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May 28, 2019

Supreme Court Decides Home Depot v. Jackson

On May 28, 2019, the Supreme Court of the United States decided Home Depot U.S.A., Inc. v. Jackson, No. 17-1471, holding that neither the general federal removal statute nor the removal provision in the Class Action Fairness Act allows a third-party counterclaim defendant to remove a case to federal court.

Citibank, N.A. sued George Jackson in State court to collect a debt Jackson incurred on a Home Depot credit card. Jackson answered and filed not only a counterclaim against Citibank but also a third-party class action claim against Home Depot and Carolina Water Systems alleging a scheme to induce homeowners to buy water treatment systems at inflated prices. After Citibank dismissed its claim against Jackson, Home Depot filed a notice of removal under both the general removal provision, 28 U.S.C. § 1441, and the Class Action Fairness Action’s removal provision, 28 U.S.C. § 1453. The district court granted Jackson’s motion to remand and the Fourth Circuit affirmed.

In a 5-4 decision, the Supreme Court affirmed the remand to State court, holding that Home Depo could not remove the case to federal court.

First, under the general removal statute, the Court held that a third-party counterclaim defendant is not included in the “defendant or defendants” that may remove an action. The text of the statute allows “any civil action” over which a district court has “original jurisdiction” to “be removed by the defendant or the defendants” to federal court. In assessing original jurisdiction, the courts may look only to the original complaint and not to any counterclaims. Hence, the phrase “defendant or the defendants” refers to the defendants of the original complaint and does not include third-party counterclaim defendants. In other removal statutes, Congress allows parties other than the original defendant to remove a case, but it did not do so in the general removal statute. The Federal Rules of Civil Procedure likewise distinguish between third-party defendants, counterclaim defendants, and defendants. Finally, the Court’s 1941 decision in Shamrock Oil & Gas Corp. v. Sheets held that original plaintiffs may not remove counterclaims against them, suggesting that the same result should hold for third-party counterclaim defendants.

Second, the removal provision in the Class Action Fairness Act—“such action may be removed by any defendant without the consent of all defendants”—also does not cover a third-party counterclaim defendant. The phrase “any defendant” in context refers to the original defendants to the lawsuit, not third-party counterclaim defendants.

Justice Thomas delivered the opinion for the Court, in which Justices Ginsburg, Breyer, Sotomayor, and Kagan joined. Justice Alito filed a dissenting opinion, in which Chief Justice Roberts and Justices Gorsuch and Kavanaugh joined.

Download Opinion of the Court.

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