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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

A post-complaint settlement demand constitutes an “other paper” for purposes of CAFA removal.

Posted in Case Summaries

Gibson v Clean Harbors Environmental Services Inc, 2016 WL 3960875 (W.D. Ark. June 28, 2016).

In this action, the Magistrate Judge held that the plaintiffs’ settlement correspondence provided the defendant significant detail, which made the case removable.

The plaintiff residents filed a putative class-action in state court that alleged the defendant, Clean Harbors El Dorado, LLC, operated a hazardous waste storage and treatment facility in a manner that resulted in numerous fires, explosions, and releases of hazardous substances. According to the complaint, those substances migrated onto the surrounding property.

The defendant removed the action to the federal court pursuant to CAFA.  The plaintiffs moved to remand the action to state court, and argued that removal was untimely. The Magistrate Judge recommended granting motion to remand.

The Magistrate Judge noted that, under CAFA, a defendant must file a notice of removal either (i) “within thirty days after the receipt by the defendant … of a copy of the initial pleading,” or (ii) “if the case stated by the initial pleading is not removable … within 30 days after receipt by the defendant … of a copy of an amended pleading, motion, order or ‘other paper’ from which it may first be ascertained that the case is one which is or has become removable.”

The plaintiffs asserted that the 30 day time period began to run 59 days prior to the defendant’s removal, when the defendant received a letter from the plaintiffs’ counsel that demanded a total payment of $6,500,000 to resolve the matter and indicated that there were more than 6,000 potential claims (the “settlement correspondence”). The defendant argued that it could not ascertain that the amount in controversy was in excess of $5,000,000 until the plaintiffs provided their expert report.

The Magistrate Judge noted that a post-complaint settlement demand can constitute an “other paper” that renders a case removable.  The court then found that the plaintiffs’ settlement correspondence provided the defendant significant detail for the defendant to determine that the case was removable.  The Magistrate Judge further held that the correspondence also established the class size for CAFA removal.

Consequently, the Magistrate Judge concluded that removal was untimely, i.e., beyond 30 days of the defendant receiving “other paper” (settlement correspondence), and thus recommended to grant the plaintiffs’ motion to remand.