Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., ____ F. 3d ____, 2007 WL 92756 Nos. 06-12419, 06-12420, 2007 WL 92756 (11th Cir. Jan. 16, 2007).
In a decision discussing the Federal Rules of Appellate Procedure’s application to the Class Action Fairness Act, the 11th Circuit held that the filing of a notice of appeal in the district court did not comply with the requirements of Federal Rule of Appellate Procedure 5 governing permissive appeals.
This case arose from two class actions involving the same factual issues that had been removed to federal court under CAFA. In the underlying cases, two independently owned pharmacies (represented by the same counsel), brought suit individually and on behalf of similarly situated pharmacies against two health insurers for failure to reimburse the pharmacies according to an agreed upon formula. The state court actions were brought before the enactment of CAFA, but the summonses were issued after the effective date of the Act. The insurers removed the cases pursuant to CAFA. The pharmacies moved to remand arguing that the actions were not controlled by CAFA and that the amount in controversy requirement was not met.
The United States District Court for the Middle District of Alabama denied the motion to remand in each case, and within seven days each plaintiff filed a notice of appeal in the district court. Neither plaintiff filed a petition for permission to appeal with the 11th Circuit Court of Appeals. (Editors’ Note: We have reported to you about the various decisions of the appellate court and the trial court over the last year. See the following CAFA Law Blog analyses posted on June 20, 2006 and March 14, 2006).
The 11th Circuit did not address the merits of plaintiffs’ motion for remand. It found that plaintiffs failed to follow the procedural rules applicable to permissive appeals and thus the Court did not have jurisdiction to hear the appeal. Citing its prior decision in Evans v. Walter Industries, Inc., 449 F. 3d 1159, 1162 (11th Cir. 2006), the Court found that interlocutory appellate jurisdiction to review CAFA remand orders is provided by 28 U.S.C. § 1453(c)(1) which provides that CAFA remand rulings are discretionary appeals. Accordingly, the requirements of Federal Rule of Appellate Procedure 5 apply to interlocutory appeals of CAFA remand orders. (Editors’ Note: See the CAFA Law Blog analysis of Evans posted on May 25, 2006.
When an appeal is discretionary, Federal Rule of Appellate Procedure 5 requires a party to file a request for permission to appeal with the district court. The request for permission to appeal must include, without limitation, the facts necessary to understand the question presented and the relief requested. A party cannot appeal unless the district court enters an order granting permission to appeal. The Court noted that all four of the other circuits that have decided the issue, concluded that the requirements of Rule 5 apply to appeals of CAFA remand orders. See DiTolla v. Doral Dental IPA of N.Y v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 679 (7th Cir.2006); Patterson v. Dean Morris, L.L.P., 444 F.3d 365, 368-69 (5th Cir.2006); Amalgamated Transit Union Local 1309 v. Laidlaw Transit Servs., 435 F.3d 1140, 1144 (9th Cir. 2006). (Editors’ Note: See the CAFA Law Blog analysis of DiTolla posted on December 28, 2006, the CAFA Law Blog analysis of Patterson posted on June 5, 2006, and the CAFA Law Blog analysis of Amalgamated Transit Union posted on June 6, 2006).
The Court rejected the argument that the Supreme Court’s decision in Eberhardt v. United States, 546 U.S. 12, 126 S.Ct. 403 (2005), overrules the circuit court decisions holding that Rule 5 applies to appeals of CAFA remand orders. The Supreme Court in Eberhardt concluded that the time requirement set out in Fed.R.Crim.P. 33 was not jurisdictional, emphasizing that "there is ‘a critical difference between a rule governing subject-matter jurisdiction and an inflexible claim-processing rule." The 11th Circuit concluded that following Eberhardt, which addressed only the Rule 33 issue, would involve “extrapolating from its implications a holding on an issue that was not before [the Supreme Court] in order to upend settled circuit law. . .” The Court held that until the Supreme Court or the 11th Circuit sitting en banc overrules the prior circuit court cases addressing Rule 5 and CAFA, the 11th Circuit is bound to find that the requirements of Rule 5 are jurisdictional.
The Court determined that the jurisdictional argument was a red herring anyway. The Court stated that even if Rule 5 was merely a claim processing rule, it was still compelled to dismiss the appeal. In response to the plaintiffs’ attempted appeal, the defendants timely filed a motion to dismiss the appeal because the plaintiffs failed to comply with Rule 5. The Court found that the plaintiffs failed to comply with the requirements of Rule 5 by merely filing a notice of appeal without first obtaining permission to appeal from the District Court. Because the defendants timely filed a motion to dismiss, the Court was compelled to dismiss the appeal.
Citing the Supreme Court’s ruling in Eberhardt, the 11th Circuit noted, “These claim processing rules thus assure relief to a party properly raising them, but do not compel the same result if the party forfeits them.” At least in the 11th Circuit Court of Appeals, rules are not to be broken but rather are to be strictly followed in order to appeal a CAFA remand order.