Watson v. City of Allen, Tex., 821 F.3d 634 (5th Cir. 2016).

In Watson, the Fifth Circuit held that a plaintiff timely filed his motion to remand under the “local controversy” and “home state” exceptions to the Class Action Fairness Act, 28 USC 1332(d)(4)(A), (B). The court reasoned that these exceptions do not fall within the thirty-day deadline set by 28 U.S.C. § 1447(c), so remand motions based on sections (d)(4)(A) and (B) need only be brought within a reasonable time.

The Watson court heard a challenge to the red-light camera legislative scheme enacted by the State of Texas. Under Chapter 707 of the Texas Transportation Code, municipalities can pass ordinances authorizing the installation and operation of “photographic traffic signal enforcement systems”—i.e., red-light cameras—which are then maintained by private companies. If a car is caught on camera running a red light, the municipality can enforce civil penalties against the car’s owner.

James Watson received a citation after his vehicle triggered a red-light camera. Watson was out of state at the time of the transgression, leading him to bring a putative class action in Texas state court to challenge Chapter 707 and the ordinances enacted under its authority. Beyond his attack on the legislative scheme, he also sought damages from the private companies that administered the scheme, claiming violations of various state laws and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The defendants removed the matter on the basis of CAFA jurisdiction then filed motions to dismiss. While these motions were pending, Watson amended his complaint to drop the RICO claim. Shortly thereafter—and fifty-two days after removal—he moved to remand, claiming that the local controversy and home state exceptions required abstention. The district court granted the motions to dismiss in large part, then denied his motion to remand, reasoning that it was untimely filed and, alternatively, that supplemental jurisdiction was warranted.  Watson appealed.

The Fifth Circuit’s analysis began and ended with the question of CAFA jurisdiction. First, it held that Watson timely moved to remand, even though he filed his motion outside of the thirty days allowed by Section 1447(c). The court ruled that the CAFA exceptions on which Watson based his motion were not jurisdictional in nature, reasoning that the exceptions mandated abstention from the exercise of jurisdiction but did not deprive the court of jurisdiction. As a result, Watson’s motion was not based on a lack of subject-matter jurisdiction or a defect in removal procedure, so Section 1447(c) did not apply. Instead, the Fifth Circuit followed the weight of its sister circuits’ precedent and applied the rule that prevailed prior to the enactment of Section 1447(c), holding that a plaintiff must file his Section 1332(d)(4) remand motion within a reasonable time. Because Watson was diligent in his efforts to gather evidence supporting his motion, the court held that his fifty-two day delay was not unreasonable and that his motion was timely.

Next, the court turned to the meat of the jurisdictional question, asking if the home state exception barred the exercise of CAFA jurisdiction. The parties agreed that at least two-thirds of the putative class of plaintiffs were citizens of Texas, so the only issue was whether the primary defendants were also Texans. And because the private defendants were the only non-Texans named in the action, the question centered on whether the private companies administering the cameras were primary defendants. The court held that they were not. It reasoned that the “primary thrust” of the lawsuit was to attack the legislation authorizing the red-light camera scheme. Because this legislation was enacted by the State of Texas and the various named municipalities, they were primary defendants. On the other hand, the claims against the private parties depended on a finding that the state and municipal defendants had enacted unconstitutional legislation. Moreover, but for the challenged legislation, the private parties would not have been hired in the first place. Accordingly, the private companies were not primary defendants, so the home state exception applied.

Finally, the Fifth Circuit determined that, in light of concerns of judicial economy and novel issues of state law, the district court abused its discretion in exercising supplemental jurisdiction  over the dispute. It therefore vacated the judgment and remanded to the district court with instructions to remand to state court.


Posted by Ben Richardson