In Ruiz v. Bradford Exchange, Ltd., the Ninth Circuit addressed a plaintiff’s attempt to sidestep the Class Action Fairness Act (CAFA) by structuring a complaint to avoid federal jurisdiction. The decision confirms that defendants can keep such cases in federal court by expressly waiving the “adequate remedy at law” objection that might otherwise deprive the court of equitable jurisdiction.

Plaintiff’s Strategy: Equitable Remedies Only

The plaintiff filed a putative class action in California state court alleging that the defendant failed to disclose that his product purchase was part of a subscription program. Instead of seeking damages, the plaintiff sought only equitable restitution under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL).

The plaintiff admitted that he could have pursued damages under the Consumers Legal Remedies Act (CLRA), a legal remedy, but elected not to do so. His omission was deliberate. By limiting his complaint to equitable relief, the plaintiff sought to avoid removal by arguing that federal courts lack equitable jurisdiction when a plaintiff has an adequate remedy at law. 

Initially, the plaintiff’s strategy worked. The district court granted plaintiff’s motion to remand on the grounds that the court lacked equitable jurisdiction. Notably, the district court held that the defendant could not waive this “jurisdictional” defect. 

The Ninth Circuit: Waiver Saves Federal Jurisdiction

The Ninth Circuit reversed. In doing so, the Court reaffirmed that, while federal courts lack “equitable jurisdiction” where a plaintiff has an adequate remedy at law, the defendant may waive that defect. Specifically, the Court held “district courts are empowered to remand a removed case to state court for lack of equitable jurisdiction, but only after the removing defendant is given the opportunity to waive the adequate-remedy-at-law issue to keep the case in federal court.” The Court described the impact of its holding plainly: “if a plaintiff files a lawsuit in state court seeking only equitable relief and the case is properly removed to federal court, a defendant can defeat remand on equitable jurisdiction grounds by waiving the adequate-remedy-at-law issue.”

Practical Implications

The Ninth Circuit’s ruling provides defendants with a new mechanism to defeat anti-removal tactics increasingly seen in California consumer class actions. While plaintiffs may continue to tailor complaints to seek only equitable restitution under the UCL and FAL, defendants can now neutralize that strategy and stay in federal court by waiving the argument that plaintiffs have an adequate remedy at law, ensuring that CAFA’s jurisdiction reach remains intact.

Key Takeaways

• Strategic Pleading Meets Strategic Waiver. Plaintiffs cannot escape CAFA removal simply by forgoing damages and pleading only equitable restitution.
• Defendants Can Elect to Stay in Federal Court. A removing defendant may expressly waive the “adequate remedy at law” objection to preserve federal jurisdiction.