FYI: 4th Cir Says CAFA Jurisdiction Over Amended Complaint Cured Supposed Improper Prior Removal

The U.S. Court of Appeals for the Fourth Circuit recently held that, even if a class action case does not satisfy the Class Action Fairness Act (“CAFA”) at the time it is removed to federal court by a defendant, a plaintiff can independently confer jurisdiction on the federal court if after removal the complaint is amended to include facts that clearly give rise to federal jurisdiction.  A copy of the opinion is attached. 

Plaintiffs in this case each filed individual complaints in a Maryland state court, alleging violations of the Maryland Secondary Mortgage Loan Law against various financial entities.  After the cases were filed, plaintiffs’ counsel sent to defendants’ counsel drafts of three amended class action complaints and a letter that stated that plaintiffs intended to amend their complaints into class actions.  Upon receiving these documents, and before the complaints were actually filed, defendants removed the cases to federal court.  Plaintiffs subsequently filed final versions of their amended complaints in federal court and then sought to remand the cases to state court, arguing that federal subject matter jurisdiction did not exist at the time of removal.  The district court denied plaintiffs’ motion for remand and this appeal followed.

In affirming the district court’s decision, the appellate court first reviewed a line of precedent in both the Eleventh Circuit and other circuits which holds that, while a case should be “fit for adjudication at the time the removal petition is filed,” “this timing requirement is not fatal to federal-court adjudication where jurisdictional defects are subsequently cured.”  Accordingly, if a plaintiff voluntarily amends his or her complaint to allege a basis for federal jurisdiction, a federal court may exercise jurisdiction even if the case was improperly removed.   

The Court found that, based on this precedent and, in the interest of judicial economy, the district court did not err in retaining jurisdiction, given that plaintiffs’ final amended complaints alleged facts that clearly gave rise to federal jurisdiction under CAFA. 

Let me know if you have any questions.  Thanks.

 

 

Ralph T. Wutscher

Kahrl Wutscher LLP

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