The opinion of the court was delivered by: SHADUR
This is the fourth tagalong action in this MDL litigation that has required this Court to deal with a motion to remand a previously-removed state court lawsuit.
Archer Daniels Midland Co. ("Archer") and its codefendants
originally removed the action from the Superior Court of the State of California for the County of San Francisco (its Case No. 974597) to the United States District Court for the Northern District of California (its Case No. C96-0191 BLJ)). Archer then urged the latter court (before the MDL Panel acted to transfer the case here) to defer ruling on plaintiff's motion to remand the case until the completion of its presumed transfer by the MDL Panel, so that this District Court could decide the matter.
Just as was true in Equine, this putative class action was filed by Feedstuffs Processing Co. ("Feedstuffs") as an indirect purchaser of lysine (Complaint P6), designating a proposed class encompassing other indirect purchasers in California (id. P32). That meant that no federal antitrust claim could be involved ( Illinois Brick Co. v. Illinois, 431 U.S. 720, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977)), and Feedstuffs has expressly negated the assertion of any federal-question claims (Complaint P1). Instead, as did the Equine plaintiff, Feedstuffs has advanced solely state law claims under the California Business and Professions Code (its Section 16720(a), the Cartwright Act, and its Section 17200, the Unfair Competition Act).
Archer's Notice of Removal ("Notice") therefore relied, as it had to, on diversity of citizenship as the predicate for federal jurisdiction. Notice P15 through 14 properly identified the states of citizenship of all of the named litigants and demonstrated the existence of the required total diversity. But as to the other essential branch of diversity jurisdiction--the required amount in controversy--Notice PP15 through 17 said only this:
15. The amount of [sic] controversy in this action, exclusive of interest and costs, is believed to exceed the sum of Fifty Thousand Dollars ($ 50,000). Plaintiff alleges that it is part of a class consisting of thousands of members that have indirectly purchased lysine from July 1992 until such time as a class is certified in this action. (Complaint PP32-33). Plaintiff further alleges that defendants' annual lysine sales are substantial. Specifically, plaintiff alleges that: 1) "annual worldwide sales of lysine total approximately $ 650 million a year;" (Complaint P12), and 2) "during the relevant time period, defendants have sold many millions of dollars of lysine in the United States each year, a significant portion of which sales occur in the State of California." (Complaint P40). Plaintiff seeks to "recover treble damages for the injuries which Plaintiff and the other members of the Class have sustained as a result of the wrongful actions and conduct of defendants . . . ." (Complaint PP1, 3).
16. Further, plaintiff seeks--and if it prevails, has a statutory right to recover--attorneys fees, which in this complex, multiparty antitrust case surely would be in excess of $ 50,000. This potential liability must be added to the potential value of plaintiff's claims for treble damages in determining the amount in controversy.
17. Under these circumstances, it is believed that plaintiff and at least certain members of the putative Class have claims that exceed $ 50,000. Accordingly, the amount in controversy requirement as to these parties is met. This Court may exercise jurisdiction over those class members with claims of less than $ 50,000 pursuant to the supplemental jurisdiction statute, 28 U.S.C. § 1367.
Unlike Equine Complaint P26 (quoted in Opinion at 2), Feedstuffs' Complaint contains no specific provision limiting either its own damages or those of other class members to less than $ 50,000. But Feedstuffs has responded to Archer's vague "believed to exceed" assertion (Notice P15) with a statement that expresses the contrary position as to Feedstuffs' own damages. And of course it is the burden of the party that seeks to invoke federal jurisdiction to establish the existence of such subject matter jurisdiction--as Archer itself acknowledges in its Defendants' Opposition to Motion To Remand ("D. Mem.") at 7-8:
Archer does not contend that it has established (by a preponderance of evidence or otherwise) that over $ 50,000 is in fact in controversy as between Feedstuffs and all or any of the defendants, and it is right not to make that contention. Clearly it has not satisfied the burden that is placed on every removing defendant in that respect. Instead, just as Archer did in Equine, it attempts to emphasize the prospect that as a matter of common sense some class member or members other than Feedstuffs may possess the requisite amount in controversy (D. Mem. 7-13). In that respect this action parallels Equine entirely, and accordingly (primarily to make this opinion self-contained) this Court will simply pick up upon and repeat what it has just said in its Equine Opinion.
Archer's position is analytically unsound as a predicate for federal jurisdiction. And the reasons for such unsoundness may be set forth without the need for overly extensive discussion.
To begin, it is true that two Courts of Appeals decisions-- In re Abbott Labs., 51 F.3d 524, 527-29 (5th Cir. 1995) and Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir. 1996)--have recently concluded that the supplemental jurisdiction provisions of 28 U.S.C. § 1367(a)
have sub silentio overruled the rule, as reconfirmed by the Supreme Court in Zahn v. International Paper Co., 414 U.S. 291, 38 L. Ed. 2d 511, 94 S. Ct. 505 (1973), that every member of a class must possess the required amount in controversy to confer federal jurisdiction over that class member.
But what those cases do not say (and what no other case says) is that supplemental jurisdiction can--like the Indian rope trick--attach itself to nothing. Instead Stromberg, 77 F.3d at 932 (emphasis added), like Abbott Labs., 51 F.3d at 527, has made it plain that the underlying claim itself must be solidly grounded in federal court before the possibility of any piggyback claims under Section 1367 (a) can be considered:
But if it is possible for the principal action to be in federal court without any jurisdictional qualms then § 1367(b)
does not block adding an additional plaintiff with a closely related ...