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Braud v. Transport Service Co. of Ill., 445 F.3d 801, No. 06-30088, 2006 WL 880051 (5^th Cir. April 6, 2006).

The named plaintiff, Pamela Braud (since this case came out of Louisiana, we think it's pronounced "Bro." And we’d bet we’re not the first to make this word association involving her name) and the issues stemming from her case caught the Fifth Circuit’s eye in this April 6, 2006, decision addressing the issue of the date of the commencement of an action under the Class Action Fairness Act.  In this issue of first impression for the Fifth Circuit,Circuit Judge Jerry E. Smith framed the issue as whether “amending a complaint to add a defendant ‘commences’ a new suit under the Class Action Fairness Act of 2005 . . . .”  After looking the issue up and down, the panel passed on Braud’s arguments, and concluded that amending a complaint to add a new defendant does, in fact, commence a new suit on the date of amendment, thereby allowing the new defendant an opportunity to remove the action.

Ms. Braud and and her bros filed their class action petition in Louisiana state court during the summer of 2004, but subsequently amended the petition to include Ineos Americas, LLC, as an additional defendant in April of 2005 – post CAFA.  Ineos and the other defendants then timely removed the action to federal district court, asserting federal jurisdiction under CAFA.  Realizing the misstep, Braud moved to remand the action, and shortly thereafter, filed a motion to voluntarily dismiss Ineos from the dispute.  The district court remanded the action based on its finding that CAFA did not grant federal jurisdiction since the original action was filed before CAFA became law.

The panel, consisting of Circuit Judges Smith, Prato, and Garza, began its analysis by establishing that each court of appeals which has considered the issue to date has concluded that the question of “when a lawsuit is initially ‘commenced’ for purposes of CAFA is determined by state law.”  Under Louisiana law, a lawsuit commences when a pleading presenting a demand to a court of competent jurisdiction is filed.  Therefore, the original action commenced August 30, 2004; however Transport Service argued that the addition of Ineos as a new defendant post-CAFA commenced a new action, allowing removal under the Seventh Circuit’s opinions in Knudsen I and Schillinger.  (See the CAFA Law Blog post summarizing Knudsen I posted on September 3, 2005, and the post summarizing Schillinger posted on October 24, 2005). 

The court agreed with the Seventh Circuit for two reasons: first, the court disagreed with the plaintiffs that the lack of specific language in CAFA supporting Transport Service’s position that the addition of a new defendant commences a new action exposed a flaw in the defendants’ argument.  Instead, the court reasoned CAFA’s lack of a definition of commencement demonstrates the statute was not intended to replace existing case law determining when a lawsuit commences.  Relying on U.S. Supreme Court precedent,Judge Smith asserted that a party added through amendment who previously had no opportunity to defend the action may treat the action as commenced at the time it was added to the proceeding.  The panel’s second point of disagreement with the plaintiffs’ argument centered on whether the addition of a new defendant opened a new window for removal under 1446(b).  The court concluded that “removability is determined as of the date of receipt of service of the amended complaint, not as of the date on which the original suit was filed in state court.”  Moreover, the one year limit on removal would not preclude removal in this instance.  “[A] new defendant can remove even if the plaintiff decided to add it more than one year after the initial suit.”  Finally, Judge Smith determined the amendment did not relate back to the original complaint, as Ineos had no notice of the proceeding before being served with the amended complaint. 

As to the plaintiffs’ dismissal of Ineos after removal, the court declined to honor the plaintiffs’ attempted jurisdictional manipulation and denied the dismissal affected the court’s jurisdiction.  The court cited authority that the entire action, and not each claim, is removable, and thus post-removal dismissal of one claim cannot destroy jurisdiction.  Supporting his conclusion, Judge Smith quoted from CAFA’s Senate Report: “The law is clear that, once a federal court properly has jurisdiction over a case removed to federal court, subsequent events generally cannot `oust’ the federal court of jurisdiction.”  Although an exception to this general rule allows a district court to remand if plaintiffs have “legitimate purposes” for dismissing a new defendant, even if it destroys diversity, this was not the case with Braud.  “[I]t appears that . . . dismissal was intended solely to destroy diversity, so there is no justification for remand.”  

The court thus concluded that a new action commenced upon the amending of the complaint, and Braud’s dismissal of Ineos did not affect the district court’s jurisdiction, thereby leading the appellate court to reverse the district court’s remand order.

Posted By McGlinchey Stafford at 05:30 AM | Comments / Questions (0)