February 05, 2020 Feature

Counterclaim Defendants Cannot Remove Class Actions

Neither the general removal statute nor the Class Action Fairness Act permits removal

By Martha L. Kohlstrand

A counterclaim defendant cannot remove a class action claim to federal court, under either the general removal statute (28 U.S.C. § 1441) or the Class Action Fairness Act (CAFA) (28 U.S.C. § 1453), the U.S. Supreme Court has ruled. In Home Depot U.S.A., Inc. v. Jackson, five of the nine justices agreed that a third-party counterclaim defendant that was not an original plaintiff has no removal rights. The opinion was authored by Justice Clarence Thomas, who was joined by the Court’s four more liberal justices. Justice Alito issued a lengthy and scathing dissent, branding the decision as “bizarre.” Whether logical or bizarre, the decision may have implications for class action practice, ABA Section of Litigation leaders say.

Counterclaim defendants cannot remove a class action claim to federal court

Counterclaim defendants cannot remove a class action claim to federal court

Photo illustration by Elmarie Jara / Getty Images

Class Action Counter-Defendant Seeks Removal

The saga began in North Carolina state court, where the original plaintiff, Citibank, brought a debt-collection lawsuit against George Jackson, alleging he was liable for charges accrued on a Home Depot credit card. Jackson answered that complaint and filed an individual counterclaim against Citibank and third-party class action claims against Home Depot U.S.A., Inc., and Carolina Water Systems, Inc., alleging a kickback scheme between Home Depot and Carolina Water Systems. Jackson also alleged that Citibank was jointly and severally liable for the wrongdoing of the third-party defendants and that his obligations under the sale were null and void.

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