District Court May Not Look Behind a State Court’s Application of Its Own Procedural Law on Motion to Remand Under 28 U.S.C. § 1446, Holds Fifth Circuit

In Turner v. GoAuto Insurance, No. 22-30103 (5th Cir. May 2, 2022), the Fifth Circuit holds that a district court properly remanded a class action to state court under 28 U.S.C. § 1446 when it accepted an amended complaint, filed two days before the removal petition, as the operative complaint that limited the class solely to citizens of that state.

On January 28, 2019, plaintiff filed a complaint in a Louisiana district court (called a petition for damages) alleging violations of state insurance law. It was originally fashioned as an individual case but was later amended to include class allegations. “Eventually, Turner filed an additional memorandum that stipulated that there were more than 3,000 class members and that each member would recover at minimum $5,000. Twenty-three days later, GoAuto filed a notice of removal to federal court under the Class Action Fairness Act [CAFA]. See 28 U.S.C. § 1453(c); 28 U.S.C. § 1332(d)(2)(A).”

“Two days before GoAuto filed its notice of removal, Turner had received permission from the Louisiana court to amend his complaint again and, as accepted on appeal, filed the amended complaint. This amendment, inter alia, changed the definition of the class from class ‘residents of Louisiana’ to class ‘citizens of Louisiana.’” On plaintiff’s petition for remand, defendant argued unsuccessfully that the amended complaint, which destroyed minimal diversity, should be disregarded because it was filed in violation of state procedural rules.

The Fifth Circuit affirms and orders that the case be remanded to state court.

“GoAuto provides an extensive argument that Turner’s amended complaint is not or should not be the operative complaint. This contention amounts to an argument that the Louisiana court contravened Louisiana law in several ways by allowing Turner to amend his complaint to redefine the class. But GoAuto’s argument is defeated by the fact that before it filed its notice of removal, the Louisiana court accepted Turner’s amended complaint.”

“A basic precept of our federal system is that federal courts do not exercise authority over the proceedings of a sovereign state’s judiciary as it relates to that state’s laws.” GoAuto argued that the Supreme Court blessed this approach in Standard Fire Insurance Co. v. Knowles, 568 U.S. 588 (2013), which held that district courts may look behind the language of a state court complaint to determine if an amount in controversy requirement was met. “But Knowles does not stand for the proposition that GoAuto advances, namely that federal courts should separately evaluate the procedural rulings of a state trial court prior to removal.”

The Fifth Circuit also rejects the argument that class definitions that purport to limit themselves to citizens of state are invalid and should be disregarded. “[U]ltimately, we find the conclusion reached by our sister circuits, that nothing in the text of the Act bars such a class definition, more persuasive. See Life of the S. Ins. Co. v. Carzell, 851 F.3d 1341, 1347–48 (11th Cir. 2017); Johnson v. Advance Am., 549 F.3d 932, 937–38 (4th Cir. 2008). In fact, GoAuto points to nothing in the text of the [CAFA] statute that would bar Turner’s class definition.”

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