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Brown v. Jevic

July 31, 2009

WILLIAM J. BROWN; LYNN D. BROWN; GRISEL CAIRS; NOEMI CAMACHO; LINDA ANSTIC; DONALD E. MCCOY; THOMAS K. TURNER; RON WAYNE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, APPELLEES,
v.
JEVIC; JEVIC TRANSPORTATION, INC.; JEVIC TRANSPORTATION SERVICES, INC.; JEVIC HOLDING CORPORATION; DAVID H. GORMAN, PRESIDENT/CEO OF JEVIC TRANSPORTATION, INC.; GERALD PAULSON, VICE PRESIDENT OF JEVIC TRANSPORTATION, INC.; HARRY MUHLSCHLEGEL, PRESIDENT OF JEVIC TRANSPORTATION SERVICES, INC.; KAREN MUHLSCHLEGEL, VICE PRESIDENT OF JEVIC TRANSPORTATION SERVICES, INC.; MICHAEL T. GILLEN, AS OTHER OFFICER OF JEVIC TRANSPORTATION, INC.; SUN CAPITAL PARTNERS INC; MICHAEL T. GILLEN, MANAGING DIRECTOR OF SUN CAPITAL PARTNERS, INC.; F. DIXON MCELWEE, JR., AS VICE PRESIDENT OF SUN CAPITAL PARTNERS, INC.; GARY TALARICO, MANAGING DIRECTOR OF SUN CAPITAL PARTNERS, INC.; YRC WORLDWIDE, INC.; WILLIAM D. ZOLLARS, PRESIDENT/CEO OF YRC WORLDWIDE, INC.; STEPHEN L. BRUFFETT, EXECUTIVE VICE PRESIDENT/CHIEF FINANCIAL OFFICER OF YRC WORLDWIDE, INC.
SUN CAPITAL PARTNERS, INC., MICHAEL T. GILLEN, F. DIXON MCELWEE, JR., GARY M. TALARICO, APPELLANTS



On Appeal from the United States District Court for the District of New Jersey (D.C. No. 08-cv-03341) District Judge: Honorable Renee M. Bumb.

The opinion of the court was delivered by: Hardiman, Circuit Judge

PRECEDENTIAL

Argued March 6, 2009

Before: SLOVITER and HARDIMAN, Circuit Judges and POLLAK,*fn1 District Judge.

OPINION OF THE COURT

In this appeal implicating the Class Action Fairness Act of 2005, we consider whether a defendant is precluded from removing a class action to federal court because a co-defendant is in bankruptcy. We hold that it is not.

I.

The essential facts and procedural history of the case are undisputed. Appellant Sun Capital Partners, Inc. (Sun) is the parent company of JEVIC Transportation, Inc., which filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware on May 20, 2008, following the closure of its transportation facility in Delanco, New Jersey. The day after JEVIC's bankruptcy filing, William J. Brown and several other former JEVIC employees (collectively "Brown") filed an adversary proceeding in the Bankruptcy Court, which was styled as a class action and alleged violations of the Millvale Dallas Airmotive Plant Jobs Loss Notification Act (known as the New Jersey WARN Act), N.J.S.A. § 34:21-1 et seq. See Czyzewski v. JEVIC Transp., Inc., Adv. Pro. 08-50662 (BLS) (Bankr. D. Del. 2008). Like its federal counterpart, the New Jersey WARN Act requires advance notice of a plant closing under certain circumstances.

One week after the JEVIC bankruptcy filing and despite the automatic stay provided for in 11 U.S.C. § 362(a)(1), Brown filed a class action against JEVIC and Sun in the Superior Court of New Jersey;*fn2 this class action also alleging violation of the New Jersey WARN Act, replicated Brown's claim in Bankruptcy Court.

On June 27, 2008 - also in derogation of the automatic stay of § 362(a)(1) - JEVIC removed the case to the United States District Court for the District of New Jersey. In support of federal jurisdiction, JEVIC invoked the general removal statutes (28 U.S.C. §§ 1441 and 1446), the bankruptcy removal statutes (28 U.S.C. §§ 157, 1334 and 1452), and the minimal diversity provisions of the Class Action Fairness Act of 2005 (CAFA) (28 U.S.C. § 1332(d)).

On July 2, 2008, the District Court sua sponte remanded the action to state court, stating: "The law is clear that 'when an action is filed post-petition, in violation of the stay, the debtor must wait until the stay is lifted before filing a petition to remove.'" Pusatere v. JEVIC Transp., Inc., No. 08-3224, 2008 WL 2676599, at *1 (D.N.J. July 1, 2008) (quoting Easley v. Pettibone Mich. Corp., 990 F.2d 905, 908 (6th Cir. 1993)).

The day after the District Court remanded the case to state court, Sun -- which was not in bankruptcy -- removed the case to federal court, invoking the general removal statutes and CAFA. The District Court, after ordering Sun to show cause why the action should not be remanded, once again remanded the case to state court, stating: "[w]hen an action is initiated after the filing of a Chapter 11 petition, in violation of the accompanying stay, removal is not available." Brown v. JEVIC, No. 08-3341, Remand Order (Sept. 12, 2008) (emphasis added) (citations omitted).

Sun then filed a petition for leave to appeal the District Court's remand order, which we granted. Thus, we exercise jurisdiction ...


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