On May 28, 2019, a divided Supreme Court held in a 5–4 opinion that third-party counterclaim defendants cannot remove putative class actions to federal court under the general federal removal statute, 28 U.S.C. § 1441, or the removal provisions of the Class Action Fairness Act (“CAFA”).

• Citibank, N.A. sued George Jackson in North Carolina state court to collect a debt that Jackson incurred on a Home Depot credit card. Jackson counterclaimed and filed third-party class-action claims against Home Depot U.S.A., Inc. and Carolina Water Systems, Inc.
• After Citibank dismissed its claim against Jackson, Home Depot filed a notice of removal under both the general removal provision and CAFA. The district court granted Jackson’s motion to remand, and the Fourth Circuit affirmed. The Supreme Court granted certiorari on September 27, 2018.
• Writing on behalf of the majority, Justice Thomas concluded that “neither provision allows such a third party to remove” “[b]ecause in the context of these removal provisions the term ‘defendant’ refers only to the party sued by the original plaintiff[.]” Thus, the majority opinion ruled that the Supreme Court’s precedent in Shamrock Oil & Gas Corporation v. Sheets, 313 U.S. 100 (1941), which held that an original plaintiff may not remove a counterclaim against it, should extend to third-party counterclaim defendants as well. Justice Thomas was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan.
• Acknowledging the dissent’s concern that litigants could use this ruling as a tactic to thwart removal, Justice Thomas stated that “if Congress shares the dissent’s disapproval of certain litigation ‘tactics,’ it certainly has the authority to amend the statute. But we do not.”
• In dissent, Justice Alito noted that CAFA made several changes to the general removal regime, permitting removal by “any defendant” (28 U.S.C. § 1453(b)), among other things. He wrote that the majority’s holding “subverts CAFA’s evident aims” and questioned “why a Congress eager to remedy alleged state-court abuses in class actions would have chosen to discriminate between two kinds of defendants, neither of whom had ever chosen the allegedly abusive state forum, all based on whether the claim against them had initiated the lawsuit or arisen just one filing later (in the countercomplaint).” Chief Justice Roberts and Justices Gorsuch and Kavanaugh joined the dissent.

The case is Home Depot U.S.A., Inc. v. Jackson, No. 17–1471 (U.S.), and the Supreme Court’s opinion can be read here.