Vivian Grijalva v. Kevin Mason, P.A.
8:18-cv-02010
C.D. Cal.Dec 30, 2019Background
- Twelve plaintiffs from nine states sued a group of defendants alleging a fraudulent "student loan debt resolution" scheme, asserting claims including RICO, the Telemarketing and Consumer Fraud and Abuse Prevention Act, fraud, legal malpractice, and breach of good faith.
- Plaintiffs alleged each was defrauded by the same enterprise, but the transactions were independent and involved different student loan accounts and different alleged solicitors or firms.
- The Court issued a show-cause order why plaintiffs should not be severed; both sides filed responses.
- The Court found the Rule 20(a) joinder requirements unmet because the plaintiffs’ interactions with defendants were not uniform and common questions did not predominate; choice-of-law issues could require applying nine different states’ laws.
- The Court exercised its discretion to sever all plaintiffs except first-named plaintiff Vivian Grijalva and dismissed the other eleven without prejudice, finding no substantial prejudice from severance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs satisfy Rule 20(a)’s "same transaction or occurrence" requirement | Plaintiffs: transactions are "nearly-identical" and part of the same fraudulent scheme | Defendants: plaintiffs engaged in separate, independent transactions with differing facts and solicitors | Court: Not satisfied — factual dissimilarities (different contacts, agreements, and facts) defeat the requirement |
| Whether there are common questions of law or fact under Rule 20(a) | Plaintiffs: legal questions are identical and predominate | Defendants: claims implicate different factual matrices and potentially different state laws | Court: Not satisfied — federal claims alone insufficient; state-law claims may require applying multiple states' laws, so common issues do not predominate |
| Whether severance would prejudice plaintiffs' substantial rights | Plaintiffs: severance may impede access to justice, especially for non-California plaintiffs and finding counsel | Defendants: severance appropriate given misjoinder; plaintiffs can sue separately | Court: Severance will not substantially prejudice plaintiffs; they may file separate suits; case early enough to avoid prejudice |
| Whether the court should exercise discretion to sever even if joinder might be arguable | Plaintiffs: joinder promotes efficiency and common adjudication | Defendants: severance avoids delay and individualized adjudication | Court: Exercised discretion to sever to avoid prejudice, delay, and inefficient individualized inquiries |
Key Cases Cited
- Coughlin v. Rogers, 130 F.3d 1348 (9th Cir. 1997) (Rule 20 severance principles and dismissal of all but first-named plaintiff)
- Visendi v. Bank of America, N.A., 733 F.3d 863 (9th Cir. 2013) (requirement of factual similarity among plaintiffs for joinder)
- Acevedo v. Allsup's Convenience Store, Inc., 600 F.3d 516 (5th Cir. 2010) (district courts may refuse joinder to avoid prejudice and delay)
- Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000) (broad discretion in severance decisions)
- In re Henson, 869 F.3d 1052 (9th Cir. 2017) (choice-of-law issues can require application of multiple states' laws)
- Bartel v. Tokyo Elec. Power Co., Inc., 371 F. Supp. 3d 769 (S.D. Cal. 2019) (choice-of-law analysis in multi-state claims)