Removal Clock For Class Action Fairness Act Does Not Start Until Plaintiff Discloses Facts Showing Removability

On April 17, 2014, the Second Circuit issued a decision in Cutrone v. Mortgage Electronic Registration Systems, Inc., No. 14-455-CV, holding that the 30-day time windows to remove an action under the Class Action Fairness Act (“CAFA”) do not start to run until the plaintiff serves the defendant with a document specifying the damages sought or setting forth facts from which the amount could be ascertained.

In Cutrone, the defendant removed an action to the EDNY under CAFA. The EDNY remanded, holding that the defendant’s notice of removal was untimely because “although the complaint filed on February 20, 2013, did not specify either the total amount of damages sought or an exact number of class members, it provided” the defendant “with all it needed to know in order to enable it to make an intelligent assessment as to CAFA removability” and, because the Notice of Removal was not filed within 30 days of receiving the Complaint, it was untimely. The Second Circuit granted the defendant’s petition for permission to appeal and, on appeal, reversed the EDNY, explaining:

We addressed this issue in Moltner v. Starbucks Coffee Co., 624 F.3d at 36‐38, a personal injury suit initially filed in New York state court. There, the plaintiff allegedly suffered severe burns while drinking tea purchased from the defendant. It was only in response to a letter from the defendant three months after the plaintiff filed suit that the plaintiff disclosed she sought more than $75,000 in damages, the threshold amount for diversity jurisdiction under 28 U.S.C. § 1332(a). The defendant filed a notice of removal within 30 days of receiving the plaintiff’s letter. In determining whether removal was timely under 28 U.S.C. § 1446(b)(3), we rejected the plaintiff’s argument that the defendant should have concluded from the state court complaint that the amount in controversy would exceed $75,000 by applying a reasonable amount of intelligence to the complaint’s general description of the plaintiff’s severe injuries. Instead, we held that the removal clock does not start to run until the plaintiff serves the defendant with a paper that explicitly specifies the amount of monetary damages sought. We stated that a bright line rule is preferable to the approach the plaintiff advocates. Requiring a defendant to read the complaint and guess the amount of damages that the plaintiff seeks will create uncertainty and risks increasing the time and money spent on litigation. Under the Moltner standard, defendants must still apply a reasonable amount of intelligence in ascertaining removability. However, defendants have no independent duty to investigate whether a case is removable. If removability is not apparent from the allegations of an initial pleading or subsequent document, the 30‐day clocks of 28 U.S.C. §§ 1446(b)(1) and (b)(3) are not triggered.

. . .

We . . . hold that, in CAFA cases, the removal clocks of 28 U.S.C. § 1446(b) are not triggered until the plaintiff serves the defendant with an initial pleading or other document that explicitly specifies the amount of monetary damages sought or sets forth facts from which an amount in controversy in excess of $5,000,000 can be ascertained. While a defendant must still apply a reasonable amount of intelligence to its reading of a plaintiff’s complaint, we do not require a defendant to perform an independent investigation into a plaintiff’s indeterminate allegations to determine removability and comply with the 30‐day periods of 28 U.S.C. §§ 1446(b)(1) and (b)(3). Thus, a defendant is not required to consider material outside of the complaint or other applicable documents for facts giving rise to removability, and the removal periods of 28 U.S.C. §§ 1446(b)(1) and (b)(3) are not triggered until the plaintiff provides facts explicitly establishing removability or alleges sufficient information for the defendant to ascertain removability.

(Internal quotations and citations omitted) (emphasis added).

Order Allowing Defendant’s Proffer To Be Disclosed To His Co-Defendants Not Appealable

On April 14, 2014, the Second Circuit issued a decision in United States v. Doe, Docket No. 14-572, dismissing an appeal from “an oral order of the” EDNY “granting the government’s motion for a protective order that would allow proffer statements made by” defendant Doe “to be disclosed to his codefendants” because the order was not appealable.

The Second Circuit determined that the EDNY’s discovery order was not appealable under the collateral order doctrine, notwithstanding the circumstances of the disclosure ordered, explaining:

Typically, this Court lacks jurisdiction to entertain an appeal until the district court renders a final judgment. Doe, however, argues his appeal properly brought pursuant to the collateral order doctrine, or as a petition for a writ of mandamus. The collateral order doctrine permits an appeal of a small class of collateral rulings that, although they do not end the litigation, are appropriately deemed final. Only decisions that are conclusive, that resolve important questions separate from the merits, and that are effectively unreviewable on appeal from the final judgment the underlying action fall within this exception to the rule of finality. In making this determination, we do not engage in an individualized jurisdictional inquiry. Rather, our focus is on the entire category to which a claim belongs. The policy embodied in 28 U.S.C. § 1291 is at its strongest in the field of criminal law. As Doe’s counsel concedes, disclosure of these proffer statements is a routine practice; we therefore cannot conclude that the entire category, of orders sanctioning the disclosure of proffer statements raises issues of such importance as to justify an exception to the final judgment rule. We conclude that we lack jurisdiction to hear Doe’s appeal.

(Internal quotations and citations omitted) (emphasis added). The court went on, however, to note that its

disposition does not endorse the district court’s decision, nor limit the ability of the court to reconsider its order, including giving further consideration to the advisability of more restrictive conditions on the government’s proposed disclosures

and to discuss alternatives to the proposed disclosure.

Second Circuit Clarifies Rules for Time to Appeal Non-Final Orders

On April 2, 2014, the Second Circuit issued a decision in United States ex rel. Maurice Keshner v. Nursing Personnel Home Care, Docket Nos. 13-1688-cv (Lead), 14-251-cv (Con), addressing the question of when the time to appeal non-final fee awards begins to run.

In Keshner, the Second Circuit addressed a motion to dismiss an appeal from an order issued by the EDNY awarding a qui tam plaintiff attorney’s fees because the appeal had been filed more than 60 days after the initial decision granting the fees was issued.  The Court held that a “fee award, entered before entry of a final judgment or a partial judgment entered pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, did not have to be appealed until entry of an appealable judgment.” It explained that:

because the fee award against [the appealing defendant] was a collateral order in a case that remained pending because of open claims against other defendants, the entry of the fee award did not trigger [the defendant’s] obligation to file a notice of appeal. Failure to take an available collateral order appeal does not forfeit the right to review the order on appeal from a final judgment. Indeed, we would not expect an appellate court to require an interlocutory appeal of a pre-judgment or pre-final order fee award because review of a fee award would normally be intertwined with the merits of an appeal from a final judgment or final order. Of course, once the District Court in the pending case entered a partial judgment under Rule 54(b), the time to appeal that judgment began upon its entry.

(Internal quotations and citations omitted).

This decision adds clarity to what can be the confusing question of whether/when interlocutory appeals need be taken under the Federal Rules of Civil Procedure.  The Keshner Court noted that four months ago, in Perez v. AC Roosevelt Food Corp., 734 F.3d 175 (2d Cir. 2013), amended, No. 13-497, 2013 WL 6439381 (2d Cir. Dec. 10, 2013), the Second Circuit reached a different conclusion on different facts, so in assessing the question of when/whether to appeal a non-final order awarding attorney’s fees, one might want to consult Perez as well as Keshner.