With a Whimper . . .

Aghaji v. Bank of America, No. B261971 (D2d4 May 31, 2016)

This is a “mass joinder” case. That’s where hundreds of plaintiffs try to join their individual suits into a mega-litigation, without it being subject to any of the rules or restrictions of a class action. These kinds of cases keep popping up in the mortgage litigation context, where a whole swath of homeowners—often represented by a common attorney or firm—try to argue that some kind of defect in the process means that they can’t be foreclosed on, or that they don’t have to pay, or something similar to that.

The general point, the plaintiffs would say, is that since each plaintiff is an actual party, the due process risks inherent in representative litigation don’t arise, so class action-type procedures aren’t necessary. But even if an attorney with 300 clients in a single case represents each client and not a class, if they are right, that doesn’t mean plaintiffs don’t need to satisfy the ordinary joinder statute. Moreover, since plaintiffs are bringing joined instead of absent parties in representative litigation, each of them should need to meet the basic requirements applicable to any old plaintiff, such as stating facts meriting a claim for relief in a complaint.

In my (limited) experience with mass joinder cases, the complexity of dealing with something so big puts a lot of strain on the court as an institution. There’s a risk is that, just to make things administratively manageable, the court feels some temptation to cut plaintiffs some slack regarding the rules applicable to an ordinary case, such as individualized pleading and proof. Or at least the court might lack either the resources or incentive to enforce the general non-class-action rules on a claim-by-claim basis. Instead, you can get what happened here—an “omnibus complaint” that speaks only in generalities and is almost impossible to address on a plaintiff-by-plaintiff basis in a demurrer but which also is immune to class action objections such as lack of commonality or typicality.

It's also worth noting that mass joinder litigation—particularly cases like this that arise from the mortgage crisis—has less than a stellar reputation when it comes to ethical attorney conduct. Whatever avenues for abuse exist in class action procedure, at least the absent members of the class don’t pay the lawyers anything out-of-pocket for the benefit of being in the class. Only if plaintiffs win or get a settlement does class counsel takes his or her comp out of the common fund. In contrast, mass joinder cases are often sold to ordinary folks as a mortgage modification/foreclosure avoidance strategy. That setup often entails each plaintiff paying a lump sum fee for the privilege of joining the mass, in exchange for a vague explanation that joining the litigation will get a plaintiff out of her mortgage or avoid or reverse a foreclosure. Given that dynamic, these mass joinder lawyers often have more interest in dragging the case out as long as possible—maximizing the time in which they can round up new plaintiffs to join and collect their fees—instead of making much of a sincere effort to litigate the case to win.

This particular case has kind of a weird posture. The plaintiffs—more than 200 of them—claimed that defects in the assignments of their mortgages meant that they no longer needed to pay them. The trial court dismissed all the claims, holding that the suffered from a common defect—that each plaintiff lacked standing to challenge defects in the assignment process.

While the appeal was pending, the Supreme Court decided Yvanova v. New Century Mortgage Corp, 62 Cal.4th 919 (2016), which largely rejected the standing argument relied upon by the trial court when it granted the demurrer. But plaintiff’s didn’t appeal the standing ruling. Instead, they appealed only the court’s denial of leave to amend to transform their case into an entirely different theory based on violation of some federal banking regulations. (As I said, endless leave to amend is part of the playbook here.) The Court of Appeal rejects the banking reg theory on the merits in what appears to be a sensible analysis. 

But then it somewhat subtly drops a bomb by holding that amendment also can’t work because the claims are misjoined under Code of Civil Procedure § 378. The court explains that each plaintiff’s case arises from a unique loan transaction, between a different plaintiff and one of many different defendants, entailing varied dealings between the plaintiffs and defendants on a case-by-case basis. That makes joinder inappropriate, particularly given the nature of the claims asserted. As the court notes, “[n]othing unites all of these Plaintiffs but the superficial similarity of their allegations and their common choice of counsel.”

And with that, the court has potentially and without much fanfare ended mass joinder mortgage litigation. We’ll see.

Affirmed.