On 11/5/02, the Supreme Court unanimously ruled that a federal district court may not exercise removal jurisdiction over a state-court suit that has the potential to undermine a federal consent order. The plaintiff in Henson persisted in prosecuting an action in Louisiana state court even after stipulating in a federal class action settlement that he would dismiss the state-court action. The defendants removed the Louisiana action to federal district court, asserting federal jurisdiction under the All Writs Act, which authorizes federal courts to "issue all writs necessary or appropriate" in aid of their jurisdiction. The district court in Louisiana asserted jurisdiction and transferred the case to the district in Alabama that had approved the class action settlement. The Alabama district court dismissed the action. Parting company with the Second, Third, Sixth, Seventh, and Eighth Circuits, the Eleventh Circuit vacated the district court's order and held that neither the All Writs Acts alone nor the All Writs Act together with the federal removal statute authorized the exercise of removal jurisdiction to control "diehard" state-court litigants intent on undermining a federal consent order.
The Supreme Court ruled that the All Writs Act does not furnish removal jurisdiction. For a case to be removed from a state to a federal court, there must be some other basis for asserting federal jurisdiction.
This case is important to all businesses facing class action suits. The decision makes settlement agreements somewhat less certain, unless the parties make sure that the agreements are comprehensive and include state court suits. It is also possible that a settling party can ask a state court to dismiss the suit as barred by the settlement agreement, even though it can't ask the federal court to do so. The Court's decision in this case means that there must be some express judicial authority for a federal court to exercise jurisdiction, a principle that will be crucial in emerging cases under the Alien Tort Claims Act. Such express authority is also proposed in the Class Action Fairness Act legislation currently before Congress.