Class Action Defense Cases-Meyers v. Texas: Defense Waives Right To Object To Federal Jurisdiction By Removing Class Action To District Court Fifth Circuit Holds

Fifth Circuit Holds that Defense Motion to Dismiss for Lack of Subject Matter Jurisdiction Should have been Denied Because State Removed Class Action to Federal Court Disabled persons filed a putative class action against the State of Texas alleging that its fee-based parking placard program violated the federal American with Disabilities Act (ADA); the defense removed the action to federal court and then moved to dismiss the action on state sovereign immunity grounds.

Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases-Eufaula Drugs v. Tmesys: Defense Removal Of Class Action Improper Because CAFA (Class Action Fairness Act of 2005) Inapplicable And Insufficient Amount In Controversy Alabama Federal Court Holds

Federal Court Remands Putative Class Action Over Defense Objection Because at Least One Member of Class Must Satisfy Jurisdictional Requirement for Damages and Because Under Alabama State Law Class Action was Commenced Prior to CAFA Even Though Summons Issued After CAFA’s Effective Date Issues regarding removal and remand, and regarding federal court jurisdiction under the Class Action Fairness Action of 2005 (CAFA), have been covered in several separate articles. On May 22, 2006, an Alabama federal court remanded to state court a putative class action over defense claims that the court had either diversity jurisdiction or jurisdiction under CAFA.

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Class Action Defense Cases-Roberts v. BJC Health: Defense Appeal Of Order Remanding Class Action To State Court Not Reviewable On Appeal Even Though State Court May Lack Jurisdiction Because Of ERISA Preemption Eighth Circuit Holds

28 U.S.C. § 1447(d) Bars Review of Class Action Defense Appeal of Order Remanding Case to State Court on Grounds that Federal Court Lacked Subject Matter Jurisdiction Over Action Roberts v. BJC Health System, 452 F.3d 737 (8th Cir. 2006), concerned a putative class action filed in Missouri state court alleging that certain medical procedures were systematically “miscoded” so that patients were overcharged for the procedures. The defense removed the action to federal court on the grounds of federal question subject matter jurisdiction, asserting that ERISA completely preempted the class action claims.

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Class Action Defense Issues–G.M. Sign v. Global Shop: New Case Law Does Not Constitute “Order Or Other Paper” Permitting Removal Of Class Action To Federal Court After 30-Day Period Has Lapsed Illinois Court Holds

The “Order or Other Paper” Exception to the 30-Day Period to Remove a State Court Action to Federal Court is not Satisfied By New Appellate Law

We have discussed that class action defense often benefits from removal of the case to federal court, and that the Class Action Fairness Act of 2005 (CAFA) greatly expanded access to federal courts in class action cases, in separate articles. If CAFA does not apply, then removal of cases to federal court generally is governed by 28 U.S.C. § 1446, also discussed in prior articles related to class action defense. Broadly speaking, the defense must remove a case to federal court within 30 days of receipt of the complaint or “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable,” 28 U.S.C. § 1446(b) (italics added). This 30-day time period is “mandatory” but not “jurisdictional.” Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980); Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1046 (2d Cir. 1991). On May 9, 2006, an Illinois federal district court considered whether a recent Seventh Circuit opinion constituted an “order or other paper” from which federal jurisdiction “may first be ascertained.” G.M. Sign, Inc. v. Global Shop Solutions, Inc., 430 F.Supp.2d 826 (N.D. Ill. 2006).

Plaintiff filed suit a putative class action against Global Shop Solutions in Illinois state court for alleged violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), which the then-existing weight of authority held “vests exclusive jurisdiction in state courts for private actions under the TCPA,” though the Seventh Circuit Court of Appeal had not yet addressed the issue. G.M. Sign, at 827-28 and n.1. In fact, a week Global Shop had been served, an Illinois federal district court remanded a similar TCPA action to state court “holding that the TCPA conferred exclusive [jurisdiction] on the state courts.” Id., at 827 (citing Brill v. Countrywide Home Loans, Inc., 2005 WL 2230193 (N.D. Ill. 2005)). After the time for removal had passed, the Seventh Circuit reversed Brill and held that TCPA claims may be brought in federal court both under federal question jurisdiction and under diversity jurisdiction. Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 451 (7th Cir. 2005). Global Shop removed its class action lawsuit to federal court 32 days after the issuance of Brill.

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Motions to Defeat Diversity Jurisdiction: Class Action Defense Issues

28 U.S.C. § 1447(e) Once a class action has been removed to federal court based on diversity jurisdiction, a plaintiff may seek to destroy diversity by naming additional defendants. Any such attempt would fall squarely within the ambit of 28 U.S.C. § 1447(e), which provides as follows: If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.

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Motions to Remand: Class Action Defense Issues

28 U.S.C. S 1447 – 30 day Time Limit

Defendants in class actions often remove their case to federal court whenever possible. Plaintiffs invariably seek to remand class actions to state court. Thus, once a class action has been removed to federal court, it can be expected that plaintiff’s counsel will file a motion to remand the matter to state court. Remand of cases to state court is governed by 28 U.S.C. S 1447(c). “A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal,” 28 U.S.C. S 1447(c). However, “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” Id.

Thus, like its removal counterpart (28 U.S.C. S 1446(b), which requires removal within 30 days of receipt of the necessary pleading or other paper), Section 1447(c) requires that any motion to remand – except one based on lack of subject matter jurisdiction – “must be made within 30 days after the filing of the notice of removal.” The United States Supreme Court summarized the requirement this way:

Once a defendant has filed a notice of removal in the federal district court, a plaintiff objecting to removal “on the basis of any defect in removal procedure” may, within 30 days, file a motion asking the district court to remand the case to state court. S 1447(c). This 30-day limit does not apply, however, to jurisdictional defects: “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” Ibid.

Caterpillar Inc. v. Lewis, 519 U.S. 61, 69, 117 S.Ct. 467, 473 (1996).

The exception for subject-matter jurisdiction cases simply reflects the general rule that jurisdictional defects may be asserted at any time and cannot be waived. See, Regents of University of California v. Bakke, 438 U.S. 265, 380 n.1, 98 S.Ct. 2733, 2794 n.1 (1978) (“lack of jurisdiction . . . touching the subject matter of the litigation cannot be waived by the parties”) (quoting United States v. Griffin, 303 U.S. 226, 229, 58 S.Ct. 601, 602, 82 L.Ed. 764 (1938)). See also, United States v. Meyer, 439 F.3d 855, 863 (8th Cir. 2006) (“[l]ack of subject matter jurisdiction cannot be waived by the parties or ignored by the court”) (quoting In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 928 (8th Cir.2005)).

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Class Action Defense Cases: Knudsen v. Liberty Mutual

Changing Class Definition in Class Action Does Not Constitute New Case Permitting Removal Under CAFA (Class Action Fairness Act) Seventh Circuit Holds

Congress enacted CAFA (Class Action Fairness Act of 2005) for the purpose of expanding defense access to federal courts in class action cases. CAFA applies only to class actions filed after its effective date (February 18, 2005), but federal courts have held that certain pleading amendments – such as adding a new party-defendant – constitutes the commencement of a “new case” thus permitting removal by defense attorneys to federal court. Class action defendants often benefit if they can remove the case to federal court, and many have tested the limits of CAFA by removing class action cases on the grounds that different actions by the plaintiffs’ lawyer commenced a new suit.

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Motions to Remand – Supplemental Jurisdiction When Federal Claims Are Resolved: Class Action Defense Issues

28 U.S.C. § 1447 – Supplemental Jurisdiction When Federal Claims Are Resolved

Defendants in class actions often remove their case to federal court whenever possible. Plaintiffs invariably seek to remand class actions to state court. Thus, once a class action has been removed to federal court, it can be expected that plaintiff’s counsel will file a motion to remand the matter to state court. When removal is based on federal questions jurisdiction, then plaintiffs may seek to secure remand by dismissing their federal question claims.

What happens, then, if an action is removed to federal court based on federal question jurisdiction and the district court exercises supplemental jurisdiction (see 28 U.S.C. §1367) over the remaining state claims, but the federal question claims are later resolved (whether by voluntary dismissal, motion to dismiss or summary judgment) leaving only state law claims before the court?

Remand of cases to state court is governed by 28 U.S.C. §1447(c). “A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal,” 28 U.S.C. § 1447(c). However, “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” Id.

If an action is removed to federal court based on federal question jurisdiction but the federal question claims are later revolved, leaving only state law claims, then two separate questions are presented. First, how does the 30-day time period for filing a motion to remand apply? A recent district court opinion holds that the absence of a federal question goes to subject matter jurisdiction and therefore is not subject to the 30-day rule:

Clearly, the defect urged by Plaintiffs is one of subject-matter jurisdiction, and not some other defect in the removal procedure. Thus, Plaintiffs’ alternative request for discretionary remand to state court is not subject to the thirty-day time limitation in §1447(c), and is, therefore, timely. See e.g., Pierpoint v. Barnes, 94 F.3d 813, 818 (2d Cir. 1996) (stating that the thirty day time period was specifically written “in terms of a defect in ‘removal procedure’ in order to avoid any implication that remand is unavailable after disposition of all federal questions . . . .”).

Hardy v. GMRI, Inc., 2006 WL 752506, *2 (S.D. Iowa 2006).

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General Rules for Appealability of Remand Orders: Class Action Defense Issues

Class action defendants often remove their case to federal court whenever possible. Plaintiffs almost invariably seek to remand the action to state court. Whether a federal district court order remanding an action to state court may be reviewed on appeal thus is important to any defendant. Because the focus of this article is on appellate review of district orders granting motions to remand a lawsuit to state court, removal and remand are not discussed here; discussions of each may be found in separate articles. Also, special rules apply to cases removed to federal court under CAFA (Class Action Fairness Act of 2005), and those are discussed in a separate article.

If an action is remanded to state court, the plaintiff commonly will assert that appellate review is barred by 28 U.S.C. § 1447(d). However, 28 U.S.C. § 1447(d) precludes review of remand orders only when the case is remanded for reasons stated in § 1447(c). Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 350 (1976). A remand order that is not based on statutory grounds is reviewable because there “is no indication whatsoever that Congress intended to extend the prohibition against review to reach remand orders entered on grounds not provided by the statute.” Id. If, for example, the district court remands the action to state court based on the mistaken belief that state courts have concurrent jurisdiction over the subject matter of the dispute, then the matter is reviewable on appeal because that basis for remand is not among the statutory grounds of 28 U.S.C. § 1447(c).

A plaintiff may seek to insulate the remand order from review by referencing 28 U.S.C. § 1447(c) in the order. While that move may strengthen the plaintiff’s case, it does not serve as a talisman to bar appellate review. In the Ninth Circuit, for example, the appealability of a remand order is subject to de novo review. The Circuit Court is not bound by the lower court’s characterization of its bases for remanding a case to state court. Ferrari, Alvarez, Olsen & Ottoboni, v. Home Ins. Co., 940 F.2d 550, 553 (9th Cir. 1991) (“We determine the basis of authority for remand by examining the substance of the remand order.”).

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Class Action Defense Cases–Miedema v. Maytag: Defense Bears Burden Under Class Action Fairness Act of 2005 (CAFA) To Establish Subject Matter Jurisdiction

CAFA (Class Action Fairness Act of 2005) Requires Defendant Prove Subject Matter Jurisdiction Supporting Removal Eleventh Circuit Holds Removal under CAFA (Class Action Fairness Act of 2005) continues to raise basic questions. On June 5, 2006, the Court of Appeals for the Eleventh Circuit addressed several of these questions in Miedema v. Maytag Corporation, ___ F.3d ___, 2006 WL 1519630 (11thCir. 2006). The main issue presented was whether CAFA shifted the burden of proof to the plaintiff to establish that remand was proper.

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