Opinion ID: 2750315
Heading Depth: 3
Heading Rank: 1

Heading: The State Action Provision

Text: The state action provision excludes from federal jurisdiction “any class action in which . . . the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief.” 28 U.S.C. § 1332(d)(5). Plaintiffs argue this provision presents an alternate ground on which we may affirm the magistrate judge’s order of remand. They interpret the state action provision more broadly than the magistrate judge—who thought the provision required all primary defendants to be states, state officials, or state entities—and urge us to interpret it as precluding federal CAFA jurisdiction if any primary defendant is a state or state entity.4 According to Plaintiffs, a contrary interpretation is inconsistent with the purpose of CAFA because it could allow a primary defendant—like the Division—to wholly escape liability under principles of Eleventh Amendment immunity. In contrast, Defendants advance an interpretation consistent with the magistrate judge’s holding, contending the state action provision requires all primary defendants to be state entities from whom the district court may be precluded from ordering relief under the Eleventh Amendment. Defendants further argue Eleventh Amendment concerns are not relevant here because, although the Division is a primary defendant and a state entity, Standard is also a primary defendant, is not a state entity, and is thus subject to liability in the federal court. 4 Although Plaintiffs challenge the magistrate judge’s interpretation of the provision, they do not dispute that Standard is a primary defendant and is not a state entity. 9 In interpreting this provision, our analysis must begin and end with the language of the statute itself, “for where . . . the statute’s language is plain, the sole function of the courts is to enforce it according to its terms.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989) (internal quotation marks omitted); Coffey, 581 F.3d at 1245 (“[I]t is our primary task in interpreting statutes to determine congressional intent, using traditional tools of statutory construction. In ascertaining such congressional intent, we begin by examining the statute’s plain language, and if the statutory language is clear, our analysis ordinarily ends.” (internal quotation marks and alterations omitted)). Based on the plain language of the state action exception, we conclude it requires all primary defendants to be state entities. The state action provision provides that CAFA jurisdiction “shall not apply to any class action in which—(A) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief.” 28 U.S.C. § 1332(d)(5)(A). The use of the definite article, “the,” before the plural noun, “primary defendants,” and the use of the plural verb, “are,” leaves no doubt Congress intended the state action provision to preclude CAFA jurisdiction only when all of the primary defendants are states, state officials, or state entities. If Congress had intended otherwise, it could have expressly stated that federal CAFA jurisdiction shall not apply to any class action in which “a primary defendant is” a state, state official, or state entity. See Mississippi ex rel. Hood v. AU Optronics Corp., ___ U.S. ___, 134 S. Ct. 736, 742 (2014) (determining CAFA’s mass action provision—which allows removal of cases where “100 or more persons” are to be tried jointly—requires there be 100 or more 10 named plaintiffs, not 100 or more unnamed real parties in interest because if Congress had intended the latter, it could have easily drafted language to that effect). This interpretation is also consistent with that of the United States Court of Appeals for the Fifth Circuit, which is the only federal circuit to have considered this precise issue. See Frazier v. Pioneer Ams. LLC, 455 F.3d 542, 546 (5th Cir. 2006) (holding the state action provision requires all primary defendants to be states, state officials, or state entities). And Plaintiffs have directed us to no court that has reached a contrary conclusion.5 In light of CAFA’s plain language, we see no reason to part company with the Fifth Circuit on this issue. See Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1521 (10th Cir. 1991) (“Splitting the circuits always is something we approach with trepidation.”); United States v. Philip Morris USA, Inc., 396 F.3d 1190, 1201 (D.C. Cir. 2005) (noting that “we avoid creating circuit splits when possible”). Finally, although we are not unsympathetic to Plaintiff’s argument that under our interpretation the Division may be shielded from liability under Eleventh Amendment immunity principles, we are bound by the statute’s clear and unambiguous language. See Frazier, 455 F.3d at 546 (recognizing the possibility that its interpretation of the statute 5 Rather, Plaintiffs cite Hangarter v. Paul Revere Life Ins. Co., No. C 05-04558 WHA, 2006 WL 213834 (N.D. Cal. Jan. 26, 2006), a case in which the court did not interpret the statutory language, but instead examined only whether a party was actually a primary defendant, and Gatti v. Louisiana, No. CIV.A. 10-329-JJB, 2011 WL 1827437 (M.D. La. Feb. 25, 2011) report and recommendation adopted, CIV.A. 10-329-JJB, 2011 WL 1827356 (M.D. La. May 12, 2011), a case in which the court recognized that the law of the Fifth Circuit requires that all primary defendants must be state entities, but examined whether a state was, in fact, a primary defendant. Neither case supports Plaintiffs’ interpretation of the state action provision of CAFA. 11 could preclude relief from one defendant, but concluding “that is the price of sovereign immunity, and in any event § 1332(d)(5)(A) is clear—all primary defendants must be states”). The statute plainly provides that a federal court lacks jurisdiction under the state action provision only if all primary defendants are state entities. Because it is undisputed Standard is a primary defendant and is not a state entity, the magistrate judge correctly determined the state action provision does not require remand of this class action to the state court.