AT&T Mobility LLC v. Shorts

Case Updates

The Fourth Circuit declined to grant en banc review to consider whether a counterclaim defendant can assert jurisdiction under the Class Action Fairness Act (CAFA).

NCLC urged the Fourth Circuit to review this case en banc. The three-judge panel erroneously held that a party joined as a defendant to a counterclaim may not remove a class action countersuit to federal court solely because the counterclaim satisfies the jurisdictional requirements of the Class Action Fairness Act (CAFA). NCLC argued that the panel majority’s decision conflicts with CAFA’s central purpose of expanding federal jurisdiction over multi-state class actions.

A three-judge panel erroneously held that a party joined as a defendant to a counterclaim may not remove a class action countersuit to federal court solely because the counterclaim satisfies the jurisdictional requirements of CAFA.

In this case, the respondent countersued with a multi-state class action after the petitioner business brought a debt collection action against the respondent. NCLC argued that when a defendant countersues with a proposed class action that satisfies all of the Class Action Fairness Act (CAFA) prerequisites, the counterclaim defendant should be allowed to remove that case to federal court. NCLC argued that the lower court’s decision to prohibit the removal of the countersuit class action to federal court would create a giant CAFA loophole encouraging the plaintiff’s bar to bring class actions as counterclaims. The result would be the resurgence of class action “magnet jurisdictions,” state courts that cater to abusive class action practices.