In reviewing the new case filings yesterday, I saw a case that caught my eye. The lawsuit was filed by the Cartwright Firm in San Francisco against Hyundai Motor America. The case is an Unfair Competition Law (“UCL”) class action relating to allegedly inaccurate advertisements regarding fuel efficiency numbers in violation of EPA regulations. The usual consumer claims and common law theories are all pled; nothing too out of the ordinary there. But this is where the story becomes strange: the class is compromised of “All persons in Maine who currently own or lease a Subject Vehicle for purposes other than resale or distribution.” By definition, in order to be a member of this California class action, one must be resident of Maine!
I then noticed that the same firm filed three other lawsuits the same day against Hyundai and Kia Motors America Inc. on behalf of residents of other states: (a) a class action lawsuit against Hyundai on behalf of Louisiana residents; (b) a class action against Kia on behalf of New Hampshire residents; (c) a class action against Kia on behalf of Alaska residents. Based on my review of the Hyundai/Maine lawsuit, it appears that a Georgia law firm and a New Hampshire law firm are working together to file these lawsuits, likely with local counsel help from the Cartwright Firm.
Perhaps this is not as unusual as it seems, but it strikes me as an oddity that East Coast lawfirms representing classes limited to residents of other states (not merely inclusive of residents of other states such as nationwide class action lawsuits) are filing lawsuits in courts in California under California consumer statutes. This phenomenon simply underscores the fact that, just as Delaware has become the preferred forum for states to incorporate, California is becoming the preferred forum for attorneys to file class action lawsuits. As previously noted on this blog, 42% of Americans with Disability Act cases nationwide are filed in California.
Is this a positive trend? Delaware generates millions of dollars in fees and taxes for the services it provides to businesses operating out of state that wish to incorporate in Delaware. In 2011, Delaware raked in $860 million in fees from taxes and fees from out of state businesses. This revnue reduces the burden on taxpayers and provides a significant beneift.
No similar similar benefit is enjoyed by residents of California for foreign litigation venued within the state simply so residents of other states can take advantage of our pro-consumer statutes. So here is the question: Is it fair to the taxpayers of California who have to underwrite this consumer litigation industry through paying for an overburdened court system when the litigation by definition provides little revenue to the state (perhaps a small filing fee) but obtains significant benefits to the citizens of another state–e.g., Maine? (Granted, these four lawsuits are filed in federal court, rather than state court–but I would assume that this type of forum stretching takes place in state courts as well.) I look forward to any comments on this issue and to providing an update on the motion practice from this case.