In its October 23, 2013 opinion in Visendi v. Bank of America, the US Court of Appeals for the Ninth Circuit reversed the US District Court for the Eastern District of California's remand order. The court held that removal of the mass action to federal district court was proper under the Class Action Fairness Act (CAFA) because the state court complaint was a joint action brought by more than 100 plaintiffs. The Ninth Circuit further held that the district court's determination of improper joinder did not deprive the court of jurisdiction, but instead determined that the plaintiffs' claims must each be heard individually. Accordingly, the Ninth Circuit remanded the case back to the district court and instructed the court to dismiss without prejudice the claims of all but the first named plaintiff.

In this case, 137 named plaintiffs filed suit against 25 financial institutions in the Sacramento County Superior Court, alleging that defendants engaged in deceptive lending and securitization practices. Defendants removed the case to federal court under CAFA's mass action provision. After removal, plaintiffs filed an amended complaint which defendants moved to dismiss for misjoinder and failing to state a claim. The district court held that it lacked removal jurisdiction under FRCP 20(a) because no common questions of law or fact connected the plaintiffs' claims, and consequently remanded the case for further proceedings in state court. Defendants timely appealed the district court's remand order.

In determining whether removal was appropriate, the Ninth Circuit looked to the plain language of CAFA. Under CAFA, removal of mass actions to federal court is proper when "monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs' claims involve common questions of law or fact" (28 U.S.C. 1332(d)(11)(B)(i)) (emphasis added). The Ninth Circuit determined that:

Because the court had jurisdiction over the case under CAFA at the time of removal, the district court's holding that defendants conceded that there were no common issues of law and fact between the plaintiffs' claims when moving to dismiss the first amended complaint did not affect that court's jurisdiction over the matter. The Ninth Circuit therefore found the district court's remand order to be erroneous.

Having determined that the district court should have retained jurisdiction under CAFA, the Ninth Circuit agreed with the district court that there were no common issues of law or fact among the plaintiffs and joinder of the plaintiffs' claims was therefore improper. While the Ninth Circuit concluded that misjoinder of the parties was not a sufficient basis to dismiss the action, the court explained that misjoinder could instead be cured by severing the misjoined plaintiffs, provided that no substantial right would be prejudiced by doing so. In certain cases, such as this one, it would be appropriate to dismiss the claims of all but the first named plaintiff without prejudice to allow the filing of individual actions. Because the plaintiffs in this case remained free to pursue their own individual claims and would not be barred by any statute of limitations due to the tolling effect of CAFA, the Ninth Circuit remanded the case back to the district court with instructions to sever the misjoined parties and dismiss without prejudice the claims of all plaintiffs except for the first named plaintiff in the action.

Counsel should bear in mind that if jurisdiction is properly invoked at the time of filing, a subsequent development in the case does not defeat jurisdiction. Therefore, where a case is properly removed to a federal district court under CAFA, a subsequent finding, such as a finding of a misjoinder of claims lacking common questions of law or fact, is not sufficient to deprive a federal court of jurisdiction over a mass action.