Opposition Brief — First Bank v. DJL Properties, LLC

(1 @ | SEP 27 2010

| OTTIce OF Tihtt CLER

IN THI

Supreme Court of the United States

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITE)

STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

BRIEF IN OPPOSITION FOR

RESPONDENT DJL PROPERTIES, LLC

QUESTION PRESENTED

; the Class Action Fairness A

A). (Pub. L.No.109-2, 119 Stat. 4 (2005)

(CAKs

original plaintiff named as a counterclaim de

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APPENDIX

TABLE OF CITEDAUTHORITIES

CASES

TAT Mobility LLC v. Shorts,

U.S. 129 8.Ut. 2826, I

553 (2009

Chicago Rock Island & Pacific

4

178 U.S. 245, 20 S.Ct. 854,

14 IL..Ed. 1055 (1900)

Haron Mobil Corp. v). Allapati

543 U-S

T

r

|

». 546, 125 S.Ct. 2611

162 Kd.2d 502 (2005)

{ aty O} boca ftato?

} £iOs L1G AA. Selo

1 662 (1998

Reigel U. Me dtronic. inc...

552 U.S. 312, 128 S.Ct. 999

169 L.Ed.2d 892 (2008)

Shamrock Oil & Gas Corp. Vv. Sheet

313 U.S. 100. 61 S.Ct. S68.

85 L.Ed. 1214 (1941)

l/nited States v. Marti

ryt

128 F.3d 1188 (7 Cir. 1997

West v. Aura City,

73 U.S. 139 (1867

’

i<cd

STATUTES AND REGULATIONS

12 U.S.C (sy ,

Z8 U.S. (]

28 U.S. 1254(]

23 U.s.0. 9144]

he eet 144]

28 U.S.A LAt

rs | 14

6 LAA

LEGISLATIVE MATERIAI

JURISDICTION

Respondent, DIL Properties, LLC, re: pectfully

submits that this Supreme Court lacks jurisdiction over

this appeal. Normally 28 U.S.C. §1254(1) provides this

Supreme Court jurisdiction to entertain a petition for a

writ of certiorari; however, this case involves an appeal

of a class action counterclaim remand order. Historically

remand orders are not reviewable per 28 U.S.C

$1447(d) which state

An order remanding a case to the State court

from which it was removed is not reviewable

on appeal or otherwise, except that an order

remanding a case to the State court from

which it was removed pursuant to sectio7

(443 of this title shall be reviewable by appeal

r otherwise. See 28 U.S.C. §1447(d)

: ’ ' ) +>

COUT Ol anpeCdl

CAFA changed this and allowed

review class action remand orders pursuart to 2% |

1453(¢)(1) which provide

CCLION T4LhAis Shall apply LO any rem )]

ease under thi ection, except th

notwithstanding section 1447(d), a court «

appeals may accept an) appeal from an orde}

of a district court granting or denying a mot

to remand a @la ction ee 2 |

145 e

. A

Wn ArA provided a ru O} ppp |

revit emand orders unde} l4d0(' did Lyra

f } nr ! { !

o respectiully suggest

remand orders. Khespondent

that the well pleaded counterclaim fails to demonstrat

any basis for federal jurisdiction that would subject th

remand orders to appeal under §14558(¢)(1)

STATUTORY PROVISIONS INVOLVED

Are If) Ol]

the Petition

relevant

The following statutory provision

this case but omitted from those listed in

S.C. §1447(d). The

fora Writ of Certiorari, 2% |

portion of 28 I C. §1447 is reproduced in tl

Respondent, DJL Properties, LL¢ Append!

STATEMENT OF THE CASE

he ISsSue pre ented in Utni Casi | VT) (>) Live

seventh Circuit Court of Appeals, consistent with th

Ninth Circuit Court of Appeals and Fourth Circuit Court

of Appeals, erred in upholding the near-canonical

/ "heel (.4]

holding of Shamrock Oil & Gas Corp

U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)), that :

cannot rem

counterclaim defendant

federal court. Specifically the issue pri nted }

whether CAFA changed the Shamrock rule so that

litigant that files an action it Late court |: i nlaintil

can remove a counterclaim f1 Cj I L | fed

court

\ Procedural Histor

i Cadse@ ITl OlVve ic] | )

Lilinol state Court to the iL | trict ¢ rt

OT! the Southern D Lrict oO] Lilin Via |

| t bea) Pilg

O9-CCH-506). and a itior reach of contruct bused ur

the commercial muaranter ecuring the loans that are

the subject of the foreclosure lawsuit, ({Ilino went

Judicial Circuit Case No. 09-L-238). Both lawsuits we

directed primarily against Defendant lonat

(,;,utnrie, ind Lisa Guthri and Defendant

(Counterclaim-Plaintiff, DJL Properti LL |

foreclosure case does name additional parties due tot

requirement of Illinois foreclosure lay (On COctober i

2009, Counterclaim-Plaintiff, DJL Properti L 1

(ola Action Countereclal y“ruinst first ban! Dot

Late court Cas hirst Bank removed hoth |

Novembet J, ZU0Y asserting jurisdiction pursual

CAFA, 28 U.S.C. §1453. The District Court in fulfilln

of its duty to « Ire proper jurisdictl ed al

on December ‘7 “004% directing the parts Om} et th

1@ Of Jurisdiction. Both partie Oriel 1 Une

on.) miliary Af "(VT 0) lhoydee (silbert r¢?t iricie*d) 4 ;

QO9-COV-_QO970-.I PC to Late oOurt Ce

\ppendl jug Cap ae

0969-MJR to State Court

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litione! \ppend horst fea J) J / rhve

if 4 hala Y ' }] (1) (p10) (On April ¢ AGBEO,

kirstl k filed a Petit rictenearing mad bt f rit

n bane. The Petition r Rehearing and Kehe my ds

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ppendl rst Bank files rawrifl

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udge Easterbrook did not ignore the inclusion of

rd “any” in §1453(b) but rather considered the

t of its inclusion. Judge Easterbrook wrote that

is inclusive, to be sure, but the word that it

+ " - 21 4% . fA nfan eo ’ } : 4a aed ‘ CO

modifies remains ‘defendant’-which First Bank is not.

r Shamrock Qi.” See Petitioner’s Appendix 4a;

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bank, 502 F.3d at 917. Juage Easterbrook

‘

concluded §1453(b) inserted two references to “any” in

order to address two barriers to removal that CAFA was

dratted to eliminate and noted that an examination of

he (

‘ontext of the two uses of “any” in $1453(b)

} ; ee ne ak ao ce : - ’ We se ee ee, te aoe eae

demonstrates this intention. See Petitioner’s Appendix

rst Bank, 552 E3d at 917

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he first barrier CAFA was intended to bring aown

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fendant Cannot remove an action

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53(b) states that class

dto whether any defendant is a citizen of the State

Monsees eon

See Petitioner's

\ppendix a: Firs Bai a 5d2 Ii3d al G17. Judge

rbrook correctly notes that the context of the first

in §1453(b) Is in relation to the citizenship of the

dant. See Petitioner's Appel! dix 4a; Furst bar

id at 917. This context is ignored by First Bank

he dissent in Palisades. The second “anv” in

+) } > > 7 } + > |

1455(bD) 1s eluded In the toliowing phrase except

at such action may be ren ved DV any de endant

+}, ' tha ’ ant 4 | 1 a la 4 + On PR | CQ (~

LHOUT € OTIS€ f i : Gerencuanits oe 2 N

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lL4oo0(D) his a IS intended to negate the rule ol

nsent all defendants in orde r to allow a lawsuit to

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f Wart 178 U.S. 245, 20 S.Ct. 854, 44

| 055 (1900)). Judge Easterbrook again notes the

context of “any and f

inserted with the specif purpose OT ¢ minati

Martin barrier to removal for elass actio ~

Petitioner's Appendix 4a; first Bank, 552 Fd at 9

Judge Easter lud ) |

two references to “any” in §$1453(b) by writing: “Neit!

instance of the word ‘any’ implies that ‘defendant’

something different in $1441(b) and $1453(b)”. &

Petitioner's Appel! dix 4a: Frrst B 5? BS

denied certiorari in that case, (see ATAT M

v Shorts, aE 129 S.Ct. 2826, 174 L.Ed.2d

(2009)), the Ninth Cireuit Court of Appeals addres:

. . 4 — a ‘ \ } yy ‘ ie ] |

the question of whether CAFA allows for removal by

counterclaim defendant. In Progressive West

Y - } ry 16-3 ‘\1 4 } Ts ’ an rae

Co. u. Pree ado, (4749 K3d 1014), the Ninth Cireut Wa

fy. } ++} ‘ 1 tO > : +>) > . YIP | >> | +4 .

1aceda W1thn an issue Whereln the original plaintill rel

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an action to leaeral court due to the adelenaant [11

> < ,c ‘ »t 1 > +7 smias ) \ 2) °

class action ¢ unterecialm. sere Toa: \ ' \V ¢

Nor can we accept Progr

4 oS ® | ’ R \ n , +

read CARKA liberally aS MAaAKINL a

excepti rt Shan , \ Wi have deelinea

construe CAFA more broadly than its plai

language indicates. S {> ') (")

that Congress 1s aware of the legal context in

which it is legislating.” /d. at 683-84. This

presumption is especially appropriate here,

where “[{t]he legal context in which the 109th

Congress passed CAFA into law features a

longstanding, near-canonical rule” that a state

plaintiff forced to defend on the basis of a

eross-ecomplaint is without authority to

remove. See id. at 684.” See Progressive West

frsuirance. 4A7UY Kk 38d al 1O18.

An examination of the origin and evolution of the

definition of “defendant(s)” in the removal statute

establishes that “defendant” means the original named

defendant(s) and not a plaintiff/eounterclaim-defendant.

This principle of federal jurisdiction was first established

in 1867 when the Supreme Court interpreted the term

“defendant” contained in the first removal statute as

meaning the originai named defendant and not a

plaintiff that subsequently becomes a counterclaim

defendant. See West v. Aura City, 73 U.S. 139, 142 (1867)

(“The right of removal is given only to a defendant who

has not submitted himself to that jurisdiction, not to an

original plaintiff in a state court who, by resorting to

that jurisdiction, has become liable under the state laws

to a ecross-action.”). This principle became further

embedded in the law of removal jurisdiction after

Congress expanded removal jurisdiction to permit either

a plaintiff or detendant to remove when Congress

amended the removal statute substituting the phrase

“either party” for the term “defendant’® and then later

Dd Act of Mr. 3 1875 ch. 137 $2, 18 Stat. 470 IS75) (permitting

removal by “either party, or any one or more to the plaintiffs or

reversed this amendment by substituting the phrase

“defendant or defendants” in the Act of 1887 for the

phrase “either party’*. The phrase “defendant or

defendants” eventually migrated into 28 U.S.C. $71

which was the immediate predecessor of the current

removal statute, 28 U.S.C. 1441(a). See Shamrock Oil,

313 U.S. at 104-05, 61 S.Ct. at 870-71, 85 L.Ed. 1214.

In the Shamrock decision, this Supreme Court

confirmed that the term “defendant(s)” contained in the

removal statute, 28 U.S.C. $71, means exactly what is

says and empowered only the original named

defendant(s) with the right to remove even if a

jurisdictionally sufficient counterclaim is filed. See

Shamrock Oil, 313 U.S. at 106-07, 61 S.Ct. at 871-72, 85 ~

L.Ed. 1214. This Supreme Court found of “controlling

significanee” to the fact that Congress not only Knew it

could expand removal! Jurisdiction to include plaintiffs

by substituting the phrase “either party” for the term

“defendant(s)” in the removal statute, and actually did

so previously in an amendment to the removal statute.

See Shanvrock Oil, 313 U.S. at 106-07, 61 S.Ct. at 871-

72, 85 L.Ed. 1214. The Court reasoned that Congress

chose to authorize removal by only “defendant(s)” and

not counterclaim-defendants because it drafted the term

“defendantis,” into 28 U.S.C. $71 knowing that the

Supreme Court in West had previously construed the

term as excluding a plaintiff/eounterclaim-defendant.

4. Act of Mr. 3 1887 ch. 378 $2. 24 Stat. 552. 558 (1887

5. It is a well established principle of statutory

interpretation that Congress is presumed to know the law and

judicial interpretations of words used in statutes. See Faragher

u. City of Boca Raton, 524 U.S. 775, 792, 118 8.Ct. 2275, 141

L.Ed.2d 662 (1998) (noting the “presumption that Congress

(Cont'd)

l2

See Shamrock Oil, 313 U.S. at 106-07 61 S.Ct. at 87]

72, 85 L.Ed. 1214. This Supreme Court concluded that

‘if Congress intended to reject the construction this

Court had placed” on the term “defendant(s)” in West,

then “we can hardly suppose that it would have failed

to use some appropriate language to express that

intention.” See Shamrock Oil, 313 U.S. at 107, 61 S.Ct.

at 872, 85 L.Ed. 1214. The exact same reasoning applies

in this ease; if Congress wished to allow a counterclaim-

defendant to remove a class action it could have used

appropriate language to express that intention.

To get around the principle that Congress is

presumed to know the state of the law that it seeks to

amend, First Bank makes the argument that the

legislative environment when Congress enacted CAFA

is distinguishable from the legal environment when

Congress previously amended the removal statutes

during the time of West and Shamrock. First Bank

argues that because Congress was expanding federal

jurisdiction when it enacted CAFA, the courts should

assume that this also included adding ceounterelaim-

defendants to the realm of parties eapable of removing

a lawsuit to federal court. As Judge Easterbrook wrote:

By using a word with an established meaning,

Congress produces the established result.

See, e.g., Nken v. Holder, U.S. , 129

(Cont'd)

was aware of [prior] judicial interpretations [of a statute] and,

in effect, adopted them”); and United States v. Martin, 128 F.3d

1188, 1192 (7" Cir. 1997) (in construing amendments to a statute,

a court presumes that Congress was aware of judicial

interpretations of the statute).

S.Ct. 1749, 1759, 173 L.Ed.2d 550 (2009

Whitfield v. United States, 543 U.S. 209, 216,

1258.Ct. 687, 160 L.Ed.2d 611 (2005). See also

oe

+)

Brill v. Countrywide Home Loans, Inc., 42%

Ii3d 446 (7th Cir.2005) (applying this approach

to the 2005 Act). Giving legal words their

standard legal meaning spares judges and

lawyers expensive tours through the

legislative history and avoids the impossible

task of trying to guess what Members of

Congress may have “had in mind” or

“intended” about statutory language. See Hor

vu. Gonzales, 400 F.8d 482, 484-85 (7th

Cir.2005). Doubtless First Bank is right to say

that exempting counterclaims from § 1453

means that the 2005 Act achieves less than it

otherwise would, but “no legislation pursues

its purposes at all costs. Deciding what

competing values will or will not be sacrificed

to the achievement of a particular objective

is the very essence of legislative choice-and it

frustrates rather than effectuates legislative

intent simplistically to assume that whatever

furthers the statute’s primary objective must

be the law.” Rodriguez v. United States, 480

U.S. 522, 525-26, 107 S.Ct. 13891, 94 L.Ed.2d

533 (1987) (emphasis in original). Congress

enacted a rule allowing removal by

“defendants”; it did not say anything similar

to: “Courts may allow removal whenever the

case involves a large, multi-state class action.”

See First Bank, 552 E§3d at 917-18.

14

It is clear from over a century of court precedence

that the word “defendant(s)” in the removal context

refers to the original named defendant(s). As this

Supreme Court has stated “|[w]Je must not give

jurisdictional statutes a more expansive interpretation

than their text warrants .. .” Hxxon Mobil Corp. v.

Allapattah Services, 545 U.S. 546, 558, 125 S.Ct. 2611,

2620, 162 L.Ed.2d 502 (2005). Under the textualist

approach, the plain meaning of the terms of a statute is

to be applied without “speculat{ing] upon Congressional!

motives”. Reigel v. Medtronic, Inc.,552 U.S. 312, 327,

128 8.Ct. 999, 1009, 169 L.Ed.2d 892 (2008). In applying

CAFA, the Seventh Circuit Court of Appeals correctly

followed a clear textual directive and held that §14538(b)

does not change the common and understood meaning

of the word “defendant” in the removal provisions.

First Bank’s argument that the legal and legislative

environment and policies that were key rationales for

the Supreme Court’s holding in Shamrock are somehow

different than those leading to the passage of CAFA is

misguided. Contrary to First Bank’s argument, the

Supreme Court’s decisions in West and Shamrock were

not based on ephemeral legal and legislative

environment and policies, but were based upon the clear

textual directive of the removal statutes and the

judicially settled meaning of the term “defendant(s)”

contained in the removal statutes. In addition, the

Supreme Court in Shamrock relied upon the

Congressional view that it was just and proper to require

a plaintiff to abide by his selection of a forum. See

Shamrock Oil, 313 U.S. at 106-07, 61 S.Ct. at 871-72, 85

Led. 1214.° Although First Bank’s Complaint pleads

diversity jurisdiction, First Bank voluntarily filed it

action in state court. Under the decisions of West and

Shamrock and in accordance with the Congressional

view, it 1s fair to require First Bank to abide by 11

selected forum

first Bank, recognizing the weakne r it

argument, attempts to ballast its argument with the

“Findings” provision of CAFA. The references to CAF'A

‘Findings” and the intent of Congress constitute pure

speculation. The “Findings” provision of CAF‘A has been

found not to be a clear textual directive for courts to

alter or abolish long established principles of federal

jurisdiction such as only an original defendant may

remove. See Morgan y) Gay, 471 F.3d 469, 473 (3d Cir

2006) (opining that courts should not consider CAFA’

findings and purposes as evidence of Congress's intent

to alter traditional rule of federal jurisdiction if there 1

no textual directive to do so). In the end the reference

to the CAFA “Findings” constitutes speculation on what

intended with CAFA. As the majority 11

Pali sade S appropriately | UL 1

Congress 1n

although we are cogniZant of the fact that

Congress clearly wished to expand federal

jurisdiction through CAF A, we also recognize

that it is our duty, as a court of law, to interpret

the statute as written, not to rewrite it a

6. The Court quoted the Congr ional view from H.R

Rep. No. 1078 at 1 (1*t Sess. 1887) wherein Congress echoed thi

Court’s conclusion expressed in West that if a plaintiff “elect

to sue in a State court when he might have brought his suit ir

federal court there would...be...no good reason to allow

remove the eau ¢

\TTM believes Congre could fave intended

to write it. lf Congre intended to make the

weeping change in removal practice that

ATTM suggests by altering the near-canonic:

rule that only a ‘defendant’ may remove and

that ‘defendant’ in the context of remova

means only the original defendant, it shoul

nave plainly indicated that intent. Pa |

52 F.8d at 556

When one considers that the word “defendan

in removal context has been uniformly interpreted a

original defendant(s) for over a century, the ri ality that

Congress is presumed to know the judicial interpretation

of “defendant’, the fact that the text has meaning b‘

eliminating the home state and unanimous consent of

all defendants barriers to removal, and that Convre

has drafted other removal statutes that clearly expand

removal beyond Just the original defendant(s), th

logical conclusion 1s that if Congress intended to change

the longstanding definition of “defendant n the

removal context it would have done so in a clear and

unequivocal text. lo conclude otherwi peculal

as to what Conpress intended

KB. There Is No Basis to Grant Wril of

Certtorari.

Petitioner acknowledges that thi le Dasis {fo}

upreme Court to vrant it Petition for a Writ

Certiorari rests with Supreme Rule 10(e¢) which state

“A state court of United stutes court of appeal hu

decided an important question of federal law that ha

not been, but should be, settled by this Court, or ha

decided an Important federul question 1n a Vv that

conttict ith rel if

upreme Court Rule 10(¢). In this case Irirst Bank d

not cite a contral decision of at court to the eVeNnti

( reuit Opinion A ich Lr OIC Das ror vrantiney

petition 1s that the ue presented represent

nportant (Jule tion of federal law that ha not. ne

hould be, settled by this Court rar Ipreme Cour

Rule 10 (contra! to First Ban ertion tl

matter does not raise an } natio

that h ot | 1 sel

in it ret Or a }

make Lrie irgpument nal ll u IMO!

the Circuit Court Q] AD en] band Lh 1 2 loop

ne 4 AFA juri diction will be reated and }

pectel that original plaintitt/eounterclan detendal

ure not permitted to remove counterclaims then CAI]

puri dgdictior Wil Hecome ‘ictal note I 13 I

argument is disingenuous as to its compulsion 1

vit In state court and it irngument that nt

1] Jvallow CALA misdietior

4 i} { | |

; OFraAe? () (ore ( ee oO rl j | f

uch First Bank could have nose oO Tile Lin te

court but elected to purse the action it e CoO

CAFA ma ne intended tf ne) 1 Se ( t¢ fey

Courts In Cla CLIO! Out it aor nowunl r |

LO if rh Ov rorum rie | (*] PUPpPO ( iri

remove the ime case when the bank decides the

no longer serve Ls purpose Further, the pecter

ountert 1177 vallov mw CAKA | 1iCLiol