Decision of Interest: Ninth Circuit on the Class Action Fairness Act

The Ninth Circuit’s recent decision in Westwood Apex v. Contreras (No. 11-55362), 2011 WL 1744960, considers which kinds of defendants may remove a class action to federal court under the Class Action Fairness Act’s removal provision (28 U.S.C. § 1453(b)). The opinion by Judge Milan Smith begins:

The Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat. 4, confers federal jurisdiction over class action lawsuits where the amount in controversy exceeds $5,000,000 and the adversaries are minimally diverse. When a class action satisfying these conditions is filed in state court, Section 5 of CAFA provides that “such action may be removed by any defendant without the consent of all defendants.” 28 U.S.C. § 1453(b). In this appeal, we address whether CAFA Section 5, 28 U.S.C. § 1453(b), allows a party joined to an action as a defendant to a counterclaim (an additional counterclaim defendant) to remove the case to federal court. We hold that § 1453(b) does not permit additional counterclaim defendants to remove an action to federal court, and we affirm the district court’s decision to remand this case to state court.

The court explains:

Since the Supreme Court’s decision in Shamrock Oil & Gas Corporation v. Sheets, 313 U.S. 100 (1941), “defendant” for purposes of designating which parties may remove a case under § 1441 has been limited by a majority of the courts to mean only “original” or “true” defendants; “defendant” in Chapter 89, thereby, excludes plaintiffs and non-plaintiff parties who become defendants through a counterclaim. . . . Likewise, the Shamrock Oil rule has been extended to preclude removal by third-party defendants to an action. . . .

This accepted understanding of “defendant” as excluding plaintiff/counterclaim defendants and third-party defendants survived the enactment of § 1453(b).

Judge Jay Bybee writes a concurring opinion that begins: “I join Judge M. Smith’s opinion in full, but I write separately to emphasize that Congress may wish to reexamine the applicability of the original defendant rule in the Class Action Fairness Act context.”

For more coverage, see CAFA Law Blog.

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