Takeaway: When litigating class certification and motions to compel arbitration, defense attorneys virtually always prefer federal over state courts. In two cases involving home security provider ADT, L.L.C. (ADT), and a rogue employee of ADT who literally spied on ADT customers in their homes, ADT deployed different mechanisms to secure federal jurisdiction. In the first, a putative class action filed against the rogue employee (but not ADT) in Texas state court, ADT resorted to a Texas Rule of Civil Procedure authorizing unilateral intervention in the action as a defendant, and then used its newly-conferred status as a party-defendant to remove the case to federal court under the Class Action Fairness Act (CAFA). In the second, involving individual claims against ADT and the non-diverse employee that could not be removed to federal court, ADT initiated an independent action in federal court to compel arbitration of the dispute. In recent appellate decisions in these two cases, the Fifth Circuit (1) agreed with ADT's strategy of intervening as a defendant and then removing, and (2) indicated a federal petition to compel arbitration (concerning a dispute initially filed in state court) could work, so long as the rogue non-diverse employee is not an indispensable party to the petition to compel arbitration.
In Madison v. ADT, L.L.C., 11 F.4th 325 (5th Cir. 2021), Texas resident Taylor Madison contracted with...
