United States: Ninth Circuit Rules That The Class Action Fairness Act Cannot Cure Jurisdictional Defects In Magnuson-Moss Warranty Act Claims

The Class Action Fairness Act of 2005 ("CAFA") greatly expanded federal subject matter jurisdiction over class action lawsuits. By providing for diversity jurisdiction where the parties are not completely diverse (i.e., where some defendants have the same citizenship as some plaintiffs), CAFA permits more class actions to be filed in (and removed to) federal court than would be allowed otherwise. Yet CAFA is not an all-powerful jurisdictional cure all, as the Ninth Circuit acknowledged this week in a case called Floyd v. Am. Honda Motor Co., 2020 WL 4331769 (9th Cir. July 28, 2020).

The plaintiffs in Floyd purchased or leased certain models of the Honda Civic sedan, the transmissions in which allegedly failed to operate properly. Three named plaintiffs filed a putative class action lawsuit in the Central District of California, raising a federal Magnuson-Moss Warranty Act ("MMWA") claim and a variety of state-law warranty and consumer protection claims. In pleading federal subject matter jurisdiction, the plaintiffs relied on CAFA diversity jurisdiction under 28 U.S.C. § 1332(d) and supplemental jurisdiction over their state-law claims under 28 U.S.C. § 1367.

The MMWA, however, contains its own jurisdictional requirements. Among other things, it provides that class action claims brought under the statute are not "cognizable" in federal court if "the number of named plaintiffs is less than one hundred." 15 U.S.C. § 2310(d)(3)(C). The defendants in Floyd argued that this statutory requirement precluded the plaintiffs from bringing their case in federal court (as there were only three named plaintiffs), while the plaintiffs asserted that the Court could still exercise jurisdiction because they satisfied all of the elements for diversity jurisdiction under CAFA.

Over the years, a split among federal district courts has emerged regarding whether class action plaintiffs can rely on CAFA jurisdiction despite failing to satisfy the MMWA's particular jurisdictional requirements. Compare Keegan v. Am. Honda Motor Co., 838 F. Supp. 2d 929, 954 (C.D. Cal. 2012) (ruling CAFA could supply federal jurisdiction) with Ebin v. Kangadis Food Inc., 2013 WL 3936193 (S.D.N.Y. July 26, 2013) (rejecting the argument that CAFA can stand in where MMWA jurisdiction is unavailable). In Floyd, the district court sided with the defendants, dismissing the MMWA claim for lack of jurisdiction and the state-law claims for lack of supplemental jurisdiction (due to the dismissal of the federal claim). 

On appeal, the Ninth Circuit acknowledged that "[c]ase law addressing the interplay between CAFA and MMWA numerosity requirements is scarce and the issue has not been addressed by the Supreme Court or by this circuit[.]" The court recognized that the Sixth Circuit had held in an unpublished opinion, Kuns v. Ford Motor Co., 543 F. App'x 572, that CAFA "can render a district court a court of competent jurisdiction and permit it to retain jurisdiction where the CAFA requisites are met but the MMWA requisites are not." Yet the Ninth Circuit disagreed with the Sixth Circuit's conclusion based on the "plain meaning" of the MMWA's text.¹ Pointing out that "repeals by implication are disfavored," the Ninth Circuit adopted a position that attempted to harmonize the two federal statutes: "the statutory language of the MMWA and of CAFA is not irreconcilable—the MMWA simply prevents claims under that Act from proceeding in federal court absent the satisfaction of certain jurisdictional prerequisites. ... We can easily give effect to that command and apply CAFA in all other cases." The Ninth Circuit, therefore, affirmed the district court's judgment on the MMWA claim, although it reversed the dismissal of the state-law claims (as the plaintiffs had alleged CAFA jurisdiction over those claims as well and the MMWA's jurisdictional requirements did not apply to those separate claims).  

As this recent decision highlights, litigants must continue to be vigilant in examining whether there are discrete jurisdictional requirements for bringing any particular statutory claim in federal court. Although CAFA jurisdiction is expansive, it does not necessarily override the text of other federal statutes. Such issues are particularly important in today's environment, as the plaintiffs' bar experiments with new theories of recovery in the fallout of the COVID-19 pandemic.  

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Footnotes

¹ In an interesting twist, the Ninth Circuit's opinion in Floyd was written by the Honorable Danny J. Boggs, a Circuit Judge for the Sixth Circuit sitting by designation.

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