Wallace v. Louisiana Citizens Property Ins. Corp., 443 F.3d 697, No. 06-00009, 2006 WL 848585 (5th Cir. March 31, 2006).


The three Circuit Judges who issued a decision March 24th interpreting CAFA’s appellate review provisions did not ride off into the sunset, but reconvened the following week to declare in this case that CAFA’s new provision creating appellate review of remand orders only applies to removals based on CAFA’s grant of federal jurisdiction. In this class action, which consisted of individuals who suffered flood damage as a result of Hurricane Katrina, the defendant insurance companies removed the case to the Eastern District of Louisiana, asserting subject matter jurisdiction under § 1441(e)(1)(B), which is part of the Multiparty, Multiform Trial Jurisdiction Act (MMTJA). Following the district court’s remand of the action, the defendants petitioned the 5th Circuit to accept consideration of an appeal under § 1453(c)(1) of the Class Action Fairness Act allowing appeal of remand orders. 

After consideration of the defendants’ argument, Circuit Judges Jerry E. Smith, Edward Charles Prado and Emilio M. Garza concluded that CAFA does not create appellate jurisdiction over a remand order issued by a district court judge in a case removed under the MMTJA. Judge Garza, who dissented from the panel’s March 24th ruling, but took the lead this time by writing the opinion in this case, relied on the plain language of the statute bolstered with support from CAFA’s legislative history. Since the text of § 1453 indicates by self reference that it only applies to removal of a case “under this section,” and CAFA’s Senate Report confines the intended use of the section to “suits brought under this new legislation,” Judge Garza wrote that his conclusion was unavoidable, and succinctly stated, “[t]he application of § 1453(c)(1) is therefore limited to the context of CAFA.”

However, just when the defendant insurance companies were probably about to say, “Son of a mother-less goat!” the three judges decided that the court did have authority to review the remand order under 28 U.S.C. § 1291. Latching onto the fact that the district court based its original remand order on abstention, and citing Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996), the Fifth Circuit decided that § 1291, which provides appellate review of remands based on abstention, allowed consideration of the appeal. After considering the merits of the appeal, particularly the district court’s misapplication of supplemental jurisdiction and abstention statues, the three amigos vacated the remand order and remanded the case back to the district court for further proceedings. (Hey, we tried to work in a “plethora of piñatas,” but just couldn’t make it work..)

Editors’ Note: It is important to note in Wallace, the Fifth Circuit reversed the remand order after examining the legislative history of the Multiparty, Multiforum Trial Jurisdiction Act (“MMTJA”), another recently enacted statute granting “minimal diversity” jurisdiction to expand federal jurisdiction for a special category of disputes. The MMTJA’s minimal diversity provisions are very similar to those in CAFA in many respects. Decisions on these analogous MMTJA provisions may provide persuasive authority under CAFA. The court noted that the House Sponsor’s Report “makes clear, the MMTJA was designed to ameliorate the restrictions on the exercise of federal jurisdiction that ultimately forced parties in multiple suits arising from the same disaster to litigate in several fora. To hamstring the removal statute by misapplying the abstention provisions would undercut the MMTJA’s ultimate goal of consolidation.”  Wallace shows another instance where Congress carved out a narrow category of cases – mass tort suits filed in multiple courts – with the objective of granting them a new path to federal court where the existing restrictive Complete Diversity Standard had previously blocked that path. The MMTJA also appears to create a presumption in favor of a finding of jurisdiction, with the burden of proof on the party opposing jurisdiction.

For further discussion on the concept of Minimal Diversity, see the CAFA Law Blog recent post, “Hot Off the Press,” posted May 5, 2005, which introduces a law review article entitled “CAFA’s New Minimal Diversity Standard For Interstate Class Actions Creates A Presumption That Jurisdiction Exists, With The Burden Of Proof Assigned To The Party Opposing Jurisdiction,” penned by Hunter Twiford, Anthony Rollo and John Rouse, three of CAFA Law Blog’s own amigos.