Ninth Circuit Allows Second Bite at the Removal Apple Under CAFA

Ninth Circuit Allows Second Bite at the Removal Apple Under CAFA

Typically, a defendant facing a lawsuit in state court must decide quickly whether to remove the action to federal court. Although there are various grounds to support removal, federal law requires the party seeking removal to do so within 30 days of receiving the initial pleading or “an amended pleading, motion, order, or other paper” from which it may first be ascertained that the case is removable.[1] Most often, this means that the defendant must decide whether to remove the action to federal court shortly after being served with the initial complaint.

However, in a recent decision from the Ninth Circuit, the three-judge panel held that, in certain cases, the defendant may have a second chance.[2] In Jordan v. Nationstar Mortgage LLC, the plaintiff filed a class-action lawsuit in Washington state court against Nationstar in April 2012. Among other claims, the initial complaint alleged violations of the federal Fair Debt Collection Practices Act, which alone would have warranted removal.[3] The complaint did not, however, specify the amount in controversy.

More than two years after filing suit, the plaintiff disclosed for the first time that the amount in controversy likely exceeded $25,000,000. Two days later, Nationstar removed the case to federal court pursuant to the Class Action Fairness Act (“CAFA”), which allows for removal of certain class actions where the amount in controversy is at least $5,000,000.[4]

The federal district court granted the plaintiff’s motion to remand the case to state court. Following Ninth Circuit precedent, the district court held that “the relevant removal date is the date on which the case itself becomes removable, rather than the date on which the case first becomes removable under CAFA.”[5] Because the complaint included a federal cause of action when filed, it could have been removed to federal court two years earlier, when filed, making Nationstar’s removal grossly untimely.[6]

But the Ninth Circuit reversed. Distancing itself from prior case law that had strictly construed the requirements for removal, and citing recent case law from the Ninth Circuit and the U.S. Supreme Court, the panel determined that CAFA’s provisions must be construed in favor of removal and that no anti-removal presumption attends cases involving CAFA.[7] Even though Nationstar could have removed the action earlier under based on federal-question jurisdiction, the 30-day removal window was reopened once the elements for removal under CAFA—a separate basis for removal—had been satisfied.[8]

While the facts in Jordan may distinguish it from cases where the basis for CAFA removal are apparent from the initial complaint, the holding is a clear break from prior Ninth Circuit case law and sets forth a more liberal approach to removal under CAFA.

–Ryan Solomon

[1] 28 U.S.C. § 1446(b).

[2] Jordan v. Nationstar Mortgage LLC, 781 F.3d 1178 (9th Cir. 2015).

[3] 15 U.S.C. § 1692, et seq.

[4] Jordan, 781 F.3d at 1180, 1182; 28 U.S.C. § 1332(d). Under the Class Action Fairness Act, a defendant in a class action may seek removal where (1) there is minimal diversity of citizenship between the parties; (2) the proposed class has at least 100 members; and (3) the aggregated amount in controversy is equal to or exceeds $5,000,000.

[5] Jordan, 781 F.3d at 1181.

[6] Id.

[7] Id. at 1183–84 (citing Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014) (holding that remand to state court was improper where the defendant failed to provide evidence that amount in controversy requirement under CAFA was satisfied, and expressly rejecting a presumption against removal in cases involving CAFA); Durham v. Lockheed Martin Corp., 445 F.3d 1247 (9th Cir. 2006) (holding that the thirty-day removal clock is reset when a defendant discovers that a case in removable on federal officer grounds under 28 U.S.C. § 1442(a)(1), even if the case was previously removable on other grounds)).

[8] Id.