Second Circuit Court of Appeals Upholds Client’s Right to Remove Case to Federal Court.
A business faced a class action lawsuit commenced in New York State Supreme Court in Brooklyn from two plaintiffs, individually and for a class of similarly situated individuals, who claimed they had been forced to pay twice, the state-tax imposed when refinancing their mortgage loan, due to what they alleged was the inability of the business to assign their mortgage and further alleged that as a result they were denied use of a consolidation, extension and modification agreement (CEMA).
Our attorneys took up the case for the defense and found that the case rightly belonged in Federal Court. The plaintiffs disagreed, and moved to remand the case to New York State Supreme Court, charging that the case did not qualify for Federal jurisdiction under the Federal Class Action Fairness Act (CAFA) and that our client’s removal was not timely. The U.S. District Court agreed with the plaintiffs and remanded the case to State Court.
Our attorneys appealed that ruling to United States Court of Appeals for the Second Circuit, a court with jurisdiction for all of New York, Connecticut and Vermont. In a unanimous decision, the Court of Appeals agreed with our attorneys and held that the two 30-day removal periods in CAFA were not triggered, because the plaintiffs’ pleadings did not state a determinant amount of damages to qualify for CAFA jurisdiction, but based on the defendant’s own investigation it determined an amount of possible damages that qualified for CAFA jurisdiction in light of the Court’s bright-line Moltner Rule. Until this case, the Moltner Rule had not been applied to CAFA cases. The Appellate Court reversed the District Court’s ruling and ordered the lawsuit be heard in Federal court.
The Court of Appeals ruling set a precedent, one that will make it clearer when future cases can be removed from State to Federal court pursuant to CAFA.
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