Friday, July 14, 2006

Fifth Circuit Holds that CAFA “Primary Defendant” Exception Requires that All Primary Defendant Be States

Per Frazier v. Pioneer Americas LLC, --- F.3d ----, 2006 WL 1843629 (5th Cir. July 06, 2006):
Section 1332(d)(5)(A) excepts from CAFA jurisdiction “any class action in which ··· the primary defendants are States, State officials, or other governmental entities [‘states'] against whom the district court may be foreclosed from ordering relief.” Plaintiffs urge that remand is proper here because DEQ [Louisiana Department of Environmental Quality], a primary defendant, is undisputedly a state entity. Defendants respond that this exception requires that all primary defendants be states, and Pioneer is a primary defendant.

Defendants' reading is correct. The plain text of § 1332(d)(5)(A), using the definite article before the plural nouns, requires that all primary defendants be states. Had Congress desired the opposite, it would have used “a” and the singular, or no article. There is no tension between this plain language and the legislative history, which explains that the exception is not meant to create a loophole whereby plaintiffs can avoid CAFA jurisdiction by naming a state as a primary defendant in an action largely targeting non-states.

We must also reject plaintiffs' suggestion that this result violates the Eleventh Amendment and the principles of state sovereign immunity. Because CAFA eliminated the requirement of unanimity of consent to removal, a state may find itself in a case removed to federal court without having joined in the removal. Such a state, having taken no affirmative act, has not waived immunity and can still assert it. Also contrary to plaintiffs' suggestion, the simple act of assuming jurisdiction over a case with a state defendant does not step on its sovereign immunity. A federal court may ignore sovereign immunity until the state asserts it. CAFA, like other statutes, provides jurisdiction over cases in which states may, if they choose, be defendants, thus respecting state dignity interests.

It is true that, absent possible waiver of immunity by DEQ, the federal courts might be “foreclosed from ordering relief” because Louisiana has waived its immunity in state, but not federal, court. Yet that is the price of sovereign immunity, and in any event § 1332(d)(5)(A) is clear--all primary defendants must be states.


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