Opinion ID: 774566
Heading Depth: 3
Heading Rank: 2

Heading: Aggregation of Disgorgement Claims

Text: 78 Aggregation is appropriate only where a defendantowes an obligation to the group of plaintiffs as a group and not to the individuals severally. Morrison, 228 F.3d at 1262 (citing Eagle, 769 F.3d at 546). This understanding of aggregation is implicit in the two decisions in our circuit in which we have allowed aggregation. In the first, Eagle v. American Tel. & Tel. Co., we held that the claims of a corporation's shareholders for breach of fiduciary duty could be aggregated as a common and undivided interest because shareholders cannot normally bring suit individually, but must instead institute a derivative suit on behalf of the corporation as a whole. See 769 F.2d at 545-46. In the second, Skokomish Indian Tribe v. France, we allowed an Indian tribe to aggregate its quiet title actions against multiple defendants in order to satisfy the amount-in-controversy requirement that then existed for federal question jurisdiction under 28 U.S.C. §§ 1331. Because the land at issue had been given to the tribe in a single treaty, the land was contiguous, and all the defendants derived title from a single source, we held that aggregation was proper. See 269 F.2d at 559. 79 Eagle and Skokomish Indian Tribe are paradigm aggregation cases, each involving a single indivisible res and concerning matters that cannot be adjudicated without implicating the rights of everyone involved with the res. Gilman v. BHC Secs., Inc., 104 F.3d 1418, 1423 (2d Cir. 1997) (quoting Bishop v. General Motors Corp., 925 F. Supp. 294, 298 (D.N.J. 1996)). In contrast to the claims in Eagle and Skokomish Indian Tribe, plaintiffs' disgorgement claims in this case are each cognizable, calculable, and correctable individually. They rest on the common legal theory that Chrysler should give up the profit from its use of allegedly defective electrocoat finish techniques--a profit that can be separated into discrete and quantifiable sums attributable to each vehicle sold. Indeed, the amended complaint contends with some specificity that Chrysler made an additional profit of between $6.00 and $16.00 per vehicle by using the electrocoat technique. That sum can be traced to particular transactions involving individual plaintiffs, each of whom can sue Chrysler for disgorgement of this per-vehicle profit. See Gilman, 104 F.3d at 1423 (refusing to aggregate disgorgement claims that could be adjudicated on an individual basis); Sellers v. O'Connell, 701 F.2d 575, 579 (6th Cir. 1983) (refusing to aggregate where each plaintiff sought a fixed sum); Potrero Hill, 410 F.2d at 978 (refusing to aggregate claims of tenants in a housing project because their claims derived from individual leases). 80 Recovery by one plaintiff in this case would not, as a legal matter, either preclude or reduce recovery by another. See Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia, S.A., 988 F.2d 559, 563 (5th Cir. 1993) (denying aggregation where one plaintiff's recovery is neither dependent upon, nor necessarily reduced by, another's). Combining plaintiffs' relatively small individual disgorgement claims into a class action may well be necessary or advantageous as a matter of litigation economics, but that does not mean that Chrysler has an undivided obligation to the class within the meaning of the aggregation rule. Contrast Berman v. Narragansett Racing Ass'n, 414 F.2d 311, 313-15 (1st Cir. 1969) (aggregating claims to money owed by racetracks pursuant to contract naming as beneficiary the group of owners whose horses win purses). If the aggregation rule were otherwise, the amountin-controversy requirement would be satisfied in all largescale but small-dollar class actions in which individual litigation is difficult or impossible as a practical matter. 81 Chrysler argues alternatively that any court-ordered disgorgement would create a common fund that would satisfy the requirements of the aggregation exception. This argument mistakes the nature of the common fund, which is an artifact of litigation, not an intrinsic characteristic of the claims. We agree with the Second Circuit's view that [s]uch a fund is created to facilitate the litigation process in virtually every class action, and has nothing necessarily to do with whether the plaintiffs shared a pre-existing (pre-litigation) interest in the subject of the litigation. Gilman, 104 F.3d at 1427.