Published on:

CAFA Class Action Defense Cases-Weber v. Mobil Oil: Tenth Circuit Dismisses Appeal Of Order Remanding Class Action To State Court Holding Class Action Fairness Act (CAFA) Did Not Afford Jurisdiction To Consider Appeal

Order Granting Intervention to New Party Plaintiffs did not “Commence” Class Action for Purposes of Removal Jurisdiction under CAFA (Class Action Fairness Act of 2005) Tenth Circuit Holds

Plaintiffs, owners of royalty interests filed a class action lawsuit in Oklahoma state court against Mobil Oil and Mobil Exploration & Producing, North America: The class action complaint, filed in May 2001, “sought damages for breach of contract, breach of plan unitization, conversion, fraud, breach of fiduciary duties, and for a violation of the Oklahoma Production Revenue Standards Act.” Weber v. Mobil Oil Corp., 506 F.3d 1311, 1312 (10th Cir. 2007). The class action complaint was amended in December 2004 to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as party-defendants, id., at 1313. In September 2005, defense attorneys removed the putative class action to federal court under the Class Action Fairness Act of 2005 (CAFA ). Id. The federal court remanded the class action to state court, and defense attorneys sought leave to appeal the remand order. Id. The Tenth Circuit denied the request, concluding that the class action did not fall within the scope of CAFA and, accordingly, that it lacked jurisdiction to consider the appeal.

As a preliminary matter, the Tenth Circuit noted that the parties agreed that the class action was properly removed to federal court if the Class Action Fairness Act applied. Weber, at 1314 n.4. The original complaint was filed in 2001, but in October 2004 other members of the putative class filed a “similar, though not identical, class action in federal district court against the same two defendants.” Id., at 1313. The federal court class action defined the class more broadly than the state court class action, and it additionally sought certain damages not requested in the state court complaint. Id. In December 2004, the state court class action complaint was amended to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as defendants, neither of which was ever named in the federal court class action. Id. In September 2005, plaintiffs in the federal and state court actions agreed that the class action pending in federal court would be voluntarily dismissed and a petition for leave to intervene filed in the state court class action, id. As part of the intervention motion, the plaintiff-intervenors “sought to assert class claims under its expanded class definition and to assert the additional claims for damages and equitable relief it raised in its federal petition.” Id. The state court granted the motion for intervention, but restricted the intervenors to the claims and class definition asserted in the then-pending state court complaint, id. Based on the granting of the motion for intervention, defense attorneys for Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. removed the class action to federal court, arguing that CAFA provided removal jurisdiction; plaintiffs moved to remand the class action to state court on the ground that CAFA did not apply, and the district court ordered remand. Id.

Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. filed with the Circuit Court a petition for leave to appeal under 28 U.S.C. § 1453(c) – “a provision of CAFA that gives the federal appellate courts discretionary jurisdiction to consider appeals of remand orders in certain types of class actions.” Weber, at 1313. The Tenth Circuit “provisionally granted the petition,” but reserved a decision on whether CAFA jurisdiction existed to consider the appeal, id. In this regard, the central issue was a determination of when the state court class action was “commenced” for purposes of CAFA. Id. Because the Circuit Court determined that the class action was commenced prior to the effective date of CAFA, it held that it lacked jurisdiction to consider the appeal.

The Tenth Circuit rejected defense arguments that the addition of the “one-time federal plaintiffs” by way of intervention “‘commenced’ a new lawsuit.” Weber, at 1314. In so doing, the Court held that its prior decision in Prime Care of Northeast Kansas, LLC v. Humana Insurance Co., 447 F.3d 1284 (10th Cir.2006), a summary of which may be found here, did not aid the defense cause because that case involved the addition of new party defendants by way of amendment of the class action complaint after CAFA’s effective date, id. (citing Prime Care, at 1285). Thus, it had no relevance to the inquiry of whether a petition in intervention relates back to the original class action complaint, id., at 1314-15.

In the end, the Tenth Circuit held that the state court class action was commenced in 2001, and that the petition for intervention had no effect on that commencement date. Weber, at 1316. Accordingly, it dismissed the appeal for lack of jurisdiction, id.

Download PDF file of Weber v. Mobil Oil