Home Depot U. S. A., Inc. v. Jackson

[2][3] Although the decision technically only governs what court hears—rather than the actual outcome of—a particular case, the ruling has been described as being "pro-consumer" because of its potentially broader implications.

"[4] As such, while the case theoretically only deals with venue, it may in practice benefit consumers with plausible claims against corporations.

"[10] CAFA was enacted in response to the failure of the Private Securities Litigation Reform Act, which had targeted "perceived abuses of the class-action vehicle in litigation involving nationally traded securities, including spurious lawsuits, vexatious discovery requests, and manipulation by class action lawyers of the clients whom they ...

"[11][12] These abuses, Congress concluded, "often forced" companies to "enter extortionate settlements in frivolous cases, just to avoid the litigation costs.

"[11] The Reform Act responded to these perceived problems by limiting possible money awards from class actions as well as curbing the recoverable attorney's fees from such suits.

The Act also mandated "sanctions for frivolous litigation" and paused "discovery pending resolution of any motion to dismiss.

"[12] Because the Reform Act tilted the federal playing-field decisively in favor of corporate defendants, consumer lawyers "found a workaround.

"[11] Litigants could avoid the Reform Act's restrictions by simply pursuing their case in state court instead.

"[11] Prior to the Reform Act, "state-court litigation of ... class actions had been rare," but "within a decade state courts were handling most such cases.

To circumvent CAFA's more generous removal provisions, consumer lawyers devised yet another tactic.

This approach involved bootstrapping a class action in the form of a third-party counterclaim to an already-existing lawsuit against a consumer.

"[15] Corporate lawyers fought back against this strategy by asserting that CAFA expanded who was eligible to remove a class action to the category of "any defendant."

The lawsuit alleged that Jackson had failed to make required payments "incurred on a Home Depot credit card.

"[17] On a legal level, Jackson charged that this scheme involved unlawful referral sales and deceptive and unfair trade practices in violation of state law.

[17][18] Jackson's claim against Citibank was that it was jointly and severally liable for this scheme and that "his obligations under the sale were null and void.

Justice Neil Gorsuch asked how "the word 'defendant' expands and contracts like that," so as to include the original defendant only for certain purposes.

"[32] In Bland's view, this discrepancy was proof that if the general removal statute meant to adopt Barnette's claim-by-claim interpretation, it would have said so by referring to "claims," not "civil actions."

[33] Justice Alito asked if the case would have qualified for removal if the counterclaim was in the original complaint, and Bland confirmed it would have.

[33] Later in the argument, Justice Brett Kavanaugh asked Bland whether Home Depot was a "defendant" under CAFA.

The opinion proceeds in three main parts, with Thomas first describing the case's legal backdrop, then reviewing the general removal statute and CAFA in turn.

"[37] As an initial matter, the Constitution "delineates the character of the controversies over which federal judicial authority may extend" and then the inferior courts are further limited "to those subjects encompassed within a statutory grant of jurisdiction.

[38] Focusing on the text and structure of the statute and invoking as support a book written by Justice Antonin Scalia, Thomas reasoned that the broader context of the statute excluded "any counterclaim defendant, including parties brought into the lawsuit for the first time by the counterclaim.

"[40] Thomas also noted that because the phrase "defendant" is used in a number of other places across the removal statutes, accepting Home Depot's interpretation would result in some of those provisions becoming "incoherent.

A picture of the Frank E. Moss Federal Courthouse.
Businesses viewed federal courts as more sympathetic forums
Photo of Justice Thomas
Justice Thomas delivered the opinion of the Court
Photo of Justice Alito
Justice Alito wrote the dissenting opinion