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 proceed.
    • 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 the case.
  • Since this case, a number of other Federal Courts have struggled with the same issue, and have come to different conclusions.
  • 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.