Home Depot U. S. A., Inc. v. Jackson
139 S.Ct. 1743, 2019 U.S. LEXIS 3558, 204 L. Ed. 2d 34 (2019)
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Rule of Law:
The term 'defendant' in the general removal statute, 28 U.S.C. § 1441(a), and the Class Action Fairness Act (CAFA), 28 U.S.C. § 1453(b), refers only to the original defendant sued by the plaintiff and does not include third parties brought into the litigation as defendants to a counterclaim.
Facts:
- In June 2016, Citibank, N.A., sued George Jackson in North Carolina state court to collect a debt for charges Jackson incurred on a Home Depot credit card.
- In August 2016, Jackson answered and filed an individual counterclaim against Citibank.
- Jackson also filed third-party class-action claims against Home Depot U.S.A., Inc., and Carolina Water Systems, Inc.
- Jackson's claims against Home Depot and Carolina Water Systems alleged an unlawful scheme to induce homeowners to purchase water treatment systems at inflated prices in violation of North Carolina law.
- Jackson asserted that Citibank was jointly and severally liable for the conduct of the other two companies.
- In September 2016, Citibank dismissed its original debt-collection claims against Jackson.
Procedural Posture:
- Citibank, N.A. sued George Jackson in North Carolina state court (a court of first instance).
- In response, Jackson filed counterclaims against Citibank and third-party class-action claims against Home Depot U.S.A., Inc.
- Home Depot, a third-party defendant, filed a notice of removal to the U.S. District Court for the Middle District of North Carolina (a federal trial court).
- Jackson moved to remand the case back to state court.
- The District Court granted Jackson's motion to remand.
- Home Depot (appellant) appealed the remand order to the U.S. Court of Appeals for the Fourth Circuit (an intermediate appellate court), which affirmed the District Court's decision in favor of Jackson (appellee).
- The U.S. Supreme Court granted Home Depot's petition for a writ of certiorari.
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Issue:
Does the term 'defendant' in the general removal statute, 28 U.S.C. § 1441(a), or the Class Action Fairness Act's removal provision, 28 U.S.C. § 1453(b), include a third-party counterclaim defendant, thereby allowing that party to remove a case to federal court?
Opinions:
Majority - Justice Thomas
No, the term 'defendant' in either § 1441(a) or § 1453(b) refers only to the party sued by the original plaintiff and does not encompass a third-party counterclaim defendant. Under § 1441(a), removal is based on the 'civil action' over which the district court has 'original jurisdiction,' which is determined by the plaintiff's complaint, not counterclaims. Therefore, 'the defendant' is the defendant to that complaint. Our precedent in Shamrock Oil, which barred an original plaintiff from removing a counterclaim, supports the conclusion that the identity of 'the defendant' is established by the original complaint and does not change. While CAFA's § 1453(b) uses the term 'any defendant,' this language merely alters specific restrictions on removal, such as the rule requiring all defendants to consent and the bar on in-state defendants removing; it does not expand the fundamental definition of who is a 'defendant' with the power to remove.
Dissenting - Justice Alito
Yes, a third-party counterclaim defendant should be considered a 'defendant' with the power to remove under both statutes. The plain meaning of 'defendant' is simply a person being sued in a civil proceeding, which describes Home Depot's position perfectly. The majority's reading creates an irrational distinction and a tactical loophole that allows plaintiffs to trap class actions in state court by styling them as counterclaims, subverting the entire purpose of CAFA, which was to facilitate the removal of such cases to federal court. CAFA's use of 'any defendant' has an expansive meaning that should include defendants of 'whatever kind.' The majority's reliance on Shamrock Oil and the well-pleaded complaint rule is misplaced, as those precedents concern forum selection by original plaintiffs and jurisdictional questions, not the separate issue of which defending parties can exercise a right to remove.
Analysis:
This decision significantly clarifies and narrows the scope of federal removal jurisdiction, cementing the 'original defendant' rule. It effectively creates a strategic 'loophole' for plaintiffs' attorneys wishing to keep class actions in state courts, which they may perceive as more favorable. By bringing a class action as a third-party counterclaim in response to a minor initial suit, plaintiffs can prevent removal by the deep-pocketed class action defendant. This ruling may frustrate the congressional intent behind CAFA, which was to provide a broad federal forum for interstate class actions, and will likely influence litigation strategy in this area.
