The issue of first impression in CitiFinancial, Inc. v. Lightner, 2007 U.S. Dist. LEXIS 78647 (N.D. W.Va. Oct. 22, 2007), was whether the Class Action Fairness Act overturned pre-CAFA precedent barring a plaintiff from removing when it becomes a counterclaim defendant where the counterclaim falls within CAFA. The Court’s answer was No.

The plaintiff bank in CitiFinancial sued to recover an unpaid $6,600 loan plus interest. In proud American tradition, the defendant responded with a class action counterclaim arising out of the loan. The bank removed pursuant to CAFA, 28 U.S.C. § 1332(d)(2)(A). The defendant filed a motion to remand, arguing that the initiating plaintiff may not remove an action from state to federal court and that, under Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), a plaintiff who becomes a counterclaim defendant is not a "defendant" for purposes of the removal statutes. The bank then filed a motion to realign the parties to make itself a defendant and to add certain insurers as necessary parties. The CitiFinancial Court denied the motion to realign, applying the functionality test and concluding that the class action counterclaim did not significantly alter the bank’s status as a true plaintiff seeking to enforce contractual rights. It then remanded. The bank filed an appeal in the Fourth Circuit and on the present motion sought a stay of the remand order pending appeal. The most interesting part of the decision denying the stay was the Court’s analysis of the public interest prong:

The moving party must show that the public interest will be served by granting the stay.... CitiFinancial argues that a stay of this Court's remand will serve the public interest by allowing the Fourth Circuit to rule on an issue of first impression, specifically whether CAFA modifies Shamrock's holding to permit removal of a putative class action counterclaim that would be subject to removal if it had been filed as an independent action. CitiFinancial observes, correctly, that the courts and the bar generally will benefit from having an issue of possible first impression resolved in this Circuit. CitiFinancial fails to demonstrate, however, any relationship between staying the remand of this particular action and serving the public interest. CitiFinancial thus fails to satisfy the public interest factor of the ... test.

[Citations omitted.] The Court concluded: "CitiFinancial's argument that CAFA overruled Shamrock rests upon CitiFinancial's belief that Congress' broad expansion of federal jurisdiction of class actions impliedly gave a plaintiff in state court to remove the action to federal court when such plaintiff becomes a counterclaim defendant in a class action counterclaim. CAFA's broad policy objectives notwithstanding, the enacted statute neither addresses realignment nor confers upon a plaintiff of any kind the right to remove an action brought in state court. This Court cannot conclude that CitiFinancial will likely prevail on the merits of the appeal."