Hot Spring County Solid Waste Authority v. UnitedHealth Group., No. 05-6065 (W.D. Ark. Jan. 13, 2006).
On January 13, 2006, United States District Judge Robert T. Dawson, writing for the Western District of Arkansas, followed Weekley v. Guidant Corp., 392 F. Supp. 2d 1066 ( E.D. Ark. 2005) (Editor’s Note: See the CAFA Law Blog case summary posted on October 6, 2005), and granted the plaintiffs’ motion to remand because, as in Weekley, the action was commenced prior to the enactment of the Class Action Fairness Act. The Plaintiff, Hot Springs County SWA, originally filed its class action complaint in the Circuit Court of Hot Spring County, Arkansas, on June 23, 2004, alleging violations of the Arkansas Deceptive Trade Practices Act, as well as claims for breach of fiduciary duty, civil conspiracy, negligent supervision and negligent management. In the preliminary, pre-CAFA skirmishes, SWA amended its complaint on July 15, 2004, and on August 5, 2004, UnitedHealth Group removed the case to federal court, asserting the existence of diversity jurisdiction based on fraudulent joinder. SWA timely moved to remand the case, and the motion was granted on October 1, 2004.
After the action was sent back to state court, the state court judge found that SWA did not have standing to pursue claims against UnitedHealth on behalf of its employees, but allowed SWA twenty days to amend its complaint. On July 26, 2005, SWA filed its third amended class action complaint, adding two SWA employees to satisfy the standing requirement, which prompted UnitedHealth to again remove this action to federal court, asserting federal jurisdiction under CAFA.
Judge Dawson addressed the issue as whether an amended complaint necessitated by a plaintiff’s lack of standing constitutes the “commencement” of a new action for purposes of determining whether CAFA is applicable. Before beginning his analysis, the court noted that the party seeking removal has the burden of establishing federal jurisdiction, without discussing the shifting of the burden to the party challenging federal jurisdiction as set out in CAFA’s legislative history.
Following the majority of precedent concerning commencement, the parties focused on whether the third amended complaint related back to the filing of the original complaint in their pleadings. However, giving great weight to Judge Holmes’ opinion in Weekley, Judge Dawson, interestingly, decided that the relation-back debate to be irrelevant. Specifically, Judge Dawson held that CAFA was unambiguous as to its application to cases filed before February 18, 2005, and to support his argument, quoted Weekley for the proposition that “[a] civil action, viewed as the whole case, the whole proceeding, can only be commenced once. Pleadings may be amended, but amending pleadings does not commence a civil action….”
Based on this rationale, the court held that the third amended complaint did not “commence” a new action on July 26, 2005, and therefore, since this action was commenced prior to the enactment of CAFA, removal was not proper under the Class Action Fairness Act.