Under the Class Action Fairness Act of 2005 (CAFA), district court orders “granting or denying a motion to remand a class action” may be immediately appealed—though the courts of appeals have broad discretion to accept or deny review. 28 U.S.C. § 1453(c)(1). In Ruhlen v. Holiday Haven Homeowners, Inc., 28 F.4th 226 (11th Cir. 2022), the Eleventh Circuit considered whether CAFA permits appeals of sua sponte remands by the district courts. Based on a strict reading of section 1453(c)(1), the Eleventh Circuit held that sua sponte remands are not appealable.
Before jumping into Ruhlen, some background on CAFA and its interpretation by the federal courts is instructive. CAFA expanded federal jurisdiction over certain categories of class actions. 28 U.S.C. § 1332(d)(1)–(2); see also Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 84–85 (2014). CAFA is triggered when a class “has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.” Dart, 574 U.S. at 84–85; see also 28 U.S.C. § 1332(d)(2), (d)(5)(B). Congress described its legislative intent for CAFA as “restor[ing] the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction.” Class Action Fairness Act of 2005, Pub. L. No. 109-2, § 2, 119 Stat. 4, 5 (2005). To that end, CAFA also included a removal provision, which permits the removal of a class action from state to federal court “by any defendant without the consent of all defendants” and “without regard to whether any defendant is a citizen of the State in which the action is brought.” 28 U.S.C. § 1453(b). In Dart, Justice Ginsburg explained that, regardless of whether there is a presumption against removal in “mine-run diversity cases,” “no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.” 574 U.S. at 89 (emphasis added).
CAFA’s expansion of federal jurisdiction left the door open to extensive amounts of class action litigation being filed in or removed to federal courts. That expansion—along with the increasing filing and removal of litigation under statutes oriented toward consumer protection like the Telephone Consumer Protection Act (TCPA), Fair Debt Collection Practices Act (FDCPA), and Fair Credit Reporting Act (FCRA)—has caused docket and administrative pressure in several federal district courts. It is common for firms that follow a volume-filing business model to specialize in these types of cases because many of the relevant statutes impose relatively low statutory damages. In the Southern District of Florida, for example, it is not uncommon for a few repeat players to have tens and sometimes even hundreds of consumer cases pending in the district. Many of those cases originated in state courts but were removed under federal question jurisdiction and, in class action cases, under CAFA.
Whether or not there is a direct correlation, the growing burden on federal district court dockets has been followed by substantive doctrines that have contracted federal jurisdiction and made remand to state court easier. This trend can be seen in recent cases like Home Depot U. S. A., Inc. v. Jackson, 139 S. Ct. 1743, 1751 (2019), which held that the CAFA removal provision does not permit removal by a third-party counterclaim defendant, and TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2205 (2021), which held that for Article III standing to sue in federal court, a plaintiff needs to have been concretely harmed by the alleged violation giving rise to the suit, and that “an injury in law is not an injury in fact.”
Since Spokeo, Inc. v. Robins, it has been common for district courts to remand consumer-oriented federal lawsuits under the TCPA, FDCPA, and FCRA. See Spokeo, Inc. v. Robins, 578 U.S. 330, 339–42, 353–54 (2016) (holding that Article III standing requires a concrete injury, not a mere procedural violation, and remanding for the court of appeals to consider whether a FCRA violation caused a concrete injury). But TransUnion settled some of the issues left open in Spokeo and will certainly accelerate the trend of remands. See, e.g., Thomas B. Bennett, “The Paradox of Exclusive State-Court Jurisdiction Over Federal Claims,” 105 Minn. L. Rev. 1211, 1236 (2021) (discussing how “Spokeo’s progeny” indicate a trend toward both dismissal and remand in federal courts in cases in which consumer privacy protection statutory claims “rel[ied] on pure procedural injury”). As Justice Thomas noted in his dissent in TransUnion, the narrowing of Article III standing will filter many federal lawsuits into state courts. TransUnion, 141 S. Ct. at 2224 n.9 (Thomas, J., dissenting) (“The Court does not prohibit Congress from creating statutory rights for consumers; it simply holds that federal courts lack jurisdiction to hear some of these cases. That combination may leave state courts . . . as the sole forum for such cases, with defendants unable to seek removal to federal court.” (internal citations omitted)).
In Ruhlen, the Eleventh Circuit held that it lacked subject matter jurisdiction to review the district court’s sua sponte remand of a case to state court. See 28 F.4th 226. In that case, mobile homeowners and their respective homeowners’ association filed suit in Florida state court, claiming violations of the Americans with Disabilities Act (ADA) and the Florida Antitrust Act. Id. at 227–28. The defendants removed the suit to federal court under CAFA. While in the federal district court, the plaintiffs filed an amended complaint that dropped the federal ADA claims and substituted additional state law claims instead. Id. at 228. In finding that there was no longer federal question jurisdiction, the federal district court concluded that the suit was no longer covered under CAFA and subsequently remanded the suit back to state court. But it did so sua sponte—without any request from the plaintiffs. Id.
Generally, a court of appeals lacks jurisdiction to review an order remanding a removed case to state court based on the district court’s determination that it lacks subject matter jurisdiction. See 28 U.S.C. § 1447(d); Hunter v. City of Montgomery, 859 F.3d 1329, 1333 (11th Cir. 2017) (citing Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345–46 (1976)). There is, however, a statutory exception to the general rule under CAFA that applies where the appeal is “from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed.” 28 U.S.C. § 1453(c)(1) (emphasis added).
The question in Ruhlen, then, was whether the CAFA exception applied to sua sponte remands for lack of subject matter jurisdiction (given that they’re not technically issued on a motion by the parties) or whether such an order is one that is deemed to have “den[ied] a motion to remand.” In assessing this question, the Eleventh Circuit looked to dictionary and legal definitions of the term “motion” and concluded that a motion requires party initiation. Ruhlen, 28 F.4th at 228–29 (“Numerous sources corroborate our conclusion that, in ordinary legal parlance, a ‘motion’ is a request or an application made by a party.”). Because the district court acted sua sponte in remanding Ruhlen back to state court, the Eleventh Circuit found no statutory basis for appellate review.
Judge Rosenbaum dissented, arguing that the majority engaged in a “hypertechnical reading of CAFA” that was “refuted by the broader view of the common understanding of the statutory language [and] the clear intention of the statute as revealed by its context. . . .” Id. at 230 (Rosenbaum, J., dissenting). In response to the majority’s conclusion that “party initiation” is necessary, the dissent argued that other Eleventh Circuit cases had defined a sua sponte action as being, effectively, a court’s own “motion.” Id. at 231 (citing Velchez v. Carnival Corp., 331 F.3d 1207, 1210 (11th Cir. 2003)). The dissent pointed to cases in other circuits that “have all concluded that an order remanding a case removed based on CAFA jurisdiction does not become unreviewable simply because it was remanded sua sponte.” Id. (citing, e.g., Watkins v. Vital Pharms, Inc., 720 F.3d 1179, 1181 (9th Cir. 2013)). The dissent concluded by criticizing the majority opinion as cutting against the legislative intent of CAFA. Id. at 231–32.
Under Ruhlen, district courts now have another tool for remanding class actions, particularly those involving consumer protection statutes like the TCPA or FDCPA, which do not involve traditional pocketbook harms to the plaintiffs but instead involve statutory damages attractive to plaintiffs’ attorneys filing in high volume. As a matter of course, many district courts issue orders to show cause when the basis for federal jurisdiction is not apparent from the notice of removal or is otherwise questionable. It is possible, and perhaps likely, that district courts will instead sua sponte remand CAFA-based removals if there is a close question about jurisdiction. The lack of reviewability may make sua sponte remand an attractive option for a district court with a busy docket.
What does this all mean for class action practice? Although at its inception CAFA intended to direct certain class actions to federal courts, cases like TransUnion and Ruhlen are perhaps a bellwether of a growing inclination to make remand of class actions easier or even prevent the initial removal of class action cases in state courts. From the defense perspective, the lack of appellate review of sua sponte remands suggests that, to avoid close cases in which the district court may be inclined to rule sua sponte, it will be important to shore up notices of removal—so plaintiffs don’t get a windfall of a remand, without having even to ask, and with no option for the defense to obtain appellate review.
