With Justice Clarence Thomas taking the lead, the U.S. Supreme Court on Tuesday made it more difficult for class action defendants to transfer their cases from plaintiff-friendly state courts to more business-friendly federal courts.
Thomas wrote the majority opinion in Home Depot USA v. Jackson, ruling that so-called third-party counterclaim defendants in class actions do not have the authority under the Class Action Fairness Act to transfer or remove their cases to federal courts.
The rare pro-consumer ruling in a class action was even more unusual because of the uncommon allies who joined Thomas: liberal Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan. That lineup had not taken place in a 5-4 ruling since 2014.
The decision at bottom was a matter of dueling statutory interpretations. Justice Samuel Alito Jr., who often aligns with Thomas, wrote a stern dissent, asserting that the majority “has not one jot or tittle of analysis on the plain meaning” of “defendant” in the class action law, also stating that another part of the majority ruling “rests on a non sequitur.”
Paul Bland of Public Justice, who argued the case on behalf of Home Depot customer George Jackson, tweeted: “Huge win in U.S. Supreme Court! Court refused to make it easier for corporations scamming consumers to push cases to their favorite courts.”
In an interview with The National Law Journal before oral argument in January, Bland said that if Home Depot prevailed, “all of a sudden nearly every sizable personal injury case or products liability case would be easy to force in federal court and get out of state court.”
In 2016, Citibank filed a debt-collection action against Jackson for money he owed on a Home Depot credit card. Jackson filed a counterclaim for a putative class against Citibank, Home Depot and Carolina Water Systems Inc. Home Depot allegedly induced homeowners to buy expensive water treatment systems, which Jackson claimed violated North Carolina law.
Home Depot removed the case to federal court, but Jackson sued to remand it to state court because under the law “third-party/additional counter defendant like Home Depot” could not transfer class actions to federal court. The federal district court and U.S. Court of Appeals for the Fourth Circuit agreed with Jackson, prompting Home Depot to take the dispute to the Supreme Court.
Thomas said his reading of the statute led him to agree with the lower courts in Jackson’s case.
“The limits Congress has imposed on removal show that it did not intend to allow all defendants an unqualified right to remove,” Thomas wrote. “The dissent argues that our interpretation allows defendants to use the statute as a ‘tactic’ to prevent removal … but that result is a consequence of the statute Congress wrote. Of course, if Congress shares the dissent’s disapproval of certain litigation ‘tactics, it certainly has the authority to amend the statute. But we do not.”
In dissent, Alito said that under the majority’s interpretation, “a defendant’s routine attempt to collect a debt from a single consumer could be leveraged into an unremovable attack on the defendant’s ‘credit and lending policies’ brought on behalf of a whole class of plaintiffs—all in the very state courts that CAFA was designed to help class-action defendants avoid.”
Alito’s dissent was joined by Chief Justice Roberts and Justices Neil Gorsuch and Brett Kavanaugh.
The Supreme Court ruling in Home Depot v. Jackson is posted below: