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Friday, November 22, 2013

Visendi v. Bank of America: Ninth Circuit Clarifies Rules for Removal and Joinder in Mass Action

Visendi v. Bank of America (9th Cir. 10/23/13) ___ F.3d ___, is an interesting case on removal and joinder of mass actions under the Class Action Fairness Act (CAFA). 

In 2011, 137 named plaintiffs sued 25 financial institutions in Superior Court. They alleged that the institutions’ deceptive mortgage lending and securitization practices decreased the value of their homes, impaired their credit scores, and compromised their privacy. 

One defendant, Bank of America, removed the case to the district court. Relying on CAFA, it argued that the action was a removable “mass action” because it was a “civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact . . . .” 28 U.S.C. § 1332(d)(11)(B)(i). 

The plaintiffs filed a first amended complaint, adding some parties, dismissing others, and changing their theories of liability. Defendants moved to dismiss, asserting misjoinder and failure to state a claim. The district court then remanded, finding that the Defendants conceded that the action was not removable when they argued that it did not present common questions of law or fact under Rule 20(a) and that the court thus lacked jurisdiction under CAFA. 

The Ninth Circuit reversed, holding: 

CAFA’s "mass action" provisions apply to civil actions in which "monetary relief claims of 100 or more persons are proposed to be tried jointly." Because the plaintiffs proposed a joint trial in state court, this provision applied, and the defendants properly removed the case. 
Whether Plaintiffs’ claims ultimately proceed to a joint trial is irrelevant. It is well settled that “post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.” 
Slip op. at 8. 

CAFA's numerosity requirement was satisfied because the original complaint named more than 100 plaintiffs. Slip op. at 9-10.

CAFA's "local controversy" exception is not jurisdictional, and the plaintiffs could not raise it for the first time on appeal. Slip op. at 10-11.

Joinder of the more than 100 plaintiffs was improper because (1) the plaintiffs did not assert a "right to relief arising out of the same transaction and occurrence" and (2) no "question of law or fact common to all the plaintiffs" would arise in the action. Slip op. at 12-14. Although the plaintiffs alleged that the defendants' misconduct was “regular and systematic,” the case involved "over 100 distinct loan transactions with many different lenders," and the factual disparities alleged were too great to support permissive joinder.

The Ninth Circuit remanded to the district court with instructions with instructions to dismiss without prejudice the claims of all plaintiffs but the one first named in the action.

The opinion is available here.

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