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

A “Neutral” Factor Under 28 U.S.C. § 1332(D)(3)(A)-(F) Should Not Count Against Remand

Posted in Case Summaries

Cowan v. Devon Energy Corporation et al., No. 6:16-cv-00510-SPS (E.D. Ok. Nov. 8, 2017).

In this action, while granting the plaintiff’s motion to remand, a district court in Oklahoma found that in determining the six enumerated factors for the application of the discretionary exception, a ‘neutral’ factor should not weigh against remand.

The plaintiff, an oil and gas well owner, brought a putative class action in Pittsburg County, Oklahoma alleging that the defendants, operator of the well, violated Oklahoma statute that required payment of interest on delayed payment of revenue from oil and gas production. The plaintiff alleged that the defendants routinely delayed payment of production proceeds and denied owners the interest payments to which they were entitled as part of an overarching scheme to avoid its obligations under the Oklahoma Law.

The defendants removed the action to federal court pursuant to CAFA. The plaintiff moved to remand based on CAFA’s “discretionary exception” under 28 U.S.C. § 1332(d)(3).  The District Court granted the plaintiff’s motion.

At the outset, the District Court noted that the discretionary exception allows a federal court to decline to exercise jurisdiction over a class action that is otherwise covered by CAFA based on six enumerated factors under § 1332(d)(3)(A)-(F). The plaintiff argued that all six factors weighed in favor of remand.  The defendants contended, inter alia, that any “neutral” factor should weigh against remand.

The District Court held a ruling in abeyance in the instant case until the Tenth Circuit issued its decision in a similar case, Speed v. JMA Energy Co., 872 F.3d 1122 (10th Cir., 2017).  (Editor’s Note: See the CAFA Law Blog analysis of Speed dated January 2, 2018).  In that decision, the Tenth Circuit disagreed with JMA Energy Company’s argument that a “neutral” factor should count against remand, and ultimately affirmed the district court’s order granting remand based on the discretionary exception.

Upon issuance of the Tenth Circuit’s decision in Speed, the District Court requested supplemental briefing from the parties based on the Tenth Circuit’s decision.  The defendants’ supplemental brief disagreed with the Tenth Circuit’s decision in Speed, but recognized that it would control the District Court’s determination in the instant case.  As such, the defendants no longer opposed an order remanding this case to Pittsburg County, noting that such a position was not intended to waive any procedural or substantive arguments as to the plaintiff’s claims that may be asserted in Oklahoma state court.  The plaintiff asserted that the facts in this case favored remand more than even the factors in Speed.  The District Court thus, in light of the Tenth Circuit’s decision in Speed and the defendants’ withdrawal of opposition to remand agreed that remand was appropriate in this case.

Accordingly, the District Court granted the plaintiff’s motion to remand.

-Melissa M. Grand