Evans v. Walter Industries, Inc.

• Decision Date: 22 May 2006
• Docket Number: No. 06-11974.,06-11974.
• Citation: 449 F.3d 1159
• Parties: Isaiah EVANS, Lillian Fomby, Ida Adams, Carter Adams, Albert McCrory, J.L. Stringer, Rosetta Bailey, individuals on behalf of themselves and a class of persons similarly situated, Plaintiffs-Appellees, v. WALTER INDUSTRIES, INC., f.k.a. U.S. Pipe and Foundry, f.k.a. T.C. King Pipe and Fittings Co., et al., Defendants, MeadWestvaco Corporation, f.k.a. Standard Foundry, f.k.a. Mead Corporation, f.k.a. Woodward Iron, f.k.a. Alabama Pipe Company, f.k.a. Lynchburg Foundry, United Defense LP, Scientific-Atlanta, Inc., f.k.a. Southern Tool, Huron Valley Steel Corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

449 F.3d 1159

Isaiah EVANS, Lillian Fomby, Ida Adams, Carter Adams, Albert McCrory, J.L. Stringer, Rosetta Bailey, individuals on behalf of themselves and a class of persons similarly situated, Plaintiffs-Appellees, v. WALTER INDUSTRIES, INC., f.k.a. U.S. Pipe and Foundry, f.k.a. T.C. King Pipe and Fittings Co., et al., Defendants MeadWestvaco Corporation, f.k.a. Standard Foundry, f.k.a. Mead Corporation, f.k.a. Woodward Iron, f.k.a. Alabama Pipe Company, f.k.a. Lynchburg

Foundry, United Defense LP, Scientific-Atlanta, Inc., f.k.a. Southern Tool, Huron Valley Steel Corporation, Defendants-Appellants.

No. 06-11974.

United States Court of Appeals, Eleventh Circuit.

May 22, 2006.

James Van Carson, Wendlene M. Lavey, Lianne Mantione, Squire, Sanders & Dempsey, LLP, Cleveland, OH, Stephen B. Devereaux, Philip E. Holladay, King & Spalding, Douglas A. Henderson, Lynette Eaddy Smith, Troutman Sanders, Atlanta, GA, John Winston Scott, James C. Huckaby, Jr., Huckaby, Scott & Dukes, P.C., Birmingham, AL, Jack D. Shumate, Karen Mysliwiec Pilar, Butzel Long, PC, Bloomfield, MI, for Defendants-Appellants.

Edward McF. Johnson, Dennis G. Pantazis, Craig L. Lowell, Brian M. Clark, Wiggins, Childs, Quinn & Pantazis, LLC, Birmingham, AL, for Plaintiffs-Appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT, ANDERSON and DUBINA, Circuit Judges.

ANDERSON, Circuit Judge:

Appellants United Defense LP, MeadWestvaco Corporation, Scientific-Atlanta, Inc., and Huron Valley Steel Corporation challenge the district court's decision to remand this case to the Alabama state court. Appellants argue that this case belongs in federal court under the recently-enacted Class Action Fairness Act ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.), and because the plaintiffs fraudulently joined non-diverse defendants in order to evade federal jurisdiction. We hold that the federal district court has jurisdiction over this case under CAFA. We need not reach the issue of fraudulent misjoinder.

I. BACKGROUND

On April 8, 2005, plaintiffs filed this case in the Circuit Court of Calhoun County, Alabama, on behalf of a class of people who were allegedly injured by the actions of 18 named defendants and a number of fictitious defendants. The plaintiffs allege that the defendants operated manufacturing facilities in the Anniston, Alabama area. Plaintiffs allege both property damage and personal injury that they attribute to defendants' release of various waste substances over an approximately 85-year period. Four of the defendants removed this case to federal court under CAFA, which expanded federal jurisdiction for class actions. Defendants' Notice of Removal also contained a footnote that stated that defendants believed that plaintiffs may have improperly joined non-diverse defendants.

Plaintiffs filed a motion to remand the case to state court. Plaintiffs' sole argument for remand is that the case fell within CAFA's "local controversy" exception to federal jurisdiction. Plaintiffs argued that their case was a local controversy because more than two-thirds of the plaintiff class were Alabama citizens and at least one Alabama defendant, U.S. Pipe, was a "significant" defendant within the meaning of CAFA. Plaintiffs proffered the affidavits of two of their attorneys to support their claim. The district court agreed that this case fell within CAFA's local controversy exception, and remanded the case to state court.¹ The four removing defendants appeal the district court's ruling.

II. STANDARD OF REVIEW

The district court's decision to remand is reviewed de novo. Brown v Snow, 440 F.3d 1259, 1262 (11th Cir.2006) ("We review questions of subject matter jurisdiction de novo.").

III. ANALYSIS

A. The Sixty-Day Rule

The relevant provisions of CAFA provide:

(c) Review of remand orders. —

(1) In general. — Section 1447 shall apply to any removal of a case under this section, except that notwithstanding section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order.

(2) Time period for judgment. — If the court of appeals accepts an appeal under paragraph (1), the court shall complete all action on such appeal, including rendering judgment, not later than 60 days after the date on which such appeal was filed, unless an extension is granted under paragraph (3).

(3) Extension of time period. — The court of appeals may grant an extension of the 60-day period described in paragraph (2) if —

(A) all parties to the proceeding agree to such extension, for any period of time; or

(B) such extension is for good cause shown and in the interests of justice, for a period not to exceed 10 days.

(4) Denial of appeal. — If a final judgment on the appeal under paragraph (1) is not issued before the end of the period described in paragraph (2), including any extension under paragraph (3), the appeal shall be denied.

28 U.S.C. § 1453(c). As a preliminary matter, we must determine whether the 60-day period begins to run from when the appellants filed their application for appeal, or from the date on which this court accepted the appeal. We hold that the 60-day period begins to run from the date when the court of appeals granted the appellants' application to appeal and thus filed the appeal.

Under CAFA, when a district court grants or denies remand to state court, a party may make an "application" for appeal to the court of appeals. 28 U.S.C. § 1453(c)(1). We believe that Congress' choice of language is significant. Section 1453(c)(1) provides for an "application" to the court of appeals, not a "notice of appeal," within 7 days of the district court's remand order. Section 1453(c)(2) provides that the court of appeals shall complete all action 60 days after the date on which the "appeal was filed," not 60 days from the date on which the "application" was filed.

We also find it significant that review by the appeals court is clearly discretionary. See 28 U.S.C. § 1453(c)(1) ("a court of appeals may accept an appeal") (emphasis added). Thus, it is plausible to conclude that Congress contemplated the application of Fed. R.App. P. 5, which governs discretionary appeals. We conclude that a request for appeal under CAFA is subject to Fed. R.App. P. 5, entitled "Appeal by Permission." Rule 5(d)(2) provides: "A notice of appeal need not be filed. The date when the order granting permission to appeal is entered serves as the date of the notice of appeal for calculating time under these rules." Thus, there is no notice of appeal, and no appeal, until the court of appeals accepts the application, whence the appeal is deemed filed.

Accordingly, we hold that the "date on which such appeal was filed" is the date that the court of appeals accepts the appeal and thus files the appeal. We agree with the resolution of every other court of appeals which has ruled on this issue. In this regard, we agree with the reasoning of Patterson v. Dean Morris, LLP, 444 F.3d 365 (5th Cir.2006) and Amalgamated Transit Union v. Laidlaw Transit Services., Inc., 435 F.3d 1140, 1145 (9th Cir. 2006). See also Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1093 (10th Cir.2005).

In this case, the appellants filed their application for appeal on March 24, 2006 and this court granted their application on March 30, 2006. Therefore, this court's ruling is due within 60 days of March 30, 2006.

B. CAFA and the Local Controversy Exception

1. Legal Background

Congress enacted CAFA on February 18, 2005. Under CAFA, federal courts now have original jurisdiction over class actions in which the amount in controversy exceeds $5,000,000 and there is minimal diversity (at least one plaintiff and one defendant are from different states). 28 U.S.C. § 1332(d)(2). CAFA, however, does have an exception to federal jurisdiction for cases that are truly local in nature. 28 U.S.C. § 1332(d)(4)(A).

In this case, the parties do not dispute that the controversy exceeds $5,000,000 and that there is minimal diversity. The issue before us is whether this case falls within CAFA's local controversy exception to federal jurisdiction. CAFA's local controversy exception provides:

(4) A district court shall decline to exercise jurisdiction under paragraph (2) —

(A)(i) over a class action in which —

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least 1 defendant is a defendant —

(aa) from whom significant relief is sought by members of the plaintiff class;

(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and

(cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and

(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons;

28 U.S.C. § 1332(d).² CAFA's language favors federal jurisdiction over class actions and CAFA's legislative history suggests that Congress intended the local controversy exception to be a narrow one, with all doubts resolved "in favor of exercising jurisdiction over the case." S.Rep. No. 109-14 at 42, U.S.Code Cong. & Admin. News 3, 40. The Senate Report on CAFA further states that the local controversy exception:

is a narrow exception that was carefully drafted to ensure that it does not become a jurisdictional loophole. Thus the Committee...