ATLAS DATA PRIVACY CORPORATION v. LUSHA SYSTEMS, INC
1:24-cv-04184
| D.N.J. | Nov 20, 2024Background
- Atlas Data Privacy Corporation and several individuals (all NJ citizens) filed 40 actions in New Jersey state court, claiming violations of New Jersey’s Daniel’s Law by numerous data broker, tech, and real estate companies (several incorporated in Delaware).
- Defendants removed to federal court, arguing federal jurisdiction based on diversity (§ 1332(a)), the Class Action Fairness Act (CAFA, § 1332(d)), and fraudulent joinder; plaintiffs moved to remand to state court.
- Atlas acts as the assignee of over 19,000 covered persons’ Daniel’s Law claims, obtaining assignments via terms of service with users.
- The court permitted jurisdictional discovery focused on the citizenship and real party in interest aspects of Atlas’s assignments.
- The amended Daniel’s Law expressly allows assignments of rights and provides a private cause of action for covered persons or their assignees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Atlas a real party in interest for diversity purposes? | Atlas is the assignee and real party in interest | Assignors (users) are real parties, so Atlas’s citizenship shouldn’t count | Atlas is real party in interest; Atlas’s citizenship counts; no complete diversity |
| Is there collusive/fraudulent joinder to destroy diversity? | Assignments and joinder were proper, no bad motive | Joinder/assignment were collusive to avoid federal court | No evidence of bad faith or collusive motive; assignments/joinder were proper and in good faith |
| Is this a class or mass action under CAFA? | Not filed as class/mass action; assignments are absolute | Complaints are disguised class/mass actions | Not a CAFA class action; Daniel's Law is not a Rule 23 analog; no class or mass action jurisdiction |
| Fraudulent joinder in specific cases (Reuters, MyHeritage) | Named defendants are proper, not fraudulently joined | Some defendants (Delaware corps) fraudulently joined to defeat diversity | In one case (MyHeritage), fraudulent joinder established and dismissed; in others, not fraudulent |
Key Cases Cited
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (whether complete diversity is required under § 1332(a)).
- Navarro Sav. Ass'n v. Lee, 446 U.S. 458 (real party in interest standard for diversity jurisprudence).
- Sprint Communications Co., L.P. v. APCC Services Inc., 554 U.S. 269 (assignees as real parties in interest for Article III)
- Kramer v. Caribbean Mills, Ltd., 394 U.S. 823 (collusive assignments to create jurisdiction prohibited).
- Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (CAFA mass action requires 100 named plaintiffs).
- Batoff v. State Farm Ins. Co., 977 F.2d 848 (standard for fraudulent joinder).