CAFA Class Action Defense Cases–United Steel Workers v. Shell Oil: Ninth Circuit Reverses District Court Order Remanding Class Action To State Court Holding Timely Removal Of Class Action Under CAFA By One Defendant Is Sufficient

Feb 5, 2009 | By: Michael J. Hassen

District Court Erred in Remanding Labor Law Class Action Complaint to State Court because Defendants Separately Filed Notices of Removal Pursuant to Class Action Fairness Act (CAFA), and Timely Removal under CAFA by One Defendant was Sufficient to Remove Class Action to Federal Court for All Defendants Ninth Circuit Holds

The United Steel Workers union filed a class action in California state court against Shell Oil, Equilon and Tesoro alleging various labor law violations; the class action complaint asserted that defendants failed to provide employees with meal or rest periods, failed to provide proper wage statements, and failed to timely pay wages on termination. United Steel, etc. v. Shell Oil Co., 549 F.3d 1204, 1206-07 (9th Cir. 2008). Royal Dutch Shell plc is the parent company of both Shell Oil and Equilon (collectively “Shell”); the union served Shell with the class action complaint on May 6, 2008, and served Tesoro on May 7, 2008. Id., at 1207. On the thirtieth day after service, Shell removed the class action to federal court alleging removal jurisdiction under the Class Action Fairness Act (CAFA) and asserting federal question jurisdiction; the following day, Tesoro filed a separate notice of removal on the same grounds. Id. The class actions were assigned to different federal district court judges, id. The district court in Shell’s case remanded the class action to state court because Shell had failed to join Tesoro in its notice of removal; the court rejected Shell’s argument that “CAFA permits one defendant to remove the entire case without the consent of all defendants.” Id. Plaintiff then had the Tesoro case transferred to the same district court judge, and the federal court then remanded that class action on the same grounds. Id. The Ninth Circuit granted Shell’s and Tesoro’s separate petitions for permission to appeal the orders remanding the class actions to state court, and reversed. Id., at 1206.

Defense attorneys argued that because CAFA permits a single defendant to remove an entire class action, the district court erred in remanding the class action to state court because Shell and Tesoro failed to include each other in their separate notices of removal. , at 1207. The union conceded that Shell properly removed the class action under CAFA, but argued that the class action was properly remanded as to Tesoro because its notice of removal was untimely as it was filed more than 30 days after service of the class action on Shell., id. The Ninth Circuit disagreed. The Circuit Court noted the split in authority, still unresolved in the Ninth Circuit, over whether the 30-day period for removal “begins to run on the day of service on the first-served or last-served defendant,” but that federal courts have “traditionally required that all defendants consent to, or join in, removal.” Id., at 1208 (citations omitted). CAFA, however, expanded rights to removal in class actions and expressly states that class actions “may be removed by any defendant without the consent of all defendants.” Id. (citation omitted). The Ninth Circuit cited with approval an Eleventh Circuit opinion that held it “‘need not concern [itself] with the circumstances pertinent to each named defendant’” because any single defendant could, under CAFA, remove the entire class action to federal court. Id. (quoting Lowery v. Alabama Power Co., 483 F.3d 1184, 1194 n.25 (11th Cir. 2007). Thus, the Ninth Circuit concluded at page 1208, “it is undisputed that United Steel Workers’s class action is removable under CAFA, and it is undisputed that Shell timely filed its notice of removal,” so Shell’s removal governed the entire class action to the point where “Tesoro could not have prevented removal even if it wished to do so,” id., at 1208-09. Accordingly, the Circuit Court reversed the district court orders remanding the class action to state court, id., at 1209.

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