Deutsche Bank National Trust Company, etc. v. Jeffrey A. Weickert, et al. Case No. 3:09-CV-288 (N.D. Ohio April 15, 2009)

“Impleader” or “joinder” – Funny how the Civil Rules make all the difference when it comes to removal. A federal district court in the Northern District of Ohio recently held that new parties “joined” by the original defendants to a simple foreclosure action were authorized to remove the case to federal court under CAFA. 

This case began as a foreclosure action in state court. In their answer to the plaintiff’s foreclosure complaint, the Weickerts asserted a number of class action counterclaims against the plaintiff, and class action claims against additional parties (the foreclosure counsel and the originating lender) who were not parties to the original action. The Court held that, in doing so, the Weickerts became “class-action plaintiffs” and the original foreclosure plaintiff and the new parties became “class-action defendants.” 

After noting that all parties agreed that the CAFA requirements were met on the face of the pleadings and that none of the CAFA exceptions applied, the Court addressed the lone issue raised in the Weickerts’ Motion for Remand—whether the removing parties were “third party defendants” with no right to remove or whether they were properly characterized as “defendants” authorized to remove under CAFA. 

The Court found that the removing parties could not be considered “third party defendants” under Rule 14 of the Ohio Rules of Civil Procedure because that “impleader” rule permits a defending party to bring a new party into a pending case only when the new party “is or may be liable to the defending party for all of the claims against it.” The Court noted that impleader is only available for the assertion of derivative claims and does not permit joinder of a new party for the assertion of any other claims, even transactionally related claims. 

Finding that the Weickerts asserted completely distinct claims against the removing parties from those arising out of the foreclosure action as opposed to “derivative claims,” the Court concluded that the removing parties were necessarily joined as defendants by way of permissive joinder under Civil Rule 20(a). Since CAFA authorizes any defendant to a class action to remove, the Court found that removal was proper under CAFA and denied the Motion to Remand. 

The Court’s implicit finding that the “any defendant” with power to remove under CAFA is not limited to the defendants to the original action is a significant break from the majority view, and is consistent with a ground-breaking dissent by Fourth Circuit Judge Paul v. Niemeyer in Palisades Collections LLC v. Shorts, No. 08-2188 (4th Cir. Dec. 12, 2008). (Editors’ Note: See the CAFA Law Blog analysis of 4th Circuit decision in Palisades posted on March 9, 2009 and the analysis of the district court decision in Palisades posted on July 23, 2008.  As an added bonus, don’t forget about the guest post by Jonathan Bridges, counsel for Shorts, who shared his thoughts on the appeal filed by counter-defendant AT&T, and even showed us his briefs (thanks, Jonathan). His Guest Post  was published on September 11, 2008).

The defendants in Palisades lost on a petition for rehearing en banc which relied on Judge Niemeyer’s dissent, but they recently filed a petition for certiorari to the United States Supreme Court on this critical issue. We will keep you posted.

CAFA Bloggers from McGlinchey Stafford’s Cleveland Office (James S. Wertheim and Rose Marie L. Fiore) and Baton Rouge Office (Anthony Rollo) handled this matter on behalf of the removing parties.