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Home Depot U.S.A., Inc. v. Jackson

Supreme Court of the United States · 2019 · Civil Procedure

Civil ProcedureRemovalClass Action Fairness Actremoval§ 1441(a)§ 1453(b)CAFAthird-party counterclaim defendant

Facts

Citibank sued George Jackson in North Carolina state court to collect a debt allegedly incurred on a Home Depot credit card. Jackson answered and filed an individual counterclaim against Citibank and third-party class-action claims against Home Depot and Carolina Water Systems based on an alleged scheme involving water treatment systems and North Carolina law violations. Citibank then dismissed its claims against Jackson, and Home Depot filed a notice of removal citing §§ 1332, 1441, 1446, and 1453. Jackson moved to remand on the ground that Home Depot, as a third-party/additional counterclaim defendant, could not remove.

Issue

Whether a party first brought into a case through a counterclaim filed by the original defendant may remove under the general removal statute, 28 U.S.C. § 1441(a), or under CAFA's removal provision, 28 U.S.C. § 1453(b). More specifically, the question is whether the term "defendant" in those provisions includes a third-party counterclaim defendant.

Rule

For purposes of 28 U.S.C. § 1441(a) and 28 U.S.C. § 1453(b), the term "defendant" refers only to the party sued by the original plaintiff in the plaintiff's complaint. A counterclaim, including a class-action counterclaim against a newly added third party, does not create a new removable civil action, and a third-party counterclaim defendant therefore may not remove.

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Maple Street Finance sued Lena Ortiz in Ohio state court for unpaid store-credit charges. Ortiz answered, asserted a state-law counterclaim against Maple Street Finance, and added Ridgeview Appliances, Inc. as a new party on that counterclaim. Ridgeview then filed a notice of removal under 28 U.S.C. § 1441(a), arguing that complete diversity exists between Ortiz and Ridgeview and the amount in controversy exceeds $75,000.

Should the federal court allow removal?

Explanation. Section 1441(a) authorizes removal of a civil action by the defendant or defendants to the plaintiff's original complaint, not by a counterclaim defendant added later. The majority reasoned that removal turns on the original civil action as defined by the plaintiff's complaint, and counterclaims do not create a new removable civil action. Thus, even if the counterclaim itself would satisfy diversity requirements, Ridgeview cannot remove under § 1441(a).