Complex Litigation: The "Zahn" Morass
Vol. 27 Nat'l L.J. 14 (Sept. 27, 2004)
5 Pages Posted: 14 Jun 2013
Date Written: September 2004
This paper is a commentary and analysis of the problems engendered by the Supreme Court’s decision in Zahn v. Int’l Paper Co., 414 U.S. 291 (1973). In Zahn, the Supreme Court held that in diversity-based class actions in federal court, each individual member of the class had to satisfy the $75,00 amount-in-controversy. If each class member did not have a claim exceeding this amount, then the class could not satisfy the threshold requirement for federal jurisdiction. In addition, the Zahn rule prohibited the aggregation of class members; damages to exceed the jurisdictional amount. However, with the enactment of the supplemental jurisdiction statute in 1990, (28 U.S.C. § 1367), federal courts have issued a number of conflicting decisions concerning whether that statute allows a federal court to assert supplemental jurisdiction over all class members’ claims, as long as the class representatives’ claims exceed $75,000. The majority of federal circuits (4th, 5th, 7th, 9th, and 11th) have determined that the supplemental jurisdiction statute overrules Zahn. The leading case to this effect is In re Abbott Labs., 51 F.3d 524 (5th Cir. 1995). This article discusses the Sixth Circuit’s decision in Olden v. LaFarge Corp., (6th Cir. Sept. 7, 2004), joining the other federal circuit courts in overruling Zahn. The article also discusses those courts that have held to the contrary, and the need for the Supreme Court to resolve this lingering conflict on the circuits with regard to supplemental jurisdiction over damage claims in diversity-based class actions.
Keywords: Zahn v. Int'l Paper Co., supplemental jurisdiction, amount-in-controversy class actions, diversity class actions, In re Abbott Labs., 28 U.S.C. 1367, Olden v. Lafarge Corp.
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