Classified Monthly: A Roundup of Class Action Decisions From Federal Appellate Courts – January 2024

Carlton Fields

Carlton Fields

The Roundup is a monthly publication that covers the previous month’s notable class action decisions from federal appellate courts, as well as notable Supreme Court cert petitions related to class actions.

Fifth Circuit

Dixon v. D.R. Horton, Inc. – D.R. Horton removed a Louisiana state court class action against it to federal court, invoking CAFA jurisdiction, and the plaintiffs moved to remand, citing the “local controversy” exception to CAFA jurisdiction. The district court granted the remand motion, and the Fifth Circuit affirmed. As the Fifth Circuit explained, “CAFA’s local controversy exception mandates remand for class actions of a sufficiently in-state character.” This decision illustrates some of the inquiries that determine when a class action is of a “sufficiently in-state character” to meet the requirements of the “local controversy” exception.

Sixth Circuit

Grainger v. Ottawa County – Shortly after the district court denied the plaintiff’s class certification motion, the appellant moved to intervene as of right and permissively under Federal Rule of Civil Procedure 24. The district court denied the intervention motion, and the Sixth Circuit affirmed. The Sixth Circuit acknowledged that “courts allow intervention by absent class members of pre-certification or certified class actions when the intervenors have shown that the named plaintiff does not adequately represent their interests.” But the court found that any substantial interest the intervenor had in the litigation would not be impaired in the absence of intervention—a requirement for intervention as of right—because the intervenor “could have filed his own class action rather than seeking to intervene in this litigation.” The court also found that the district court’s denial of permissive intervention for a host of case management and other reasons was not an abuse of discretion.

Supreme Court

Smith v. Spizzirri – The Court granted cert in this case, which will be argued in April. The petition asked the Court to resolve a circuit split on the following question presented: when a district court finds that all claims in an action are subject to arbitration, does Section 3 of the Federal Arbitration Act require the court to stay the action or does the court have discretion to dismiss?

Visa v. National ATM Council – The Supreme Court has made clear that Rule 23 requires a “rigorous analysis” of class certification that may overlap with the merits. This petition argues that the circuit courts are in “disarray” over the meaning of that requirement with respect to when damages models for proving classwide injury meet the predominance standard. According to the petition, the Eighth, Ninth, and D.C. Circuits have held that it is enough for district courts to decide that the model “appears to be valid,” rather than fully determining the merits of the model at the certification stage, while the Second, Third, Fifth, and Eleventh Circuits have held that district courts must decide whether the model ultimately establishes classwide injury in order to properly assess predominance.

Erie Indemnity Co. v. Erie Insurance Exchange – Three insurance policyholders filed a class action in Pennsylvania state court that the insurer removed to federal court. The policyholders then dismissed the case and re-filed it in state court, but this time as trustees ad litem of an insurance exchange under two state procedural rules designed to let trustees of associations and corporations prosecute claims. Petitioner asks the Court to resolve what it describes as a circuit split about whether such procedural changes in a newly filed complaint can defeat federal jurisdiction under CAFA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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