Palisades Collections, LLC v. Shorts, No. 08-2188 (4th Cir. 12/16/08).

In previous posts the CAFA Law Blog brought you extensive coverage (yes, full briefs) of the Shorts story. 

In July you read about the West Virginia district court decision in Palisades Collections, LLC v. Shorts, in which the district court yanked AT&T’s drawers and tossed the small collection action turned bulging class action back to state court on the grounds that CAFA does not authorize removal by a counterclaim defendant.  (Editors’ Note:  See the CAFA Law Blog analysis of the district court decision in Shorts published on July 23, 2008).  Chances are you don’t remember much about the post other than the picture of Daisy Duke with backlighting à la Touched by an Angel. That’s ok. 

At any rate, in September you read a guest post by Jonathan Bridges, counsel for Shorts, who shared his thoughts on the appeal filed by counter-defendant AT&T, and even showed us his briefs (thanks, Jonathan). (Editors’ Note:  See the Guest Post by Jonathan Bridges published on September 11, 2008)

In December, the Fourth Circuit denied AT&T’s appeal, joining the majority of courts to hold that a newly added counter-defendant faced with class allegations in state court cannot remove under CAFA or otherwise – “They’ve got you by the Looms, buddy.” 

However, Judge Paul V. Niemeyer wrote a lengthy dissent in which he argued that the majority was way too confined by statutory language and precedent, and needed to take a more elastic view of the CAFA removal provisions to close the counterclaim class action loophole.   

Continuing to spread CAFA enlightenment to all the boys and girls, CAFA Law Blog editor Anthony Rollo and analyst Candy Burnette wrote an article published in January in the Consumer Financial Services Law Report which analyzed the majority and dissenting opinions in Shorts and the pending petition for rehearing en banc filed by AT&T.  (Editors’ Note:  See the artilce published in the Conumer Financial Serivces Law Report by clicking here).  

In particular, Rollo and Burnette noted the potential significance of a narrowing of the panel’s holding, supported by Judge Niemeyer’s dissent, that would allow removal by at least an added counter-defendant, if not the original counter-defendant. Such a narrowing would have been good news for consumer financial organizations who rely on other entities to collect debt. 

Alas, it was not to be. On January 15, the Fourth Circuit denied the petition for rehearing with no opinion, and no poll. However, Judge Niemeyer again wrote a dissent, confessing that he did not request a poll of the court (in other words, everyone told him he’d lose), instead lobbying for early consideration of the issue by the Supreme Court. Said Judge Niemeyer: “This is an important issue of statutory interpretation, and the majority’s interpretation creates an unfortunate loophole in the Class Action Fairness Act that only the Supreme Court can now rectify.” Come on Supremes, put the mouse back in the house. CAFA Law Blog out.