PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 17-1627

GEORGE W. JACKSON,

 Third Party Plaintiff – Appellee,

v.

HOME DEPOT U.S.A., INCORPORATED,

 Third Party Defendant – Appellant,

and

CAROLINA WATER SYSTEMS, INC.; CITIBANK, N.A.,

 Defendants.

Appeal from the United States District Court for the Western District of North Carolina, 

at Charlotte. Graham C. Mullen, Senior District Judge. (3:16-cv-00712-GCM)

Argued: December 5, 2017 Decided: January 22, 2018

Before NIEMEYER, SHEDD and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion, in which Judge 

Niemeyer and Judge Shedd joined.

ARGUED: Sidney Stewart Haskins, II, KING & SPALDING, LLP, Atlanta, Georgia, 

for Appellant. David Kevin Lietz, VARNELL & WARWICK, P.A., Lady Lake, Florida, 

for Appellee. ON BRIEF: Merritt McAlister, J. Andrew Pratt, Zheyao Li, Atlanta, 
2

Georgia, Antonio E. Lewis, KING & SPALDING, LLP, Charlotte, North Carolina, for 

Appellant. Daniel K. Bryson, WHITFIELD, BRYSON & MASON, LLP, Raleigh, North 

Carolina; Rashad Blossom, BLOSSOM LAW PLLC, Charlotte, North Carolina; Janet R. 

Varnell, VARNELL & WARWICK, P.A., Lady Lake, Florida, for Appellee.
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DUNCAN, Circuit Judge:

Third-Party Defendant Home Depot U.S.A., Inc., filed a Petition for Permission to 

Appeal the district court’s order remanding this case to state court. This court deferred 

ruling on Home Depot’s Petition for Permission to Appeal pending consideration of the 

merits of the appeal. Home Depot argues that it is entitled to remove the class action 

counterclaim against it despite Fourth Circuit precedent to the contrary because either the 

Supreme Court has called this precedent into question or it is distinguishable here. Home 

Depot also appeals the district court’s denial of its motion to realign the parties. 

We grant Home Depot’s Petition for Permission to Appeal. For the reasons that 

follow, we affirm both the district court’s decision to remand this case to state court and 

its denial of Home Depot’s motion to realign the parties.

I.

On June 9, 2016, Citibank, N.A., filed a debt collection action against George W. 

Jackson in the District Court Division of the General Court of Justice of Mecklenburg 

County, North Carolina. Citibank alleged that Jackson failed to pay for a water treatment 

system he purchased using a Citibank-issued credit card. On August 26, 2016, Jackson 

filed an Answer in which he asserted a counterclaim against Citibank and third-party 

class action claims against Home Depot and Carolina Water Systems, Inc. (“CWS”). 

Jackson alleged that Home Depot and CWS engaged in unfair and deceptive trade 

practices by misleading customers about their water treatment systems, and that Citibank 

was jointly and severally liable to him because Home Depot “directly sold or assigned the 
4

transaction to” Citibank. J.A. 51. On September 23, 2016, Citibank voluntarily 

dismissed its claims against Jackson without prejudice.

Home Depot filed a notice of removal on October 12, 2016, citing federal 

jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”). Home Depot 

asserted that its notice of removal was timely under 28 U.S.C. § 1446(b) because it was 

filed within thirty days of its September 12, 2016, receipt of Jackson’s counterclaim. On 

October 28, 2016, Home Depot moved to realign the parties with Jackson as plaintiff and 

Home Depot, CWS, and Citibank as defendants. On November 8, 2016, Jackson moved 

to remand. On November 18, 2016, Jackson amended his third-party complaint to 

remove any reference to Citibank. 

The district court denied Home Depot’s motion to realign because it concluded 

that this was not a case “where there are antagonistic parties on the same side,” and 

granted Jackson’s motion to remand because Home Depot did not meet the removal 

statute’s definition of “defendant.” See Citibank, N.A. v. Jackson, No. 3:16-CV-00712-

GCM, 2017 WL 1091367, at *2–4 (W.D.N.C. Mar. 21, 2017). 

II.

We review de novo the district court’s decision to remand to state court. See

Quicken Loans Inc. v. Alig, 737 F.3d 960, 964 (4th Cir. 2013). We also review de novo 

the district court’s refusal to realign the parties, but review the district court’s factual 

determinations on this point for clear error. See Prudential Real Estate Affiliates, Inc. v. 

PPR Realty, Inc., 204 F.3d 867, 872–73 (9th Cir. 2000).
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Under the general removal statute, “any civil action brought in a State court of 

which the district courts of the United States have original jurisdiction[] may be removed 

by the defendant or the defendants” to the appropriate district court. 28 U.S.C. § 1441(a). 

Section 1446 establishes the procedure for removal under § 1441 and other sections.

In Shamrock Oil & Gas Corp. v. Sheets, the Supreme Court concluded that the 

predecessor to § 1441 did not permit an original plaintiff to remove a counterclaim

against it. 313 U.S. 100, 108 (1941). The Court contrasted the statute, which authorized 

removal “by the defendant or defendants therein,” with other statutes that had allowed 

removal by “either party,” and held that Congress’s choice of words indicated “the 

Congressional purpose to narrow the federal jurisdiction on removal.” See id. at 104, 

107. While § 1441 was not before the Court in Shamrock Oil, § 1441 uses similar 

language to its predecessor and allows removal by “the defendant or the defendants.” 

Courts therefore interpret § 1441 in accordance with Shamrock Oil. See, e.g., Westwood 

Apex v. Contreras, 644 F.3d 799, 805 (9th Cir. 2011); First Nat’l Bank of Pulaski v. 

Curry, 301 F.3d 456, 462–63 (6th Cir. 2002).

Congress, however, has expanded removal authority for class actions. It enacted 

CAFA “to curb perceived abuses of the class action device which, in the view of CAFA’s 

proponents, had often been used to litigate multi-state or even national class actions in 

state courts.” Tanoh v. Dow Chemical Co., 561 F.3d 945, 952 (9th Cir. 2009). To that 

end, CAFA, and in particular 28 U.S.C. § 1453(b), was adopted to extend removal 

authority beyond the traditional rules.
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Section 1453(b) states that a class action filed in state court may be removed “in 

accordance with section 1446 (except that the 1-year limitation under section 1446(c)(1) 

shall not apply), without regard to whether any defendant is a citizen of the State in 

which the action is brought, except that such action may be removed by any defendant 

without the consent of all defendants.” 28 U.S.C. § 1453(b) (emphases added). Section 

1453(b) thus refers to § 1446, which establishes the procedures for removal. 

This court has interpreted § 1453(b) to eliminate three of the traditional limitations 

on removal. See Palisades Collections LLC v. Shorts, 552 F.3d 327, 331 (4th Cir. 2008) 

(citing Progressive W. Ins. Co. v. Preciado, 479 F.3d 1014, 1018 n.2 (9th Cir. 2007)). 

First, it eliminates the rule that the defendant cannot remove a case filed in its home 

forum. Id. Second, it eliminates the rule that a defendant cannot remove a case that has 

been pending in state court for more than one year. Id. Third, it eliminates the rule 

requiring unanimous consent of all defendants for removal. Id.

This court has also held that CAFA’s expanded removal authority does not allow 

removal of a class action counterclaim asserted against an additional counter-defendant.

1

 

See id. at 336. Palisades addressed facts similar to those presented here,2 and concluded 

 1 Palisades described a defendant, not the original plaintiff, named in a 

counterclaim as an “additional counter-defendant,” and we adopt that language here. 

Home Depot’s caption in this case is “Third Party Defendant,” but any suit by a 

defendant against the plaintiff, including any properly joined claims, is a counterclaim. 

Id. at 329 n.1. A counter-defendant need not also be the original plaintiff. Id.

2 In Palisades, the plaintiff initiated a collection action in state court to recover 

unpaid charges plus interest owed on a cellphone service contract. Id. at 329. The 

original defendant filed an answer denying the complaint’s allegations and asserting a 

counterclaim against the original plaintiff. Id. The original defendant later filed an 

(Continued)
7

that an additional counter-defendant was not “the defendant or the defendants” with 

removal authority under § 1441(a). Id. First, Palisades applied Shamrock Oil and held 

that an additional counter-defendant was not “the defendant or the defendants” because it 

was not a defendant against whom the original plaintiff asserted a claim. Id. Second, it 

emphasized that “Congress has shown the ability to clearly extend the reach of removal 

statutes to include counter-defendants, cross-claim defendants, or third-party defendants,” 

but § 1441(a) refers only to “the defendant or the defendants,” which supports a narrow 

view of removal under that provision. Id. at 333–34. Third, it observed that this 

conclusion was consistent with the obligation to construe removal jurisdiction strictly. 

Id.

Palisades also held that an additional counter-defendant was not “any defendant” 

entitled to removal under § 1453(b). Id. at 334. First, it concluded that because an 

additional counter-defendant was not “the defendant or the defendants” under § 1441(a), 

it could not be “any defendant” under § 1453(b). Id. It reasoned that “any” did not 

change the meaning of “defendant,” and that the inclusion of “any” at most allowed 

removal by a party that met the existing definition of “defendant.” Id. at 335. Second 

(and relatedly), it examined the text of § 1453(b) and concluded that the two references to 

“any defendant” eliminated specific removal restrictions but did not expand the definition 

 

amended counterclaim joining an additional counter-defendant and moved for class 

certification. Id. The additional counter-defendant removed to federal court. Id. The 

original defendant moved to remand on the grounds that the additional counter-defendant 

was not a “defendant” pursuant to § 1441. Id. at 329–30. The district court granted the 

motion to remand, and we affirmed. Id. at 330, 337.
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of “defendant.” Id. at 335. According to the court, the phrase “without regard to whether 

any defendant is a citizen of the State in which the action is brought” merely eliminated 

the home-state defendant rule. See id. And the phrase “may be removed by any 

defendant without the consent of all defendants” merely eliminated the unanimity 

requirement. See id. In the context of construing § 1453(b) as well, Palisades observed 

that “this conclusion is consistent with our duty to construe removal jurisdiction strictly 

and resolve doubts in favor of remand.” Id. at 336. 

Since this court’s decision in Palisades, other courts have considered whether an 

additional counter-defendant can remove a class action counterclaim. Palisades’s

conclusion that an additional counter-defendant cannot remove a class action has been 

adopted by at least two other circuits. See Tri-State Water Treatment, Inc., v. Bauer, 845 

F.3d 350, 355–56 (7th Cir. 2017) (reaching the same conclusion and stating that “[t]he 

only two circuits that have squarely addressed this issue agree with us”); Contreras, 644 

F.3d 799 (the other decision cited by Tri-State).

III.

Home Depot argues that it is entitled to remove Jackson’s counterclaim for two 

reasons. It first argues that the Supreme Court has cast doubt on the assumptions that 

underpinned this court’s decision in Palisades, and that we must therefore reconsider 

whether an additional counter-defendant is entitled to remove a class action counterclaim. 

In particular, Home Depot claims that the conclusion in Palisades that an additional 

counter-defendant is not “any defendant” with removal authority under § 1493(b) does 
9

not survive the Supreme Court’s decision in Dart Cherokee Basin Operating Co., LLC v. 

Owens, 135 S. Ct. 547 (2014). Home Depot argues that Dart Cherokee called into 

question the application of Shamrock Oil’s interpretation of “defendant” in the class 

action context.

Alternatively, Home Depot argues that even if Palisades survives Dart Cherokee, 

Palisades is inapplicable here because Citibank, the original plaintiff, is no longer a party 

in this case. Home Depot argues that it is a defendant in Jackson’s counterclaim, the sole 

live action remaining, and thus is entitled to remove under § 1446(b). Because our 

analysis is constrained by the intricate timeline before us, we note again that on August 

26, 2016, Jackson filed his counterclaim; on September 23, 2016, Citibank voluntarily 

dismissed its claims against Jackson without prejudice (but remained a counter-defendant 

in Jackson’s counterclaim); on October 12, 2016, Home Depot filed its notice of removal;

on October 28, 2016, Home Depot moved to realign the parties; on November 8, 2016, 

Jackson moved to remand; and on November 18, 2016, Jackson amended his 

counterclaim to drop his claims against Citibank. Only at that point was Citibank no 

longer a party to this dispute.

Finally, Home Depot argues that the district court erred by failing to realign the 

parties. Home Depot apparently seeks to be captioned as a “defendant” in order to 

strengthen its argument that it is a defendant under the removal statutes.

For the reasons that follow, we disagree. We conclude that our decision in 

Palisades survives Dart Cherokee and is applicable here. We also affirm the district 
10

court’s denial of Home Depot’s motion to realign the parties. We address each argument 

in turn.

A.

Home Depot first argues that Palisades does not survive Dart Cherokee because 

the “Supreme Court’s rejection of the anti-removal presumption in Dart Cherokee

undermines Palisades’s reasoning” and calls into question the application of Shamrock 

Oil under CAFA because of the unique federalism interests present in class action cases. 

See Appellant’s Br. at 22. We disagree. We hold that the Supreme Court has not called 

into question Palisades’s conclusion that an additional counter-defendant is not entitled 

to remove under § 1441(a) or § 1453(b), nor has it abandoned Shamrock Oil’s definition 

of “defendant” in the class action context.

In Dart Cherokee, the Supreme Court held that a defendant’s notice of removal 

need only include a plausible allegation that the amount in controversy exceeds the 

jurisdictional threshold. Dart Cherokee, 135 S. Ct. at 553–54. In so holding, the 

Supreme Court remarked that “no antiremoval presumption attends cases invoking 

CAFA, which Congress enacted to facilitate adjudication of certain class actions in 

federal court.” Id. at 554.

Home Depot argues that Palisades’s “application of the ‘original defendant’ rule 

was based, in substantial part, on a flawed premise that the ‘anti-removal presumption’ 

applies to CAFA.” Appellant’s Br. at 21. This characterization appears to be based on 

Palisades’s interpreting § 1453(b) “consistent with our duty to construe removal 
11

jurisdiction strictly and resolve doubts in favor of remand.” See Palisades, 552 F.3d at 

336. But it is possible to construe removal strictly without applying an anti-removal 

presumption. The Seventh Circuit recently did precisely that in holding that § 1453(b) 

did not expand removal authority to an additional counter-defendant in a class action 

while explicitly noting the absence of an anti-removal presumption in the CAFA context. 

Tri-State, 845 F.3d at 356. Moreover, Palisades itself recognized that CAFA expanded 

removal authority, noting that “[t]hrough CAFA, Congress expanded federal diversity 

jurisdiction by amending 28 U.S.C. § 1332,” and that “we are cognizant of the fact that 

Congress clearly wished to expand federal jurisdiction through CAFA.” See Palisades, 

552 F.3d at 331, 336. Accordingly, we conclude that the strict construction of the 

removal statute in Palisades did not reflect an anti-removal presumption.

Nor can we conclude that Palisades applied an anti-removal presumption by 

utilizing Shamrock Oil’s definition of “defendant” in the class action context. The 

analytical focus of Palisades was on interpreting the word “defendant” in § 1441(a) and 

§ 1453(b) to have the same meaning in both provisions. Since the definition of the term 

“the defendant or the defendants” in § 1441(a) was well-established and the provision 

was not amended by CAFA, we concluded that § 1453(b)’s two references to “any 

defendant” did not change the meaning of § 1441(a) or extend a right of removal under 

§ 1453(b) to additional parties. To give the term “defendant” in these interlocking 

removal statutes different meanings would render the provisions “incoherent.” See First 

Bank v. DJL Props., LLC, 598 F.3d 915, 917 (7th Cir. 2010). When Congress uses a 

term with a well-established meaning, we presume--absent evidence otherwise--that 
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Congress intends to adopt that meaning, because Congress is presumed to be aware of 

judicial interpretations. See id. 

As the Seventh Circuit noted in rejecting an argument identical to that presented 

here, “there is not a whisper in Dart Cherokee of any move to overrule Shamrock Oil. If 

that is where the Supreme Court is going, it will have to get there on its own; it is not for 

us to anticipate such a move.” Tri-State, 845 F.3d at 356. We agree. If the Supreme 

Court believes that CAFA expanded the meaning of “defendant,” it will say so directly. 

We decline to upend so settled a definition as “defendant” without clear direction from 

the Supreme Court. We therefore hold that Dart Cherokee did not undermine Palisades’s 

interpretation of § 1441(a) and § 1453(b).

B.

Alternatively, Home Depot seeks to distinguish Palisades on the grounds that it is 

a defendant--not a counter-defendant or a third-party defendant--in the only live dispute 

in this case. As such, it contends that it is entitled to remove because § 1446(b)(2)(B) 

allows each defendant “30 days after receipt by or service on that defendant of the initial 

pleading or summons . . . to file the notice of removal.” But at the time Home Depot 

filed for removal, Citibank--the original plaintiff--remained a counter-defendant. We 

therefore hold that Home Depot cannot avoid Palisades merely because Citibank had 

dismissed its claims against Jackson. 

In reaching this conclusion, we pay particular attention to the complex timeline of 

events in this case. While Citibank is no longer a party to this dispute, it remained a 
13

counter-defendant when Home Depot filed its notice of removal, which is when we 

evaluate removability. See Francis v. Allstate Ins. Co., 709 F.3d 362, 367 (4th Cir. 

2013). When Home Depot filed its notice of removal on October 12, 2016, Jackson’s 

counterclaim still asserted claims against Citibank. Indeed, Jackson still asserted claims 

against Citibank when he filed his motion to remand on November 8, 2016. Because 

Citibank remained a counter-defendant when Home Depot filed its notice of removal, we 

cannot give weight to the fact that Jackson later dropped his claims against Citibank. The 

only relevant distinction between this case and Palisades is that here the original 

complaint had been voluntarily dismissed without prejudice when Home Depot filed its 

notice of removal. 

Against this backdrop, we hold that Home Depot is not entitled to remove 

Jackson’s counterclaim. First, this result is most consistent with our precedent governing 

removal under § 1441(a) and § 1453(b). We have consistently allowed removal only by 

parties against whom the original plaintiff asserts claims and have never conditioned this 

rule upon the viability of the original complaint. See Palisades, 552 F.3d at 333. As we 

stated previously, we pay close attention to the fact that at the time Home Depot filed its 

notice of removal, Citibank remained a counter-defendant in this case even though it had 

voluntarily dismissed without prejudice its claim against Jackson. We need not decide 

how § 1441(a) and § 1453(b) would apply if, at the time Home Depot filed its notice of 

removal, Jackson had dropped his counterclaim against Citibank.

Second, allowing Home Depot to remove would give the original plaintiff--who in 

North Carolina has broad power to voluntarily dismiss its complaint, see N.C. Gen. Stat. 
14

§ 1A–1 Rule 41(a)--the power to decide whether a counterclaim against it is adjudicated

in federal court. Citibank’s voluntary dismissal of its complaint cannot make an existing 

counterclaim against Citibank and others removable. If it did, Citibank would have de 

facto removal authority in contravention of the rule that an original plaintiff cannot 

remove a counterclaim against it. 

Third, allowing Home Depot to remove would invite gamesmanship. When 

Jackson filed his counterclaim, Home Depot could not remove because it was not a party 

against whom Citibank initially brought a claim. See Palisades, 552 F.3d at 333. If 

Home Depot could now remove Jackson’s counterclaim, an original plaintiff counterdefendant could voluntarily dismiss its complaint without prejudice in order to disrupt 

unfavorable proceedings in state court, and, given CAFA’s expanded removal authority, 

an additional counter-defendant could then remove the counterclaim to federal court. 

The original plaintiff might later attempt to reinstate its state court action, creating 

parallel proceedings in state court. 

At the time Home Depot filed its notice of removal, the original plaintiff remained 

a party in the counterclaim Home Depot tried to remove. Allowing Home Depot to 

remove the counterclaim against Home Depot, Citibank, and CWS would be inconsistent 

with our prior interpretations of CAFA’s removal statute. Accordingly, we conclude that 

Home Depot cannot escape the holding of Palisades. 
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C.

In an attempt to bolster its argument that it is a defendant entitled to file a notice of 

removal under § 1446(b)(2)(B), Home Depot appeals the district court’s denial of its 

motion to realign the parties. Because this case does not involve an attempt to artificially 

manufacture diversity jurisdiction, we affirm the district court’s denial of Home Depot’s 

motion to realign.

Judicial realignment of the parties prevents the creation of sham diversity 

jurisdiction. Faysound Ltd. v. United Coconut Chems. Inc., 878 F.2d 290, 295 (9th Cir. 

1989). “Diversity jurisdiction cannot be conferred upon the federal courts by the parties’ 

own determination of who are plaintiffs and who are defendants. It is [the Supreme 

Court’s] duty, as it is that of the lower federal courts, to look beyond the pleadings and 

arrange the parties according to their sides in the dispute.” Indianapolis v. Chase Nat’l 

Bank of City of N.Y., 314 U.S. 63, 69 (1941). In determining whether to realign the 

parties, this court employs the “principal purpose” test, in which we determine the 

primary issue in controversy and then align the parties according to their positions with 

respect to that issue. U.S. Fidelity & Guar. Co. v. A&S Mfg. Co., Inc., 48 F.3d 131, 133 

(4th Cir. 1995). 

In its rush to claim applicability of the principal purpose test, Home Depot ignores 

the reason realignment exists at all. Realignment ensures that parties do not artfully draft 

pleadings in order to escape “the mandate that courts carefully confine their diversity 

jurisdiction to the precise limits that the jurisdictional statute, pursuant to Article III, has 

defined.” See id. Because no party contends that this case involves an attempt to 
16

fraudulently manufacture diversity jurisdiction, we need not delve too deeply into the 

issue of realignment. In the absence of a compelling reason to apply principles of 

realignment outside their traditional domain, we affirm the district court’s denial of 

Home Depot’s motion to realign the parties.

IV.

For the foregoing reasons, the district court properly declined to realign the parties 

and correctly remanded this case to state court. Accordingly, the judgment of the district 

court is

AFFIRMED.