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)
William Walter Wilkins, Jr., NEXSEN PRUET, LLC, Greenville,
South Carolina, for Petitioners.
Todd Wissbroecker, ROBBINS GELLER RUDMAN & DOWD, LLP, San
Diego, California; Lawrence P. Eagel, BRAGAR EAGEL &
SQUIRE, P.C., New York, New York, for Respondent.
F. Williams, Andrew A. Mathias, NEXSEN PRUET, LLC,
Greenville, South Carolina; Brian E. Pumphrey, Brian D.
Schmalzbach, MCGUIREWOODS LLP, Richmond, Virginia, for
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.
MOTZ, KING, and THACKER, Circuit Judges.
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
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.
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). 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.").
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). 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).
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.
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.
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. 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.
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
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.
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. 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
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.
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.
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),
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.
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.
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.
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)).
§ 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