In Probola v. Long & Foster Real Estate, Inc., No. 12-2199, 2012 U.S. App. Lexis 11062 (3rd Cir. May 31, 2012), the Third Circuit reversed its acceptance of discretionary appeal from a federal district court order remanding a class action case to state court.  The appeal was to address the appropriate standard for determining remand when the parties dispute whether the required amount in controversy under CAFA has been met.

The plaintiffs brought a class action lawsuit against their real estate broker for breach of fiduciary duty and violation of state consumer protection statutes based on allegations that the defendant’s $345 document fee was a phony charge in connection with the purchase or sale of real estate for which no service was provided.  The defendant removed the case to federal court pursuant to both CAFA and federal question jurisdiction.  The plaintiffs moved for remand and the motion was granted.  Upon return to state court, the plaintiffs filed an amended complaint.  The defendant appealed the remand order to the Third Circuit, and also filed a motion to dismiss in state court.  The state court granted the motion to dismiss and the plaintiffs appealed the dismissal to the state appellate court.

The defendant’s application to the Third Circuit to appeal the remand order was made pursuant to 28 U.S.C. § 1453(c)(1) which allows a court of appeals to accept an appeal from an order granting or denying remand of a class action provided the application to appeal is made to the appellate court not more than ten days after entry of the order.  28 U.S.C. § 1453(c)(2) provides that all action on the appeal must be completed no later than sixty days after the date on which the appeal was filed.  The basis of the defendant’s appeal was a dispute relating to CAFA’s amount in controversy requirement.  The plaintiffs failed to allege a specific amount in controversy in the complaint, but averred upon information and belief that the amount collected by the defendant from the class members during the class period was less than $5 million.  The plaintiffs argued that the defendant had not established CAFA’s amount in controversy, and the defendant argued that unless it appeared to a legal certainty that the amount in controversy failed to exceed $5 million, the district court should have exercised jurisdiction.

The Third Circuit vacated the appeal as improvidently granted.  It noted that it first learned of the post-remand state court dismissal in the briefing submitted after leave to appeal had been granted.  The court observed that while the judgment in the state court proceedings did not divest the Third Circuit of its ability to hear the appeal, it presented practical problems that would have caused the court not to accept the appeal had it known of the state court judgment.