Labor Law Class Action Dismissed because Class Action Predominance Test of Rule 23(b) could not be Satisfied and, Absent Potential for Class Action Certification, Federal Court Lacked Subject Matter Jurisdiction because Class Action Fairness Act (CAFA) was Inapplicable Mississippi Federal Court Holds
Plaintiffs filed a class action lawsuit against Wal-Mart Stores alleging violations of Mississippi’s labor laws; specifically, the class action complaint alleged that Wal-Mart required plaintiffs to work hours “off the clock,” and to work through meal and rest periods for which they were not paid in violation of state law. Robinson v. Wal-Mart Stores, Inc., 253 F.R.D. 396, 397-98 (S.D. Miss. 2008). The class action sought to represent “all current and former hourly-paid employees of Wal-Mart Stores, Inc., in the State of Mississippi that were employed from May 28, 1999 until the present,” and prayed for compensatory and punitive damages. Id., at 398. Defense attorneys moved to dismiss the class action for lack of subject matter jurisdiction, and the district court granted the motion with leave to amend because plaintiffs had failed to allege citizenship as required to establish diversity jurisdiction, id. The amended class action complaint is “virtually identical” to the original class action complaint, and defense attorneys again moved to dismiss for lack of subject matter jurisdiction because the class action failed to allege the $5 million amount in controversy required for federal court jurisdiction under the Class Action Fairness Act (CAFA). Id. Also, the defense asked the federal court to dismiss the class action allegations in the complaint. Id. The district court granted the defense motion in part, and denied it in part.
Consistent with Fifth Circuit authority, the district court began its analysis with the jurisdictional attack under Rule 12(b)(1): “When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.” Robinson, at 398 n.1 (quoting Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001)). After noting that the burden of establishing federal court jurisdiction rested on “the party seeking to litigate in federal court,” id., at 398, the district court turned to Wal-Mart’s argument that CAFA’s $5 million amount in controversy requirement had not been met, id., at 399. Plaintiffs’ argued that the putative class consisted of 80,000 people and, accordingly, “each class member’s claim would only need to equal $62.50 to satisfy the $5,000,000 jurisdictional requirement.” Id., at 399. Plaintiffs’ noted also that they sought punitive damages, id. Defense attorneys made several arguments in support of the position that the $5 million threshold had not been met, but the district court concluded “it is not apparent, to a legal certainty, that Plaintiffs cannot recover the jurisdictional amount of $5,000,000 as claimed in their Amended Complaint.” Id. On this ground, then, the district court denied the motion to dismiss the class action, id. It rejected also Wal-Mart’s claim that the federal court lacked subject matter jurisdiction because the claims of some of the class members arose prior to CAFA’s effective date. Id., at 399-400.
With respect to the defense motion to dismiss the class action claims, the district court began by observing the well settled rule that “the plaintiff bears the burden of demonstrating that a lawsuit should proceed as a class action.” Robinson, at 400 (citations omitted). And for purposes of ruling on the motion, the federal court assumed that the requirements of Rule 23(a) for class action certification had been met, id. It turned, therefore, directly to whether the requirements for certification of a class action under Rule 23(b) had been satisfied. Id. The district court began by analyzing whether class action treatment was warranted under Rule 23(b)(1), and concluded that plaintiffs had failed to establish a risk of inconsistent or varying adjudications, id., at 401. As the district court concluded at page 401, “At best, separate actions on Plaintiffs’ breach of contract and conversion claims may result in differing findings of liability and/or damages awards, but neither of these are grounds for certification under Rule 23(b)(1).” With respect to the request for class action certification under Rule 23(b)(2), the federal court concluded that the monetary damages sought by the class action complaint were not merely incidental to the injunctive and declaratory relief sought by plaintiffs. Id., at 401. The court therefore concluded that a class action could not be certified under Rule 23(b)(2), id., at 401-02.
Finally, the federal court addressed whether a class action could be certified under Rule 23(b)(3), which required the court determine whether the requisite predominance and superiority tests had been met. Robinson, at 402. The district court held that predominance was not satisfied because “the amount of damages each putative class member could recover is dependent upon the amount of time he or she worked off-the-clock and/or the number of rest/meal breaks he or she was denied while employed by Wal-Mart, [so] the Court finds it would be required to make individualized calculations to determine the amount of recovery, if any, as to each member.” Id. The court found further that individual issues predominate whether plaintiffs “were required to work off-the-clock” because “the individualized issues will arise from the myriad of possibilities that could be offered to explain why any one of the plaintiffs worked off-the-clock.” Id. Importantly, the federal court recognized that Wal-Mart was entitled to present its defenses as to each plaintiffs’ claim that they were required to work off-the-clock. Id. Accordingly, the district court rejected Rule 23(b)(3) as a basis for certification of a class action, id.
Having reached that decision, the district court revisited its ruling on whether it had subject matter jurisdiction over the lawsuit. See Robinson, at 403. Without the class action allegations, plaintiffs were required to meet the $75,000 amount in controversy for diversity jurisdiction, and the federal court held that plaintiffs had failed to meet this test. Id. Accordingly, the district court granted the defense motion to dismiss the class action claims, and then dismissed the lawsuit for lack of subject matter jurisdiction because, absent a class and the federal court jurisdiction available under CAFA, the amount in controversy could not be met. Id., at 404.
NOTE: In part, plaintiffs opposed the motion to dismiss the class action claims on the grounds that the defense motion was premature “because discovery has not yet been conducted.” Robinson, at 400. The district court rejected this argument because “Plaintiffs have not informed the Court as to the matters on which they seek discovery, or the manner in which it would be relevant to issue of class certification.” Id.