BP America, Inc. v. Oklahoma, No. 09-705, 2010 WL 2961253 (10th Cir. July 29, 2010).

A Twofer on Hump Day…10th Circuit CAFA Ruling merits an additional post today.

Ruling on an issue of first instance in the Tenth Circuit, the Court of Appeals granted BP leave to appeal the Western District of Oklahoma’s remand order. The Court of Appeals found that CAFA provided a discretionary exception to the general rule that a remand order was not appealable, and so doing, decided to exercise that discretion.

The Attorney General for Oklahoma brought a parens patriae action against several BP companies in Oklahoma state court, alleging that BP violated various provisions of the Oklahoma Consumer Protection Act by deceptively manipulating propane gas prices in Oklahoma. 

BP removed the case to federal court under CAFA, arguing that the case was a “mass action,” because the real parties in interest were the individual Oklahoma citizens, and that it was these claims that the Attorney General proposed to be tried jointly. 

The Attorney General subsequently filed a motion to remand, urging the propriety of the case as a parens patriae action. He argued that he, as the State’s representative, is the sole plaintiff, thus there are not the 100 or more plaintiffs needed to sustain federal jurisdiction under CAFA. The AG further argued that CAFA eschews federal jurisdiction over cases when all of the claims are asserted on behalf of the general public pursuant to a state statute. Here, the AG argued that the Oklahoma Consumer Protection Act specifically authorized such an action.

The district court agreed with the AG and granted remand. 

BP then petitioned the Tenth Circuit for leave to appeal the remand order, arguing that CAFA expressly provided an exception to the general rule that remand orders are non-appealable. 

The AG opposed the appeal, arguing that because the district court had sent its remand order to the state court prior to BP’s petition for appeal, the Court of Appeals was divested of jurisdiction. 

The Tenth Circuit disagreed. The Court read the plain language of CAFA to afford an exception to the general rule and that the interpretation argued by the AG is not supported by the statute or jurisprudence. The cases cited by the AG hold that the transmission of the remand order from the district court clerk to the state court, as contemplated by §1447(c), operate to divest federal district courts of further jurisdiction, but they speak nothing of the jurisdiction afforded to the federal courts of appeal. 

Assured of its jurisdiction to entertain the appeal, the Court then proceeded to determine whether or not they should do so. Whether or not the Tenth Circuit should grant an appeal from a remand order in an case involving CAFA and a suit by a state attorney general was one of first impression in the Tenth Circuit. The Court looked to other circuits and found the First Circuit’s College of Dental Surgeons of P.R. v. Conn. Gen. Life Ins. Co., 585 F.3d 33 (1st Cir. 2009) decision particularly helpful. (Editors’ Note: We have no doubt that the Tenth Circuit also studied the CAFA Law Blog analysis of College of Dental Surgeons of P.R. posted on April 29, 2010).

There the First Circuit outlined a number of factors to consider whether to grant leave to appeal under CAFA, which the Tenth Circuit noted were not exhaustive considerations, or “rigid rules.” The Court found that each factor favored granting review. For example, it found that this case raised the important and unsettled legal question of whether CAFA’s mass action provision applies to suits by a state attorney general; whether the “general public” exception covers such suits; and how, if at all, the “real party in interest” analysis pertains to such suits. The Tenth Circuit further felt compelled to create a body of law on these issues, foreseeing the possibility of district courts having to decide these issues in the future. Moreover, if it declined the appeal, the case would leave the ambit of the federal courts for good, precluding any other opportunity for BP to vindicate its claimed legal entitlement to have a federal court adjudicate the merits. 

Thus, without addressing the merits of the remand order, the Tenth Circuit granted BP’s application for leave to appeal.