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No Federal Jurisdiction for BofA Fraud Lawsuit

(CN) - A state court should determine whether Bank of America deceived Nevada consumers about mortgage modification programs, the 9th Circuit ruled.

A three-judge panel in Pasadena sent the parens patriae lawsuit to the Eighth Judicial District Court in Clark County, Nev., finding "no basis for federal subject matter jurisdiction."

Nevada sued Bank of America and its subsidiaries for violations of the state's Deceptive Trade Practices Act, alleging that the bank had misled consumers and violated a previous consent judgment. A federal judge granted the bank's motion to remove the case to the District of Nevada, terming the lawsuit a class action or a "mass" action that would require an interpretation of federal law.

The 9th Circuit unanimously reversed on Friday.

Under the Class Action Fairness Act (CAFA), parens patriae lawsuits - in which a state sues an entity on behalf of its citizens - cannot be removed to federal court, the panel found, adding that "the action does not otherwise satisfy CAFA's 'mass action' requirements."

"Nevada's strong sovereign interest in enforcing its state laws - and its state-law-created consent judgment - in the courts of its own state weighs in favor of remand to its state court system," the ruling states.

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