendant's

cost of providing the classwide injunctive relief.

A number of district courts have properly applied the

defendant's viewpoint of the amount in controversy in this

manner. For example, in Littleton v. Shelter Ins. Cos., 2000

WL 356408 at 2 (S.D. Ill. 2000), the district court took the

13

defendant's claimed cost of complying with the requested

injunctive relief of $802,755, divided it by the approximately

541,947 class members and concluded that the cost to the

defendant of injunctive relief in favor of the named plaintiff

(and, consequently, to each of the absent class members)

amounted to about $1.50, far less than the jurisdictional

requirement.

Similarly, in Sherwood v. Microsoft Corp., the district

court noted that Microsoft's estimate of the cost of providing

the injunctive relief sought by the plaintiffs, $58.5 million,

when divided by anything more than 710 class members,

would "...bring the apportionment of that total cost among

each class member to less than $75,000 per class member."

91 F. Supp. 2d at 1203. Thus, that district court held that the

jurisdictional amount had not been met. /d.

As another district court put it, "Even the Seventh

Circuit, which seems to have adopted the ‘either viewpoint’

(i.e., plaintiff or defendant)...seems also to suggest that if the

defendant's cost is considered, it must then essentially be

divided by the number of potential plaintiffs." Melnick v.

Microsoft Corp., 2000 WL 761013 at | fn. | (D. Me. 2000)

(citing Brand Name, 123 F.3d at 609-10). Only Petitioners

and their supporters, by virtue of assessing the defendant's

cost of compliance with an injunction in the context of a

fictional individual suit in which the named plaintiff seeks

classwide injunctive relief, would attribute the entire fixed

cost of providing c!. sswide injunctive relief to just the named

plaintiff.

The fictional and improper nature of Petitioners’

suggested approach oi valuing the cost to a defendant of

providing the relief requested in the actual class suit as if it

had been brought in an individual suit by the named plaintiff

is easily demonstrated. In this case, for example, it is highly

unlikely that a plaintiff in an individual suit against

14

Petitioners would request reinstatement of the prior program

set up to accrue credits for millions of people or that any

court would consider this a realistic request for relief.

Rather, any plaintiff in an individual suit would

request a court to order Petitioners to honor the terms of his

contract by keeping track of his purchases, which would

require nothing more than one employee reviewing his bills

each month and keeping a running tally. Even if the plaintiff

were to ask for reinstatement of the entire program, it is

highly unlikely that any court would consider such a request

for relief to be potentially recoverable and thus a realistic

basis for calculating the amount in controversy."

Consistent with this analysis, the district court in

Smiley v. Citibank (South Dakota), N.A., 863 F. Supp. 1156,

1164-5 (C.D. Cal. 1993), rejected Petitioners’ exact argument

as follows:

The Court finds two flaws with this argument.

First, while Smiley may have been able to

bring this action as an individual, she clearly

did not do so; it is undisputed that she brought

the case on behalf of all other similarly

situated Citibank cardholders. Moreover, if

Smiley had brought an action purely on behalf

of herself it ‘s not at all clear that she could

obtain the kind of sweeping injunctive relief

order that she seeks here on behalf of all

present and potential future Citibank

cardholders.

* Petitioners attempt to use this argument as support for the proposition

that the class members below sought to enforce a single title or right in

which they had a common and undivided interest. Brief for Petitioners at

25. As set forth in Section IV below, this argument has no merit.

15

For that reason, the court refused to calculate the amount in

controversy as to just the named plaintiff based upon the

classwide injunctive relief she had requested in her actual

class action suit. /d.

In cases like this one where the requested injunctive

or other equitable relief serves as an alternative form of relief

to monetary damages, the economics of settlement dictate

that the amount in controversy is even less than the

defendant's cost of compliance per class member. In this

case, for example, they dictate that the amount in controversy

does not exceed $75,000 as to any one plaintiff, much less as

to each and every class member.

The maximum amount that any plaintiff or class

member could recover as a result of this case would be

$3,500, because that was the maximum credit allowed under

the credit card program. Petitioners could, obviously, settle

this case at any time by offering the maximum possible

recovery, $3,500, to each and every plaintiff and class

member.

Accordingly, Petitioners would never allow entry of

an injunction against them that would cost them more than

$3,500 per class member to implement. This demonstrates

that the true amount in controversy between Petitioners and

each and every plaintiff and absent class member does not

exceed $3,500." See Brand Name, 123 F.3d at 609 ("The

defendant would be willing to pay the plaintiff up to a shade

less than the cost that the injunction would impose on the

deferidant.... In that way the cost to the defendant would be

* Even if only the amount in controversy as to one named plaintiff was

considered in this case, per Brand Name, basic economic theory dictates

the same conclusion. Petitioners would never spend more than $3,500 to

provide injunctive relief to any one named plaintiff, making that the true

maximum amount in controversy.

16

transmuted into an equivalent value to the plaintiff.");

Hoffman v. Vulcan Materials Co., 19 F. Supp. 2d at 482

("...[I}n cases where injunctions or declaratory judgments are

requested, the value of the relief could be determined by

considering...how much the defendant would be willing to

pay the plaintiff to be rid of the injunction.").

In summary, requiring that the defendant's cost of

compliance with a proposed injunction (or the maximum

settlement value of the case) must exceed $75,000 per class

member is the only approach that fully comports with Snyder

and Zahn and with this Court's declaration that "...the amount

in controversy is measured by the value of the object of the

litigation." Hunt v. Washington State Apple Advertising

Comm'n, 423 U.S. 333, 347 (1977). Petitioners’ approach

does not, and should, therefore, be rejected.

B. A Majority of Lower Courts Have Purported to Reject

the Use of the Defendant's Viewpoint in Class Action

Cases, But Their Decisions Actually Constitute

Examples of the Proper Application of the

Defendant's Viewpoint Pursuant to Snyder and Zahn.

Most or all of the injunction class action cases

purporting to refuse to- apply the either viewpoint rule

(because doing so would serve to bypass the nonaggregation

rule of Snyder and Zahn) actually constitute examples of the

proper application of the defendant's viewpoint in the class

action context. The courts in those cases, consistent with the

economic realities of the cases before them, correctly treated

the defendant's cost of compliance per class member as the

amount in controversy for diversity jurisdiction purposes.

Unfortunately, those courts then erroneously treated

that cost of compliance per class member as an application of

the plaintiffs viewpoint and erroneously assumed that the

defendant's viewpoint would have required them to aggregate

17

those amounts and consider only the total cost to the

defendant as the amount in controversy in violation of the

nonaggregation principles of Snyder and Zahn.° See, e.g.,

Kanter v. Warner-Lambert Co., 265 F.3d 853, 858-61 (9th

Cir. 2001); In Re Ford Motor Co./Citibank (South Dakota),

N.A., 264 F.3d 952, 960-1 (9th Cir. 2001) ("Jn Re Ford");

Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1050 (3d

Cir. 1993); Massachusetts State Pharmaceutical Ass'n vy.

Federal Prescription Service, Inc., 431 F.2d 130, 132 fn. 1

(8th Cir. 1970); Lonnquist v. J.C. Penney Co., 421 F.2d 597,

599 (10th Cir. 1970).

In Kanter, 265 F.3d at 858, for example, the

defendant made the exact same argument as Petitioners make

herein:

Put another way, Pfizer wants us to assume for

purposes of amount in controversy that a

single plaintiff seeks the injunctive relief

requested by Plaintiffs, and to allocate the cost

to Defendants of providing the requested

injunctive relief to that one plaintiff. Pfizer

contends that if we were to view Plaintiffs’

case in this way, the amount in controversy

would exceed $75,000.

The Ninth Circuit held that the true economic value of

an injunction to each plaintiff and class member would be the

cost of the allegedly ineffective medication-between $9 and

$17. Id. at 859. It then held that accepting Pfizer's argument

would mean that virtually every mass-tort class action

involving an incidental request for injunctive relief could

* In fact, pursuant to the plaintiff's viewpoint, the amount in controversy

is measured by the value to the plaintiff of the injunctive or equitable

relief, not the cost to the defendant of providing it. Snow v. Ford Motor

Co., 561 F.2d 787, 788 (9th Cir. 1977).

18

satisfy the amount-in-controversy requirement of 28 U.S.C. §

1332. Id. at 861.

The Ninth Circuit was exactly correct. As it noted in

Snow v. Ford Motor Co., the same rules must apply to

plaintiffs originally filing suit in federal court as to

defendants removing them from state court. 561 F.2d at 791.

Under Petitioners' argument, in order to avoid Snyder and

Zahn and gain entry into federal court, all a plaintiff would

have to do is plead for injunctive relief suitable for an entire

class that would cost in excess of $75,000.

Thus, the fear expressed by many courts that adopting

Petitioners’ argument could inundate overburdened federal

courts with state law diversity class actions involving very

modest disputes is well founded. In this case, it would confer

federal court jurisdiction over a class action that constitutes

nothing more than the joinder of multiple suits for $3,500 or

less. In Kanter v. Warner-Lambert Co., the argument would

have conferred diversity jurisdiction over the consolidation of

multiple $9 to $17 suits. 265 F.3d at 859. In Siow v. Ford

Motor Co., it would have conferred diversity jurisdiction

over the consolidation of multiple $11 suits. 561 F.2d at 790-

l.

In Smiley v. Citibank (South Dakota), N.A., 863 F.

Supp. at 1164, the Central District of California explained

well the compelling reasoring of these cases in the context of

its particular facts:

...Smiley is seeking to protect...the alleged

right of Citicorp's current and _ future

cardholders not to have to pay the $15 late

charge if they fail to pay their balance in a

timely manner. The fact that plaintiff seeks a

court-approved public information campaign

does not through sheer alchemy transform a

19

cause of action which will provide marginal

benefits (in all probability, well less than $100

per class member) into a claim that meets the

$50,000 amount in controversy requirement.

To hold otherwise would allow any class of

plaintiffs who are completely diverse from the

defendants to obtain federal jurisdiction

merely by seeking a injunction requiring the

defendant to engage in an expensive public

information campaign announcing the error of

his ways.

Petitioners will undoubtedly protest that a suit that

could result in them incurring expenses exceeding $75,000 in

order to provide the requested injunctive relief does not

constitute a trivial state law suit of the sort that the $75,000

jurisdictional amount seeks to keep out of federal court. This

protestation ignores that, pursuant to the nonaggregation rule

as pronounced in Synder and Zahn, a class action seeking

millions of dollars in total damages or other relief

nevertheless constitutes nothing more than the consolidation

of multiple individual state law suits seeking recovery of

trivial amounts.

Looking to the economic realities of this litigation, it

could not be more clear that the amount in controversy as to

the named plaintiffs and as to each of the absent class

members does not exceed $3,500, much less $75,000. Given

the absence of a federal question, this state law suit joining

multiple $3,500 or less claims belongs exclusively in state

court.

od The Approach Advocated by Petitioners and Amici

Would Severely Damage Significant Federal and

State Interests.

The approach advocated herein would leave the

20

current federal-state balance undisturbed. In contrast, the

approach advanced by Petitioners and their amici would

significantly expand federal diversity jurisdiction with a

corresponding increase in federal court cases (and a decrease

in state court cases). The exact impact will, of course,

depend upon a number of factors, including the extent to

which plaintiffs seeking to vindicate their rights under state

consumer protection statutes simply abandon requests for

injunctive relief.

In many cases brought under state consumer

protection statutes, plaintiffs couple an ancillary request for

injunctive or other equitable relief with the primary claim for

money damages. See, e.g., Kanter v. Warner-Lambert Co.,

265 F.3d at 859-61; Snow v. Ford Moter Co., 561 F.2d at

788. To avoid removal to federal court, many plaintiffs are

likely to simply omit such claims for future injunctive relief.’

Such a trend could be devastating to the effective

enforcement of state consumer protection laws.

The deceptive trade practices acts of 33 states

explicitly authorize injunctive relief. Nat'l Consumer Law

Center, Unfair and Deceptive Acts and Practices § 8.6.2.1

(Sth ed. 2001). Of the other 18 states, all but one or two

allow the award of injunctive relief as a form of either "other

equitable relief" or "other relief the court deems appropriate."

Id. § 8.6.2.2.

A significant trend of plaintiffs not seeking such

injunctive relief in order to remair in state court would

severely diminish the effectiveness of these statutes, because

injunctive relief often provides a more effective remedy to

” In its brief, the National Association of Manufacturers frankly admits

that this is the likely result of this Court ruling in favor of Petitioners.

Brief of Amicus Curiae National Association of Manufacturers in Support

of Petitioners at 19-20.

ed —

21

society than damage awards, as the National Consumer Law

Center explains:

One of the potentially most effective UDAP

remedies against wide spread marketplace

misconduct is for a private individual to seek a

court-ordered injunction preventing the seller

from engaging in specified conduct in the

future. A merchant may treat occasional

damage awards, even if trebled or increased

with punitive damages, as an acceptable cost

of business, not deterring future misconduct.

But a properly framed and monitored

injunction can eliminate the seller's use of the

challenged practice against all future

customers. /d. § 8.6.1.

Reliance on state attorney generals to seek injunctive

relief does not solve this problem, as those state officials

have limited resources and their own priorities. /d. Indeed,

recognizing that governmental enforcement alone cannot

solve the problem, these statutes were specifically drafted to

allow private parties to bring actions as private attorney

generals on behalf of all injured members of the public and

on behalf of society as a whole. /d.

Thus, a ruling by this Court that would discourage

plaintiffs from seeking injunctive relief in order to avoid

federal court jurisdiction would not only serve to destroy the

effectiveness of such statutes, but would also contradict the

fundamental principles underlying their enactment. Coupled

with the offense to states’ rights and interests and the

potentially crippling increase in federal courts’ caseloads that

could occur, the certain damage to the enforcement of state

consumer protection statutes should guide this Court to reject

Petitioners’ requested radical expansion of diversity

jurisdiction and to affirm the decision below.

22

lil. UNDER NO CIRCUMSTANCES SHOULD A

DEFENDANT'S CLERICAL OR MINISTERIAL

COSTS OF COMPLIANCE WITH AN

INJUNCTION COUNT TOWARDS THE

AMOUNT IN CONTROVERSY

REQUIREMENT.

The discussion above has focused on how to calculate

the amount in controversy from the defendant's viewpoint in

a class action in which the class requests injunctive relief.

Whatever standard the Court adopts, it needs .o also address

what costs of a defendant may be included in the calculation.

Confusingly, Petitioners argue that courts should

include a defendant's "administrative costs" in the calculation

of the amount in controversy. That purported category of

costs has little or no meaning, however, and it clearly

represents a conscious departure by Petitioners from the

reasoning of Brand Name, which otherwise provides virtually

the entire basis for Petitioners’ appeal.

In Brand Name, the Seventh Circuit stated that there

are four ways in which a request for an injunction might be

thought to satisfy the amount in controversy requirement.

123 F.3d at 609. The first was the value of the injunction to

the plaintiff--the plaintiff's viewpoint. /d. The second, third,

and fourth ways are variations of the defendant's viewpoint.

Id. at 609-10.

The second way was described by the Seventh Circuit

as the cost of "some alteration in the defendant's method of

doing business..." /d. at 609. The third way was the value to

the defendant of a benefit that the plaintiff's injunction would

force the defendant to forego. /d. at 610. The fourth way

was the defendant's clerical or ministerial cost of compliance

with the injunction. /d.

23

Significantly, the Seventh Circuit expressed

considerable doubt as to whether clerical or ministerial costs

of compliance should be included in the calculation of the

amount in controversy:

Just the cost of duplicating an injunction in a

case such as this and distributing the copies to

all the relevant personnel might exceed

$50,000 for each defendant, and, if so, this

would argue for allowing removal to federal

court.... But if the argument were accepted,

then every case, however trivial, against a

large company would cross the threshold,

whether the threshold was $50,000 or as it

now is $75,000, even if the plaintiff were

asking for an injunction against disclosing his

unlisted telephone number. It would be an

invitation to file state-law nuisance suits in

federal court.

Id. It then held that it need not "bite the bullet" and decide

this issue because the defendant had made no effort to

quantify the internal cost of compliance with the requested

injunction. /d.

Petitioners and their amici do, however, advocate

counting clerical or ministerial costs of compliance in

valuing the amount in controversy. Under this approach, not

only would virtually any injunction against a large company

cross the jurisdictional threshold, but so would many, if not

most, class action damage suits against large companies. The

judgments in many cases would require the defendant to draft

and run a computer program on its customer database to

calculate the damages for each class member and then to

either credit the account of each class member or to cut a

check and mail it to each class member. The cost of this

could easily exceed $75,000.

24

Of course, the clerical or ministerial costs of

complying with the injunction or of making damage

payments to each class member would almost never exceed

$75,000 per class member and, thus, would not satisfy the

amount in controversy requirement under the standard

advocated herein by TLPJ. However, under the standard

urged by Petitioners and their supporters, virtually every

class action requesting a large company to cease and desist

from engaging in any activity or requesting payment of small

amounts to a large number of class members would exceed

the jurisdictional threshold, flooding the federal courts with

purely state law class actions that constitute nothing more

than the consolidation of multiple suits over trivial amounts.

While the Ninth Circuit's statement below that it

would not consider "fixed administrative costs" for purposes

of calculating the amount in controversy is admittedly vague,

the Ninth Circuit made the correct ruling. Plaintiffs

essentially ask for nothing more than specific performance--

that is, they want Petitioners to honor their contracts and to

continue accruing rebates in connection with their credit card

purchases. The cost of the personnel and computers to

provide that very minor individual relief on a classwide basis

constitutes nothing more than clerical or ministerial costs.

Indeed, the facts of this case illustrate well why

counting such clerical or ministerial costs would violate the

nonaggregation rule of Snyder and Zahn. As noted

previously, the cost of honoring the rebate program as to only

one plaintiff would be minuscule, as one employee could

review a plaintiff's bills each month and keep a running tally

of his credits on a sheet of paper. The cost of reinstating the

original rebate program, therefore, merely constitutes the

aggregation of the minuscule costs of honoring the credit

card program for millions of individual class members.

25

IV. PETITIONERS' ATTEMPT TO BRING THIS

CASE UNDER THE "COMMON AND

UNDIVIDED INTEREST" EXCEPTION TO

THE NONAGGREGATON RULE SHOULD BE

REJECTED BY THE COURT.

Recognizing the weakness of their argument that they

satisfied the jurisdictional amount in the context of a suit by

class members asserting separate and distinct rights,

Petitioners alternatively argue that they fall into the exception

to the nonaggregation rule for "cases in which two or more

plaintiffs unite to enforce a single title or right in which they

have a common and undivided interest." See Snyder v.

Harris, 394 U.S. at 335. This Court should summarily reject

this alternative argument, as the Ninth Circuit did below.

This exception has historically been limited to a very

narrow class of cases in which a single plaintiff could not

possibly recover relief affecting only him or her. Petitioners’

requested expansion of the exception misconstrues the nature

of a common and undivided interest and is at complete odds

with the required strict construction of the amount in

controversy requirement, thereby promising to open the

floodgates of federal court to waves of new state law class

actions.

Indeed, a quick survey of the amicus briefs filed in

support of Petitioners graphically illustrates the massive

influx of class actions that the federal courts can expect if this

Court adopts Petitioners’ argument. In addition to cases

seeking injunctive relief brought pursuant to the consumer

protection laws of all 50 states, Petitioners’ amici believe

Petitioners' arguments will lead to federal jurisdiction over

cases where plaintiffs seek orders requiring: relabeling of

products, product redesign, product repair (Brief of Amicus

Curiae Pharmaceutical Research and Manufacturers of

America in Support of Petitioners); corrective advertising,

26

environmental clean-up (Brief of the Product Liability

Advisory Council as Amicus Curiae in Support of

Petitioners); medical monitoring (Brief of the Business

Round Table as Amicus Curiae Supporting Reversal); safety

programs (Brief of Amicus Curiae National Association of

Manufacturers in Support of Petitioners); and compliance

with state insurance regulations (Brief of Amicus Curiae

State Farm Mutual Automobile Insurance Company in

Support of Petitioners).

Class members seek to enforce a single title or night

in which they have a common and undivided interest when

that interest cannot be adjudicated without implicating the

interests of each and every class member. Gilman v. BHC

Sec., Inc., 104 F.3d 1418, 1423 (2d Cir. 1997). In other

words, if the subject matter of the suit could be adjudicated

on an individual basis, the class members have no common

and undivided interest in the subject matter of the suit. /d.

The paradigm case of multiple plaintiffs seeking to

enforce a single title or right in which they have a common

and undivided interest involves a single indivisible res, such

as an estate, a piece of property (the classic example) or an

insurance policy. /d. It can also include cases in which a

class of persons has a collective right to recover a fund of

money from a defendant (subject to later distribution to the

class, the terms of which distribution may be the subject of

litigation between the class members), but no individual class

member has a right to recover any particular part of the fund

or any particular amount of money from the defendant. See,

e.g., Berman v. Narragansett Racing Ass'n, 414 F.2d 311,

314-15 (ist Cir. 1969).

The classic example of the latter type of case is a

shareholder's derivative action or a suit against a trustee in

which the sum recovered would be paid into a corporate

treasury or trust estate for later proportionate distribution. /d.

— «= - .

27

at 315. See, e.g., Eagle v. American Tel. & Tel. Co., 769 F.2d

541, 546-7 (9th Cir. 1985). In such cases, a shareholder or

trust beneficiary has no right to recover any specific amount

because he or she holds only a common and undivided

interest in the corporation's or trust's assets. Gilman v. BHC

Securities, Inc., 104 F.3d at 1423.

One last category of cases involving a common and

undivided interest is where plaintiffs join to seek abatement

of a continuing nuisance. Packard v. Provident Nat'l Bank,

994 F.2d at 1050 fn. 14. See, e.g., Hoffman v. Vulcan

Materials Co., 19 F. Supp. 2d at 42-3. In those cases, as

well, relief cannot possibly be granted solely to the named

plaintiff, but not to the other members of the class, because

abatement of the nuisance as to the plaintiff abates it as to all

class members.

As the Ninth Circuit held, this case clearly does not

fall into any of these categories. Jn Re Ford, 254 F.3d at

959-60. As that court noted, the named plaintiffs and absent

class members had no common and undivided interest in

accruing rebates under the credit card program; each plaintiff

charged purchases and accrued rebates individually pursuant

to individual contracts, not as part of a group. /d. As noted

previously, the requested injunctive relief of continuing to

accrue credits, up to a maximum of $3,500, based upon credit

card purchases could easily be provided to an individual

plaintiff without providing similar relief to other persons or

class members.

Petitioners will undoubtedly protest that regardless of

what could have been done on an individual basis, the named

plaintiffs in this case allegedly specifically pled for

reinstatement of the entire program, which program would

necessarily benefit the entire class. Crucially, however,

every single court which has considered the issue has held

that the nature of the underlying claim, rather than the

28

specific relief requested by the plaintiff, must be examined to

determine whether it potentially could be vindicated

individually or could only be vindicated in the context of

providing relief to an entire class. Kanter v. Warner-Lambert

Co., 265 F.3d at 859-60; In Re Ford, 264 F.3d at 959-60;

Packard v. Provident Nat'l Bank, 994 F.2d at 1050 fn. 14;

Snow v. Ford Motor Co., 561 F.2d at 790 ("Given Snyder, the

proper focus in this case is not influenced by the type of

relief requested, but rather continues to depend upon the

nature and value of the right asserted.").

To focus on the specific relief requested, rather than

the nature of the underlying claim, would lead to anomalous

results. Even Petitioners would concede that the proposed

class’ monetary damages claims constitute the assertion of

separate and distinct rights. How then can the proposed

class' injunctive claims (really claims for specific

performance asserted as an alternative to monetary damages)

constitute the assertion of a single right in a common and

undivided interest? Petitioners do not attempt an

explanation. Nor could they.

Two cases present facts indistinguishable from the

facts of this case. In Kanter v. Warner-Lambert Co., the

plaintiff sought an injunction requiring Pfizer to either

change the formulation of its product to become effective

(i.e., to stop selling an ineffective product) or to disclose on

the label that the product is not effective. 265 F.3d at 859.

Obviously, Pfizer could not easily stop seliing or advertising

its lice medication one consumer at a time. /d.

Significantly, the Ninth Circuit did not rest its

decision on the specific relief requested. Rather, it looked to

the nature of the right asserted by the plaintiffs, which was

the right to be protected from allegedly deceptive advertising,

and it found that each plaintiff could sue to vindicate that

right as an individual without joining the other members of

29

the class in order to bring a cognizable claim. /d. at 860. As

a consequence, it held that the plaintiffs asserted separate and

distinct individual rights, not a single right in a common and

undivided interest. /d.

In Smiley v. Citibank (South Dakota), N.A., the

plaintiffs sought an affirmative injunction requiring Citibank

to provide a statewide advertising and public information

campaign warning all California residents regarding its

illegal late payment charges. 863 F. Supp. at 1164. The

district court found that the right that plaintiffs sought to

vindicate, the right of Citicorp's current and future

cardholders not to be forced to pay a $15 late charge if they

failed to pay their balances timely, constituted a separate and

distinct right capable of individual vindication and that the

mere fact that the plaintiffs sought a court-approved public

information campaign did not convert the plaintiffs’ rights

into a single right in a common and undivided interest. /d.

The exact same reasoning applies even more forcibly

in this case. The named plaintiffs and absent class members

could individually sue for specific performance of their rights

under their individual contracts with Petitioners. Petitioners

could provide that relief to any one plaintiff without

providing it to all the other class members. Thus, plaintiffs

have asserted only separate and distinct rights in this case,

not a single right in a common and undivided interest.

Petitioners also argue that the unlikelihood that a

court would grant the classwide relief of requiring them to

reinstate their entire credit card program in an individual suit

brought by one plaintiff demonstrates that class members

sought to enforce a single right and title in a common and

undivided interest. Once again, Petitioners fail to distinguish

between the specific relief requested by plaintiffs and the

nature of their underlying claims, which properly controls the

analysis.

30

Finally, by making this argument, Petitioners

contradict their own pleadings. As the Ninth Circuit noted in

In Re Ford, 264 F.3d at 960, when it was to their advantage

in this litigation, Petitioners took the exact opposite position:

As Ford and Citibank correctly stated in their

memorandum opposing class certification,

{t}his case, after all, does not involve a

common fund or a joint interest among

cardholders. Instead, it involves a collection

of individual claims based on individual

patterns of consumer purchasing decisions.’

They concluded that '[b]ecause the [putative]

class members in this case do not in any sense

possess joint ownership of, or an undivided

interest in a common res, their claims...are

separate and distinct.’

Petitioners had it right the first time. Simply put, this

class action does not meet the requirements for federal court

jurisdiction.

CONCLUSION

Wherefore, Trial Lawyers for Public Justice, as

Amicus Curiae in support of Respondents, respectfully

requests this Court to affirm the ruling of the Ninth Circuit

that the federal district court below did not have diversity

jurisdiction over Respondents’ claims.

ARTHUR BRYANT

TRIAL LAWYERS FOR

PUBLIC JUSTICE

One Kaiser Plaza, Suite 275

Oakland, CA 94612-3684

(510) 622-8150

(510) 622-8155 (Fax)

MICHAEL QUIRK

TRIAL LAWYERS FOR

PUBLIC JUSTICE

1717 Massachusetts Ave.,

N.W., Suite 800

Washington, DC 20036-2001

(202) 797-8600

(202) 232-7203 (Fax)

Respectfully Submitted,

ROGER L. MANDEL

Counsel of Record

MARC R. STANLEY

STANLEY, MANDEL &

IOLA, L.L.P.

3100 Monticello Ave.,

Suite 750

Dallas, Texas 75205

(214) 443-4300

(214) 443-0358 (Fax)

MARK A. CHAVEZ

KARIN KRAMER

CHAVEZ & GERTLER, L.L.P.

42 Miller Avenue

Mill Valley, CA 94941

(415) 381-5599

(415) 381-5572 (Fax)

ATTORNEYS FOR

AMICUS CURIAE,

TRIAL LAWYERS

FOR PUBLIC JUSTICE