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Quicken Loans Incorporated v. Alig, Nos. 12-342, 13-1073, 13-1077

Decided: December 19, 2013

The Fourth Circuit held that the United States District Court for the Northern District of West Virginia erred by aggregating the unnamed members of a proposed but uncertified class of defendant appraisers for purposes of the “at least 1 defendant” requirement, 28 U.S.C. § 1332(d)(4)(A), of the local controversy exception to the Class Action Fairness Act (CAFA).  The Fourth Circuit therefore vacated the decision of the district court and remanded the case.

Phillip Alig, Sara J. Alig, Roxanne Shea, and Daniel V. Shea (the plaintiffs) filed a lawsuit in West Virginia state court against Quicken Loans (Quicken), Title Source, Inc., and a class of defendant appraisers represented by Appraisals Unlimited, Inc., Dewey V. Guida, and Richard Hyett (the defendant appraisers).  The plaintiffs brought their suit “both individually and on behalf of a class of West Virginia citizens.”  They alleged, inter alia, that the defendant appraisers—including the named appraisers and the unnamed class of appraisers—were complicit in a scheme of unlawful loans originating in West Virginia.  Quicken filed a notice of removal in the district court, stating that the court had jurisdiction under CAFA.  The plaintiffs then filed a motion to remand based on the local controversy exception to CAFA, 28 U.S.C. § 1332(d)(4)(A).  The district court remanded the case to state court, and Quicken appealed.  On appeal, Quicken argued that the district court should not have aggregated the defendant appraisers in determining whether they satisfied the “at least 1 defendant” requirement of the local controversy exception.

The Fourth Circuit disagreed with Quicken, finding that the term at least “permits a reading that more than one defendant could satisfy the stated criteria.”  The court also held that disallowing such aggregation would produce an absurd result and would be contrary to clearly expressed congressional intent.  Thus, the Fourth Circuit concluded that the district court properly aggregated the named defendant appraisers.  However, the Fourth Circuit noted that the district court also aggregated the unnamed defendant appraisers—who, as members of a proposed but uncertified class, were not parties to the litigation.  The Fourth Circuit therefore remanded the case so the district court could determine whether the named defendant appraisers satisfied the “at least 1 defendant” element of the local controversy exception.

Full Opinion

– Stephen Sutherland