Anyone who has been on the receiving end of unsolicited communications from lawyers who don’t represent you knows that such missive can sometimes be a frightening thing. But not always. I am pleased to pass along a response by two Jones Day lawyers to arguments I set forth in a blog post about their amicus curiae brief in Standard Fire Insurance Co. v. Knowles a couple months ago (as well as to related arguments set forth in an amicus curiae brief opposing theirs). Their response does not change my assessment of the merits of their position, which I still find unpersuasive. But it’s a shrewd move on their part to continue the conversation. The first challenge of amicus curiae advocacy of the sort in which they are engaged is to get one’s arguments considered. These lawyers accomplished this in the first instance through a write-up in Alison Frankel’s “On the Case” column. Were it not for the fortuity of having a link to my post lingering at the top of Howard Bashman’s “How Appealing” for a time, I doubt many would have noticed my arguments about the position in their brief. But I suppose that is how the Internet works. In any event, I am happy to satisfy the Jones Days lawyers’ request to post this response. While I do not think that their position ought to prevail in Standard Fire, their firm is on the right side of the HHS Mandate litigation and I am grateful for that. Their full response is below.
In defense of NAM’s jurisdictional argument
in Standard Fire Insurance Co. v. Knowles
Gregory G. Katsas and Jeffrey A. Mandell
We filed an amicus brief on behalf of the National Association of Manufacturers in Standard Fire Insurance Co. v. Knowles. That brief has attracted significant attention, including on this blog, because the position it advocates would increase defendants’ ability to remove class actions from state to federal court. Knowles’ merits brief addresses NAM’s argument by suggesting it is inapplicable in this case. But two other sources—an extended post on this blog and an amicus brief filed by Public Citizen and Public Justice—challenge NAM’s position on its merits. This post responds to those challenges. (The arguments in this post reflect only the authors’ views, and not those of Jones Day or any client other than NAM.)
Knowles, which will be argued before the Supreme Court on January 7th, involves the removal of class actions from state to federal court under the Class Action Fairness Act of 2005 (“CAFA”). One provision of CAFA creates original jurisdiction in federal court over any class action that involves (1) a dispute of more than $5 million, (2) at least 100 class members, and (3) minimal diversity of citizenship—i.e., diversity as between at least one class member and one defendant. See 28 U.S.C. § 1332(d)(2), (5). Another provision of CAFA generally allows defendants to remove class actions from state to federal court. See 28 U.S.C. § 1453(b). Both parties in Knowles assume that the restrictions on original jurisdiction apply equally to removal jurisdiction, disputing only the scope of the amount-in-controversy requirement. But, as NAM’s brief shows, CAFA’s plain language indicates that any class-action defendant may remove a case from state to federal court. The contrary arguments made by Professor Walsh and Public Citizen (collectively “the critics”) fall short of the mark.
First, the critics insist that § 1453 merely governs the procedures for removal of class actions. But the statutory text does more than set forth removal procedures; instead, it provides that “[a] class action may be removed to a district court of the United States in accordance with section 1446.” 28 U.S.C. § 1453(b). Insofar as § 1453 addresses removal procedures, it does so through a cross-reference to § 1446, which is the procedural counterpart to the general removal statute and which does not address the substantive scope of removal jurisdiction. But § 1453 does expressly address that question: in stating that “[a] class action may be removed,” it uses the same jurisdiction-creating language as both the general removal statute (§ 1441(a): civil actions within federal courts’ original jurisdiction “may be removed”) and the bankruptcy removal statute (§ 1452(a): “[a] party may remove any claim or cause of action” related to a bankruptcy case), and it differs in kind from § 1446, which contains no language authorizing removal, but merely provides procedures for “defendants desiring to remove any civil action from a State court.”[1] Moreover, the title of § 1453 (“Removal of Class Actions”) parallels those of § 1441 (“Removal of Civil Actions”) and § 1452 (“Removal of Claims Related to Bankruptcy Cases”), all of which differ in kind from the title of § 1446 (“Procedure for Removal of Civil Actions”). If CAFA were designed to expand original and removal jurisdiction in tandem, there would have been no need to create a new § 1453 in the U.S. Code. Instead, just as CAFA expanded original jurisdiction over class actions by amending § 1332, it could have altered the removal procedures for class actions by amending § 1446.
Second, the critics point to three clauses in § 1453(b) that they contend implicitly recognize that § 1441, not § 1453, authorizes removal of class actions. However, these clauses simply confirm that some limitations on removal jurisdiction in other contexts do not apply under CAFA. For example, § 1453(b) authorizes removal of class actions “without regard to whether any defendant is a citizen of the State in which the action is brought.” This clause, they contend, creates an exception to § 1441(b)(2), which provides that “[a] civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” From this, the critics draw an inference that removal of class actions must be accomplished not only through § 1453, but also through § 1441. However, the fact that § 1453 and § 1441 provide opposite rules regarding the jurisdictional consequences of naming an in-state defendant hardly suggests that one provision implicitly incorporates the other. Moreover, the argument also fails on its own terms: because original federal jurisdiction over class actions is addressed in § 1332(d), not in § 1332(a), such suits are not “removable solely on the basis of . . . section 1332(a).” Accordingly, § 1441(b)(2) simply does not address removability under CAFA, and there is even less reason to think that § 1453 implicitly incorporates § 1441 and then silently modifies § 1441(b)(2).
Contrary to the critics, § 1453(b)’s in-state-defendant clause is not an exception to an otherwise applicable provision. Rather, it is a confirmation—not essential, but helpful to those navigating the statute—that the presence of an in-state defendant does not destroy removal jurisdiction under CAFA as it would destroy removal jurisdiction under § 1441. That emphasis makes sense in light of pre-CAFA history, under which the provisions of § 1441 had long been cited to prevent removal of class actions. So, to emphasize its departure from prior rules, Congress spelled out in § 1453 some distinguishing features of CAFA removal, even though doing so was unnecessary given its broad authorization of removal jurisdiction for class actions.
For similar reasons, the critics overstate the importance of the provision in § 1453(b), which says class actions “may be removed by any defendant without the consent of all defendants.” The critics note that this rule differs from that under § 1446(b)(2)(A), which provides that “[w]hen a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.” And, the critics reason, if CAFA removal did not proceed under § 1441(a), which limits removal jurisdiction to cases in which the district courts would have had original jurisdiction, then there would have been no need to enact a different rule for CAFA removal. Contrary to the critics, however, there is no reason to pile inference upon inference in order to engraft non-textual limitations onto § 1453(b). Given familiarity with the pre-CAFA requirement that all defendants must consent to removal, Congress sensibly could have decided to be explicit that this procedural requirement does not apply to CAFA. Moreover, the critics’ approach requires assuming not just that § 1441 augments § 1453 in authorizing CAFA removal, but that CAFA removals are accomplished “solely under section 1441(a).” That account renders meaningless the opening words of § 1453(b), which identifies—in the same jurisdiction-conferring language contained in other federal removal statutes—a distinct group of cases that “may be removed” to federal court.
The final clause cited by the critics is the parenthetical statement in § 1453(b) that “the 1-year limitation under section 1446(c)(1) shall not apply” to class actions removed under CAFA. The critics note that this parenthetical cross-references § 1446(c)(1), which is a limitation on the purely procedural removal mechanism of § 1446(b)(3). In delimiting the cases to which this procedural limitation applies, § 1446(c)(1) contains a reference to “jurisdiction conferred by section 1332.” The critics place a great deal of weight on this statutory pinball machine—ricocheting the reader from § 1453(b) to § 1446(c) to § 1446(b) to § 1332—by suggesting that the attenuated inference they find at the end should trump § 1453’s plain text, which authorizes removal of class actions. As Justice Kagan recently wrote for a unanimous Court, “It would be hard to dream up a more roundabout way of [reaching a statutory result]. If Congress had wanted to [reach that end], it could just have said so. The [proponents have] offered no reason for Congress to have constructed such an obscure path to such a simple result.” Kloeckner v. Solis, No. 11-184, slip op. at 10 (U.S. Dec. 10, 2012). Prior to CAFA’s enactment and the creation of § 1453, § 1446—which no one contends is a jurisdictional statute—contained a shorthand reference to § 1332. The critics offer no account of how Congress’s creation of § 1453 injected jurisdictional significance into a limitation in a purely procedural provision that is referenced by another purely procedural provision that is in turn referenced by a parenthetical in § 1453(b). In Justice Kagan’s words, “taking the [] analysis one step at a time makes it no more plausible than as a gestalt.” Kloeckner, slip op. at 10. The more plausible, straightforward reading of this parenthetical is that, like its two companion clauses in § 1453(b), it serves as a helpful though non-essential signpost that CAFA removal is free from some familiar limitations applicable to removal under the general removal statute.
Third, Public Citizen invokes § 1332(d)(11), the CAFA provision that addresses mass actions—civil actions involving 100 or more plaintiffs that involve common questions of law or fact but that are not class actions. Section 1332(d)(11)(A) provides in pertinent part that, “[f]or purposes of this subsection and section 1453, a mass action shall be deemed to be a class action removable under paragraphs (2) through (10) if it otherwise meets the provisions of those paragraphs.” Public Citizen insists that the phrase “removable under paragraphs (2) through (10)” shows that any class action must also satisfy those paragraphs to be removable under CAFA. That insistence is odd for several reasons. To begin with, paragraphs (2) through (10) make no mention of removal, which significantly undercuts Public Citizen’s proposed reading of the statute. Moreover, that reading also treats compliance with § 1332(d)(9)—which on its face simply creates a series of reticulated exceptions to the conferral of original jurisdiction over class actions in § 1332(d)(2)—as equally applicable to removal jurisdiction under § 1453. But that would render entirely superfluous § 1453(d), which sets forth the same reticulated exceptions for the removal of class actions. And it would render incoherent the contrasts between §§ 1332(d) and 1453, as the latter provision addressing removal jurisdiction incorporates some—but far from all—of the limitations set forth in the former provision governing original jurisdiction. In response to this problem, Public Citizen suggests that § 1453(d) exists to exclude certain class actions from § 1453(c)’s provisions for interlocutory appeal of remand orders. However, that reading would require altering the opening words of § 1453(d) from “This section” to “The previous subsection.” And Public Citizen’s approach ignores § 1332(d)(10), which defines the citizenship of unincorporated associations “[f]or purposes of this subsection and section 1453”; if § 1453 does not authorize removal, there is no reading of it under which the citizenship of an unincorporated association has any relevance.
The critics also make much of the fact that NAM’s reading of CAFA necessitates engrafting an implicit minimal-diversity requirement onto § 1453, lest that provision be unconstitutional as applied to cases removed without minimal diversity. However, statutes are routinely construed to avoid unconstitutionality or even constitutional difficulty. Moreover, the critics’ competing interpretation requires taking even greater liberties with the statutory text, such as ignoring the jurisdiction-conferring language in § 1453 and the careful contrasts drawn by Congress between that provision and § 1332(d).
Finally, Public Citizen can discern no policy reason why Congress would make removal jurisdiction under § 1453 broader than original jurisdiction under § 1332(d). But as NAM explained in its brief, CAFA was a response to the widespread view that state courts often treated class-action defendants unfairly. Given that view, it was entirely reasonable for Congress in some cases to give defendants, but not plaintiffs, the option of proceeding in federal court.
[...] an amicus brief filed by a manufacturers’ association, and the lawyers who filed the brief responded), but to address the broader issue raised by the case. Like many plaintiff’s lawyers, [...]