Seventh Circuit Rules That Class Actions Pleaded as Counterclaims Are Not Removable Under the Class Action Fairness Act

Originally published April 1, 2010

Keywords: Seventh Circuit, class actions, counterclaims, not removable, class action fairness act

Congress enacted the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4, to ensure that major interstate class action lawsuits can be litigated in federal court, where Congress believed they belong. In furtherance of that goal, CAFA provides that a qualifying class action lawsuit filed in state court may be removed to a federal district court "by any defendant," even if some defendants object to removal. 28 U.S.C. § 1453(b). 

Last week, in an opinion authored by Chief Judge Easterbrook, the Seventh Circuit held that defendants that are the target of class–action lawsuits pleaded as counterclaims may not remove those counterclaims under CAFA. First Bank v. DJL Properties, LLC, Nos. 10-8008 & 10-8009. The court noted that, nearly seven decades ago, the Supreme Court had interpreted the phrase "may be removed