Sixth Circuit clarifies CAFA removal rules in favor of defendants

On April 7, the United States Court of Appeals for the Sixth Circuit issued a decision clarifying the rules governing the timing of removal of cases to federal court under the Class Action Fairness Act (CAFA). In Graiser v. Visionworks of America, Inc., the plaintiff sued Visionworks in Ohio state court and sought to represent a consumer class, alleging that Visionworks’ “Buy One, Get One Free” promotional advertisement was misleading and in violation of Ohio’s Consumer Sales Practices Act.

Visionworks removed the case to the United States District Court for the Northern District of Ohio pursuant to CAFA, after applying the plaintiff’s “proposed damage formula” to Visionworks’ own sales data for the relevant time period, concluding that the matter in controversy exceeded $5 million. The district court remanded the case back to state court after the plaintiff argued that Visionworks was tardy in removing the case for two reasons: (1) the amended complaint had been removable (but was not timely removed by Visionworks) on diversity jurisdiction grounds, thereby precluding subsequent CAFA removal; and (2) Visionworks was in possession of its own sales data and could have ascertained CAFA removability months earlier in any event.

The appeals court rejected both bases for the remand and reversed the district court’s decision. First, the Sixth Circuit held that:

[I]n CAFA cases, the thirty-day clocks of § 1446(b) begin to run only when the defendant receives a document from the plaintiff from which the defendant can unambiguously ascertain CAFA jurisdiction. Under this bright-line rule, a defendant is not required to search its own business records or "perform an independent investigation into a plaintiff's indeterminate allegations to determine removability.

Second, the Sixth Circuit held that:

[O]nce a defendant ascertains that a case is removable under CAFA, a defendant may remove the case — within the time constraints of § 1446(b)(1) and (b)(3) discussed above — even if the case was originally removable under a different theory of federal  jurisdiction.

The holdings, on all respects favorable to class action defendants, are consistent with the decisions of other United States Courts of Appeals that have addressed the questions presented to the Sixth Circuit in the Graiser case.

Class Action Fairness Act, Federal Class Action Law, Sixth Circuit Class Action Law