CAFA Removal Appeal to Watch

Here's one to watch.  The Supreme Court agreed earlier this week to consider whether defendants seeking removal of a proposed class suit to federal court under the Class Action Fairness Act must provide additional evidence supporting jurisdiction or just a short and plain statement of the grounds for removal. See Dart Cherokee Basin Operating Co., LLC v. Owens,  No. 13-719 (U.S., cert. granted 4/7/14).

The case came to the Court in an unusual posture. The Tenth Circuit denied defendant's petition for panel review, and the appeals court divided 4-4 on whether to hear the case en banc. Judge Hartz wrote a dissent, see 730 F.3d 1234 (10th Cir. 2013).

A defendant seeking removal of a case to federal court must file a notice of removal containing “a short and plain statement of the grounds for removal” and attach only the state court filings served on such defendant. 28 U.S.C. § 1446(a). Consistent with that statutory pleading requirement, the First, Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh Circuits require only that a notice of removal contain allegations of the jurisdictional facts supporting removal; those courts do not require the defendant to attach evidence supporting federal jurisdiction to the notice of removal. District courts in those Circuits may consider evidence supporting removal if it comes later in response to a motion to remand.

Here, the Tenth Circuit let stand an order remanding a class action to state court based upon the district court’s refusal to consider evidence establishing federal jurisdiction under CAFA because
that evidence was not attached to the original notice of removal. 

This case presents an important question of federal removal procedure and federal jurisdiction that potentially affects all litigants and district courts involved in a removal proceeding. More than 30,000 cases are removed to federal court each year.

New Law Takes Effect Regarding Venue, Removal

For all the litigators out there, a reminder that The Federal Courts Jurisdiction and Venue Clarification Act of 2011, H.R. 394, P.L. 112-63. took effect last week.  The act amends the federal jurisdictional statutes regarding diversity jurisdiction (28 U.S.C. § 1332), venue (28 U.S.C. §§ 1390-92, 1404), and removal (28 U.S.C. §§ 1441, 1446, 1454).  Legislative history here.

Among its provision, the new act states that, with respect to diversity, the district courts shall not have original jurisdiction of any civil action between citizens of a state, and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same state.

It modifies the citizenship rules to treat corporations as citizens of any foreign state: (1) by which it has been incorporated, and (2) where it has its principal place of business. It treats insurers as citizens of any foreign state: (1) of which the insured is a citizen, (2) by which the insurer has been incorporated, and (3) where the insurer has its principal place of business.

The law now dictates that, upon removal of any civil action with both removable and non-removable claims, the district court shall sever from the action all non-removable claims and remand them to the state court from which the action was removed.  So no discretion to hold on to such claims.

The law prescribes revised requirements for filing notices of removal, including allowing statements in the notice of the amount in controversy, when it exceeds the necessary amount, if the initial pleading seeks: (1) non-monetary relief; or (2) a money judgment, but where the relevant state practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded. Removal of the action is proper on the basis of an amount in controversy asserted this way,  if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds the amount required.

Importantly, the law now allows removal of a case based on diversity of citizenship more than one year after commencement of the action if the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.  This deals with a common plaintiff tactic in mass torts, such as the inclusion of a treater simply to defeat diversity. In 1988, Congress amended the statute to prohibit the removal of diversity cases more than one year after their commencement. This change was intended to encourage prompt determination of issues of removal in diversity proceedings, and it sought to avoid the disruption of state court proceedings that might occur when changes in the case made it subject to removal. The change, however, led some plaintiffs to adopt removal-defeating strategies designed to keep the case in state court until after the 1-year deadline passed. In those situations, some courts have viewed the 1-year time limit as `jurisdictional' and therefore an absolute limit on the district court's jurisdiction.

The new venue provision requires the issue of proper venue of any civil action brought in a U.S. district court to be determined without regard to whether the action is local or transitory in nature. It repeals the "local action" rule that any civil action, of a local nature, involving property located in different districts in the same state, may be brought in any of such districts.  It also allows a district court to transfer a civil action to any district or division to which all parties have consented.

Significantly, the act resolves a circuit split regarding the time each defendant in a multi-defendant case has to file a notice of removal. Traditionally, the defendant had 30 days from receipt of the plaintiff’s complaint to file a notice of removal.  But in multi-defendant cases, some courts have adopted the “first-served” rule, under which each defendant in a case had 30 days from the date on which the first defendant was served, while others adopted the “later-served” rule, which gives each defendant a 30-day period to file a notice of removal after that defendant is served.  The new law adopts the latter view (but keeps the unanimity rule.)

New Edition of Reference Manual on Scientific Evidence

The National Research Council and Federal Judicial center last week released the new edition of the Reference Manual on Scientific Evidence. Readers of MassTortDefense know   about this manual as a guide for judges searching for effective and fair ways to handle science-based issues, including assessing expert testimony. The Supreme Court has made clear that the law imposes on trial judges the duty, with respect to scientific evidence, to become evidentiary gatekeepers. The judge, without interfering with the jury’s role as trier of fact, must determine
whether purported scientific evidence is “reliable” and will “assist the trier of fact,” thereby keeping from juries testimony that  lacks the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.

The manual is intended to assist judges in managing cases involving complex scientific and technical evidence by describing the basic tenets of key scientific fields from which legal evidence is typically derived and providing examples of cases in which that evidence has been used. As the introduction to the new edition notes, the search is not a search for scientific precision. Courts cannot hope to investigate all the subtleties that characterize good scientific work. A judge is not a scientist, and a courtroom is not a scientific laboratory. But the objective is to seek legal decisions that fall within the boundaries of scientifically sound knowledge.

The Manual includes general chapters such as on "The Admissibility of Expert Testimony" and "How Science Works," and specific chapters on (of interest to our readers) Exposure Science,  Epidemiology, and Toxicology, and new chapters on Neuroscience, and Mental Health Evidence. The authors note the new edition has a focus on two critical topics that judges frequently confront, causation and expert bias.

The new edition was produced by a committee of judges, scientific experts, attorneys and academics. Bu it will be interesting to see if readers, after getting a chance to review it, will find that this version inappropriately undermines the Daubert guidelines enunciated by the Supreme Court and overemphasizes the "discretion" of trial judges to "manage" their dockets despite the meaning of the Federal Rules of Evidence.