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James Watson v. City of Allen, Texas, 15-10732 (2016)

Court: Court of Appeals for the Fifth Circuit Number: 15-10732 Visitors: 16
Filed: May 05, 2016
Latest Update: Mar. 02, 2020
Summary: Case: 15-10732 Document: 00513494190 Page: 1 Date Filed: 05/05/2016 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 15-10732 United States Court of Appeals Fifth Circuit FILED JAMES H. WATSON, And Others Similarly Situated, May 5, 2016 Lyle W. Cayce Plaintiff - Appellant Clerk v. CITY OF ALLEN, TEXAS; CITY OF AMARILLO TEXAS; CITY OF ARLINGTON, TEXAS; CITY OF AUSTIN TEXAS; CITY OF BALCH SPRINGS TEXAS; CITY OF BALCONES HEIGHTS, TEXAS; CITY OF BASTROP, TEXAS; CITY OF BAYTOWN, TEXAS;
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     Case: 15-10732   Document: 00513494190     Page: 1   Date Filed: 05/05/2016




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT


                                 No. 15-10732                  United States Court of Appeals
                                                                        Fifth Circuit

                                                                      FILED
JAMES H. WATSON, And Others Similarly Situated,                    May 5, 2016
                                                                 Lyle W. Cayce
             Plaintiff - Appellant                                    Clerk

v.

CITY OF ALLEN, TEXAS; CITY OF AMARILLO TEXAS; CITY OF
ARLINGTON, TEXAS; CITY OF AUSTIN TEXAS; CITY OF BALCH
SPRINGS TEXAS; CITY OF BALCONES HEIGHTS, TEXAS; CITY OF
BASTROP, TEXAS; CITY OF BAYTOWN, TEXAS; CITY OF BEDFORD
TEXAS; CITY OF BURLESON, TEXAS; CITY OF CEDAR HILL, TEXAS;
CITY OF CLEVELAND, TEXAS; CITY OF CONROE, TEXAS; CITY OF
COPPELL TEXAS; CITY OF CORPUS CHRISTI TEXAS; CITY OF DALLAS,
TEXAS; CITY OF DENTON, TEXAS; CITY OF DIBOLL, TEXAS; CITY OF
DUNCANVILLE, TEXAS; CITY OF EL PASO TEXAS; CITY OF ELGIN,
TEXAS; CITY OF FARMERS BRANCH, TEXAS; CITY OF FORT WORTH,
TEXAS; CITY OF FRISCO TEXAS; CITY OF GARLAND TEXAS; CITY OF
GRAND PRAIRIE TEXAS; CITY OF HALTOM CITY, TEXAS; CITY OF
HUMBLE, TEXAS; CITY OF HURST, TEXAS; CITY OF HUTTO, TEXAS;
CITY OF IRVING TEXAS; CITY OF JERSEY VILLAGE, TEXAS; CITY OF
KILLEEN TEXAS; CITY OF LEAGUE CITY, TEXAS; CITY OF LITTLE
ELM, TEXAS; CITY OF LONGVIEW, TEXAS; CITY OF LUFKIN, TEXAS;
CITY OF MAGNOLIA, TEXAS; CITY OF MARSHALL TEXAS; CITY OF
MESQUITE TEXAS; CITY OF NORTH RICHLAND HILLS, TEXAS; CITY
OF PLANO TEXAS; CITY OF PORT LAVACA, TEXAS; CITY OF
RICHARDSON, TEXAS; CITY OF RICHLAND HILLS, TEXAS; CITY OF
ROANOKE, TEXAS; CITY OF ROUND ROCK, TEXAS; CITY OF
SOUTHLAKE, TEXAS; CITY OF SUGAR LAND TEXAS; CITY OF
TOMBALL TEXAS; CITY OF UNIVERSITY PARK TEXAS; CITY OF
WATAUGA, TEXAS; CITY OF WILLIS, TEXAS; REDFLEX TRAFFIC
SYSTEMS, INCORPORATED; AMERICAN TRAFFIC SOLUTIONS,
INCORPORATED; AMERICAN TRAFFIC SOLUTIONS, L.L.C.; XEROX
STATE & LOCAL SOLUTIONS, INCORPORATED, formerly known as ACS
State & Local Solutions, Incorporated; STATE OF TEXAS
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                                      No. 15-10732
               Defendants - Appellees




                  Appeals from the United States District Court
                       for the Northern District of Texas


Before REAVLEY, JOLLY, and ELROD, Circuit Judges.
REAVLEY, Circuit Judge:
       This putative class action challenges the use of red light cameras within
Texas and, more specifically, the legislation authorizing such cameras. The
case was originally filed in state court and subsequently removed to federal
court. We must decide whether it should have been remanded. 1
                                    BACKGROUND
       Chapter 707 of the Texas Transportation Code allows municipalities to
install and operate “photographic traffic signal enforcement systems,” i.e., red
light cameras. Tex. Transp. Code Ann. §§ 707.001(3), 707.002. Municipalities
that choose to take advantage of Chapter 707 may enact ordinances
authorizing civil penalties against “the owner of a motor vehicle” that is
photographed running a red light.             
Id. at §
707.002.       The 53 municipal
defendants in this case have done so.             Private companies administer the
municipalities’ red light camera programs. See 
id. at §
707.003. Defendants
American Traffic Solutions, L.L.C., American Traffic Solutions, Inc.
(collectively, “ATS”), Redflex Traffic Systems, Inc. (“Redflex”), and Xerox State




       1 The 58 defendants in this case filed eleven appellees’ briefs. Most of them are
duplicative and many of them expressly adopt portions of other briefs pursuant to Federal
Rule of Appellate Procedure 28(i). Accordingly, throughout this opinion, we refer generically
to the arguments of the “appellees.” Where relevant, we identify which particular party or
parties make which particular arguments.
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                                  No. 15-10732
and Local Solutions, Inc. (“Xerox”) are the private companies with which the
municipal defendants have contracted.
      James Watson received a citation after his vehicle was photographed
running a red light. He was not driving the vehicle at the time of the infraction
and was, in fact, out of state. Watson paid the penalty and then brought this
putative class action challenging Chapter 707 and the various municipal
ordinances enacted pursuant to Section 707.002. He also sought damages from
ATS, Redflex, and Xerox, alleging that they had violated various state laws
and the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”).
      Watson filed his action in state court, but it was removed to federal court
based on the RICO claim and the Class Action Fairness Act of 2005 (“CAFA”),
which generally speaking, “provides the federal district courts with ‘original
jurisdiction’ to hear a ‘class action’ if the class has more than 100 members, the
parties are minimally diverse, and the ‘matter in controversy exceeds the sum
or value of $5,000,000.’” Standard Fire Ins. Co. v. Knowles, 
133 S. Ct. 1345
,
1348 (2013) (quoting 28 U.S.C. § 1332(d)(2), (d)(5)(B)).
      Arguing that Watson lacked standing to sue those entities not directly
involved with his citation, defendants promptly began filing motions to dismiss
based on Federal Rule of Civil Procedure 12(b)(1). While those motions were
still pending, Watson amended his complaint to delete the RICO claim. Eleven
days later, he moved to remand arguing that CAFA’s exceptions precluded the
district court from exercising diversity jurisdiction over the action and arguing
that, given the deletion of his RICO claim, the exercise of supplemental
jurisdiction over the state law claims was improper.
      The district court ultimately dismissed the claims against all but three
of the defendants “because plaintiff does not have standing under Texas law to
assert the dismissed claims.” (The only remaining defendants are Texas, the
City of Southlake, and Redflex—the parties directly involved in Watson’s
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                                  No. 15-10732
citation.) The district court then denied Watson’s motion to remand, finding
that it was untimely as it pertained to CAFA and that the exercise of
supplemental jurisdiction was warranted. Watson timely appealed.
                                 DISCUSSION
                                        I.
      Watson argues on appeal that the case should have been remanded to
state court following the dismissal of the RICO claim because the exercise of
supplemental jurisdiction over the state claw claims was improper and because
the case falls within CAFA’s mandatory abstention provisions. He also argues
that the district court erred by ruling he lacked standing to bring his claims
against certain of the defendants. This combination of issues produces an issue
of its own. In what order should Watson’s arguments be addressed?
      Generally, we consider Article III standing first because it relates to
subject matter jurisdiction. Here, however, there is a fundamental antecedent
question—whether this case even belongs in federal court.           Watson has
independent Article III standing to challenge the case’s removal to federal
court. See Int'l Primate Prot. League v. Administrators of Tulane Educ. Fund,
500 U.S. 72
, 77, 
111 S. Ct. 1700
, 1704 (1991). Accordingly, we first consider
whether Watson’s motion to remand should have been granted.
      The district court addressed the propriety of retaining supplemental
jurisdiction before addressing CAFA jurisdiction. CAFA, however, provides for
original jurisdiction. 28 U.S.C. § 1332(d)(2). If CAFA applies, the district court
has original jurisdiction over the entire action and there is no “supplemental”
jurisdiction at all.   Indeed, the test to determine whether exercise of
supplemental jurisdiction was proper includes a query into whether “the
district court has dismissed all claims over which it has original jurisdiction.”
28 U.S.C.A. § 1367(c)(3). That question cannot be answered until we have


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                                    No. 15-10732
determined whether the district court properly exercised jurisdiction over the
action pursuant to CAFA. We start there.
                                           II.
      The parties agree that this action meets CAFA’s basic requirements
pertaining to the amount in controversy, the number of plaintiffs, and the
existence of minimal diversity. They disagree on whether the district court
erred by finding Watson’s motion to remand untimely and whether either the
“local controversy” or “home state” exceptions apply. 2 We first consider the
remand motion’s timeliness.
                                           A.
      The district court found Watson’s remand motion untimely because it
was filed more than thirty days after the case’s removal and because it was not
filed within a “reasonable amount of time.” The 30-day deadline applied by the
district court is found in 28 U.S.C. § 1447(c), which provides: “A motion to
remand the case on the basis of any defect other than lack of subject matter



      2   These exceptions are found at 28 U.S.C. § 1332(d)(4)(A) (the local controversy
exception) & (B) (the home state exception). In its entirety, subsection (d)(4) provides:
       A district court shall decline to exercise jurisdiction under paragraph (2)--
       (A)(i) over a class action in which--
       (I) greater than two-thirds of the members of all proposed plaintiff classes in
       the aggregate are citizens of the State in which the action was originally filed;
       (II) at least 1 defendant is a defendant--
       (aa) from whom significant relief is sought by members of the plaintiff class;
       (bb) whose alleged conduct forms a significant basis for the claims asserted by
       the proposed plaintiff class; and
       (cc) who is a citizen of the State in which the action was originally filed; and
       (III) principal injuries resulting from the alleged conduct or any related
       conduct of each defendant were incurred in the State in which the action was
       originally filed; and
       (ii) during the 3-year period preceding the filing of that class action, no other
       class action has been filed asserting the same or similar factual allegations
       against any of the defendants on behalf of the same or other persons; or
       (B) two-thirds or more of the members of all proposed plaintiff classes in the
       aggregate, and the primary defendants, are citizens of the State in which the
       action was originally filed.
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                                     No. 15-10732
jurisdiction must be made within 30 days after the filing of the notice of
removal under section 1446(a).” Does invocation of the local controversy and
home state expectations implicate a “defect” subject to this 30-day deadline?
Joining all other circuits that have considered the issue, we hold that Section
1447(c) does not apply to remand motions based on CAFA’s mandatory
abstention provisions. See Graphic Commc’ns Local 1B Health & Welfare Fund
A v. CVS Caremark Corp., 
636 F.3d 971
, 975 (8th Cir. 2011); Gold v. New York
Life Ins. Co., 
730 F.3d 137
, 142 (2d Cir. 2013).
      We have already recognized that the “local controversy” and “home state”
exceptions require abstention from the exercise of jurisdiction and are not truly
jurisdictional in nature. See Hollinger v. Home State Mut. Ins. Co., 
654 F.3d 564
, 568 (5th Cir. 2011) (per curiam). This follows from Section 1332’s text,
which directs district courts to “decline to exercise” CAFA jurisdiction where
specific conditions exist. 28 U.S.C. § 1332(d)(4). Thus, Section 1332(d)(4) “does
not deprive federal courts of subject matter jurisdiction, but rather, acts as a
limitation upon the exercise of jurisdiction granted” by CAFA. See Wallace v.
La. Citizens Prop. Ins. Corp., 
444 F.3d 697
, 701 (5th Cir. 2006).
       “An ‘abstention-based remand order does not fall into either category of
remand order described in § 1447(c), as it is not based on lack of subject matter
jurisdiction or defects in removal procedure.’” 
Id. at 701
(quoting Quackenbush
v. Allstate Ins. Co., 
517 U.S. 706
, 712, 
116 S. Ct. 1712
, 1718 (1996)). 3 Because
Watson’s motion to remand was based on a mandatory abstention provision
rather than a “defect,” Section 1447(c)’s 30-day deadline does not apply.




      3  In 1996, Section 1447(c) was amended to remove the phrase “in removal procedure,”
which appears in Quackenbush. Wallace impliedly rejects the notion that the amendment
abrogated Quackenbush. Other circuits have squarely held the same. See, e.g., Graphic
Commc’ns, 636 F.3d at, 975; Kamm v. ITEX Corp., 
568 F.3d 752
, 756 (9th Cir. 2009); Snapper,
Inc. v. Redan, 
171 F.3d 1249
, 1258 (11th Cir. 1999).
                                            6
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                                      No. 15-10732
       The inapplicability of the Section 1447(c) deadline does not mean there
is no deadline at all. Prior to the enactment of a 30-day deadline, “a motion to
remand was untimely only if it was filed after a reasonable time had elapsed
or after the taking of affirmative steps in federal court.” Belser v. St. Paul Fire
& Marine Ins. Co., 
965 F.2d 5
, 8 (5th Cir. 1992).            The Eleventh Circuit has
held that “[t]his rule continues for remands not covered by § 1447(c).” Snapper,
Inc. v. Redan, 
171 F.3d 1249
, 1257 (11th Cir. 1999). The Second, Third, Eighth
and Ninth Circuits are in accord. 
Gold, 730 F.3d at 142
; Foster v. Chesapeake
Ins. Co., 
933 F.2d 1207
, 1213 n.8 (3d Cir. 1991); Graphic 
Commc’ns, 636 F.3d at 975
–6; Kamm v. ITEX Corp., 
568 F.3d 752
, 757 (9th Cir. 2009). We are
unaware of any conflicting holdings and join these circuits. See Halliburton,
Inc. v. Admin. Review Bd., 
771 F.3d 254
, 264 (5th Cir. 2014) (noting that we
are “hesitant to create a circuit split absent a persuasive justification”).
       Motions to remand pursuant to Section 1332(d)(4) must be brought
within a reasonable time. We review for an abuse of discretion the district
court’s determination that the motion was not brought within a reasonable
time. 
Gold, 730 F.3d at 142
. The district court seemingly found the fifty-two
days it took to file the motion unreasonable because the basis for “remand [was]
generally apparent from the time of removal.” We cannot agree.
       Watson bore the burden of showing that Section 1332(d)(4) was satisfied.
Frazier v. Pioneer Americas LLC, 
455 F.3d 542
, 546 (5th Cir. 2006). Carrying
the burden typically requires presentation of admissible evidence. 4                   See




       4 Appellees argue that Watson did not need evidence because, given the nature of the
lawsuit, “[c]ommon sense dictates that Texas citizens comprise more than two-thirds of the
individuals within the class definition.” We do not decide whether evidence was necessary.
When opposing Watson’s remand motion, appellees argued that he failed to collect enough
evidence showing Texas citizenship of the class members. Their new and contrary argument
is disingenuous. Whether or not Watson needed the affidavits he collected, there was nothing
unreasonable about gathering them, or about the time spent doing so.
                                             7
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                                  No. 15-10732
Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 
485 F.3d 793
, 796 (5th
Cir. 2007). Thus, while the basis for remand may have been readily apparent
at the time of removal, it still remained to collect the evidence. All indications
are that Watson acted diligently to gather evidence and file his motion to
remand the case. Finally, fifty-two days is simply not a very long time. See
Foster, 933 F.2d at 1213
n.8 (observing that the various reasons a remand
motion should be filed within a reasonable time “simply are not present in this
case as [the remand] motion was made on the 54th day after removal”).
      The district court erred by deeming Watson’s remand motion untimely.
Because the home state and local controversy exceptions have been fully
briefed and their application is a question of law subject to de novo review, we
consider their applicability in the first instance.
                                        B.
      Watson argues that both the “home state” and “local controversy”
exceptions apply to this action and preclude the exercise of CAFA jurisdiction.
We first consider the home state exception. Cases removed to federal court
pursuant to CAFA must be remanded if “two-thirds or more of the members of
all proposed plaintiff classes in the aggregate, and the primary defendants, are
citizens of the State in which the action was originally filed.”        28 U.S.C.
§ 1332(d)(4)(B). As already noted, appellees no longer dispute that at least
two-third of the proposed plaintiffs are citizens of Texas. Accordingly, the
home state exception applies if all of the primary defendants are citizens of
Texas. See 
Frazier, 455 F.3d at 546
(holding that the phrase “the primary
defendants” means all primary defendants).
      The only defendants in this case who are not citizens of Texas are ATS,
Xerox, and Redflex. The question, therefore, is whether they are “primary
defendants.” Only one Fifth Circuit case has applied this requirement. In
Hollinger, we determined the applicability of the home state exception in a case
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                                      No. 15-10732
brought against several insurance companies that could be divided into two
categories. 654 F.3d at 568
. One set of defendants, the “County Mutuals,” had
allegedly issued policies in violation of the Texas Insurance Code. 
Id. The other
set of defendants, the “Reinsurers,” had allegedly “participated in and
permitted such violations.” 
Id. “The County
Mutuals,” we held, were “the
primary defendants, because all putative class members, by definition, have
claims against the County Mutuals, and as the entities that issued the
insurance policies, the County Mutuals have a primary role in the alleged
discrimination.” 
Id. at 572.
       Here, the first aspect of Hollinger illuminates nothing because all of the
putative plaintiffs will have claims against Texas, against at least one
municipality, and against at least one of the private companies. It is the state
and the municipalities, however, that had the “primary role in the alleged”
violations of the Texas Constitution.
       This suit’s primary thrust is an attempt to declare unconstitutional the
Texas red light camera legislative scheme. The challenged laws were enacted
by the Texas legislature and various municipalities, who therefore played the
primary role. As Watson alleged, “[t]he substantive issues controlling the
outcome of this litigation are whether Transportation Code Chapter 707, the
red light ordinances set forth above enacted pursuant to same, and Section
29.003(g) of the Texas Government Code are constitutional or not.” 5 It is true
that Watson alleged various other claims against the private defendants.
Those claims, however, are expressly contingent on a threshold finding that
the challenged legislative scheme is unconstitutional. Moreover, the private
companies’ very hiring can be traced to the challenged legislation. See Tex.


       Section 29.003(g) of the Texas Government Code reads: “A municipal court, including
       5

a municipal court of record, shall have exclusive appellate jurisdiction within the
municipality’s territorial limits in a case arising under Chapter 707, Transportation Code.”
                                             9
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                                 No. 15-10732
Transp. Code Ann. § 707.003.      ATS, Xerox, and Redflex are not primary
defendants, and the home state exception applies.
      Appellees agree that the state and the municipalities are primary
defendants but argue that “ATS, Xerox, and Redflex must also be considered
‘primary defendants.’” Appellees’ arguments lack a textual footing and are
unavailing. The phrase “primary defendants” indicates a chief defendant or
chief class of defendants. According it a broader meaning is inconsistent with
this ordinary meaning and with CAFA’s distinct treatment of “primary”
defendants, see 28 U.S.C. § 1332(d)(4)(B), (d)(5), and “significant” defendants,
see 
id. at §
1332(d)(4)(A)(i)(II).     This case illustrates the linguistic
awkwardness of giving the word “primary” a broad and inclusive meaning. We
deal here with 58 different defendants occupying three different strata of
significance. A person generally familiar with the case and with the English
language who asked, “Well, which are the primary defendants?” would not
expect the answer to be “all of them.” Because the home state exception
applies, we need not consider the local controversy exception.
                                      III.
      Having determined that CAFA will not support the exercise of diversity
jurisdiction over the action, we next consider whether the district court
properly exercised supplemental jurisdiction over Watson’s state law claims.
We share the parties’ mutual assumption that, because there existed a federal
claim at the time of removal, supplemental jurisdiction may potentially
displace CAFA’s call for mandatory remand. Even so, in this case, the exercise
of supplemental jurisdiction was an abuse of discretion. Enochs v. Lampasas
Cty., 
641 F.3d 155
, 158 (5th Cir. 2011).
      “The general rule is that a court should decline to exercise jurisdiction
over remaining state-law claims when all federal-law claims are eliminated
before trial.” Brookshire Bros. Holding v. Dayco Products, Inc., 
554 F.3d 595
,
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                                  No. 15-10732
602 (5th Cir. 2009). We have considered the statutory and common law factors.
See 
Enochs, 641 F.3d at 159
–60. As in Enochs, “[t]he mistake which led the
district court to abuse its discretion was in failing to reconsider its jurisdiction
over the Texas state law claims as of the moment it granted [the] motion to file
an amended complaint deleting all federal claims from the case.” 
Id. at 161.
      The district court’s primary reason for retaining jurisdiction was the
level of work put into determining the defendants’ many motions to dismiss.
Watson, however, deleted his lone federal claim and sought remand before
those motions were decided.        Further, though the question of state law
standing has been extensively litigated, “[l]ittle new legal research would be
necessary” to put these arguments before a Texas state court.            Parker &
Parsley Petroleum Co. v. Dresser Indus., 
972 F.2d 587
(5th Cir. 1992); see also
Guzzino v. Felterman, 
191 F.3d 588
, 595 (5th Cir. 1999) (finding the judicial
economy factor to favor remand where, despite “substantial pretrial activity,”
“the parties’ work product could be taken, with little loss, to the state
litigation”). State claims substantially predominate over the federal claim,
which has been dismissed, and considerations of judicial economy favor
remand. See 
Enochs, 641 F.3d at 159
–60.
      Additionally, Watson’s lawsuit challenging Chapter 707 “concerns a
novel Texas state law issue with no Texas Supreme Court guidance.” 
Id. at 159.
We deal here with an action directly contending that a Texas legislative
scheme violates the Texas Constitution and has produced thousands of
violations of other state laws. Texas courts have a strong interest in deciding
whether Texas legislation comports with the Texas Constitution (and in
defining the contours of state law standing). On matters of Texas law, they
speak with an authority rightly denied federal courts. R.R. Comm’n of Tex. v.
Pullman Co., 
312 U.S. 496
, 500, 
61 S. Ct. 643
, 645 (1941). This lawsuit touches
on multiple issues of state importance while impacting no federal policy. See
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                                       No. 15-10732
United Mine Workers of Am. v. Gibbs, 
383 U.S. 715
, 726–27, 86 S. Ct.1130,
1139 (1966). Considerations of comity weigh dramatically in favor of remand.
See Parker & 
Parsley, 972 F.2d at 589
–90 & n.12.
       The district court concluded that Watson’s maneuvering evinced
attempted forum manipulation. In that regard, it is enough to say, as we did
in Enochs, that a “motion to amend [the] complaint to delete the federal claims
is not a particularly egregious form of forum manipulation, if it is manipulation
at 
all.” 641 F.3d at 160
. Assuming manipulation, “it was not so improper as
to override the balance of the statutory and common law factors weighing
heavily in favor of remand.” 6 
Id. at 161.
We follow 
Enochs, 641 F.3d at 161
,
and rule that the district court abused its discretion in not remanding.
                                     CONCLUSION
       We express no opinion on the merit of Watson’s putative class action or
on whether his theory of standing is sound. We simply hold that this case
belongs in state court. Accordingly, we VACATE the district court’s judgment
and REMAND the case with instructions to the district court to remand the
case to the Texas state court whence it came.




       6 The parties agree that the common law factor of convenience is neutral in this case.
We also do not discuss fairness, a common law factor with little salience under the
circumstances. Finally, because we have already found the exercise of supplemental
jurisdiction to be an abuse of discretion, we do not determine whether additional “exceptional
circumstances” also favor remand. See 28 U.S.C. § 1367(c)(4).
                                             12

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