ELDON C. FALLON, District Judge.
Currently pending before the Court is Plaintiffs' Motion to Remand (Rec. Doc. 147). Additionally, a similar motion is before the Court in Ronald Rivers, et al. v. Chalmette Medical Center, Inc., et al., Case No. 06-8519, Rec. Doc. 173.
The present case arises from the injuries to and deaths of patients at Pendleton Memorial Methodist Hospital ("Methodist"), in New Orleans, Louisiana, following Hurricane Katrina in late August and early September of 2005.
On October 3, 2006, the Defendants timely filed a Notice of Removal. On November 2, 2006, the Plaintiffs filed a motion to remand. The Court, satisfied that it has jurisdiction over this case pursuant to the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (codified in various sections of 28 U.S.C.), denied the Plaintiffs' motion and issued a Case Management Order for Class Certification Issues. The Court conducted a class certification hearing and ultimately denied a motion to certify a class. Samuel, 2010 WL 2428107.
Having denied a motion to certify the class, the next question is, as one commentator has put it, "Now what?" G. Shaun Richardson, Class Dismissed, Now What? Exploring the Exercise of CAFA Jurisdiction After the Denial of Class Certification, 39 N.M. L.Rev. 121 (2009). According to Plaintiffs, the answer is remand to state court for lack of jurisdiction. Defendants take the position that remand is improper and that the Court retains jurisdiction under CAFA even after denying class certification.
The removing party bears the burden of showing that federal jurisdiction exists and that removal is proper. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir.1995). Diversity jurisdiction is based on the claims in the state court petition as they existed at the time of removal. Cavallini v. State Farm Mut. Auto. Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand. Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir.2000). If at any time before final judgment it appears the district court lacks subject matter jurisdiction, the case shall be remanded to state court. 28 U.S.C. § 1447(c).
Congress enacted the Class Action Fairness Act in 2005 "to encourage federal jurisdiction over interstate class action lawsuits of national interest." Preston v. Tenet Healthsystem Mem'l Med. Ctr., Inc., 485 F.3d 793, 797 (5th Cir.2007); see generally Edward F. Sherman, Class Actions after the Class Action Fairness Act of 2005, 80 Tul. L.Rev. 1593 (2006). CAFA grants federal diversity jurisdiction over class actions exceeding an aggregate $5,000,000 in controversy, with minimal diversity and more than 100 class members. 28 U.S.C. § 1332(d)(2), (d)(5). The statute defines "class action" as "any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action." Id. at § 1332(d)(1)(B). This expanded grant of diversity jurisdiction allows removal of more class actions from state to federal court. See Sherman, Class Actions, at 1595-96.
CAFA does not address what happens to a district court's jurisdiction if, after removal, it denies a motion to certify a
In the circuit courts, a consensus has begun to emerge. The Seventh, Ninth, and Eleventh Circuits have held that a district court retains CAFA jurisdiction over a case after class certification is denied. U. Steel Workers Int'l Union v. Shell Oil Co., 602 F.3d 1087, 1092 (9th Cir.2010); Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n. 12 (11th Cir.2009). No circuit court of appeals has held that denying class certification divests the district court of CAFA jurisdiction.
The arguments for and against post-denial CAFA jurisdiction have been fully developed in prior opinions, and the parties present them ably and succinctly. The Court will begin with the reasoning it finds controlling and then address and dismiss arguments to the contrary advanced by Plaintiffs and adopted by other district courts.
The Court's continued jurisdiction post-denial follows from the plain language of CAFA. The Court has diversity jurisdiction if a civil action is a "class action" and there are minimally diverse parties, 100 claimants, and $5,000,000 aggregate in controversy.
Additional support and confirmation is found in the well-settled principle that once a court has diversity jurisdiction, subsequent developments do not divest it of jurisdiction. CAFA is not a sui generis grant of jurisdiction, but rather a supplement to the diversity jurisdiction statute. See 28 U.S.C. § 1332(d); see also In re Burlington N. Santa Fe Ry., 606 F.3d 379, 381 (7th Cir.2010) ("CAFA is, at base, an extension of diversity jurisdiction."). Therefore the normal rules for analyzing diversity jurisdiction apply to CAFA cases. See Genenbacher, 500 F.Supp.2d at 1015. Diversity jurisdiction is determined according to the jurisdictionally significant facts as they existed at the time of removal; post-removal changes to citizenship of the parties or the amount in controversy do not oust the court of jurisdiction. See St. Paul Mercury Indem. Co. v. Red Cab. Co., 303 U.S. 283, 289-91, 58 S.Ct. 586, 82 L.Ed. 845 (1938); Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000) (holding that the court does not lose jurisdiction over diversity case that was properly removed if subsequent events reduce amount in controversy below jurisdictional threshold).
Accordingly, the Court agrees with the circuit courts that have adopted this reasoning. United Steel, 602 F.3d at 1092 ("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."); Cunningham, 592 F.3d at 807 ("Our conclusion vindicates the general principle that jurisdiction once properly invoked is not lost by developments after a suit is filed, such as a change in the state of which a party is a citizen that destroys diversity."); Vega, 564 F.3d at 1268 n. 12 ("[J]urisdictional facts are assessed at the
A number of district courts have sidestepped St. Paul Mercury by holding that whether a case is a class action is not a jurisdictional fact to be determined as of the time of removal, but rather a legal determination that the court later makes. Those courts reason that if certification is denied, the case was never a class action to begin with and the court in fact did not have jurisdiction under CAFA at the time of removal. E.g., Salazar, 2008 WL 5054108, at *5. This argument purports to be "analogous to diversity cases in which the court learns a party is actually from Arizona and not California, thereby destroying diversity" and "the St. Paul Mercury rule is inapplicable." Id. at *6.
This reasoning is unpersuasive. As noted above, a "class action" is "any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure." 28 U.S.C. § 1332(d)(1)(B) (emphasis added). The Court does not make a case a class action for the purposes of CAFA by certifying a class; plaintiffs do when they invoke Rule 23 or a similar procedural rule. See Cunningham, 592 F.3d at 806; Allen-Wright, 2009 WL 1285522, at *3. The jurisdictional fact is how the case was filed. That fact is fixed at the time of removal and will not change even though the Court determines that the case cannot actually be certified as a class.
Some cases have reached the same conclusion through statutory interpretation. One CAFA subsection states that the statute "shall apply to any class action before or after the entry of a class certification order." 28 U.S.C. § 1332(d)(8). Another subsection defines "class certification order" as "an order issued by a court approving the treatment of some or all aspects of a civil action as a class action." 28 U.S.C. § 1332(d)(1)(C) (emphasis added). Some courts reason that if a court denies class certification, it has not issued and never will issue a "class certification order," and if a court will never enter a class certification order, then there will be no time "before or after the entry of a class certification order" for CAFA to apply. E.g. Avritt, 2009 WL 1703224, at *2.
This statutory reading ignores the much simpler interaction between subsection (d)(2), which expressly grants original jurisdiction over any civil action that is a class action, and (d)(1)(B), which defines "class action" as "any civil action filed under rule 23 . . . or similar State statute or rule." Section 1332(d)(8), which states that CAFA "shall apply to any class action before or after the entry of a class certification order," does not purport to grant jurisdiction. The Seventh Circuit offers the better interpretation of section (d)(8):
592 F.3d at 806. This reading of (d)(8) does not make it "a superfluous partial restatement of section 1332(d)(2)." Avritt, 2009 WL 1703224, at *2. While (d)(8) follows logically from the interaction of (d)(2) and (d)(1)(B), the fact that it clarifies a corollary proposition should not prompt the Court to strain to find some other meaning that directly undermines the express jurisdictional grant.
Furthermore, absurd results would follow if denying class certification defeats jurisdiction. If Plaintiffs and the courts that have so held are correct, "after a class action is removed to federal court, jurisdiction would neither exist nor not exist" and would "float in some kind of suspended animation" until the court ruled one way or the other on class certification. Delsing, 2010 WL 1507642, at *2. Congress cannot have intended that a case removed pursuant to CAFA be some kind of "Schrödinger's Class" subject to the vagaries of uncertain jurisdiction until such time as the court examines and rules on a motion to certify a class. Class certification can involve costly discovery and time-consuming briefing, and the Court will not complicate matters further when the plain language of the statute and traditional jurisdictional principles lead to a much simpler conclusion.
Finally, courts and the parties make policy arguments for either outcome. First, there is the efficiency interest in keeping a case "in the system that first acquired jurisdiction." Cunningham, 592 F.3d at 807. Second, remanding to state court would risk undermining Congress's intention to have more class actions litigated in federal court. As courts have articulated in various ways, there is a danger that denying certification will invite plaintiffs to take another bite at the certification apple in state court under the same facts but potentially different certification standards, which could prompt a second removal. See U. Steel Workers Int'l Union, 602 F.3d at 1090 (describing "jurisdictional ping-pong game" after district court denied class certification and remanded); Lewis v. Ford Motor Co., 685 F.Supp.2d 557, 568 & n. 12 (W.D.Pa.2010) (interpreting CAFA to avoid "merry-go-round problem").
Plaintiffs argue that there is no such risk in this case. They assert that since certification was denied, the majority of the members of the proposed class have since filed non-class suits in state court to vindicate their rights individually. Thus, there seems to be little risk that remand to state court would result in a class certified under state-court standards in contravention of Congress's purpose. Moreover, remand
One commentator has suggested that although courts retain jurisdiction after denying certification, they should abstain from exercising that jurisdiction over purely non-class state-law claims and remand to state court as a matter of comity and conservation of federal court resources. Richardson, Class Dismissed, 39 N.M.L.Rev. at 141-47. The Court is not aware of any other courts which have found jurisdiction but declined to exercise it. In light of the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them," the Court retains jurisdiction of this case. Colo. R. Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
For the foregoing reasons, Plaintiffs' motion to remand is DENIED.
Cunningham, 592 F.3d at 807.