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: CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005

The US Court of Appeals can Unwind and Rewind a CAFA Action

Rhoades v. Progressive Cas. Ins. Co., No. 10-17129, 2010 WL 5139258 (9th Cir. Cal. Nov. 23, 2010). 

 

While reversing a district court's remand order, the Ninth Circuit found that appellate jurisdiction over remand orders exists despite the occurrence of events subsequent to the remand, and in addition, federal courts retain power to enforce removal jurisdiction against state court proceedings. 

The plaintiffs, claims adjusters employed by the defendant, Progressive Casualty Insurance Company, brought a wage and hour class action in state court for unpaid waiting period, inaccurate wage statements, and for penalties under the California Labor Code.

The defendant removed the action to the federal court; following which the plaintiffs filed a first amended complaint ('FAC') alleging violations of the California's Labor Code and Business and Professions Code, and then a remand motion. Without considering the FAC--(a court cannot consider a pleading subsequent to the removal petition), the District Court, on June 10, 2010, remanded the action to the state court. 

If at first you don't succeed, try, try again. Based on the allegations in the FAC, the defendant again removed the action to the District Court. The plaintiffs again moved to remand arguing that the defendant failed to satisfy its burden of showing that the amount in controversy exceeded the sum of $5 million. The District Court agreed and granted the motion on October 8, 2010. The defendant appealed the June 10, 2010 order, and the Ninth Circuit reversed and remanded. 

The Ninth Circuit stated that the defendant tendered credible and unrebutted evidence that the amount sought exceeded $5 million due to the claim for unpaid overtime and attorneys fees; thus, the District Court erred in remanding the action to state court.

The plaintiffs, however, contended that the Ninth Circuit lacked appellate jurisdiction because of events that had occurred subsequent to the District Court's remand order.  The Ninth Circuit found that appellate jurisdiction over remand orders exists despite the occurrence of events subsequent to the remand, and in addition, federal courts retain power to enforce removal jurisdiction against state court proceedings. 

The dissenting judge, however, observed that in concluding that the appellate court had jurisdiction over the District Court's June 10, 2010 remand order, even though events after the remand had made any controversy regarding that remand order moot, the majority relied on a Fifth Circuit case--News-Texan, Inc. v. City of Garland, 814 F.2d 216, 218 (5th Cir. 1987).  The dissent noted that the Ninth Circuit's precedent, however, was otherwise. The Ninth Circuit's precedent in United Steel Workers Int'l Union v. Shell Oil Co., 602 F.3d 1087, 1092 n.3 (9th Cir. 2010) indicates that when a properly removed case is remanded, and then becomes moot in the course of litigation, a federal court no longer has jurisdiction over the case. (Editors' Note: See the CAFA Law Blog analysis of Shell posted on August 13, 2010).

The dissent concluded that the defendant's appeal of the District Court's June 10, 2010 remand order was moot.  The dissent remarked that after the June 10^th remand, the defendant could have taken one of a number of procedural steps to maintain the status quo, including seeking a stay of the District Court's June 10^th remand order pending resolution of this appeal.  

Had the defendant done so, the Ninth Circuit's jurisdiction over this appeal would have been unaffected, the dissent observed. But instead, after the June 10^th remand, the defendant decided to remove the case again, resulting in a second remand order that is now both final and unreviewable. Thus, the dissent remarked that when the party appealing a decision participates in conduct that moots its case while it is on appeal, the appellate court is not authorized to provide that party with appellate relief.  Accordingly, the dissent concluded that the Court should not take the extraordinary steps of vacating the District Court's remand order that the defendant elected not to appeal, and unwinding subsequent state-court proceedings undertaken pursuant to a final remand order.

Full post as published by CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005 on January 25, 2011 (boomark / email).