SAN FRANCISCO — It is all a matter of semantics for a California restaurant that alleged antitrust violations against a major credit brand.
It came down to the truest definition of "class" in an opinion set by Judge Mary M. Schroeder and dissent by Judge Johnnie B. Rawlinson on May 18 when plaintiff Broadway Grill Inc., was not allowed to amend its antitrust violation complaint against Visa to modify the meaning of the class-action suit under the Class Action Fairness Act (CAFA) in order to deny federal court jurisdiction over the case.
District Judge Steven Paul Logan, also presiding over the matter, agreed with Schroeder.
“After [the] defendants removed the action to federal court under the Class Action Fairness Act, [the] plaintiffs amended their complaint to change the plaintiff class to include only ‘California citizens,’ in order to eliminate diversity, and then sought a remand, which the district court granted,” according to the decision.
Basing their decision on Benko v. Quality Loan Service Corp., the panel “held that in this case, [the] plaintiffs had attempted to do what the Class Action Fairness Act was intended to prevent,” which is “changing the nature of the class to divest the federal court of jurisdiction,” according to the court's opinion.
“I respectfully dissent,” Rawlinson said in the decision. “I agree with the district court that the amendment of the complaint in this case fits within the parameters recently articulated by us in Benko v. Quality Loan Serv. Corp.”
The original argument stemmed from Broadway Grill filing action against Visa Inc. for violating the state antitrust laws through fixed rates and “and preventing merchants from applying a surcharge for the use of credit cards,” according to the opinion, further noting that the complaint described the class to include any California businesses that had accepted Visa-branded cards since 2004.
“[The] class as described in the original state court complaint included both California and non-California citizens,” according to the opinion. Because it included in-state and out-of-state citizens, the court held that "CAFA’s minimal diversity requirement was satisfied."
That is when the California restaurant attempted to amend the “class” definition to entail California residents “only in order to remove any considered minimal diversity,” according to the opinion. “Thus, unlike other civil actions, where there must be complete diversity between named plaintiffs and defendants, CAFA requires only what is termed ‘minimal diversity.’”
The panel deemed that while the law delivers “minimal diversity” at the time of removal, “the amendment in this case, however, did not provide an explanation of the allegations, but changed the definition of the class itself,” according to the order.
Logan disagreed. According to his dissent in the opinion, the class amendment “in no way” altered the nature of the action against Visa.