Antitrust Law Daily Wrap Up, RICO—D. Mass.: Class action not subject to remand on attempt to voluntarily dismiss RICO claim, (Nov 26, 2013)

By John W. Arden, J.D., LL.M.

An individual pursuing a class action—alleging violations of Massachusetts Consumer Protection Act, Massachusetts common law, and federal RICO law—was not entitled to remand of the action to Massachusetts state court by attempting to voluntarily dismiss the RICO claim, the federal district court in Boston has ruled (Schwartz v. CACH, LLC, November 21, 2013, Saylor, F.).

Lawrence Schwartz, a Massachusetts resident, received a collection letter, sent by J.A. Cambece Law Offices, P.C., on behalf of CACH , LLC, a company with offices in Colorado. That same day, CACH filed a lawsuit against Schwartz in Middlesex Superior Court. However, CACH was not licensed by the Massachusetts Commissioner of Banks to act as a debt collector and had not registered with the Secretary of State to do business in Massachusetts. Under Massachusetts law, a foreign corporation that does not file a certificate with the Secretary of State may not maintain a proceeding in state court.

On September 30, 2013, Schwartz filed a putative class action in Middlesex Superior Court, seeking a declaratory judgment and alleging breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, violation of the Massachusetts Consumer Protection Act, and violation of the federal RICO law.

Defendants CACH; Square Two, incorporated in Delaware with offices in Colorado; and J.A. Cambece Law Offices, a professional corporation with offices in Massachusetts removed the action to the federal district court on the grounds of federal question jurisdiction and supplemental jurisdiction. Schwartz moved to remand the action to state court, requesting permission to “dismiss without prejudice any separate RICO claims that are not part of the [Massachusetts Consumer Protection Act] claims.”

Schwartz’s motion could be read as an attempt to voluntarily dismiss the RICO-based declaratory judgment claim, or as a motion for leave to amend his complaint, the court observed. “Whatever the case, the request fails.”

While a plaintiff may voluntarily dismiss an action without court approval, the plaintiff must dismiss the entire action against a particular defendant, not merely some of the claims, according to the court. Schwartz sought only to dismiss the RICO claims, rather than all claims against any or all of the defendants.

The proper route to dismiss some, but not all, claims is to seek leave to amend pursuant to Federal Rule of Civil Procedure 15(a). Under Rule 15, a party may amend a pleading as a matter of course within 21 days of serving it or within 21 days after service of a responsive pleading or motion under Federal Rule of Civil Procedure 12(b), (e), or (f). A party may amend a pleading at other times, with the opposing party’s written consent or the leave of court.

In this case, Schwartz filed a motion to remand more than 21 days after the service of his complaint. Thus, he needed the written consent of the defendants or the leave of the court to amend the complaint. He had neither. Thus, Schwartz’s attempt to dismiss the RICO claims failed.

If he wished to file a notice of voluntary dismissal or a motion to amend his complaint, he could do so, the court noted. If he moved to amend his complaint—and ultimately the complaint no longer arose under federal law or otherwise conferred subject-matter jurisdiction—the district court could choose, in its discretion, to retain jurisdiction over the supplemental state-law claims or to remand the matter to state court.

Because the complaint arose under federal law, the district court had subject-matter jurisdiction. Schwartz’s motion to remand was therefore denied.

The case is Civil Action No. 13-12644-FDS.

Attorneys: Evans J. Carter (Evans J. Carter, PC) for Lawrence P. Schwartz. Joshua M.D. Segal (Lawson & Weitzen) for CACH, LLC. Wynter N. Lavier (Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC) for Square Two Financial Corp. Andrew M. Schneiderman (Hinshaw & Culbertson LLP) for J.A. Cambece Law Offices, P.C.

Companies: CACH, LLC; Square Two Financial Corp.; J.A. Cambece Law Offices, P.C.

Cases: RICO MassachusettsNews