Appealing remand orders under the Class Action Fairness Act.

• Date: 22 September 2006
• Author: Horan, David L.
• Published date: 22 September 2006
• Author: Horan, David L.

Defendants generally may not appeal orders that remand cases once removed to federal court. (1) For parties in cases filed as class actions, however, Congress provided in February 2005 a new avenue for appellate review through 28 U.S.C. [section] 1453(c), a provision enacted in the Class Action Fairness Act of 2005. (2) Section 1453(c) provides for discretionary appellate review of any order denying or granting remand of a removed class action to state court. (3)

Though this discretionary appellate review offers some relief to parties in class actions, appeals under [section] 1453(c) present thorny procedural issues arising from imprecise and unclear language in the CAFA, which mostly concerns whether a party seeking to remove a class action to federal court must do so based on [section] 1453 and when the application for appeal must be filed. Thankfully, recent case law deciding the first round of appeals filed under this new provision sheds light on the procedural issues likely to confront litigants and courts of appeals in the near future.

Admittedly, filing deadlines, briefing formats, and other procedural requirements are not the stuff of most appellate lawyers' dreams. But, these matters can keep lawyers up at night, and getting them right is critical to presenting properly any substantive arguments to any appellate court. With that reality in mind, this article reviews the procedure--that is, the "who, what, where, when, and how"--for bringing a [section] 1453(c) appeal and concludes with several guidelines on navigating this statutory appeals process.

THE WHAT

Congress limits review of many remand orders through 28 U.S.C. [section] 1447(d), which states that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise." (4) In cases involving class actions, however, the CAFA provides a statutory procedure for reviewing such remand orders. Section 1453(a) provides that a "class action" is defined as

any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons. (5) Section 1453(b) provides for removal of a class action regardless of whether a defendant is a citizen of the forum state or whether all defendants consent to removal:

[a] class action may be removed to a district court of the United States in accordance with section 1446 (except that the 1-year limitation under section 1446(b) shall not apply), without regard to whether any defendant is a citizen of the State in which the action is brought, except that such action may be removed by any defendant without the consent of all defendants. (6) And, [section] 1453(c)(1) provides that an order concerning a motion to remand a class action back to the state court from which the case was removed is reviewable:

Section 1447 shall apply to any removal of a case under this section, except that notwithstanding section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed. (7) This last provision, [section] 1453(c)(1), raises two important interpretive issues as to the kinds of remand orders that are subject to CAFA's discretionary appeals and, thus, are excluded from the general prohibition on appellate review. First, [section] 1453(c)(1) may require parties seeking appellate review to have called upon this section and to have relied on particular jurisdictional statutes when the class action was removed to federal court. And this section may authorize appeals from orders remanding a removed class action sua sponte or as a result of a show cause order and, in either case, not based upon a party's motion to remand.

Section 1453(c)(1) authorizes discretionary appeals from an order granting or denying remand of a class action only if the case was removed pursuant to [section] 1453(b). (8) The Fifth Circuit in Wallace v. Louisiana Citizens Property Insurance Corp. (9) accordingly held that it lacked [section] 1453(c)(1) appellate jurisdiction to review a remand order, because the defendants failed to base their notice of removal on the CAFA, and because they "expressly disavowed any reliance on CAFA" when opposing the plaintiffs' motion to remand, such that there was "no nexus with CAFA that would justify the exercise of appellate jurisdiction under [section] 1453(c)(1)." (10) From the Fifth Circuit's decision in Wallace and the language of [section] 1453(c)(1) itself, it is reasonable to conclude that any class action defendant filing a notice of removal must invoke [section] 1453(b) as a basis for removal to preserve the possibility of a remand appeal.

Another aspect of this procedural issue is whether a party invoking [section] 1453(b) to remove a class action also must satisfy class action diversity jurisdiction under 28 U.S.C. [section] 1332(d). (11) Section 1332(d)(2), which was enacted in the CAFA along with [section] 1453, generally grants federal district courts original jurisdiction if the amount in controversy exceeds five million dollars, and the dispute is a "class action" in which any member of the plaintiff's class is a citizen of a state different from any defendant. (12)

While there is no doubt that [section] 1453(b) removal of a class action can be based on [section] 1332(d) class action diversity jurisdiction, [section] 1453(b) does not limit removal of class actions only to those that could be brought under a federal court's [section] 1332(d) class action diversity jurisdiction. Although some courts have implied in dicta that removal under [section] 1453(b) is limited to cases that meet the [section] 1332(d) diversity requirements, such a reading of [section] 1453(b)'s scope is not supported by its text. (13) There is no explicit limitation, because Congress did not explicitly limit [section] 1453(b)'s applicability, as it did in other CAFA provisions. (14) And there is no implicit limitation, because [section] 1453(b) allows removal of a class action "in accordance with section 1446," (15) which generally prescribes the removal procedures for civil actions and criminal prosecutions and also does not restrict its applicability to any particular federal jurisdictional statute. (16) Because [section] 1453(c)(1) relies on [section] 1453(b), which plainly relies on [section] 1446, [section] 1453(c)(1) authorizes appeals from any order remanding or refusing to remand a class action so long as it is removed pursuant to [section] 1453(b), regardless of the basis for the federal court's subject matter jurisdiction.

Some courts have rejected this view, however. (17) The Eighth Circuit has concluded that "the review provisions of 28 U.S.C. [section] 1453(c) are limited to class actions brought under CAFA, 28 U.S.C. [section] 1332(d)." (18) That court reasoned that, while [section] 1453 (c)(1)'s appeal provision applies by its own terms "to any removal of a case under this section," [section] 1453(a) defined "'class action' ... by reference to [section] 1332(d)(1), the diversity jurisdiction provision added by CAFA." (19) By this reasoning, the court found that it lacked appellate jurisdiction over the appeal of an order denying remand based on [section] 1332(a) traditional diversity jurisdiction, because [section] 1453(c) applies only to class actions removed based on [section] 1332(d) class action diversity jurisdiction simply because Congress incorporated by reference [section] 1332(d)(1)'s definition of "class action." Limiting [section] 1453's applicability through this reasoning seems tenuous at best, because [section] 1332(d)(1)'s definition of "class action" could easily apply to class actions that satisfy the requirements for, for example, federal question jurisdiction. Nevertheless, practitioners should note the Eighth Circuit's ruling.

A final and related aspect of the applicability of [section] 1453(c)(1) concerns whether a court of appeals is limited upon review of the remand order. Here, the circuit courts are split. The Seventh Circuit found in Brill v. Countrywide Home Loans, Inc., (20) that

[b]ecause [section] 1453(c)(1) permits appellate review of remand orders "notwithstanding section 1447(d)", [a court of appeals is] free to consider any potential error in the district court's decision, not just a mistake in application of the Class Action Fairness Act. (21) As Judge Easterbrook explained for the Seventh Circuit panel, where an "appeal is proper because the district judge reject[s a defendant's] argument that the Class Action Fairness Act allows removal," and where [section] 1453(c)(1) thus "authorizes interlocutory appellate review, it is the district court's entire decision that comes before the court for review." (22) From this court's rationale, potential class action parties can conclude that a court of appeals can reverse a remand order on the basis of arguments not limited to challenging mistakes in applying CAFA provisions.

As Wallace suggests, the Fifth Circuit, however, has taken a contrary view. Specifically in Patterson v. Dean Morris, L.L.P., (23) the Fifth Circuit observed that

[t]hough CAFA also provides that we "may accept an appeal from an order of a district court granting or denying a motion to remand a class action," this precatory language cannot serve as a mandate for us to reach otherwise non-reviewable remand decisions once we determine that CAFA is inapplicable. (24) The court went on to hold that CAFA limits discretionary review of a remand order "premised on the prerequisites of [section] 1453 or on claims with an adequate nexus to CAFA." (25)

The Eleventh Circuit for its part adopted the conclusion implicit in the reasoning of both the Fifth and Seventh Circuits. In Tmesys, Inc. v. Eufaula Drugs, Inc., the Eleventh Circuit found that it has jurisdiction to review a remand...