FILED
FOR PUBLICATION MAR 06 2007
CATHY A. CATTERSON, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PROGRESSIVE WEST INSURANCE No. 06-17367
COMPANY,
D.C. No. CV-06-01785-FCD
Plaintiff - Appellant,
v. OPINION
SIMON H. PRECIADO,
Defendant - Appellee.
Appeal from the United States District Court
for the Eastern District of California
Frank C. Damrell, District Judge, Presiding
Argued and Submitted February 12, 2007
San Francisco, California
Filed March 6, 2007
Before: B. FLETCHER, CLIFTON, and IKUTA, Circuit Judges.
Opinion by Judge Ikuta, Circuit Judge:
This appeal raises the question whether the Class Action Fairness Act
("CAFA"), Pub. L. No. 109-2, § 5, 119 Stat. 12 (2005), gives the federal district
court removal jurisdiction over this action. We conclude that it does not, and
affirm the district court.
Factual and Procedural Background
On December 22, 2004, Progressive West Insurance Company
("Progressive") filed a breach of contract action in California state court against its
insured, Simon Preciado. Progressive sought $5,000 in reimbursement for medical
payments it made on behalf of Preciado. On February 17, 2005, Preciado filed a
cross-complaint1 against Progressive, which alleged (among other things) that
Progressive's policy of claiming such reimbursements was an unfair business
practice under California's unfair competition law, California Business and
Professions Code § 17200 et seq. Preciado sought remedies "on behalf of the
general public" for these unfair business practices but failed to allege the elements
of a class action necessary to bring a representative claim under California's unfair
competition law. See CAL. BUS. & PROF. CODE § 17203 (West 2005). On August
7, 2006, the state trial court granted Preciado leave to remedy this defect, and
Preciado subsequently filed an amended cross-complaint asserting the required
class action elements.
After Preciado filed the amended cross-complaint, Progressive removed the
action to federal district court, asserting federal jurisdiction under CAFA. See 28
1
In federal practice, Preciado's "cross-complaint" would be deemed a
"counterclaim." See CAL. CIV. PROC. CODE § 428.10; FED. R. CIV. P. 13.
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U.S.C. § 1332(d). The federal district court remanded the action to state court.
Progressive appealed the remand order, and we accepted the appeal pursuant to
section 5 of CAFA, 28 U.S.C. § 1453(c)(1).
Analysis
Signed into law on February 18, 2005, CAFA significantly expanded federal
subject matter and removal jurisdiction over class actions that commenced on or
after CAFA's effective date. "CAFA amends, inter alia, the federal diversity
statute, 28 U.S.C. § 1332, and now vests original jurisdiction for class actions in
federal court where there is minimal diversity and the amount in controversy
exceeds $ 5,000,000." Bush v. Cheaptickets, Inc., 425 F.3d 683, 684 (9th Cir.
2005) (citing 28 U.S.C. § 1332(d)). CAFA makes it easier for litigants to remove
class actions to federal district courts. See 28 U.S.C. § 1453(b). It also gives
appellate courts jurisdiction over appeals from orders remanding class actions to
state court by creating an exception from the general rule in 28 U.S.C. § 1447(d)
that such orders are not reviewable. See 28 U.S.C. § 1453(c)(1).
The question we must answer is whether CAFA authorized Progressive's
removal of this class action. By its express terms, CAFA applies only to actions
"commenced on or after" February 18, 2005. Pub. L. 109-2, § 9, 119 Stat. 14 (note
on 28 U.S.C. § 1332). As noted above, both the original complaint and the
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original cross-complaint in this action were filed before February 18, 2005. If
either of these pleadings is deemed to "commence" this action for purposes of
CAFA, the class action is not covered by CAFA.
Although CAFA does not define the term "commenced," we have held that
an action commences for purposes of CAFA when a suit becomes "a cognizable
legal action in state court" under "[a] state's own laws and rules of procedure."
Bush, 425 F.3d at 686. As this action arose in California state court, Bush requires
us to apply California's laws and rules of procedure to determine when it
commenced. See id. at 686–87. Under California law, an action commences when
the "complaint" is filed with the court. CAL. CIV. PROC. CODE §§ 350, 411.10
(West 2006); Bush, 425 F.3d at 686–87. The California Code of Civil Procedure
defines a "complaint" to include a cross-complaint, but does not define
"complaint" to include an amended cross-complaint. See CAL. CIV. PROC. CODE
§§ 426.10, 431.30, 438, 581, 583.110 (West 2006). Based on these California
statutes, Preciado's class action against Progressive commenced when Preciado
filed his original cross-complaint on February 17, 2005.
Progressive does not dispute this statutory analysis. Rather, Progressive
asserts that under California's "relation-back" doctrine, Preciado's amended cross-
complaint commenced a new action because it substantially changed the nature of
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the action from an individual action to a representative action. Progressive urges
us to follow the Seventh Circuit's reasoning that an amended action may
commence a new action for purposes of removal under CAFA if it does not "relate
back" to an earlier filing. See Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805 (7th
Cir. 2005); see also Prime Care of Northeast Kan., LLC v. Humana Ins. Co., 447
F.3d 1284, 1285–89 (10th Cir. 2006) (discussing various positions taken by the
Fifth, Seventh, Eighth and Tenth Circuits on the application of the relation-back
doctrine in this context).
We, however, are bound by Bush, which requires us to consider whether
California's "laws and rules of procedure" permit application of the relation-back
doctrine in the circumstances before us. Bush, 425 F.3d at 686. California courts
have applied the relation-back doctrine in only two contexts. See Barrington v. A.
H. Robins Co., 702 P.2d 563, 566 (Cal. 1985). First, California courts have long
applied the relation-back doctrine "to determine the time of commencement of an
action for the purpose of the statute of limitations." Id. at 565. In this context, "an
amended complaint is not barred by the statute of limitations . . . if the amended
complaint relates back to a timely original complaint." Id.
The California Supreme Court has extended application of this doctrine to
one additional context, namely, to a statute requiring dismissal of an action for
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failure to serve a summons within three years of its commencement. Id. at 566. In
Barrington, the California Supreme Court noted that "because the relation back
rule has so far been confined to the statute of limitations," the court below
"shrank" from applying the doctrine to this new context. Id. This was error,
however, because the nature and purpose of the statute of limitations and the
failure-to-serve statute were "virtually identical." Id. Both statutes "were
designed to move suits expeditiously toward trial," and both "conflict with the
strong public policy that seeks to dispose of litigation on the merits rather than on
procedural grounds." Id. (internal quotations omitted). In light of the similarity of
the two statutes and this strong public policy, the California Supreme Court
concluded that the relation-back doctrine, an exception "created to mitigate the
harshness of the statute of limitations," should be extended to mitigate the
harshness of the failure-to-serve statute. Id.
Barrington makes clear that California courts apply the relation-back
doctrine only in limited circumstances. Indeed, we are not aware of any California
Supreme Court decision since Barrington that has even considered extending the
relation-back doctrine to any additional contexts. Based on the reasoning in
Barrington, the California Supreme Court would extend the doctrine, if at all, only
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to statutes that are "virtually identical" to the statute of limitations or the failure-
to-serve statute. See id.
CAFA is not "virtually identical" to these statutes. CAFA's effective date
does not bar any class actions that might otherwise be litigated on the merits; it
merely deprives litigants of one basis for removing the actions to federal court.
The parties have cited no authority, nor have we found any, indicating that
California courts have applied the relation-back doctrine to give litigants the
benefit of a new statutory regime, and Barrington suggests that applying the
doctrine in such a context would be an error. Therefore, we must conclude that
California's relation-back doctrine does not apply in this context. Because
Preciado commenced his class action lawsuit for purposes of CAFA on February
17, 2005, one day before CAFA became effective, Progressive cannot invoke
CAFA's removal provision.
This conclusion would not change if Progressive were able to point us to
California law applying the relation-back doctrine in a manner supporting
Progressive's position. Even if we assumed that CAFA is applicable to Preciado's
class action, we would agree with the district court's determination that
Progressive lacks the authority to invoke CAFA's removal provision.
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The district court remanded this class action on the ground that a
plaintiff/cross-defendant, such as Progressive, is not a "defendant" for purposes of
the federal removal statutes and therefore cannot remove an action to federal
court. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941) (interpreting
the provision allowing an action to be removed "by the defendant or defendants"
in former removal statute 28 U.S.C. § 71 as precluding a plaintiff/cross-defendant
from removing an action on the basis of a counterclaim). Progressive argues that
given CAFA's purpose to increase class action litigants' access to federal courts,
we should interpret CAFA as allowing a plaintiff forced to defend a class action
on the basis of a cross-complaint to have the same right to remove the class action
as a defendant. However, CAFA is not susceptible to such an interpretation.
Although CAFA does eliminate three significant barriers to removal for
qualifying actions,2 CAFA does not create an exception to Shamrock's
longstanding rule that a plaintiff/cross-defendant cannot remove an action to
2
Specifically, CAFA's removal provision, 28 U.S.C. § 1453(b), expressly
"exempts qualifying actions from the § 1446(b) prohibition of removal more than
1 year after commencement of the [state court] action." Abrego v. Dow Chem. Co,
443 F.3d 676, 681 (9th Cir. 2006) (per curiam) (alteration in original) (internal
quotation marks omitted). CAFA also "overrides the judge-created requirement
that each defendant consent to removal." Id. Finally, it "allows for removal of
actions without regard to whether any defendant is a citizen of the State in which
the action is brought." Id. (internal quotation marks omitted).
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federal court. CAFA's removal provision, section 1453(b), provides that "[a] class
action may be removed to a district court . . . in accordance with section 1446."
Section 1446, in turn, sets forth the removal procedure for "[a] defendant or
defendants desiring to remove any civil action . . . from a State court." 28 U.S.C.
§ 1446(a) (emphasis added). The interpretation of "defendant or defendants" for
purposes of federal removal jurisdiction continues to be controlled by Shamrock,
which excludes plaintiff/cross-defendants from qualifying "defendants."
Nor can we accept Progressive's invitation to read CAFA liberally as
making a sub silentio exception to Shamrock. We have declined to construe
CAFA more broadly than its plain language indicates. See Abrego v. Dow Chem.
Co, 443 F.3d 676 (9th Cir. 2006) (per curiam). "Faced with statutory silence . . .,
we presume that Congress is aware of the legal context in which it is legislating."
Id. 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 cross-complaint is without authority to remove. See id. at 684.
Therefore, we must conclude CAFA does not alter the longstanding rule
announced in Shamrock that precludes plaintiff/cross-defendants from removing
class actions to federal court. For this reason, Progressive would lack statutory
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authority to remove the action pursuant to CAFA even if the action had
commenced after CAFA’s effective date.
In conclusion, we hold that under California's laws and rules of procedure,
Preciado commenced his class action lawsuit for purposes of CAFA on February
17, 2005. As this was one day before CAFA became effective, Progressive could
not remove this action pursuant to section 1453(b). Moreover, even if CAFA
were applicable to Preciado's class action, the district court was correct to remand
the action because Progressive is a plaintiff/cross-defendant and not authorized to
remove an action under section 1453.
AFFIRMED.
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COUNSEL LISTING
Craig E. Farmer, Farmer Smith Law Group, LLP, Sacramento, California;
John B. Moorhead and Paul Karlsgodt, Baker & Hostetler, LLP, Denver,
Colorado, for Appellant.
Michael J. Bidart and Ricardo Echeverria, Shernoff Bidart & Darras, LLP,
Claremont, California, for Appellee.
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