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May 2015

The Ninth Circuit Provides Additional Opportunities for Removal after Class Certification

In a recent decision—Reyes v. Dollar Tree Stores, Inc., D.C. No. 2:14-cv-04581-R-VBK—the Ninth Circuit Court of Appeals held that a California Superior Court’s class certification order, which expanded the class definition to include more members than the plaintiff’s original request, constituted a “new occasion for removal,” allowing the defendant to seek removal to federal court a second time under the Class Action Fairness Act (CAFA).

The class action sought past wages and penalties against Dollar Tree Stores, Inc. (Dollar Tree) for failure to provide rest breaks to its assistant managers, as required under California law. Dollar Tree attempted to remove the class action to federal court in the Central District under CAFA, which provides for federal court jurisdiction of a class action if there is diversity of citizenship between at least one member of the class and the defendant, the amount in controversy exceeds $5 million, and the proposed class consists of more than 100 members. The Central District remanded the case back to the California Superior Court because the amount in controversy did not exceed $5 million based on the class definition identified in the plaintiff’s Complaint.

Thereafter, the plaintiff filed a motion to certify a class consisting of all assistant managers who did not receive proper rest breaks and who worked without another assistant manager on the clock. The Superior Court, exercising its discretion to redefine the proposed class definition, certified a class consisting of all assistant managers who did not receive proper rest breaks, regardless of whether they worked with another assistant manager or not.

Recognizing that the Superior Court’s expansion of plaintiff’s proposed class increased the amount in controversy to over $5 million, Dollar Tree again attempted to remove the case to the Central District. The Central District however remanded the class action again on the basis that the request for removal was untimely.

The Ninth Circuit reversed the Central District’s order, finding that removal was proper under CAFA notwithstanding that removal was sought twice and relatively late in the litigation.

In reaching this conclusion, the Ninth Circuit first noted that the ordinary rule prohibiting successive removal petitions was not applicable because a subsequent event revealed a new and different ground for removal. Specifically, the Superior Court’s class certification order expanded the class and thereby satisfied the jurisdictional requirement that was previously lacking. The Ninth Circuit noted that “the certification order is functionally indistinguishable from an order permitting the amendment of pleadings to alter the class definition, creating CAFA jurisdiction for the first time.”

Second, the Ninth Circuit held that removal was, in fact, timely when judged under the correct statutory period relating to subsequent events that create removal grounds after the initial pleading. The Court reasoned that the CAFA provision provides that removal is timely if sought “during the first thirty days after the defendant receives ‘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.” The Ninth Circuit held that the removal was timely because it was sought within thirty days after the Superior Court’s class certification order, from which it was first ascertained that the case was removable.

This Ninth Circuit opinion clarifies that a class certification order can constitute a “new occasion for removal,” and thereby potentially provides class action defendants a second chance at removal under CAFA after class certification. This is significant in jurisdictions that permit judicial discretion to redefine a proposed class during the class certification process, such as California.

Employment Law

Brandon D. Saxon

Employment Law