Ninth Circuit Holds that Class Action Fairness Act Does Not Override Narrower Jurisdictional Requirements for Magnuson-Moss Warranty Act Claims

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On July 28, the Ninth Circuit held in a putative automotive class action that the jurisdictional requirements of the Class Action Fairness Act (“CAFA”) do not override the more specific jurisdictional requirements under the Magnuson-Moss Warranty Act (“MMWA”)—becoming the first circuit court to decide this issue in a published opinion.

  • Plaintiffs alleged that their Honda Civic vehicles had a defective transmission that prevented the vehicles’ electric parking brake from engaging, which could lead to crashes or injuries.
  • The three named plaintiffs filed suit against Honda in federal district court, alleging a federal claim under the MMWA and a variety of state-law breach of warranty and consumer protection claims. Among other requirements, the MMWA prohibits federal courts from exercising jurisdiction over MMWA claims on a class-wide basis where the number of named plaintiffs is less than one hundred. Based on that requirement, the district court dismissed the plaintiffs’ MMWA claim because the complaint did not name one hundred plaintiffs. The district court then declined to exercise supplemental jurisdiction over the plaintiffs’ state law claims and dismissed the action.
  • The issue on appeal was whether CAFA (which was passed after the MMWA) altered the MMWA’s numerosity requirement. Unlike the MMWA, CAFA does not require a complaint to name one hundred plaintiffs. Instead, CAFA gives district courts jurisdiction over class actions where, among other requirements, the amount in controversy exceeds $5,000,000 and any member of the putative class is a citizen of a state different from any defendant. Accordingly, the plaintiffs contended that CAFA overrode the MMWA’s numerosity requirement, and therefore permitted the district court to exercise jurisdiction over the MMWA claim.
  • The Ninth Circuit rejected that contention. It began by noting the absence of binding authority from the Supreme Court and Ninth Circuit. The court did note that the Sixth Circuit had held in a single, unpublished opinion that CAFA, as the more recent statute, effectively supersedes the narrower MMWA requirement.
  • The Ninth Circuit refused to follow the Sixth Circuit. Instead, the court looked to the plain language of the MMWA, concluding that the statute unambiguously limits federal jurisdiction over class actions to cases with one hundred named plaintiffs. The court rejected plaintiffs’ argument that CAFA impliedly repealed that requirement, noting that repeals by implication are disfavored and that the two statutes are not in conflict: “CAFA allows certain claims to proceed under diversity jurisdiction, while the MMWA provides for a distinct claim to be brought in federal court for certain state-law warranty violations.” Because the statutes did not irreconcilably conflict, it was not clear that Congress intended for CAFA to override the MMWA—especially since canons of construction dictate that a later-enacted general statute typically does not supplant an existing, more specific statute. As a result, the court held that plaintiffs could not use CAFA to evade the MMWA’s numerosity requirement.
  • Although the Ninth Circuit agreed with the district court’s MMWA holding, it found that the district court erred in dismissing plaintiffs’ state law claims for lack of supplemental jurisdiction. Because plaintiffs alleged that they satisfied the jurisdictional requirements under CAFA (which permits district courts to exercise original jurisdiction over state-law claims in class actions under relaxed diversity requirements), the district court did not need underlying federal question jurisdiction to exercise CAFA jurisdiction over state-law claims. As a result, even with the dismissal of the federal MMWA claim, the district court should have independently considered whether plaintiffs satisfied CAFA’s relaxed diversity requirements; if so, the court would have original jurisdiction over plaintiffs’ state-law claims.
  • The Ninth Circuit’s decision is an important win for product manufacturers and other defendants that frequently face MMWA claims, as the court clearly held that plaintiffs cannot rely on CAFA’s looser requirements to support jurisdiction over an MMWA claim.
  • The case is Floyd v. American Honda Motor Co., Inc., and you can read more here.

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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