The U.S. Supreme Court recently granted certiorari in Home Depot U.S.A. Inc. v. Jackson, No. 17-1471 to decide whether a defendant to a class-action counterclaim can remove the case to federal court under the Class Action Fairness Act (CAFA) where the jurisdictional requirements under CAFA are otherwise satisfied. At one level, the dispute involves the meaning of “any” versus “the,” an esoteric battle that only a lexicographer or civil procedure nerd would find interesting. At another level, the dispute is over whether plaintiffs can strategically avoid federal jurisdiction by filing class action counterclaims or claims against third-party defendants in small suits, typically debt collection suits. When the big corporation sues for $5,000 in some little state court, it gets hit with a $50 million putative class action that courts have held cannot be removed to federal court.

This case was originally filed in North Carolina state court as a debt collection suit by Citibank against the plaintiff, George W. Jackson. Perhaps because his lawyer recognized that the best defense is a big offense, Jackson filed a counterclaim against Citibank, and also brought class action claims against Home Depot and Carolina Water Systems as third-party defendants. Home Depot removed the case to federal court under CAFA, and moved to realign the parties.  Citibank voluntarily dismissed without prejudice its original debt collection claims. The district court remanded the case on the grounds that Home Depot was not a “defendant” under CAFA, and denied the motion to realign. The Fourth Circuit granted permission to appeal, and affirmed.

The Fourth Circuit’s decision noted that Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941) held that an original plaintiff could not remove a counterclaim under a predecessor statute to 28 U.S.C. § 1441, which only authorized removal by a “defendant.” The Fourth Circuit explained that courts have reached the same result under the current version of § 1441, which is similarly allows removal by “the defendant or the defendants.” CAFA, in section 1453(b), permits removal by “any defendant,” and otherwise broadens the scope of removal in other respects (such as by eliminating the one-year rule, and allowing a defendant to remove in its home state). The Fourth Circuit had previously held that the use of the word “any” defendant rather than “the” defendant did not expand the scope of removal to encompass counterclaim defendants, and thus held that only an original defendant can remove. The Fourth Circuit rejected Home Depot’s argument that the Supreme Court’s decision in Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014), which noted that there is no antiremoval presumption under CAFA, warranted a different outcome. The Fourth Circuit noted that only the Supreme Court could overrule Shamrock Oil, and it would leave to the Supreme Court whether “defendant” means something different in CAFA than it does in § 1441. The Fourth Circuit also rejected Home Depot’s argument that it was no longer truly a defendant because Citibank had voluntarily dismissed its claims.

The petition argued that, although there is no circuit split, that is because the courts of appeals have consistently, but erroneously, interpreted Shamrock Oil, and only the Supreme Court can clarify Shamrock Oil.  The petition also highlighted the practical problem this creates for defendants like Home Depot, where they lose federal jurisdiction under CAFA simply because the class action claim is filed as a tag-along to a run-of-the-mill collections suit brought by another company.

The Court’s order granting certiorari also asked the parties to brief the following question: “Should this Court’s holding in Shamrock Oil & Gas Corp. v. Sheets, 313 U. S. 100 (1941) that an original plaintiff may not remove a counterclaim against it extend to third-party counterclaim defendants?” This suggests that the Court will be considering whether third-party defendants should have the right to remove cases not only under CAFA, but also under traditional diversity jurisdiction.

Print:
EmailTweetLikeLinkedIn
Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.