Home Depot U. S. A., Inc. v. Jackson

• Decision Date: 28 May 2019
• Docket Number: No. 17-1471,17-1471
• Citation: 139 S.Ct. 1743
• Parties: HOME DEPOT U. S. A., INC., Petitioner v. George W. JACKSON
• Court: U.S. Supreme Court

139 S.Ct. 1743

HOME DEPOT U. S. A., INC., Petitioner

v.George W. JACKSON

No. 17-1471

Supreme Court of the United States.

Argued January 15, 2019

Decided May 28, 2019

William Barnette, Atlanta, GA, for the petitioner.

F. Paul Bland, Washington, DC, for the respondent.

William P. Barnette, Kacy D. Goebel, Home Depot U.S.A., Inc., Atlanta, GA, Sarah E. Harrington, Thomas C. Goldstein, Erica Oleszczuk Evans, Goldstein & Russell, P.C., Bethesda, MD, for petitioner.

Brian Warwick, Janet Varnell, David Lietz, Varnell & Warwick, P.A., Lady Lake, FL, F. Paul Bland, Karla Gilbride, Leah M. Nicholls, Ellen Noble, Public Justice, P.C., Washington, DC, Jennifer Bennett, Public Justice, P.C., Oakland, CA, Rashad Blossom, Blossom Law PLLC, Charlotte NC, Daniel K. Bryson, John Hunter Bryson, Whitfield Bryson & Mason LLP, Raleigh, NC, for respondent.

Justice THOMAS delivered the opinion of the Court.

The general removal statute, 28 U.S.C. § 1441(a), provides that "any civil action" over which a federal court would have original jurisdiction may be removed to federal court by "the defendant or the defendants." The Class Action Fairness Act of 2005 (CAFA) provides that "[a] class action" may be removed to federal court by "any defendant without the consent of all defendants." 28 U.S.C. § 1453(b). In this case, we address whether either provision allows a third-party counterclaim defendant—that is, a party brought into a lawsuit through a counterclaim filed by the original defendant—to remove the counterclaim filed against it. Because in the context of these removal provisions the term "defendant" refers only to the party sued by the original plaintiff, we conclude that neither provision allows such a third party to remove.

I

A

We have often explained that "[f]ederal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of America , 511 U. S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Article III, § 2, of the Constitution delineates "[t]he character of the controversies over which federal judicial authority may extend." Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee , 456 U. S. 694, 701, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). And lower federal-court jurisdiction "is further limited to those subjects encompassed within a statutory grant of jurisdiction." Ibid. Accordingly, "the district courts may not exercise jurisdiction absent a statutory basis." Exxon Mobil Corp. v. Allapattah Services, Inc. , 545 U. S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005).

In 28 U.S.C. §§ 1331 and 1332(a), Congress granted federal courts jurisdiction over two general types of cases: cases that "aris[e] under" federal law, § 1331, and cases in which the amount in controversy exceeds $ 75,000 and there is diversity of citizenship among the parties, § 1332(a). These jurisdictional grants are known as "federal-question jurisdiction" and "diversity jurisdiction," respectively. Each serves a distinct purpose: Federal-question jurisdiction affords parties a federal forum in which "to vindicate federal rights," whereas diversity jurisdiction provides "a neutral forum" for parties from different States. Exxon Mobil Corp. , supra , at 552, 125 S.Ct. 2611.

Congress has modified these general grants of jurisdiction to provide federal courts with jurisdiction in certain other types of cases. As relevant here, CAFA provides district courts with jurisdiction over "class action[s]" in which the matter in controversy exceeds $ 5,000,000 and at least one class member is a citizen of a State different from the defendant. § 1332(d)(2)(A). A "class action" is "any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure." § 1332(d)(1)(B).

In addition to granting federal courts jurisdiction over certain types of cases, Congress has enacted provisions that permit parties to remove cases originally filed in state court to federal court. Section 1441(a), the general removal statute, permits "the defendant or the defendants" in a state-court action over which the federal courts would have original jurisdiction to remove that action to federal court. To remove under this provision, a party must meet the requirements for removal detailed in other provisions. For one, a defendant cannot remove unilaterally. Instead, "all defendants who have been properly joined and served must join in or consent to the removal of the action." § 1446(b)(2)(A). Moreover, when federal jurisdiction is based on diversity jurisdiction, the case generally must be removed within "1 year after commencement of the action," § 1446(c)(1), and the case may not be removed if any defendant is "a citizen of the State in which such action is brought," § 1441(b)(2).

CAFA also includes a removal provision specific to class actions. That provision permits the removal of a "class action" from state court to federal court "by any defendant without the consent of all defendants" and "without regard to whether any defendant is a citizen of the State in which the action is brought." § 1453(b).

At issue here is whether the term "defendant" in either § 1441(a) or § 1453(b) encompasses a party brought into a lawsuit to defend against a counterclaim filed by the original defendant or whether the provisions limit removal authority to the original defendant.

B

In June 2016, Citibank, N. A., filed a debt-collection action against respondent George Jackson in North Carolina state court. Citibank alleged that Jackson was liable for charges he incurred on a Home Depot credit card. In August 2016, Jackson answered and filed his own claims: an individual counterclaim against Citibank and third-party class-action claims against Home Depot U. S. A., Inc., and Carolina Water Systems, Inc.

Jackson’s claims arose out of an alleged scheme between Home Depot and Carolina Water Systems to induce homeowners to buy water treatment systems at inflated prices. The crux of the claims was that Home Depot and Carolina Water Systems engaged in unlawful referral sales and deceptive and unfair trade practices in violation of North Carolina law, Gen. Stat. Ann. §§ 25A–37, 75–1.1 (2013). Jackson also asserted that Citibank was jointly and severally liable for the conduct of Home Depot and Carolina Water Systems and that his obligations under the sale were null and void.

In September 2016, Citibank dismissed its claims against Jackson. One month later, Home Depot filed a notice of removal, citing 28 U.S.C. §§ 1332, 1441, 1446, and 1453. Jackson moved to remand, arguing that precedent barred removal by a "third-party/additional counter defendant like Home Depot." App. 51–52. Shortly thereafter, Jackson amended his third-party class-action claims to remove any reference to Citibank.

The District Court granted Jackson’s motion to remand, and the Court of Appeals for the Fourth Circuit granted Home Depot permission to appeal and affirmed. 880 F. 3d 165, 167 (2018) ; see 28 U.S.C. § 1453(c)(1). Relying on Circuit precedent, it held that neither the general removal provision, § 1441(a), nor CAFA’s removal provision, § 1453(b), allowed Home Depot to remove the class-action claims filed against it. 880 F. 3d at 167–171.

We granted Home Depot’s petition for a writ of certiorari to determine whether a third party named in a class-action counterclaim brought by the original defendant can remove if the claim otherwise satisfies the jurisdictional requirements of CAFA. 585 U. S. ––––, 139 S.Ct. 51, 201 L.Ed.2d 1129 (2018). We also directed the parties to address whether the holding in Shamrock Oil & Gas Corp. v. Sheets , 313 U. S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941) —that an original plaintiff may not remove a counterclaim against it—should extend to third-party counterclaim defendants.¹ 585 U. S. ––––, 139 S.Ct. 51.

II

A

We first consider whether 28 U.S.C. § 1441(a) permits a third-party counterclaim defendant to remove a claim filed against it.² Home Depot contends that because a third-party counterclaim defendant is a "defendant" to the claim against it, it may remove pursuant to § 1441(a). The dissent agrees, emphasizing that "a ‘defendant’ is a ‘person sued in a civil proceeding.’ " Post , at 1755 (opinion of ALITO, J.). This reading of the statute is plausible, but we do not think it is the best one. Of course the term "defendant," standing alone, is broad. But the phrase "the defendant or the defendants" "cannot be construed in a vacuum." Davis v. Michigan Dept. of Treasury , 489 U. S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). "It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Ibid. ; see also A. Scalia & B. Garner, Reading Law 167 (2012) ("The text must be construed as a whole"); accord, Bailey v. United States , 516 U. S. 137, 145–146, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995). Considering the phrase "the defendant or the defendants" in light of the structure of the statute and our precedent, we conclude that § 1441(a) does not permit removal by any counterclaim defendant, including parties brought into the lawsuit for the first time by the counterclaim.³

Home Depot emphasizes that it is a "defendant" to a "claim," but the statute refers to "civil action[s]," not "claims." This Court has long held that a district court, when determining whether it has original jurisdiction over a civil action, should evaluate whether that action could have been brought originally in federal court. See Mexican Nat. R. Co. v. Davidson , 157 U. S. 201, 208, 15 S.Ct. 563, 39 L.Ed. 672 (1895) ; Tennessee v. Union & Planters’ Bank , 152 U. S. 454, 461, 14 S.Ct. 654, 38 L.Ed. 511 (1894). This requires a district court to evaluate whether the plaintiff could have filed its operative complaint in federal court, either because it raises claims arising under federal law or because it falls within the court’s diversity jurisdiction. E.g. , Franchise...