MELODIE McATEE v. CAPITAL ONE ( 2007 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MELODIE MCATEE, individually and 
on behalf of all others similarly
situated,
Plaintiff-Appellee,
v.
CAPITAL ONE, F.S.B., a Foreign
Corporation; CAPITAL ONE No. 07-55065
SERVICES, a Foreign Corporation;
CAPITAL ONE FINANCIAL  D.C. No.
CV-06-00709-CJC
CORPORATION, a Foreign
Corporation; CAPITAL ONE BANK, a OPINION
Foreign Corporation,
Defendants-Appellants,
and
JOHN DOES, 1 Through 20,
Inclusive
Defendant.

Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Argued and Submitted
March 14, 2007—San Francisco, California
Filed March 16, 2007
Before: Procter Hug, Jr., Melvin Brunetti, and
William A. Fletcher, Circuit Judges.
Opinion by Judge William A. Fletcher
3351
MCATEE v. CAPITAL ONE 3353
COUNSEL
James R. McGuire, Dean J. Zipser, Morrison & Foerster,
Irvine, California, for the appellants.
Anthony A. Ferrigno, San Clemente, California; David J.
Franklin, Franklin & Franklin, San Diego, California, for the
appellee.
3354 MCATEE v. CAPITAL ONE
OPINION
W. FLETCHER, Circuit Judge:
Melodie McAtee, a California citizen, filed an amended
complaint in California state court before the effective date of
the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No.
109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28
U.S.C.), naming as defendants Capital One, F.S.B., Capital
One Services, and John Doe defendants 1 to 20. After the
effective date of CAFA, McAtee amended her complaint to
substitute Capital One Bank for one of the Doe defendants.
Capital One Bank removed the action to federal district court
based on the supposed authority of CAFA. Capital One Bank
argued that the substitution “commenced” a civil action
within the meaning of CAFA, and that CAFA therefore
applied to McAtee’s suit and authorized removal.
The district court remanded, holding that McAtee’s action
commenced upon the filing of the original complaint. We
affirm.
I. Procedural Background
This action has a lengthy procedural history. On August 13,
2004, Susanne Ball filed a complaint in Orange County Supe-
rior Court under section 17204 of the California Business and
Professions Code. Ball’s complaint named as defendants Cap-
ital One, F.S.B. and Capital One Services. Both are subsidia-
ries of Capital One Financial Corporation. The complaint also
named John Doe defendants 1 through 20, as permitted by
section 474 of California Code of Civil Procedure. Ball’s
complaint alleged that provisions in the credit card contracts
of the two named defendants constituted unlawful business
practices under California law. Ball filed an amended com-
plaint on November 6, 2004, which the two named defendants
answered on December 10, 2004.
MCATEE v. CAPITAL ONE 3355
On November 2, 2004, California voters approved Proposi-
tion 64, which limited the ability of citizens to bring claims
under Section 17204. Compare Cal. Bus. & Prof. Code
§ 17204 (West 1997) (allowing claims to be brought by “any
person acting for the interests of . . . the general public”) with
Cal. Bus. & Prof. Code § 17204 (West 2005) (allowing
actions brought by “any person who has suffered injury in fact
and has lost money or property”). The limitation applied
retroactively to all pending cases. Id.
In May 2005, the Superior Court held that Proposition 64
prevented Ball from pursuing her claim against Capital One,
F.S.B. and Capital One Services. A second amended com-
plaint was filed on June 1, 2005, in which McAtee replaced
Ball as the plaintiff. The two named defendants removed the
action to federal district court based on supposed authority of
the recently enacted CAFA. CAFA applies to “any civil
action commenced on or after” February 18, 2005. Pub. L.
No. 109-2, § 9, 119 Stat. 4, 14 (codified at 28 U.S.C. § 1332).
McAtee moved to remand. The federal district court
granted the motion, holding that the action had “commenced”
within the meaning of CAFA on August 13, 2004, when
Ball’s original complaint was filed. The defendants filed a
petition to appeal under CAFA, Pub. L. No. 109-2, § 5, 119
Stat. 4, 12 (codified at 28 U.S.C. § 1453(c)), which we
denied.
After remand, McAtee learned that her credit card contract
was with a different subsidiary of Capital One Financial. Her
contract was with Capital One Bank rather than Capital One,
F.S.B. or Capital One Services. On June 22, 2006, McAtee
filed an amended complaint substituting Capital One Bank in
place of one of the Doe defendants. McAtee dismissed her
claims against the other two named defendants.
Capital One Bank, like the two previous named defendants,
removed to federal district court based on the supposed
3356 MCATEE v. CAPITAL ONE
authority of CAFA. McAtee moved to remand. The district
court again held that Ball’s initial complaint filed on August
13, 2004, commenced McAtee’s action, and remanded to state
court.
We granted Capital One Bank’s petition for appeal to this
court. We must decide whether substitution of a named defen-
dant for a Doe defendant in a California state court action
commences a civil action against the new named defendant
within the meaning of CAFA. Looking to California law for
the definition of commence, we conclude that it does not. We
therefore affirm.
II. Standard of Review
We review the district court’s interpretation of CAFA de
novo. Bush v. Cheaptickets, Inc., 425 F.3d 683 (9th Cir.
2005). If we have jurisdiction under CAFA to review a dis-
trict court’s remand order, we review de novo. Abrego Abrego
v. Dow Chemical Co., 443 F.3d 676, 679 (9th Cir. 2006);
Lowdermilk v. U.S. Bank Nat’l Ass’n, 2007 WL 678221, *2
n.3 (9th Cir. 2007).
III. Discussion
Our decision is controlled by our recent decision in Pro-
gressive West v. Preciado, ___ F.3d ___ (9th Cir. 2007), 2007
WL 725717, at *1, published just before oral argument in this
case. Assuming arguendo that a defendant’s counterclaim
could serve as a basis for a CAFA-based removal by the
plaintiff, we held in Preciado that an amendment to a cross-
complaint in California state court (a counterclaim in federal
court) does not commence an action under CAFA as of the
date of the amendment. 2007 WL 725717, at *3. (We also
held, contrary to our arguendo assumption, that CAFA does
not depart from the normal rule under 28 U.S.C. § 1446 that
a counterclaim does not provide a basis for removal. Id. at *3-
4.)
MCATEE v. CAPITAL ONE 3357
[1] In Preciado, we followed our previous decision in Bush
v. Cheaptickets, Inc., 425 F.3d 683 (9th Cir. 2005), which
requires that we look to state law to determine when an action
has been commenced under CAFA. See also Braud v. Transp.
Servs. Co., 445 F.3d 801, 803 (5th Cir. 2006) (citing Bush for
proposition that “when a lawsuit is initially ‘commenced’ for
purposes of CAFA is determined by state law”). We wrote,
“Although CAFA does not define the term ‘commenced,’ we
have held that an action commences for purposes of CAFA
when a suit becomes ‘a cognizable legal action in state court’
under ‘[a] state’s own laws and rules of procedure.’ ” 2007
WL 725717, at *2 (quoting Bush, 425 F.3d at 686).
We looked to California state law in Preciado. We noted
that California courts have employed the relation back doc-
trine for only two purposes — for the purpose of applying the
statute of limitations, and for the purpose of applying timeli-
ness rules for serving process. Preciado, 2007 WL 725717, at
*2-3. So far as we were able to determine, the relation back
doctrine has never been used in California for the purpose of
determining a statute’s effective date. We therefore held that
for the purpose of determining CAFA’s effective date, an
action is commenced under California law when the original
complaint in the action is filed, irrespective of any relation
back analysis. Id. at *2 (citing Cal. Civ. Proc. Code § 350
(West 2006) (“An action is commenced, within the meaning
of this Title, when the complaint is filed.”)).
We take this occasion to provide further explanation of our
holding in Preciado, and to apply it to the Doe defendant
practice in California.
A. Definition of Commence Under State Law
Much of the discussion in federal courts about the defini-
tion of “commence” has involved the operation of Federal
Rule of Civil Procedure 3. Rule 3 provides that “a civil action
is commenced by filing a complaint” with the federal district
3358 MCATEE v. CAPITAL ONE
court. The Supreme Court has looked to the federal definition
of commence in Rule 3 for the purpose of tolling the statute
of limitations in an action based on federal law. West v. Con-
rail, 481 U.S. 35 (1987). However, the Court has looked to
the state law definition of commence for that purpose in an
action based on state law. Walker v. Armco Steel Corp., 446
U.S. 740 (1980). Class actions removable under CAFA are
diversity suits based on state law. Thus, in Bush we were fol-
lowing the lead of the Court in Walker and West v. Conrail
when we held that we must look to the state-law definition of
commence to determine the meaning of that term in CAFA.
See Bush, 425 F.3d at 686.
[2] Because McAtee’s suit was filed in California state
court, we look to California law to determine whether her
action was commenced before the effective date of CAFA.
All of the federal courts of appeals that have so far addressed
the question of when an action is commenced under CAFA
have relied at least in part on state-law relation back doctrine.
Prime Care of Ne. Kan. v. Humana Ins. Co., 447 F.3d 1284,
1289 (10th Cir. 2006) (holding that “the effect of post-CAFA
amendments should be a function of whether they relate back
to the pre-CAFA filing”); Plubell v. Merck & Co., 434 F.3d
1070, 1071 (8th Cir. 2006) (stating that when complaint was
amended to replace class representative “[t]he issue becomes
whether the amendment relates back or is instead a new
action”); Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755, 757
(7th Cir. 2006) (holding that amending a complaint to add
new claims commenced new litigation for purposes of CAFA
and employing relation back principles); see also Braud v.
Trans. Serv. Co., 445 F.3d 801, 806 (5th Cir. 2006) (noting
that “the same result” that addition of a new defendant com-
mences an action under CAFA would be reached if “the rela-
tion back test were used”). A number of district courts,
however, have not done so. See Lowery v. Honeywell Intern.,
Inc., 460 F. Supp. 2d 1288, 1292 (N.D. Ala. 2006); Comes v.
Microsoft Corp., 403 F. Supp. 2d 897, 903 (S.D. Iowa 2005);
Weekley v. Guidant Corp., 392 F. Supp. 2d 1066, 1067-68
MCATEE v. CAPITAL ONE 3359
(E.D. Ark. 2005); In re Expedia Hotel Taxes and Fees Litiga-
tion, 377 F. Supp. 2d 904, 906 (W.D. Wash. 2005). In Pre-
ciado, we declined to follow the courts of appeals that have
applied the relation back doctrine. Instead, we simply applied
the definition of commence used in Section 350 of the Cali-
fornia Civil Procedure Code, which provides that an action is
“commenced” when the complaint is filed. Preciado, 2007
WL 725717, at *2.
Following Preciado’s approach to the definition of com-
mencement comports with the purpose of both the relation
back doctrine and CAFA. When the ultimate question before
the court is whether to dismiss an action for lack of timeli-
ness, it makes sense to apply the relation back doctrine, for in
such cases the very survival of the action is at issue. If the
action is dismissed, the defendant is forever free from suit by
that plaintiff on the claims in that action. The relation back
doctrine is formulated slightly differently from one jurisdic-
tion to another, but the common premise of all the formula-
tions is that, when the stakes involve the survival of the
action, a defendant should not be ambushed by a late-filed or
late-served action. Thus, for example, an amendment to the
complaint that is filed or served after the running of the stat-
ute of limitations will be allowed to relate back to the date of
the original complaint only when the defendant would not be
unfairly surprised. See, e.g., Fed. R. Civ. P. 15(c).
By contrast to a case in which the statute of limitations is
at issue, the stakes are lower when the question is whether a
case is covered by CAFA. The case will be allowed to go for-
ward, in some forum, whether CAFA applies or not. If CAFA
applies, the action may go forward in federal court if a defen-
dant files a timely motion for removal. If CAFA does not
apply, the action must go forward in state court unless there
is some other basis for removal to federal court.
We recognize, of course, that the parties often have prefer-
ences — sometimes quite strong preferences — as to forum.
3360 MCATEE v. CAPITAL ONE
Indeed in enacting CAFA, Congress expanded the availability
of the federal forum to accommodate concerns of class action
defendants. See Pub. L. No. 109-2, § 1, 119 Stat. 4, 5 (codi-
fied at 28 U.S.C. § 1711). But even after CAFA’s enactment,
Erie-related doctrines ensure that, for the most part, removal
of a CAFA case from state to federal court produces a change
of courtrooms and procedure rather than a change of substan-
tive law. The only change of substantive law effected by
CAFA is a limitation of coupon-based settlements, see Pub.
L. No. 109-2, § 3, 119 Stat. 4, 6 (codified at 28 U.S.C.
§ 1712), but we do not think that this one substantive change
materially changes our analysis of the relative stakes between
statute of limitations and CAFA cases.
[3] Because of the difference in stakes in statute of limita-
tions and CAFA cases, the considerations that have gone into
the formulation of the relation back doctrine have relatively
little bearing on whether CAFA should apply to a class action
filed in state court. In a CAFA case, we need be less con-
cerned about avoiding unfair surprise of a defendant, and
more concerned about having a clear and easy-to-follow rule.
We therefore held in Preciado that, in the absence of any
clear indication in state law to the contrary, relation back doc-
trine should not be imported into the determination of when
an action is commenced in state court for purposes of CAFA.
2007 WL 725717, at *3. Instead, at least in California, we
simply look to the date on which the original complaint in the
action was filed. Id.
B. Application to Doe Defendant Cases
Our prior decisions in Bush and Preciado make this case
easy. Bush tells us that commencement of an action for pur-
poses of CAFA is determined under the law of the state in
which the action is filed. 425 F.3d at 686. Preciado tells us
that an action filed in California state court is commenced for
purposes of CAFA when a complaint is filed, irrespective of
any later amendment of that complaint. 2007 WL 725717, at
MCATEE v. CAPITAL ONE 3361
*2-3. See also Rezendes v. Dow Corning Corp., 717 F. Supp.
1435, 1437 (E.D.Cal. 1989) (stating that it is “undisputed”
that the California action “commenced” when it was filed in
state court), abrogated on other grounds by Ritchey v. Upjohn
Drug Co., 139 F.3d 1313, 1317 (9th Cir. 1998); Coman v.
Int’l Playtex, Inc., 713 F. Supp. 1324, 1328 (N.D. Cal. 1989)
(“California law clearly defines the time an action is com-
menced as the time when it is filed.”).
Capital One Bank contends, despite our opinion in Pre-
ciado, that a new action is commenced for the purpose of the
effective date of CAFA by adding a new defendant. It cites,
for example, Jackson v. Lacy, 100 P.2d 313, 317 (1940), in
which the California Court of Appeal wrote, “As against [the
newly added defendant] this action was not commenced until
January 13, 1937, when for the first time [this defendant] was
made a party by the filing of plaintiff’s second amended com-
plaint.” According to Capital One Bank, the only effect of
Preciado is that the relation back doctrine does not apply to
the new defendant. Thus, according to Capital One Bank, an
amended complaint adding a new defendant commences a
new action as to that defendant, even if the defendant is suffi-
ciently related to the allegations in the original complaint that
California’s relation back doctrine would deprive that defen-
dant of a statute of limitations defense to the new complaint.
[4] We do not read Preciado to require such a counter-
intuitive result. Rather, we read it to hold, quite simply, that
a California state court action is commenced for the purpose
of the effective date of CAFA when the original complaint is
filed. 2007 WL 725717, at *2. Any amendment of that com-
plaint — whether to add new causes of action, to add or
replace plaintiffs, or to add or replace defendants — does not
change that commencement date. In the case before us, the
original complaint in this action was filed on August 13,
2004, by Susanne Ball. That is the date of the commencement
of the action for the purpose of the effective date of CAFA.
3362 MCATEE v. CAPITAL ONE
Conclusion
[5] Because this action was commenced before its effective
date, CAFA and its removal provisions do not apply. Specifi-
cally, CAFA’s provision amending 28 U.S.C. § 1447(d) to
allow appellate review of a district court’s remand order does
not apply. Pub. L. No. 109-2, § 5, 119 Stat. 4, 12 (codified at
28 U.S.C. § 1453(c)). In its unamended form applicable to
this appeal, § 1447(d) provides that we have no jurisdiction to
review a district court’s remand order. We therefore dismiss
Capital One Bank’s appeal for want of jurisdiction.
DISMISSED.