McFarland v. Capital One, N.A.
MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 10/10/2019. (heps, Deputy Clerk)
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
On Behalf of Himself and All Others Similarly
Civil Action No. TDC-18-2148
CAPITAL ONE, N.A.,
d/b/a Capital One Auto Finance,
Plaintiff Anthony McFarland has filed a putative class action against Defendant Capital
One, N.A. ("Capital One") in the Circuit Court for Prince George's County, Maryland, alleging
that in financing the purchase of vehicles, Capital One has charged and collected convenience fees
in violation of state law. After Capital One removed the case to federal court, this Court granted
McFarland's Motion to Remand and ordered the case remanded to state court. Capital One has
since appealed this ruling to the United States Court of Appeals for the Fourth Circuit. Pending
before this Court is Capital One's Motion to Stay Pending Appeal. ECF No. 37. For the reasons
set forth below, the Motion to Stay will be DENIED.
The Court set forth the factual background of this case in its Memorandum Opinion of May
31,2019, see McFarlandv.
Capital One, NA., No. TDC-18-2148, 2019 WL 2330872, at *1 (D.
Md. May 31, 2019), and so recounts here only those facts relevant to the pending Motion. In that
opinion, the Court held that although Capital One had removed this case to federal court under the
Class Action Fairness Act ("CAFA"), 28 U.S.C.
(2018), the case did not meet CAFA's
such that the Court lacked subject matter
jurisdiction over it. McFarland, 2019 WL 2330872, at *3. Af1er the Court remanded the case to
state court, Capital One filed a petition in the United States Court of Appeals for the Fourth Circuit,
pursuant to 28 U.S.C.
1453(c), seeking leave to appeal this Court's remand order. The Fourth
Circuit has since "opened a new civil appeal and consolidated Capital One's Petition with briefing
on the merits of the appeal." Mot. Stay at 4, ECF No. 37-1. Capital One now seeks a stay of this
Court's remand order until the Fourth Circuit decides its appeal.
As a preliminary matter, the Court notes that on September 4, 2019, Capital One filed a
reply briefon the Motion. On July 17,2019, however, after a case management conference during
which Capital One agreed that no reply brief was necessary, the Court issued an Order setting the
briefing schedule and stating, "There shall be no reply." Order at 1, ECF No. 38. Where Capital
One filed its reply brief in violation of this Order and made no effort to seek either an amendment
of that Order or leave to file a reply brief notwithstanding the Order, the Court will strike Capital
One's reply brief.
At the outset, Capital One asserts that this Court has jurisdiction to issue a stay of its remand
Although McFarland does not contest this claim, federal courts have an independent
responsibility to ensure that they have jurisdiction before proceeding to the merits. See Steel Co.
v. Citizens for a Better Environment, 523 U.S. 83,94 (1998). The Court thus begins by addressing
whether it has jurisdiction to stay a remand order in the first place.
Generally, federal jurisdiction ends once a case is remanded to state court. Three J Farms,
Inc. v. Alton Box Bd. Co., 609 Fold 112, 115 (4th Cir. 1979). Because remand orders are generally
not appealable, see 28 U.S.C.
issuing such an order ends the involvement of the federal
courts and allows the state court to assume control over the case, id.
federal district courts divestthemselves
of jurisdiction over a case by issuing a remand order and
mailing it to the relevant state court. Shapiro v. Logistec USA Inc., 412 F.3d 307, 312 (2d Cir.
However, CAF A makes this general rule inapplicable to orders remanding class actions to
state courts. It carves these orders out of
1447(d)'s appellate prohibition and expressly grants
jurisdiction to federal courts of appeals to hear appeals of class action remand orders. 28 U.S.C.
Because such a remand order does not necessarily end the involvement of the federal
courts, courts have generally found that federal district courts retain jurisdiction to stay their
remand orders pending appeals of those orders. See, e.g., Morgan v. Gay, 471 F.3d 469,471 (3d
Cir. 2006) (noting that the district court granted a motion to stay an order to remand a class action);
Manier v. Medtech Prods., Inc., 29 F. Supp. 3d 1284, 1287 (S.D. Cal. 2014) ("The Court finds that
it is appropriate for the Court to address a motion to stay pending appeal of a remand order as
Congress has specifically allowed these remand orders to be appealable."); Coffey v. FreeportMcMoran Copper & Gold, Inc., No. 08-0640-HE, 2009 WL 10672022, *1-2 (W.D. Okla. May 8,
2009) (finding that because CAF A authorizes appellate review of a remand order, the district court
had authority to stay the remand order). The Court therefore holds that it has jurisdiction to stay
its remand order pending appeal.
Motion to Stay
The fact that this Court has the power to stay its remand order does not mean that Capital
One is entitled to such a stay. "A stay is riot a matter of right," but rather is "an exercise of judicial
discretion," the propriety of which "is dependent upon the circumstances of the particular case."
Nken v. Holder, 556 U.S. 418,433 (2009) (citation omitted). As both parties agree, the issuance
of a stay is subject to four separate requirements: (1) whether the stay applicant has made a strong
showing of a likelihood of success on the merits; (2) whether the applicant will be irreparably
injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties;
and (4) whether a stay is in the public interest. Id. at 434. The party seeking the stay has the
burden to establish that each factor has been met. Id. at 433-34 (citation omitted).
Likelihood of Success
To satisfy this factor, the party seeking the stay must make a "strong showing" that it is
"likely to succeed on the merits." Nken, 556 U.S. at 433 (citation omitted). In arguing that it is
likely to succeed on its appeal, Capital One largely rehashes the arguments that the Court rejected
in its decision remanding the case to state court. Chiefly, Capital One again argues that this Court
should have adopted the "aggregation principle" for determining the amount in controversy for a
class action as set forth in Freeman v. Blue Ridge Paper Products Inc., 551 F.3d 405 (6th Cir.
2008). But as the Court noted in its prior opinion, several other circuits have assiduously avoided
adopting this principle.
See, e.g., Marple v. T-Mobile Cent., LLC, 639 F.3d 1109, 1110-11 (8th
Cir. 2011 ) (distinguishing Freeman without adopting it); see also Scimone v. Carnival Corp., 720
F.3d 876, 885-86 (11th Cir. 2013) (distinguishing Freeman); Anderson v. Bayer Corp., 610 F.3d
390,393 (7th Cir. 2010) (same); Tanoh v. Dow Chemical Co., 561 F.3d 945, 955 (9th Cir. 2009)
More importantly, even assuming the validity of the reasoning of Freeman, the present
case is clearly distinguishable.
In Freeman, the plaintiffs split their claims into several separate
identical suits that each fell below CAF A's jurisdictional
plaintiffs' counsel conceded that this separation was effected for the sole purpose of avoiding
removal under CAFA. Freeman, 551 F.3d at 407. The United States Court of Appeals for the
Sixth Circuit held that in the face of such a blatant attempt to avoid federal jurisdiction, courts
should aggregate the total amount of damages sought in the five lawsuits in deciding whether
minimum was met.
Here, by contrast, counsel followed the
dismissal of a previously removed class action by bringing only one smaller lawsuit, voluntarily
limiting the scope and value of its case, as it is permitted to do to avoid federal jurisdiction.
e.g., Sf. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294 (1938); Freeman, 551 F.3d
at 409. While the class in this case is certainly a subset of the class in Brown v. Capital One, NA.,
No. GJH-17-3076, 2018 WL 3105768, at *1 (D. Md. June 25, 2018), aff'd, 750 F. App'x 236 (4th
Cir. Feb. 6, 2019), the previously removed and dismissed lawsuit, there are no other similar suits
with which to aggregate it in deciding whether it meets CAF A's jurisdictional minimum.
situation, it is unclear how the aggregation principle of Freeman could apply.
Finally, Capital One's assertion that there is "a noted lack of authority in this Circuit on
the aggregate principle and the amount in controversy to be used" such that "appellate review" is
"proper" does not establish a strong showing of likely success on the merits. Mot. Stay at 7. It
does not follow from the fact that the issue on appeal is a matter of first impression in this Circuit
that Capital One's position is likely to prevail, nor does it follow that a s.tay is necessary in order
to allow the Fourth Circuit to consider the issue. The Court finds that Capital One has not made a
strong showing of likely success on the merits.
The second factor to consider is whether the applicant will be irreparably injured absent a
stay. Nken, 556 U.S. at 434. A showing of "some possibility of irreparable injury" is insufficient.
ld. at 434-35. Capital One asserts a litany of harms that it claims will cause it irreparable injury if
the Court does not stay the remand. One alleged harm-potential
and federal jurisprudence" regarding Maryland's credit laws-is
"inconsistency between state
not a harm to Capital One and so
should not be considered. Mot. Stay at 8. Capital One also argues that if it is forced to litigate its
pending motion to dismiss in state court, and the Fourth Circuit then holds that it should have been
in federal court all along, it will have incurred the "additional expense" of unnecessary motion
practice. ld. This argument is inconsistent with the United States Supreme Court's holding that
"[mJere litigation expense, even substantial and unrecoupable cost, does not constitute irreparable
injury." Renegotiation Bd. v. Bannercraft Clothing Co., Inc., 415 U.S. 1,24 (1974). This holding
also disposes of Capital One's claim that it will be irreparably harmed if it is forced to conduct
discovery in state court. Particularly where the Fourth Circuit is required to rule on the appeal
within 60 days of accepting it, 28 U.S.C.
1453(c)(2), such that any parallel litigation in state
court would be of limited duration, the Court concludes that Capital One has not identified
irreparable harm that would result in the absence of a stay.
Injury to Other Parties
The third factor is a consideration of whether the other parties to the litigation will be
substantially injured by the issuance of the stay.
McFarland argues that further delay in the
progress of the state court litigation will cause harm to him, while Capital One argues that the
delay will be brief, and any harm will therefore.be minimal. Brief or not, this case's detour into
federal court has already delayed the state court litigation by more than one year, dating back to
the original removal of this case in July 2018. A stay of the remand order pending resolution of
the appeal would extend this delay even further. Under these circumstances, where the burden is
on the party seeking the stay to establish that the factors are all met, see Nken, 556 U.S. at 433,
Capital One has failed to demonstrate that McFarland will not be harmed by the issuance of a stay,
see Hawaii ex rei. Louie v. Bristol-Myers Squibb Co., No. 14-00180 HG-RLP, 2014 WL 3865213,
at *4 (D. Haw. Aug. 5,2014) (finding that where the defendant's improper removal under CAFA
had already delayed the proceeding several months, this factor favored denial of a stay).
The final factor requires the Court to consider whether the public interest favors a stay.
Capital One has put forth two arguments on this front. First, it contends that the Court's remand
order "frustrates the purpose of CAF A." Mot. Stay at 11. This argument, however, assumes the
merits of Capital One's appeal, as it could hardly be the purpose of CAF A to detain in federal court
a case that properly belongs in state court. Capital One's second argument, that a stay will avoid
potentially duplicative litigation and thus promote judicial economy, is stronger. Again, however,
this argument depends on the assumption that Capital One is likely to prevail in its appeal. To the
extent that the likely outcome is that the remand will be upheld, the public interest in prompt
resolution of cases and avoiding protracted litigation would weigh in favor of denying a stay. This
distinction highlights the broader principle that where the Court has found that the first two factors
weigh against a stay, the public interest factor, even if viewed as favoring a stay, is insufficient to
support a finding that Capital One has met its burden on the Motion. See Nken, 556 U.S. at 43445 (noting that "the first two factors ... are the most critical" and that the public interest factor is
assessed "nce an applicant satisfies the first two factors").
stay its remand order.
Consequently, the Court will not
For the foregoing reasons, Capital One's reply brief will be STRICKEN, and the Motion
to Stay Pending Appeal will be DENIED.
Date: October 10, 2019
THEODORE D. CHUA
United States District J
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