Amicus Curiae Brief — Home Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 51 (2018) (No. 17-1471)

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No. 17-1471

IN THE

Supreme Court of the United States

HOME Deport U.S. A., INC.,

Petitioner,

GEORGE W. JACKSON,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

BRIEF OF AMICUS CURIAE

AMERICAN ASSOCIATION FOR JUSTICE

ELISE SANGUINETTI

President

JEFFREY WHITE

Senior Associate General

Counsel

AMERICAN ASSOCIATION

FOR JUSTICE

777 6th Street, NW #200

Washington, DC 20001

Counsel for

Amicus Curiae

SMOGER & ASSOCIATES

13250 Branch View Lane

Dallas, TX 75234

(972) 243-5297

gerson@texasinjurylaw com

David M. Arbogast

ARBOGAST LAW

933 WOODLAND AVENUE

SAN CARLOS, CA 94070

(650) 587-3006

david@arbogastlaw com

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..................ccsscrcceeeeeees v

INTEREST OF AMICUS CURIAE ......................... l

SUMMARY OF ARGUMENT. 2

——————pñ̃ ¼——pp—————j—ĩ—j—j—çjr—:᷑]m 4

|. ASSUMING ARGUENDO THAT HOME

DEPOT IS CORRECT IN ITS ANALYSIS,

HOME DEPOT WOULD STILL NOT BE

ABLE TO REMOVE THIS CASE TO

FEDERAL COURT; AS SUCH, ANY

DECISION BY THIS COURT WOULD AT

44 SO 4

A. Home Depot, Even as a “Defendant,” Would

Not Have Been Entitled to Remove this

Action Under the Law as it Existed Before

the Enactment of CAT...... 6

B. Even if Home Depot is Considered To Be a

“Defendant,” CAFA Would Still Not Provide

Home Depot With an Alternate Basis for

EE ELE ETS oh RO 7

C. Ultimately It Will Be Proven That this Court

Does Not Have Jurisdiction to Hear this

Case and Any Opinion Will Accordingly

e iiscninnearcinenernpannintinees 9

II.

CONTRARY TO THE PROTESTATIONS OF

HOME DEPOT AND ITS AMICI, ALL

PUBLIC POLICY ARGUMENTS WEIGH IN

FAVOR OF THIS CASE PROCEEDING IN

NORTH CAROLINA STATE COURT......... 10

A. Home Depot and Its Amici Recite Rote

Descriptions About Class Actions Absent

Case or Documentary Support, Ignoring

That this is the Prototypical Class Action

That Congress, When Enacting CAFA,

Intended Would Remain in State Court..... 10

In Contrast to the Protestations of Amici

Chamber, When Congress Passed CAFA, It

Expressly Did Not Show a Desire to Enhance

the Coverage of MDL Jurisdiction.............. 13

. The State Courts Are Necessary Courts of

General Jurisdiction and the Much Smaller

Federal Court System Is Limited in Its

, cs SS eR 15

Amicus DRI Is Categorically Wrong in Its

Characterization of State Judges as Being

Biased Due to Their Elections Being

Dominated by Contributions from the

EEE ET SAR SI cE 17

ill

III. ITS TEXT AND HISTORY MAKE IT CLEAR

THAT CONGRESS NEVER MEANT TO

INCLUDE “THIRD-PARTY

COUNTERCLAIM DEFENDANTS” WHEN

IT GRANTED REMOVAL RIGHTS TO

J.... — 19

A. Congress Intended to Grant Removal Rights

IV.

Only to Traditional Defendants.................. 19

. This Court’s Long-Established Tradition to

Strictly Construe Removal Under § 1441

Was Not Changed By CAFA and § 1453 in

Order to Extend Removal Rights to Third-

Party Counterclaim Defendants. ................ 23

Home Depot Cannot Use Congress’ Silence

on Its Idiosyncratic Interpretation of

“Defendant” To Support That Unique

D “3 27

IF THIS COURT CONCLUDES THAT

“THIRD-PARTY COUNTERCLAIM

DEFENDANTS” MAY REMOVE ACTIONS

TO FEDERAL COURT, INSTEAD OF

LIMITING GAMESMANSHIP, IT WILL

USHER IN A NEW ERA OF A VASTLY

ENLARGED FEDERAL DOCKPT............. 29

A. Home Depot’s Concerns Are Grossly

Overblown; There Have Been Relatively Few

Third-party Counterclaim Class Actions in

the Thirteen Years Since CAFA Became

—r L —ͤ— —k2 29

B. If This Court Rules As Home Depot Wishes,

the Much Greater Risk Will Be That Some

Defendants Will Attempt to Game the

System In Order to Gain Their Preferred

ie . 32

C. History Shows That Certain Defendants

Have Used Such Loopholes to Gain Their

Preferred Federal Jurisdiction. .................. 35

CONCLUSION .................4. ä — — — 36

TABLE OF AUTHORITIES

Cases

Alexander v. Sandoval,

Bender v. Williamsport Area School Dist.,

Cannon v. Univ. of Chi.,

Cent. Bank of Denver, N. A. v. First Interstate

Bank of Denver, N.A., 511 U.S. 164 (1994).....

Cent. Virginia Cmty. Coll. v. Katz,

e —Rm n

Chi., Rock Island, & Pac. Ry. Co. v. Martin,

Chisom v. Roemer,

City of Ann Arbor Emps. Ret. Sys. b. Gecht,

No. C-06-7453 EMC, 2007 WL 760568

Croy u. Buckeye Int'l, Inc.,

483 F. Supp. 402 (D. Md. 1979).......................

Dart Cherokee Basin Operating Co. v. Owens,

135 S.Ct. 547, 554-55 (20 14) 26, 30, 31

Dauenhauer v. Superior Court,

149 Cal. App. 2d 22 (3rd Dist. 1987) 32

Doran v. Salem Inn, Inc.,

EEE 18

Epic Sys. Corp. v. Lewis,

r 27

Exxon Mobil Corp. v. Allapattah Servs. Inc.,

SS 20

First Bank v. DJL Props., LLC,

598 F.3d 915 (7th Cir. 2010)... . 31

Foster v. Chatman,

, 10

Garcia v. San Antonio Metro. Transit Auth.

r ̃ 222... ecensowoonenee 15

Grupo Dataflux v. Atlas Global Grp., L.P.,

, a 9

Harvey u. Shelter Ins. Co, Civ. A. No. 13-392,

2013 WL 1768658 (E. D. La. Apr. 24, 2013) 35

Holloway v. Gamble-Skogmo, Inc.,

274 F. Supp. 321 N. D. III. 1967 )) 34

Hyde v. Carder,

310 F. Supp. 1340 (W. D. Ky. 1970 34

In re Morig. Elec. Registration Sys., Inc.,

680 F.3d 849 (6th Cir. 2012) 31

Keene Corp. v. U.S.,

/ een 28

King v. Burwell,

e are ree oe 23

Kokkenen v. Guardian Life Ins. Co. of Am.,

e .. 21

Lewis v. Lewis & Clark Marine, Inc.,

r eminent 18

Marshall u. Vauco, Inc.,

152 F. Supp. 50 (S. D. Tex. 1957) 34

Monessen Sw. Ry. Co. v. Morgan,

I 27

Morris v. Marshall Cty. Bd. of Educ.,

560 F. Supp. 43 N. D. W. Va. 1983) 33

Muskrat v. United States,

I 10

NLRB v. Jones and Laughlin Steel Co.,

, ̃ ... 15

Palisades Collections LLC v. Shorts,

552 F.3d 327 (4th Cir. 2008) 30, 31

Palsgraf v. Long Island R.R. Co.,

163 N.E. S (N.Y. 1 16

Phillips Constr., LLC v. Daniels Law Firm, PLLC,

93 F. Supp. 3d 544 (S. D. W. Va. 2015) 35

Poznanovich v. AstraZeneca Pharm. LP,

Civ. A. No. 11-4001 (JAP), 2011 WL 6180026

r 35

Progressive West Ins. Co. v. Preciado,

479 F.3d 1014 (9th Cir. 2007) 30

Robinson v. Shell Oil Co.,

e ER eS 21

San Remo Hotel, L. P. v. City and Cnty. of S. V.,

e ee EP . 18

Schoneweather v. L. V. Richardson, Inc.,

122 F. Supp. 692 (W. D. Mo. 1954) 34

Shamrock Oil & Gas Corp. v. Sheets,

SRN . passim

Share v. Sears, Roebuck & Co.,

550 F. Supp. 1107 (E.D. Pa. 1982) ..................... 33

Sullivan v. Novartis Pharm. Corp.,

575 F. Supp. 2d 640 (D.N.J. 2008) 36

Tri-State Water Treatment, Inc. v. Bauer,

845 F.3d 350 (7th Cir. 2017) ——— 31

Tuyagda Aluminum Prods. Corp. v. Hull Dobbs

65th Infantry Ford, Inc.,

313 F. Supp. 774 (D.P.R 1970) 34

United Founders Life Ins. Co. of Ill. v.

Blackhawk Holding Corp.,

341 F. Supp. 483 (E. D. Wis. 1972 33

United States v. Corrick et ul.,

. ——. 10

United States v. Heirs of Boisdoré,

49 U.S. (8 How.) 113 (1850) 21

Verschell v. Fireman’s Fund Ins. Co.,

257 F. Supp. 153 (S.D.N.Y. 1966)....................... 33

Vimar Seguros y Reaseguros, S.A. v.

M/V Sky Reefer, 515 U.S. 528 (1999) 27

White v. Baltic Conveyor Co.,

209 F. Supp. 716 O. N. J. 1962) .......................... 34

Will v. Michigan Dep't of State Police,

400 24

Wisconsin Cent. Lid. v. United States,

0 22

Statutes

. ..— passim

1 — 13, 14

1 passim

1 6, 23, 24

ü 8 23

1 — 3, 23, 26

Other Authorities

Act of 1789, ch. 20, § 12, 1 Stat. 73 (1845) 20

Act of Mar. 3, 1887, ch. 373, § 2,

en 19

Alicia Bannon et al.,

Who Pays for Judicial Races?, 7 (2017) ............. 18

Blacks Law Dictionary (10th ed. 2014)................ 21

Buzzfile, Caroline Water Systems Inc. Business

Description, http://www.buzzfile.com/

business/Rainsoft-Water-Treatment-

ie 5

The Class Action Fairness Act of 2005,

S. Rep. No. 109-14 (200 5))))))))))) 11, 13

Corporate Office Headquarters,

The Home Depot, Inc., http://www.corporate-

office-headquarters.com/the-home-depot-inc....... 5

1 22

Followthemoney. org, Courting Donors: Money in

Judicial Elections, 2011 and 2012,

https://www.followthemoney.org/research/institut

e-reports/courting-donors-money-in-judicial-

elections-201 1-and-2012#item_1........................ 17

The Home Depot, Store Finder,

https://www.homedepot.com/I/ search / north%20

carolina /full/?lat=35.760336605333244&Ing=-

79.22108 101843261 &radius=100....................... 12

Judiciary Act of 1875, ch. 137,

Tee 19

Andrew F. Popper, On ‘he Necessity of Preserving

Access to State Courts and Civil Justice:

xii

Rediscovering Federalism & Debunking

“Fraudulent” Joinder,

44 Rutgers L. Rec. 160 (2017) 16

Wiley E. Rice, “Allegedly “Biased,” “Intimidating,”

and “Incompetent” State Court Judges and the

Questionable Removal of State Law Class Actions

to Purportedly “Impartial” and “Competent”

Federal Courts -- A Historical Analysis of Class

Action Dispositions in Federal and State Courts,

1925-2011, 3 Wm. & Mary Bus. L. Rev. 419

“ee ES 11, 16

Joanna Shepherd, Justice At Risk An Empirical

Analysis Of Campaign Contributions And

Judicial Decisions, American Constitution

Society for Law and Policy (June 2013 17

Jed Handelsman Shugerman,

The People’s Courts: Pursuing Judicial

Independence in America (2012) 16

INTEREST OF AMICUS CURIAE!

The American Association for Justice (“AAJ”) is

a national voluntary bar association founded in 1946

to safeguard the right of all Americans to seek legal

recourse for wrongful injury, strengthen the civil-

justice system, and protect access to the courts. AAJ

is the world’s largest trial bar association, with

members in the United States, Canada, and abroad.

Throughout its 70-year history, AAJ has served as a

leading advocate of the right to access to the courts

for legal redress for wrongful injury.

This case is of acute interest to AAJ, because

the redefinition of the basic term “defendant,” as

Petitioner proposes, rejects this Court’s careful

jurisprudence and invites a host of unintended

consequences, including unwarranted expansion of

federal court jurisdiction over state-law causes of

action, diminution of state courts’ important role in

developing and defining state law, and undermining

the historic right of plaintiffs to proceed in the forum

of their choice.

' Pursuant to Rule 37.6, amicus affirms that no counsel for any

party authored this brief in whole or in part and no person or

entity, other than amicus, its members, or its counsel has made

a monetary contribution to its preparation or submission.

Petitioner and Respondent have consented to the filing of this

brief.

SUMMARY OF ARGUMENT

Assuming arguendo that Petitioner Home

Depot U.S. A., Inc. (“Home Depot”) is correct in its

analysis and it should be construed to be a

“defendant” under the removal statutes, Home

Depot would still not be able to remove this case to

federal court. First, Home Depot, even as a

“defendant,” would not be entitled to remove this

action under the law as it existed before the

enactment of the Class Action Fairness Act Of 2005

(“CAFA”), because it would not be able to get the

agreement of all “defendants” to that removal.

Secondly, the CAFA amendments do not provide

Home Depot the right to remove, because Home

Depot cannot survive the “local controversy”

exception to CAFA federal court jurisdiction. As a

result, it will ultimately be proven that this Court

does not have jurisdiction to hear this case and any

opinion will accordingly be merely advisory.

While Petitioner and its amici make various

claims about the public policy behind the enactment

of CAFA, none of them makes even a passing

attempt to relate those policy considerations to the

actual facts of the case before this Court. In fact, all

public policy arguments weigh in favor of this case

proceeding in North Carolina state court, as the

facts of this case make it the prototypical type of

class action Congress expressly intended should

remain in state court. Nor, as is argued by the Brief

of the Retail Litigation Center, Inc. and the

Chamber of Commerce of the United States of

America (“Chamber”), did Congress feel that the

absence of CAFA might affect MDL jurisdiction;

indeed, in the body of CAFA, Congress actually

included a limitation upon the jurisdiction of MDLs.

Further, the Brief of Defense Research Institute

(“DRI”) is categorically wrong when without any

evidence it argues that state court judges are biased

due to their elections being dominated by

contributions from the plaintiff bar when the reality

is, if anything, the opposite. The bottom line is that

state courts are absolutely necessary courts of

general jurisdiction in the federal scheme and the

denigration of those courts by Home Depot and its

amici is unwarranted.

The text and history of 28 U.S.C. §§ 1441 and

1453 make it clear that Congress never meant to

confer upon “third-party counterclaim defendants”

the removal rights it granted to “defendants” that

were sued by the plaintiff. This Court's long

established tradition to strictly construe removal

under § 1441 should not be changed, and it was not

changed by CAFA and § 1453 in order to extend

removal rights to third-party counterclaim

defendants. Shamrock Oil & Gas Corp. v. Sheets,

313 U.S. 100 (1941) has been correctly viewed as

limiting removal rights to only defendants sued by

the plaintiff and there is no reason to change that

interpretation now.

Home Depot’s concerns over a great loophole

opening the floodgates to federal jurisdiction are

grossly overblown, as there have been relatively few

third-party counterclaim class actions in the

thirteen years since CAFA became law. However, if

this Court concludes that third-party counterclaim

defendants may be construed to be “defendants”

under the removal statutes and afforded the same

rights to remove proper state court actions as

defendants sued by the plaintiff(s), instead of

limiting gamesmanship, it will likely usher in a new

era of a vastly enlarged federal court civil docket.

History shows that certain defendants have abused

textual loopholes to gain federal jurisdiction when

preferred, and nothing in contemporary

jurisprudence indicates they won't do it again.

ARGUMENT

I. ASSUMING ARGUENDO THAT HOME

DEPOT IS CORRECT IN ITS ANALYSIS,

HOME DEPOT WOULD STILL NOT BE

ABLE TO REMOVE THIS CASE TO

FEDERAL COURT; AS SUCH, ANY

DECISION BY THIS COURT WOULD AT

BEST BE ADVISORY.

Home Depot does not dispute that the removal

statutes vest the right of removal exclusively in a

“defendant” who has been sued by a plaintiff in a

civil action brought in state court. Instead, the

consistent thrust of Home Depot’s argument is that

it should also be regarded as a “defendant” and,

therefore, enjoy all of the removal rights accorded to

the defendants sued by the plaintiff. Thus, under

Home Depot's proposed formulation there would

actually be three defendants in this action that could

seek removal rights under the removal statutes: Mr.

Jackson, an individual residing in North Carolina

and the defendant sued by the plaintiff; Home

Depot, a Georgia-based, publicly traded company

and third-party counterclaim defendant, Pet. for a

Writ of Certiorari at ii;? and Carolina Water

Systems, Inc. (“CWS”), a North Carolina-based

third-party counterclaim defendant, Respondent's

Brief (“RB”) 58 (citing Dist. Ct. Dkt. No. 24, at 16-

17).5 Yet, even if Home Depot is correct, Home Depot

would still not be entitled to remove this action.

See also Corporate Office Headquarters, The Home Depot,

Inc, http://www.corporate-office-headquarters.com/the-home-

depot-inc (last visited December 13, 2018).

® Publicly available information describes CWS as follows:

“Business Description Carolina Water Systems, which also

operates under the name Rainsoft Water Treatment, is located

in Charlotte, North Carolina. This organization primarily

operates in the Water Purification Equipment business /

organization has been operating for approximately 21 years.

Carolina Water Systems is estimated to generate $4.2 million

in annual revenues, and employs approximately 29 people at

this single location.” Buzzfile, Carolina Water Systems Inc.

Business Description, http://www.buzzfile.com/business/

Rainsoft-Water-Treatment-704-921-1950 (last visited

December 13, 2018).

A. Home Depot, Even as a “Defendant,”

Would Not Have Been Entitled to

Remove this Action Under the Law

as it Existed Before the Enactment

of CAFA.

Before CAFA was enacted, the only avenue for

removal of this action by Home Depot would have

been under the diversity provisions of 28 U.S.C.

§ 1332(d). However, such removal would not have

been possible, because when § 1441(a) provides the

sole basis for removal, “all defendants who have

been properly joined and served must join in or

consent to the removal of the action.” 28 U.S.C.

§ 1446(b)(2)(A). Indisputably, Mr. Jackson, who has

been properly joined and served, has not consented

to removal. Therefore, even if this Court construed

Home Depot to have been a defendant pursuant to

§ 1441(a), Home Depot could not remove this action

to federal court. The plain text of the removal

statutes requires Mr. Jacksons consent and Home

Depot has never had that.

While there can be no question that Mr.

Jackson is a defendant as defined by § 1441(a), even

if Mr. Jackson were somehow considered a

“plaintiff,”* Home Depot still could not remove based

‘ This Court has already determined that Mr. Jackson, having

not initiated the original proceeding, may not be considered a

“plaintiff” Even in the more liberal context of CAFA, in

Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161,

169-170 (2014) this Court held that when Congress used the

upon the traditional diversity statutes. An action

“may not be removed if any of the parties in interest

properly joined and served as defendants is a citizen

of the State in which such action is brought,”

§ 1441(b)(2), and Defendant CWS is a citizen of

North Carolina. Further, pursuant to § 1332(a), no

diversity jurisdiction e ts over cases in which any

plaintiff is a citizen of the same state as any

defendant, and here both Mr. Jackson and CWS are

North Carolina citizens.

B. Even if Home Depot is Considered

To Be a “Defendant,” CAFA Would

Still Not Provide Home Depot With

an Alternate Basis for Successful

Removal.

Post-CAFA § 1332(d)(4) specifically exempts

local controversies, such as this, from federal court

jurisdiction. Section 1332(d)(4) provides that that

there is no federal court jurisdiction under CAFA

when four criteria are met: (1) “greater than two-

thirds of the members of all proposed plaintiff

classes are citizens of the State in which the

action was originally filed”; (2) “at least” one

defendant “from whom significant relief is sought”

and “whose alleged conduct forms a significant basis

for the claims” is “a citizen of the State in which the

action was originally filed”; (3) “principal injuries

resulting from the alleged conduct or any related

word “plaintiffs,” it intended the term to have its ordinary

meaning as used in the Federal Rules of Civil Procedure.

conduct of each defendant were incurred in the State

in which the action was originally filed”; and (4)

“during the 3-year period preceding the filing of that

class action, no other class action has been filed

asserting the same or similar factual allegations

against any of the defendants on behalf of the same

or other persons.” § 1332(d)(4).

Before the courts below, Mr. Jackson properly

raised the local controversy exception. RB 57-59.

The facts as summarized below lead inexorably to

the conclusion that there is no federal court

jurisdiction even if Home Depot is considered a

“defendant” for purposes of its ability to remove this

action under the CAFA amendments.

The class at issue includes all people who

purchased water-treatment systems from Home

Depot and CWS, with class members residing almost

entirely within the state of North Carolina. Joint

Appendix (“JA”) 62. Home Depot’s own records show

that out of 286 purchasers, 259 have North Carolina

addresses. Dist. Ct. Dkt. No. 42-1, at 5-15. Thus,

approximately ninety percent of the proposed

class—greater than the two-thirds required—are

citizens of North Carolina. /d. Third-party

counterclaim defendant CWS is a citizen of North

Carolina, meaning that “at least” one defendant

“from whom significant relief is sought” and “whose

alleged conduct forms a significant basis for the

claims” is an in-state defendant. The class definition

shows that the principal injuries of the alleged

North Carolina water-treatment scheme occurred in

North Carolina. Dist. Ct. Dkt. No. 24, at 18-19.

Finally, the record reveals that no other class action

asserting similar factual allegations against Home

Depot or CWS was filed in the three years preceding

Mr. Jackson's counterclaims. Id. at 19. Given this,

CAFA does not provide federal court jurisdiction to

Home Depot even if it is considered to be a

“defendant” trying to remove.

C. Ultimately It Will Be Proven That

this Court Does Not Have

Jurisdiction to Hear this Case and

Any Opinion Will Accordingly Be

Merely Advisory.

This Court made clear in Grupo Dataflux v.

Atlas Global Grp., L.P. that by “whatever route a

case arrives in federal court, it is the obligation of

both district court and counsel to be alert to

jurisdictional requirements.” 541 U.S. 567, 593

(2004) (citing Bender v. Williamsport Area School

Dist., 475 U.S. 534, 541 (1986), which states that

“every federal appellate court has a ‘special

obligation to satisfy itself not only of its own

jurisdiction, but also that of the lower courts in a

cause under review, even though the parties are

prepared to concede it” (quoting Mitchell v. Maurer,

293 U.S. 237, 244 (1934)).

Here, the bottom line is that despite the

questions accepted for review by this Court, as has

been shown above, federal courts do not have the

underlying jurisdiction to hear this case. When a

lower district court lacks jurisdiction, this Court's

only jurisdiction on appeal is “not of the merits, but

merely for the purpose of correcting the error of the

lower court in entertaining the suit.” United States

v. Corrick et al., 298 U.S. 435, 440 (1936) (footnotes

omitted). See also Foster u. Chatman, 136 S.Ct. 1737,

1763 (2016) (Thomas, J., dissenting) (warning that

proceeding further without establishing the Court’s

jurisdiction will lead to “an impermissible advisory

opinion.”). Such an impermissible advisory opinion

would be the ultimate fate of any decision this Court

renders here. Simply put, Congress did not confer

jurisdiction on Article III federal courts to render

— opinions. See Muskrat v. United States, 219

U.S. 346, 354-56 (1911).

II. CONTRARY TO THE PROTESTATIONS

OF HOME DEPOT AND ITS AMICI, ALL

PUBLIC POLICY ARGUMENTS WEIGH

IN FAVOR OF THIS CASE PROCEEDING

IN NORTH CAROLINA STATE COURT.

A. Home Depot and Its Amici Recite

Rote Descriptions About Class

Actions Absent Case or

Documentary Support, Ignoring

That this is the Prototypical Class

Action That Congress, When

Enacting CAFA, Intended Would

Remain in State Court.

Home Depot's amici resuscitate a time-worn

parade of supposed horrible conduct perpetrated by

class counsel and the class actions they bring. Many

of their citations and references regarding the

problematic nature of class actions come from The

Class Action Fairness Act of 2005, S. Rep. No. 109

14 (2005) (‘Senate Report”). See Chamber 18-19,

Brief of Washington Legal Foundation and Allied

Educational Foundation (““WLF”) 30, DRI 5, 9-10.

These descriptions by their very nature are at best

descriptive of a pre-CAFA world. However, in this

post-CAFA world, Chamber goes to great lengths to

explain that CAFA was a huge success and has

worked quite well. Chamber 3, 5, 13, 20.5

It is to the detriment of this ostensibly

massively-improved post-CAFA federal court world

that Home Depot and its amici argue plaintiffs have

discovered a “giant loophole” which could bring down

the efficient CAFA edifice. Petitioner's Brief (“PB”)

42. The result would do serious harm to CAFA’s

overriding purpose — the critical need for federal

jurisdiction of interstate cases of national

importance. See, e.g., Chamber 20, DRI 7, WLF 13.

gut for a contrary view, see Wiley K. Rice, Allegedly “Biased,”

“Intimidating,” and “Incompetent” State Court Judges and the

Questionable Removal of State Law Class Actions to

Purportedly “Impartial” and “Competent” Federal Courts -- A

Historical Analysis of Class Action Dispositions in Federal and

State Courts, 1925-2011, 3 Wm. & Mary Bus. L. Rev. 419, 559-

60, 568 (April 2012) (“[t}he research and empirical findings in

this Article strongly suggest: (1) CAFA’s highly questionable

removal and jurisdictional rules evolved from untruths or just

plain fabrications, and (2) the new rules undermine the

principles of judicial federalism.”). In this extensive study,

Professor Rice analyzed and coded 2,657 federal and state

Yet, neither Home Depot nor its amici ever

make even a passing attempt to relate the actual

facts at issue before this Court to their doom and

gloom scenario. The reason is obvious. This case is

not what has been defined as an interstate case nor

can it conceivably be considered a case of national

rather than North Carolina importance. The alleged

fraudulent scheme in question was perpetrated

within the state of North Carolina to almost entirely

North Carolina residents and has been brought

pursuant to North Carolina law, including

allegations of violation of the rather unique North

Carolina Referral Sales Statute (N.C. Gen. Stat. §

25A-37.). The defendant that Home Depot was

allegedly in cahoots with is based in North Carolina.

And from purely a public policy perspective, even

Home Depot can hardly be considered the type of

disadvantaged “out of state” resident the framers

sought to protect. See PB 25, WLF 23. Home Depot

has 39 locations within the state of North Carolina.®

® On its website, Home Depot lists the following North Carolina

locations: Apex; Asheville; Battleground; Burlington; Cary;

Cornelius; Durham; E. Charlotte; E. Greensboro; Fayetteville;

Fuquay Varina; Garner, Gastonia; Greensboro,

Hendersonville; Hickory; High Point; Hillsborough;

Jacksonville; Kannapolis; Kitty Hawk; Knightdale; Matthews,

Myrtle Grove; North Durham; Northwest Raleigh; Pineville; S.

Boulevard Charlotte; Shallotte; South Charlotte; Statesville;

Steele Creek; University; W. Asheville; Wake Forest;

Wendover, Wilmington; and Winston Salem (2). See The Home

Depot, Store Finder, https://)www.homedepot.com/\/search/

north% 20carolina/full/7lat=35. 760336605333244&Ing=79.22

108101843261 &radius=100 (last visited December 13, 2018).

Instead, this case is a prototype of the type of

case Congress concluded should remain in state

court even after CAFA was enacted. At page 41 of

the Senate Report, an example of a class action

brought against a Florida funeral home is described

as one that “would remain in state court” even after

CAFA. In the example, just as here, “about 90

percent” of the class members are residents of the

state where the action is brought. Similar to the

third-party crossclaim defendants here, the example

describes one in-state resident defendant along with

an out-of-state defendant. And just as here, no other

class action has been filed regarding the issues of

concern. As a result, the Senate Report concludes:

“This is precisely the type of case for which the Local

Controversy Exception was developed the

controversy is at its core a local one, and the Florida

state court where it was brought has a strong

interest in resolving the dispute.” /d.

B. In Contrast to the Protestations of

Amici Chamber, When Congress

Passed CAFA, It Expressly Did Not

Show a Desire to Enhance the

Coverage of MDL Jurisdiction.

In 1968, Congress created the multidistrict

litigation device and, to administer it, the United

States Judicial Panel on Multidistrict Litigation

(“MDL Panel”). See 28 U.S. C. § 1407. Amici

Chamber argue without explanation that the failure

of this case to proceed in federal court will somehow

undermine the entire MDL system. Chamber 8-11.

How this would happen is unclear. There is no MDL

referenced that the within action might be a part of

nor is there an explanation as to how a consumer

fraud action for North Carolina residents against a

North Carolina company for conduct committed

almost entirely in North Carolina would become

part of an MDL. Moreover, there is certainly no

attempt to demonstrate that a federal court would

handle this matter more efficiently than a North

Carolina state court, particularly when most of the

issues are peculiar to North Carolina law.

Furthermore, the actual text of 28 U.S.C.

§ 1407 demonstrates that Congress did not view the

MDL procedure as a panacea for all similar claims

as those claims removed pursuant to CAFA. In fact,

subsections § 1332(d)(11)(C) and (D), enacted as a

part of CAFA, state that when a mass action is

removed to a federal court under CAFA’s new

provisions, it may not be transferred to another

federal court under the MDL statute (§ 1407) unless

a majority of the plaintiffs request such a transfer.

This is hardly the ringing endorsement of the MDL

process proffered in Chamber's brief, but rather a

Congressional expression of keeping local matters

local.

C. The State Courts Are Necessary

Courts of General Jurisdiction and

the Much Smaller Federal Court

System ls Limited in Its

Jurisdiction.

Home Depot and its amici spend much time

denigrating the state court system. PB 43-45,

Chamber 16-17, DRI 7-15, 19-21. They ignore the

fact that from the founding of our Republic, the

expectation has been that the state courts would be

the primary forum for the protection of rights and

interests of citizens and that the power of the federal

courts and Congress itself would be carefully

confined or limited. Indeed, from 1789 through to

the present, the 10th Amendment has made it

explicit that the states are to play a vital role in

protecting the interests of citizens. [Thel Tenth

Amendment was adopted specifically to ensure that

the important role promised the States by the

proponents of the Constitution was realized.” Garcia

v. San Antonio Metro. Transit Auth., 469 U.S. 528,

568 (1985) (Powell, J., dissenting).

As a result, this Court has long recognized the

hazard of undue assertion of federal power. [The

scope of this [federal] power must be considered in

the light of our dual system of government, and may

not be extended so as to . . . effectually obliterate the

distinction between what is national and what is

local and create a completely centralized

government.” NLRB v. Jones and Laughlin Steel

Co., 301 U.S. 1, 37 (1937).

This deference is necessary not only

constitutionally but administratively. The vast

majority of litigation in the United States takes

place in state courts. As of 2012, there were 94

federal district courts as against approximately

2,177 state trial courts of general jurisdiction with

approximately 10,387 state judges trying cases. See

Rice, supra footnote 5, at 559-60.

State court cases touch on every aspect of

modern life and every imaginable type of dispute,

including many that have their origin in federal law.

Indeed, the development of tort law and its guiding

principles are indebted to legal issues first resolved

by state courts. Just one example is the seminal

decision by Justice Benjamin Cardozo in Palsgraf v.

Long Island R.R. Co., 162 N.E. 99 (N.Y. 1928). Tort

law students are trained in the decisions of

California Justices Malcolm Lucas and Roger

Traynor.

“History and precedent affirm the virtue of

state courts to protect citizens, evolve new

standards, and achieve just and fair resolution of

claims.” Andrew F. Popper, On The Necessity of

Preserving Access tc State Courts and Civil Justice:

Rediscovering Federalism & Debunking

“Fraudulent” Joinder, 44 Rutgers L. Rec. 160, 170

(2017) (citing Jed Handelsman Shugerman, The

People’s Courts: Pursuing Judicial Independence in

America (2012), which states “Margaret Marshall,

the recently retired chief justice of the

Massachusetts Supreme Judicial Court said “From

the people’s point of view, justice in America is

delivered first and foremost through the state

courts|.|”)). Home Depot and its amici’s general

denigration of the state court system is, to say the

least, unfortunate.

D. Amicus DRI Is Categorically

Wrong in Its Characterization of

State Judges as Being Biased Due

to Their Elections Being

Dominated by Contributions from

the Plaintiffs’ Bar.

Without any evidentiary support, DRI claims

state court bias due to the fact that “state-court trial

judges’ electoral campaigns routinely receive

substantial financial support from the plaintiffs’

bar.” DRI 7. However, the empirical evidence shows

the exact opposite. For instance, during 2011 and

2012, the Ohio Republican Party was the highest

donor nationally, followed by large defense firms,

many of which are presumably members of DRI. See

Followthemoney.org, Courting Donors: Money in

Judicial Elections, 2011 and 2012, https://www.

followthemoney.org/research/institute-reports/court

ing-donors-money-in-judicial-elections-201 1-and-

2012#item_1.

In fact, a 2013 study shows that business

interests, not plaintiff lawyers, dominate judicial

election financing and that the votes of justices are

influenced by these contributions. See Joanna

Shepherd, Justice At Risk An Empirical Analysis

Of Campaign Contributions And Judicial Decisions,

American Constitution Society for Law and Policy

(June 2013), available at https://www.acslaw.org/

wp-content/uploads/old-uploads/originals/document

s/JusticeAtRisk_Nov2013.pdf.

More recently, a report by The Brennan Center

noted that “[o]ne of the most striking aspects of the

2015-16 cycle was the sharp rise in outside spending

most of it non-transparent — by political action

committees, ‘social welfare organizations’

incorporated under 501(c)(4) of the Internal Revenue

Code, and other non-party groups, mirroring the

trends in regular political races, both state and

federal.” Alicia Bannon et al., Who Pays for Judicial

Races?, 7 (2017), available at https://www.brennan

center.org/sites/default/files/publications/Politics of

Judicial Elections Final. pdf.

Thus, DRl's naked suggestion that state courts

are impermissibly biased because they “receive

substantial financial support from the plaintiffs’

bar” should be flatly rejected as entirely without

support. While state courts certainly have a strong

interest in providing a forum for their citizens, this

does not suggest a bias or lack of fairness. Rather, it

suggests the proper role of state courts, which has

been repeatedly acknowledged by this Court. See

San Remo Hotel, L.P. v. City and Cnty. of S. V., 545

U.S. 323, 347 (2005); Lewis v. Lewis & Clark Marine,

Inc., 531 U.S. 438, 449 (2001); Doran v. Salem Inn,

Inc., 422 U.S. 922, 930 (1975).

III. ITS TEXT AND HISTORY MAKE IT

CLEAR THAT CONGRESS NEVER

MEANT TO INCLUDE “THIRD-PARTY

COUNTERCLAIM DEFENDANTS” WHEN

IT GRANTED REMOVAL RIGHTS TO

“DEFENDANTS.”

A. Congress Intended to Grant

Removal Rights Only to Traditional

Defendants.

In 1875, Congress “greatly liberalized” removal

practice by allowing “either party” to remove a case

to federal court. See Judiciary Act of 1875, ch. 137,

18 Stat. 470, 471 (1875) (permitting removal in a

case “wholly between citizens of different States, and

which can be fully determined as between them,” by

“either one or more of the plaintiffs or defendants

actually interested in such controversy”). Within

twelve years, Congress recoiled from the vast

expansion of the federal docket and replaced the

“either party” language of the 1875 Act with “the

defendant or defendants therein” language that

eventually made its way into the 28 U.S.C. § 71

(1940) that was considered by this Court in the

seminal case of Shamrock Oil & Gas Corp. v. Sheets,

313 U.S. 100 (1941). See Act of Mar. 3, 1887, ch. 373,

§ 2, 24 Stat. 552, 553 (1887).

In 1911, with some alterations in language, this

statute became § 28 of the Judicial Code (Act of Mar.

3, 1911, ch. 231, 36 Stat. 1087, 1094-1095 (1911)

(codified at 28 U.S.C. § 71 (1940)), and in 1948, with

additional alterations, it migrated to § 1441 (Act of

June 25, 1948, ch. 646, Pub. L. No. 80-773, 62 Stat.

869, 937-938 (1949)). Today, § 1441(a) governs

removal in the absence of another, more specific

removal provision.

In Shamrock Oil, this Court unequivocally held

that in interpreting the removal statute, the phrase

“the defendants or defendants therein” means what

it says and provides only that the defendant(s) sued

by the plaintiff(s) in a case have the right to remove.

313 U.S. at 104-109. This Court’s reasoning focused

on the history and language of the various iterations

of the removal statute. Id. at 105-108. In particular,

the first removal statute, § 12 of the Judiciary Act of

1789, allowed only “the defendant” to remove a case.

See Act of 1789, ch. 20, § 12, 1 Stat. 73, 79 (1845); see

also Shamrock Oil, 313 U.S. at 105-106. This Court

further found that the specificity of the word

“defendant” standing alone is clear, which to this

day has not changed and should govern this Court's

answer to the question presented regarding

Shamrock Oil: Shamrock Oil’s removal bar does

“extend to third-party counterclaim defendants,”

because they have never been considered to be

“defendants” to an action brought by a plaintiff as

that word was used at the time the language in

question was first drafted through to today.

This Court has long mandated that

jurisdictional statutes, particularly removal

statutes, must be textually limited. See Exxon Mobil

Corp. b. Allapattah Servs. Inc., 545 U.S. 546, 558

(2005) (stating that wle must not give

jurisdictional statutes a more expansive

interpretation than their text warrants.”); Kokkenen

v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377

(1994).

The starting point of any textual analysis of a

statute is the plain language of the statute and here

that language only uses the word “defendant” rather

than the word “defendant” with some preceding

descriptive language, such as “third-party,” “cross-,”

or “third-party counterclaim.” “The plainness or

ambiguity of statutory language is determined by

reference to the language itself, the specific context

in which the language is used, and the broader

context of the statute as a whole.” Robinson v. Shell

Oil Co., 519 U.S. 337, 341 (1997); see also United

States v. Heirs of Boisdoré, 49 U.S. (8 How.) 113

(1850). Here, the word “defendant,” standing on its

own, has long commonly meant a party sued by a

plaintiff.

This is because textually a “third-party

defendant” is “[a] party brought into a lawsuit by the

original defendant.” Black’s Law Dictionary (10th

ed. 2014) (emphasis added). Here, of course, Home

Depot is one of the third-party counterclaim

defendants brought into the action in state court by

Mr. Jackson and would never commonly be referred

to as the “defendant.” Home Depot's reliance on an

idiosyncratic revamping of the meaning of the word

“defendant” is unavailing against the more specific

generally used term “third-party defendant” that in

common parlance describes its status. See, e.g., Fed.

R. Civ. Pro. 14 (Third Party Practice) (which would

be rendered meaningless if Rule 14 was made

applicable to all or “any defendants”). Moreover,

Home Depot and its amici “supply no persuasive

proof that Congress sought to invoke their

idiosyncratic definition” of the word “defendant”

when enacting the removal statutes. See Wisconsin

Cent. Lid. v. United States, 138 S.Ct. 2067, 2072-73

(2018) (‘while the term ‘money’ sometimes might be

used in this much more expansive sense, that isn't

how the term was ordinarily used at the time of the

Act’s adoption (or is even today).”).

Moreover, this Court in Shamrock Oil bolstered

its interpretation of § 71 with a policy argument: the

desirability of “strict construction” of “acts of

Congress regulating the jurisdiction of the federal

courts.” 313 U.S. at 108. “Due regard for the rightful

independence of state governments,” this Court

noted, requires the federal courts to “scrupulously

confine their own jurisdiction to the precise limits

which the statute has defined.” Id. at 109 (quoting

Healy v. Ratta, 292 U.S. 263, 270 (1934) (internal

quotation marks omitted)). It did not and could not

have meant to expand that jurisdiction by allowing

third-party counterclaim defendants removal rights.

For more than 200 years, with only a short break,

removal textually has been limited to those

“defendants” sued by the plaintiff. Defendant, as a

term standing alone, means the party sued by the

plaintiff. This is consistent with this Court’s recent

guidance that ſilf the statutory language is plain,

the Court must enforce it according to its terms.”

King v. Burwell, 135 S.Ct. 2480, 2483 (2015).

Removal Under § 1441 Was Not

Changed By CAFA and § 1453 in

Order to Extend Removal Rights

to Third-Party Counterclaim

Defendants.

This Court's long-established tradition to

narrowly construe removal under § 1441 as

expressed in Shamrock Oil should be followed unless

it was specifically prohibited by the clear meaning of

the textual provisions of § 1453. It was not.

With the passage of CAF A, Congress expressed

its intention to expand removal in discrete ways by

amending various sections of 28 U.S.C. §§ 1332,

1446, and 1447. Importantly, CAFA did not

completely rewrite or replace the removal statute

§ 1441 in its entirety. Rather, removal under CAF A,

codified as § 1453, is an entirely separate procedural!

statute that adds discrete, specific, changes, none of

which changed or altered § 1441 removal in a way

that would permit a third-party counterclaim

defendant to remove an action to federal court.

Indeed, a careful, textual, examination of § 1453

reveals that it clearly does not confer removal

authority to third-party counterclaim defendants.

Here, the last clause of § 1453(b) provides that

certain actions “may be removed by any defendant

without the consent of all defendants.” Home Depot

has glommed onto the word “any” in order to provide

a reading to this phrase that is not described in the

Senate History nor any other similar statute.

Clearly, when read in its context, the use of the word

“any” only alters this Court's rule requiring the

unanimous consent of all defendants in cases not

subject to CAFA.’ See, e.g., Chi., Rock Island, & Pac.

Ry. Co. v. Martin, 178 U.S. 245, 247-48 (1900)

(stating that because the removal statute “is

confined to the defendant or defendants, it was well

settled that a removal could not be effected unless

all the parties on the same side of the controversy

united in the petition”). CAFA does not, as Home

Depot and its amici argue, expand the removal

statute, § 1441, to include removal rights for third-

party counterclaim defendants.

This Court’s canon is to follow ordinary usage

of a term, such as “defendant,” unless Congress

specifically provides a specified or technical

meaning. See Will v. Michigan Dep't of State Police,

491 U.S. 58, 64 (1989). Here, Congress did not

provide a specified or technical meaning to the word

“defendant” when it is used in the phrase “any

defendant.” Thus, regardless of the use of the

adjective “any,” there is absolutely no reason to

' Notably, the unanimous consent requirement of

§ 1446(b)(2)(A) has not been extended to third-party

counterclaim defendants when a defendant has sought removal

pursuant to § 1441(a).

believe that Congress meant to change the meaning

of the word “defendant.” Certainly, Congress cannot

ressonably be believed to have meant that the use of

the word “defendant” in “any defendant” would

mean something different from the same word

“defendant” it had been using in the phrase “a

defendant or defendants” for more than 100 years

nor that such a novel definition of the word

“defendant” would be readily apparent to those

reading the new statute.

If Congress had desired to alter the

understanding of such an enduring term as

“defendant” to suddenly include “third-party

counterclaim defendants,” it would not have done so

subtly and silently. To the contrary, it can be

presumed that a prior legal rule should be retained

if no one in legislative deliberations even mentioned

the rule or discussed any changes in the rule. See

Chisom v. Roemer, 501 U.S. 380, 396 & n.23 (1991).

This is described as the “dog didn’t bark” canon,

which is particularly relevant here, because

Congress never even mentioned, much less

discussed, providing removal rights to a third-party

counterclaim defendant, such as Home Depot, or

enlarging the ambit of the word “defendant” to

include third-party counterclaim defendants.

Under both §§ 1441(a) and 1453(b), the text of

these statutes simply does not permit a third-party

counterclaim defendant to remove a case to federal

court. Congress is presumed to know the legal

landscape against which it legislates. Applying the

long-standing, well-established rules and canons of

statutory interpretation, if Congress wants to

overturn a precedent, it can do so expressly. As to

third-party counterclaim defendants, such as Home

Depot, Congress was meaningfully silent. There can

only be one conclusion. The plain text of §§ 1441 and

1453 do not permit a third-party counterclaim

defendant to remove a case to federal court. This

should end the inquiry.

Finally, while this Court in Dart Cherokee

Basin Operating Co. v. Owens, 135 S. Ct. 547, 554-55

(2014) has interpreted CAFA, and in particular,

§ 1453, to be read broadly, that does not mean § 1441

should now be read beyond the words Congress

chose to include in the statute. When there is

nothing in the text of CAFA or in the Congressional!

record that even suggests that Congress intended

§ 1441 to be read broadly, there is no textual or

historical basis to change this Court’s Shamrock Oil

decision and now read § 1441 in favor of removal by

a separately described entity, a third-party

counterclaim defendant. Moreover, as is discussed

below, to do so would be to broadly expand federal!

jurisdiction, which the Constitution, Congress, and

this Court have consistently limited.

C. Home Depot Cannot Use

Congress’ Silence on Its

Idiosyncratic Interpretation of

“Defendant” To Support That

Unique Interpretation.

In order to support its idiosyncratic

reinterpretation of the word “defendant, Home

Depot and its amici (WLF 21-22) seek to persuade

this Court to assume a lack of Congressional

awareness of judicial precedents on existing

statutory schemes. But Cannon v. Univ. of Chi., 441

U.S. 677, 696-98 (1979) clearly stands for the

proposition that Congress is presumed to know the

existing laws and their interpretation when it drafts

new legislation. See also Monessen Sw. Ry. Co. v.

Morgan, 486 U.S. 330, 338 (1988); Vimar Seguros y

Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,

554 (1995); Cent. Virginia Cmty. Coll. v. Katz, 546

U.S. 356, 362 n.3 (2006). Additionally, this Court has

held that “Congress will specifically address

preexisting law when it wishes to suspend its

normal operations in a later statute. [Citation.|.”

Epic Sys. Corp. b. Lewis, 138 S. Ct. 1612, 1624 (2018).

There can be little question that long before

CAFA was adopted the word “defendant” was

consistently interpreted to mean only the party sued

by the plaintiff(s) and not “third-party counterclaim

defendants.” Where there is a “settled judicial

construction,” this Court has applied the

“presumption that Congress was aware of these

earlier judicial interpretations and, in effect,

adopted them.” Keene Corp. v. U.S., 508 U.S. 200,

212 (1993) (citing Lorillard v. Pons, 434 U.S. 575,

580 (1978)). Even the authority cited at WLF 21-22,

Cent. Bank of Denver, N.A. v. First Interstate Bank

of Denver, N.A., states, “[w|hen Congress reenacts

statutory language that has been given a consistent

judicial construction, we often adhere to that

construction in interpreting the reenacted statutory

language.” 511 U.S. 164, 185 (1994).

WLFs separate reliance on Alexander ov.

Sandoval is misplaced, as it is in conflict with Home

Depot's statement throughout its briefing of the

extensive and lengthy study Congress undertook in

adopting CAFA. See PB passim; see also Chamber

14. It certainly is not true about CAFA that

“Congress [did] not comprehensively revise] a

statutory scheme but has made only isolated

amendments” that would call into question its

approval of the court’s interpretations. Alexander v.

Sandoval, 532 U.S. 275, 292 (2001). As is discussed

by amici Chamber, CAF A resulted from a “grinding

eight-year effort” and “required an exceedingly rare

level of persistence and, ultimately, bipartisan

cooperation.” Chamber 14. Under these

circumstances, it is ludicrous to think that Congress

was not aware of prior precedents when CAFA was

enacted.

IV. IF THIS COURT CONCLUDES THAT

“THIRD-PARTY COUNTERCLAIM

DEFENDANTS” MAY REMOVE ACTIONS

TO FEDERAL COURT, INSTEAD OF

LIMITING GAMESMANSHIP, IT WILL

USHER IN A NEW ERA OF A VASTLY

ENLARGED FEDERAL DOCKET.

A. Home Depot’s Concerns Are Grossly

Overblown; There Have Been

Relatively Few Third-party

Counterclaim Class Actions in the

Thirteen Years Since CAFA Became

Law.

Home Depot argues that upholding the Fourth

Circuit’s reading of CAFA as consistent with all

prior removal statutes would somehow result in a

dystopian world of class-action litigation where

plaintiffs’ attorneys would devote their time to

combing over dockets for “a debt collection

proceeding or other minor state-court litigation to

use as a vehicle for asserting an interstate class-

action claim against an entity that is not even a

party to the state-court action.” PB 43.

Then, without evidentiary support of any

pattern or practice on the part of the Plaintiffs’ bar,

Home Depot alleges that the uniform decisions of the

Fourth, Sixth, Seventh, and Ninth Circuits “provide

a roadmap for circumventing” what it asserts is the

clear purpose of CAFA to “combat the observed

biases against out-of-state defendants.” /d.

In support of its position, Home Depot cites to

articles fretting about a perceived risk without

identifying any actual tsunami of state court class

actions resulting from the appellate cases they point

to as allegedly opening up the floodgates.* The

reality is that there have been remarkably few cases

that have needed to address this issue, much less

enough to necessitate asking this Court to wade into

an area where there is no split of authority among

the Circuits and the appellate court decisions are

remarkably consistent. The paucity of cases falling

into the category of third-party counterclaim class

actions over the thirteen years since CAFA was

enacted is striking. All of two circuit courts ruled on

this issue prior to this Court’s decision in Dart

Cherokee. See Progressive West Ins. Co. v. Preciado,

479 F.3d 1014, 1017 (9th Cir. 2007); Palisades

Collections LLC v. Shorts, 552 F.3d 327, 332-33 (4th

Cir. 2008).° And just two more circuit courts have

For instance, Home Depot cites as authority a “legal opinion

letter” from Dan Himmelfarb disparaging the Fourth Circuit's

holding in Palisades without disclosing that Mr. Himmelfarb

represented the appellants in that case. PB 42-43. His views,

far from being scholarly insight, were an extension of his

advocacy in that case. Dan Himmelfarb, Fourth Circuit Ruling

Permits Broad Circumvention of Class Action Fairness Act,

Legal Opinion Letter (Wash. Legal Found.), Apr. 10, 2009, at

Home Depot's position at PB 10 that Dart Cherokee somehow

overruled Palisades and ita progeny by holding that there is no

“antiremoval presumption” under CAFA is incorrect because it

misstates the basis for the Fourth Circuit's decision. Dart

Cherokee, 135 S. Ct. at 554. Palisades certainly recognized that

ruled after this Court's decision in Dart Cherokee,

with both rulings being consistent with the first two

circuits. See Tri-State Water Treatment, Inc. v.

Bauer, 845 F.3d 350, 356 (7th Cir. 2017); In re Mortg.

lec. Registration Sys., Inc., 680 F.3d 849, 854 (6th

Cir. 2012) “(MERS’); First Bank v. DJL Props., LLC,

598 F.3d 915, 916-17 (7th Cir. 2010). Equally

remarkable is the extremely small number of

counterclaim class actions Home Depot and its amici

have been able to cite to which have not generated

circuit court decisions. See PB 39, Chamber 13, PLC

8, and DRI 18.

Absent evidentiary support or any pattern of

abuse, Home Depot's floodgate fears are nothing

more than a lament that it is “stuck litigating a large

class action in a state court of someone else’s

choosing” — as if its business decision to partner in

a predatory scheme to defraud North Carolina

consumers was not a choice. PB 45.

There is simply nothing in the cases Home

Depot and its amici point to as creating a roadmap

to defeat CAFA actually operating that way.

Instead, there is remarkable consistency among the

circuits in the way CAFA was intended to apply.

“Congress clearly wished to expand federal jurisdiction

through CAFA.” Palisades, 552 F3d. at 336.

B. If This Court Rules

As Home Depot Wishes, the Much

Greater Risk Will Be That Some

Defendants Will Attempt to Game the

System In Order to Gain Their

Preferred Jurisdiction.

On the facts of this case, Home Depot is arguing

that when the word “defendant” is used in the

removal statutes, it must be read to mean that third-

party counterclaim defendants are among those

permitted to remove a case to federal court. If this

Court agrees, instead of closing what Home "epot

and its amici describe as a “loophole,” it is much

more likely that the door will be left wide open for

defendants to game the system and remove state-

based cases of all types to federal court.

Well before CAFA was enacted, defendants

attempted this gamesmanship. In Dauenhauer v.

Superior Court, after plaintiff filed his complaint, a

defendant filed a cross-complaint against Utah

Home Fire Insurance Company. 149 Cal.App.2d 22,

24 (3rd Dist. 1957). Utah Home Fire Insurance

Company, joined as an out-of-state cross-defendant,

removed the case. Id. It was subsequently and

correctly remanded. Id. However, if such a third-

party counterclaim removal is now sanctioned, any

in-state tort defendant could implead its out-of-state

insurance company to gain a federal venue.

The reality is that there would be no shortage

of cases involving out-of-state’ third-party

counterclaim defendants that could provide in-state

defendants with a means to escape from state courts

they do not like. See, e.g., United Founders Life Ins.

Co. of Ill. v. Blackhawk Holding Corp., 341 F. Supp.

483 (E.D. Wis. 1972) (finding in the absence of

diversity of citizenship between a plaintiff and one

or more defendants, crossclaim involving defendants

among whom there was diversity cannot provide a

basis for removal); Verschell v. Fireman’s Fund Ins.

(o., 257 F. Supp. 153 (S. D. N. V. 1966) (holding that

fire insurer was not entitled to remove to federal

court action against it that was brought by insured’s

assignee); Morris b. Marshall Cty. Bd. of Educ., 560

F. Supp. 43 (N.D.W. Va. 1983).

While it is now rather settled law that third-

party counterclaim defendants cannot initiate

removal proceedings, other early cases in which such

removal was attempted highlight the ability

defendants would have if this Court accepts Home

Depot's argument. Gaming of the system could occur

particularly in product liability cases. In Share v.

Sears, Roebuck & Co., 550 F. Supp. 1107 (E. D. Pa.

1982), the plaintiff brought suit against Sears for

injuries he received operating a lawn mower

purchased at the department store. Sears, in turn,

filed a third-party complaint against the lawn

mower manufacturer, seeking indemnification for

any damages. The manufacturer removed the case

on the basis of diversity. The court found that a

third-party defendant is not a “defendant” within

the meaning of the removal statute and, therefore,

the manufacturer did not have standing to remove

the case. Id. at 1108-09. Similarly, in Hyde v.

Carder, 310 F. Supp. 1340 (W.D. Ky. 1970), the

defendant beverage distributor filed a third-party

action for indemnification after it was sued for

damages when the plaintiff was injured by an

exploding bottle. Other similar liability cases would

readily end up removed to federal court. See, e. g.

Holloway u. Gamble-Skogmo, Inc., 274 F. Supp. 321,

323-24 (N. D. III. 1967) (involving a defective tire);

White v. Baltic Conveyor Co., 209 F. Supp. 716

(D. N. J. 1962) (involving defective installation of a

conveyor belt); Marshall u. Navco, Inc., 152 F. Supp.

50, 54 (S.D. Tex. 1957) (involving worker injuries);

Schoneweather v. L. V. Richardson, Inc., 122 F.

Supp. 692, 693 (W.D. Mo. 1954) (involving injuries

from the negligent installation of a heating unit).

Such potential for removal would extend to

cases outside of the tort realm. A lawsuit against a

car dealer for rescission and damages would have

been removed after the dealer filed a third-party

complaint against the manufacturer. See, e.g.,

Tuyagda Aluminum Prods. Corp. v. Hull Dobbs 65th

Infantry Ford, Inc., 313 F. Supp. 774 (D.P.R 1970).

Allowing defendants to game the system for even the

most basic of contract disputes would overrun the

federal courts.

One case shows the absurd results that Home

Depot's interpretation could bring about. In Croy v.

Buckeye Int l, Inc., 482 F. Supp. 402 (D. Md. 1979),

it was a fourth-party defendant that sought removal.

The court held that a fourth-party defendant is not

a “defendant” under the removal statute.

Conceivably, if this well-crafted limitation is lifted

from third-party counterclaim defendants, every

hyphenated defendant down the chain, no matter

how removed from the original claim, could remove

the action. Federal courts would be overwhelmed.

C. History Shows That Certain

Defendants Have Used Such

Loopholes to Gain Their Preferred

Federal Jurisdiction.

In fact, a number of defendants have already

been gaming removal jurisdiction through the

artifice of checking filings and removing cases before

they have been “properly joined and served,” thereby

gaming the language of § 1441(b)(2). See Phillips

Constr., LLC v. Daniels Law Firm, PLLC, 93 F.

Supp. 3d 544, 554 n.2 (S.D.W. Va. 2015). See also

Harvey v. Shelter Ins. Co, Civ. A. No. 13-392, 2013

WL 1768658, *2 (E.D. La. Apr. 24, 2013). Che

plain language of the statute must prevail over the

plaintiffs policy arguments to the contrary. The

statutory forum defendant rule simply does not

support plaintiffs position.”); City of Ann Arbor

Emps. Ret. Sys. v. Gecht, No. C-06-7453 EMC, 2007

WL 760568, *8-10 (N.D. Cal. Mar. 9, 2007) (holding

that the court was “constrained by the plain

language of § 1441(b)” but also stating that

plaintiffs argument that the resident defendant

engaged in gamesmanship “is not without merit-

indeed, has a great deal of appeal”); Poznanovich v.

AstraZeneca Pharm. LP, Civ. A. No. 11-4001 (JAP),

2011 WL 6180026, *3 (D. N. J. Dec. 12, 2011) (courts

following the plain meaning approach “acknowledge

in some way ‘the colorable policy arguments that it

is unjust that a properly joined defendant could

monitor state court dockets and remove cases prior

to being served, and that it makes little sense to

provide a federal forum to an in-state defendant

upon removal of a diversity case, [but] these

decisions found sucl. arguments to be insufficient to

overcome the requirement that a court give meaning

to the plain language of the statute.”).

No doubt, “Congress could not possibly have

anticipated the tremendous loophole that would one

day manifest from technology enabling forum

defendants to circumvent the forum defendant rule

by, inter alia, electronically monitoring state court

dockets.” Sullivan v. Novartis Pharm. Corp., 575 F.

Supp. 2d 640, 645 (D.N.J. 2008). Yet, this loophole

would be de minimus when compared to the

floodgates that would open up if third-party

counterclaim defendants receive removal rights.

CONCLUSION

For the foregoing reasons, AAJ urges this Court

to affirm the judgment of the Fourth Circuit Court

of Appeals.

Respectfully submitted,