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Westwood Apex v. Contreras

November 4, 2010

WESTWOOD APEX
v.
JESUS A CONTRERAS ET AL.



The opinion of the court was delivered by: Honorable Gary Allen Feess

CIVIL MINUTES - GENERAL

Proceedings: (In Chambers) ORDER REMANDING CASE

I. INTRODUCTION & BACKGROUND

Plaintiff Westwood Apex ("Westwood Apex") filed suit against Defendant Jesus Contreras ("Contreras") for breach of contract in San Bernardino Superior Court based on allegations that Contreras failed to pay amounts due on his student loan note. (Not., Ex. A [Complaint].) Contreras answered Westwood Apex's complaint and filed a class action cross-complaint against Westwood Apex and several additional defendants-George Burnett; William jile; Alta Colleges, Inc.; Westwood College, Inc.; Trav Corporation; Grant Corporation; esgray Corporation; Bounty Island Corporation (collectively, "Cross-Defendants"). (Id., Ex. nswer]; Ex. C [Cross-Complaint].) Contreras's cross-complaint alleges that Cross-efendants violated the Consumers Legal Remedies Act, Cal. Bus. & Prof. Code § 1750 et seq., California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., and the Maxine aters School Reform and Student Protection Act by engaging in unfair and deceptive practices in connection with their operation of for-profit college campuses. (Cross-Compl. at 26, 30, 32.)

On September 10, 2010, all Cross-Defendants except Westwood Apex joined in removing the case to this Court pursuant to the Class Action Fairness Act of 2005 ("CAFA"). (Not. at 1.)

September 29, this Court issued an Order to Show Cause why the case had been properly removed under CAFA, 28 U.S.C. § 1453(b). The Court has now received responses from the removing Cross-Defendants and from Contreras. Having considered the parties' arguments, the REMANDS the case to the San Bernardino Superior Court because removal was not authorized by CAFA.

II. DISCUSSION

CAFA provides in pertinent part:

A class action may be removed to a district court of the United States in accordance with section 1446 (except that the 1-year limitation under section 1446(b) 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). Section 1446, in turn, provides the procedures that "[a] defendant or defendants desiring to remove any civil action . . . from a State court" must follow to remove an action to federal court. See id. § 1446. Here, the Court must decide whether § 1453(b) s cross-defendants who are not plaintiffs in the original action to remove a class action federal court.

BACKGROUND LAW

In Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), the Supreme Court construed a predecessor removal statute to preclude a cross-defendant that was originally a plaintiff in the state action from removing. Id. at 104, 107--08.*fn1 That version of the removal like the current version, allowed removal "by the defendant or defendants." Id. at

The Court took particular note of the fact that the prior removal statute allowed removal "either party" and reasoned that the change to allow removal "by the defendant or defendants" reflected Congress's intent to narrow the availability of removal. Id. at 106--07. In support of this conclusion, the Court pointed to congressional policy "calling for strict construction" of removal statutes. Id. at 108.

The Ninth Circuit has extended application of the Shamrock Oil rule to cases involving plaintiff/cross defendants removed under CAFA. Progressive West Ins. Co. v. Preciado, 479 F.3d 1014, 1015 (9th Cir. 2007). That case addressed whether § 1453(b) departed from Shamrock Oil's rule barring removal by a plaintiff/cross-defendant in cases here a plaintiff is subject to a class action counterclaim. The court concluded that CAFA allow a such a plaintiff/cross-defendant to remove. Id. at 1017--18.*fn2 The court noted 1453(b) allows a class action to be removed to federal court "in accordance with 1446," which sets forth the removal procedure for "[a] defendant or defendants desiring to remove any civil action . . . from a State court." Id. (quoting 28 U.S.C. ยง 1446(a)) (emphasis added in Progressive West). From that, the court concluded that "[t]he ...


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