Robb et al. v. Stericycle, Inc. et al., No. Civ. A.05-1370, 2005 WL 2304457 (W.D. La. August 19, 2005).
The plaintiffs filed their putative class action in Louisiana state court in 2002, on behalf of the minority shareholders of 3CI Complete Compliance Corporation, against Stericycle, a national provider of medical waste services, and several of its officers and directors, for actions allegedly detrimental to the interests of 3CI and its minority shareholders. After 3 years of contentious litigation (and over $200,000 in discovery sanctions), documents were produced at the 11th hour by the defendants which allegedly implicated the Chicago law firm which handled the 3CI sale transaction. The plaintiffs, with express reservations as to the possible loss of their trial setting, nevertheless amended to add the law firm and two partners as additional defendants on July 22, 2005, and on August 8, 2005, the defendant lawyers removed the case to federal court under CAFA, claiming more than $5,000,000 amount in controversy and at least minimal diversity. Two days later, on August 10th, the plaintiffs apparently reconsidered their decision and moved to voluntarily dismiss the newly added lawyer defendants.
U. S. Magistrate Judge Mark L. Hornsby, in his August 19, 2005 report and recommendation, first considered the “date of commencement” issue, since the case was initially filed in 2002, long before CAFA was enacted, and the removal took place after CAFA’s effective date (and within days of the addition of the new lawyer defendants). The plaintiffs, relying on Pritchett v. Office Depot and its progeny, argued that the action was “commenced” when the state action was filed in 2002, while the defendants argued that the Knutson v. Liberty Mutual speculation that the addition of new defendants after the adoption of CAFA could be the date of “commencement” under CAFA. The Court also cited the Adams v. Federal Materials decision so holding, which permitted newly added defendants to remove under CAFA.
Magistrate Judge Hornsby also considered whether the CAFA securities litigation exception under Sections 1332(d)(9) and 1453(d) exempted this litigation from expanded CAFA jurisdiction, and cited to the In Re Textainer Partnership Securities Litigation decision.
However, rather than reaching any conclusion as to the two CAFA issues considered, Magistrate Judge Hornsby instead recommended that the plaintiffs be allowed to voluntarily dismiss the new lawyer defendants, reasoning that once they were dismissed, the federal court would not have jurisdiction under CAFA since the case — with all of the original defendants – would have been commenced long before CAFA’s effective date. The fight among the parties and the Court’s discussions of the Rule 41 issues surrounding the plaintiffs’ efforts to voluntarily dismiss the new lawyer defendants over their objections, while interesting procedurally, are themselves not directly related to CAFA, and will not be discussed at length here.
Thus, the report and recommendation, while raising several issues key to CAFA, ultimately provides no guidance to practitioners in the area. The Magistrate Judge’s Report and Recommendation was adopted by Order of U. S. District Judge S. Maurice Hicks, Jr. on September 15, 2005.