First Circuit Clarifies Timing For CAFA Removal

Practice area:

You represent the defendant in a putative wage and hour class action filed in state court, alleging that certain categories of employees were denied mandatory meal breaks.  The complaint does not contain sufficient information to estimate the amount in controversy for purposes of removal under the Class Action Fairness Act.  You nevertheless estimate a worst-case damages scenario, which assumes that every meal break was missed, and your estimated damages exceed the $5 million threshold for CAFA jurisdiction.  So, naturally, you remove the case to federal district court.  Unfortunately, the district court grants plaintiffs’ motion to remand the case to state court because plaintiffs alleged only that some, but not all, breaks were missed.

The case then moves into discovery.  You produce timekeeping data to plaintiffs, from which they estimate the number of missed breaks.  Two years after the case was filed, they send you an email with the results of their estimate.  With that information, you again calculate the amount in controversy, and again conclude that it exceeds $5 million.  You file a second notice of removal within thirty days of your receipt of the plaintiffs’ email.  You rely on 28 U.S.C. Section 1446(b)(3), which states that “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.”  (Emphasis added.)  Plaintiffs again move for remand, arguing that their email is not an “other paper” within the meaning of the statute, and that removal is not justified because their estimate of the number of alleged meal break violations was based on data you had produced and that your client had all along.  Result?

On October 24th, in the case of Romulus v CVS Pharmacy, Inc., the First Circuit held that the removal was proper.  The court held:

The timeliness inquiry is limited to the information in the plaintiffs’ papers, regardless of whether its original source is the defendant.  The defendant has no duty to perform significant investigation of its own data to ascertain removability.  The test is not whether the information is “new,” but when the plaintiffs’ papers “first” enable the defendant to make the requisite merits showing to the district court.  (Emphasis in original.)

This is the central holding of an opinion that includes a detailed discussion of the removal statute and that touches on other removal issues.  It is supported by the First Circuit’s wish “to avoid ‘extensive and time consuming litigation over the question of the amount in controversy in CAFA removal cases.”  Quoting Amoche v. Guar. Trust Life Ins. Co., 556 F.3d 41, 50 (1st Cir. 2009).  It also seems consistent with CAFA’s basic purpose in making it easier for class actions to be brought in federal court.  Stay tuned to this blog for a continued exploration of this important decision and the numerous issues that it raises for class action defense counsel.

Written by former litigation partner, Donald R. Frederico.

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