Supreme Court Rules That Third-Party Counterclaim Defendants Cannot Remove Class Actions Under the Class Action Fairness Act (CAFA)


The U.S. Preeminent Court held today that a third-party respondent couldn’t evacuate a class action to government court under CAFA. It is because “litigant” utilized CAFA alludes just to the party or gatherings sued by the first offended party. Likewise, Court’s sentiment has suggestions past the class action setting since it tends to the extent of evacuation purview under 28 U.S.C. § 1441(a). The essential ramifications of this decision in class actions are that an organization can consistently bring suit against customers.

It might compel to shield a class action counterclaim documented by the buyer in state court, with no chance to evacuate the case to a government court. Organizations might have the option to stay away from this result. if there is an administering discretion arrangement or discussion determination proviso in the pertinent purchaser contract. 

Appeal for Fourth Circuit Affirmation

 In-Home Depot U.S.A., Inc. v. Jackson, No. 1701471, the claim started as an assortments suit by Citibank, N.A. against George Jackson. Additionally, looking to recoup for an unpaid parity on a Home Depot charge card. Jackson counterclaimed against Citibank and brought third-party class action claims against Home Depot and Carolina Water Systems, Inc. After Citibank excused its cases against Jackson, Home Depot expelled the case to a government court. The area court remanded the case because Home Depot, as a third-party litigant, had no privilege of evacuation. The Fourth Circuit asserted, and the Supreme Court insisted too. 

U.S Courts versus Third-Party Counterclaim Defendants

 Equity Thomas composed the joint opinion from Justices Ginsburg, Breyer, Sotomayor, and Kagan. The Court initially tended to the extent of the privilege of evacuation under 28 U.S.C. § 1441(a), the expulsion rule ordered some time before CAFA, which accommodates removal of collective action “by the respondent or the defendants.” The Court noticed that it was conceivable that the expression “litigant” alluded to any individual or element sued in a typical case, yet inferred that was not the best translation of the rule. Instead, the Court presumed that Section 1441(a) centers on whether there is purview over the “common action,” not specific cases or counterclaims made in that.

The Court reasoned that “Segment 1441(a) accordingly doesn’t allow evacuation dependent on counterclaims by any means, as a counterclaim is insignificant to whether the locale court had ‘unique purview’ over the collective action.

Slip operation at 6. The Court contemplated the following points: 

  1. Federal Rules of Civil Procedure recognize “defendants,” “third-party defendants,” and “counterclaim defendants.”
  2. Expulsion resolutions in chapter 11 and patent/copyright setting permit “any party” to expel;  
  3. Court held in Shamrock Oil and Gas Corporation v. Sheets, 313 U.S. 100 (1941). A counterclaim litigant that the first offended party had no privilege of evacuation under § 1441. 

The Court, at that point, tended to the extent of the privilege of expulsion under 28 U.S.C. § 1453(b), some portion of CAFA, which accommodates evacuation of a putative class action “regardless of whether any respondent is a resident of the State where the action brought. It is any litigant might expel such action without the consent all things considered.”

The Court inferred that the utilization of the words “any litigant” in this rule proposed to explain that the in-state respondent restriction and assent necessity don’t have any significant bearing to expulsion under CAFA. The Court noticed that, in different settings, “any” is given a “sweeping significance,” however presumed that Congress didn’t expect far-reaching importance in this unique circumstance. Slip operation at 10. The Court noticed that “[o]f course if Congress shares the contradiction’s dissatisfaction with certain suit ‘strategies,’ it unquestionably has the power to change the rule. Yet, we don’t.” 11. 


 Equity Alito composed a vast difference, joined by Chief Justice Roberts and Justices Gorsuch and Kavanaugh. It doesn’t seem to give direction on the extent of the more significant part conclusion that is presently the overseeing law. To sum things up, the dispute’s key focuses included: 

  1. the motivation behind CAFA was to extend defendants’ privilege of expulsion.
  2. the standard significance of “litigant,” i.e., a party sued, incorporates a counterclaim respondent or third-party litigant; 
  3. “any” ought to give immense importance; 
  4. the Court recently expressed that there is no enemy of evacuation assumption under CAFA. 

This choice maintains earlier decisions by some lower courts that counterclaim defendants have no privilege of expulsion. In the class action setting, the opportunity is probably going to have the most effect on organizations. That regularly bring suits against shoppers that may bring about a class action counterclaim. Other than campaigning Congress to revise CAFA, potential vital choices of the protection point of view may incorporate. Also including the utilization of assertion arrangements. The Supreme Court’s decisions have maintained, and possibly the usage of gathering determination conditions that could endeavor to limit the documenting of CAFA-qualified class actions to government courts.