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IN RE HIGH FRUCTOSE CORN SYRUP ANTITRUST LITIG.

August 22, 1996

IN RE HIGH FRUCTOSE CORN SYRUP ANTITRUST LITIGATION. THIS DOCUMENT RELATES TO ALL ACTIONS.


The opinion of the court was delivered by: Mihm, Chief Judge.

ORDER

Over the course of the last nine months, the Judicial Panel on Multidistrict Litigation transferred a number of cases to this Court pursuant to 28 U.S.C. § 1407. In each of these cases the Plaintiffs allege that they have been the victims of a price fixing scheme perpetrated by Defendants Archer Daniels Midland Co., Inc. ("ADM"), CPC International, Inc., A.E. Staley Manufacturing, Co., Cargill, Inc., and American Maize Company. Many of these cases were originally filed in state courts alleging only violations of state law. The Defendants removed these state court cases to federal court based on diversity jurisdiction, 28 U.S.C. § 1332. Pursuant to Fed.R.Civ.P. 23, on May 29, 1996, this Court certified a class of Plaintiffs who were direct purchasers of high fructose corn syrup. The class Plaintiffs have alleged that the Defendants' actions violated the Sherman Act, 15 U.S.C. § 1.

There are twelve cases in which the Plaintiffs have filed Motions to Remand. During oral argument on the Motions to Remand on August 1, 1996, counsel for the parties informed this Court that in ten of the cases the parties had stipulated that the Plaintiffs neither directly purchased HFCS nor satisfied the amount in controversy requirements set forth in § 1332.

Therefore, this Court GRANTS the following Motions to Remand: Abbott v. ADM, et al., Case No. 96-1337; Batson v. ADM, et al., Case No. 96-1333; Guzman v. ADM, et al., Case No. 96-1336; MCFH v. ADM, et al., Case No. 96-1282; Noldin v. ADM, et al., Case No. 96-1335; NuLaid Foods v. ADM, et al., Case No. 96-1334; Patane v. ADM, et al., Case No. 96-1287; Rainbow Acres v. ADM, et al., Case No. 96-1286; Ricci v. ADM, et al., Case No. 96-1283; and St. Stan's Brewing v. ADM, et al., Case No. 96-1206. Each of these cases is hereby REMANDED to state court. Additionally, counsel for Kagome Foods informed this Court that its Motion to Remand was withdrawn.

This leaves only one case with a Motion to Remand pending, Freda's v. ADM, et al., Case No. 96-1204. Freda's filed suit in West Virginia State Court alleging violations of the West Virginia Antitrust Act ("the Act"), W.Va.Code § 47-18-1, et seq. Defendant Cargill, Inc. ("Cargill") removed the case to the United States District Court for the Southern District of West Virginia alleging diversity jurisdiction under 28 U.S.C. § 1332. This Court has thoroughly reviewed the pleadings and heard oral argument from counsel. For the reasons set forth herein, this Court GRANTS the Motion to Remand.

Discussion

Under 28 U.S.C. § 1441, "any civil action brought in a state court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending." As noted, Cargill removed this action pursuant to § 1332. Section 1332 requires diverse citizenship of the parties and an amount in controversy in excess of $50,000, exclusive of interest and costs. 28 U.S.C. § 1332. As a federal court sitting in diversity jurisdiction, this Court will apply the substantive law of the forum state, West Virginia. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); see also S.A. Healy Co. v. Milwaukee Metropolitan Sewerage Dist., 60 F.3d 305, 309-10 (7th Cir. 1995).

Freda's concedes that its matter satisfies the diversity of citizenship provision of § 1332. However, it contends that Cargill has failed to demonstrate that it meets the amount in controversy requirement of § 1332. The removing party bears the burden of establishing the district court's jurisdiction by a preponderance of evidence. See Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921)). Defendants may bear this burden by presenting "proof to a reasonable probability that jurisdiction exists." Id. (citations omitted).

Two Supreme Court cases stand for the proposition that members of a class action must each have the jurisdictional amount, $50,000, in dispute. See Snyder v. Harris, 394 U.S. 332, 340, 89 S.Ct. 1053, 1059, 22 L.Ed.2d 319 (1969); Zahn v. International Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 512, 38 L.Ed.2d 511 (1973). Cargill argues that the 1990 amendments to Title 28 implicitly overrule the holdings in Snyder and Zahn. Specifically, it relies upon the new supplemental jurisdiction statute which provides:

  [I]n any civil action in which the district courts
  have original jurisdiction, the district courts shall
  have supplemental jurisdiction over all other claims
  that are so related to claims in the action within
  such original jurisdiction that they form part of the
  same case or controversy under Article III of the
  United States Constitution.

28 U.S.C. § 1367(a). Cargill asserts that only one class member must have the requisite amount in controversy for this Court to have supplemental jurisdiction over the remainder of the claims. In support of this proposition, Cargill cites Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir. 1996).

In Stromberg, two sub-contractors filed suit against a general HVAC contractor because it did not pay the subs. 77 F.3d at 930. The subs sued the general under the Maryland Construction Trust Fund Statute. Id. The Seventh Circuit first noted that subcontractor # 1 had a claim in excess of $50,000 but that sub-contractor # 2 did not. Id. Writing for the court, Judge Easterbrook found that § 1367 allowed the district court to exercise jurisdiction over the pendant claim of sub-contractor # 2. Id. at 931. In the course of the opinion, the court noted that, unlike Zahn, Stromberg was not a class action but that the Supreme Court's opinions in Snyder and Zahn did not distinguish between class actions and other forms of suit. Stromberg, 77 F.3d at 931. Thus, the Seventh Circuit concluded that § 1367 had altered the previous rule established in Zahn that each class member must have the requisite amount in controversy at issue. Id. at 931-32.

The Stromberg decision relied heavily upon the Fifth Circuit decision of In re Abbott Laboratories, 51 F.3d 524, 527-29 (5th Cir. 1995). Stromberg, 77 F.3d at 931 ("we are reluctant to create a conflict among the circuits on a jurisdictional issue"). Interestingly, at issue in Abbott were the plaintiffs' allegation that the defendants had conspired to fix the price of infant formula. Abbott, 51 F.3d at 525. The Fifth Circuit directly addressed the issue of whether § 1367 abrogated Snyder and Zahn as to Rule 23 class actions and held that the district courts could exercise supplemental jurisdiction over the class members. Id. at 525, 529. Although the court did not find that the named plaintiffs must satisfy the statutory amount in controversy, it is noteworthy that the class representatives in Abbott had over $50,000 at issue. Id. at 529.

The Honorable Milton Shadur has addressed this very issue in the In re Lysine Antitrust cases. Judge Shadur held that the named plaintiffs must have the requisite dollar amount at issue before § 1367 would affect the court's jurisdiction over the "pendant claims" of the other class members. In so doing, he relied on Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921) and In ...


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