United Steel, Paper & Forestry v. Shell Oil Company ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STEEL, PAPER & FORESTRY, 
RUBBER MANUFACTURING ENERGY,
ALLIED INDUSTRIAL & SERVICE
WORKERS INTERNATIONAL UNION,
AFL-CIO, CLC, on behalf of
members employed by defendants;
RICHARD FLOYD, individually and
on behalf of all similarly situated
current and former employees;
EDUARDO CARBEJAL, individually
and on behalf of all similarly
No. 08-56672

situated current and former
employees, D.C. No.
Plaintiffs-Appellees, 2:08-03693-RGK-E
v.
SHELL OIL COMPANY; EQUILON
ENTERPRISES LLC, DBA SHELL OIL
PRODUCTS US,
Defendants-Appellants,
and
TESORO REFINING AND MARKETING
COMPANY,
Defendant.

16131
16132 UNITED STEEL v. SHELL OIL CO.
UNITED STEEL, PAPER & FORESTRY, 
RUBBER MANUFACTURING ENERGY,
ALLIED INDUSTRIAL & SERVICE
WORKERS INTERNATIONAL UNION,
AFL-CIO, CLC, on behalf of
members employed by defendants;
RICHARD FLOYD, individually and
on behalf of all similarly situated
current and former employees;
EDUARDO CARBEJAL, individually No. 08-56673
and on behalf of all similarly
D.C. No.

situated current and former
employees, 2:08-cv-03693-
Plaintiffs-Appellees, RGK-E
v. OPINION
SHELL OIL COMPANY; EQUILON
ENTERPRISES LLC, DBA SHELL OIL
PRODUCTS US,
Defendants,
and
TESORO REFINING AND MARKETING
COMPANY,
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Submitted November 17, 2008*
Pasadena, California
*The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
UNITED STEEL v. SHELL OIL CO. 16133
Filed December 9, 2008
Before: Myron H. Bright,** Stephen S. Trott, and
Michael Daly Hawkins, Circuit Judges.
Opinion by Judge Trott
**The Honorable Myron H. Bright, Senior United States Circuit Judge
for the Eighth Circuit, sitting by designation.
16134 UNITED STEEL v. SHELL OIL CO.
COUNSEL
Deanna L. Ballesteros, Epstein Becker & Green, P.C., Los
Angeles, California, for appellants Shell Oil Company and
Equilon Enterprises LLC dba Shell Oil Products US.
UNITED STEEL v. SHELL OIL CO. 16135
Timothy M. Rusche, Los Angeles, California, Seyfarth Shaw
LLP, for appellant Tesoro Marketing and Refining Company.
Robert A. Cantore, Gilbert & Sackman, Los Angeles, Califor-
nia, for the appellees.
OPINION
TROTT, Circuit Judge:
United Steel, Paper & Forestry, Rubber Manufacturing,
Energy, Allied Industrial & Service Workers International
Union, AFL-CIO, CLC, as well as Richard Floyd and
Eduardo Carbejal, individually and on behalf of similarly situ-
ated current and former employees (collectively United Steel
Workers), filed a class action against Shell Oil Company,
Equilon Enterprises, LLC, and Tesoro Refining and Market-
ing Company in California state court. Shell Oil and Equilon
(collectively Shell) filed a notice of removal to the federal dis-
trict court, and then Tesoro filed a separate notice of removal.
Both notices of removal relied, in part, on the Class Action
Fairness Act of 2005 (CAFA), 28 U.S.C. §§ 1332(d), 1453, as
a basis of jurisdiction. After opening two separate cases, the
district court first remanded Shell’s case on the ground that
Tesoro failed to consent to removal within thirty days of ser-
vice on the first-served defendant, and then remanded
Tesoro’s case for the same reason.
Shell and Tesoro filed separate petitions for permission to
appeal, which this Court granted. We have jurisdiction pursu-
ant to 28 U.S.C. § 1453(c), and we reverse the district court’s
orders remanding the case to state court. Under § 1453(b) of
CAFA, Shell’s timely notice of removal effected removal of
the entire action, including the claims against Tesoro.1
1
We deny United Steel Workers’s request for sanctions on appeal
against Shell and Tesoro because the record does not support a finding of
bad faith, and United Steel Workers did not file a separate motion for
sanctions.
16136 UNITED STEEL v. SHELL OIL CO.
I
BACKGROUND
On April 25, 2008, United Steel Workers filed a single
complaint in California state court against Shell Oil, Equilon,
and Tesoro. The complaint alleged violations of California
Labor Code §§ 201, 201.7, 202, 203, 216, 226, 226.6, 226.7,
512, 1194, and 1199, and California Business and Professions
Code §§ 17200-17209, for failure to provide meal periods,
permit rest periods, provide proper wage statements, and pay
wages timely upon termination. Royal Dutch Shell plc is the
parent company of both Shell Oil and Equilon (collectively
Shell). United Steel Workers effected service of the complaint
on Shell on May 6, 2008, and on Tesoro on May 7, 2008.
On June 5, 2008, the thirtieth day after service on Shell,
Shell filed a notice of removal, asserting federal question
jurisdiction, 28 U.S.C. § 1331, as well as jurisdiction under
CAFA, 28 U.S.C. §§ 1332(d), 1453. The case (No. CV 08-
03693) was assigned to the Honorable R. Gary Klausner. The
next day, June 6, 2008, Tesoro filed a separate notice of
removal, asserting jurisdiction on the same grounds as Shell.
Tesoro’s case, however, received a different case number
(No. CV 08-03720) and was assigned to a different district
judge, the Honorable Ronald S.W. Lew. Tesoro’s case was
subsequently reassigned to the Honorable Manuel L. Real.
In Shell’s removal case, Judge Klausner ordered Shell to
show cause why the case should not be remanded for several
defects in Shell’s notice of removal, including the failure to
join Tesoro. Shell filed motions in support of removal, argu-
ing, in part, that CAFA permits one defendant to remove the
entire case without the consent of all defendants. On June 27,
2008, Judge Klausner issued an order remanding Shell’s case
to state court because Tesoro had not joined in Shell’s notice
of removal within thirty days of the first-served defendant,
Shell.
UNITED STEEL v. SHELL OIL CO. 16137
Meanwhile, in Tesoro’s separate removal case before Judge
Real, United Steel Workers filed a notice regarding the related
case before Judge Klausner on June 19, 2008. On July 8,
2008, Judge Real issued an order transferring Tesoro’s case
to Judge Klausner. On July 11, 2008, Judge Klausner issued
an order remanding Tesoro’s case to state court for the same
reasons set forth in the order remanding Shell’s case.
Shell and Tesoro (collectively the defendants) separately
petitioned for permission to appeal the remand orders. On
October 9, 2008, this Court issued an order, sua sponte, grant-
ing the defendants’s petitions, consolidating their appeals, and
indicating that this Court shall complete all action on the
appeals, including rendering judgment, within 60 days.
II
DISCUSSION
A. Standard of Review
We review a district court’s remand order de novo. Abrego
Abrego v. The Dow Chemical Co., 443 F.3d 676, 679 (9th Cir.
2006).
B. Analysis
1. Removal in a Multi-Defendant Action Under CAFA
The defendants assert the district court erred because
CAFA entitles one defendant to remove the entire action, and
therefore that Shell’s removal covered the entire action. The
defendants assert, alternatively, the district court erred by sua
sponte remanding for procedural defects in the notices of
removal, and by doing so without providing Tesoro an oppor-
tunity to respond to the show cause order. United Steel Work-
ers concedes that Shell properly filed a notice of removal
under CAFA, and the district court therefore erred in remand-
16138 UNITED STEEL v. SHELL OIL CO.
ing Shell’s case (No. CV 08-03693). United Steel Workers
asserts, however, that the district court did not err by remand-
ing Tesoro’s case (No. CV 08-03720) because Tesoro filed its
notice of removal over thirty days after service on Shell, the
first-served defendant.
[1] Under 28 U.S.C. § 1441, defendants may remove a civil
action brought in a state court to federal district court if the
federal district courts have original jurisdiction. See Abrego
Abrego, 443 F.3d at 679-80. Section 1446 provides:
The notice of removal of a civil action or proceeding
shall be filed within thirty days after the receipt by
the defendant, through service or otherwise, of a
copy of the initial pleading setting forth the claim for
relief upon which such action or proceeding is based,
or within thirty days after the service of summons
upon the defendant if such initial pleading has then
been filed in court and is not required to be served
on the defendant, whichever period is shorter.
28 U.S.C. § 1446(b). In cases with multiple defendants, there
is a split in authority — unresolved in this Circuit — on
whether the thirty-day period to file, or join in, a notice of
removal begins to run on the day of service on the first-served
or last-served defendant. See United Computer Systems, Inc.
v. AT & T Corp., 298 F.3d 756, 763 n.4 (9th Cir. 2002)
(declining to adopt the first-served rule or the last-served
rule). The judge-created rule of unanimity, however, has tra-
ditionally required that all defendants consent to, or join in,
removal. See Abrego Abrego, 443 F.3d at 681.
[2] CAFA amended, in part, 28 U.S.C. § 1332 and added
§ 1453, thereby vesting district courts with original jurisdic-
tion over class actions that meet certain requirements, includ-
ing minimal diversity and an amount in controversy of
$5,000,000. See Abrego Abrego, 443 F.3d at 680. Relevant
here, CAFA added § 1453(b), which provides:
UNITED STEEL v. SHELL OIL CO. 16139
In general. — A class action may be removed to a
district court of the United States in accordance with
section 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 action is brought, except that such action
may be removed by any defendant without the con-
sent of all defendants.
28 U.S.C. § 1453(b) (emphasis added). We have previously
held that this provision “overrides the judge-created require-
ment that each defendant consent to removal . . . .” Abrego
Abrego, 443 F.3d at 681.
[3] The Eleventh Circuit has further elaborated, in a case
with multiple defendants, that § 1453(b) entitles one defen-
dant to remove the entire action. See Lowery v. Alabama
Power Co., 483 F.3d 1184, 1196 (11th Cir. 2007). There,
plaintiffs initiated a class action in state court against multiple
defendants prior to CAFA’s effective date, but amended their
complaint to include additional defendants after CAFA’s
effective date. Id. at 1194. One of the post-CAFA defendants
filed a notice of removal, in which nearly all other defendants
later joined. Id. Holding under CAFA that “one defendant
may remove the entire action, including claims against all
defendants,” id. at 1196, the Lowery court noted, because one
defendant “could procedurally remove the action as a whole,
including all defendants, we need not concern ourselves with
the circumstances pertinent to each named defendant,” id. at
1194 n.25. We agree.
[4] Here, it is undisputed that United Steel Workers’s class
action is removable under CAFA, and it is undisputed that
Shell timely filed its notice of removal. Because the case is
governed by CAFA and the rule of unanimity is inapplicable,
Shell removed the action as a whole, including claims against
Tesoro. Indeed, Tesoro could not have prevented removal
even if it wished to do so, and it certainly could not defeat
16140 UNITED STEEL v. SHELL OIL CO.
Shell’s removal of the entire case by filing a separate, but
untimely, notice of removal. We need not concern ourselves,
therefore, with the circumstances surrounding Tesoro’s notice
of removal. See Lowery at 1194 n.25.2
2. Request for Sanctions on Appeal
United Steel Workers seeks sanctions against the defen-
dants for causing needless delay and additional litigation
expenses. According to United Steel Workers, the defendants
caused needless delay by failing to coordinate their notices of
removal and failing to present to the district court the argu-
ments upon which they rely on appeal.
[5] Imposing sanctions under the Court’s inherent powers
requires a finding of bad faith, which may be demonstrated by
actions delaying or disrupting the litigation. Primus Automo-
tive Financial Services, Inc. v. Batarse, 115 F.3d 644, 648-49
(9th Cir. 1997). Here, there is no basis, however, to find that
the defendants intentionally delayed or disrupted the litiga-
tion. Contrary to United Steel Workers’s assertions, the defen-
dants each relied upon CAFA in their respective notices of
removal. Indeed, in Shell’s second response to the district
2
Subsequent to Lowery, the Eleventh Circuit rejected use of the first-
served rule and adopted the last-served rule. See Bailey v. Janssen Phar-
maceutica, Inc., 536 F.3d 1202, 1205 (11th Cir. 2008). We express no
opinion on the merits of the first-served rule, as a general matter or in
cases removable under CAFA, because the district court had jurisdiction
over the entire action even if the first-served rule applied. Shell filed a
notice of removal on the thirtieth day after service on the first-served
defendant (itself). Although Tesoro’s notice of removal would have been
untimely under the first-served rule, the timeliness of its notice was irrele-
vant once Shell removed the entire case. Nor need we address the alterna-
tive assertion that the district court improperly remanded the case sua
sponte, thereby depriving Tesoro of an opportunity to oppose remand. See
Kelton Arms Condominium Owners Ass’n, Inc. v. Homestead Ins. Co., 346
F.3d 1190, 1193 (9th Cir. 2003) (district courts have no authority to
remand a case removed from state court sua sponte for procedural
defects).
UNITED STEEL v. SHELL OIL CO. 16141
court’s show cause order, Shell argued — consistent with its
argument on appeal — that joinder of all defendants was not
required for removal and that the entire case had already been
properly removed.
[6] Furthermore, while this court has discretion to impose
sanctions for bringing a frivolous appeal under Federal Rule
of Appellate Procedure 38, “such a request must be made in
a separate motion . . . .” In re Ybarra, 424 F.3d 1018, 1027
n.11 (9th Cir. 2005). United Steel Workers did not file a sepa-
rate motion or even cite Rule 38. United Steel Workers’s
request for sanctions on appeal is denied.
III
CONCLUSION
Under CAFA, Shell’s timely notice of removal effected
removal of the entire action, including claims against Tesoro.
We therefore reverse the orders of the district court remand-
ing the claims against Shell and Tesoro to state court. Addi-
tionally, we deny United Steel Workers’s request for
sanctions against Shell and Tesoro.
REVERSED AND REMANDED.