Morgan v. Gay, Case No. 06-8045 (3d Cir. October 16, 2006).

On October 16, 2006, the United States Court of Appeals for the Third Circuit handed down a short opinion, labeled “Precedential”,  written by Circuit Judge Smith regarding CAFA’s appeal period under 28 U.S.C. § 1453(c). The case was originally filed by New Jersey purchasers of the skin cream Stri Vectin-SD, not Captain Morgan’s rum, in the Superior Court of New Jersey and removed to federal court by the defendants. The District Court remanded the case back to state court on the motion of the plaintiffs, concluding that it lacked removal jurisdiction over the matter. (Editor’s note: See the CAFA Law Blog analysis of the District Court case of Morgan posted on October 24, 2006).  Ready for round two of this saga?

The defendants filed a petition for leave to appeal seven days after the District Court’s remand Order. The appeal was filed pursuant to under 28 U.S.C. § 1453(c) which states that a court of appeals “may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order.” Judge Smith noted that the language of the statute provides the court with discretion as to whether to grant the petition. In determining whether to exercise that discretion, the court examined the seven day timing requirement as an issue of first impression in the Third Circuit. Circuit Judge Smith asked whether a statutory provision from CAFA should be read “according to the uncontested intent of Congress rather than as it is literally (but mistakenly) written.”

The Third Circuit concluded that because the uncontested legislative intent behind § 1453(c) was to impose a seven-day deadline for appeals, the statute as written contains a typographical error and should be read to mean “not more than 7 days.” In making the determination, the Third Circuit pointed to United States v. Ron Pair Enterprises, 489 U.S. 235, 242 (1989) for the proposition that “The plain meaning of legislation should be conclusive, except in [ ] rare cases in which the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters. In such cases, the intention of the drafters, rather than the strict language, controls.” (Editor’s note: See the CAFA Law Blog analysis of Amalgamated Transit posted on June 6, 2006, which cited the same proposition). The court noted that this is one of those rare circumstances.

The Third Circuit went straight to the legislative history of CAFA noting Congress’ intent to prevent undue delay. The language of Section 1453 itself also instructs appellate courts to dispose of CAFA appeals within 60 days. The court cited the other circuits that have addressed the issue: the Ninth Circuit in Amalgamated, the Tenth in Pritchett and the Eleventh in Miedema. (Editor’s Note: If you have been reading carefully, we have already given you the cite for our analysis of  Amalgamated Transit posted on June 6, 2006.  See the CAFA Law Blog analysis of Pritchett posted on October 23, 2005 and the CAFA Law Blog analysis of Miedema posted on August 22, 2006. See also the CAFA Law Blog critique of the Miedema decision posted on August 22, 2006). Following the reasoning set forth by the other circuits, the Third Circuit dodged a debate over statutory interpretation, but noted that Section 1453(c)(1) needs common sense revision that accurately reflects the uncontested intent of congress.

(Editor’s note: This is yet another CAFA case using the statute’s legislative history to reach a result that is admittedly contrary to the express language of the statute regarding the timing of appeals.  In this context, Morgan and other courts make a bee-line to CAFA’s legislative history for guidance.  However, in the different context of which party bears the threshold burden of proof as to CAFA jurisdiction, Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005) and its progeny, in finding that a party asserting CAFA jurisdiction bears the burden of proof, have concluded that they may not look to legislative history, even though that language reflects an uncontested legislative intent to the contrary, it is the party opposing jurisdiction who bears the burden of proof.  As noted by the Editors in their law review article on this issue, Brill and its progeny are not well reasoned and use an incorrect standard of statutory construction to reach their incorrect conclusion.  If Brill and its progeny had followed the standard of statutory construction used in Morgan, they would have reached the conclusion opposite their holdings.)