One tactic plaintiffs’ attorneys have attempted to use in trying to avoid federal jurisdiction under the Class Action Fairness Act (CAFA) is to split up what would ordinarily be one class action into multiple cases, each of them structured to try to achieve an amount in controversy below $5 million.  An important issue that federal courts are addressing is whether the amount in controversy in multiple similar class actions can be aggregated to determine whether CAFA jurisdiction exists.

In Marple v. T-Mobile Central LLC, the Eighth Circuit recently issued a per curiam decision refusing to aggregate multiple suits in determining the amount in controversy, but the case appears to be limited to its unusual facts.  T-Mobile had filed ten separate lawsuits against municipalities in Missouri, seeking to recover tax payments it made under protest.  Plaintiffs, customers of T-Mobile, then filed ten separate class action lawsuits, claiming that T-Mobile improperly passed on the taxes to its customers, and seeking to recoup any monies obtained by T-Mobile in each of its lawsuits against the municipalities.  The class actions filed against T-Mobile mirrored the declaratory judgment lawsuits it brought.

The Eighth Circuit noted that CAFA does not expressly address aggregation of multiple class actions to determine the amount in controversy, and it discussed the Sixth Circuit’s opinion in Freeman v. Blue Ridge Products, Inc., where the Sixth Circuit aggregated the amount in controversy in five separate class actions that appeared to be structured to avoid CAFA.  In Marple, the Eighth Circuit distinguished Freeman on the basis that “the structure of Marple’s class actions exactly mirror the underlying ten lawsuits brought by T-Mobile and are driven by T-Mobile’s own litigation decisions.  Moreover, there is no indication that Marple artificially divided the lawsuit to avoid CAFA.”  The Eighth Circuit was careful to indicate that it was not disagreeing with Freeman and only distinguishing it on the unusual facts of Marple, which may also have been why this was a per curiam decision.

While the circumstances in Marple were unique, this is a critical issue not only for insurers but all defendants in class actions, and its resolution is important for the continued viability of CAFA.  If federal courts allow plaintiffs to divide up class action lawsuits that would otherwise be over $5 million into a series of smaller suits that are under $5 million, nearly any class action can be structured in a way to avoid CAFA, and the entire purpose of CAFA is defeated.  This type of structuring is the new equivalent of fraudulent joinder and federal courts should recognize it as such.