Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dominion Energy, Inc. v. City of Warren Police And Fire Retirement System

United States Court of Appeals, Fourth Circuit

June 28, 2019

DOMINION ENERGY, INC.; SEDONA CORP., Petitioners,
v.
CITY OF WARREN POLICE AND FIRE RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Respondent. DOMINION ENERGY, INC.; SEDONA CORP., Petitioners,
v.
METZLER ASSET MANAGEMENT GMBH, on behalf of themselves and all others similarly situated, Respondent. CITY OF WARREN POLICE AND FIRE RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Plaintiff - Appellee,
v.
DOMINION ENERGY, INC.; SEDONA CORP., Defendants - Appellants. METZLER ASSET MANAGEMENT GMBH, on behalf of themselves and all others similarly situated, Plaintiff - Appellee,
v.
DOMINION ENERGY, INC.; SEDONA CORP., Defendants - Appellants.

          Argued: March 19, 2019

          Appeals from the United States District Court for the District of South Carolina, at Columbia. Margaret B. Seymour, Senior District Judge. (3:18-cv-00509-MBS; 3:18-cv-00505-MBS)

         ARGUED:

          William Walter Wilkins, Jr., NEXSEN PRUET, LLC, Greenville, South Carolina, for Petitioners.

          David Todd Wissbroecker, ROBBINS GELLER RUDMAN & DOWD, LLP, San Diego, California; Lawrence P. Eagel, BRAGAR EAGEL & SQUIRE, P.C., New York, New York, for Respondent.

         ON BRIEF:

          Burl F. Williams, Andrew A. Mathias, NEXSEN PRUET, LLC, Greenville, South Carolina; Brian E. Pumphrey, Brian D. Schmalzbach, MCGUIREWOODS LLP, Richmond, Virginia, for Petitioners.

          James M. Morton, MORTON & GETTYS, Rock Hill, South Carolina; Timothy Z. Lacomb, ROBBINS GELLER RUDMAN & DOWD LLP, San Diego, California; Thomas C. Michaud, VANOVERBEKE, MICHAUD & TIMMONY, P.C., Detroit, Michigan; Mark D. Chappell, Graham S. Newman, CHAPPELL SMITH & ARDEN, P.A., Columbia, South Carolina; Melissa A. Fortunato, BRAGAR EAGEL & SQUIRE, P.C., New York, New York; Deborah Sturman, STURMAN LLC, New York, New York, for Respondent.

          Before MOTZ, KING, and THACKER, Circuit Judges.

          KING, Circuit Judge.

         The Petitioners in these proceedings - Dominion Energy, Inc., and its subsidiary Sedona Corp. - seek to appeal from two District of South Carolina orders remanding putative class action lawsuits to the South Carolina state courts. See City of Warren Police & Fire Ret. Sys. v. SCANA Corp., No. 3:18-cv-00509 (D.S.C. June 27, 2018), ECF No. 60 (the "Warren Remand Order"); Metzler Asset Mgmt. GmbH v. Aliff, No. 3:18-cv-00505 (D.S.C. Aug. 1, 2018), ECF No. 48 (the "Metzler Remand Order"). The Respondents are named plaintiffs in the separate lawsuits - City of Warren Police and Fire Retirement System ("Warren") and the Metzler Asset Management GmbH ("Metzler"). Their class actions, initiated in two circuit courts of South Carolina, arise from a merger agreement between Dominion and SCANA Corporation, a former utility company in which the Respondents were stockholders. Both class action complaints name the Petitioners as two of several defendants and allege that Petitioners aided and abetted a breach of fiduciary duty in negotiating the merger agreement.

         The Petitioners removed the class action lawsuits to the District of South Carolina, invoking provisions of the Class Action Fairness Act of 2005 ("CAFA"). By the Warren and Metzler Remand Orders, however, the federal district court returned the lawsuits to their respective state circuit courts, ruling that neither was subject to removal. Pursuant to CAFA, the Petitioners seek appellate review and ask us to reverse the Remand Orders. Because we are satisfied that the class action lawsuits were properly removed from the state courts and should, pursuant to CAFA, be litigated in the District of South Carolina, we grant the petitions for permission to appeal and reverse.

         I.

         A.

         These proceedings center on CAFA's jurisdictional provisions. Congress enacted CAFA in 2005 to expand subject matter jurisdiction in the federal courts over "interstate" class actions "of national importance." See CAFA, Pub. L. No. 190-2, § 2(b)(2), 119 Stat. 4, 5 (2005); see also Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 595 (2013) (describing CAFA's objective).[1] CAFA sought to accomplish that purpose by amending the diversity jurisdiction statute, codified in 28 U.S.C. § 1332. A primary justification for diversity jurisdiction in the federal courts under § 1332 - and for expanding such jurisdiction under CAFA in particular - is the prevention of state court "bias against out-of-State defendants." See CAFA, § 2(a)(4)(B), 119 Stat. at 5 (specifying congressional finding that "State and local courts . . . sometimes act[ed] in ways that demonstrate bias against out-of-State defendants" in class action lawsuits); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 74 (1938) ("Diversity of citizenship jurisdiction was conferred in order to prevent apprehended discrimination in state courts against those not citizens of the state.").

         To ensure that interstate class actions of national importance are litigated in a perceived more neutral federal forum, CAFA extended federal jurisdiction to those class action proceedings that satisfy three requirements: (1) the putative class has more than 100 members (numerosity); (2) the amount in controversy exceeds five million dollars, exclusive of interest and costs (amount in controversy); and (3) the parties are minimally diverse in citizenship (minimal diversity). See 28 U.S.C. § 1332(d)(2), (5)(B).[2] When the foregoing three criteria (i.e., numerosity, amount in controversy, and minimal diversity) are satisfied, a defendant sued in a class action in a state court is presumptively entitled to remove the proceedings to federal court. See 28 U.S.C. § 1453(b).

         Congress, however, has excluded from CAFA's jurisdictional reach three types of class actions, even when such actions otherwise satisfy CAFA's jurisdictional criteria. See 28 U.S.C. § 1332(d)(9); see also Ferrell v. Express Check Advance of S.C. LLC, 591 F.3d 698, 704 (4th Cir. 2010) (explaining that § 1332(d)(9) of Title 28 identifies CAFA's three exceptions to federal court jurisdiction). Those same types of class actions are also, of course, excepted from removal to federal court. See 28 U.S.C. § 1453(d). CAFA's removal provision - specifying the three excepted types of class actions - provides in full at 28 U.S.C. § 1453(d):

Exception.-This section shall not apply to any class action that solely involves-
(1) a claim concerning a covered security as defined under section 16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));
(2) a claim that relates to the internal affairs or governance of a corporation or other form of business enterprise and arises under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized; or
(3) a claim that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the regulations issued thereunder).

See 28 U.S.C. § 1453(d) (footnote omitted). In sequence with their listing, CAFA's removal exceptions are generally called the "covered security" exception, the "internal affairs" exception, and the "securities-related" exception.[3]

         Significant to these proceedings, by § 1453(d)'s "solely involves" language, CAFA allows for the removal of a class action that alleges both an excepted claim and an unexcepted claim. Thus, the existence of an unexcepted claim in a class action complaint means that CAFA confers federal court jurisdiction on that class action lawsuit.

         B.

         In these proceedings, the two underlying putative class actions arise from a 2018 merger between two major utility companies. Petitioner Dominion is a Virginia-based energy utility company that operates in eighteen states, making it "one of the largest energy utility companies in the United States." See J.A. 29.[4] On January 3, 2018, Dominion announced that it had entered into a merger agreement with SCANA, which was then a South Carolina-based electric and natural gas utility with about 25, 000 stockholders. Pursuant to the merger agreement, Dominion's subsidiary, Petitioner Sedona, was to merge with SCANA, and Dominion would then own the business resulting from the merger.

         1.

         On January 23, 2018, soon after learning of the merger agreement, Respondent Warren - on behalf of itself (as an owner of SCANA common stock), and a class comprised of other such owners - lodged a class action complaint against Petitioners Dominion and Sedona, plus SCANA, SCANA's CEO, and nine members of SCANA's Board of Directors (the "Board Members"). According to the Warren complaint - filed in the Circuit Court of Lexington County, South Carolina - the Board Members decided to "fire-sell" SCANA to Dominion for "an unfair price" after SCANA's stock price "dropped roughly 10%" in late 2017. See J.A. 26-27. That decrease in stock price followed SCANA's summer of 2017 announcement that it would abandon a multibillion-dollar project to build two nuclear reactors in South Carolina. The announcement confirmed that SCANA intended to recover the billions of dollars it had spent on the nuclear project from its public utility customers.

         The Warren complaint alleges that the merger agreement was "a bad deal for SCANA stockholders," in that those stockholders would receive only a 0.6690 share of Dominion stock in exchange for each share of SCANA common stock. See J.A. 27. In contrast, the complaint alleges that the merger would be a financial boon to SCANA's CEO and the Board Members, and also for Dominion. That is, SCANA's CEO and the Board Members would receive cash for certain of their shares of SCANA stock, along with other benefits not provided to other SCANA stockholders. And, according to the complaint, Dominion was able to "acquir[e] SCANA at a significant discount to its fair market value." Id.

         Based on the purported lopsidedness of the merger agreement, the Warren class action complaint alleges two causes of action under South Carolina law: (1) a claim against SCANA's CEO and the Board Members for breach of fiduciary duty; and (2) a claim against SCANA and the Petitioners for aiding and abetting that breach.[5] With respect to its aiding and abetting claim, the complaint alleges that SCANA and the Petitioners knew that SCANA's CEO and the Board Members were breaching their fiduciary duties to SCANA stockholders by negotiating and acceding to the terms of the unfair merger agreement. Additionally, the complaint alleges that SCANA and the Petitioners knowingly participated in the fiduciary breach. For relief, the complaint requests, inter alia, an injunction against the finalization and consummation of the merger agreement. Alternatively, because the merger might be completed during the class action litigation, the complaint requests an order rescinding any such merger, plus an award of damages.

         2.

         On February 7, 2018, about two weeks after Respondent Warren filed its class action complaint in Lexington County, Respondent Metzler - on behalf of itself as a SCANA common stock owner and other such owners - filed its class action complaint and thereby opened a second litigation front in the Circuit Court for Richland County, South Carolina. The Metzler complaint names as defendants Petitioners Dominion and Sedona, as well as the Board Members. Like the Warren complaint, the Metzler class action complaint alleges that the Board Members engaged in "a severely flawed sales process and agree[d] to the inadequately priced sale of [SCANA] to Dominion." See J.A. 244.

         The Metzler complaint also alleges two claims for relief under South Carolina law: (1) a claim against the Board Members for breach of fiduciary duty; and (2) a claim against the Petitioners for aiding and abetting the fiduciary breach. In its aiding and abetting claim, the complaint maintains that the Petitioners knowingly assisted the Board Members in breaching their fiduciary duties to SCANA stockholders. The complaint requests that the state circuit court enjoin the proposed merger. Insofar as the merger might be completed while the litigation is ongoing, Metzler alternatively requests a rescission of any such merger, plus damages.

         3.

         On February 21, 2018, the Petitioners removed the Warren and Metzler class action lawsuits to the District of South Carolina. The removal filings allege and explain that the lawsuits are both removable under the CAFA provisions codified in 28 U.S.C. §§ 1332(d) and 1453(b). More specifically, the notice of removal in each action alleges that subject matter jurisdiction exists in the District of South Carolina, in that the putative class includes more than 100 members, the claimed damages are at least $600 million, and minimal diversity of citizenship exists between the parties. See 28 U.S.C. § 1332(d)(2), (5)(B).[6]

         About three weeks later, on March 14, 2018, Warren moved to remand its class action lawsuit to the Circuit Court for Lexington County. Warren did not, however, contest the fact that CAFA's removal requirements of numerosity, amount in controversy, and minimal diversity are satisfied. Instead, Warren maintained that at least one of CAFA's three exceptions to removal bars its class action from being removed to federal court. See 28 U.S.C. § 1453(d). By its Warren Remand Order of June 27, 2018, the district court remanded Warren's class action, having concluded that a remand to the Circuit Court for Lexington County was required because "one or all of the exceptions" to removal under CAFA is satisfied. See Warren Remand Order 14. In so ruling, the district court rejected the Petitioners' contention that Warren's aiding and abetting claim undermines all three CAFA exceptions to removal.

         On July 11, 2018, Respondent Metzler moved to remand its class action lawsuit to the Circuit Court for Richland County. Like Respondent Warren, Metzler did not dispute the Petitioners' contention that CAFA's requirements for federal subject matter jurisdiction are satisfied. Metzler similarly maintained, however, that its class action claims fall within at least one of CAFA's exceptions to removal, as specified in 28 U.S.C. § 1453(d). About three weeks thereafter, on August 1, 2018, the district court granted that motion by its Metzler Remand Order, relying on the Warren Remand Order. The court again ruled that "one or all of the exceptions" to removal under CAFA is satisfied. See Metzler Remand Order 2. The court therefore remanded the Metzler class action to the Circuit Court for Richland County.

         C.

         On July 9, 2018, the Petitioners sought this Court's permission to appeal the Warren Remand Order. See 28 U.S.C. § 1453(c)(1) (providing for appeal of order granting or denying motion to remand class action). On August 3, 2018, the Petitioners filed their second petition for permission to appeal, requesting appellate review of the Metzler Remand Order. We consolidated the two petitions for appeal on September 6, 2018, and thereafter received briefing and conducted oral argument.[7]

         II.

         A.

         Before assessing the consolidated petitions for permission to appeal, we will identify and briefly discuss some pertinent legal principles. Generally, a district court's order remanding a removed case to a state court is not appealable. See 28 U.S.C. § 1447(d) (providing that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise," with limited exceptions); AU Optronics Corp. v. South Carolina, 699 F.3d 385, 390 n.7 (4th Cir. 2012) (discussing § 1447(d)). Section 1453(c)(1) of Title 28, however, derives from CAFA and authorizes a court of appeals to "accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed." Consistent with § 1453(c)(1), a party is entitled to petition the appropriate court of appeals for permission to appeal a class action remand order. See BP Am., Inc. v. Okla. ex rel. Edmondson, 613 F.3d 1029, 1033 (10th Cir. 2010) (describing petition for appeal process for class actions under § 1453(c)(1)).

         Although § 1453(c)(1) authorizes a court of appeals to entertain a petition for permission to appeal a remand order in a class action, that provision does not identify any legal standards that govern a decision on the petition. And - notwithstanding that we have previously addressed and resolved petitions for appeal under § 1453(c)(1) - we have yet to specify any relevant factors for deciding such petitions. See, e.g., Quicken Loans Inc. v. Alig, 737 F.3d 960, 962 (4th Cir. 2013) (granting petition for permission to appeal under CAFA without specifying standards). The decisions of our sister circuits, however, provide useful guidance. In particular, the First Circuit has adopted a non-exhaustive list of factors for an assessment of petitions for permission to appeal under the CAFA provisions codified at ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.