State of Nevada v. Bank of America Corporation et al

Filing 149

ORDER - Nevada's 119 appeal has neither divested the court of jurisdiction nor effected a stay of proceedings. The status conference/hearing calendared for Thursday, February 2, 2012, at 8:00 a.m. shall proceed as scheduled. Signed by Magistrate Judge William G. Cobb on 1/31/2012. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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STATE OF NEVADA,

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Plaintiff ,
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vs.
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BANK OF AMERICA CORPORATION;
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BANK OF AMERICA, N.A., BAC HOME )
LOANS SERVICING, LP; RECONTRUST )
COMPANY, N.A.; COUNTRYWIDE
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FINANCIAL CORPORATION;
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COUNTRYWIDE HOME LOANS, INC.; and)
FULL SPECTRUM LENDING, INC.,
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Defendants.
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_____________________________________)

3:11-cv-00135-RCJ (WGC)

ORDER

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On March 22, 2011, Plaintiff State of Nevada (“Nevada”) filed a motion to remand to state

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court. (Doc. #18.)1 On July 5, 2011, Chief District Judge Robert C. Jones denied Nevada’s motion

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(Doc. #52) and Nevada, therefore, appealed to the Ninth Circuit Court of Appeals. (Doc. #119.) On

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January 3, 2012, the Ninth Circuit granted Nevada’s application for interlocutory appeal under the

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Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1453(c)(1). The question now before the court is

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whether Nevada’s appeal to the Ninth Circuit has divested this court’s jurisdiction and, consequently,

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stayed proceedings pending appeal.

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During a January 25, 2012 hearing, the parties addressed the matter and the court expressed

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concern that the case may be automatically stayed by virtue of Nevada’s appeal to the Ninth Circuit,

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Refers to court’s docket number.

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which also questions this court’s jurisdiction. At the court’s request, Nevada and the Bank of America

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defendants submitted briefs addressing whether the case was stayed by virtue of the appeal. After

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reviewing the parties’ informative memoranda, the court concludes that Nevada’s appeal has neither

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divested the court of jurisdiction nor effected a stay of proceedings.

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Although an appeal generally divests the district court of jurisdiction, “[t]he principle of

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exclusive appellate jurisdiction is not . . . absolute.” Nat’l Resources Def. Council v. Sw. Marine, 242

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F.3d 1163, 1165 (9th Cir. 2001). “Absent a stay, an appeal seeking review of collateral orders does

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not deprive the trial court of other proceedings in the case, and an appeal of an interlocutory order does

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not ordinarily deprive the district court of jurisdiction except with regard to the matters that are the

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subject of the appeal.” Britton v. Co-op Banking Group, et. al, 916 F.2d 1405, 1412 (9th Cir. 1990)

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(citing Manual for Complex Litigation §§ 25.11, 25.16 (2d Ed.). The purpose of the rule is twofold:

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it seeks to promote judicial economy and avoid the confusion that would inevitably result from

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simultaneously litigating the same issues before separate courts. Sw. Marine, 242 F.3d at 1166 (citing

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Masalosalo v. Stonewall Ins. Co., 718 F.2d 955, 956 (9th Cir. 1983); 20 James Moore, Moore’s

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Federal Practice, § 303.32[1] (3d Ed. 2000).

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Although there is limited case law on point, Nevada and Bank of America concur that this court

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retains jurisdiction over pendant matters while awaiting the Ninth Circuit’s review of the court’s

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jurisdiction under CAFA, 28 U.S.C. § 1453(c)(1). See (Pl.’s Br. (#145) at 2); (Def.’s Br. (#146) at 3.)

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Britton was particularly instructive to the court’s conclusion that it retains jurisdiction and that

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proceedings are not stayed. Britton held that the district court retained jurisdiction to enter a default

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judgment against a defendant, notwithstanding a pending interlocutory appeal from an order denying

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the defendant’s motion to compel arbitration. Britton, 916 F.2d at 1411-12. The circumstances before

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the court are substantially analogous to Britton. The issue on appeal of whether this case should

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proceed in federal or state court mirrors the issue on appeal presented in Britton: namely, whether the

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case should proceeded in court or through arbitration. Id. Further, the question concerning the court’s

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jurisdiction under CAFA is severable from both the merits of this action and the ongoing discovery

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coordination dispute.

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As a result, there is no reason to believe that proceeding will interfere with the Ninth Circuit’s
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review or somehow create a “moving target.” Rather, proceeding herein both maintains the “status

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quo,” which presumes that the court has jurisdiction under CAFA, and promotes judicial economy by

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addressing and resolving matters not on appeal, such as the discovery coordination dispute. See

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Moses H. Cone Memorial Hospital v. Mercury Constr., 460 U.S. 1, 21 (1983) (permitting concurrent

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litigation on the issues of arbitration and the merits of the underlying dispute); United States v. Pitner,

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307 F.3d 1178, 1183 n.5 (9th Cir. 2002) (stating that “the district court retains jurisdiction to address

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aspects of the case that are not the subject of the appeal”).

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The court, therefore, concludes that Nevada’s appeal has neither divested the court of

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jurisdiction nor effected a stay of proceedings. The status conference/hearing calendared for Thursday,

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February 2, 2012, at 8:00 a.m. shall proceed as scheduled.

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IT IS SO ORDERED.

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DATED: January 31, 2012

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_____________________________________________
WILLIAM G. COBB
UNITED STATES MAGISTRATE JUDGE

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