Passage of the Class Action Fairness Act, 28 U.S.C. § 1332, 28 U.S.C. § 1441(a) and (b) and 28 U.S.C. §1453 (“CAFA”) of course dramatically expanded federal jurisdiction over class action cases. But while CAFA explicitly defines what constitutes a “class action” for purposes of federal jurisdiction, it does not explicitly address what happens to federal jurisdiction after it becomes apparent, whether by judicial decision or amendment, that no class can be certified.
Until now, the circuit courts had not directly addressed this issue, and the district courts had reached conflicting decisions, based in part on the procedural posture of the cases being decided. See, e.g., Irish v. Burlington Northern Santa Fe Railway Co., 632 F. Supp. 2d 871 (W.D. Wis. 2009) (collecting competing authority). However, in Cunningham Charter Corp. v. Learjet, Inc., No. 09-8042 (7th Cir. Jan. 22, 2010), the Seventh Circuit held the denial of class certification does not automatically mean a cases loses federal jurisdiction. In support of its conclusion, the Seventh Circuit cited the general rule that jurisdiction, once properly invoked, cannot be ousted by subsequent events as well as the danger of jurisdictional "ping-pong" if a case was found uncertificable by a federal court, but a state court reached a different conclusion after remand. The Seventh Circuit also cited what was arguably dicta from an Eleventh Circuit case, Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n. 12 (11th Cir. 2009) in support of its conclusion.
In contrast, the Second Circuit has implied that once it becomes clear a class action cannot be maintained, federal jurisdiction disappears. In County of Nassau v. Hotels.com, LP, 577 F.3d 89 (2d Cir. 2009), the Second Circuit sua sponte remanded the case to the district court with instructions “to determine whether class certification is appropriate” in order to evaluated the existence of jurisdiction under CAFA. See also In re TJX Cos. Retail Sec. Breach Litig., 564 F.3d 489, 492 (1st Cir. 2009) (suggesting in dicta that “denial [of class certification] would . . . defeat [CAFA] jurisdiction”).
The Seventh Circuit's position seems more consistent with CAFA's langage concerning jurisdiction where a case is "filed" as a class action. 28 U.S.C. § 1332(d). Although not relied upon by the Seventh Circuit, the legislative history of CAFA also supports the proposition that Congress did not intend that federal court's would lose jurisdiction over a case after class cerification was denied. Until S. Rep. 14, 109th Cong. 1st Sess. 70–71, 2005 U.S.C.C.A.N. 3, 66–67 (citing St. Paul Mercury Indemn. Co. v. Red Cab Co., 303 U.S. 283, 294 (1938). However, until the other circuits expressly answer the question, the possibility of litgation ping-pong in CAFA cases remains.
Thanks to Lindsey Carr and Olivia Lin for their thoughts and research on this issue.