“Tie Goes To The Runner:” 5th Circuit gives plaintiffs benefit of doubt by calling suit “commenced” before CAFA became law, despite only partial payment of fax filing fees in state court

Patterson v.

Dean Morris LLP

Safe! That was the call from the U. S. Fifth Circuit Court of Appeals, ruling on the question of when an action is “commenced” under the Class Action Fairness Act, saying that these Louisiana plaintiffs slid into state court just in time by faxing their petitions the day before the law took effect. But a fight broke out in the stands between the Fifth and Seventh Circuits over the scope of appellate review of remand orders under CAFA.

"We want it all," the Seventh Circuit said in Brill v. Countrywide Home Loans, Inc.,427 F.3d 446 (7th Cir. 2005) (see CAFA Law Blog summary posted on November 2, 2005).“When a statute authorized interlocutory appellate review, it is the district court’s entire decision that comes before review.” Since the district court rejected removal under CAFA when remanding, the Seventh Circuit said it could consider whether the lower court’s decision to remand to state court was out of line with the Telephone Consumers Protection Act.

"Bankruptcy is different," the Fifth Circuit said, kicking dirt towards the Seventh Circuit. Federal bankruptcy law clashes with CAFA’s appellate review provision because it includes a provision barring review of an order like the equitable remand order on the table here. A footnote mentioned that this reasoning might create a circuit split.

Balk?The panel chose not to weigh in on whether CAFA shifts the burden of proving federal jurisdiction to the party attempting to escape back into state court. Federal courts are dividing themselves into the “yes” and “no” columns on this issue, but the Fifth Circuit said that the district court was too vague on this score in this case, and that the issue wasn’t deemed to be critical to the outcome of the appeal. The “undisputed documents in the record . . . answer the jurisdictional question.”

The underlying plaintiffs alleged lenders and a law firm overcharged them during collection and foreclosure proceedings tied to their home loans. All of the

As for the remand related to CAFA, the bottom line was whether the borrowers paid the “applicable filing fee” within five days of faxing their petitions to court, as required by Louisiana’s fax filing statute. Unless a party pays the correct amount on time, the fax has “no force or effect,” the court noted.

The lender and law firm defendants argued that the borrowers came up short when they showed up at the clerk’s office to pay $3,039.00, less than the $5,127.00 the clerk asked for on the fax confirmation notice. The borrowers argued they paid what the clerk asked for when they showed up on February 22, even though they received a bill for additional court costs in May. The defendants countered that the action was “commenced” only when the plaintiffs completely settled up with the clerk’s office, which was well after CAFA’s effective date.

Editors’ Note

Editors’ Note