High Court Should Not “DIG” Dart Cherokee Basin Case

supreme courtDart Cherokee Basin Operating Co. v. Owens, which raises right-of-removal issues under the Class Action Fairness Act (CAFA), is among the more important civil justice cases being heard by the Supreme Court this term. Legal commentators are virtually unanimous in concluding that the trial court adopted an overly restrictive standard governing removal of cases from state to federal court. Yet, as Columbia Law Professor Ronald Mann noted in a recent column for ScotusBlog, questioning during the October 7 oral argument revealed that the Court may be reluctant to decide the case at all. Every question posed to counsel for Petitioner focused on “vehicle” issues, not on the merits of his CAFA arguments. Several justices even suggested that the case might be dismissed as improvidently granted—which would be a terrible mistake.

On closer examination, the procedural posture issues that troubled the Court at oral argument turn out to be insubstantial; they should not dissuade the Court from addressing the Question Presented by the petition. Moreover, as explained in Washington Legal Foundation’s amicus brief, it is critical that the Court retain jurisdiction in this case to unwind the judicially created doctrine that motivated the mistake below in the first place. Dart Cherokee provides the Court an ideal opportunity to end the rule of construction whereby federal courts continue to narrowly construe federal removal statutes against the party seeking removal, contrary to Supreme Court precedent and despite the utter lack of any textual basis for doing so.

The parties’ briefs focused solely on whether the district court acted properly in remanding to state court a class action complaint removed to federal court by Petitioner Dart. Consumer activist group Public Citizen alone raised the contention that the Court lacks jurisdiction to hear the Question Presented in its amicus brief in support of the Respondents. As Public Citizen asserts, although CAFA provides for appeals from district court decisions remanding class actions to state court, the right to appeal is not automatic. Rather, it can proceed only if the court of appeals, in its discretion, grants a petition to appeal. In this instance, the U.S. Court of Appeals for the Tenth Circuit denied the petition without explanation, and it denied a petition for rehearing en banc by an equally divided vote. Public Citizen contends that although the Supreme Court has jurisdiction to review the Tenth Circuit’s denial of the petition for leave to appeal (under an abuse-of-discretion standard), it lacks jurisdiction to consider the propriety of the district court’s remand order.

Public Citizen’s jurisdictional argument is untenable. The relevant federal statute, 28 U.S.C. § 1254, grants the Supreme Court certiorari jurisdiction over “cases in the courts of appeals,” whether “before or after rendition of judgment or decree.” The Supreme Court held in Hohn v. United States that, for purposes of § 1254, a case is “in” a federal appeals court the moment a party first seeks review in that court, without regard to whether the court actually agrees to hear the appeal. Public Citizen argues, however, that while the issue of whether to grant a discretionary appeal was “in” the appeals court, the underlying merits issue—whether the district court properly remanded the case to state court—was not “in” the court. That argument ignores the wording of § 1254; the statute refers to “cases” in the appeals courts, not “issues.” The moment that Dart filed its Tenth Circuit petition for leave to appeal, review of the entire “case”—including the propriety of the district court remand order—fell within the Supreme Court’s jurisdiction.

In addition, Public Citizen’s reliance on Hohn to support its jurisdiction argument is misplaced. Hohn addressed appellate review of federal district court decisions denying habeas corpus petitions. As with district court remand decisions under CAFA, federal law does not grant an automatic right to appeal the denial of a habeas corpus petition; rather, a petitioner must first convince a federal judge to issue a “certificate of appealability” (COA) based on a determination that the appeal makes a “substantial showing of denial of a constitutional right.” 28 U.S.C. § 2253(c). In Hohn, the Eighth Circuit denied a COA, and the question before the Supreme Court was whether § 1254 granted it jurisdiction to review the case. After determining that it had jurisdiction to review the case, and that the petitioner had made a showing sufficient to obtain a COA, the Court remanded the case to permit the Eighth Circuit to determine in the first instance whether the petitioner’s constitutional rights had been violated. But contrary to Public Citizen’s suggestion, neither Hohn nor the remainder of the Court’s § 2253(c) case law indicates that the Court lacks jurisdiction to decide whether a petitioner’s constitutional rights have been violated until after the appeals court has addressed that issue. The Court has stated that review of denial of a COA generally “is not the occasion for a ruling on the merits” because such a ruling is fact-intensive and thus best deferred until the lower courts have fully developed the facts—not because the Court lacks jurisdiction to render a ruling on the merits.

At oral argument in Dart, Justice Scalia suggested that even if the Court possessed jurisdiction over the case, exercise of that jurisdiction might be inconsistent with Congress’s intent in adopting CAFA. He noted that CAFA establishes no criteria for when an appeals court should exercise its discretion to review district court orders remanding class actions to state court, and he opined that Congress thereby signaled that a decision not to hear an appeal should be largely unreviewable. Justice Scalia stated that Congress imposed limits on CAFA appeal rights because it did not want to impose significant new workload burdens on appeals courts. If the Court begins second-guessing denials of discretionary appeals because it determines a district court’s remand order to be particularly objectionable, Justice Scalia worried, then appeals courts will feel the need to devote more resources to every CAFA petition for leave to appeal, thereby undercutting the resource-saving design underlying the discretionary appeal procedure.

Given this concern, it is important to emphasize that the Court is not reviewing whether the Tenth Circuit abused its discretion in denying the petition for review, but rather is reviewing the merits of the remand order. Indeed, Respondent did not raise the “no abuse of discretion” issue in either of his Supreme Court briefs, thereby waiving the issue. Public Citizen’s amicus brief cannot resurrect that waived issue. Hence, a decision that the district court erred in remanding the class action back to state court would not suggest that the Tenth Circuit acted inappropriately in denying leave to appeal in this case.

By way of comparison, consider that the Court routinely exercises its certiorari jurisdiction under 28 U.S.C. § 1257 to review (and ultimately overturn) the decision of a State’s intermediate appellate court even though the State’s highest court declined to exercise its own discretionary right to review the decision, yet no one suggests in such instances that the State’s highest court abused its discretion by declining review. Accordingly, there is no reason to conclude that the Supreme Court’s exercise of appellate jurisdiction over Dart’s claim will increase appellate court workloads by, in effect, forcing them to grant every CAFA petition for leave to appeal that raises facially meritorious claims.

Public Citizen notes that the Supreme Court only rarely reaches out to consider whether a district court has misconstrued a federal statute, and argues that the Court should dismiss the writ as improvidently granted because the alleged errors of a single federal district court are not sufficiently important to warrant the Court’s attention. But now that the case has been fully briefed and argued and the Court has already invested the resources necessary to review the Question Presented, it makes little sense to duck the issue by dismissing the writ; doing so would not save many resources.

Moreover, that argument overlooks the significant importance of the Question Presented. Congress passed CAFA in 2005 because it determined that most large class actions ought to be heard in federal court, not state courts, which often “demonstrate bias against out-of-State defendants.” Yet, the district court here interpreted the removal statutes very narrowly, concluding (based on what it viewed as well-established Tenth Circuit precedent) that a removal petition is deficient (and cannot be corrected later) unless accompanied by documentary evidence supporting the petition’s allegations that the prerequisites for removal have been met. Unless the district court decision is overturned, a significant danger exists that district courts within the Tenth Circuit will continue to order remand of such petitions, in direct conflict with decisions from numerous other circuits.

More importantly, the remand decision in this case was apparently the product of a thinly disguised hostility that many lower federal courts harbor against removal in diversity jurisdiction cases. Many federal courts, faced with burgeoning dockets and limited resources, would prefer to devote more of their resources to federal question cases and to limit the number of diversity cases on their dockets. In furtherance of that goal, every federal appeals court other than the Seventh Circuit has adopted a presumption against removability and has decreed that removal statutes are to be strictly construed against the party seeking removal rights.

This presumption derives no support from the structure of the Constitution (whose Framers strongly supported removal jurisdiction) and is directly contrary to CAFA, adopted by Congress to ensure a federal forum for all large class actions involving parties of minimally diverse citizenship. Yet, as has occurred in so many other CAFA cases, the district court emphasized the supposed presumption against removability as a significant factor in her decision to read CAFA removal rights narrowly. Thus, it is particularly important for the Supreme Court to retain jurisdiction in Dart in order to remind lower federal courts that removability is to be determined solely on the basis of the governing statutory language and that they should not place a thumb on the scale by applying a presumption against removability.

If Justice Scalia wishes to ensure that the federal judiciary implements CAFA consistently with the statutory text, then holding onto Dart Cherokee Basin and erasing the presumption against removal that so often frustrates proper consideration of class-action lawsuits in federal court is in order. Such a decision would do far more to advance the cause of faithful adherence to CAFA than would dismissing the case as improvidently granted for fear of increasing appeals courts’ workloads against Congress’ wishes. The Court runs a far greater risk of limiting statutory CAFA appeal rights too severely, by dismissing Dart, than it does of extending those rights too generously by deciding this case on the merits.

Also published by Forbes.com on WLF’s contributor site

One thought on “High Court Should Not “DIG” Dart Cherokee Basin Case

  1. Pingback: Wednesday round-up | Authority Court

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