Moffit v. Residential Funding Co., LLC, 604 F.3d 156, 2010 WL 1782435 (4th Cir. (M.D.), May 3, 2010)(NO. 10–1316)

Apparently all of the talk about leak-stoppage in the news has made quite an impact on the judges of the 4th Circuit. In Moffit, the court decided to show that it could do what a certain oil and gas company has recently been incapable of doing—it stopped a leak. 

This case involved three plaintiffs who filed individual claims in Maryland state district court. Eventually, the plaintiffs decided that they would like to pursue this as a class action suit and sent a letter to the defendant notifying him of their intentions. The defendant promptly removed the case to federal district court, believing that the letter satisfied the “other paper[s]” requirement for removal under 28 U.S.C. § 1446(b) and that the 30 day period for removal would run before the plaintiffs filed their amendments.

After the case had been removed, the plaintiffs filed their amended class action complaints in the federal court. The complaints, as amended, satisfied all of the requirements necessary for federal jurisdiction under CAFA.

A number of weeks after filing their complaints, the plaintiffs decided that they no longer wished to remain in federal court. They then sought to remand the case to state court on the basis that the initial removal was improper.

The motion was denied by the district court.

Shortly thereafter, the plaintiffs received permission to file an interlocutory appeal to the 4th Circuit.

On appeal, the plaintiffs argued that the removal was improper because subject matter jurisdiction did not exist at the time the case was removed. Thus, the plaintiffs argued that the removal by the defendants—which occurred prior to the actual amendment—was improper. Unfortunately for the plaintiffs, the Fourth Circuit placed a cap on their argument. The court cited numerous cases holding that when a plaintiff voluntarily amends his petition in such a manner that creates a basis for federal jurisdiction, a federal court may exercise jurisdiction regardless of whether the removal was initially proper.

The plaintiffs, in a last-ditch effort to leak out of federal court, argued that the jurisprudence upon which the court was relying had only dealt with final judgments. Thus, the plaintiffs argued that, since there was no final judgment, their motion to remand should be granted.

In response, the court held that the interests of judicial economy necessarily lead to the conclusion that the motion to remand should be denied. The court, going for the top kill (one that actually worked), pointed out that, were the case remanded, the defendants would then simply re-remove the case back to federal court because, as amended, the complaints state a valid basis for federal jurisdiction. Thus, the court held that the case would proceed in federal court.

—C. Austin Holliday