UPDATE: Ninth Circuit Follows Seventh Circuit, Holding that Denial of Class Cert Does Not Divest Court of CAFA Jurisdiction
This is not a mass torts or consumer class action case, but it bears noting because the issue arises often in such cases.
Regular readers will recall that, in January, the Seventh Circuit held that a district court did not lose jurisdiction over a case that had been removed to federal court pursuant to CAFA, even though the district court subsequently determined that the case could not proceed as a class action. See Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806-07 (7th Cir. 2010). Yesterday the Ninth Circuit adopted the same approach in an employment law case asserting a class action against employers for their failure to provide meal periods, rest periods, timely and accurate wage statements, and wages due at termination. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers Int'l Union v. Shell Oil Co., No. 10-55269, Slip op. (9th Cir. Apr. 21, 2010).
In United Steel, the case had been removed to federal court pursuant to CAFA. The trial court adjudicated plaintiffs' motion to certify two classes, ultimately holding that the classes would be unmanagable and that class adjudication was not "superior" as required by Rule 23(b)(3). The trial court remanded the case to state court, reasoning that its denial of class certification was "not a post-removal change of a jurisdictional fact, but rather a legal conclusion that CAFA jurisdiction never existed." Slip op. at 6028.
The Ninth Circuit reversed, relying on the Seventh Circuit's reasoning in Cunningham Charter. The Ninth Circuit thus held that "a putative class action, once properly removed, stays removed," and that the federal jurisdictional question under CAFA is measured as of when the suit is filed, not when the class is certified:
Had Congress intended that a properly removed class action be remanded if a class is not eventually certified, it could have said so. We think it more likely that Congress intended that the usual and long-standing principles apply -- post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.
Slip op. at 6031.
