881 F.3d 786 (9th Cir. 2018), 17-56809, Kenny v. Wal-Mart Stores, Inc

• Docket Nº: 17-56809
• Citation: 881 F.3d 786
• Opinion Judge: M. SMITH, Circuit Judge:
• Party Name: Kris KENNY, on behalf of himself and all others similarly situated, Plaintiff-Appellee, v. WAL-MART STORES, INC., a Delaware Corporation; Wal-Mart Associates, Inc., a Delaware Corporation, Defendants-Appellants.
• Attorney: Mark D. Kemple (argued) and Ashley Farrell-Pickett, Greenberg Traurig LLP, Los Angeles, California, for Defendants-Appellants. David M. deRubertis (argued) and Jeff D. Neiderman, The deRubertis Law Firm APC, Studio City, California; Ellen R. Serbin, Todd H. Harrison, and Brennan S. Kahn, Perona L...
• Judge Panel: Before: MILAN D. SMITH, JR. and MICHELLE T. FRIEDLAND, Circuit Judges, and JED S. RAKOFF, District Judge.
• Case Date: February 01, 2018
• Court: United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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881 F.3d 786 (9th Cir. 2018)

Kris KENNY, on behalf of himself and all others similarly situated, Plaintiff-Appellee,

v.

WAL-MART STORES, INC., a Delaware Corporation; Wal-Mart Associates, Inc., a Delaware Corporation, Defendants-Appellants.

No. 17-56809

United States Court of Appeals, Ninth Circuit

February 1, 2018

Argued and Submitted January 9, 2018, Pasadena, California

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Central District of California, Manuel L. Real, District Judge, Presiding, D.C. No. 5:17-cv-00967-R-KK

SUMMARY

^[**]

Remand / Removal

The panel vacated the district court's order remanding a putative class action to California state court because the district court exceeded its statutory authority in remanding sua sponte based on a non-jurisdictional defect, and because Wal-Mart did not waive its right to remove the action to federal court; and remanded to the district court for further proceedings.

Plaintiff filed the putative class action in California state court, challenging Wal-Mart's policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Wal-Mart removed the case to federal court based on jurisdiction under the Class Action Fairness Act ("CAFA"). The district court sua sponte remanded the action to state court, concluding that Wal-Mart had waived its right to remove the case by filing a demurrer in response to plaintiff's First Amended Complaint ("FAC") in state court.

The panel held that the district court lacked authority under 28 U.S.C. § 1447(c) to remand sua sponte based on a non-jurisdictional defect.

The panel noted that a defendant "may waive the right to remove to federal court where, after it is apparent that the case is removable, the defendant takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum." Resolution Tr. Corp. v. Bayside Developers, 43 F.3d 1230, 1240 (9th Cir. 1994). The panel held that the district court erred in concluding that Wal-Mart waived its right to remove the case when the FAC did not reveal a basis for removal pursuant to CAFA. The panel also held that Wal-Mart's choice to file a demurrer, rather than another form of responsive pleading, to plaintiff's indeterminate FAC did not amount to a waiver of its right to remove. The panel further held that where Wal-Mart removed the case before plaintiff opposed the demurrer and before any hearing was held, clearly Wal-Mart did not manifest an intent to litigate in state court.

Mark D. Kemple (argued) and Ashley Farrell-Pickett, Greenberg Traurig LLP, Los Angeles, California, for Defendants-Appellants.

David M. deRubertis (argued) and Jeff D. Neiderman, The deRubertis Law Firm APC, Studio City, California; Ellen R. Serbin, Todd H. Harrison, and Brennan S. Kahn, Perona Langer Beck Serbin Mendoza & Harrison APC, Long Beach, California; for Plaintiff-Appellee.

Before: MILAN D. SMITH, JR. and MICHELLE T. FRIEDLAND, Circuit Judges, and JED S. RAKOFF,^[*] District Judge.

OPINION

M. SMITH, Circuit Judge:

Defendants Wal-Mart Stores, Inc. and Wal-Mart Associates, Inc. (collectively, Wal-Mart) appeal from the district court’s order remanding Plaintiff Kris Kenny’s (Kenny) putative class action to California state court. In a four-sentence minute order, the district court remanded the case sua sponte, stating summarily that Wal-Mart waived its right to remove by filing a demurrer in state court prior to removal.

We disagree, and hold that the district court erred on two grounds. First, the district court exceeded its statutory authority in remanding sua sponte based on a non-jurisdictional defect. Second, Wal-Mart did not waive its right to remove by filing a demurrer in state court, when its right to remove pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), was not ascertainable from Kenny’s pleading. We therefore vacate the district court’s remand order, and remand to that court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

On January 13, 2017, Plaintiff Kris Kenny filed a putative class action Complaint against Defendants Wal-Mart Stores, Inc., Wal-Mart Associates, Inc., and U.S. Healthworks Medical Group,¹ in California

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state court, challenging Wal-Mart’s policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Kenny did not serve the Complaint on any of the Defendants.

On February 17, 2017, Kenny filed a First Amended Complaint (FAC), and served the FAC on Wal-Mart. Generally, a defendant in a California state court must respond to the complaint within thirty days after service, or risk default. See Cal. Civ. Proc. Code § 471.5. Wal-Mart obtained a fifteen-day extension to respond to the FAC, resulting in a deadline of April 4, 2017.

On April 4, 2017, Wal-Mart filed a demurrer and a motion to strike the FAC. Wal-Mart set the hearing on the demurrer for June 15, 2017. Kenny’s deadline to oppose the demurrer was June 2, 2017, nine court days before the hearing. See id. § 1005(b).

On May 17, 2017, nearly a month before the hearing, Wal-Mart removed the case to federal court, asserting that the district court had jurisdiction over the case pursuant to CAFA. At the time of removal, Kenny had not yet opposed the demurrer, discovery had not begun, and the state court had issued no rulings.

On June 8, 2017, the district court, acting sua sponte, issued a four-sentence minute order remanding the action to state court. The district court concluded, without explanation, that Wal-Mart had waived its right to remove the case by filing a demurrer in response to Kenny’s FAC in state court.

Wal-Mart timely petitioned this court for permission to appeal the district court’s remand order. We granted the petition on December 4, 2017.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction to review the district court’s sua sponte remand order pursuant to 28 U.S.C. § 1453(c)(1). See Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1180-81 (9th Cir. 2013) (per curiam). We review the district court’s remand order de novo . Brinkley v. Monterey Fin. Servs., Inc., 873 F.3d 1118, 1121 (9th Cir. 2017).

ANALYSIS

I. The District Court Erred in Remanding Sua Sponte Based on a Non-Jurisdictional Defect.

A district court lacks authority under 28 U.S.C. § 1447(c) to remand sua sponte based on a non-jurisdictional defect.² Corona-Contreras v. Gruel, 857 F.3d 1025, 1030 (9th Cir. 2017); see Smith v. Mylan Inc., 761 F.3d 1042, 1044 (9th Cir. 2014). Whereas a " district court must remand ‘if at any time before final judgment it appears that the district court lacks subject matter jurisdiction,’ " it " may remand for defects other than lack of subject matter jurisdiction only upon a timely motion

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to remand." Smith, 761 F.3d at 1044 (alteration omitted) (quoting 28 U.S.C. § 1447(c) ). In essence, subject matter jurisdiction is the touchstone for a district court’s authority to remand sua sponte .

Here, the district court erred by remanding sua sponte on a non-jurisdictional ground. Neither the district court nor Kenny questioned the court’s subject matter jurisdiction under CAFA.³ Instead, the district court stated, without explanation, that Wal-Mart waived its right to remove by filing a demurrer to Kenny’s FAC in state court. Plainly, waiver, a common-law doctrine, does not implicate the court’s original jurisdiction over the action. See City of Albuquerque v. Soto...