In Re Katrina Canal Litigation Breaches

REVISED APRIL 23,2008
IN THE UNITED STATES COURT OF APPEALS
United States Court of Appeals
FOR THE FIFTH CIRCUIT Fifth Circuit

FILED
April 11, 2008

No. 08-30145 Charles R. Fulbruge III
Clerk

STATE OF LOUISIANA; ET AL.

Plaintiffs - Appellants
v.

AAA INSURANCE; ET AL.

Defendants - Appellees

Appeal from the United States
District Court for the Eastern District of Louisiana
USDC No. 05-4182

Before HIGGINBOTHAM, STEWART, and ELROD, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
The Attorney General of Louisiana filed a class action, naming the State
and numerous Louisiana citizens as Plaintiffs. The class action alleged that the
Defendant insurance companies failed to pay covered insurance claims following
Hurricanes Katrina and Rita and as a result breached the insurance contracts
to which the State is a partial assignee. It requested damages and declaratory
and injunctive relief, all under state law. At several Defendants’ request, the
case was removed to federal district court under the Class Action Fairness Act
 No. 08-30145

(“CAFA”).1 Louisiana moved to remand to state court, arguing that CAFA did
not apply and that Louisiana enjoyed sovereign immunity from involuntary
removal to federal court in that it was suing in its state court to enforce state
law. The district court denied remand. Louisiana petitioned this court for
permission to appeal the interlocutory order under CAFA, which we granted.
I
Louisiana administers the Road Home Program, which advances money
to Louisiana homeowners for reconstructing homes damaged or destroyed by
Hurricanes Rita and Katrina. Any homeowner could receive up to $150,000 from
Louisiana with a written assignment to the State of the owner’s claim against
his insurer in the amount of the payment received from the State. Only an
owner’s claim for damage to his dwelling was assigned. These assignments,
functionally subrogation agreements, read in part:
Notwithstanding anything to the contrary contained herein, this is
a limited subrogation and assignment, and is limited to an amount
not to exceed the amount of the grant received by the undersigned
[insured] under the Program, to which the State has not been
reimbursed from other sources.

While an owner’s assignment was partial in that the owner retained his claim
against his insurer for amounts exceeding the sum advanced by the State, the
assignment also granted Louisiana the right to sue his insurer in the owner’s
name for the owner’s insured losses.2

1
28 U.S.C. § 1453. Section 1453(b) provides, “In general. - - A class action may be
removed to a district court of the United States in accordance with section 1446 . . . .” Section
1453(c)(1) provides that “a court of appeals may accept an appeal from an order of a district
court granting or denying a motion to remand a class action to the State court from which it
was removed if application is made to the court of appeals not less than 7 days after entry of
the order.”
2
The agreement stated, in relevant part, “I/we agree to assist and cooperate with the
State should the State elect to pursue any of the claims I/we have against the insurers for
reimbursement under any such policies. My/our assistance and cooperation shall include

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Under a Louisiana statute, all insurance claims relating to damages from
Hurricane Katrina had to be filed by September 1, 2007.3 On August 23, 2007,
Louisiana filed this suit in Orleans Parish against more than 200 insurance
companies. By an amended petition filed five days later, Louisiana added a class
action against the same defendants under Louisiana Code of Civil Procedure,
Article 591.4 It was filed on behalf of “The State of Louisiana, individually and
on behalf of” the state agency administering the program. The asserted class
consisted of:
[a]ll current and former citizens of the State of Louisiana who have
applied for and received or will receive funds through the Road
Home Program, and who have executed or will execute a
subrogation or assignment agreement in favor of the State, and to
whom insurance proceeds are due and/or owed for damages
sustained to any such recipient’s residence as result of any natural
or man-made occurrence associated with Hurricanes Katrina and/or
Rita under any policy of insurance, as plead herein, and for which
the State has been or will be granted or be entitled to recover as
repayment or reimbursement of funds provided to any such
recipient through the Road Home Program.

allowing suit to be brought in my/our name(s) . . . .”
3
See LA. REV. STAT. § 22:658.3 (providing that “any person or entity having a claim for
damages pursuant to a homeowners’ insurance policy . . . . and resulting from Hurricane
Katrina shall have through September 1, 2007, within which to file a claim with their insurer
for damages”).
4
LA. CODE CIV. PROC. ANN. art. 591(A) provides,
One or more members of a class may sue or be sued as representative
parties on behalf of all, only if:
(1) The class is so numerous that joinder of all members is impracticable.
(2) There are questions of law or fact common to the class.
(3) The claims or defenses of the representative parties are typical of the
claims or defenses of the class.
(4) The representative parties will fairly and adequately protect the
interests of the class.
(5) The class is or may be defined objectively in terms of ascertainable
criteria, such that the court may determine the constituency of the class
for purposes of the conclusiveness of any judgment that may be rendered
in the case.

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The amended petition5 requested injunctive relief, declaratory judgment,
damages, and “an order finding the Insurance Company Defendants liable to the
State and the recipients (members of the class), as plead herein,” “[f]or an
injunctive order directing that the Insurance Company Defendants pay all
coverage afforded under the terms of the recipients’ policies, and where a total
loss is found, an injunctive order directing the payment of the full value placed
on the recipients’ residence . . . with full reimbursement or repayment of any
funds to which the State is entitled to as a result of any grant issued under The
Road Home Program,” “[f]or a declaration of the State’s and the recipient’s [sic]
rights under Louisiana law, and . . . a declaration of the Insurance Company
Defendants’ responsibilities to the State and the recipients, as plead herein,” “for
an injunction prohibiting the Insurance Company Defendants from committing
further breaches of their duties owed to the State and members of the class, and
. . . forbidding . . . Defendants from failing to honor the coverage provided by the
All Risk policies . . . issued to the recipients,” and “[f]or any and all monetary,
general and equitable relief or injunctive relief as this Court deems just and
appropriate under Louisiana law, whether plead herein or otherwise.”
The amended petition alleged breach of contract, breach of the implied
covenant of good faith and fair dealing, and breach of fiduciary duty, asserting
inter alia that “repeated demands were made by recipients to the . . . Defendants
which refused to meet their obligations under the All Risk policies and refused
to pay the full damages for recipients’ homes being destroyed or damaged,” that
the insurance companies had “by failing . . . to pay the recipients all of the
benefits due and owing them . . . violated the duties of good faith and fair dealing
owed to recipients,” and that “Defendants’ failure to fully disclose and properly

5
First Amended and Restated Class Action Petition for Damages and Declaratory and
Injunctive Relief (Aug. 29, 2007).

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advise the recipients . . . breached the fiduciary duties owed to them as their
policyholders.” The amended petition also requested a declaratory judgment
that “under Louisiana’s Valued Policy Law, La. R.S. § 22:695, et seq., recipients
are entitled to recover the full value placed on their residences by the Insurance
Company Defendants without deduction or offset, especially without any
deduction or offset for funds received under The Road Home Program.”
On the filing of the amended petition with its class action allegation,
several Defendants filed a notice of removal in which others joined and
consented. Louisiana moved to remand to state court, arguing that CAFA did
not apply and that exercise of federal jurisdiction over the suit offended its
sovereign immunity. Following a hearing, the district court refused to remand.
At the hearing, the insurance companies argued that removal was proper under
CAFA and the Multiparty Multiform Trial Jurisdiction Act (MMTJA), which
provides for original jurisdiction in the district court, and removal to district
court, for certain minimal diversity actions arising from a “single accident.”6
Finding minimal diversity under CAFA, the district court declined to reach the
claim of jurisdiction under MMTJA.7
Louisiana here argues that CAFA does not apply, and that even if it does
apply by its terms, it cannot abrogate sovereign immunity from federal process,
or at the least Congress did not clearly do so in CAFA; and that MMTJA does not
apply by its own terms.
II

6
28 U.S.C. § 1369 provides, “The district courts shall have original jurisdiction of any
civil action involving minimal diversity between adverse parties that arises from a single
accident.” 28 U.S.C. § 1441(e)(1)(A) permits removal of a civil action to a federal district court
if “the action could have been brought in a United States district court under 1369 of this title
. . . .”
7
Nor do we, as we affirm the district court’s jurisdiction under CAFA.

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Enacted in 2005, CAFA provides for removal of class actions involving
parties with minimal diversity. It defines a “class action” as
any civil action filed under rule 23 of the Federal Rules of Civil
Procedure or similar State statute or rule of judicial procedure
authorizing an action to be brought by 1 or more representative
persons as a class action.8

Louisiana argues that a state has never been treated as a person for purposes
of diversity jurisdiction and that it has not filed a class action as defined by
CAFA. The argument is not without force,9 but we are not persuaded. CAFA
only requires that the action be brought under Rule 23 or a state statute that
authorizes class actions to be brought by a person.10 Louisiana’s Article 591(A)
is such a statute, as it permits “members of a class” to “sue or be sued as
representative parties.”11 Congress considered and rejected an amendment that
would have exempted class actions filed by an attorney general from removal
under CAFA.12 Nor can we agree that CAFA’s use of the term “citizen” bars its

8
28 U.S.C. § 1332(d)(1)(B); see also 28 U.S.C. § 1453(a) (“Definitions. - - In this section,
the terms ‘class’, ‘class action’, ‘class certification order’, and ‘class member’ shall have the
meanings given such terms under section 1332(d)(1).”).
9
See, e.g., Wilson v. Omaha Indian Tribe, 442 U.S. 653, 658, 666-67 (1979) (citing
(United States v. Cooper Corp., 312 U.S. 600, 604-05 (1941)) (holding that under 28 U.S.C. §
194, applying to land disputes between a tribe and a “white person,” a state was not a person
but observing that “[t]here is nevertheless ‘no hard and fast rule of exclusion,’ . . . and much
depends on the context, the subject matter, the legislative history, and executive
interpretation”); see also Will v. Mich. Dep’t of State Police, 491 U.S. 58, 64 (1989). In Will, the
Court found that a state was not a “person” as defined by § 1983 because reading the term
“person” to include “state” under the statutory language would “be a decidedly awkward way
of expressing an intent to subject the States to liability.”
10
28 U.S.C. § 1453(a); 28 U.S.C. § 1332(d)(1).
11
LA. CODE CIV. PROC. ANN. art. 591(A).
12
See 151 Cong. Rec. S1157-02, S 1158, 2005 WL 309648 (Feb. 9, 2005). Senator Pryor
introduced the amendment, stating, “My amendment simply clarifies that State attorneys
general should be exempt from S. 5 and be allowed to pursue their individual State’s interests
as determined by themselves and not by the Federal Government.” Congress rejected the

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application here. The statute refers to the citizenship of any class member and
any defendant.13 It signifies that CAFA, in expanding federal jurisdiction over
certain class actions filed in state court, escaped the rule that citizenship of the
named representative is controlling.14
CAFA has additional general jurisdictional requirements that must be
met. CAFA requires that a class action involve an aggregate amount in
controversy of at least $5 million15 and present at least minimal diversity of
parties.16 Louisiana contests only whether the requisite diversity is met.
Louisiana argues that it is the real party in interest and as a state, it is not a
citizen for purposes of diversity jurisdiction. We agree that a state is not a
citizen under the diversity statutes, including CAFA.17 But that is not this case.
Louisiana seeks relief for both the State and the citizens as “recipients” of
insurance. While it is true that as partial assignees and assignors, both the

proposed amendment. Cf. Cooper Corp., 312 U.S. at 605, 607-09 (holding that “we are to read
the statutory language in its ordinary and natural sense, and if doubts remain, resolve them
in the light, not only of the policy intended to be served by the enactment, but, as well, by all
other available aids to construction” and looking to “supplemental legislation” and the “scheme
and structure of the legislation”).
13
28 U.S.C. § 1453(b) provides, “In general.--A class action may be removed to a district
court of the United States in accordance with section 1446 (except that the 1-year limitation
under section 1446(b) shall not apply), without regard to whether any defendant is a citizen
of the State in which the action is brought, except that such action may be removed by any
defendant without the consent of all defendants.”
14
Cf. Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356, 363-64 (1921), overruled on
other grounds by Toucey v. New York Life Ins. Co., 314 U.S. 118 (1941).
15
28 U.S.C. 1332(d)(2) (“The district courts shall have original jurisdiction of any civil
action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive
of interest and costs, and is a class action in which-- (A) any member of a class of plaintiffs is
a citizen of a State different from any defendant . . .”).
16
See Frazier v. Pioneer Americas LLC, 455 F.3d 542, 545 (5th Cir. 2006) (discussing
the requirements for federal jurisdiction under CAFA with respect to Louisiana class actions).
17
Moor v. County of Alameda, 411 U.S. 693, 717 (1973) (“There is no question that a
State is not a ‘citizen’ for purposes of the diversity jurisdiction.”).

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State and the citizens are likely real parties in interest,18 we need not pause to
examine its force. With citizens of Louisiana joined as plaintiffs there is
minimal diversity. CAFA supplies federal jurisdiction and a path to removal
unless state sovereignty turns away its exercise. We turn to this difficult
question.
III
Our precise question is not the insulating force of any sovereign immunity
of the State of Louisiana from removal of a suit filed by it alone in its own state
courts, seeking enforcement of its state laws against insurers who each qualified
to do business in the State and are subject to its regulation. That question
states Louisiana’s claim of sovereign protection from removal in its most
powerful form and has never been directly answered. It has eluded answer for
the practical reason that it has been long settled that a State is not a person for
purposes of diversity jurisdiction. This, with the long time companion insistence
upon complete diversity, made the presence of additional parties aligned with
the State irrelevant to federal diversity jurisdiction. CAFA, with its grant of
jurisdiction to the federal district courts of qualifying class actions with minimal
diversity of parties, pushes the question forward but does not tax the immunity
claimed here by Louisiana–involuntary removal of its suit in its own courts to
enforce its own laws against companies subject to its regulation.
Defendants reply that Louisiana enjoys no immunity as a plaintiff; that
its immunity is from suit filed against it. As the argument goes, it is only those
actions against the State that offend its dignitary interests and imperil its
coffers. And indeed several courts seem to say as much. We would stop here if
we found these cases to be dispositive, for joinder of the class would not weigh

18
See Grassi v. Ciba-Geigy, Ltd., 894 F.2d 181, 185 (5th Cir. 1990) (addressing removal
under 28 U.S.C. § 1441 and holding that “[w]ith a partial assignment . . . an actual transfer
of a fractional interest is made, making both the transferor and transferee real parties in
interest”).

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on the question of immunity–the State as a plaintiff would then surely have no
protection from removal to federal court of a suit it filed in state court. This
would be so whether such “immunity as a plaintiff rule” rested on the
substantive reach of its immunity or waiver. Louisiana would distinguish these
cases where either federal questions were at issue or the cited language was
dicta. We will briefly explain why we do not share Defendants’ dismissive ease,
although we will ultimately conclude that any immunity from removal to federal
court was waived by the addition of the class of private citizens in the amended
complaint, and relatedly that immunity of the State from removal to federal
court does not extend to the members of the class.
By their logical order we would first address whether Louisiana has any
of the immunity from federal process that Louisiana claims for itself as a
plaintiff suing in its own courts to enforce its own laws, turning next to whether
Congress has sufficiently expressed its intent to abrogate the immunity and then
to whether the State can extend any of its immunity to private citizens of
Louisiana suing citizens of other states for money damages and declaratory
relief. We will follow a narrower course.
By this course, we accept for now that there is some measure of insulation.
Doing so, the question becomes rather whether the State can extend that
protection to private citizens of the State–whether immunity’s net casts so
broadly as to protect private citizens joined in a state claim. There is a footnote
to the question of whether Louisiana waived immunity by bringing private
citizens into its suit, parties that provided the requisite minimal diversity under
CAFA. If Louisiana had not named these citizens as plaintiffs, we would have
faced the question of what effect immunity may have had given the fact that the
assignments are only partial. Stated more directly, because Louisiana brought
a class action, we need not address whether Louisiana might have been

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compelled to join these additional parties in any event, or its effects upon federal
jurisdiction.19
IV
Constitutional questions unanswered by the Founders and which remain
open ought not be reached unless doing so is necessary to the resolution of a case
or controversy. A brief repair to history informs our decision. The scope of
sovereign immunity is put in play by the intersection of Article III, Section 2 of
the Constitution, providing for federal jurisdiction over “Controversies . . .
between a State and Citizens of another State,” and the Eleventh Amendment,
which provides, “The Judicial power of the United States shall not be construed
to extend to any suit in law or equity, commenced or prosecuted against one of
the United States by Citizens of another State, or by Citizens or Subjects of any
Foreign State.”
As freestanding prose these grants and limitations could be read to end
our inquiry, and, without more, affirm the district court’s denial of remand.
Louisiana as plaintiff has brought a suit against “citizen” insurance companies
of other states,20 and the insurance companies, as defendants, have not

19
Where an assignment or subrogation is partial in Louisiana, the failure to include
either of the contracting parties in a suit constitutes nonjoinder of a necessary party. LA. CODE
CIV. PROC. ANN. art. 697 (2008); LA. CODE CIV. PRO. ANN. art. 698 (2008). Of course, courts
may still hear a case where joinder is not feasible. See, e.g., Mount Beacon Ins. Co. v. Mills,
205 So.2d 144, 145 (La. Ct. App. 1967) (affirming award of remainder of damages from auto
accident to subrogor, despite subrogee insurance company’s lack of authorization to do business
in the State and the state court’s lack of jurisdiction over the company); see also LA. CODE CIV.
PROC. ANN. art. 642 (2008) (“If a person described in Article 641 cannot be made a party, the
court shall determine whether the action should proceed among the parties before it, or should
be dismissed.”). But given Louisiana’s rights under the assignment to litigate the interests
of citizen assignees, in their name, this could estop individual assignees–typically a necessary
party in Louisiana–from later bringing their claims. See, e.g., Rond v. Sims, 355 So. 2d 591,
593 (La. Ct. App. 1978) (“Ordinarily, a subrogor has no right of action for the right or that
portion of the right which has been subrogated away, Code of Civil Procedure, Article 697, the
subrogee being the only one who could sue for the subrogated right.”).
20
Teal Energy USA, Inc. v. GT, Inc., 369 F.3d 873, 875 (5th Cir. 2004) (citing 28 U.S.C.
§ 1332) (“Section 1332(a) provides that a corporation is a citizen of both its state of

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“commenced or prosecuted” a suit against Louisiana. But read as Constitutional
text, sovereign immunity is a “fundamental rule of which the Amendment is but
an exemplification.”21 In Hans v. Louisiana, the Court held that the Eleventh
Amendment bars suits against a State by the State’s own citizens, stating:
[T]he plaintiff in error contends that he, being a citizen of
Louisiana, is not embarrassed by the obstacle of the eleventh
amendment, inasmuch as that amendment only prohibits suits
against a state which are brought by the citizens of another state,
or by citizens or subjects of a foreign state. . . . It is an attempt to
strain the constitution and the law to a construction never imagined
or dreamed of. Can we suppose that, when the eleventh amendment
was adopted, it was understood to be left open for citizens of a state
to sue their own state in federal courts, while the idea of suits by
citizens of other states, or of foreign states, was indignantly
repelled?22

The Hans Court also held that despite the Eleventh Amendment’s text, states
as defendants may consent to federal jurisdiction.23 In Principality of Monaco
v. Mississippi, the Court recognized that “there is no express provision that the
United States may not be sued in the absence of consent. . . . [A]rticle [III] . . .
extends the judicial power ‘to Controversies to which the United States shall be
a Party.’ Literally, this includes such controversies, whether the United States
be party plaintiff or defendant.”24 Yet it concluded that “by reason of the
established doctrine of the immunity of the sovereign from suit except upon
consent, . . . [A]rticle [III] . . . does not authorize the maintenance of suits against

incorporation and the state of its principal place of business for purposes of diversity
jurisdiction.”).
21
Ex parte New York, No. 1, 256 U.S. 490, 497 (1921).
22
134 U.S. 1, 10, 15 (1890).
23
Id. at 17.
24
292 U.S. 313, 321 (1934).

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the United States.”25 In Seminole Tribe of Florida v. Florida, the Court held that
Congress through its Article I powers could not abrogate states’ immunity
against suit in federal court,26 holding, “Although the text of the Amendment
would appear to restrict only the Article III diversity jurisdiction of the federal
courts, ‘we have understood the Eleventh Amendment to stand not so much for
what it says, but for the presupposition . . . which it confirms.’”27 In Alden v.
Maine, the Court upheld a similar principle for suits against states in state
court,28 reasoning that
sovereign immunity derives not from the Eleventh Amendment but
from the structure of the original Constitution itself. The Eleventh
Amendment confirmed rather than established sovereign immunity
as a constitutional principle; it follows that the scope of the States’
immunity from suit is demarcated not by the text of the Amendment
alone but by fundamental postulates implicit in the constitutional
design.29

The many cases looking to immunity’s purpose and rejecting a strict
textual interpretation of immunity have all focused on the importance of
protecting states as defendants, as did the Founders’ debates over Article III.
The Alden Court emphasized states’ “immunity from suit,”30 observing, “[T]he
doctrine that a sovereign could not be sued without its consent was universal in
the States when the Constitution was drafted and ratified.”31 In Seminole Tribe,

25
Id.
26
517 U.S. 44, 72 (1996).
27
Id. at 54 (quoting Blatchford v. Native Village of Noatak, 501 U.S. 775, 779 (1991)).
28
527 U.S. 706, 712 (1999).
29
Id. at 728-29.
30
527 U.S. at 713 (emphasis added).
31
Id. at 715-16.

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the Court held that the “presupposition” confirmed by the Eleventh Amendment
is that “‘it is inherent in the nature of sovereignty not to be amenable to the suit
of an individual without its consent.’”32
Founders supporting Article III in the debates argued that it would not
force defendant states into federal courts. At the Virginia Convention, James
Madison maintained that under the Supreme Court’s “jurisdiction in
controversies between a state and citizens of another state . . . It is not in the
power of individuals to call any state into court.”33 At the same convention, John
Marshall asserted, “With respect to disputes between a state and citizens of
another state . . . . I hope that no gentleman will think that a state will be called
at the bar of federal court.” In The Federalist, Alexander Hamilton wrote,
It has been suggested that an assignment of the public securities of
one State to the citizens of another, would enable them to prosecute
that State in the federal courts for the amount of those securities;
a suggestion which the following considerations prove to be without
foundation. It is inherent in the nature of sovereignty not to be
amenable to the suit of an individual without its consent.34

These same supporters of Article III argued that its purpose, rather than to
subject states to federal jurisdiction as defendants, was to require plaintiff states
to bring suits against citizens in federal court. Madison stated, “The only
operation it can have, is that, if a state should wish to bring a suit against a
citizen, it must be brought before the federal court.”35 And Marshall urged, “The

32
517 U.S. at 54 (quoting Hans, 134 U.S. at 13).
33
Martha A. Field, The Eleventh Amendment and other Sovereign Immunity Doctrines:
Part One, 126 U. PA. L. REV. 515, 527 (1978) (quoting THE DEBATES IN THE SEVERAL
STATE CONVENTIONS ON THE ADOPTION OF THE FEDERAL CONSTITUTION 533 (J.
Elliot ed. 1836)); see also Hans, 134 U.S. at 14 (also quoting Elliot).
34
Field, The Eleventh Amendment at 528 (quoting 3 ELLIOT’S DEBATES at 555-56).
35
Id. (quoting 3 ELLIOT’S DEBATES at 551) (emphasis added).

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intent is, to enable states to recover claims of individuals residing in other
states. . . . I see a difficulty in making a state defendant which does not prevent
its being plaintiff.”36
The anti-federalist doubters focused their fire upon subjecting defendant
states to suits in federal courts, although they hinted at negative implications
for states as plaintiffs. Richard Henry Lee wrote,
How far it may be proper so to humble a state, as to oblige it to
answer to an individual in a court of law, is worthy of consideration
. . . this new jurisdiction will subject the states, and many
defendants to actions . . . which were not in the contemplation of
the parties, when the contract was made . . . . 37

At the Virginia Convention, Patrick Henry worried,
A state may be sued in the federal court, by the paper on your table
. . . . [and later] [Madison’s] construction of it [Article III] is to me
perfectly incomprehensible. . . . What says the paper? That it shall
have cognizance of controversies between state and citizens of
another state, without discriminating between plaintiff and
defendant.38

More recently, courts have continued their focus on states as defendants,
not plaintiffs. In Huber, Hunt, & Nichols, Inc. v. Architectural Stone Co.,
plaintiffs in a contract dispute with a state university sought arbitration,
requesting removal to federal district court on diversity grounds. This court
observed in a footnote, “Of course, the eleventh amendment is inapplicable
where a state is a plaintiff . . . .”39 In California ex rel. Lockyer v. Dynegy, Inc.,

36
Id. (quoting 3 ELLIOT’S DEBATES at 556).
37
Id. at 533 (quoting R.H. LEE, LETTERS OF A FEDERAL FARMER (NUMBER III)
(Oct. 10, 1787), reprinted in PAMPHLETS ON THE CONSTITUTION OF THE UNITED
STATES 309 (P. Ford ed. 1888)).
38
Id. at 532 (quoting 3 ELLIOT’S DEBATES at 318-19, 543-44).
39
625 F.2d 22, 24 n.6 (5th Cir. 1980).

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the Ninth Circuit held, “[A] state that voluntarily brings suit as a plaintiff in
state court cannot invoke the Eleventh Amendment when the defendant seeks
removal to a federal court of competent jurisdiction.”40 The Federal Circuit held
in Regents of the University of California v. Eli Lilly & Co. that “the Eleventh
Amendment applies to suits ‘against’ a state, not suits by a state. Thus, we need
not determine whether . . . [Plaintiff state] waived its immunity . . . .”41 In
Oklahoma ex rel. Edmondson v. Magnolia Marine Transportation Co., a removal
case grounded in federal question jurisdiction, the Tenth Circuit held, “[T]he
Eleventh Amendment’s abrogation of federal judicial power ‘over any suit . . .
commenced or prosecuted against one of the United States’ does not apply to
suits commenced or prosecuted by a State.”42
The Supreme Court has similarly held. In Illinois v. City of Milwaukee,
the Court held, “where a State is suing parties who are not other States, the
original jurisdiction of this Court is not exclusive and . . . those suits may now
be brought in or removed to the Circuit Courts [now the District Courts] without
regard to the character of the parties.”43 And in Ames v. Kansas, the Court held
that
a suit brought by a State in one of its own courts, against a
corporation amenable to its own process, to try the right of the
corporation to exercise corporate powers within the territorial limits
of the State, can be removed to the Circuit Court of the United
States. . . .44

40
375 F.3d 831, 848 (9th Cir. 2004).
41
119 F.3d 1559, 1564-65 (Fed. Cir. 1997).
42
359 F.3d 1237, 1239 (10th Cir. 2004).
43
406 U.S. 91, 101 (1972) (internal quotation marks and citations omitted).
44
111 U.S. 449, 462 (1884).

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The Tenth Circuit recognized that Ames and City of Milwaukee were
distinguishable from other removal questions but still found them relevant to
the question of removing a plaintiff state, finding,
While the immediate issue in City of Milwaukee and Ames was
whether the Supreme Court’s original jurisdiction in actions
involving States is exclusive of jurisdiction in the lower federal
courts, nearly every court to consider Eleventh Amendment
immunity in the removal context has relied on the unconditional
holding of those cases, in conjunction with the pointed and specific
language used in the constitutional text itself, to conclude that a
State cannot assert Eleventh Amendment immunity to bar the
removal of a suit it has brought.45

That said, none of the cases or founding history speak directly to the issue
at hand, which might well raise a constitutional concern had the State not
waived immunity by bringing a suit with private citizens: whether a state as a
plaintiff suing defendants over whom it has regulatory authority in state court
under its own state laws may be removed to federal court on diversity grounds
under CAFA, rather than federal question jurisdiction. In sum, we are
persuaded that we ought to rest our decision on the most narrow of
grounds46–waiver and its predicate that any immunity the State may have
cannot be conferred by the State upon the prosecution of suits by private
citizens. We are persuaded that the State cannot pull these citizens under its
claimed umbrella of protection in frustration of a congressional decision to give

45
Edmondson, 359 F.3d at 1239.
46
See, e.g., Wash. State Grange v. Wash. State Republican Party, 128 S.Ct. 1184 (2008)
(quoting United States v. Raines, 362 U.S. 17, 22 (1960)) (“Exercising judicial restraint in a
facial challenge ‘frees the Court not only from unnecessary pronouncement on constitutional
issues, but also from premature interpretations of statutes in areas where their constitutional
application might be cloudy.’”); Texas v. United States, 497 F.3d 491, 499 (5th Cir. 2007)
(asking whether procedures were authorized by statute “[t]o avoid resolution of any
constitutional issues”).

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access to federal district courts to defendants exposed to these private claims,47
presumably for reasons not far removed from those that led the first Congress
to confer diversity jurisdiction–known then and now to the trial bar as “home
cooking.”
V
At the oral hearing on removal in district court, Plaintiffs raised the
possibility of splitting the action in two, leaving the Plaintiff citizens to pursue
the class action in federal court and allowing Louisiana to remand its portion of
the case to state court, perhaps staying the federal case to await the decision of
the Louisiana courts, which will control in any event. The district court
considered this remedy but did not implement it, denying the motion for remand.
We trust that given our caution in this matter of state sovereignty, the
district court will explore the possibility of returning Louisiana to the state court
while retaining the class suit–perhaps with new class representatives drawn
from its membership. We express no opinion regarding either the permissible
or the practicable segmenting of this case. We make these observations against
the backdrop of the settled power of the district courts.48 We will affirm the

47
See, e.g., Hart v. FedEx Ground Package Sys., Inc., 457 F.3d 675, 681 (7th Cir. 2006)
(quoting S. Rep. 14, 109th Cong. 1st Sess. 43 (2005), 2005 U.S.C.C.A.N. 3, 41). The Senate
Judiciary Committee’s report on CAFA stated that
[o]verall, new section 1332(d) is intended to expand substantially
federal court jurisdiction over class actions. Its provisions should
be read broadly, with a strong preference that interstate class
actions should be heard in a federal court if properly removed by
any defendant.
48
See, e.g., Nix v. Grand Lodge of Int’l Ass’n of Mach. & Aerospace Workers, 479 F.2d
382, 385 (5th Cir. 1973) (“A district court is given broad discretion in controlling class actions
because of the managerial difficulties which may develop . . . . [T]he district court may only
take those parts of a lawsuit which lend themselves to convenient use of the class action
motif.”); id. at 386 (discussing how “[t]he court has the power under subdivision c(4)(a), which
permits an action to be brought under Rule 23 ‘with respect to particular issues’ to confine the
class action aspects of a case to those issues pertaining to the injunction and to allow damages
issues to be tried separately”); see also In re Cendant Corp. Sec. Litig., 404 F.3d 173, 202 (3d
Cir. 2005) (citing Fed. R. Civ. Pro. 23(c)(4)(B)) (“A district court hearing a class action has the

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decision not to remand and will remand the case to the district court. That court
is the able manager of this complex litigation and we will not extend these
appellate hands into that endeavor.
AFFIRMED.

discretion to divide the class into subclasses and certify each subclass separately.”); Wagner
v. Taylor, 836 F.2d 578, 585 (Fed. Cir. 1987) (“[I]n all class actions,” trial courts “can narrow
the definition of the class, divide the proposed class into subclasses, and permit class members
to opt out of the class.”); In Re Master Key Antitrust Litig., 528 F.2d 5, 12 n.11, 14 (2d Cir.
1975) (internal citations omitted) (“If the appellees establish [liability] at the trial. . . . and
further establish injury . . . [,] the amount of such injury could then be computed at a separate
trial for damages, and appropriate substratification of classes could be utilized to facilitate that
determination.”).

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