Friday, May 11, 2007

D.N.J. Bars Plaintiffs From Bringing Subsequent Smaller Class Actions in State Court After Granting Voluntary Dismissal

Per Shappell v. PPL Corp., Slip Copy, 2007 WL 893910 (D.N.J. March 21, 2007):

On March 30, 2006, Plaintiffs, as a class of individuals, filed suit in state court, alleging several state law claims stemming from an environmental spill of fly ash caused by Defendants, which permeated the Delaware River and surrounding areas. Defendants removed the action to this Court under the recently enacted Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), allowing removal of class actions with minimally diverse classes, when the aggregate amount in controversy exceeds five million dollars. Plaintiffs now seek to voluntarily dismiss all of the class action allegations of their complaint, and request remand of the remaining claims to state court.

As an initial matter, Defendants argue that Plaintiffs improperly employ Federal Rule of Civil Procedure 41(a)(2) for voluntary dismissal of specific claims, when what they in fact seek to do is amend their complaint. Defendants argue that Plaintiffs attempt to strategically alter their complaint, to sever CAFA jurisdiction and thereby avoid having to litigate their claims in federal court. Defendants seek denial of the motion on this basis.

. . .

The Court is concerned that Plaintiffs may attempt, as Defendants argue, to use this voluntary dismissal as a means of “gerrymandering” smaller class sizes in state court, which fall beyond the purview of CAFA. While Defendants are not prejudiced by the timing of the dismissal, they certainly would be prejudiced by having to litigate multiple class actions in state court without the option of removal. Additionally, the Congressional intent behind CAFA would be undermined by such strategic use of the rules. See. e.g., 28 U.S.C. § 1711(b)(2) (stating one of the purposes of CAFA is “[to] restore the intent of the framers of the United States Constitution by providing for federal court consideration of interstate cases of national importance under diversity jurisdiction”). Therefore, the Court grants Plaintiffs' motion to voluntarily dismiss, on the condition that none of the Plaintiffs named within the complaint may file or enter a class action in any court in the United States on the basis of any theory of recovery stemming from the facts stated in the complaint before this Court. See, e.g. In re Phillips Petroleum Sec. Litigation, 109 F.R.D. 602, 609 (D.Del.1986) (granting plaintiff's voluntary dismissal on the condition that he not file a duplicative class action in any court); Goldlawr, Inc. v. Shubert, 32 F.R.D. 467 (S.D.N.Y.1963) (dismissal without prejudice conditioned on plaintiff covenanting not to sue defendants). If any Plaintiff named in the complaint violates this condition, the dismissal granted herein shall be with prejudice as to that Plaintiff. 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2366, at p. 316 (2d ed.1994) (citing various cases and noting if a plaintiff “accepts dismissal but does not meet the conditions, the order of dismissal may be made with prejudice”).


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