Admiral Ins. Co. v. Abshire, 574 F.3d 267 (5th Cir. 2009)

The U.S. Fifth Circuit recently upheld a district court’s ruling that the plaintiffs did not commence a new suit under CAFA, by seeking class certification in an amended complaint or by reviving claims held by the deceased plaintiffs, in a suit which was filed prior to commencement of CAFA.

Seventeen years back and long before the commencement of CAFA, Abshire and other purchasers of life insurance products, sued the State of Louisiana in the state court alleging that the State’s negligent, intentional, and criminal acts contributed to the failure of the insurance companies. A total of 1,383 plaintiffs were initially named as parties in three petitions, which were later consolidated into a single action.

After CAFA came into effect in 2005, the plaintiffs amended the complaint seeking class certification and attorneys’ fees. In the meantime, the state court also substituted survivors of many deceased plaintiffs.

The State then removed the action to the federal court under CAFA’s subject-matter jurisdiction arguing that the amended complaint and substitution of survivors commenced a new suit for the purpose of CAFA. But the district court remanded the suit back to state court holding that the action was not “commenced” after CAFA’s effective date. The State appealed, but the U.S. Fifth Circuit affirmed the order.  

While upholding the district court’s ruling, the Fifth Circuit noted that under Louisiana law, the default rule is that absent special circumstances, a suit is commenced only at the time the original petition is filed in a court of competent jurisdiction. Therefore, the plaintiffs commenced this suit long before CAFA’s effective date, when at least one of the petitions for damages was filed in a Louisiana court competent to hear it. In doing so, the Fifth Circuit, giving effect to the plain meaning of the term “civil action” in § 9 of CAFA, noted that “civil action” is a more extensive and inclusive proceeding which may commence before it becomes a “class action.”

Explaining that special circumstances were absent to hold that the suit commenced post-CAFA, the Fifth Circuitstated that its limited holding in Braud v. Transp. Serv. Co. of Ill., 445 F.3d 801, 803 (5th Cir. 2006) — that addition of a new defendant commences a new suit as to that defendant for the purpose of CAFA providing a new removal window — could not be enlarged to the addition of new claims or new plaintiffs to a case when the amendment relates back to the pre-CAFA suit. (Editors’ Note: See the CAFA Law Blog analysis of Braud posted on May 24, 2006). The Fifth Circuit found that amended complaint was not a drastic modification of the case because mere addition of class allegations applied to the class comprising only individuals or successors of individuals who were parties to the suit filed prior to CAFA.

The Fifth Circuit further observed that given CAFA’s non-retroactivity, the relation back doctrine to commencement of a suit was virtually non-existent in this case because the State had notice of all of the plaintiffs’ claims before enforcement of CAFA, except their claims for attorneys’ fees. The Fifth Circuit, however, found that request for attorneys’ fee did not commence a new “civil action” because attorneys’ fees arose out of the same transaction that led to the filing of the original complaint.

Finally, the Fifth Circuit found that even if the relation back test needed to apply, “resurrected” plaintiffs and claims satisfied the test both under Louisiana as well as Federal law. In this regard, the Fifth Circuit observed that the plaintiffs satisfied the Louisiana Supreme Court’s relation back analysis in Giroir v. South Louisiana Medical Center, 475 So. 2d 1040, 1044 (La. 1985), because the amended claims were sufficiently related to old claims and the substituted parties were not wholly new but were survivors of the deceased plaintiffs.

The Fifth Circuit also agreed with the Seventh Circuit’s opinion in Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 750, 752 (7th Cir. 2005), that class members were not new plaintiffs even if they had not previously joined the action as individuals. (Editors’ Note: See the CAFA Law Blog analysis of Schorsch posted on September 4, 2005).