The Sixth Circuit is at the center of a developing circuit split. In a recent decision, the court prevented plaintiffs from artificially dividing a class action into multiple suits to avoid the jurisdictional thresholds of the Class Action Fairness Act, 28 U.S.C. 1332(d)(6) (“CAFA”). The plaintiffs in Freeman v. Blue Ridge Paper Products, Inc., 551 F.3d 405 (6th Cir. 2008), attempted to avoid federal jurisdiction under CAFA by dividing one suit into five separate suits covering distinct six-month time periods, to limit the total damages for each suit to under $5 million. Finding that Congress was trying to prevent plaintiffs from such attempts to “game the system,” Freeman held that the give suits should be aggregated to determine the true amount in controversy. This approach makes it more difficult for plaintiffs to avoid federal jurisdiction by careful pleading. See, e.g., Hubbard v. Elec. Arts, Inc., 2011 U.S. Dist. LEXIS 77859 (E.D. Tenn. July 18, 2011).
Yet a growing chorus of courts have declined to follow Freeman, most recently the Eighth Circuit. In Marple v. T-Mobile Cent. LLC, 639 F.3d 1109, 1110 (8th Cir. 2011), the Eighth Circuit expressed doubt that Congress intended courts to aggregate claims between different class actions, and limited any application of Freeman to its facts. Both the Seventh and Ninth Circuits have also expressly limited any potential application of Freeman. See Tanoh v. Dow Chemical Co., 561 F.3d 945, 965-66 (9th Cir. 2009); Anderson v. Bayer Corp., 610 F.3d 390, 393 (7th Cir. 2010). As summarized by one district court, “[c]ourts in this circuit and elsewhere have repeatedly emphasized that Freeman applies only where there is “no colorable basis for dividing the claims” other than to avoid federal jurisdiction.” Site Mgmt. Solutions v. TMO CA/NV, LLC, 2011 U.S. Dist. LEXIS 52493, 10 (C.D. Cal. May 4, 2011) (collecting cases). The result creates the prospect of contrasting views of CAFA jurisdiction existing between the circuits.
Although these courts have stopped short of a flat rejection of Freeman, it is likely only a matter of time before a more pronounced circuit split develops around this issue. The Supreme Court may then have to intervene to determine whether Freeman's pragmatic approach to jurisdiction will prevail.