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White & Case Wins Appeal for Kolter City Plaza II

Miami, June 16, 2010 ... Global law firm White & Case LLP won an appeal in the US Court of Appeals for the 11th Circuit on behalf of Kolter City Plaza II, a Palm Beach, FL-based real estate developer, in a multimillion dollar class-action lawsuit.

In Andrew Pretka, et al v. Kolter City Plaza II, Inc., the plaintiffs – on behalf of themselves and an alleged class of more than 300 individuals – sought rescission of their purchase and sale contracts for Two City Plaza, a new high-rise building in West Palm Beach, alleging breach of contract and violations of the Florida Condominium Act.

Plaintiffs filed the action in state court. White & Case removed the case to federal court under the Class Action Fairness Act of 2005 (CAFA), which Congress enacted to cure "abuses of the class action device" and which expressly broadened federal jurisdiction over class actions. The plaintiffs moved to remand the case to state court on the basis that the complaint did not allege any amount of damages and therefore Kolter could not show that the amount put in controversy by the complaint exceeded CAFA's $5 million jurisdictional minimum.

Although Kolter – concededly – knew the total amount of all deposits sought by plaintiffs in the action and submitted affidavits of its CFO and controller that the amount in controversy exceeded $5 million, the US District Court for the Southern District of Florida granted the plaintiffs' motion to remand. The District Court interpreted the 11th Circuit's 2006 decision in Lowery v. Alabama Power as prohibiting consideration of Kolter's affidavits because they were not documents created by the plaintiffs or received by Kolter from the plaintiffs. Several other District Courts had interpreted Lowery in the same way, effectively nullifying CAFA's intended expansion of federal jurisdiction and allowing plaintiffs – by the simple expedient of omitting a damage number from their complaints – to avoid federal court entirely.

CAFA, however, permits defendants to seek permission to appeal such decisions. White & Case successfully petitioned the 11th Circuit for permission to appeal. After expedited briefing, including supplementary briefing, the 11th Circuit issued its decision on June 8, 2010. In a 72-page opinion and concurring opinion, the court made clear that Lowery does not foreclose defendants from submitting affidavits or other documents to show that removal is proper under CAFA. To rule otherwise, the court held, would permit plaintiffs to game the system and to avoid federal jurisdiction by artful pleading. Accordingly, the court reversed the decision of the District Court and ordered that the case be returned to the federal docket.

"This case should be decided in Federal Court because a class action of this size and complexity belongs in federal court, with its more consistent procedures and better-developed law and where the judiciary has the appropriate resources to handle such large-scale litigation," said Jaime Bianchi, the lead partner on the case and a litigation partner with White & Case in Miami. "We are happy with the decision of the 11th Circuit to move this case back to federal court and are confident that we can defend our client successfully."

In addition to Bianchi, the White & Case team comprised partner David P. Draigh and associates Christopher Dawson and Laura Reich.

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