Palisades Collections LLC v. AT&T Mobility LLC ( 2008 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PALISADES COLLECTIONS LLC, 
Plaintiff,
v.
CHARLENE SHORTS,
Defendant-Appellee,
v.
AT&T MOBILITY LLC; AT&T  No. 08-2188
MOBILITY CORPORATION,
Counter-Defendants-Appellants.
CHAMBER OF COMMERCE OF THE
UNITED STATES,
Amicus Supporting Appellants.

Appeal from the United States District Court
for the Northern District of West Virginia, at Wheeling.
Irene M. Keeley, District Judge.
(5:07-cv-00098-IMK)
Argued: October 30, 2008
Decided: December 16, 2008
Before WILLIAMS, Chief Judge, and NIEMEYER and
KING, Circuit Judges.
2 PALISADES COLLECTIONS v. SHORTS
Affirmed by published opinion. Chief Judge Williams wrote
the opinion, in which Judge King concurred. Judge Niemeyer
wrote a dissenting opinion.
COUNSEL
ARGUED: Dan Himmelfarb, MAYER BROWN, L.L.P.,
Washington, D.C., for Appellants. Christopher James Regan,
BORDAS & BORDAS, Wheeling, West Virginia, for Appel-
lee. ON BRIEF: William M. Connolly, Michael P. Daly,
DRINKER BIDDLE & REATH, L.L.P., Philadelphia, Penn-
sylvania; Jeffrey M. Wakefield, Christina S. Terek,
FLAHERTY SENSABAUGH & BONASSO, P.L.L.C.,
Charleston, West Virginia; Evan M. Tager, Charles A. Roth-
feld, Jack Wilson, MAYER BROWN, L.L.P., Washington,
D.C., for Appellants. Jonathan Bridges, SUSMAN GOD-
FREY, L.L.P., Dallas, Texas; William R. H. Merrill, SUS-
MAN GODFREY, L.L.P., Houston, Texas, for Appellee.
Robin S. Conrad, Amar D. Sarwal, NATIONAL CHAMBER
LITIGATION CENTER, INC., Washington, D.C.; John H.
Beisner, Jessica Davidson Miller, Charles E. Borden, Richard
G. Rose, O’MELVENY & MYERS, L.L.P., Washington,
D.C., for Amicus Supporting Appellants. William David Wil-
moth, Karen Elizabeth Kahle, STEPTOE & JOHNSON,
P.L.L.C., Wheeling, West Virginia; Joseph Anthony Curia,
III, STEPTOE & JOHNSON, P.L.L.C., Charleston, West Vir-
ginia, for Palisades Collections, LLC, on the merits.
OPINION
WILLIAMS, Chief Judge:
This case presents an issue of first impression — whether
a party joined as a defendant to a counterclaim (the "addi-
tional counter-defendant") may remove the case to federal
PALISADES COLLECTIONS v. SHORTS 3
court solely because the counterclaim satisfies the jurisdic-
tional requirements of the Class Action Fairness Act of 2005
("CAFA"), Pub. L. 109-2, 119 Stat. 4 (codified in scattered
sections of Title 28 of the United States Code). We hold that
neither 28 U.S.C.A. § 1441(a) (West 2006) nor 28 U.S.C.A
§ 1453(b) (West 2006 & Supp. 2008) permits removal by
such a party.
I.
On June 23, 2006, Palisades Collection L.L.C.
("Palisades"), a Delaware corporation, initiated a collection
action in West Virginia state court against Charlene Shorts, a
West Virginia resident, to recover $794.87 in unpaid charges
plus interest on Shorts’s cellular phone service contract.
The contract, originally entered into with AT&T Wireless
Services, Inc., provided that Shorts would be charged a
$150.00 early termination fee if she defaulted on her payment
obligations before the end of the contract. In October 2004,
Cingular Wireless L.L.C. ("Cingular") merged with AT&T
Wireless Services, Inc. to become AT&T Mobility L.L.C.
("ATTM"). Before her contract term expired, ATTM deter-
mined that Shorts was in default on her account, terminated
her service, and charged her the early termination fee. In June
2005, ATTM assigned its right to collect on Shorts’s default
to Palisades.
After Palisades filed the collection action in state court,
Shorts filed an answer denying the complaint’s allegations.
Shorts also asserted a counterclaim against Palisades, alleging
"unlawful, unfair, deceptive and fraudulent business act[s]
and practices," in violation of the West Virginia Consumer
Credit & Protection Act (the "Act"), as codified at W. Va.
Code Ann. § 46A-6-104 (LexisNexis 2006). (J.A. at 8).
Almost one year later, the state court granted Shorts leave to
file a first amended counterclaim joining ATTM as an addi-
4 PALISADES COLLECTIONS v. SHORTS
tional counter-defendant.1 The amended counterclaim alleged
that Palisades and ATTM violated the Act by "systematically
contract[ing] for, charg[ing], attempt[ing] to collect, and col-
lect[ing] illegal default charges in excess of the amounts
allowed by West Virginia Code § 46A-2-115(a) and impos-
[ing] unconscionable charges in violation of § 46A-2-121."
(J.A. at 26.)
Shorts filed a motion for class certification, seeking to rep-
resent a class of individuals under similar contracts with
Cingular and ATTM, but before the state court could rule on
that motion, ATTM removed the case to the United States
District Court for the Northern District of West Virginia. In
response, Shorts filed a motion to remand, arguing that
ATTM could not remove the case because it was not a "defen-
dant" pursuant to the general removal statute, 28 U.S.C.A.
1
We note that "[a] counterclaim is any suit by a defendant against the
plaintiff including any claims properly joined with the claims against the
plaintiff. A counterdefendant need not also be a plaintiff." Dartmouth
Plan, Inc. v. Delgado, 736 F. Supp. 1489, 1491 (N.D. Ill. 1990); Starr v.
Prairie Harbor Dev. Co., 900 F. Supp. 230, 233 (E.D. Wis. 1995) (agree-
ing with Delgado’s conclusion that additional parties joined as defendants
on a counterclaim are "properly characterized as ‘counterclaim defen-
dants’ for removal purposes"). See also Grubbs v. General Electric Credit
Corp., 405 U.S. 699, 705 (1972) (referring to a party as "the additional
counter-defendant").
Also, the district court properly noted that there is "some confusion as
to the identity of the counterclaim defendants." Palisades Collections
L.L.C. v. Shorts, No. 5:07CV098, 2008 U.S. Dist. LEXIS 6354, at *3 n.2
(N.D. W. Va. Jan. 29, 2008). Although Shorts requested leave to amend
her counterclaim to assert causes of action against Palisades Collections
L.L.C., AT&T Mobility L.L.C., and AT&T Mobility Corporation and
served both AT&T Mobility L.L.C. and AT&T Mobility Corporation with
the amended counterclaim, she named only Palisades and AT&T Mobility
L.L.C. in the actual counterclaim. Nevertheless, both AT&T Mobility
L.L.C. and AT&T Mobility Corporation joined in the notice of removal
and in the memorandum in opposition to Shorts’s motion to remand. The
district court treated AT&T Mobility Corporation as a counter-defendant
and referred to both AT&T Mobility entities jointly as "ATTM." We will
do the same.
PALISADES COLLECTIONS v. SHORTS 5
§ 1441. The district court granted Shorts’s motion and
remanded the case to state court, concluding that ATTM
could not remove the case to federal court because: (1) "it
[was] not a ‘defendant’ for purposes of removal under
§ 1441," Palisades Collections L.L.C. v. Shorts, No.
5:07CV098, 2008 U.S. Dist. LEXIS 6354, at *13 (N.D. W.
Va. Jan. 29, 2008), and (2) CAFA does not create independent
removal authority that would allow ATTM to "circumvent the
long-standing requirement that only a true defendant may
remove a case to federal court," id. at *29.
We granted ATTM permission to appeal, and we possess
jurisdiction to review the district court’s remand order under
28 U.S.C.A. § 1453(c)(1).
II.
ATTM makes two principal arguments. First, in its notice
of removal, ATTM contended that the case is removable
under the general removal statute, 28 U.S.C.A. § 1441.2 Sec-
ond, on appeal, ATTM now argues that, even if § 1441 does
not permit removal by additional counter-defendants,
§1453(b), added by CAFA, constitutes a separate removal
power authorizing ATTM to remove. ATTM also makes an
additional argument that, if neither § 1441 nor § 1453(b) per-
mits removal by additional counter-defendants, then we
2
In the jurisdictional statement portion of its notice of removal, ATTM
demonstrated that the counterclaim satisfied the requirements of CAFA
and then stated that "[b]ecause this action states a basis for original subject
matter jurisdiction under 28 U.S.C. § 1332, this action is removable pur-
suant to 28 U.S.C. § 1441(a)." (J.A. at 37 (emphasis added).) In the proce-
dural statement portion of its notice of removal, ATTM stated that,
pursuant to 28 U.S.C.A. § 1453 (West 2006 & Supp. 2008), it could
remove the case without obtaining the consent of all defendants and
regardless of whether one of the defendants was a citizen of West Vir-
ginia, the state in which the action was brought; ATTM also relied on 28
U.S.C.A. § 1441(a) (West 2006) to establish that venue was proper in the
Northern District of West Virginia.
6 PALISADES COLLECTIONS v. SHORTS
should realign the parties to make ATTM a traditional defen-
dant.
ATTM’s first two arguments raise questions concerning
removal to federal court and issues of statutory interpretation,
which we review de novo. Payne ex rel. Estate of Calzada v.
Brake, 439 F.3d 198, 203 (4th Cir. 2006) (questions concern-
ing removal); United States v. Abuagla, 336 F.3d 277, 278
(4th Cir. 2003) (issues of statutory interpretation). In resolv-
ing this case, we are mindful that "federal courts, unlike most
state courts, are courts of limited jurisdiction, created by Con-
gress with specified jurisdictional requirements and limita-
tions." Strawn v. AT&T Mobility L.L.C., 530 F.3d 293, 296
(4th Cir. 2008). And, we are likewise cognizant that "[w]e
must not give jurisdictional statutes a more expansive inter-
pretation than their text warrants, but it is just as important not
to adopt an artificial construction that is narrower than what
the text provides." Exxon Mobil Corp. v. Allapattah Servs.,
545 U.S. 546, 558 (2005) (citation omitted).
"When interpreting statutes, we start with the plain lan-
guage." United Seniors Ass’n, Inc. v. Social Sec. Admin., 423
F.3d 397, 402 (4th Cir. 2005) (internal quotation marks omit-
ted). We also recognize that "[s]tatutory construction is a
holistic endeavor," Koons Buick Pontiac GMC, Inc. v. Nigh,
543 U.S. 50, 60 (2004), and that "[t]he plainness or ambiguity
of statutory language is determined by reference to the lan-
guage itself, the specific context in which that language is
used, and the broader context of the statute as a whole," Rob-
inson v. Shell Oil Co., 519 U.S. 337, 341 (1997). See also
United States v. Heirs of Boisdore, 49 U.S. (8 How.) 113, 122
(1850) ("In expounding a statute, we must not be guided by
a single sentence or member of a sentence, but look to the
provisions of the whole law, and to its object and policy.").
"A provision that may seem ambiguous in isolation is often
clarified by the remainder of the statutory scheme—because
the same terminology is used elsewhere in a context that
makes its meaning clear, or because only one of the permissi-
PALISADES COLLECTIONS v. SHORTS 7
ble meanings produces a substantive effect that is compatible
with the rest of the law." United Sav. Ass’n of Tex. v. Timbers
of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988)
(citations omitted).
A.
Before turning to the issues raised in this appeal, an over-
view of the relevant jurisdictional statutes is appropriate to
place the following discussion in context.
The general removal statute, 28 U.S.C.A. § 1441, provides
that "any civil action brought in a State court of which the dis-
trict courts of the United States have original jurisdiction,
may be removed by the defendant or the defendants, to the
district court of the United States for the district and division
embracing the place where such action is pending." § 1441(a)
(emphasis added). Section 1446 of Title 28 of the United
States Code establishes the procedures for removal of a case
under § 1441. See 28 U.S.C.A. § 1446 (West 2006).
Through CAFA, Congress expanded federal diversity juris-
diction by amending 28 U.S.C.A. § 1332 to give federal dis-
trict courts original jurisdiction of "any civil action in which
the matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interest and costs, and is a class
action in which—(A) any member of a class of plaintiffs is a
citizen of a State different from any defendant." 28. U.S.C.A.
§ 1332(d)(2) (West 2006).
In addition to amending § 1332, Congress also added 28
U.S.C.A. § 1453(b), which provides:
A class action may be removed to a district court of
the United States in accordance with [28 U.S.C. §]
1446 (except that the 1-year limitation under section
1446(b) shall not apply), without regard to whether
any defendant is a citizen of the State in which the
8 PALISADES COLLECTIONS v. SHORTS
action is brought, except that such action may be
removed by any defendant without the consent of all
defendants.
For purposes of § 1453(b), Congress defined a "class action"
as "any civil action filed under rule 23 of the Federal Rules
of Civil Procedure or similar State statute or rule of judicial
procedure authorizing an action to be brought by 1 or more
representative persons as a class action." 28 U.S.C.A.
§ 1332(d)(1)(B); see 28 U.S.C.A. § 1453(a) (explaining that,
for purposes of § 1453, a class action has the meaning given
in § 1332(d)(1)).
Section 1453(b) eliminates at least three of the traditional
limitations on removal: (1) the rule that, in a diversity case,
a defendant cannot remove a case from its home forum,
§ 1441(b); (2) the rule that a defendant cannot remove a
diversity case once it has been pending in state court for more
than a year, § 1446(b); and (3) the rule that all defendants
must consent to removal, Chicago, Rock Island & Pac. Ry.
Co. v. Martin, 178 U.S. 245, 248 (1900) (concluding that "all
the defendants must join in the application" for removal);
Payne ex rel. Estate of Calzada, 439 F.3d at 203 ("Failure of
all defendants to join in the removal petition . . . is . . . an
error in the removal process."). See, e.g., Progressive W. Ins.
Co. v. Preciado, 479 F.3d 1014, 1018 n.2 (9th Cir. 2007); see
also S. Rep. No. 109-14, at 48 (2005), reprinted in 2005
U.S.C.C.A.N. 3, 45 ("[Section 1453] establishes the proce-
dures for removal of interstate class actions over which the
federal court is granted original jurisdiction in new section
1332(d). The general removal provisions currently contained
in Chapter 89 of Title 28 would continue to apply to class
actions, except where they are inconsistent with the provi-
sions of the Act. For example, like other removed actions,
matters removable under this bill may be removed only ‘to the
district court of the United States for the district and division
embracing the place where such action is pending.’").
PALISADES COLLECTIONS v. SHORTS 9
Accordingly, with this framework in place, we now turn to
ATTM’s arguments.
B.
In its notice of removal, ATTM contended that § 1441(a),
which permits removal of a civil action over which the federal
district courts have original jurisdiction by "the defendant or
the defendants," permits ATTM, an additional counter-
defendant, to remove the case to federal court. We do not
agree.
In Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100(1941), the Supreme Court considered the question of
"whether the suit in which [a] counterclaim is filed is one
removable by the [original] plaintiff to the federal district
court . . . ," id. at 103, under the statutory predecessor to
§ 1441(a), which provided that an action "may be removed by
the defendant or defendants therein to the district court of the
United States for the proper district," id. at 105 n.1. Although
the Court acknowledged that, between 1875 and 1887, the
removal statute allowed "either party" to remove the suit to
federal court, id. at 104-05, the Court concluded that Congress
"narrow[ed] the federal jurisdiction on removal" by amending
the statute in 1887 to allow removal only "by the ‘defendant
or defendants’ in the suit," id. at 107. Noting that interpreta-
tion of removal statutes "call[ed] for . . . strict construction,"
id. at 108, the Court thus held that the original plaintiff
against whom the original defendant had filed a counterclaim
could not remove the case to federal court under § 1441(a)’s
predecessor.
For more than fifty years, courts applying Shamrock Oil
have consistently refused to grant removal power under
§ 1441(a) to third-party defendants—parties who are not the
original plaintiffs but who would be able to exercise removal
power under ATTM’s interpretation. See Cross Country Bank
v. McGraw, 321 F. Supp. 2d 816, 821-22 (S.D. W. Va. 2004)
10 PALISADES COLLECTIONS v. SHORTS
(noting that district courts within the Fourth Circuit have
adopted the majority rule that "a third-party defendant is dis-
tinct from ‘the defendant or defendants’ who are permitted to
remove cases pursuant to 28 U.S.C. § 1441(a)"); Galen-Med,
Inc. v. Owens, 41 F. Supp. 2d 611, 614 (W.D. Va. 1999)
("The majority view, that third-party defendants are not
‘defendants’ for purposes of removal under 28 U.S.C.
§ 1441(a), is the better rule."); Hayduk v. UPS, 930 F. Supp.
584, 590 (S.D. Fla. 1996) ("Nearly every court that has con-
sidered the question whether third-parties may remove under
§ 1441(a) has determined that they may not."); Croy v. Buck-
eye Int’l, Inc., 483 F. Supp. 402, 406 (D. Md. 1979) ("The
overwhelming weight of authority indicates that a third party
defendant is not entitled to removal of an entire case to fed-
eral court under 28 U.S.C. § 1441(a)."); Manternach v. Jones
County Farm Serv. Co., 156 F. Supp. 574, 577 (N.D. Iowa
1957) (noting that courts "are not in disagreement as to the
non-removability of a third-party claim [under § 1441(a)]").
As the Sixth Circuit more recently explained, "[a]lthough
Shamrock Oil is not dispositive of the precise issue before us,
it does dictate that the phrase ‘the defendant or the defen-
dants,’ as used in § 1441(a), be interpreted narrowly, to refer
to defendants in the traditional sense of parties against whom
the [original] plaintiff asserts claims." First Nat’l Bank of
Pulaski v. Curry, 301 F.3d 456, 462-63 (6th Cir. 2002) (not-
ing that the American Law Institute has recommended that
Congress "make[ ] clear what the present law merely implies:
the right of removal applies only to the action as framed by
the pleading that commences the action. Counterclaims,
cross-claims, and third-party claims cannot be the basis for
removal [under § 1441(a)]"); see also Florence v. ABM
Indus., 226 F. Supp. 2d 747, 749 (D. Md. 2002) ("[I]n adopt-
ing the current language [of the removal statute], Congress
intended to restrict removal jurisdiction solely to the defen-
dant to the main claim.").
Of course, additional counter-defendants, like third-party
defendants, are certainly not defendants against whom the
PALISADES COLLECTIONS v. SHORTS 11
original plaintiff asserts claims. Thus, we easily conclude that
an additional counter-defendant is not a "defendant" for pur-
poses of § 1441(a). See, e.g., Capitalsource Fin., L.L.C. v.
THI of Columbus, Inc., 411 F. Supp. 2d 897, 900 (S.D. Ohio
2005) (concluding that "additional counterclaim defendants
. . . are not defendants within the meaning of the removal stat-
ute . . . [and] do not have statutory authority . . . to remove
this case"); Dartmouth Plan, Inc. v. Delgado, 736 F. Supp.
1489, 1492 (N.D. Ill. 1990) ("But just as a third-party has no
special rights to remove, neither does a nonplaintiff coun-
terdefendant. A counterdefendant is not a defendant joined in
the original action and therefore not a party that can remove
a state action to federal court."); Tindle v. Ledbetter, 627 F.
Supp. 406, 407 (M.D. La. 1986) (noting that because the Jus-
tices, who were joined as defendants on the counterclaim
under Louisiana’s procedural equivalent to Fed. R. Civ. P.
13(h), "are [additional] counterclaim defendants, they cannot
remove this suit to federal court"); see also 16 James W.
Moore et al., Moore’s Federal Practice § 107.11[1][b][iv] (3d
ed. 1998) (noting that the "better view" is that counter-
defendants, cross-claim defendants, and third-party defen-
dants "are not defendants within the meaning of [§ 1441(a)]").
Congress has shown the ability to clearly extend the reach
of removal statutes to include counter-defendants, cross-claim
defendants, or third-party defendants, see 28 U.S.C. § 1452(a)
(West 2006) ("A party may remove any claim or cause of
action . . . [related to bankruptcy cases]." (emphasis added)).
In crafting § 1441(a), however, Congress made the choice to
refer only to "the defendant or the defendants," a choice we
must respect. Thus, ATTM, as an additional counter-
defendant, may not remove the case to federal court under
§ 1441(a).3 This conclusion is consistent with the well-
3
Shorts also contends that removal under § 1441(a) is impermissible
because the district court does not have "original jurisdiction" over the
case based on Palisades’s complaint, which asserts only a state-law collec-
tion action for approximately $800, and because a counterclaim cannot
serve as the basis for original jurisdiction in a diversity case such as this
one. Given our conclusion that an additional counter-defendant may not
remove under § 1441(a), we have no reason to address this argument.
12 PALISADES COLLECTIONS v. SHORTS
established principle that "[w]e are obliged to construe
removal jurisdiction strictly because of the significant federal-
ism concerns implicated" and that "if federal jurisdiction is
doubtful, a remand to state court is necessary." Md. Stadium
Auth. v. Ellerbe Becket Inc., 407 F.3d 255, 260 (4th Cir. 2005)
(internal quotation marks, citations, and alterations omitted);
see also Shamrock Oil, 313 U.S. at 109 ("Due regard for the
rightful independence of state governments, which should
actuate federal courts, requires that they scrupulously confine
their own jurisdiction to the precise limits which the statute
has defined." (internal quotation marks omitted)).
C.
Perhaps anticipating our conclusion that an additional
counter-defendant may not remove under § 1441(a), ATTM
argues that § 1453(b) provides a removal power independent
of that conferred in § 1441(a). ATTM further argues that,
under the broad language of § 1453(b), any defendant, includ-
ing a counter-defendant, may exercise that removal power.
We need not decide whether § 1453(b) grants such a power
because, even assuming that § 1453(b) grants a power of
removal, ATTM, as an "additional counter-defendant," may
not exercise this power.
ATTM argues that the broad language of § 1453(b) permits
an additional counter-defendant to remove a class action to
federal court for two reasons. First, ATTM contends that
because § 1453(b) provides only that a class action "may be
removed to a district court," it does not limit the parties enti-
tled to remove. Second, ATTM contends that, in overriding
several traditional limitations on removal, § 1453(b) twice
refers to "any defendant," a phrase it believes is broad enough
to include counter-defendants.
We find neither argument convincing. First, ATTM’s con-
tention that § 1453(b) grants it removal power because it does
not expressly limit the parties who may remove simply does
PALISADES COLLECTIONS v. SHORTS 13
not comport with the language of § 1453(b) when the statute
is read in its entirety. Given that the only reference in the stat-
ute as to a party who may remove is to a "defendant," and that
the statute states that the class action may be removed "in
accordance with [28 U.S.C. §] 1446," which specifically pro-
vides procedures for "[a] defendant or defendants" to remove
cases to federal court, see § 1446(a), we think that Congress
clearly did not intend to extend the right of removal to parties
other than "defendant[s]." And, as discussed in Section II.B,
"defendant" in the removal context is understood to mean
only the original defendant.4
4
We note that ATTM’s broad interpretation of § 1453(b) would neces-
sarily allow an original plaintiff/counter-defendant to remove a class
action asserted against it. The Ninth Circuit recently considered just such
a situation in Progressive W. Ins. Co. v. Preciado, 479 F.3d 1014 (9th Cir.
2007), albeit in dicta. In that case, the plaintiff argued that CAFA should
be interpreted as "allowing a plaintiff forced to defend a class action on
the basis of a cross-complaint to have the same right to remove the class
action as a defendant." Id. at 1017. Concluding that "CAFA is not suscep-
tible to such an interpretation," id., the Ninth Circuit wrote:
Although CAFA does eliminate three significant barriers to
removal for qualifying actions, CAFA does not create an excep-
tion to Shamrock’s longstanding rule that a plaintiff/cross-
defendant cannot remove an action to federal court. CAFA’s
removal provision, section 1453(b), provides that "[a] class
action may be removed to a district court . . . in accordance with
section 1446." Section 1446, in turn, sets forth the removal proce-
dure for "[a] defendant or defendants desiring to remove any civil
action . . . from a State court." The interpretation of "defendant
or defendants" for purposes of federal removal jurisdiction con-
tinues to be controlled by Shamrock [Oil & Gas Corp. v. Sheets,
313 U.S. 100 (1941)], which excludes plaintiff/cross-defendants
from qualifying "defendants."
Nor can we accept Progressive’s invitation to read CAFA lib-
erally as making a sub silentio exception to Shamrock. We have
declined to construe CAFA more broadly than its plain language
indicates. "Faced with statutory silence . . ., we presume that
Congress is aware of the legal context in which it is legislating."
This presumption is especially appropriate here, where "[t]he
legal context in which the 109th Congress passed CAFA into law
14 PALISADES COLLECTIONS v. SHORTS
Second, the use of the phrase "any defendant" also does not
grant removal power to additional counter-defendants. Sec-
tion 1453(b) uses "any defendant" twice—first stating that a
class action may be removed "without regard to whether any
defendant is a citizen of the State in which the action is
brought" and then stating that "such action may be removed
by any defendant without the consent of all defendants."
§1453(b) (emphasis added). The first provision eliminates the
so-called "home-state defendant" restriction on removal found
in § 1441(b), which is the rule that diversity actions "shall be
removable only if none of the parties in interest properly
joined and served as defendants is a citizen of the State in
which such action is brought." § 1441(b). Of course, under the
normal rules of statutory construction, "the same terms
[should] have the same meaning in different sections of the
same statute." LaRue v. DeWolff, Boberg & Assocs., 128 S.
Ct. 1020, 1027 (2008) (internal quotation marks and alter-
ations omitted). Thus, given that we have already concluded
that "defendant" in § 1441(a) means only an original defen-
dant, we must likewise conclude that "defendant" in § 1441(b)
means only an original defendant. Because "we presume that
Congress legislated consistently with existing law and with
the knowledge of the interpretation that courts have given to
the existing statute," Strawn, 530 F.3d at 297, that the first
reference to "defendant" in § 1453(b) is in relation to
§ 1441(b)’s "home-state defendant" rule only reinforces our
features a longstanding, near-canonical rule" that a state plaintiff
forced to defend on the basis of a cross-complaint is without
authority to remove.
Therefore, we must conclude CAFA does not alter the long-
standing rule announced in Shamrock that precludes
plaintiff/cross-defendants from removing class actions to federal
court.
Id. at 1017-1018 (emphasis in original) (internal citations omitted). We
agree that § 1453(b) should not be read to allow removal by original plain-
tiffs.
PALISADES COLLECTIONS v. SHORTS 15
conclusion that "defendant" in § 1453(b) also means only the
original defendant. Cf. Blockbuster, Inc. v. Galeno, 472 F.3d
53, 58 (2d. Cir. 2006) ("It is true that Congress displayed in
CAFA an aim to broaden certain aspects of federal jurisdic-
tion for class actions. However, we think that, rather than
evincing an intent to make as drastic a change to federal juris-
diction as Blockbuster proposes, CAFA’s detailed modifica-
tions of existing law show that Congress appreciated the legal
backdrop at the time it enacted this legislation.").
The statute’s use of the word "any" to modify "defendant"
does not alter our conclusion that additional counter-
defendants may not remove under § 1453(b) because the use
of the word "any" cannot change the meaning of the word
"defendant." Likewise, § 1453(b)’s second use of the phrase
"any defendant," i.e., "such action may be removed by any
defendant without the consent of all defendants," § 1453(b)
(emphasis added), eliminates the judicially-recognized rule of
unanimous consent for removal; the use of the word "any"
juxtaposed with the word "all" was intended to convey the
idea of non-unanimity, not to alter the definition of the word
"defendant."
Put simply, there is no indication in the language of
§ 1453(b) (or in the limited legislative history) that Congress
intended to alter the traditional rule that only an original
defendant may remove and to somehow transform an addi-
tional counter-defendant like ATTM into a "defendant" with
the power to remove. Reading § 1453(b) to also allow
removal by counter-defendants, cross-claim defendants, and
third-party defendants is simply more than the language of
§ 1453(b) can bear.
Thus, we conclude that ATTM, as an additional counter-
defendant, does not have a right to remove under either
§ 1441(a) or § 1453(b). Again, this conclusion is consistent
with our duty to construe removal jurisdiction strictly and
16 PALISADES COLLECTIONS v. SHORTS
resolve doubts in favor of remand.5 SeeMd. Stadium Auth.,
407 F.3d at 260.
In an effort to overcome this plain language, ATTM
stresses that "[i]t is inconceivable that Congress intended to
leave [a] large category of class actions in state court."
(Appellants’ Br. at 25.) But, § 1332(d) itself leaves many
class actions in state courts, see, e.g., Luther v. Countrywide
Home Loans Servicing L.P., 533 F.3d 1031 (9th Cir. 2008)
(affirming remand of a class action to state court); Preston v.
Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 804 (5th
Cir. 2007) (same), and although we are cognizant of the fact
that Congress clearly wished to expand federal jurisdiction
through CAFA, we also recognize that it is our duty, as a
court of law, to interpret the statute as it was written, not to
rewrite it as ATTM believes Congress could have intended to
write it. If Congress intended to make the sweeping change in
removal practice that ATTM suggests by altering the near-
canonical rule that only a "defendant" may remove and that
"defendant" in the context of removal means only the original
defendant, it should have plainly indicated that intent.
5
ATTM argues that this federalism-based canon of strict construction,
which favors adjudication in state court, has no place in the interpretation
of CAFA because Congress enacted CAFA to favor federal jurisdiction
over qualifying class actions. This suggestion finds no support in our sister
circuits. See Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29 (11th Cir.
2006) ("Statements in CAFA’s legislative history, standing alone, are a
insufficient basis for departing from th[e] well-established rule [of con-
struing removal statutes strictly and resolving doubts in favor of
remand]."); Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 685 (9th
Cir. 2006) (applying the rule of strict construction of removal statutes to
interpretation of CAFA); see also Pritchett v. Office Depot, Inc., 420 F.3d
1090, 1097 n.7 (10th Cir. 2005) ("We are mindful of the fact that Con-
gress’ goal in passing [CAFA] was to increase access to federal courts,
and we also recognize that the Senate report instructs us to construe the
bill’s terms broadly. But these general sentiments do not provide carte
blanche for federal jurisdiction over a state class action any time the stat-
ute is ambiguous." (internal citations omitted)).
PALISADES COLLECTIONS v. SHORTS 17
D.
Finally, ATTM argues that, if neither § 1441 nor § 1453(b)
permits removal by an additional counter-defendant, then "the
parties should be realigned so that ATTM is deemed a ‘defen-
dant’ with the right of removal." (Appellants’ Br. at 41.)
Because the question of realignment concerns removal, and
removal jurisdiction and realignment are "not severable for
the purpose of determining the proper standard of review,"
U.S. Fid. & Guar. Co. v. Thomas Solvent Co., 955 F.2d 1085,
1088 (6th Cir. 1992), we also review the district court’s
refusal to realign the parties de novo. Should our inquiry
involve factual determinations made by the district court, we
review those determinations for clear error. Prudential Real
Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 872-
73 (9th Cir. 2000).
In determining whether to realign parties, we apply the
"principal purpose" test: First, we determine the primary issue
in controversy, and then we align the parties according to
their positions with respect to the primary issue. United States
Fid. & Guar. Co. v. A & S Mfg. Co., 48 F.3d 131, 132-33 (4th
Cir. 1995). "The determination of the ‘primary and control-
ling matter in dispute’ does not include the cross-claims and
counterclaims filed by the defendants. Instead, it is to be
determined by plaintiff’s principal purpose for filing its suit."
Zurn Indus., Inc. v. Acton Constr. Co., 847 F.2d 234, 237 (5th
Cir. 1988) (emphasis added).
Here, Palisades’s "principal purpose" in filing the suit was
to collect Shorts’s debt. On that issue, Palisades and Shorts
were properly aligned. Thus, like the district court, we con-
clude that realignment was inappropriate.
III.
We reiterate that our holding today is narrow: Under both
§ 1441(a) and § 1453(b), a counter-defendant may not remove
18 PALISADES COLLECTIONS v. SHORTS
a class action counterclaim to federal court. Congress is pre-
sumed to know the current legal landscape against which it
legislates, and we are merely applying those pre-existing
established legal rules. If Congress wants to overturn such
precedent, it should do so expressly.
For the foregoing reasons, the judgment of the district court
is hereby
AFFIRMED.
NIEMEYER, Circuit Judge, dissenting:
Palisades Collections LLC, a collection agency, com-
menced this action in West Virginia state court by filing a
state-law debt collection case against Charlene Shorts for a
$794.87 debt incurred by Shorts under her cell phone service
contract with AT&T Mobility LLC. Shorts filed a class action
counterclaim against Palisades Collections and joined AT&T
Mobility LLC and AT&T Mobility Corporation (collectively
"AT&T") as defendants. In the class action counterclaim,
Shorts purported to represent 160,000 citizens of West Vir-
ginia, alleging that AT&T’s cell phone service contracts vio-
lated the West Virginia Consumer Credit and Protection Act,
W. Va. Code § 46A-1-101 et seq. and demanding over $16
million in damages.
Relying on the Class Action Fairness Act of 2005
("CAFA"), Pub. L. No. 109-2, 119 Stat. 4, AT&T removed
the case to federal court. See 28 U.S.C. §§ 1332(d), 1453(b).
On Shorts’ motion, the district court remanded the case to
the West Virginia state court from which it was removed. The
court found that Shorts’ counterclaim class action met all of
the jurisdictional requirements of CAFA embodied in 28
U.S.C. § 1332(d)(2) inasmuch as Shorts purported to repre-
sent a class of 160,000 West Virginia customers (well over
the CAFA minimum of 100 class members); the class claimed
PALISADES COLLECTIONS v. SHORTS 19
in the aggregate a minimum of $16 million in damages (well
over the CAFA minimum of $5 million); and minimum diver-
sity, as required by § 1332(d)(2)(A), existed. Most of the class
members are West Virginia citizens, whereas AT&T is a citi-
zen of Georgia and Delaware, and Palisades Collections is a
citizen of New Jersey and Delaware. See 28 U.S.C.
§ 1332(c)(1). The district court also found inapplicable
CAFA’s home-state exception, which only applies when most
class members have the same citizenship as one of the defen-
dants. See 28 U.S.C. § 1332(d)(4). Although the district court
thus found that it had removal jurisdiction under § 1332(d), it
nonetheless held that CAFA did not give AT&T, as a counter-
claim defendant, removal authority under 28 U.S.C.
§ 1453(b).
AT&T filed this interlocutory appeal under 28 U.S.C.
§ 1453(c), challenging the district court’s ruling that because
AT&T was a counterclaim defendant, it did not have removal
authority under CAFA. Shorts supports the district court’s
conclusion that CAFA did not provide AT&T with removal
authority and also challenges the district court’s finding of
removal jurisdiction under § 1332(d).
The majority opinion agrees with the district court that a
counterclaim defendant is not granted authority under CAFA,
28 U.S.C. § 1453(b), to remove a class action that otherwise
meets the jurisdictional requirements of § 1332(d), and there-
fore it does not reach Shorts’ jurisdictional argument.
For the reasons stated in this opinion, I conclude that
CAFA does indeed authorize AT&T to remove this interstate
class action, even though AT&T was sued as a counterclaim
defendant, not as an original defendant. Section 1453(b),
added by CAFA, expanded removal authority, conferring on
"any defendant" the right to remove a "class action." And
removal jurisdiction exists under 28 U.S.C. §§ 1332(d) and
1441, as found by the district court. Accordingly, I respect-
fully dissent.
20 PALISADES COLLECTIONS v. SHORTS
I. Removal Authority
Removal of a case from state court to federal court is gen-
erally proper when (1) the federal court has removal jurisdic-
tion and (2) the removing party has removal authority. Since
the majority rests its judgment entirely upon AT&T’s pur-
ported lack of removal authority, I begin with that issue.
The majority holds that AT&T may not remove the class
action filed against it because, and only because, AT&T was
sued as an additional defendant in a counterclaim, as distinct
from being named an original defendant in an independent
action. It concludes that because AT&T is a counterclaim
defendant, it does not fall within the language "may be
removed by any defendant" of § 1453(b) (emphasis added).
The majority’s conclusion, I respectfully submit, is demon-
strably at odds with this broad language.
Section 1441(a) states the general rule for removal author-
ity, that civil actions, "of which the district courts of the
United States have original jurisdiction, may be removed by
the defendant or the defendants." 28 U.S.C. § 1441(a)
(emphasis added). This language is the basis for both the rule
that all defendants must unanimously consent to removal, see
Chicago, Rock Island & Pac. Ry. v. Martin, 178 U.S. 245,
247 (1900), and the rule that only original defendants can
remove, see Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.
100, 106-08 (1941). But 28 U.S.C. § 1453(b), which was
added by CAFA, provides a different rule for removal of class
actions over which the district court has removal jurisdiction.
It states that a class action "may be removed by any defendant
without the consent of all defendants" (emphasis added). This
language expands removal authority in the CAFA context.
Shorts and the majority agree that § 1453(b) does expand
removal authority, but just not far enough to reach the present
case. For example, § 1453(b) expands removal authority by
allowing removal "without regard to whether any defendant is
PALISADES COLLECTIONS v. SHORTS 21
a citizen of the State in which the action is brought." They
acknowledge that this modifies § 1441(b)’s home-state rule,
which denies removal authority whenever at least one defen-
dant resides in the State whose court has the case.
Similarly, I submit that § 1453(b), in authorizing removal
"by any defendant," also expands removal authority beyond
the limits of § 1441(a) so that it includes any defendant joined
as an additional defendant to a counterclaim, as well as any
counterclaim defendant. As the Supreme Court has repeatedly
noted, "[r]ead naturally, the word ‘any’ has an expansive
meaning, that is, ‘one or some indiscriminately of whatever
kind.’" Ali v. Fed. Bureau of Prisons, 128 S. Ct. 831, 835-36
(2008) (quoting United States v. Gonzales, 520 U.S. 1, 5
(1997) (quoting Webster’s Third New International Dictio-
nary 97 (1976))). A counterclaim defendant is certainly a
"kind" of defendant and falls easily within "indiscriminately
of whatever kind" of defendant. The plain language of
§ 1453(b) thus gives AT&T, as a kind of defendant, authority
to remove the class action in this case from state court to fed-
eral court.
Both Shorts and the majority argue that we should read the
word "any" narrowly, based upon the exclusive congressional
purpose perceived to exist behind the entire clause. But nei-
ther Shorts nor the majority cite any statutory language or leg-
islative history to support their articulation of CAFA’s
exclusive purpose in authorizing any defendant to remove a
class action. They maintain simply that in using "any defen-
dant" in § 1453(b), Congress intended to overrule only the
long-standing requirement that defendants must unanimously
consent to removal. See Martin, 178 U.S. at 247. And in mak-
ing this point, they argue that the "any defendant" language
of § 1453(b), for some unexplained reason, does not modify
the rule announced in Shamrock Oil, 313 U.S. at 106-08, that
counterclaim defendants who are also plaintiffs cannot
remove under § 1441(a).
22 PALISADES COLLECTIONS v. SHORTS
I agree with Shorts and the majority that § 1453(b)’s "any
defendant" language expands removal authority by abolishing
Martin’s unanimous consent rule in the CAFA context. But I
maintain that the same clause also abolishes the Shamrock Oil
rule for CAFA purposes. Not only is the language of
§ 1453(b) clear here, but also both Shamrock Oil and Martin
were based on the exact same language in § 1441(a)’s predeces-
sor.1 It seems implausible at best that the § 1453(b) language
abolished the Martin rule while leaving untouched the Sham-
rock Oil rule, especially when both rules depended on the
same language.
In both Martin and Shamrock Oil, the Supreme Court based
its holding on the statutory interpretation of the wording "the
defendant or defendants" in § 1441(a)’s prior codifications, 28
U.S.C. § 71 (1940) (the codification at the time of Shamrock
Oil), and Act of August 13, 1888, 25 Stat. 433, ch. 866, § 2
(the location at the time of Martin).2 The Martin court found
the unanimity rule plain:
It thus appears on the face of the statute that if a suit
arises under the Constitution or laws of the United
States, or if it is a suit between citizens of different
States, the defendant, if there be but one, may
remove, or the defendants, if there be more than one.
1
The decision in Progressive West Insurance Co. v. Preciado, 479 F.3d
1014, 1017 (9th Cir. 2007), is not persuasive to reach a contrary conclu-
sion as it forces Shamrock Oil’s interpretation of § 1441(a)’s "the defen-
dant or defendants" onto § 1446(a)’s "a defendant or defendant," which
Shamrock Oil did not interpret. Yet, "[i]t is a rule of law well established
that the definite article ‘the’ particularizes the subject which it precedes.
It is a word of limitation as opposed to the indefinite or generalizing force
of ‘a’ or ‘an.’" American Bus Ass’n v. Slater, 231 F.3d 1, 4-5 (D.C. Cir.
2000). Section 1446, moreover, neither creates nor alters removal author-
ity, being entirely procedural, as suggested by its title, "Procedure for
Removal."
2
Congress added the second "the" in "the defendant or the defendants"
as part of a modernization of § 1441’s language. See Act of June 25, 1948,
ch. 646, 62 Stat. 937; 28 U.S.C.A. § 1441 note (2008).
PALISADES COLLECTIONS v. SHORTS 23
* * *
And in view of the language of the statute we think
the proper conclusion is that all the defendants must
join in the application . . . .
178 U.S. at 247, 248 (emphasis added). And Shamrock Oil
relied upon Congress’ deliberate replacement in 1887 of "ei-
ther party" with "the defendant or defendants" in finding that
counterclaim defendants who are also plaintiffs cannot
remove. See 313 U.S. at 106-07.
Even though both the unanimity rule of Martin and the
original defendant rule of Shamrock Oil derive from the same
language in § 1441(a), the majority asserts that § 1453(b)’s
"any defendant" language abolishes one but not the other. We
should hesitate before attributing such acrobatic skill to Con-
gress.
Shorts and the majority contend that "defendant" should be
read consistently throughout §§ 1441 and 1453 and that
because "the defendant" in § 1441(a) refers to the original
defendant, "any defendant" in § 1453(b) should also refer to
the original defendant. See, e.g., ante at 13. But reading "de-
fendant" consistently does not mean we must read "any defen-
dant" in § 1453(b) the same as "the defendant or the
defendants" in § 1441(a). Surely one is not construing "defen-
dant" differently when one finds "any defendant" has a differ-
ent meaning from "the defendant or the defendants." The
article "the" restricts the noun that follows, while the article
"any" expands its meaning. See Reid v. Angelone, 369 F.3d
363, 367 (4th Cir. 2004); accord Warner-Lambert Co. v.
Apotex Corp., 316 F.3d 1348, 1356 (Fed. Cir. 2003) ("the"
has a narrowing effect, while "any" would have a broadening
effect). Moreover, the majority seems to recognize the differ-
ence in meaning between "any defendant" and "the defen-
dant" when it states that "any defendant" overrules the Martin
24 PALISADES COLLECTIONS v. SHORTS
rule, which had depended on the phrase, "the defendant." See
ante at 15.
The majority’s assertion that in both § 1441(a) and
§ 1453(b) the word "defendant" means only "original defen-
dant" is both puzzling and potentially unsettling to existing
interpretations of jurisdictional statutes. The majority opinion
applies the logic that because "the defendant" in § 1441(a)
refers to the original defendant, as held by Shamrock Oil,
"any defendant" must likewise mean only original defendant
because both terms use the word "defendant." I conclude that
the majority takes this misstep only in an effort to import the
Shamrock Oil rule into the CAFA context. Yet, Shamrock Oil
did not state that the word "defendant" itself means "original
defendant." Rather, it held that "the defendant or defendants,"
when adopted by Congress to replace "either party" in the ear-
lier statute, refers to the original defendant and not a counter-
claim defendant who was also the plaintiff. 313 U.S. at 106-
08.3
The majority contends additionally that the language fol-
lowing "any defendant," which provides that a class action
may be removed "without the consent of all defendants," was
the basis by which § 1453(b) overruled Martin. To reach this
conclusion, the majority finds that the text "without the con-
3
Insofar as AT&T was first joined in the action by the filing of a class
action complaint against it and by service of that complaint and process
upon it, the action as to AT&T began with that class action complaint, in
which it was joined only in its capacity as a defendant. Unlike Palisades,
which commenced the collection action in state court and thus was both
a plaintiff and a counterclaim defendant, AT&T in this case is only a
defendant. Because AT&T was not also a plaintiff, the Shamrock Oil rule,
which denied a defendant who was also a plaintiff the authority to remove,
would appear not to be applicable to AT&T even apart from the amend-
ments made by CAFA. See Shamrock Oil, 313 U.S. at 106-08; Fed. R.
Civ. P. 13(h) note to 1966 Amendment (For purposes of applying joinder
of additional parties to a counterclaim, "the party pleading the claim is to
be regarded as a plaintiff and the additional parties as plaintiffs or defen-
dants as the case may be").
PALISADES COLLECTIONS v. SHORTS 25
sent of all defendants" somehow reads back and narrows the
meaning of "any defendant." But such a reading is not gram-
matically supportable. The "without the consent of all defen-
dants" language does not restrict "any defendant," but rather
expands removal authority; "without the consent of all defen-
dants" modifies the verb "may be removed" and not the noun
"any defendant," thus eliminating the requirement that AT&T
get "the consent of all defendants," a group that undoubtedly
would include Shorts, who clearly did not want the case
removed.
The error in the majority’s reading of "without the consent
of all defendants" becomes apparent when one takes the full
clause of § 1453(b) and substitutes for "any" the Supreme
Court’s definition of "any," and for the parties, the names of
the parties in this case. Thus, the full clause of § 1453(b)
would provide that the class action "may be removed by [‘one
or some indiscriminately of whatever kind’ of] defendant
[which includes the counterclaim defendant AT&T] without
the consent of all defendants [which includes the defendant
Shorts]."
Shorts and the majority argue that in adopting their con-
struction of §§ 1441(a) and 1453(b) they are following the
canon that courts strictly construe federal jurisdictional stat-
utes and that their construction, in denying AT&T removal
authority, eliminates the possibility of removal by all counter-
claim defendants in qualifying class actions. But in purport-
edly applying the canon, they overlook the fact that the canon
cannot defeat the plain meaning of the statutory language.
"We must not give jurisdictional statutes a more expansive
interpretation than their text warrants; but it is just as impor-
tant not to adopt an artificial construction that is narrower
than what the text provides." Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546, 558 (2005) (citation omitted).
Moreover, the canon applies with less force in this case
because the justifications for the canon are not present in view
of Congress’ explicit purposes for enacting CAFA.
26 PALISADES COLLECTIONS v. SHORTS
The Supreme Court first annunciated the canon of strict
interpretation of federal jurisdictional statutes in Healy v.
Ratta, 292 U.S. 263, 269-70 (1934), and reiterated it as an
additional basis for its ruling in Shamrock Oil. In both Sham-
rock Oil and Healy, the Court gave two reasons for applying
the canon of strict construction. First, the Court observed that
successive acts of Congress had constricted federal jurisdic-
tion, evincing a clear congressional policy to narrow federal
jurisdiction. See Shamrock Oil, 313 U.S. at 108; Healy, 292
U.S. at 269-70. Second, in both Shamrock Oil and Healy, the
Court stated that federalism principles required strict con-
struction of encroachment on state court jurisdiction. Sham-
rock Oil, 313 U.S. at 108-09; Healy, 292 U.S. at 270.
But neither of these rationales applies with any force in this
case. First, CAFA unquestionably expanded federal jurisdic-
tion and liberalized removal authority, see Johnson v.
Advance America, Cash Advance Centers of South Carolina,
Inc., No. 08-2186, slip op. at 5-6, 11, ___ F.3d ___ (4th Cir.
Dec. 12, 2008), thus reversing the restrictive federal jurisdic-
tion policies of Congress that both Healy and Shamrock Oil
listed as the primary justification for application of the canon.
Second, CAFA § 2 addresses the federalism principle, stating
that Congress intended the extension of federal jurisdiction
over large interstate class actions and liberalization of
removal to further the proper balance of federalism and "re-
store the intent of the framers of the United States Constitu-
tion by providing for Federal court consideration of interstate
cases of national importance under diversity jurisdiction."
CAFA § 2(b)(2), Pub. L. No. 109-2, 119 Stat. 4-5 (2005);
Johnson, slip op. at 5-6, 11. Unlike the generalized legislative
history referenced in Shamrock Oil and Healy and by the
majority, this stated purpose for expanding federal jurisdiction
and liberalizing removal in the CAFA context is part of the
statutory text, and federal courts surely have an obligation to
heed it.
The Supreme Court recently relied upon similar statutory
statements of findings and purposes in rejecting an artificial
PALISADES COLLECTIONS v. SHORTS 27
reading of the Securities Litigation Uniform Standards Act of
1998 ("SLUSA"). In Merrill Lynch, Pierce, Fenner & Smith
Inc. v. Dabit, 547 U.S. 71 (2006), the Court interpreted the
words "in connection with the purchase or sale" of securities,
as contained in SLUSA. The plaintiff Dabit argued for an arti-
ficially narrow reading of the words, premised on the canon
against finding federal preemption of state law. Id. at 84. That
canon, like the canon of strict interpretation of jurisdictional
statutes, derived partly from federalism concerns. But, based
largely on SLUSA’s purposes, as stated in SLUSA § 2, the
Court unanimously gave the statute its natural reading, even
though that reading had the effect of significantly preempting
more state law. Id. at 82, 86, 87-88. Under a similar analysis,
this court should give "any defendant" used in 28 U.S.C.
§ 1453(b) its natural reading.
I conclude that the plain language of § 1453(b) grants
removal authority to AT&T in this case. Section 1453(b)’s
"any defendant" language could not have overruled one rule
derived from the phrase "the defendants" in § 1441(a) but not
another rule derived from the same statutory language in the
same statute. And when one also considers the expansive
meaning given to "any" by the Supreme Court, the natural
reading of the plain language of § 1453(b) unambiguously
grants AT&T removal authority.
II. Removal Jurisdiction
Because I conclude that AT&T has removal authority, I
must also determine whether the district court correctly found
it had removal jurisdiction.
Section 1332(d)(2) confers original jurisdiction on district
courts over "any civil action in which the matter in contro-
versy exceeds the sum or value of $5,000,000, exclusive of
interest and costs, and is a class in which any member of a
class of plaintiffs is a citizen of a State different from any
defendant." 28 U.S.C. § 1332(d)(2)(A). The district court con-
28 PALISADES COLLECTIONS v. SHORTS
cluded and Shorts acknowledges that the class action counter-
claim in this case meets the requirements of § 1332(d)(2)
insofar as it alleges the jurisdictional amount ($5 million) and
diversity of citizenship (minimal diversity). Shorts contends,
however, that the class action counterclaim in this case is not
"any civil action" over which § 1332(d)(2) grants jurisdiction
to district courts. She states, "A counterclaim is not a ‘civil
action.’ Rather, a civil action arises from the plaintiff’s origi-
nal claims," citing Federal Rule of Civil Procedure 3 ("A civil
action is commenced by filing a complaint with the court").
In state court, Palisades Collections, as a plaintiff, filed a
collection claim against Shorts, as a defendant. Shorts, as a
counterclaim plaintiff, then filed a class action against Pali-
sades Collections, as a counterclaim defendant, and against
AT&T, as an additional defendant joined under the West Vir-
ginia analog to Federal Rule of Civil Procedure 13(h). See
Fed. R. Civ. P. note to 1966 Amendment ("the party pleading
the claim is to be regarded as a plaintiff and the additional
parties as plaintiffs or defendants as the case may be"). Thus,
while Palisades Collections is the plaintiff and Shorts the
defendant in the original collection action, Shorts is the class
action plaintiff, representing 160,000 class plaintiffs against
Palisades Collections and AT&T, as class action defendants.
I conclude that Shorts’ claim on behalf of 160,000 against
Palisades Collections and AT&T is a class action over which
CAFA confers jurisdiction.
In using the term "any civil action" in § 1332(d)(2), where
Congress granted jurisdiction to the district courts in CAFA,
Congress used a term of art created by the Federal Rules of
Civil Procedure to merge all actions and causes of actions,
whether claims for damages, injunctive relief, and other relief,
and whether at law or in equity. With that merger, a plaintiff
now claims, in one action, without stating separate "causes of
action," claims for damages, injunctive relief and other relief.
See Fed. R. Civ. P. 2 ("There is one form of action—the civil
action").
PALISADES COLLECTIONS v. SHORTS 29
The effect of this rule was to streamline all pleading by
eliminating the numerous earlier requirements such as stating
causes of action and transferring claims between law and
equity. At the same time Rule 2 was adopted, the Advisory
Committee provided an instructional note to the Rule: "Refer-
ence to actions at law or suits in equity in all statutes should
now be treated as referring to the civil action prescribed in
these rules." Fed. R. Civ. P. 2 note 2 (emphasis added). Con-
gress complied with this instruction when referring in
§ 1332(d)(2) to a class action as a civil action.
That a class action in whatever form is a civil action was
indicated early by the Supreme Court soon after it adopted the
rules in 1937. As the Court stated, "The class suit was an
invention of equity to enable it to proceed to a decree in suits
where the number of those interested in the subject of the liti-
gation is so great that their joinder as parties in conformity to
the usual rules of procedure is impracticable." Hansberry v.
Lee, 311 U.S. 32, 41 (1940). Thus, the class action, once a
form of suit in equity, became with the enactment of Rule 2,
a civil action. Indeed, the text of Rule 23, regulating class
actions generally, confirms this. See, e.g., Fed. R. Civ. P.
23(c)(1)(A) ("whether to certify the action as a class action");
id. 23(d) ("Conducting the Action"); id. 23(d)(1) ("in conduct-
ing an action under this rule"); id. 23(d)(1)(B)(i) ("any step
in the action"); id. 23(d)(1)(B)(iii) ("otherwise come into the
action"); id. 23(g)(1)(A)(ii) ("the types of claims asserted in
the action") (emphases added throughout). As recognized in
Hansberry v. Lee from the history of class actions, a class
action is available in conformity with the usual rules of proce-
dure as practicable, whether by complaint, counterclaim,
cross-claim, or third-party claim. Indeed, Shorts herself must
recognize this as she brought her class action as a counter-
claim.
Shorts, of course, does not maintain that her class action
counterclaim is barred simply because she brought it as a
counterclaim. She undertook, in filing the class action, to seek
30 PALISADES COLLECTIONS v. SHORTS
certification of "the action" as a class action. See West Vir-
ginia Rule 23(c)(1)(A) (containing the same language as the
Federal Rules counterpart). That rule provides that "the court
must determine by order whether to certify the action as a
class action." This applies to Shorts’ class action counter-
claim. Shorts therefore cannot credibly claim that her class
action counterclaim is not an action and thus a "civil action"
under Rule 2.
Courts have reached a similar conclusion in the context of
28 U.S.C. § 1442, which authorizes the removal of "a civil
action" against federal officers and agencies. Implementing
the authority granted by § 1442, which authorizes removal of
"a civil action . . . commenced in a State court against" a fed-
eral official or agency, courts have found removal jurisdiction
when those federal officials or agencies were first brought
into the case through a third-party complaint. See Johnson v.
Showers, 747 F.2d 1228 (8th Cir. 1984); IMFC Professional
Servs. of Fla., Inc. v. Latin Am. Home Health, Inc., 676 F.2d
152 (5th Cir. 1982). While these holdings might be justified
in part by the federal policy encouraging federal-court resolu-
tion of claims against federal officers and agencies, Congress
has also announced a similar federal policy in CAFA in favor
of federal-court resolution of class actions such as this one.
Section 2(b) of CAFA states that Congress intended CAFA to
"restore the intent of the framers of the United States Consti-
tution by providing for Federal court consideration of inter-
state cases of national importance under diversity
jurisdiction." (Emphasis added).
Shorts’ reliance on Federal Rule of Civil Procedure 3, stat-
ing that "[a] civil action is commenced by filing a complaint
with the court," is misplaced, as that rule addresses when an
action commences for purposes of federal statutes of limita-
tions and similar time-related provisions. See 4 Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure
§§ 1051, 1056 (3d ed. 2002).
PALISADES COLLECTIONS v. SHORTS 31
As the district court concluded, the requirements for origi-
nal jurisdiction set forth in 28 U.S.C. § 1332(d)(2) are ful-
filled, and when combined with 28 U.S.C. § 1441(a), the
district court is granted removal jurisdiction. Accordingly, I
would conclude that the district court had removal jurisdiction
over this interstate class action, a conclusion that is entirely
consonant with Congress’ purposes in enacting CAFA,
expressed in the statutory text, at CAFA § 2, Pub. L. No. 109-
2, 119 Stat. 4, 5 (2005).
III
The majority correctly recognizes that Congress does not
sub silentio disturb preexisting legal principles for removal
jurisdiction and authority. See Strawn v. AT&T Mobility LLC,
530 F.3d 293, 297 (4th Cir. 2008). But when new statutory
language, added by CAFA, modifies preexisting language, the
new language must control. Id. The majority, however, fails
to apply the new language. Section 1453(b), by authorizing
"any defendant" to remove, makes Shamrock Oil inapplicable
in the CAFA context, thus giving AT&T removal authority.
And the language of §§ 1332(d)(2) and 1441 gives the district
court removal jurisdiction. Accordingly, I would reverse the
district court’s remand order to let this interstate class action
proceed in federal court, as CAFA clearly provides.