Circuit Court Adopts Bright-Line Rule for Removal under CAFA
By Kristen L. Burge, Litigation News Contributing Editor – September 8, 2016

The U.S. Court of Appeals for the Sixth Circuit joined several circuits in holding the 30-day window runs the moment the defendant receives an unambiguous document establishing the amount in controversy. In so doing, the Sixth Circuit affirmed CAFA does not require a defendant to independently investigate removability. The bright-line rule for the time to remove cases under the Class Action Fairness Act (CAFA) allows litigants to identify the triggering event for timely removal. The clarity now provides an even playing filed for litigants, say observers.

"Buy One, Get One Free," Maybe?
In Graiser v. Visionworks of America, Inc., Graiser sought to buy eyeglasses during a Visionworks' advertised "Buy one, Get One Free" event. Once in the store, Visionworks offered to sell Graiser one pair for $246 or two pairs for $410. Claiming false advertisement and consumer protection violations, Graiser filed a proposed class action complaint in state court. Graiser sought declaratory judgment, injunctive relief, and statutory attorney fees, specifically disclaiming monetary damages.

Shortly thereafter, Visionworks timely removed the case to federal court under 28 U.S.C. § 1332(a). The federal court remanded, agreeing with Graiser that the relief sought did not confer standing under Article III of the Constitution. After remand, Graiser amended his complaint to seek actual and punitive damages. But Visionworks did not seek removal under §1332(a) despite having acquired Article III standing.

After the window for asserting diversity jurisdiction lapsed, Visionworks sought to remove the case under CAFA, which confers federal jurisdiction to class actions exceeding $5 million in damages. During discovery, Graiser provided a written valuation formula based on sales figures through January 2015. Under this calculation, the case valued less than $4 million. Graiser later requested updated sales figures through October 2015. Visionworks supplemented its discovery with estimated damages now valued at slightly more than $5 million. Graiser never provided such calculations to Visionworks.

Determining When Visionworks Ascertained Amount in Controversy
Under CAFA, a defendant must remove within 30 days after receiving "a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is . . . removable." In its notice of removal, Visionworks asserted it "first ascertain[ed] that this case became removable after the receipt of the October 15, 2015 sales figures." But Graiser argued Visionworks' removal fell outside the 30-day window triggered by the amended complaint. Alternatively, Graiser asserted Visionworks neglected to calculate damages at an earlier date when it possessed the sales data necessary for such calculations.

The Sixth Circuit first looked at what papers, if any, Visionworks "received" such that the 30-day clock began. Because Graiser never served Visionworks such a "pleading or other paper," the clock did not run. When the damages exceeded $5 millon was irrelevant. Nevertheless, the court recognized Visionworks had a right, but not an obligation, to conduct its own investigation and seek removal before Graiser triggered the 30-day window.

The Sixth Circuit next determined whether the expiration of the 30-day window for diversity jurisdiction precluded removal under CAFA. Graiser argued by filing his amended complaint, he initiated a single window for removability. Once expired, Visionworks could no longer remove under CAFA. The Sixth Circuit rejected Graiser's argument. Instead, the court held Visionworks had two mutually exclusive vehicles to invoke federal jurisdiction. Therefore, the diversity 30-day window had no bearing on CAFA's jurisdiction.

Bright-Line Rule More Aptly Named "Brighter-Line"
Graiser's holding is consistent with a number of other circuits in creating an easy-to-follow rule for calculating the 30-day window. "With an unambiguous threshold, there is no fight over what is enough information to demonstrate amount in controversy," explains Wystan M. Ackerman, Hartford, CT, social media editor for the ABA Section of Litigation's Class Actions & Derivative Suits Committee.

By providing clarity on when and under what circumstances the 30-day period begins, "the decision fairly places plaintiffs and defendants on a more level playing field," says Laurie A. Novion, Kansas City, MO, cochair of the Section of Litigation's Mass Torts Committee. Additionally, the decision will "likely reduce premature removal notices filed out of an abundance of caution, where the grounds for removal may be uncertain or based on speculation," notes Novion.

Section leadership agrees the decision does not eliminate all uncertainty, however. "While Graiser's holding is couched in terms of a bright-line rule, there will still be questions raised about whether a document 'unambiguously' revealed CAFA jurisdiction eligibility," observes Kathryn Honecker, Scottsdale, AZ, cochair of the Section's Class Actions & Derivative Suits Committee.

Under this decision, litigators are less likely to engage in gamesmanship, but the brighter-line rule does not eliminate it altogether. "The decision seems to suggest defendants can use CAFA as a tactic to remove the case at a later time depending on how state proceedings progress; but in my experience, defendants will likely remove as soon as possible," explains Ackerman.

Furthermore, defendants "must ensure that they promptly review all documents a plaintiff files and produces to ensure they timely remove the case no later than 30 days from receiving the documents," notes Honecker. On the other hand, "Plaintiffs are encouraged to identify CAFA jurisdiction eligibility facts, such as damage amounts over $5 million, early in the case to start the clock on defendant's time to remove the case," advises Honecker.

Keywords: litigation, class actions, CAFA, Class Action Fairness Act, removal, amount in controversy

 
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