Westwood Apex v. Contreras

• Decision Date: 02 May 2011
• Docket Number: No. 11–55362.,11–55362.
• Citation: 644 F.3d 799
• Parties: WESTWOOD APEX, Plaintiff/Counterclaim.George Burnett, an individual; William Ojile, an individual; Alta Colleges Inc., a Delaware Corporation; Westwood College Inc., a Colorado Corporation; Trav Corporation, a Colorado Corporation, DBA Westwood College, DBA Westwood College Online; Grant Corporation, a Colorado Corporation, DBA Westwood College; Wesgray Corporation, a Colorado Corporation, DBA Westwood College; Bounty Island Corporation, a Delaware Corporation, FDBA Redstone College, Additional Counterclaim Defendants–Appellants.,v.Jesus A. CONTRERAS, Defendant/Counter–Complainant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

644 F.3d 799

11 Cal. Daily Op. Serv. 5135

2011 Daily Journal D.A.R. 6237

WESTWOOD APEX, Plaintiff/Counterclaim.George Burnett, an individual; William Ojile, an individual; Alta Colleges Inc., a Delaware Corporation; Westwood College Inc., a Colorado Corporation; Trav Corporation, a Colorado Corporation, DBA Westwood College, DBA Westwood College Online; Grant Corporation, a Colorado Corporation, DBA Westwood College; Wesgray Corporation, a Colorado Corporation, DBA Westwood College; Bounty Island Corporation, a Delaware Corporation, FDBA Redstone College, Additional Counterclaim Defendants–Appellants.,

v.Jesus A. CONTRERAS, Defendant/Counter–Complainant–Appellee.

No. 11–55362.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 12, 2011.Filed May 2, 2011.

Jeffrey K. Brown, Esq., Payne & Fears, LLP, Irvine, CA; Christopher King, Esq., Homer Bonner, P.A., Miami, FL, for the appellants.Timothy G. Blood, Esq., Blood Hurst & O'Reardon, LLP, San Diego, CA; John A. Yanchunis, Esq., James Hoyer Newcomer Smiljanich & Yanchunis, P.A., Tampa, FL, for the appellee.Appeal from the United States District Court for the Central District of California, Gary A. Feess, District Judge, Presiding. D.C. No. 5:10 Civ. 01382(GAF).Before: JAY S. BYBEE and MILAN D. SMITH, JR., Circuit Judges, and KENT J. DAWSON, District Judge.^*

OPINION

M. SMITH, Circuit Judge:

The Class Action Fairness Act of 2005 (CAFA), Pub.L. No. 109–2, 119 Stat. 4, confers federal jurisdiction over class action lawsuits where the amount in controversy exceeds $5,000,000 and the adversaries are minimally diverse. When a class action satisfying these conditions is filed in state court, Section 5 of CAFA provides that “such action may be removed by any defendant without the consent of all defendants.” 28 U.S.C. § 1453(b). In this appeal, we address whether CAFA Section 5, 28 U.S.C. § 1453(b), allows a party joined to an action as a defendant to a counterclaim (an additional counterclaim defendant) to remove the case to federal court. We hold that § 1453(b) does not permit additional counterclaim defendants to remove an action to federal court, and we affirm the district court's decision to remand this case to state court.

BACKGROUND

I. CAFA and the Removal Statutes

Congress enacted CAFA to “ ‘curb perceived abuses of the class action device which, in the view of CAFA's proponents, had often been used to litigate multi-state or even national class actions in state courts.’ ” United Steel v. Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir.2010) (quoting Tanoh v. Dow Chem. Co., 561 F.3d 945, 952 (9th Cir.2009)). CAFA wrought several changes to the Judicial Code, including amending the federal diversity statute, 28 U.S.C. § 1332(d)(2), and liberalizing the requirements governing removal from state court, 28 U.S.C. § 1453.

Section 4(a) of CAFA amended the federal diversity jurisdiction statute, 28 U.S.C. § 1332, to grant original federal jurisdiction over large interstate class actions ( i.e., at least 100 class members) in which the matter in controversy exceeds $5,000,000 and any member of the plaintiffs' class is diverse in his domicile from any defendant. See 28 U.S.C. § 1332(d)(2), (d)(5)(B).

Section 5 of CAFA augmented Chapter 89 of the Judicial Code (which governs the removal of state-court actions to federal courts) by the addition of 28 U.S.C. § 1453. Subsection (b) of § 1453 provides that

[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(b) shall not apply), without regard to whether any defendant is a citizen of the State in which the action is brought, except that such action may be removed by any defendant without the consent of all defendants. 28 U.S.C. § 1453(b). Section 1446, which is cross-referenced in § 1453(b), sets forth the procedures a removing defendant must follow and provides, inter alia, that “[a] defendant or defendants desiring to remove any civil action ... shall file in the district court of the United States for the district and division within which such action is pending a notice of removal ... containing a short and plain statement of the grounds for removal” as well as the operative pleadings. Id. § 1446(a). The notice of removal “shall be filed within thirty days after the receipt by the defendant” of the complaint or, in certain states, the summons. Id. § 1446(b).

The “general” removal statute, which was not amended by CAFA, is also found in Chapter 89 of the Judicial Code, and provides:

[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. § 1441(a).

II. The Underlying Proceedings

This litigation commenced in San Bernardino County Superior Court on May 17, 2010, when plaintiff Westwood Apex filed a breach of contract action against defendant Jesus Contreras to recover $20,000 on an unpaid student loan. Westwood Apex is a subsidiary entity of the for-profit higher-education institution Westwood College. Contreras, a former Westwood College student, answered the complaint and, on August 11, 2010, filed class action counterclaims alleging violations of California consumer-protection laws.

Contreras's counterclaims allege that plaintiff/counterclaim defendant Westwood Apex and additional counterclaim defendants ¹ Westwood College and certain affiliated individuals and entities (collectively, the additional counterclaim defendants, removing parties, or Westwood College) committed fraud and engaged in unfair and deceptive business practices in connection with their operation of the college. Contreras's putative class consists of all California residents who have attended, or are presently attending, Westwood College's programs.

On September 10, 2010, the additional counterclaim defendants ( i.e., all Westwood College entities except Westwood Apex) filed a notice of removal in the Central District of California. That notice asserted that federal jurisdiction was appropriate under 28 U.S.C. § 1332(d)(2), and that removal was authorized by Section 5 of CAFA, 28 U.S.C. § 1453(b). Specifically, the notice of removal reads:

Section 1453(b), added by CAFA, expands removal authority, conferring on “any defendant” the right to remove a class action.... [Section] 1453(b), in authorizing removal “by any defendant,” expands removal authority beyond § 1441(a)'s limits so that it includes “any defendant,” including naturally a defendant joined in the case by a counterclaim.

On September 29, 2010, the district court ordered Westwood College to show cause why removal was appropriate under CAFA. Specifically, the district court highlighted the dearth of authority in this circuit regarding whether “state court cross-defendants, joined by way of a cross-complaint, qualify as defendants under [28 U.S.C. § ] 1453.” The order to show cause further recognized persuasive authority from the United States Court of Appeals for the Fourth Circuit which, in considering the issue presented here, held that CAFA does not permit removal by additional counterclaim defendants. See Palisades Collections, LLC v. Shorts, 552 F.3d 327, 328–29 (4th Cir.2008).

Following briefing by the parties, the district court remanded the action to state court on the ground that removal by an additional counterclaim defendant was not authorized by either the language or purpose of CAFA (the Order of Remand). See Apex v. Contreras, No. 10 Civ. 1382(GAF), 2010 WL 4630274 (C.D.Cal. Nov. 4, 2010).

On March 4, 2011, we granted the additional counterclaim defendants' petition to appeal the Order of Remand.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1453(c). “CAFA mandates a prompt disposition of controversies that arise over issues relating to jurisdiction under the Act.” Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 396 (9th Cir.2010). An appeal of an order of remand must be decided no more than 60 days after the petition to appeal was granted. 28 U.S.C. § 1453(c)(2).

Whether a case was properly removed from state to federal court is a question we review de novo. Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 938 (9th Cir.2006). We likewise review the “construction, interpretation, or applicability” of CAFA de novo. Bush v. Cheaptickets, Inc., 425 F.3d 683, 686 (9th Cir.2005).

DISCUSSION

The removing parties contend that § 1453(b) permits removal by “any defendant” and that this phrase includes additional counterclaim defendants. This is a question of statutory interpretation, and thus our analysis begins with the plain language of the act. Campbell v. Allied Van Lines Inc., 410 F.3d 618, 620 (9th Cir.2005). “The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). Where language is susceptible to varying interpretations, we will look to other sources to determine congressional intent, such as the canons of construction or a statute's legislative history. Jonah R. v. Carmona, 446 F.3d 1000, 1005 (9th Cir.2006).

Our circuit has addressed the meaning of § 1453(b). See Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 684 (9th Cir.2006); see also Progressive W. Ins. Co. v. Preciado, 479 F.3d, 1014, 1017–18 & n. 2 (9th Cir.2007). In Progressive West, where the question of removal by a plaintiff/cross defendant arose, we recognized that § 1453(b) was written to “eliminate three significant barriers to removal for qualifying actions.” 479 F.3d at 1017 & n. 2. First, § 1453(b) “expressly ‘exempts qualifying actions from the § 1446(b) prohibition of...