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Kenny v. Wal-Mart Stores, Inc.

United States Court of Appeals, Ninth Circuit

February 1, 2018

Kris Kenny, on behalf of himself and all others similarly situated, Plaintiff-Appellee,
v.
Wal-Mart Stores, Inc., a Delaware Corporation; Wal-Mart Associates, Inc., a Delaware Corporation, Defendants-Appellants.

          Argued and Submitted January 9, 2018 Pasadena, California

         Appeal from the United States District Court for the Central District of California D.C. No. 5:17-cv-00967-R-KK Manuel L. Real, District Judge, Presiding

          Mark D. Kemple (argued) and Ashley Farrell-Picket, Greenberg Traurig LLP, Los Angeles, California, for Defendants-Appellants.

          David M. deRubertis (argued) and Jeff D. Neiderman, The deRubertis Law Firm APC, Studio City, California; Ellen R. Serbin, Todd H. Harrison, and Brennan S. Kahn, Perona Langer Beck Serbin Mendoza & Harrison APC, Long Beach, California; for Plaintiff-Appellee.

          Before: MILAN D. SMITH, JR. and MICHELLE T. FRIEDLAND, Circuit Judges, and JED S. RAKOFF, [*] District Judge.

         SUMMARY [**]

         Remand / Removal

         The panel vacated the district court's order remanding a putative class action to California state court because the district court exceeded its statutory authority in remanding sua sponte based on a non-jurisdictional defect, and because Wal-Mart did not waive its right to remove the action to federal court; and remanded to the district court for further proceedings.

         Plaintiff filed the putative class action in California state court, challenging Wal-Mart's policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Wal-Mart removed the case to federal court based on jurisdiction under the Class Action Fairness Act ("CAFA"). The district court sua sponte remanded the action to state court, concluding that Wal-Mart had waived its right to remove the case by filing a demurrer in response to plaintiff's First Amended Complaint ("FAC") in state court.

         The panel held that the district court lacked authority under 28 U.S.C. § 1447(c) to remand sua sponte based on a non-jurisdictional defect.

         The panel noted that a defendant "may waive the right to remove to federal court where, after it is apparent that the case is removable, the defendant takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum." Resolution Tr. Corp. v. Bayside Developers, 43 F.3d 1230, 1240 (9th Cir. 1994). The panel held that the district court erred in concluding that Wal-Mart waived its right to remove the case when the FAC did not reveal a basis for removal pursuant to CAFA. The panel also held that Wal-Mart's choice to file a demurrer, rather than another form of responsive pleading, to plaintiff's indeterminate FAC did not amount to a waiver of its right to remove. The panel further held that where Wal-Mart removed the case before plaintiff opposed the demurrer and before any hearing was held, clearly Wal-Mart did not manifest an intent to litigate in state court.

          OPINION

          Milan D. Smith, Jr. Judge

         Defendants Wal-Mart Stores, Inc. and Wal-Mart Associates, Inc. (collectively, Wal-Mart) appeal from the district court's order remanding Plaintiff Kris Kenny's (Kenny) putative class action to California state court. In a four-sentence minute order, the district court remanded the case sua sponte, stating summarily that Wal-Mart waived its right to remove by filing a demurrer in state court prior to removal.

         We disagree, and hold that the district court erred on two grounds. First, the district court exceeded its statutory authority in remanding sua sponte based on a non-jurisdictional defect. Second, Wal-Mart did not waive its right to remove by filing a demurrer in state court, when its right to remove pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), was not ascertainable from Kenny's pleading. We therefore vacate the district court's remand order, and remand to that court for further proceedings.

          FACTUAL AND PROCEDURAL BACKGROUND

         On January 13, 2017, Plaintiff Kris Kenny filed a putative class action Complaint against Defendants Wal-Mart Stores, Inc., Wal-Mart Associates, Inc., and U.S. Healthworks Medical Group, [1] in California state court, challenging Wal-Mart's policy requiring employees who have suffered workplace-related injuries to submit ...


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