Cutrone v. Mortgage Electronic Registration Systems, Inc.
749 F.3d 137
| 2d Cir. | 2014Background
- Plaintiffs Cutrone and Cervone filed a putative New York class action (state court) alleging MERS’s Esign mortgage practices caused borrowers to pay extra mortgage-recording taxes; causes of action under NY law (breach, GBL §§ 349–350).
- Complaint named two plaintiffs, listed the tax they paid on refinancing ($6,835.20), and estimated the class as “hundreds, and likely thousands,” but did not specify an aggregate damages amount or precise class size.
- MERS is a Delaware corporation with principal place of business in Virginia and operates an eRegistry of electronic promissory notes; MERS later investigated its records and found thousands of registered eNotes in New York.
- More than 90 days after the complaint, MERS removed under CAFA (28 U.S.C. § 1332(d)), alleging >100 class members, minimal diversity, and a reasonable probability the aggregate amount in controversy exceeded $5,000,000 based on its records.
- District court granted plaintiffs’ remand motion, holding removal untimely under 28 U.S.C. § 1446(b)(1) because plaintiffs’ complaint provided MERS enough information to assess CAFA removability; MERS appealed.
- Second Circuit reversed: held CAFA removal clocks under § 1446(b) are triggered only by a plaintiff’s pleading or other paper that explicitly states damages or sets forth facts from which >$5,000,000 can be ascertained, and held a defendant may remove after its own investigation when plaintiffs’ papers are indeterminate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Moltner’s bright-line rule (removal clock starts only when a paper explicitly specifies the amount sought) applies to CAFA cases | Mollo (plaintiffs) argued defendants can be charged with removability when complaint provides enough information (e.g., plaintiff’s own payment × “hundreds”) | MERS argued Moltner should apply to CAFA so removal clock requires an explicit damages statement or equivalent facts | Held: Moltner applies to CAFA; §1446(b) 30-day clocks trigger only when a pleading/other paper explicitly specifies monetary amount or facts enabling ascertainment of >$5M |
| Whether defendant must investigate independently to trigger §1446(b) 30-day periods | Plaintiffs: defendants should investigate when information is available; allowing post-investigation removals encourages delay/gamesmanship | MERS: if plaintiff’s papers are indeterminate, defendant may investigate and remove once it independently determines removability | Held: A defendant is not required to investigate to start the 30-day clocks; but if plaintiff’s papers do not trigger §1446(b), defendant may remove after its own investigation (the 30-day windows are not exclusive) |
| Timeliness of MERS’s removal here | Plaintiffs: the complaint provided sufficient info (class “hundreds/thousands” × $6,835.20) to trigger §1446(b)(1) and make MERS’s removal untimely | MERS: complaint was indeterminate; after independent review of eRegistry it reasonably concluded CAFA jurisdiction and timely removed | Held: Plaintiffs’ filings did not explicitly show aggregate >$5M; MERS’s independent investigation supplied adequate facts and removal was timely |
Key Cases Cited
- Moltner v. Starbucks Coffee Co., 624 F.3d 34 (2d Cir. 2010) (removal clock starts when plaintiff serves a paper explicitly specifying the amount sought)
- Walker v. Trailer Transit, Inc., 727 F.3d 819 (7th Cir. 2013) (bright-line rule: removal clock begins when paper affirmatively and unambiguously reveals predicates for removal)
- Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136 (9th Cir. 2013) (complaint must indicate value of other class members to trigger CAFA removal clock)
- Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392 (5th Cir. 2013) (same bright-line approach applied in CAFA context)
- Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121 (9th Cir. 2013) (defendants may remove based on their own information when plaintiff’s papers do not trigger §1446(b))
- Blockbuster, Inc. v. Galeno, 472 F.3d 53 (2d Cir. 2006) (CAFA jurisdictional predicates and burden on defendant to show reasonable probability aggregate claims exceed $5,000,000)
- Whitaker v. American Telecasting, Inc., 261 F.3d 196 (2d Cir. 2001) (defendant must apply a reasonable amount of intelligence to pleadings but is not required to independently investigate to determine removability)