Fifth Circuit holds New Action Commences with New Defendant Under CAFA

Per Braud v. Transp. Serv. Co. of Ill., --- F.3d ----, 2006 WL 880051 (5th Cir. Apr. 6, 2006):

A distinct issue, however, is whether an amendment of the complaint through the addition of a new defendant “commences” a new suit for purposes of CAFA. . . .

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We agree with the Seventh Circuit that amendments that add a defendant “commence” the civil action as to the added party. We reach this conclusion based on two considerations, of which only the latter has been discussed by that court.

First, the district court's remark that “there's no specific language in the CAFA legislation itself ··· that would support that position that if a new party was added [post-CAFA to a pre-CAFA case then] CAFA would apply” misses the mark. Precisely because CAFA does not define “commencement” of an action, it is obvious that CAFA is not intended to replace caselaw deciding when a lawsuit is considered “commenced” as to a new defendant.

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Second, we agree with the Knudsen I court that the addition of a new defendant “opens a new window of removal” under 1446(b). Section 1446(b) indicates that a case that was previously non-removable can become removable when a new party is added. As explained in Wright, Miller & Cooper, supra, § 3732 at 311-48, § 1446(b) “supplements the thirty-day removal period described in the first paragraph of the provision,” which covers only the period for effecting removal to federal court following the “receipt or filing” of the initial pleading.

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. . . Therefore, as to the new defendant, removability is determined as of the date of receipt of service of the amended complaint, not as of the date on which the original suit was filed in state court.

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. . . [A] new defendant can remove even if the plaintiff decided to add it more than one year after the initial suit. Therefore, there is no indication that the time when the initial suit was filed has any relevance as to when an action “commences” under CAFA for an amendment adding a new defendant. Rather, the correct approach is that used in Adams, Martinez, and Miller, which, because of concerns regarding notice and limitations, looked at commencement as to a new defendant as of the date of service of the amended pleading (or receipt of that pleading under 1446(b)).

Thus, although “an amendment of the complaint will not revive the period for removal if a state court case previously was removable but the defendant failed to exercise his right to do so,” a different result generally is reached if the pleading amendment provides (1) a “new basis for removal” or (2) “changes the character of the litigation so as to make it substantially a new suit.” 14C Wright, Miller & Cooper, supra, § 3732 at 311-48.