Recent Fifth Circuit Interpretations of the Class Action Fairness Act

March 1 2018 | Committees

By: Alexandra G. Roselli

Most defendants prefer to litigate in federal court, which is why removing a lawsuit is often one of the earliest strategic decisions that defense counsel must confront. While federal question and diversity are the two most frequently raised bases for removal, another basis exists under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), which expands federal subject matter jurisdiction to certain class actions and mass actions. In the last few months, the United States Fifth Circuit Court of Appeals has given significant attention to CAFA in two opinions: one of which resolves res nova issues relating to mass actions, while the other addresses appellate review of remand orders.

  1. Lester v. Exxon Mobil Corp.

Under CAFA, a mass action includes any suit that involves 100 or more individual plaintiffs, who propose to try their claims jointly on the grounds that they involve common questions of law or fact. In Lester v. Exxon Mobil Corp., 879 F.3d 582 (5th Cir. 2018), the Fifth Circuit interpreted what constitutes a suit that is “proposed to be tried jointly,” such that it meets the requirements of a mass action. When plaintiffs from a separately filed suit moved to consolidate their action with the plaintiffs in Lester—which involved over 600 plaintiffs segregated into smaller trials—the defendants removed both suits as a mass action under CAFA. The court held that removal was appropriate because the plaintiffs’ motion to consolidate constituted a joint trial proposal and, therefore, qualified as a mass action. The plaintiffs argued that this creates a “dangerous precedent” because a separately-represented plaintiff can unilaterally trigger CAFA by filing an opposed motion to consolidate a separate case with a preexisting suit. The Fifth Circuit answered that it need not decide this issue because, here, the same lawyers represented the plaintiffs in both cases. There was a strong dissent by Judge Graves and, as of this writing, an application for rehearing en banc is pending.

  1. City of Walker v. State of Louisiana

In another opinion, the Fifth Circuit addressed the scope of appellate review of remand orders under CAFA. While remand orders are generally not reviewable, see 28 U.S.C. § 1447, CAFA supplies appellate courts with jurisdiction to “accept an appeal from an order of a district court granting or denying a motion to remand a class action.” 28 U.S.C. § 1453. However, the circuits are split on whether jurisdiction to review “an order” extends to the entire order or just CAFA-related issues within it. Some circuits—the Second, Third, Seventh, and Tenth—adopt an inclusive approach, holding that review jurisdiction can extend to every issue decided in “an order.”

The Fifth Circuit acknowledged this circuit split in City of Walker v. State of Louisiana, 877 F.3d 563 (5th Cir. 2017), where it addressed whether, on an appeal taken under CAFA, review extends to federal question jurisdictional issues. Recognizing the rapidly approaching CAFA deadline for quickly deciding the appeal, the court declined to adopt the inclusive approach and, instead, held that review “stops at the edge of the CAFA portion of the order.” In reaching its decision, the court chose to follow precedent in Patterson v. Dean Morris, L.L.P., 448 F.3d 736, 739 (5th Cir. 2006), where it held that review did not extend to issues relating to diversity jurisdiction. Accordingly, the Fifth Circuit concluded that it lacked review jurisdiction for the federal question issues.

CAFA is a relatively new statute which continues to perplex even the brightest legal minds. Because there are many unresolved issues, opinions like these are important. Indeed, Congress’s intent in providing for appeals of remand orders under CAFA was to “develop a body of appellate law interpreting [CAFA] without unduly delaying the litigation of class actions.” S. Rep. No. 109-14, at 49 (2005). This interest is further reflected in the appellate courts’ discretion to accept the appeal, the exercise of which largely turns on the importance and novelty of issues raised. See Alvarez v. Midland Credit Mgmt., 585 F.3d 890, 894 (5th Cir. 2009) (citing cases from the Second, Eighth, and Tenth Circuits).

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