Tenth Circuit Joins Three Sister Circuits to Limit Appellate Review of Class Action Remand Orders | Practical Law

Tenth Circuit Joins Three Sister Circuits to Limit Appellate Review of Class Action Remand Orders | Practical Law

In Chan Healthcare Group, PS v. Liberty Mutual Fire Insurance Co., the US Court of Appeals for the Tenth Circuit held that appellate review of remand orders is limited to diversity class actions brought and removed under the Class Action Fairness Act of 2005 (CAFA). The Tenth Circuit joined the Fifth, Sixth, and Eighth Circuits and confirmed the narrow scope of appellate review of remand orders in class actions.

Tenth Circuit Joins Three Sister Circuits to Limit Appellate Review of Class Action Remand Orders

by Practical Law Litigation
Published on 09 Jan 2017 • USA (National/Federal)
In Chan Healthcare Group, PS v. Liberty Mutual Fire Insurance Co., the US Court of Appeals for the Tenth Circuit held that appellate review of remand orders is limited to diversity class actions brought and removed under the Class Action Fairness Act of 2005 (CAFA). The Tenth Circuit joined the Fifth, Sixth, and Eighth Circuits and confirmed the narrow scope of appellate review of remand orders in class actions.
On January 3, 2017, in Chan Healthcare Group, PS v. Liberty Mutual Fire Insurance Co., the US Court of Appeals for the Tenth Circuit held that appellate review of remand orders is limited to diversity class actions brought and removed under the Class Action Fairness Act of 2005 (CAFA). The Tenth Circuit joined the Fifth, Sixth, and Eighth Circuits and confirmed the narrow scope of appellate review of remand orders in class actions. ( (10th Cir. Jan. 3, 2017).)
This case arose out of a series of interrelated lawsuits brought by medical providers against insurance companies. In late 2015, Chan Healthcare Group, PS filed two class action lawsuits, one against Safeco Insurance Company and one against Liberty Mutual Insurance Company, both of whom were targets of prior class action suits. All three suits were based on similar allegations of unlawfully reduced payments to medical providers.
Despite the fact that Chan's complaint against Liberty contained no basis for federal jurisdiction, Liberty removed the case to federal court, arguing that Chan's reply brief contained a federal due process claim that created federal question jurisdiction under 28 U.S.C. § 1331.
Chan moved to remand the case, challenging the timeliness of Liberty's removal as well as Liberty's claim of federal jurisdiction. The district court granted Chan's motion to remand based on the ground that removal was untimely. Liberty petitioned for review of the remand order.
Remand orders are generally not appealable (28 U.S.C. §1447(d)). However, CAFA contains an exception permitting appeals courts to review remand orders brought "under this section" (28 U.S.C. §1453(c)(1)). Liberty argued that the CAFA exception covers remand orders in all class action cases, including those based on federal question jurisdiction.
The Tenth Circuit disagreed with Liberty and held that CAFA's exception for appellate review of remand orders is limited to diversity class actions brought under CAFA, and does not cover all class actions. The court thus lacked jurisdiction to review the district court's remand order, dismissed Liberty's petition, and kept the case in state court.
The court reached this conclusion by examining the statute's:
  • Text. The phrase "under this section" in §1453(c)(1) limits the universe of appealable orders to class actions brought under CAFA, especially when read in context of the whole of §1453.
  • Structure. §1453(b) includes references that are explicitly tied to diversity, and does not include similar provisions aimed at federal question jurisdiction.
  • Legislative history. Congress's goal in enacting CAFA was federal consideration of interstate cases, suggesting that federal question class actions were not covered.
In so holding, the Tenth Circuit joined the Fifth, Sixth, and Eighth Circuits, who concluded that the CAFA review carve-out is indeed limited to class actions brought under CAFA and not all class actions.