CAFA Class Action Defense Cases-May’s v. Total Containment: Alabama Federal Court Remands Class Action To State Court Holding Amendment Of Complaint After CAFA’s (Class Action Fairness Act) Effective Date Did Not Permit Removal

Dec 13, 2007 | By: Michael J. Hassen

Amendment of Class Action Complaint After Effective Date of Class Action Fairness Act of 2005 (CAFA) did not Trigger Removal Period Because Under State Law the Amendment Related Back to Original Complaint Alabama Federal Court Holds

Plaintiff, operator of three gasoline distribution facilities, filed a putative class action against Total Containment (TCI) arising out of the manufacture, sale and installation of allegedly defective gas station piping systems. May’s Distributing Co. Inc. v. Total Containment, Inc., 523 F.Supp.2d 1303, 2007 WL 4180362, *1 (M.D. Ala. November 28, 2007). The class action complaint was filed in January 2003, and was amended twice prior to March 2004 to add new defendants, including Underwriters Laboratories (UL). Id. In March 2004, TCI filed for bankruptcy protection and defense attorneys removed the class action to federal court on the ground that it was “related to” the bankruptcy, id. On February 16, 2005, two days before the effective date of the Class Action Fairness Act of 2005 (CAFA), the district court remanded the class action to state court finding (1) the complaint was not related to TCI’s bankruptcy, and (2) even if it was, abstention was appropriate. Id., at *2. In September 2005 plaintiffs filed a third amended class action complaint that “added certain allegations related to UL,” and in July 2006 plaintiffs amended the class action yet again, this time to “add[] to its statement of facts and consolidate[] its claims against all defendants into one negligence claim.” Id. In August 2006, defense attorneys again removed the class action to federal court, this time arguing that removal jurisdiction existed under CAFA. Id. The district court disagreed and remanded the class action to state court.

The issue presented is whether the post-CAFA amendments to the class action complaint were sufficient so as to constitute “commencement” of the action after CAFA’s February 18, 2005, effective date. May’s Distributing, at *3. With respect to the threshold inquiry of whether a post-CAFA amendment to a class action complaint may constitute “commencement” under CAFA, the district court concluded that the Eleventh Circuit had not squarely addressed the issue, id., at *3-*4, but adopted the majority view that “an amendment to a complaint does not commence a new action for CAFA purposes if the amended complaint ‘relates back’ to the original complaint under state law.” Id., at *4. Defense attorneys argued that the July 2006 amendment to the class action “was such a dramatic change from the prior complaints, that it constituted a new claim against them.” Id., at *3. The district court rejected this argument, concluding that the fourth amended complaint “arises out of the same ‘conduct, transaction, or occurrence’ as the original complaint.” Id., at *5. Accordingly, removal jurisdiction under CAFA did not exist and the class action was remanded to state court. Id., at *5-*6.

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