When 30 Days Just Isn’t Enough: The Ninth Circuit Rules That Defendants’ Right To Remove May Not Be Limited To 30 Days

In Rea v. Michaels Stores, No. 14-55008, 2014 U.S. App. LEXIS 2928 (9th Cir. Feb. 18, 2014), the Ninth Circuit reversed the district court's order remanding a wage-and-hour class complaint to state court, ruling that the defendant employer's removal of the case to federal court under the Class Action Fairness Act (CAFA) was proper. The Ninth Circuit held that a defendant's removal options are not limited to the two 30-day periods specified in the federal removal statutes.

The plaintiffs brought the action against Michaels Stores, Inc. on behalf of Michaels' California store managers, alleging that the store had improperly classified the managers as exempt from overtime. The district court first remanded the case back to state court after finding that CAFA's $5 million amount in controversy requirement was not met (because the plaintiffs "expressly disclaimed" any recovery for the class over $4,999,999). However, after the Supreme Court's holding in Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (2013), that attempted damage waivers are ineffective, Michaels removed the case under CAFA a second time. The district court remanded the case once again after finding that the removal ran afoul of CAFA's 30-day removal window. The district court also held, in the alternative, that Michaels had not demonstrated that the amount in controversy exceeded $5 million.

The Ninth Circuit reversed the district court's decision and held that Michaels' second removal action was proper. The Ninth Circuit reaffirmed its holding in Roth v. CHA Hollywood Medical Center, L.P., 720 F.3d 1121, 1124-25 (9th Cir. 2013), that the two 30-day windows specified in the federal removal statutes are not the exclusive periods for removal. Rather, so long as no pleading or other paper revealed that the case was removable, the time period does not start to run. Thus, even though Michaels did not file its removal action until years into the litigation...