July 02, 2015 Practice Points

Ninth Circuit Rules in Benko v. Quality Loan Service Corp.

The circuit court vacated the district court’s Rule 12(b)(6) dismissal and remanded the case to Nevada state court

by Matthew Mall

In a published opinion issued on June 18, 2015, the United States Court of Appeals for the Ninth Circuit held that class action plaintiffs should be permitted to amend a complaint after removal to “clarify” or “elaborate on” issues pertaining to federal jurisdiction under the Class Action Fairness Act (CAFA). Benko v. Quality Loan Service Corp., No. 13-15185 (9th Cir. June 18, 2015). Because the plaintiffs’ post-removal amended complaint contained allegations satisfying CAFA’s “local controversy” exception, the Ninth Circuit vacated the district court’s Rule 12(b)(6) dismissal and remanded the case to Nevada state court. 

The plaintiffs in Benko filed a Nevada state class action against Meridian Foreclosure Services and five other defendants, asserting claims arising from the defendants’ roles as trustees in private foreclosures of real property securing the class members’ loans. Meridian, the only defendant domiciled in Nevada, removed the complaint pursuant to CAFA and moved to dismiss for failure to state a claim. In response, the plaintiffs moved to remand under CAFA’s local controversy exception, 28 U.S.C. § 1132(d)(4)(A), and subsequently sought leave to amend the complaint to allege additional facts supporting the application of that exception. The district court denied the plaintiffs’ motions to remand and amend and granted the defendants’ Rule 12(b)(6) motion to dismiss.

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