Cases & Deals

National retailer obtains favorable Eighth Circuit ruling in groundbreaking opinion recognizing that CAFA's local controversy provision is not jurisdictional

Clients National retailer

Jones Day represented a national retailer on appeal and obtained a reversal of a district court decision that ordered a putative class action remanded to state court. Plaintiffs filed this lawsuit in state court and alleged pricing violations by a number of defendants, one of them represented by Jones Day. Relying on the Class Action Fairness Act of 2005 ("CAFA"), defendants removed the case to federal court. Plaintiffs did not object to the federal forum and proceeded to litigate. Several months later, however, the district court dismissed plaintiffs' complaint, giving them an opportunity to refile. In addition to refiling, plaintiffs decided they no longer wished to proceed in federal court and moved to remand the case to state court under CAFA's local controversy provision, which allows certain matters of truly local interest to remain in state court. Defendants opposed the remand motion because it was untimely. The district court reasoned that the motion dealt with whether the court had jurisdiction to hear the case and therefore could be raised at any time. The court remanded the case.

Defendants petitioned for review by the U.S. Court of Appeals for the Eighth Circuit, and Jones Day led the appellate effort. In a groundbreaking opinion, the appellate court agreed, becoming the first Circuit Court to recognize in a published opinion that "the local controversy provision operates as an abstention doctrine, which does not divest the district court of subject matter jurisdiction." The court reversed the district court's remand order.