New Article Analyzes CAFA Commencement Issue

Lonny Hoffman (Univ. of Houston, visiting at Texas) has posted a new article analyzing the first year of caselaw concerning CAFA's commencement issue.  Though the issue of when a class action "commenced" for purposes of whether or not CAFA applies is an issue that will fade with time. Professor Hoffman argues that there are important lessons for statutory commencement issues generally that can be drawn from the CAFA caselaw.

Eastern District of New York Holds Action Commenced After CAFA Even Where Parallel State Claims Predate CAFA

        On March 7, in Steinberg v. Nationwide Mutual Insurance Co., United States District Judge for the Eastern District of New York Arthur D. Spatt denied Nationwide's motion to dismiss for lack of subject matter jurisdiction a class action filed on behalf of all those insured by Nationwide who were involved in accidents and had a "betterment charge", not included in the insurance contract, deducted from their claim award. 
         A parallel claim was filed on November 24, 1999 and, after a series of procedural maneuvers, ended up in New York state court, where it was still pending at the time of this decision. On July 15, 2005, Plaintiff filed the instant action, which was "parallel to the pending state court action in form and in substance, in that it is based on the same transactions and occurences; alleges identical claims; and seeks identical relief." Finding that the issue of commencement and subject matter jurisdiction in the instance of such an existing parallel claim had "not yet been addressed at any level in any circuit," the court gave a detailed accounting of the legislative history of CAFA and analogous precedent. The court found "no compelling reason under CAFA, or any other federal law, to dismiss the Plaintiff's action solely based on the similar action pending in state court," and held that a new and independent action was commenced on July 15 and was thus eligible under CAFA.
         The court also held that "claim splitting does not apply to parallel state and federal actions." Finally, the Court weighed the Colorado River factors, found that no "exceptional" circumstances warranted dismissal of the case, and denied Defendant's motion to abstain.- A.S.

Eastern District of Michigan Holds that Case Commenced for CAFA Purposes on Date New Claim was Filed

On October 17, 2005, in Price v. Berkeley Premium Pharmaceuticals, 2005 WL 2649205 (E.D. Mi. 2005), District Judge Avern Cohn held that the commencement date of this class action was the date plaintiffs filed their new claim in federal court under CAFA, not the earlier date on which the original claim was filed in state court.  Plaintiffs filed a claim in state court in March 2004.  The court erroneously removed the case to federal court at Defendant's request that August.  Plaintiffs, who initially sought state court jurisdiction, then sought to remove to federal court, voluntarily dismissing the original complaint and filing a new claim under CAFA in April 2005.  The defense, relying upon the Tenth Circuit's decision in Pritchett v. Office Depot, 420 F.3d 1090 (10th Cir. 2005) (case commenced for CAFA purposes when it was filed in state court, not when it was removed), argued that Plaintiffs did not meet CAFA requirements because commencement occured in March 2004, before CAFA was effective.  The court disagreed.  It distinguished the case at bar from Pritchett because in this case the federal court never had jurisdiction over the original claim and the plaintiffs exercised their right to dismiss the original claim and file a new one.  - L.C.

Ninth Circuit Holds that CAFA Commencement Occurs When Case is Filed in State Court, Not When it is Removed

On October 6, 2005, in Bush v. Cheaptickets, Inc., the Ninth Circuit joined the Seventh and Tenth Circuits (see Knudsen v. Liberty Mutual Ins. Co., 411 F.3d 805 (7th Cir. 2005); Pritchett v. Office Depot, 404 F.3d 1090 (10th Cir. 2005)) in holding that CAFA commencement occurs when a suit is initially filed in state court.  In this case, plaintiffs filed their claim against Cheaptickets, on February 17, 2005, one day before CAFA became effective.  Defendants removed the case to federal court, asserting jurisdiction under CAFA, but the district court remanded the case to state court, holding that removal was improper because the case was filed before CAFA was effective.  Cheaptickets argued that the CAFA commencement date should be the date the case was removed to federal court or, alternatively, the date process was served on defendants.  The Ninth Circuit rejected both arguments, and further held that defendants' concerns about procedural problems in cases in which there is a long delay between filing and service of process were "largely hypothetical" and would soon phase out.  See also CAFAblog's comments here.  - L.C.