In re Abott Laboratories
51 F.3d 524 (5th Cir. 1995)
Abbot was accused of price
fixing their baby formula. A class action was filed in a Federal court in Louisiana. Aboott appealed the class action certification.
In order to sue in Federal
Court, the amount in controversy must be greater than $75k. However,
each class member's claim in this case was limited by Louisiana State law
to a maximum of $20k.
The class action lawyers argued that if they won they could also recover attorney's fees, so at least one person could get more than $75k.
Everyone else would get
dragged into the lawsuit via the supplemental jurisdiction codified in 28 U.S.C. § 1367.
Abbott argued that unless all
class members could recover $75k each, then the lawsuit needed to be
dismissed out of Federal Court.
The Appellate Court agreed
that the class action could
The Appellate Court looked
to legislative intent of 28 U.S.C. § 1367.
The US Supreme Court heard the
case, but came to a 4-4 split, which sets no precedent.
One Justice was recused from
Since this case, a number of
other Federal Courts have struggled with the same issue, and have come to
The US Supreme Court, in Zahn
v. International Paper Co. (414
U.S.291 (1973)) said that every member of the class must meet the minimum
$75k, but that was prior to 28 U.S.C. § 1367. It remains undetermined if 28
U.S.C. § 1367 overrules Zahn.
At the time I took this
class, the US Supreme Court had not officially ruled on the issue yet.
28 U.S.C. § 1332(d)(2) came out in 2005 to permit Federal diversity
jurisdiction for any case in which the aggregate amount in
controversy exceeds $5M, thereby getting around this issue entirely.