Class Action Defense Cases-Eufaula Drugs v. Tmesys: Defense Removal Of Class Action Improper Because CAFA (Class Action Fairness Act of 2005) Inapplicable And Insufficient Amount In Controversy Alabama Federal Court Holds

Aug 14, 2006 | By: Michael J. Hassen

Federal Court Remands Putative Class Action Over Defense Objection Because at Least One Member of Class Must Satisfy Jurisdictional Requirement for Damages and Because Under Alabama State Law Class Action was Commenced Prior to CAFA Even Though Summons Issued After CAFA’s Effective Date

Issues regarding removal and remand, and regarding federal court jurisdiction under the Class Action Fairness Action of 2005 (CAFA), have been covered in several separate articles. On May 22, 2006, an Alabama federal court remanded to state court a putative class action over defense claims that the court had either diversity jurisdiction or jurisdiction under CAFA. Eufaula Drugs, Inc. v. Tmesys, Inc., 432 F.Supp.2d 1240 (M.D. Ala. 2006). Plaintiff filed the putative class action on February 14, 2005 – four days before the effective date of CAFA – but the summons was not issued until February 28 because plaintiff’s lawyer “did not file the summons or a completed certified mail card or provide the appropriate postage to the state court clerk’s office until then.” Id., at 1242. Defense attorneys removed the action to federal court. The defense urged that federal diversity jurisdiction existed and, alternatively, that the action was removable under CAFA. Id., at 1243.

The federal court rejected both arguments. As to diversity jurisdiction, while the district court agreed that the parties were diverse, Eufaula Drugs, at 1243 n.4, “at least one class representative or named plaintiff must meet the amount-in-controversy requirement before supplemental jurisdiction can arise,” id., at 1244 (citing Exxon Mobil Corp. v. Allapattah Servs., Inc., ___ U.S. ___, 125 S.Ct. 2611, 2615 (2005)). As to CAFA, the court recognized that “commencement” for purposes of CAFA turned on state law, id., at 1245-46. and under its analysis of Alabama state law, on the particular facts of the case, the action would be deemed “commenced” as of the date the complaint was filed and accordingly remanded the action to state court, id., at 1246-50.

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