In the context of an employment law dispute, the Ninth Circuit Court of Appeals has established the criteria it will consider in determining whether to grant an appeal of an order remanding a putative class action to state court under the Class Action Fairness Act (CAFA). Coleman v. Estes Express Lines, Inc., No. 10-80152 (9th Cir., decided November 30, 2010).
The defendant called on the district court to look beyond the pleadings to decide if the federal courts had jurisdiction over the matter or whether the case involved a local controversy only and should be decided in state court. The district court decided that CAFA precluded it from considering extrinsic evidence but, even without that evidence, determined that the local controversy exception applied. The defendant sought leave to appeal the order remanding the case to state court.
The Ninth Circuit had not previously addressed under CAFA either (i) how it would evaluate applications for leave to appeal, or (ii) whether extrinsic evidence can be considered in ruling on federal-court jurisdiction. Looking to the First and Tenth Circuits, the court adopted the following factors (not as “a series of bright-line rules”) to guide its discretion in granting leave to appeal: “the presence of an important CAFA-related question” that is unsettled, incorrectly decided by the lower court or fairly debatable; the significance of the CAFA-related question to the case; and “whether the record is sufficiently developed and the order sufficiently final to permit ‘intelligent review.’” According to the court, the potential detriment to the respective parties must also be balanced.
Applying these factors, the court found that the case presented an important and unsettled question of CAFA law that could be dispositive on whether the case should be heard in state or federal court. The Ninth Circuit did not determine whether the lower court had correctly decided the issue of extrinsic evidence, but because courts have differed over the matter, it was “fairly debatable” and “appellate review would be useful.” The court also found that the matter had been fully briefed, “so the case is well-positioned for review.” As to a balancing of the equities, the court ruled that the only harm to the putative class was delay, while the defendant “will lose almost any chance of litigating this case in a federal forum if it is not allowed to appeal the remand order.” Thus, the court granted the defendant’s application for leave to appeal.