On my way to work today at Reuters’ satellite office in Suffolk County, New York, I had a chance to witness the devastation Hurricane Sandy wreaked on Long Island, where I live and where 90 percent of us lost power in the storm. Wending around downed trees and power lines turned what should have been a half-hour drive on major roads into an hour-long trek through police-directed detours and past huge piles of branches already cleared by road crews. In some neighborhoods there’s not a power line still attached to utility poles — unless the pole itself has been toppled.
I was traveling east, so at least I eventually arrived at a functioning office with a phone and Internet. Had I tried to head west, to Manhattan, I would never have made it to work. The Queens Midtown Tunnel, which is the primary artery between Long Island and the rest of the world, is closed, and traffic was so thick in the approach to the Queensboro Bridge, the next-best alternative, that it was for all intents and purposes closed as well. As of Wednesday afternoon, Long Islanders have virtually no way out.
Believe it or not, my little tale of woe is actually an extended metaphor for the story I bring you today of an amicus brief that could block class action lawyers from state court as effectively as the hurricane has sealed off Long Island from the rest of the world. Remember the case known as Standard Fire v.Knowles, in which the U.S. Supreme Court granted certiorari in August? Both sides in the case say the question it presents is whether a class action plaintiff can defeat removal to federal court under the Class Action Fairness Act by stipulating on behalf of the entire class to seek less than $5 million, the statutory cut-off for a state-court class action. That’s an important question, since class action lawyers in certain jurisdictions (most notably in the 8th Circuit) have used such stipulations to stay in state court, where they’ve been able to force defendants into settlements of more than $5 million in litigation before plaintiff-friendly judges.
But the National Association of Manufacturers, in an amicusbrief written by Jones Day, asserts that both Standard Fire and the class are asking the wrong question. According to NAM, the real issue is whether defendants have the right, under the Class Action Fairness Act, to remove every class action from state court as long as diversity jurisdiction exists. Under the CAFA reading proposed by NAM and Jones Day, class action lawyers would have no route to state court unless they were suing corporations headquartered in the same state as the class.
To return to my Hurricane Sandy metaphor, class action lawyers have so far been able to wind around the fallen trees CAFA has thrown in their path to reach the destination of state court. Even if Standard Fire manages to divert class counsel with a fallen power line — by prevailing on the issue it presented to the Supreme Court — plaintiffs’ lawyers would probably figure out a route to state court. But the NAM theory would shut down the tunnel and seal off the bridge, blocking class actions from leaving federal court.