Recent Development by Stephen Aslett
Several months after Hurricane Katrina destroyed their homes, a group of Louisiana citizens—among them James Wallace—filed a class action lawsuit against their insurance companies in Louisiana state court, alleging that the insurance companies refused to pay them the full value of their homeowner's insurance policies as required by Louisiana law. The insurance companies, all based in Louisiana, removed the case to the United States District Court for the Eastern District of Louisiana, claiming the court had subject matter jurisdiction under a little-known federal law: the Multiparty, Multiforum Trial Jurisdiction Act of 2002 (MMTJA). One of the MMTJA's removal provisions, 28 U.S.C. § 1441(e)(1)(B), allows a defendant to remove a state court case to federal court if (1) it is already a defendant in another case brought under the MMTJA and (2) that case arose out of the same “accident” as the state court case. The defendant insurers had already been sued under the MMTJA in a case brought in the United States District Court for the Middle District of Louisiana—Chehardy v. Louisiana Insurance Commissioner--by policyholders who, like the plaintiffs in the noted case, claimed the insurance companies did not properly reimburse them for property damage caused by Hurricane Katrina. The insurance companies argued that because they were already defendants in a case brought under the MMTJA (Chehardy) that arose out of the same accident (Hurricane Katrina) as the noted case, § 1441(e)(1)(B) gave the Eastern District subject matter jurisdiction over the noted case.
The district court, however, ruled that another provision of the MMTJA, which requires federal courts to abstain from hearing cases under the MMTJA when plaintiffs sue defendants from the same state under state law, did not allow it to exercise subject matter jurisdiction and remanded the case to state court. Although federal law generally prohibits appellate review of remand orders, the insurance companies nonetheless appealed to the United States Court of Appeals for the Fifth Circuit, arguing that the appellate court had jurisdiction under the general appeals statute and the recently enacted Class Action Fairness Act of 2005 (CAFA). Reversing the district court, the Fifth Circuit held that the district court had appellate jurisdiction under the general appeals statute but not CAFA and that § 1441(e)(1)(B) gave the district court supplemental jurisdiction to hear the case. Wallace v. Louisiana Citizens Property Insurance Corp., 444 F.3d 697, 702 (5th Cir. 2006).
About the Author
Stephen Aslett. J.D. candidate 2008, Tulane University School of Law; B.A. 2003, Rice University.
Citation
81 Tul. L. Rev. 1331 (2007)