Quicken Loans Incorporated v. Phillip Alig
737 F.3d 960
4th Cir.2013Background
- Plaintiffs (West Virginia borrowers) sued Quicken Loans, Title Source, and a class of appraisers in West Virginia state court alleging unlawful loan origination practices and complicit appraisers who used suggested values, causing underwater loans.
- Plaintiffs sought class relief on behalf of West Virginia citizens; named defendant appraisers included Appraisals Unlimited, Dewey V. Guida, and Richard Hyett.
- Quicken Loans removed under the Class Action Fairness Act (CAFA); plaintiffs moved to remand invoking CAFA’s local controversy exception.
- The district court granted remand, aggregating the named and unnamed appraiser defendants to satisfy the exception’s “at least 1 defendant” requirement.
- The Fourth Circuit granted permission to appeal, vacated the remand, and directed the district court to determine whether the named defendant appraisers (not unnamed, uncertified class members) satisfy the local-controversy “at least 1 defendant” element.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA’s local controversy exception applies | Alig: the exception applies because class and injuries are local and at least one local defendant (appraisers) suffices, so remand appropriate | Quicken: district court wrongly aggregated multiple defendants and uncertified class members; the statute requires a single defendant to meet the element | Court: "at least 1 defendant" may be satisfied by aggregating multiple named local defendants, but not by including unnamed, uncertified class members; remand vacated and case sent back to decide if the named appraisers suffice |
| Whether unnamed/uncertified class members may be treated as defendants for the exception | Alig: district court properly treated the appraiser class (including unnamed members) as local defendants | Quicken: unnamed class members are not parties/defendants and cannot be counted | Held: unnamed, uncertified class members are not defendants and cannot be considered |
| Whether argument about improper aggregation was waived | Alig: Quicken failed to articulate this theory below, so waived | Quicken: argued the second element generally below | Held: Court reached the argument despite imperfect preservation because it was encompassed in earlier general argument and no new evidence required |
| Remedy and next step | Remand should stand if requirement met | Proceed in federal court if requirement not met | Held: Remand vacated; district court must decide whether the named appraisers alone satisfy the "at least 1 defendant" criteria; if yes, remand; if no, federal jurisdiction remains |
Key Cases Cited
- Francis v. Allstate Ins. Co., 709 F.3d 362 (4th Cir. 2013) (standard of review for remand de novo)
- Strawn v. AT&T Mobility LLC, 530 F.3d 293 (4th Cir. 2008) (burden on removing party to establish federal jurisdiction)
- W. Va. ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169 (4th Cir. 2011) (discussion of CAFA’s purposes and scope)
- Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000) (preservation/clarity of appellate theories)
- PCTV Gold, Inc. v. SpeedNet, LLC, 508 F.3d 1137 (8th Cir. 2007) (treatment of arguments encompassed by earlier general arguments)
- In re Sunterra Corp., 361 F.3d 257 (4th Cir. 2004) (canon against statutory readings that conflict with congressional intent)
- Smith v. Bayer Corp., 564 U.S. 299 (2011) (unnamed members of a proposed, uncertified class are not parties)