DRI Proposes Model Legislation to Remedy High Court Decision in Home Depot U.S.A., Inc. v. Jackson

Seeks Consistency in Removal of Class Actions to Federal Courts

CHICAGO – (August 10, 2020)—DRI’s Center for Law and Public Policy has proposed model legislation that would remedy the Supreme Court’s decision in Home Depot U.S.A, Inc. v. Jackson.

For over 240 years, Congress has allowed citizens of different states to litigate in federal court and for equally as long has permitted defendants, in cases exceeding the jurisdictional minimum, to remove such cases from state court to federal court. The underlying premise has always been the same: certain conditions being met, an out-of-state defendant facing a claim in the plaintiff’s home court should have the ability to have the dispute heard in federal court. 

For more than 60 years before Congress enacted the Class Action Fairness Act of 2005 (CAFA), the Supreme Court and lower federal courts had held that persons who were made defendants to a counterclaim were stuck in state court without the right of removal. The reasoning was that only the original defendants were entitled to the right of removal.

In CAFA, Congress hoped to promote more uniformity and predictability in class adjudication by funneling class litigation to federal courts operating under the same set of procedural rules, rather than the procedural rules of 50 different states. CAFA’s removal provisions do not limit removal to the original defendants, but instead allow “any defendant” to remove a case containing a claim meeting its requirements.

But last year, in Home Depot U.S.A, Inc. v. Jackson, the Supreme Court by a 5-4 majority again precluded a party – in that instance a third-party defendant who had nothing to do with the choice of the original forum – from removing a class action against it which met the requirements of CAFA.

“We have had a fair process of removal that worked for over 240 years,” said Mike Pennington, one of the DRI authors of the model legislation. “It surely was the intent of the Class Action Fairness Act of 2005 that that process was to continue. This legislation would restore the right of removal to all defendants.”

DRI suggests a legislative remedy, similar to one already in place in other removal statutes. This simple amendment to CAFA’s removal provision would solve the problem:

28 USC 1453

 (b) In General.—

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(c)(1) shall not apply), without regard to whether any party is a citizen of the State in which the action is brought.  Such class action may be removed by any party against whom any claim, crossclaim, counterclaim, or third-party claim is asserted that purports to assert claims on a class action basis, without the consent of any other party….

Michael Pennington, Chair of DRI’s Class Action Task Force is available for interview or expert comment through the contact information listed above.

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About DRI – The Voice of the Defense Bar

DRI, with nearly 18,000 members, has tirelessly advocated for the valuable role attorneys play in representing businesses and individuals in civil matters. DRI is committed to enhancing the skills and professionalism of defense attorneys and anticipating and addressing issues germane to the civil justice system, including preserving the civil jury and promoting the appreciation of the role of the defense bar. 

DRI Proposes Model Legislation to Remedy High Court Decision in Home Depot U.S.A., Inc. v. Jackson

Seeks Consistency in Removal of Class Actions to Federal Courts

CHICAGO – (August 10, 2020)—DRI’s Center for Law and Public Policy has proposed model legislation that would remedy the Supreme Court’s decision in Home Depot U.S.A, Inc. v. Jackson.

For over 240 years, Congress has allowed citizens of different states to litigate in federal court and for equally as long has permitted defendants, in cases exceeding the jurisdictional minimum, to remove such cases from state court to federal court. The underlying premise has always been the same: certain conditions being met, an out-of-state defendant facing a claim in the plaintiff’s home court should have the ability to have the dispute heard in federal court. 

For more than 60 years before Congress enacted the Class Action Fairness Act of 2005 (CAFA), the Supreme Court and lower federal courts had held that persons who were made defendants to a counterclaim were stuck in state court without the right of removal. The reasoning was that only the original defendants were entitled to the right of removal.

In CAFA, Congress hoped to promote more uniformity and predictability in class adjudication by funneling class litigation to federal courts operating under the same set of procedural rules, rather than the procedural rules of 50 different states. CAFA’s removal provisions do not limit removal to the original defendants, but instead allow “any defendant” to remove a case containing a claim meeting its requirements.

But last year, in Home Depot U.S.A, Inc. v. Jackson, the Supreme Court by a 5-4 majority again precluded a party – in that instance a third-party defendant who had nothing to do with the choice of the original forum – from removing a class action against it which met the requirements of CAFA.

“We have had a fair process of removal that worked for over 240 years,” said Mike Pennington, one of the DRI authors of the model legislation. “It surely was the intent of the Class Action Fairness Act of 2005 that that process was to continue. This legislation would restore the right of removal to all defendants.”

DRI suggests a legislative remedy, similar to one already in place in other removal statutes. This simple amendment to CAFA’s removal provision would solve the problem:

28 USC 1453

 (b) In General.—

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(c)(1) shall not apply), without regard to whether any party is a citizen of the State in which the action is brought.  Such class action may be removed by any party against whom any claim, crossclaim, counterclaim, or third-party claim is asserted that purports to assert claims on a class action basis, without the consent of any other party….

Michael Pennington, Chair of DRI’s Class Action Task Force is available for interview or expert comment through the contact information listed above.

###

About DRI – The Voice of the Defense Bar

DRI, with nearly 18,000 members, has tirelessly advocated for the valuable role attorneys play in representing businesses and individuals in civil matters. DRI is committed to enhancing the skills and professionalism of defense attorneys and anticipating and addressing issues germane to the civil justice system, including preserving the civil jury and promoting the appreciation of the role of the defense bar.