Class Action Fairness Act – Special CAFA Rules for Appealability of Remand Orders Lawyers Should Know

When defending against a class action, it is important to understand that special rules apply under Class Action Fairness Act (CAFA) concerning the appealability of remand orders. Whether a federal district court order remanding an action to state court may be reviewed on appeal is important to any defendant, but special rules apply if the action has been removed to federal court under the Class Action Fairness Act of 2005. Because the focus of this article is on appellate review of district orders granting motions to remand a lawsuit to state court a case removed under CAFA, removal and remand are not discussed here; discussions of each may be found in separate articles, as is a discussion concerning appellate review of remand orders in non-CAFA cases.

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Amalgamated Transit Union v. Laidlaw Transit — Class Action Defense Cases

CAFA (Class Action Fairness Act of 2005) Requires Appeal From Grant or Denial of Motion to Remand Be Made Within 7 Court Days Ninth Circuit Holds On January 26, 2006, the Court of Appeals for the Ninth Circuit denied a motion to dismiss as untimely an appeal under CAFA (Class Action Fairness Act of 2005) from a district court order denying a motion to remand a putative class action to state court.

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Class Action Defense Cases–Prime Care of Northeast Kansas v. Humana Insurance: Tenth Circuit Rules On Removal Of Class Action Under CAFA (Class Action Fairness Act)

CAFA (Class Action Fairness Act of 2005) Allows Removal of Suit Filed Prior to CAFA’s Effective Date by Defendant Added to Suit by Amendment After CAFA’s Effective Date Tenth Circuit Holds On May 12, 2006, the Court of Appeals for the Tenth Circuit considered as a matter of first impression the question of “whether CAFA permits the removal of a class action filed before the Act’s effective date if the removing defendant was first added by amendment after the effective date.

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Class Action Defense Cases–Patterson v. Dean Morris: Fifth Circuit Rules On “Commencement Of Action” Under Federal Class Action Fairness Act (CAFA)

CAFA (Class Action Fairness Act of 2005) Determination of “Commencement” of Action Turns on State Law Fifth Circuit Holds

On May 3, 2006, the Fifth Circuit Court of Appeals issued its opinion in Patterson v. Dean Morris, L.L.P., ___ F.3d ___, 2006 WL 1156388 (5th Cir. 2006), where it considered whether an action that had been filed on February 17, 2005 (prior to CAFA’s February 18, 2005 effective date), but the filing fees not paid until February 22, 2005, could be removed to federal court under CAFA (Class Action Fairness Act of 2005). Slip Opn., at 6-7. The district court remanded the consolidated actions finding that CAFA did not apply, and the Fifth Circuit affirmed. _Id._, at 6. The Fifth Circuit’s analysis turned entirely upon state law, determining when Louisiana would deem the action to have been “commenced.” In so analyzing the case, the Court joined several sister circuits in relying upon state law to determine when an action has “commenced” under CAFA.

Louisiana law permits a party to fax-file a complaint, provided that the filing fee be paid within 5 days thereof, together with a $5 “transmission fee.” If a plaintiff fails to pay the required filing fee and transmission fee, then the fax filing “shall have no force or effect.” Slip Opn., at 7 (citations omitted). In Patterson, plaintiffs paid the court $3,039 on February 22. However, on May 12 plaintiffs learned that they owed the court an additional $2,145 in fees, which they did not pay until June 14. Defendants urged that the late payment took the action outside of the Louisiana statute’s five-day deadline, so the effective date of the commencement of the lawsuit was after the effective date of CAFA. Slip Opn., at 7.

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Class Action Defense Cases–Abrego Abrego v. Dow Chemical

CAFA (Class Action Fairness Act of 2005) Requires Defendant Establish Removal Jurisdiction in “Mass Action” Cases and Jurisdictional Discovery Discretionary Ninth Circuit Holds

CAFA greatly expands access to federal courts to class action defendants, as well as to defendants in “mass action” cases. One question federal courts have grappled with is whether Congress intended to shift the burden from a class action defendant to establish removal jurisdiction, to a class action plaintiff to prove that the matter should be remanded to state court. On April 4, 2006, the Ninth Circuit held that CAFA does not shift the burden of proof to plaintiffs in mass action cases. Abrego Abrego v. Dow Chemical Co., 443 F.3d 676 (9th Cir. 2006).

Abrego Abrego involved a mass action brought by 1160 Panamanian workers against Dow Chemical for alleged distribution and use in Panama of a pesticide banned in the United States. Dow removed the case to federal court under 28 U.S.C. § 1332(d)(11), added by CAFA to provide federal court jurisdiction over “mass actions.” (The requirements of mass actions are discussed in a separate article.) In response to plaintiffs’ motion to remand the action to state court, Dow argued:

[U]nder CAFA and contrary to preexisting removal jurisdiction law: (1) plaintiffs bear the burden of refuting the district court’s removal jurisdiction; (2) a “mass action” is removable regardless of whether there is jurisdiction over all plaintiffs whose claims are necessary to qualify the action as a mass action; and (3) the district court must allow jurisdictional discovery to determine the amount in controversy.

443 F.3d at 677-78. The district court found that Dow had failed to establish removal jurisdiction and remanded the case to state court. Id., at 679.

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Class Action Defense Cases–Braud v. Transport Service Company

Post-CAFA (Class Action Fairness Act of 2005) Amendment of Complaint to Add Defendant Allows Removal to Federal Court by that Defendant of Suit Filed Prior to CAFA’s Effective Date Fifth Circuit Holds On April 6, 2006, the Fifth Circuit Court of Appeals considered “an issue of first impression for this court: whether amending a complaint to add a defendant ‘commences’ a new suit under the Class Action Fairness Act of 2005 (CAFA),” Braud v.

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Ford Motor Class Action Defense Case–Phillips v. Ford Motor Company

Post-CAFA (Class Action Fairness Act of 2005) Amendment of Complaint to Add or Substitute Named Plaintiffs Does Not “Commence” New Action Under CAFA Seventh Circuit Holds

The Class Action Fairness Act of 2005 (CAFA) became effective on February 18, 2005. Understandably, then, federal courts still confront matters of first impression under CAFA. On January 30, 2006, the Seventh Circuit Court of Appeals addressed “whether amending a complaint to add or substitute named plaintiffs (class representatives) ‘commences’ a new suit” for purposes of CAFA. Phillips v. Ford Motor Co., 435 F.3d 785, 786 (7th Cir. 2006). The Court noted, “No appellate court has yet decided whether adding named plaintiffs to a class action suit ‘commences’ a new suit for purposes of removal under CAFA.” Id.

In Phillips, the lawsuits at issue had been filed prior to the enactment of CAFA, but new plaintiffs were added by amendment after CAFA’s effective date. The Seventh Circuit held that the amendment did not commence a new suit for purposes of CAFA. In analyzing the legal issue presented, the Court observed that state law controlled: because the question “is whether adding named plaintiffs commences a new suit in state court, the answer should depend on state procedural law.” Phillips, at 787.

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