Carla Visendi v. Bank of America, N.A. , 733 F.3d 863 ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CARLA VISENDI; 159 OTHER NAMED No. 13-16747
INDIVIDUALS,
Plaintiffs-Appellees, D.C. No.
2:11-cv-02413-
v. MCE-GGH
BANK OF AMERICA, N.A.;
COUNTRYWIDE FINANCIAL OPINION
CORPORATION; BANK OF NEW YORK
MELLON CORPORATION;
COUNTRYWIDE HOME LOANS, INC.;
BAC HOME LOANS SERVICING;
RECONTRUST COMPANY, NA;
AURORA LOAN SERVICES LLC;
BANK OF THE WEST, a California
State Banking Corporation;
FEDERAL HOME LOAN MORTGAGE
CORPORATION; FEDERAL NATIONAL
MORTGAGE ASSOCIATION;
GREENTREE SERVICING, LLC; HSBC
BANK USA, N.A.; UBS REAL
ESTATE SECURITIES, INC; US BANK,
NA; WELLS FARGO BANK, N.A.,
Defendants-Appellants.
2 VISENDI V. BANK OF AMERICA
Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, Jr., Chief District Judge, Presiding
Argued and Submitted
October 7, 2013—San Francisco, California
Filed October 23, 2013
Before: Dorothy W. Nelson, Milan D. Smith, Jr.,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY*
Class Action Fairness Act / Removal
The panel reversed the district court’s order remanding
the case to state court after it was removed to federal court
under the mass action provisions of the Class Action Fairness
Act.
The panel held that because more than 100 named
plaintiffs proposed a joint trial, and because the Class Action
Fairness Act’s (“CAFA”) other prerequisites were satisfied,
this action was properly removed from state to federal court.
The panel declined to consider plaintiffs’ argument
concerning CAFA’s “local controversy” exception because
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
VISENDI V. BANK OF AMERICA 3
plaintiffs failed to raise it before the district court, and the
exception is not jurisdictional. Under the permissive joinder
provisions of Federal Rule of Civil Procedure 20(a), the
panel held that the First Amended Complaint did not present
common questions of law and fact, and remanded with
instructions to dismiss without prejudice the claims of all
plaintiffs but the first named plaintiff.
COUNSEL
Douglas E. Winter (argued), Bryan Cave LLP, Washington,
D.C.; Robert E. Boone III, Nafiz Cekirge, and Brian J. Recor,
Bryan Cave LLP, Santa Monica, California, for Defendants-
Appellants.
Kristin Day (argued) and Jamie Edwards Quadra (argued),
Quadra Day, PC, Roseville, California, for Plaintiffs-
Appellees.
OPINION
M. SMITH, Circuit Judge:
In this appeal, we address whether Defendants-Appellants
(Defendants) properly removed a 137-plaintiff action from
state court to federal court under the Class Action Fairness
Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat. 4 (2005).
We also consider whether Plaintiffs-Appellees (Plaintiffs) are
misjoined under Federal Rule of Civil Procedure 20(a). We
answer both questions in the affirmative. Accordingly, we
reverse the order of the district court, and remand with
4 VISENDI V. BANK OF AMERICA
instructions to dismiss without prejudice the claims of all
Plaintiffs but the first named Plaintiff, Carla Visendi.
FACTUAL AND PROCEDURAL BACKGROUND
On August 17, 2011, 137 named plaintiffs sued 25
financial institutions in the Sacramento County Superior
Court. Plaintiffs alleged, among other things, that the
institutions’ deceptive mortgage lending and securitization
practices decreased the value of their homes, impaired their
credit scores, and compromised their privacy. They asserted
eight state law causes of action: rescission, fraudulent
concealment, intentional and negligent misrepresentation,
invasion of privacy, and violation of California Civil Code
§§ 2923.5, 1798.82, and 2924.
On September 12, 2011, Bank of America Corporation
and Bank of America, N.A. (together, Bank of America)
removed this case to the United States District Court for the
Eastern District of California. Relying on CAFA, Bank of
America argued that this action was a removable “mass
action” because it was a “civil action . . . in which monetary
relief claims of 100 or more persons are proposed to be tried
jointly on the ground that the plaintiffs’ claims involve
common questions of law or fact . . . .” 28 U.S.C.
§ 1332(d)(11)(B)(i).
After removal, Plaintiffs obtained leave from the district
court to file a First Amended Complaint.1 The First Amended
1
Plaintiffs filed a motion to remand on September 29, 2011, shortly after
removal. Rather than disputing the propriety of removal under CAFA,
Plaintiffs urged the district court to decline to exercise jurisdiction “based
VISENDI V. BANK OF AMERICA 5
Complaint added and dropped multiple parties, resulting in a
total of 160 named plaintiffs asserting claims against 15
defendants. Further, Plaintiffs abandoned their original
causes of action and asserted three new state-law claims:
invalid assignment, mistake, and negligence. In the First
Amended Complaint, Plaintiffs alleged that Defendants
engaged in deceptive and unscrupulous mortgage lending and
securitization practices, and that Bank of America
mismanaged their applications for loan modifications. As
was true of the allegations in the original complaint, the
named plaintiffs resided in or owned many unrelated
properties throughout the country, and obtained loans from
many different financial institutions.
Defendants moved to dismiss the First Amended
Complaint, asserting misjoinder and failure to state a claim.
Plaintiffs opposed the motion, arguing that Defendants
waived their right to contest joinder when they removed the
case to federal court under CAFA. Plaintiffs argued in the
alternative that the district court should remand this case to
state court because “jurisdiction is doubtful.”
On October 17, 2012, the district court directed
Defendants to “explain to the Court what common question
of law or fact existed when the case was removed from state
court pursuant to CAFA, and why, according to Defendants,
there is no longer a common question of law or fact such that
the parties are now improperly joined under Rule 20.”
By Memorandum and Order dated December 20, 2012,
the district court remanded this case to state court, and denied
upon abstention principles.” The district court denied this motion, and
Plaintiffs do not challenge this ruling on appeal.
6 VISENDI V. BANK OF AMERICA
Defendants’ motion to dismiss as moot. According to the
district court, Defendants conceded that this action was not
removable when they argued that it did not present common
questions of law or fact under Rule 20(a). Concluding that
the case did not present such common questions, the district
court determined that it lacked jurisdiction under CAFA.
Defendants timely petitioned for permission to appeal
under 28 U.S.C. § 1453(c). We granted Defendants’ petition.
“Consistent with Congress’s mandate, this decision is being
rendered ‘not later than 60 days’ from that grant.”
Kuxhausen v. BMW Fin. Servs. NA, 707 F.3d 1136, 1139 (9th
Cir. 2013) (quoting 28 U.S.C. § 1453(c)).
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction under 28 U.S.C. § 1453(c). We
review a district court’s order remanding a case to state court
after removal de novo. United Steel, Paper & Forestry,
Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l
Union v. Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir. 2010)
(citing Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020
(9th Cir. 2007)). “We review the construction, interpretation,
or applicability of CAFA de novo.” Nevada v. Bank of Am.
Corp., 672 F.3d 661, 667 (9th Cir. 2012) (quoting
Washington v. Chimei Innolux Corp., 659 F.3d 842, 846–47
(9th Cir. 2011) (internal quotation marks omitted)).
DISCUSSION
I. Applicability of CAFA
“Congress passed [CAFA] ‘primarily to curb perceived
abuses of the class action device which, in the view of
VISENDI V. BANK OF AMERICA 7
CAFA’s proponents, had often been used to litigate
multi-state or even national class actions in state courts.’”
United Steel, 602 F.3d at 1090 (quoting Tanoh v. Dow Chem.
Co., 561 F.3d 945, 952 (9th Cir. 2009)). In furtherance of
this objective, “CAFA wrought several changes to the
Judicial Code, including amending the federal diversity
statute, 28 U.S.C. § 1332(d)(2), and liberalizing the
requirements governing removal from state court, 28 U.S.C.
§ 1453.” Westwood Apex v. Contreras, 644 F.3d 799, 801
(9th Cir. 2011). “CAFA also covers more than traditional
class actions by providing for removal of ‘mass actions.’”
United Steel, 602 F.3d at 1091 (citing Tanoh, 561 F.3d at
952). This appeal concerns such a mass action.
Subject to certain other requirements, CAFA confers
jurisdiction on federal courts over civil actions “in which
monetary relief claims of 100 or more persons are proposed
to be tried jointly on the ground that the plaintiffs’ claims
involve common questions of law or fact . . . .” 28 U.S.C.
§ 1332(d)(11)(B)(i) (emphasis added). Because more than
100 named plaintiffs proposed a joint trial here, and because
CAFA’s other prerequisites were satisfied, this action was
properly removed.
A. Proposal for a Joint Trial
Plaintiffs acknowledge that their initial complaint
proposed a joint trial in state court. Nevertheless, the district
court concluded that because Plaintiffs’ claims did not
present common questions of law or fact, “Defendants’
removal under the CAFA mass action provision was
improper.” Because Defendants filed a post-removal motion
to dismiss for misjoinder, the district court accused them of
“gamesmanship and bad faith.”
8 VISENDI V. BANK OF AMERICA
The district court misinterpreted CAFA. In construing the
provisions of a statute, “our inquiry begins with the statutory
text, and ends there as well if the text is unambiguous.” In re
HP Inkjet Printer Litig., 716 F.3d 1173, 1180 (9th Cir. 2013)
(quoting Satterfield v. Simon & Schuster, Inc., 569 F.3d 946,
951 (9th Cir. 2009)). CAFA’s text is unambiguous in this
respect. “[B]y its plain language, CAFA’s ‘mass action’
provisions apply only to civil actions in which ‘monetary
relief claims of 100 or more persons are proposed to be tried
jointly.’” Tanoh, 561 F.3d at 956 (quoting 28 U.S.C.
§ 1332(d)(11)(B)(i)) (emphasis added). Because Plaintiffs
proposed a joint trial in state court, Defendants properly
removed this case.
Whether Plaintiffs’ claims ultimately proceed to a joint
trial is irrelevant. It is well settled that “post-filing
developments do not defeat jurisdiction if jurisdiction was
properly invoked as of the time of filing.” United Steel,
602 F.3d at 1091–92. When, for example, “a defendant
properly remove[s] a putative class action at the get-go, a
district court’s subsequent denial of Rule 23 class
certification does not divest the court of jurisdiction, and it
should not remand the case to state court.” Id. at 1092.
Similarly here, the district court’s post-removal conclusion
that Plaintiffs’ claims were improperly joined does not affect
the court’s jurisdiction, because—at the time of
removal—Plaintiffs proposed a joint trial. The district court’s
conclusion to the contrary was erroneous.2
2
Plaintiffs’ argument that “the purpose of CAFA . . . is not well served
by allowing Defendants to immediately remove the case and then move
to dismiss for misjoinder,” Appellees’ Br. at 16, is contradicted by the
plain language of CAFA. See 28 U.S.C. § 1332(d)(11)(B)(i).
VISENDI V. BANK OF AMERICA 9
Our recent decision in Romo v. Teva Pharmaceuticals
USA, Inc., —F.3d—, 2013 WL 5314334 (9th Cir. Sept. 24,
2013), does not suggest otherwise. In Romo, we held that
plaintiffs did not propose a joint trial when they moved to
coordinate several state-court cases, each with fewer than 100
plaintiffs, for pretrial purposes. Id. at *3. In so holding, we
reaffirmed that “plaintiffs are the ‘masters of their complaint,’
and do not propose a joint trial simply by structuring their
complaints so as to avoid the one hundred-plaintiff
threshold.” Id. (citing Tanoh, 561 F.3d at 953, 956).
Here, unlike in Romo, Plaintiffs filed a single state-court
complaint that named well over 100 plaintiffs. On its face,
the complaint provides that “Plaintiffs, and each of them,
demand a jury trial . . . .” Plaintiffs further alleged that they
were victims of a “common plan and scheme,” and they
specifically sought damages “in excess of $75,000 each, the
specific amount to be determined at trial.” Accordingly,
Plaintiffs’ initial complaint presented “monetary relief claims
of 100 or more persons . . . proposed to be tried jointly on the
ground that the plaintiffs’ claims involve common questions
of law or fact . . . .” 28 U.S.C. § 1332(d)(11)(B)(i).
B. Numerosity
This action also satisfies CAFA’s numerosity
requirement. To be a removable “mass action,” a state-court
action must involve “claims of 100 or more persons . . . .”
28 U.S.C. § 1332(d)(11)(B)(i). Because the initial complaint
named 137 plaintiffs, this action was properly removed.
Although they did not challenge numerosity in the district
court, Plaintiffs now contend that their initial complaint did
not involve claims of 100 or more persons. They observe that
10 VISENDI V. BANK OF AMERICA
the initial complaint concerned only ninety-five properties,
and that many of the named plaintiffs were included only in
their capacities as “spouses or other related titleholders to the
propert[ies].” Appellees’ Br. at 9. Citing the principle that
federal courts must “rest jurisdiction only upon the
citizenship of real parties to the controversy,” Navarro Sav.
Ass’n v. Lee, 446 U.S. 458, 461 (1980), Plaintiffs argue that
there were only ninety-five “real” state-court plaintiffs
because the initial complaint concerned only ninety-five
properties.
We address Plaintiffs’ numerosity argument because it
relates to subject matter jurisdiction. See Sentry Select Ins.
Co. v. Royal Ins. Co. of Am., 481 F.3d 1208, 1217 (9th Cir.
2007). But the argument is unavailing. First, the language of
CAFA concerns “persons,” not properties. 28 U.S.C.
§ 1332(d)(11)(B)(i). Because the initial complaint named
137 “persons” as plaintiffs, it satisfied CAFA’s numerosity
requirement. Second, Plaintiffs’ assertion that “only one
claim exists per property,” Appellees’ Br. at 10 (emphasis
omitted), is inaccurate. At least four of Plaintiffs’ original
claims—fraudulent concealment, intentional and negligent
misrepresentation, and violation of privacy—relate expressly
to each named plaintiff. Accordingly, all named plaintiffs
were “real parties to the controversy,” Navarro, 446 U.S. at
461, and the district court had jurisdiction under CAFA.
C. Local Controversy Exception
On appeal, Plaintiffs argue for the first time that CAFA’s
“local controversy” exception, 28 U.S.C. § 1332(d)(4)(A),
precludes federal jurisdiction. Under this exception, “a
‘district court shall decline to exercise jurisdiction’ over a
class action [or mass action] in which the plaintiff class and
VISENDI V. BANK OF AMERICA 11
at least one defendant meet certain characteristics that
essentially make the case a local controversy.” Serrano,
478 F.3d at 1022 (quoting 28 U.S.C. § 1332(d)(4)) (emphasis
omitted). “We apply a ‘general rule’ against entertaining
arguments on appeal that were not presented or developed
before the district court.” In re Mercury Interactive Corp.
Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (quoting
Peterson v. Highland Music, Inc., 140 F.3d 1313, 1321 (9th
Cir. 1998)). On the other hand, “a ‘disappointed plaintiff’
may attack subject matter jurisdiction for the first time on
appeal . . . .” Sentry Select Ins. Co., 481 F.3d at 1217
(quoting Clinton v. City of New York, 524 U.S. 417, 428
(1998)). Thus, whether Plaintiffs may now invoke the “local
controversy” exception depends on whether that exception is
jurisdictional.
The “local controversy” exception is not jurisdictional.
See Kuxhausen, 707 F.3d at 1139 n.1 (declining to consider
the CAFA exceptions sua sponte). The exception provides
that district courts “shall decline to exercise jurisdiction” in
certain circumstances. 28 U.S.C. § 1332(d)(4). But
“implicit” in the statutory text “is that the court has
jurisdiction, but the court . . . must decline to exercise such
jurisdiction.” Serrano, 478 F.3d at 1022.3 Accordingly, we
decline to consider Plaintiffs’ “local controversy” argument
because Plaintiffs failed to raise it to the district court.
3
Other courts of appeals have also determined that the “local
controversy” exception and the related “home state” exception are not
jurisdictional. See Gold v. N.Y. Life Ins. Co., —F.3d—, 2013 WL
5226183, at *3 (2d Cir. Sept. 18, 2013); Morrison v. YTB Int’l, Inc.,
649 F.3d 533, 536 (7th Cir. 2011); Graphic Commc’ns Local 1B Health
& Welfare Fund A v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir.
2011).
12 VISENDI V. BANK OF AMERICA
II. Joinder
In its Memorandum and Order remanding this case to
state court, the district court denied Defendants’ motion to
dismiss for misjoinder as moot. Nevertheless, the court
determined that remand to state court was necessary because
the case did not involve common questions of law or fact.
We agree that the First Amended Complaint does not present
such common questions, and we therefore remand to the
district court with instructions to dismiss without prejudice
the claims of all Plaintiffs but the first named Plaintiff, Carla
Visendi.
Under Federal Rule of Civil Procedure 20(a), permissive
joinder of plaintiffs “is proper if (1) the plaintiffs assert[] a
right to relief arising out of the same transaction and
occurrence and (2) some question of law or fact common to
all the plaintiffs will arise in the action.” Coleman v. Quaker
Oats Co., 232 F.3d 1271, 1296 (9th Cir. 2000) (citing Fed. R.
Civ. P. 20(a)) (emphasis omitted). Further, “[e]ven once
these requirements are met, a district court must examine
whether permissive joinder would ‘comport with the
principles of fundamental fairness’ or would result in
prejudice to either side.” Id. (quoting Desert Empire Bank v.
Ins. Co. of N. Am., 623 F.2d 1371, 1375 (9th Cir. 1980)).
The First Amended Complaint satisfies neither of Rule
20(a)’s requirements. To meet the first requirement,
Plaintiffs’ claims must arise from “the same transaction,
occurrence, or series of transactions or occurrences . . . .”
Fed. R. Civ. P. 20(a)(1)(A). By its terms, this provision
requires factual similarity in the allegations supporting
Plaintiffs’ claims. Such factual similarity is absent here.
This case involves over 100 distinct loan transactions with
VISENDI V. BANK OF AMERICA 13
many different lenders. These loans were secured by separate
properties scattered across the country, and some of the
properties, but not all, were sold in foreclosure. While
Plaintiffs allege in conclusory fashion that Defendants’
misconduct was “regular and systematic,” their interactions
with Defendants were not uniform. Factual disparities of the
magnitude alleged are too great to support permissive joinder.
See Coughlin v. Rogers, 130 F.3d 1348, 1351 (9th Cir. 1997)
(collecting cases).
Nor do Plaintiffs’ claims present “any question of law or
fact common to all plaintiffs . . . .” Fed R. Civ. P.
20(a)(1)(B). Plaintiffs own separate and unrelated properties
across the country, they entered into separate loan
transactions, and their dealings with Defendants were
necessarily varied. Nothing unites all of these Plaintiffs but
the superficial similarity of their allegations and their
common choice of counsel. Further, the three claims that
Plaintiffs now assert—invalid assignment, mistake, and
negligence—each require particularized factual analysis.
Plaintiffs merely allege that Defendants violated the same
laws in comparable ways. Rule 20(a) requires more. See
Coughlin, 130 F.3d at 1351.
Standing alone, “[m]isjoinder of parties is not a ground
for dismissing an action.” Fed. R. Civ. P. 21. Rather, “the
court may at any time, on just terms, add or drop a party.” Id.
Thus, if plaintiffs fail to meet the standard for permissive
joinder, “the district court may sever the misjoined plaintiffs,
as long as no substantial right will be prejudiced by the
severance.” Coughlin, 130 F.3d at 1351 (citations omitted).
In appropriate cases, courts can remedy misjoinder by
dismissing the claims of all but the first named plaintiff
14 VISENDI V. BANK OF AMERICA
without prejudice to the filing of individual actions. Id. at
150–51.
Here, severance will not prejudice Plaintiffs, as they
remain free to pursue their claims individually.4 Any
potential risk of prejudice is further minimized because “[t]he
limitations periods on any claims asserted in a mass action
that is removed to Federal court pursuant to [CAFA] shall be
deemed tolled during the period that the action is pending in
Federal court.” 28 U.S.C. § 1332(d)(11)(D). For these
reasons, severing the misjoined plaintiffs is warranted.
Ordinarily, when “[t]he district court did not recognize
that it had subject matter jurisdiction” over a case, we remand
to the district court to allow it to address non-jurisdictional
issues “in the first instance.” Maronyan v. Toyota Motor
Sales, U.S.A., Inc., 658 F.3d 1038, 1043 n.4 (9th Cir. 2011)
(citing Cutter v. Wilkinson, 544 U.S. 709, 718 n.7 (2005)).
Here, however, the district court already determined that the
First Amended Complaint did not present common questions
of law or fact. The district court’s analysis was correct in this
respect, and requiring the court to reconsider Defendants’
misjoinder arguments would serve no purpose. Accordingly,
we decline to do so.
4
We express no opinion as to whether the First Amended Complaint
“contain[s] sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007));
see also Fed R. Civ. P. 12(b)(6).
VISENDI V. BANK OF AMERICA 15
CONCLUSION
This massive, multi-plaintiff lawsuit is a prototypical
mass action subject to removal under CAFA. That the
plaintiffs are misjoined does not undermine federal
jurisdiction. We therefore reverse the order of the district
court, and remand with instructions to dismiss without
prejudice the claims of all Plaintiffs but the first named
Plaintiff, Carla Visendi.
REVERSED and REMANDED, with instructions.