Monday, February 08, 2016

California claims for injunctive relief can't be remanded after CAFA removal

Mezzadri v. Medical Depot, Inc., 113 F. Supp. 3d 1061 (S.D. Cal. 2015)
The rule against claim-splitting clashes with the injustice of the ability of a defendant to destroy a form of relief by removing a complaint from state to federal court, and the rule against claim-splitting wins.  Mezzadri filed a class action claim against Medical Depot for allegedly falsely marketing full-body patient slings, asserting the usual California claims in state court.  Mezzadri sought injunctive as well as monetary relief; Medical Depot removed under CAFA.  Mezzadri sought remand on the injunctive relief claims, because federal courts often (not always) hold that they lack Article III jurisdiction over injunctive relief in consumer protection claims, where the named plaintiff’s knowledge of the untruth makes future injury to the named plaintiff unlikely.
California allows injunctive relief if there is a likelihood that the harm will reoccur, even if the harm will not reoccur to the particular named plaintiff. In re Tobacco II Cases, 207 P.3d 20 (Cal. 2009) (“An injunction would not serve the purpose of prevention of future harm if only those who had already been injured by the practice were entitled to that relief.”).  In Lee v. American Nat’l Ins. Co., 260 F.3d 997 (9th Cir. 2001), the 9th Circuit held that, in a diversity action removed from state court, the entire case does not need to be remanded if the plaintiff lacks Article III standing as to one of several defendants. However, the court stated in dicta that a case that is “properly removed in its entirety may  nonetheless be effectively split up when it is subsequently determined that some claims cannot be adjudicated in federal court” and that a partial remand might be appropriate where dismissal would require the plaintiff to forfeit an otherwise viable state-law claim.  Machlan v. Procter & Gamble Co., 77 F. Supp. 3d 954 (N.D. Cal. 2015), made just such a partial remand for injunctive relief on similar California consumer protection claims.  Machlan relied on Carnegie–Mellon University v. Cohill, 484 U.S. 343 (1988), which allowed a federal court to remand to state court a removed case upon a proper determination that retaining jurisdiction over the case would be inappropriate.  Otherwise, the case could get stuck in a perpetual loop of costly re-filing in state court, then removal, then dismissal by the federal court, preventing adjudication on the merits.  Machlan concluded that “[a]llowing a defendant to undermine California’s consumer protection statutes and defeat injunctive relief simply by removing a case from state court is an unnecessary affront to federal and state comity.”
The court sided with Medical Depot. The case was properly removed under CAFA, and the court had subject matter jurisdiction over the California claims.  “CAFA’s policy in favor of litigating interstate class actions in federal court trumps the general presumption against removal jurisdiction,” even if the federal court lacks power to decide on injunctive relief. Moreover, under California’s primary rights theory, a cause of action is comprised of a primary right of the plaintiff, a corresponding primary duty of the defendant, and a wrongful act by the defendant constituting a breach of that duty.  A single violation of a primary right gives rise to a single cause of action; injunctive relief is not a separate cause of action.  (Fair enough, but have California courts made this holding when, because of federal law, injunctive relief is not available in federal court but would be in state court?)  Primary right doctrine prevents claim-splitting except in extraordinary cases.  (Which I’d say this is.)
Medical Depot argued that a partial remand would require both the federal and state courts to simultaneously adjudicate the same causes of action based on the same underlying acts.  Mezzadri responded that the remanded case would be stayed pending the resolution of the federal case, and res judicata would apply to any issues adjudicated on the merits.
The court concluded that splitting the cause of action from the remedy was different than splitting causes of action from a case.   “This effectively distinguishes much of the authority cited, including Lee, which discussed the possibility of splitting claims in the context of all claims against one defendant being sent to state court while all claims against the other defendant remained in federal court.”  Without subject matter jurisdiction over injunctive relief, the court couldn’t remand and “direct the state court’s actions regarding that relief.”  While Machlan was on all fours, it was “unworkable once a federal court has determined that subject matter jurisdiction does not exist.”  Instead, the request for injunctive relief must simply be dismissed.  Ses Lee, 260 F.3d at 1001–02 (“[A] plaintiff whose cause of action is perfectly viable in state court under state law may nonetheless be foreclosed from litigating the same cause of action in federal court, if he cannot demonstrate the requisite injury.”).  Mezzadri might well be able to refile in state court, but that claim-splitting result wasn’t the federal court’s problem.

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