State of Nevada v. Bank of America Corp.

For purposes of the minimal diversity requirement under the Class Action Fairness Act, the court will examine “the essential nature and effect of the proceeding as it appears from the entire record” in determining whether the state is the real party in interest in a state Attorney General parens patriae action.

The State of Nevada appealed the district court’s denial of Nevada’s motion to remand to Nevada state court after Nevada’s Attorney General brought a parens patriae action against Bank of America Corporation (BOA), alleging that BOA’s home mortgage and foreclosure process violated the Nevada Deceptive Trade Practices Act (DTPA). Nevada also alleged BOA violated an existing consent judgment. BOA removed to federal court based on the Class Action Fairness Act (CAFA) and federal question jurisdiction under 28 U.S.C. § 1331. The district court held that the case was removable as a class action under CAFA, which allows federal jurisdiction over a “class action” or “mass action” involving parties with minimal diversity. The Ninth Circuit subsequently decided Washington v. Chimei Innolux Corp., holding that state Attorney General parens patriae actions are not removable as class actions under CAFA. On appeal, the Ninth Circuit also considered whether the action was a mass action, which turned on whether Nevada is the real party in interest for purposes of CAFA’s minimal diversity requirement. The Court concluded that, when looking at the case as a whole, Nevada is the real party in interest and removal under CAFA was improper, because Nevada sought substantial relief available to it alone, enforcement of the consent judgment, civil penalties not available to consumers, and injunctive relief requiring a lower standard of proof than suits brought by consumers. As to federal question jurisdiction, the Court held that the Attorney General brought this suit in state court to enforce state laws. REVERSED and REMANDED.