In some putative class actions, the defendant seeks dismissal of the complaint on the grounds that the named plaintiff lacks standing to sue.  Where the case has been removed to federal court, however, one possible outcome of such a motion is an order remanding the case back to state court.  This may not be what the defendant desires, especially if the state court has a different standard for evaluating standing than the federal standards under Article III.  Further complicating matters, a remand on these grounds also might not be reviewable on appeal, as a recent Tenth Circuit decision demonstrates.

In Hill v. Vanderbilt Capital Advisors, LLC, No. 11-2213, 2012 U.S. App. LEXIS 26463 (10th Cir. Dec. 27, 2012), the plaintiffs, state education employees in New Mexico, brought a putative class action alleging that an improper investment was made by a retirement fund from which they would receive pension benefits.  The defendants removed the case to federal court and then moved for dismissal on the grounds of lack of standing.  The district court agreed, concluding that the plaintiffs had failed to allege facts demonstrating that there was an appreciable risk that the fund would be unable to pay pension benefits, and therefore the plaintiffs lacked standing.  Concluding that the lack of standing demonstrated a lack of subject matter jurisdiction, the district court then remanded the case to state court, even though a federal securities law claim, subject to exclusive federal jurisdiction, had been pled after the removal.  Id. at *5.

The plaintiffs appealed, and the Tenth Circuit dismissed the appeal for lack of appellate jurisdiction.  It first applied a limited standard of review on the issue of whether the district court’s decision was based on a lack of subject matter jurisdiction, and therefore unreviewable under 28 U.S.C. § 1447(d).  The court wrote that “our inquiry is essentially a superficial determination of plausibility,” which it described as a “highly deferential standard.”  Id. at *10.  The court found that the district court had plausibly found a lack of subject matter jurisdiction because standing has frequently been characterized as a requirement of subject matter jurisdiction.  The court also noted that several courts of appeals had remanded cases to state court rather than dismissing them where the court found a lack of standing.  Id. at *10-12.  The court further concluded that, even though the federal securities law claim was subject to exclusive federal jurisdiction, there was nothing the court of appeals could do about that because it lacked appellate jurisdiction over the remand order.  Id. at *15-16.

The key lesson I see here from a defense strategy perspective is that defendants should be careful about what they ask for.  A finding that the named plaintiff in a putative class action lacks standing, if it results in a remand to state court, may not be a desirable outcome for the defendant, particularly if it is not clear that the state court will analyze the standing issue in the same manner.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.