[00:00:18] Speaker 03: Good morning, Your Honors. [00:00:19] Speaker 03: Kate Spellman for Appellant Bradford Exchange. [00:00:22] Speaker 03: And with the court's leave, I'd like to reserve three minutes for rebuttal. [00:00:26] Speaker 03: Your Honors, the district court's decision to remand this case to state court should be reversed, because the purported lack of equitable jurisdiction arising from a plaintiff's strategic decision to withhold an inadequate legal claim does not provide a basis for remand. [00:00:45] Speaker 03: And the court erred in refusing to permit Bradford to waive its adequate remedy at law defense here. [00:00:53] Speaker 03: The implications for condoning this strategy to effectuate an end run around CAFA are far reaching and inconsistent with the practice in this circuit and other circuits. [00:01:05] Speaker 03: And we have already seen a proliferation of this pleading approach in putative class actions across the state. [00:01:11] Speaker 03: Indeed, this court has three other almost identical appeals pending before it right now. [00:01:19] Speaker 03: I'd like to use this time today to highlight three points that I think are particularly salient to our argument. [00:01:25] Speaker 03: First, Your Honors, the district court's application of the adequate remedy at law doctrine in this case ignores its fundamental purpose, which is to protect a defendant's right to a jury trial. [00:01:39] Speaker 03: And it elevates the doctrine to a threshold jurisdictional inquiry akin to subject matter jurisdiction, which is not supported by case law. [00:01:49] Speaker 03: federal court practice and ultimately which serves no federal or state objective that would seem to support the idea that your client could waive it how is that relevant or is it relevant to the remand versus dismissal issue the fundamental purpose of the doctrine I think your honor is correct that it does go to the issue of waiver and obviously [00:02:15] Speaker 03: I guess I would say that the simplest way to resolve this case that you have before you today is on the issue of waiver. [00:02:22] Speaker 03: We think that that is very clear. [00:02:25] Speaker 03: But in terms of the fundamental purpose being to protect a right to a jury trial for the defendant, I also think that goes to the fact that it is a defense that can be raised by the defendant. [00:02:37] Speaker 00: But it is not kind of a free-floating doctrine that can be raised by a plaintiff Which is the purpose is to protect the right to jury trial in your whole position now Is to waive your right to jury trial kind of why do we think you have a real gripe? [00:02:57] Speaker 03: A gripe with the district court's decision. [00:02:59] Speaker 00: Yeah, I mean I [00:03:01] Speaker 03: Well, I mean I think your honor that the our front our first position is that there is no basis for remand here So I do think that that is our primary position is that the adequate remedy at law doctrine does not provide a basis for remand either under Abstention doctrine or any other sort of free basis for remand You want to go ahead or you or you want dismissal? [00:03:26] Speaker 00: This is where I was a little confused [00:03:30] Speaker 03: I'm sorry, I mean our position is that there that the adequate remedy at law Doctrine does not provide a basis for remand and in this case it should not have been taken up the the alleged lack of equitable jurisdiction here should not have been taken up at this sort of procedural posture in the case based on the plaintiff raising the argument given that it is a defense that can be raised if I understand your question, it's if it stays in federal court [00:03:59] Speaker 04: The next step is you say, now you need to dismiss it from federal court. [00:04:02] Speaker 04: Is that correct? [00:04:04] Speaker 03: No, Your Honor. [00:04:04] Speaker 03: That is not our position. [00:04:05] Speaker 03: And we do not intend to seek dismissal of the equitable claim from federal court. [00:04:10] Speaker 04: And that's because of the waiver. [00:04:11] Speaker 04: That gets back to you would waive the equitable jurisdiction defense, or whether we call it a defense or whatever we call it, you'd waive the equitable jurisdiction issue and stay in federal court. [00:04:20] Speaker 03: That is correct. [00:04:21] Speaker 03: In this case, we are willing to waive the adequate remedy at law defense in order to stay in federal court to the extent [00:04:28] Speaker 03: the court finds that we are required to waive it in order to avoid a remand or a dismissal. [00:04:36] Speaker 03: But our initial position is that there is no basis for a remand and that there also is no basis for the court to, I mean, there was no request for dismissal, Your Honors. [00:04:47] Speaker 03: So there is no basis for a remand. [00:04:50] Speaker 03: The court did not have the right to remand the case based on the plaintiff's motion to remand. [00:04:57] Speaker 03: There was no request for dismissal in front of the court at that time. [00:05:00] Speaker 03: And I think fundamentally, the equitable, the adequate remedy at law doctrine, which goes to equitable jurisdiction, is not a fundamental threshold jurisdictional inquiry. [00:05:14] Speaker 00: So nobody wants to say, at least when I looked at it and tell me if I'm just wrong, I would have said they have an adequate remedy at law. [00:05:23] Speaker 00: They just chose not to use it, and therefore, [00:05:27] Speaker 00: I take it nobody wants to say that they do have an adequate remedy at law, and therefore there's no equitable jurisdiction? [00:05:36] Speaker 03: Well, Your Honor, I think that the plaintiff is saying that. [00:05:39] Speaker 03: I think the plaintiff is saying that they have an adequate remedy at law, but they chose not to assert it. [00:05:46] Speaker 03: And I think that our position is, because that is how the plaintiff has proceeded, the case is of course removable under CAFA, which nobody disputes here. [00:05:56] Speaker 03: and we don't believe that it is that the court had the Power to remand on the basis of the adequate remedy at law doctrine so we think that the case should just remain in federal court that the Decision remanding the case should be reversed and the case should simply proceed how I ask you about pussy and Jones versus Hanson because I [00:06:21] Speaker 04: I read that to say, if the court, in looking at the proofs, found none of the matters which would make a proper case for equity, it would have the duty of the court to recognize the fact and give it effect. [00:06:34] Speaker 04: And in that case, as I understand it, it was a sua sponte issue. [00:06:38] Speaker 04: So I don't quite understand how your argument that the court could just proceed along and not notice this problem is consistent with PUSSY. [00:06:51] Speaker 03: Your honor, I apologize in pussy. [00:06:56] Speaker 04: It's that. [00:06:57] Speaker 04: Oh, I'm sorry. [00:06:58] Speaker 04: Wait a second. [00:06:59] Speaker 04: Sorry, I'm saying the wrong case. [00:07:00] Speaker 04: I'm sorry. [00:07:00] Speaker 04: I was just reading from Alan. [00:07:02] Speaker 04: I'm sorry. [00:07:03] Speaker 04: It's Alan B. Pullman. [00:07:04] Speaker 04: I have my notes have both cases next to each other. [00:07:06] Speaker 04: I read the wrong case name. [00:07:07] Speaker 04: So I apologize. [00:07:09] Speaker 04: It's Alan B. Pullman at page 662 that it has the quote I just said, which is that if there has no proper case for equity, the court must recognize that fact and give it effect. [00:07:20] Speaker 03: Yes, your honor. [00:07:24] Speaker 03: Excuse me, I apologize. [00:07:26] Speaker 03: I am finding that case in front of me, but I know the case that you're talking about there your honor You know I think that what we would say there is that that court that decision there which was before the merger of law and equity and and I can speak more to that if that if the court would would like but That that does that statement in that case does conflict with later cases that find that the adequate remedy at law or or the equitable jurisdiction can be [00:07:53] Speaker 03: Waved by the defendant, so I do think that it goes back to waiver. [00:07:58] Speaker 04: Okay, but I think you said to Judge Boggs This isn't something the court needs to do a suicide today. [00:08:05] Speaker 04: You can just stay in federal court I mean, I guess why proceeding you're saying we would waive it though, but isn't the waiver needed That's what I'm saying about this Pullman. [00:08:13] Speaker 04: I said the wrong case, but now I'm in it seems like the court has to do something unless there actually is a waiver and [00:08:19] Speaker 03: So, Your Honor, I think that later cases have clarified that it is not a requirement for the court to sue Espante consider this issue, but I think that perhaps it is permissible for the court to sue Espante consider the issue of whether there's an adequate remedy at law or whether there's equitable jurisdiction. [00:08:38] Speaker 03: That doesn't make it permissible to remand on that basis. [00:08:42] Speaker 03: It would continue to be our position, and I think that's clear from the case law. [00:08:47] Speaker 03: And I can speak more to that if the court would be interested in hearing. [00:08:50] Speaker 03: But I think that the, so there's no basis to remand suesponte. [00:08:55] Speaker 03: Should the court take the issue of suesponte in sort of a dismissal posture, for example, then the defendant would have the opportunity to waive. [00:09:07] Speaker 03: But I think there's other case law that says, and later in time, right? [00:09:10] Speaker 03: So Alan is from 1891 and we're talking about a lot of case law that existed from 130 years ago. [00:09:16] Speaker 03: I would point the court to, let me find the site, the Beacon Theaters versus Westover case, Your Honor, which is from 1959 where the court said, unless there is an issue of a right to jury trial or other rights which depend on whether the cause is legal or equitable, the question of adequacy of legal remedies is purely academic and need not arise. [00:09:38] Speaker 03: So I think that perhaps to Your Honor's question, the court, perhaps there is discretion to raise the issue, Sue Esponte, [00:09:46] Speaker 03: in the sort of dismissal posture should the court feel that there is an issue that needs to be addressed with respect to jury trial or another substantive right that is implicated. [00:09:57] Speaker 03: But it is in that posture that then the defendant could choose to waive the defense because it is a defense that goes to a defendant's right to a jury trial. [00:10:07] Speaker 03: And as we know, the right to a jury trial is waivable. [00:10:10] Speaker 03: And so because that is what it is protecting, the defendant should have that right. [00:10:15] Speaker 03: hopefully that answers your honor's question. [00:10:18] Speaker 02: I mean here it wasn't raised to respond to, it was raised by the plaintiff who asked for a remand and the district court then had to entertain that request and it seemed like your first-order position was you just can't remand it at all and then should what dismiss it for lack of equitable jurisdiction? [00:10:33] Speaker 03: No your honor our position is that the court should simply deny the remand. [00:10:37] Speaker 02: Right but the reason for that presumably would be because you're waiving the defense. [00:10:43] Speaker 03: Well no I would I mean we would [00:10:45] Speaker 03: disagree with that, Your Honor, respectfully, that, I mean, I think our initial position is that there is no basis for remand. [00:10:51] Speaker 03: The relief being sought by the party was a remand, and there is no basis for remand here. [00:10:57] Speaker 03: So I can speak to that. [00:10:59] Speaker 02: And the reason why is because the federal court, you would say, lacks the power to remand a case when someone has raised this equitable jurisdiction issue? [00:11:08] Speaker 03: Yes, Your Honor, we would say that. [00:11:10] Speaker 03: So I mean, I think that this is not an issue that is properly raised. [00:11:13] Speaker 02: What if you had consented to the remand? [00:11:15] Speaker 02: What if your client had consented to the remand, would you say the federal court lacks the power to remand? [00:11:21] Speaker 02: And I know you removed it, but what if you changed your mind and said, okay, you know what, we'll go back to state court. [00:11:28] Speaker 03: Your honor perhaps that would put the court the case more in the position of sort of a contractual waiver of the right to be in federal court. [00:11:35] Speaker 02: Yeah, but we're talking about the power of the federal courts and you can't contract around our authority or lack thereof right so it doesn't seem to me to be this just kind of keeps falling back on the question of what your client wants here and whether if you want to stay in federal court whether you're allowed to say that essentially by waiving this defense. [00:11:54] Speaker 03: Mean your honor. [00:11:55] Speaker 03: We do obviously take the position that the defense is waivable and our client has affirmatively offered to waive the defense So I mean that is obviously on the table and as I mentioned earlier I do I do understand that that is sort of the simplest approach in this particular case to come to a resolution but I do I guess I would take some issue with this be Your honors conclusion that that Well, I guess what I would say is [00:12:22] Speaker 03: You know, our position is that there is that the Supreme Court has articulated limited bases for remand. [00:12:30] Speaker 03: There are statutory bases for remand and there are non-statutory bases for remand, which have included a lack of supplemental jurisdiction, a forum selection clause, which in effect, Your Honor, is essentially a contractual waiver around the right to be in federal court, as well as abstention principles. [00:12:46] Speaker 03: there are no abstention principles that apply here. [00:12:49] Speaker 03: So none of the articulated abstention principles apply here as were articulated in Colorado River or Quacken Bush. [00:12:56] Speaker 03: And as this court said in the Pareto Tree case that we cite in our case, in our briefs, excuse me, you know, where there are no sort of abstention principles that apply, the court should not kind of develop this free-floating right to abstain. [00:13:11] Speaker 02: Yeah. [00:13:11] Speaker 02: But if the district court had denied the remand, [00:13:15] Speaker 02: What would then happen if your client moved to dismiss for lack of equitable jurisdiction? [00:13:22] Speaker 03: I think that at that point, the district court would have taken that up. [00:13:26] Speaker 02: Right. [00:13:26] Speaker 02: And that gets us into this perpetual loop issue that a lot of courts have been concerned about. [00:13:31] Speaker 02: And I thought one of the things you said at the beginning was, well, we're not moving to dismiss. [00:13:35] Speaker 03: That's correct. [00:13:35] Speaker 02: OK. [00:13:36] Speaker 02: But I think the reason then is that because you're just waiving this [00:13:42] Speaker 02: Motion to dismiss that you do in fact have if the district court denied the motion to vacate in the case room federal court You would be able to dismiss that case for lack of equitable jurisdiction Your honor. [00:13:54] Speaker 03: I mean I think that we would have the right to raise the objection On that basis, but I do think there is still a question of whether it's appropriate for a court to dismiss at the initial pleading stage based simply on a plaintiff's allegation that there is an adequate legal remedy and [00:14:10] Speaker 03: or an adequate legal claim to be had. [00:14:12] Speaker 03: And I think that that is because, so I would just say that the Ninth Circuit obviously decided in Sonner, both Sonner cases, as well as the Guzman case, and I think there's the Key versus Qualcomm case, if I'm remembering correctly, that this issue can be decided later in the case, right? [00:14:30] Speaker 03: Because it really goes to the issue of whether [00:14:32] Speaker 03: the court can issue relief as opposed to whether there's a jurisdictional sort of threshold inquiry. [00:14:38] Speaker 03: So those are published decisions saying that the court can consider the adequate remedy at law defense later in the case when it has the full view of what the case is about, what relief the plaintiff is seeking. [00:14:54] Speaker 03: There are no published Ninth Circuit decisions saying that it is in fact appropriate to dismiss at the initial pleading stage based on [00:15:02] Speaker 03: And just simply an alleged lack or alleged presence of an adequate remedy at law or an alleged lack of an adequate remedy at law. [00:15:11] Speaker 03: So I think that that is still sort of an open question. [00:15:15] Speaker 03: However, obviously there are district court decisions that have done that. [00:15:19] Speaker 03: And I think that it would be a defense that the defendant could raise here. [00:15:29] Speaker 04: Could I just ask? [00:15:31] Speaker 04: If we rule that the district court can't remand in a case like this without first giving a chance for a waiver, I assume that defendants who remove would probably waive because they're trying to be in federal court. [00:15:48] Speaker 04: I think it's your position that the plaintiff didn't include the remedy at law because they wanted to stay in state court. [00:15:54] Speaker 04: But if we have this new world where you can stay in federal court by waiving, [00:15:58] Speaker 04: Will the outcome be that people do start pleading the remedy at law like it can you tell me like what's going to happen to the world if you win here. [00:16:06] Speaker 03: I think that's probably right your honor I think that that and that kind of goes to the incentives that we're talking about here right so I think that under plaintiff sort of theory right the incentives that are created by that theory of the world and that conception of equitable jurisdiction is that plaintiffs will start restricting. [00:16:24] Speaker 03: the remedies and the claims that they're seeking on behalf of unnamed class representatives. [00:16:29] Speaker 03: And perhaps that's permissible. [00:16:31] Speaker 03: And of course, plaintiff argues that he is the master of his complaint. [00:16:34] Speaker 03: And I do have some thoughts about that I can address. [00:16:37] Speaker 03: But I think that it's very clear that the incentives are that there's a limitation on sort of the relief that is requested. [00:16:45] Speaker 03: Here, plaintiff did not request, they did not allege a CLRA claim, but they also did not request injunctive relief. [00:16:50] Speaker 03: And I think that was also for the purpose of [00:16:53] Speaker 03: limiting the case to prevent it from going forward in federal court. [00:16:59] Speaker 03: So I think that in the alternative, if we win here, I think the incentives are, in fact, reversed in the sense that the plaintiff will no longer have an incentive to sort of limit that relief in putative class actions on behalf of unnamed class representatives. [00:17:15] Speaker 04: And I think- And if the CLRA were added, just in this hypothetical new world where there's a waiver option, [00:17:23] Speaker 04: Are those remedies really equivalent so that world would be in federal court, but what the claim and the remedies and everything is really identical? [00:17:33] Speaker 04: I know there's then the jury trial issue. [00:17:36] Speaker 04: Can you walk me through how the world would be different if defendants could stay in federal court in these claims? [00:17:41] Speaker 04: I guess you're saying it's already different, but let's say the plaintiff is currently right that they can stay in state court, but now we announce you can waive and that means now you can stay in federal court. [00:17:52] Speaker 04: Once that's the universe, where a waiver is possible, maybe people add the CLRA, and that means there's now jury trials in federal court? [00:18:04] Speaker 03: Yes, I think that is correct, Your Honor. [00:18:07] Speaker 03: I mean, this is not the approach that all plaintiffs are taking, just to be clear, even now, right? [00:18:12] Speaker 03: And the world as we currently live in it, district courts every day are issuing decisions on the merits on CLRA, FAL, and UCL claims. [00:18:22] Speaker 03: And this court has affirmed such decisions on the merits without the district court sort of sui sponte considering its equitable jurisdiction. [00:18:31] Speaker 03: So I mean, that is the world we currently live in, Judge Friedland. [00:18:34] Speaker 03: But I think if we win, that will continue to be the world that we live in, where the district court can consider all of those claims unless there is an objection raised by the defendant as to the adequate remedy at law, unless the [00:18:50] Speaker 03: court I guess in the same seemingly in your honor's conception of it raises this issue to respond to a and defendant waves. [00:18:58] Speaker 03: So you know I think that. [00:18:59] Speaker 03: Hope I'm answering your question but yeah I'm wondering. [00:19:02] Speaker 04: So it seems like one difference is you can. [00:19:05] Speaker 04: Have a jury trial because now you've got a legal claim. [00:19:08] Speaker 04: Is there any other difference in the substance of the C. L. R. A. versus the 70 under whatever like is there any difference in I'm wondering when we say adequate whether they're identical. [00:19:19] Speaker 03: That's a very good question, Your Honor, and certainly have given this a lot of thought. [00:19:23] Speaker 03: I mean, I think in Sonner, right, the plaintiff contended that remedies were identical, excuse me. [00:19:32] Speaker 03: So the plaintiff essentially conceded that what they were seeking under the CLRA was exactly the same as what they would seek under the UCL. [00:19:39] Speaker 03: But I think to Your Honor's point, I mean, the CLRA provides for legal damages, right, and it also provides for punitive damages. [00:19:47] Speaker 03: The UCL does not provide for punitive damages and only provides for restitution, which is a more equitable, of course, that's why we're here, remedy and perhaps has some, you know, in certain cases, I think there could be a distinction between what would be available at the end of the day in terms of relief for class members between those claims. [00:20:10] Speaker 04: We've taken you over your time, but I'll still give you, I think you wanted three minutes for rebuttal, we'll still give it to you. [00:20:14] Speaker 04: Thank you so much. [00:20:15] Speaker 03: So let's hear from the other side. [00:20:21] Speaker 01: Good morning, Your Honor. [00:20:22] Speaker 01: Zach Dostart for Plaintiff Appellees. [00:20:25] Speaker 01: Let me first address the waiver argument that the appellant has raised. [00:20:33] Speaker 01: The waiver argument, in effect, is seeking to unwind what York did, what Sonner did, what Bartling has held, what Guzman has held, and what Barranco has held. [00:20:45] Speaker 01: Sonner held that [00:20:48] Speaker 01: equitable jurisdiction is a, quote, rigid restriction on a federal court's ability to exercise its equitable jurisdiction. [00:20:56] Speaker 01: And in Guzman, the court held, which I know Judge Freeland is very familiar with, that although subject matter jurisdiction and equitable jurisdiction are distinct, both [00:21:07] Speaker 01: must exist in order for a federal court to address the merits of the equitable claim. [00:21:14] Speaker 01: And in Bartling, although it's unpublished, the Ninth Circuit held that the plaintiff is obligated to allege an inadequate remedy at law in order to invoke the court's equitable jurisdiction. [00:21:26] Speaker 01: And in Barranco, which is a published Ninth Circuit decision, [00:21:29] Speaker 01: The Ninth Circuit held that even if the party stipulated, and this gets to Judge Bress's question, but on the other side of the issue, even if the party stipulated and we said we would agree, which we don't, but to the court's lack of equitable jurisdiction, we're going to compel the court to hear our case. [00:21:45] Speaker 01: We can't. [00:21:46] Speaker 01: And that goes back, it really does go back to the Judiciary Act of 1789. [00:21:52] Speaker 01: Judge Ortt got it right. [00:21:53] Speaker 01: I mean, this is a fundamental tenet of our democracy. [00:21:57] Speaker 02: Hold on a second. [00:21:57] Speaker 02: I mean, one thing that's hard to reconcile with this is just the practice of federal courts, which is that we do not go around. [00:22:06] Speaker 02: We look for other things. [00:22:07] Speaker 02: Do we have subject matter jurisdiction? [00:22:09] Speaker 02: But we're not scouring cases to say, is there an equitable jurisdiction issue? [00:22:14] Speaker 02: Sometimes we notice it, and that can happen. [00:22:17] Speaker 02: And parties can bring it to our attention. [00:22:19] Speaker 02: But we've never thought you have to go and figure that out, Sue Espante. [00:22:22] Speaker 01: I understand your honor's concern or question, and let me bring it back to the question that Judge Friedland raised, which is the Allen versus Pullman case, and that sort of addresses it. [00:22:35] Speaker 01: In that case, the United States Supreme Court said, even if equitable jurisdiction or the lack thereof was not raised by the pleadings or by the parties, plural, it would be the duty of the court [00:22:50] Speaker 01: to examine whether it exists now i understand what the court is saying will counsel are you saying that we always need to look and you know it's it's a new it's like subject matter and uh... well yet [00:23:02] Speaker 01: I'm not saying that, but I'm saying once it's raised, once it's raised by the parties or the court, sui sponte, as my colleague indicated, courts have done, it does need to be addressed. [00:23:13] Speaker 01: And here, Judge Hayes did address it. [00:23:15] Speaker 01: Judge Hayes addressed it and said, it is wanting. [00:23:18] Speaker 01: It is not here. [00:23:19] Speaker 02: Why can't you waive it? [00:23:20] Speaker 02: I mean, you can waive personal jurisdiction. [00:23:22] Speaker 02: You can waive lots of things that go to the quote unquote power of the court. [00:23:26] Speaker 01: Well, what I would suggest is that the Guzman court was very clear [00:23:31] Speaker 01: that the court could not, should not, and did not reach the merits of the claim because equitable jurisdiction was lacking. [00:23:42] Speaker 01: Here we have raised it. [00:23:44] Speaker 01: We have raised the lack of the court's equitable jurisdiction. [00:23:47] Speaker 01: So it's not a personal privilege of one party to compel a federal court to exercise jurisdiction it lacks. [00:23:55] Speaker 01: That's not what equitable jurisdiction is. [00:23:57] Speaker 01: If a state, looking at York, for example, or looking at Schlesinger, or looking at Cates, for example, a state cannot pass a law that works to expand a federal court's equitable jurisdictional powers. [00:24:13] Speaker 01: This goes back to our Constitution. [00:24:15] Speaker 01: So if a state can't pass a law, [00:24:17] Speaker 01: that requires a federal court to have broader equitable jurisdictional powers. [00:24:23] Speaker 01: How can a defendant force a court to have powers that even a sovereign state can't hold? [00:24:30] Speaker 00: So what of the quote in Pucey, unlike the lack of jurisdiction as a federal court, a lack of equity jurisdiction, if not objected to by a defendant, may be ignored by the court? [00:24:44] Speaker 00: Was the court simply wrong there or has that been overruled by a particular case? [00:24:49] Speaker 01: So that language needs to be read in context of that decision and in every decision that has followed it and surrounds it back to Cates, 1893, all the way through to any decision that addresses equitable jurisdiction. [00:25:04] Speaker 01: It's the holding that matters. [00:25:06] Speaker 01: It's not the dicta. [00:25:07] Speaker 01: And what I would suggest is that if it is not raised by the parties, if it is not caught or raised by the court, and the parties end up on appeal, [00:25:17] Speaker 01: For the first time, a party then would not be able to say, oh, wait, I don't like the way this went. [00:25:24] Speaker 01: We want to challenge the court's lack of equitable jurisdiction. [00:25:27] Speaker 01: And in that way, it's true. [00:25:28] Speaker 01: It is distinct from subject matter jurisdiction. [00:25:31] Speaker 01: But as Guzman held, both must exist. [00:25:35] Speaker 02: I don't understand your position. [00:25:36] Speaker 02: I mean, it seems to me that if somebody raised it on appeal, we would then, under your view, have an obligation to [00:25:44] Speaker 02: I don't see how we could accept a waiver on appeal that we couldn't accept in the district court. [00:25:51] Speaker 01: Just so I understand, Your Honor's question is, could we actually, in fact, address the question? [00:25:57] Speaker 02: Yeah, I mean, if the case was preceded in the district court, nobody raised it, and it got on appeal, and you came here and said, aha, there's an issue with the equitable jurisdiction. [00:26:07] Speaker 02: It would seem to me under the logic of your position, we would have to say, oh, you're right. [00:26:10] Speaker 02: We have to dismiss for lack of jurisdiction. [00:26:12] Speaker 01: Well, that's a question maybe for a different day. [00:26:14] Speaker 01: But I would suggest that maybe your honor is right. [00:26:17] Speaker 01: In fact, in digital media security, which is from the Sixth Circuit, it was Judge Murphy that wrote the opinion. [00:26:22] Speaker 01: The parties had done a lot of work. [00:26:24] Speaker 01: And at the conclusion of that opinion, which was the 2023 opinion, [00:26:28] Speaker 01: He says, I commend the parties for all their work. [00:26:30] Speaker 01: I commend the district court for all their great work. [00:26:33] Speaker 01: I'm sorry. [00:26:33] Speaker 01: I can't issue the equitable relief being requested of me because those decisions on the court's exercise, if it's equitable jurisdictional powers, belong in Congress. [00:26:44] Speaker 01: The issues with respect to the question of whether or not a federal court can exercise its equitable jurisdictional powers when they're lacking is something that Congress would need to address. [00:26:55] Speaker 01: The parties couldn't agree to it. [00:26:56] Speaker 01: And that's the same thing Justice Scalia held in Grupo in 1999. [00:27:00] Speaker 01: He says it's near the end of the opinion once again. [00:27:04] Speaker 01: He says, I understand that the parties are asking for the court to exercise its equitable powers, but we can't, because in our democracy, these questions belong, colon, in Congress. [00:27:17] Speaker 01: That's where this issue lies. [00:27:19] Speaker 01: So is Your Honor's question, to the extent that it's saying, well, maybe, actually, it's not even waivable on appeal, even, that I'm conceding too much. [00:27:27] Speaker 01: Maybe. [00:27:28] Speaker 01: But for purposes of today, [00:27:31] Speaker 01: There's definitely no waiver. [00:27:33] Speaker 01: Judge Hayes found it was lacking. [00:27:35] Speaker 01: It is lacking. [00:27:36] Speaker 01: And therefore, it is a rigid restriction. [00:27:40] Speaker 01: Both equitable jurisdiction and subject matter jurisdiction must exist. [00:27:45] Speaker 04: You keep talking about Congress. [00:27:47] Speaker 04: Where do you think Congress has spoken to this? [00:27:49] Speaker 01: This goes back to Judge Oreck's decision in Guthrie. [00:27:52] Speaker 01: This originates, the court's equitable jurisdictional powers originate from the Judiciary Act of 1789. [00:28:00] Speaker 01: And it's the courts of chance for it. [00:28:02] Speaker 01: And it's the issues with respect to what equitable powers does a federal district court have when sitting in a court of equity? [00:28:10] Speaker 01: And when can it reach? [00:28:13] Speaker 01: When can it exercise those powers? [00:28:14] Speaker 01: And when can it not? [00:28:16] Speaker 01: And when Erie, which was the same year, in fact, as the merger of law and equity in 1938 came down, it was seven years later in York, 1945, where the court addressed it. [00:28:28] Speaker 01: And this Supreme Court was very clear. [00:28:30] Speaker 01: It said, Congress has spoken, and our exercise of our equitable remedial powers cannot be expanded by state statutes. [00:28:40] Speaker 04: Sorry, sorry. [00:28:41] Speaker 04: Just stop for a second. [00:28:43] Speaker 04: I thought it was common law, though, that's giving us this equitable jurisdiction concept. [00:28:48] Speaker 04: You keep saying it's Congress. [00:28:50] Speaker 04: So where is the language that Congress wrote that tells us about this? [00:28:53] Speaker 01: Well, in the Judiciary Act of 1789, the federal equitable jurisdictional powers were limited as to those powers that England had in the courts of Chancery. [00:29:02] Speaker 04: So that's where the common law comes. [00:29:04] Speaker 01: That's correct. [00:29:04] Speaker 01: Exactly. [00:29:05] Speaker 01: And this is addressed. [00:29:06] Speaker 01: This is laid out very clearly in the Sonner decision, in fact. [00:29:09] Speaker 01: So Sonner addresses what happens when these principles collide, the federal common law, court's equitable jurisdictional powers. [00:29:16] Speaker 01: What powers does the court have or not have? [00:29:19] Speaker 01: And that was answered then in Guzman. [00:29:22] Speaker 01: The holding of Guzman, the last sentence before the conclusion, where we cannot consider the merits of a plaintiff's claims, we also lack the ability to bar a state court from doing so. [00:29:38] Speaker 01: And that is a part of the sonner holding, that equitable jurisdiction is a rigid restriction. [00:29:46] Speaker 01: And Guzman says both equitable jurisdiction and subject matter jurisdiction must exist. [00:29:52] Speaker 01: Bartling says the plaintiff is obligated to allege an inadequate remedy at law. [00:29:58] Speaker 04: So I mean, I had understood this to be more about common law than Congress, but you've been talking about Congress. [00:30:03] Speaker 04: So what do you think Congress would say if they wanted to change this? [00:30:06] Speaker 01: Well, I would suggest, I don't know exactly. [00:30:11] Speaker 01: The answer is, [00:30:12] Speaker 01: If Congress wanted to address a federal court's equitable jurisdictional powers, there are many ways in which that could be done. [00:30:19] Speaker 01: I'm not sure of all of them, but I do know that as we sit here today, the Supreme Court, from Cates versus Allen, 1893, to Grupo, to York, to Schlesinger, to this court's holdings, and Sonner and Guzman limit them to what they have been and what they are today. [00:30:33] Speaker 01: So if Congress were to address this, as Justice Scalia said, as Judge Murphy said, I'm sure it could come up with a way in which it could do it, but it hasn't. [00:30:42] Speaker 02: I mean, if we're talking just purely congressional intent, then the other side of this is that it's CAFA, right? [00:30:49] Speaker 02: And it seems that this strategy that's being presented to us is a real end run around that. [00:30:54] Speaker 01: Not at all, Your Honor. [00:30:56] Speaker 01: In fact, CAFA, there's no dispute about CAFA. [00:30:59] Speaker 01: CAFA, minimal diversity, 5 million in controversy, that's not what we're disputing here. [00:31:05] Speaker 01: And there's been, once again, there's been [00:31:07] Speaker 01: sort of contentions, CAFA, or the council is doing this, or Clevinger and Judge Kearney are wrong. [00:31:14] Speaker 01: This is not an issue that is for me or for CAFA. [00:31:18] Speaker 01: It's for Congress. [00:31:20] Speaker 01: CAFA says what it says, but it didn't address or change federal court's equitable jurisdictional powers, period. [00:31:28] Speaker 01: And the defendant recognizes that. [00:31:30] Speaker 01: They have to say things like, it's an in-run around, or you're looking. [00:31:34] Speaker 01: They're ad hominem attacks. [00:31:37] Speaker 01: Saying that you know something isn't right well Caffa didn't address this and every district court that has examined it I mean do you deny opposing counsels? [00:31:50] Speaker 04: Description of the fact that a lot of cases have reached equitable issues without talking about this so when we look at like what would Congress think the world was and [00:32:00] Speaker 04: They might think it's a world in which CAFA didn't need to address this, because it seems like federal courts often talk about equitable things. [00:32:06] Speaker 01: I do not know, Your Honor, what the legislation 20 years ago and the legislatures did or did not think at that time. [00:32:16] Speaker 01: What I do know is what they did. [00:32:17] Speaker 01: And they did and they did not do. [00:32:19] Speaker 01: And what we know they didn't do is change the court's ability to exercise its equitable powers and circumstances. [00:32:29] Speaker 01: to the extent that CAFA dictates the conclusion here, I would suggest that it's clear. [00:32:35] Speaker 01: CAFA didn't change the court's equitable powers. [00:32:38] Speaker 04: So can I ask you, you want to be in state court. [00:32:41] Speaker 04: That's why you're making all these arguments, right? [00:32:43] Speaker 04: Ultimately, you'd rather be in state court than federal court. [00:32:46] Speaker 01: Believe that only the state court has the ability to issue the relief requested the federal judge judge Hayes He says I lack equitable jurisdiction if we hold though that you're wrong And they can waive that and so it could stay in federal court as long as they waive the defense if that becomes [00:33:07] Speaker 04: Clear going forward. [00:33:08] Speaker 04: How do you think that's going to change class-action litigation? [00:33:11] Speaker 01: Well, first of all, it's not a personal defense. [00:33:13] Speaker 04: It's not a defense of a single party to say you lose that just tell me as a practical matter how the world is good. [00:33:17] Speaker 04: I'm just curious about what this is going to do to litigation if we say you're wrong. [00:33:22] Speaker 04: and we make it definitively clear that if the defendant says we can stay in federal court, we will. [00:33:27] Speaker 01: They haven't said that. [00:33:28] Speaker 04: I understand that they say we hold that they can, and then they do. [00:33:31] Speaker 04: And so cases going forward, defendants will. [00:33:33] Speaker 01: What will happen? [00:33:34] Speaker 01: And so just so I understand your honor's hypothetical, your honor is saying that if this court were to say, contrary to Guzman, that's equitable. [00:33:40] Speaker 04: Don't just answer the question. [00:33:42] Speaker 04: We are going to say that you are wrong. [00:33:44] Speaker 01: Then what? [00:33:45] Speaker 01: Let me just say this. [00:33:47] Speaker 01: CAFA, for 20 years, has brought cases from state to federal courts [00:33:53] Speaker 01: And the multitude of class actions that are currently litigated in federal courts that involve legal causes of action, privacy, labor, need I go on, they'll remain in federal court. [00:34:07] Speaker 02: But in this case, if you're stuck in federal court, are you going to amend the complaint to add a CLRA claim? [00:34:12] Speaker 02: Are you going to do something else? [00:34:14] Speaker 02: That's what we're trying to figure out here. [00:34:15] Speaker 02: Because there was obviously an intention to limit the claims to stay in state court. [00:34:20] Speaker 02: So that was a strategy. [00:34:21] Speaker 02: If the strategy fails, [00:34:23] Speaker 02: then how are... [00:34:25] Speaker 02: Clients in your client situation going to react to that. [00:34:27] Speaker 01: That's our that's our question What I'm suggesting is that these are the rules of the road? [00:34:31] Speaker 04: In the rules of the road where the defendant can stay in federal court, would you add a CLA claim? [00:34:40] Speaker 04: I would future plaintiffs like you add a CLA claim. [00:34:42] Speaker 01: I have I do not your honor I do not believe the see here's the deal plaintiff is the master of her complaint and this is just You're telling us we can't do this, but we say we do [00:34:54] Speaker 04: You just don't have an answer. [00:34:56] Speaker 01: I'm suggesting that plaintiff should not be and cannot be forced to amend her You're not required to a legacy all right complain. [00:35:04] Speaker 02: That's up to you, but the question is what's going to happen? [00:35:08] Speaker 02: If you are in federal court where it just as a matter of practical matter How do you see as someone who practices in this area? [00:35:14] Speaker 01: How do you see the practice developing as the defend as the appellant argued they may address the court's lack of equitable jurisdiction at a different time and if they did that and they brought a motion to say [00:35:25] Speaker 01: In fact, the court lacks equitable jurisdiction. [00:35:27] Speaker 01: Or if this were to come up on appeal on the merits like it did in Guzman, then we would have said, wait a second, the court didn't have equitable jurisdiction. [00:35:35] Speaker 01: Plaintiff's complaint only sought equitable relief. [00:35:38] Speaker 01: It is a rigid restriction. [00:35:39] Speaker 01: So what I'm suggesting is that in this situation, the notion that litigants would be in effect required to disregard their ability to choose. [00:35:52] Speaker 04: OK, let me give you a new hypothetical. [00:35:53] Speaker 04: Congress passes a lot tomorrow that says federal courts have federal courts have equitable jurisdiction where the defendant waives any objection to that So the congress writes that in a statute now would plaintiffs in your position Have clra claims in their complaint because there's not going to be any way to stay out of federal court anyway. [00:36:19] Speaker 04: You might as well have it [00:36:20] Speaker 01: And in your honor's hypothetical, is Congress also saying that plaintiffs don't have a say in the matter about a courts federal? [00:36:27] Speaker 01: Basically, yes. [00:36:28] Speaker 04: So Congress says if defendants want to add to CAFA, you can remove and it can stay there as long as you don't make an equitable jurisdiction defense. [00:36:36] Speaker 01: The answer is I don't know. [00:36:37] Speaker 01: I think it would depend upon the circumstances of each case. [00:36:40] Speaker 01: California case law, for example, in the nationwide case, talk about the remedial purposes and the types of relief that the UCL intends to be equitable and to proceed on an equitable track. [00:36:55] Speaker 01: And so I think that there are significant issues with your Honor's hypothetical with respect to all of the Supreme Court and Ninth Circuit guidance that I've discussed. [00:37:05] Speaker 01: What I'm saying is I don't, I can't answer what hypothetically. [00:37:09] Speaker 04: Is there anything, it sounds to me from, if I understand the CLRA is that it gives you additional options but doesn't take anything away. [00:37:17] Speaker 04: Like is there anything bad about having a CLRA remedy other than the fact that it might make you be in federal court? [00:37:24] Speaker 01: Well, the CLRA, if it were brought in your honor's hypothetical, could arguably lead a federal court. [00:37:33] Speaker 01: to have a different conclusion than the state court would have, because in federal court, the defendant has argued if there were a CLRA claim, they would have some right to potentially have that claim heard by a jury. [00:37:50] Speaker 04: And is that not true in state court? [00:37:53] Speaker 01: In state court, the remedies are cumulative, and the answer is correct. [00:37:58] Speaker 01: It is not true. [00:37:59] Speaker 01: California has its own right to a jury trial, Article 1, Section 26 of its constitution. [00:38:04] Speaker 01: It is different than the federal right to a jury trial, and California's Supreme Court guidance nationwide says that California courts want to have UCL consumer type relief remedies sought potentially first by the court, heard first by the court. [00:38:22] Speaker 01: And that is a fundamental, important difference. [00:38:25] Speaker 01: So what Your Honor is suggesting, that hypothetical, I think would very much undermine California's ability to enforce [00:38:33] Speaker 01: its consumer protection laws. [00:38:35] Speaker 01: It isn't a front to comedy. [00:38:37] Speaker 01: This is what the Ninth Circuit held in Davidson. [00:38:40] Speaker 01: Having removal work as an undermining principle to California consumer protection law isn't a front to comedy. [00:38:49] Speaker 04: And that's because you're saying now that California law wants these questions to be decided by judges, not juries. [00:38:56] Speaker 01: California has stated that, and that is the UCL. [00:38:59] Speaker 01: That is why the UCL exists. [00:39:01] Speaker 01: It's to get relief quick, expedient, fast. [00:39:06] Speaker 01: And that is the definition of consumer protection under the UCL. [00:39:10] Speaker 04: But if you stayed in federal court and you just didn't add the CLRA, you wouldn't have that problem. [00:39:15] Speaker 01: If we stayed in federal court and we didn't add the CLRA and the court were to hold that equitable jurisdictional principles don't apply, I guess there'd be an issue there if, if, if. [00:39:25] Speaker 01: But the problem is there is so much binding case law. [00:39:30] Speaker 01: Ninth Circuit, Supreme Court, all the way from rigid restriction to both must exist, cannot stipulate to be around it under Barranco. [00:39:39] Speaker 04: I think we have your argument. [00:39:40] Speaker 04: I think we're taking you over your time and we have your argument. [00:39:42] Speaker 04: Thank you, counsel. [00:39:43] Speaker 04: I appreciate the argument. [00:39:44] Speaker 04: Let's put three minutes on the clock for rebuttal. [00:39:50] Speaker 03: Thank you, Your Honors. [00:39:52] Speaker 03: I'd like to address just a few points that came up in my counsel's argument. [00:39:56] Speaker 03: Number one, I think this was the point we were talking about earlier in the hypothetical that Judge Friedland, you were attempting to pose. [00:40:02] Speaker 03: I think what I heard you trying to get at, or my view, is that the incentives of holding for the defendant here are sort of exactly what I think you were insinuating, which is that there would be additional requests for relief, pled, most logically, by the plaintiffs on behalf of putative class members. [00:40:20] Speaker 03: I do think that it gets at sort of the Supreme Court's articulated concern in Knowles about, you know, limitations on requested relief for punitive class members made by representative plaintiffs. [00:40:32] Speaker 03: And so that's just talking about incentives of the ruling here. [00:40:36] Speaker 03: I think it would incentivize plaintiffs to bring additional requests for relief because they know that those will not, you know, one way or the other, they will likely be in federal court. [00:40:46] Speaker 04: And that might, you said that would give punitive damages potentially. [00:40:50] Speaker 03: Yeah. [00:40:50] Speaker 03: Well, under the CLRA, putative damages are, I mean, of course, not conceiving that they would be available in this case or that they would be appropriate in this case. [00:40:58] Speaker 03: They are a remedy under the CLRA that is not available under the UCL. [00:41:02] Speaker 03: And I would just make a couple other points. [00:41:04] Speaker 03: I think Judge Bress, you're exactly correct to analogize to personal jurisdiction here with respect to the waiver issue. [00:41:11] Speaker 03: And I would point the court to the Rurgus decision of the Supreme Court where they stated that essentially personal jurisdiction [00:41:19] Speaker 03: is a fundamental issue that, or a fundamental limitation on a federal court's right to issue relief, but it is also waivable. [00:41:29] Speaker 03: And I think that that really kind of makes sense in conjunction with what the court has said in Sonner and Guzman, right? [00:41:36] Speaker 03: The court in Sonner and in Guzman said, I mean, it recognized the distinction between subject matter jurisdiction [00:41:43] Speaker 03: and equitable jurisdiction, both are necessary. [00:41:46] Speaker 03: One can be waived. [00:41:47] Speaker 02: Yeah. [00:41:47] Speaker 02: And if there's a distinction with personal jurisdiction, it may have to deal with the, whether the district court can sua sponte raise it, because we don't usually think of district courts sua sponte raising personal jurisdiction. [00:41:57] Speaker 02: If anything, that would seem to be taking a defense of a party, but it seems to be the understanding that maybe equitable jurisdiction is a little different in that way, that you could, a federal court could raise it sua sponte. [00:42:11] Speaker 03: I think I have to concede that that is potentially true. [00:42:13] Speaker 03: But I think with respect to waiver, the analogy between personal jurisdiction and equitable jurisdiction holds quite tightly. [00:42:22] Speaker 03: And I think that your honors were right to, I think your honors raised it, if I'm remembering, the issue of waiver on an appeal. [00:42:29] Speaker 03: So if equitable jurisdiction was sort of this threshold jurisdictional inquiry, as plaintiff seems to be suggesting, it should not have been waived [00:42:39] Speaker 03: You know for purposes of appeal yet in your in this court's decision in the Connecticut general life case which we cite in our brief that is exactly what the court found that the equitable the issue of the alleged lack of equitable jurisdiction was waived and couldn't be decided on the appeal so I do think that that court that case [00:42:56] Speaker 03: addresses that issue quite nicely. [00:42:57] Speaker 03: And I would just say we were sort of talking about Congress congressional acts that, you know, allegedly established equitable jurisdiction as a limitation. [00:43:08] Speaker 03: I would point the court, if you're looking for sort of additional congressional acts, right, to the merger of law and equity and the federal rules of civil procedure that came out in 1938, including Rule 18, which established that parties can plead in the alternative. [00:43:24] Speaker 03: legal and equitable claims. [00:43:26] Speaker 03: And I think that if that is true, then why would it then follow that, you know, equitable claims need to be remanded on the basis of the existence of a legal claim? [00:43:38] Speaker 03: It would sort of vitiate that entire rule. [00:43:41] Speaker 03: I would also just point out that Rule 18B of the Federal Rules of Civil Procedure actually expressly abrogated the holding in Cates and [00:43:53] Speaker 03: That's just a fact that, to be honest, I read as I was preparing for this argument, but that Rule 18B actually addresses the exact holding in Cates and it abrogated it. [00:44:03] Speaker 03: And that was acknowledged by the Fifth Circuit actually in a case. [00:44:09] Speaker 03: I can, apologies. [00:44:15] Speaker 03: Well, I will get back to that if I can. [00:44:17] Speaker 03: But, and I think the last thing I would just say is, [00:44:20] Speaker 03: You know, I do think we view this, of course, as an end run around CAFA and in California in particular, which is, as we know, a hotbed of these kind of consumer putative class actions. [00:44:32] Speaker 03: I think sort of condoning the strategy that the plaintiffs have taken here would really kind of, again, like really be a sea change for the way that courts approach these cases in California and would really [00:44:47] Speaker 03: You know vitiate plaintiffs or defendants excuse me right to a federal forum here This is the exact case type of case that that you're over your time I think we have apologies, so thank you both sides for the helpful arguments. [00:45:02] Speaker 04: This case is submitted Thank you so much a five-minute break before we hear the last case I [00:45:25] Speaker 00: This court shall stand in recess for five minutes.