Fourth Circuit Adopts Standards for Discretionary Appeals of CAFA Remands

In Dominion Energy, Inc. v. City of Warren Police and Fire Retirement System (PDF, 147KB), the Fourth Circuit announced a non-exhaustive list of things it would consider in deciding whether to allow an appeal from an order remanding a class action to state court. These criteria are the same as those that several other courts of appeals use. The Fourth Circuit went on to accept an appeal to address whether claims for aiding or abetting the breach of a fiduciary duty fall within CAFA’s removal exceptions. It ultimately held that they didn’t.

The Class Action Fairness Act (which is commonly referred to with the acronym “CAFA”) allows parties to remove a class action from state court to federal court if certain criteria are met. But if the district court remands the class action back to state court, opportunities for appealing that order are limited. Aggrieved parties petition the court of appeals for permission to appeal under 28 U.S.C. § 1453(c)(1). The court of appeals then has discretion to accept the appeal.

Before Dominion Energy, the Fourth Circuit had accepted appeals under § 1453(c)(1) without announcing any standards for exercising its discretion. In Dominion Energy, the court adopted the same non-exhaustive set of considerations that several other courts of appeals have used:

1. Whether the petition presents an important CAFA-related question;
2. Whether the question presented by the CAFA appeal petition is unsettled;
3. Whether the district court’s jurisdictional decision under CAFA is incorrect, or at least fairly debatable;
4. Whether the CAFA-related question is consequential to the resolution of the particular class action;
5. Whether that question is likely to evade effective review if left for consideration only after final judgment;
6. Whether the CAFA-related question is likely to recur;
7. Whether the petition arises from a decision that is sufficiently final to position the class action for intelligent review; and
8. Whether the probable harm to the petitioners if an immediate appeal is denied outweighs the probable harm to the other parties should an immediate appeal be entertained.

The petition in Dominion Energy involved the application of CAFA’s removal exceptions (found in § 1453(d)). CAFA provides that certain kinds of class claims cannot be removed to federal court despite meeting the normal removal criteria. The defendants in Dominion Energy asked the Fourth Circuit to address whether a claim for aiding and abetting the breach of a fiduciary duty falls within one or more of those exceptions. And the Fourth Circuit thought that this issue merited an immediate appeal. The issue had been the subject of several district court decisions and was likely to recur. The issue was also primed for appellate review; no further factual development was necessary, and absent an immediate appeal the defendants would likely lose any chance to litigate in a federal forum.

Judge Motz dissented. But she agreed that the appeal should be allowed, dissenting on the merits of the removal-exception question.

Links to the decision: Dominion Energy, Inc. v. City of Warren Police and Fire Retirement System, 2019 WL 2707584 (4th Cir. 2019), available at the Fourth Circuit and Westlaw.