The issue of whether federal subject matter jurisdiction under the Class Action Fairness Act (“CAFA”) continues to exist after class certification is denied continues to generate new and conflicting opinions. The Ninth Circuit Court of Appeals has now issued two rulings on the question. The first, Kennedy v. Natural Balance Pet Foods, Inc., Case No. 08-56378 (9th Cir. Jan. 6, 2010), ordered a case remanded to state court after class certification was denied, citing 28 U.S.C. Section 1447(c). However, the panel noted that the parties had not disputed that the district court no longer had jurisdiction over the dispute once class certification was denied, which obviously limits the precedential impact of the opinion.
In a later opinion where the issue was squarely raised, the Ninth Circuit reached the opposite conclusion. In AFL-CIO v. Shell Oil Co., No. 10-55269, 2010 U.S. App. LEXIS 8208 (9th Cir. April 21, 2010) the panel, without referencing the earlier Kennedy decision, held that once a case was removed under CAFA, the district court retained jurisdiction over the matter even after class certification was denied. Relying on Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir. 2010) and Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (2d Cir. 2009), the Ninth Circuit held that “Congress intended 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.” AFL-CIO, 2010 U.S. App. LEXIS at *9.
District courts continue to address the “vanishing jurisdiction” issue as well. A particularly interesting example is a decision by Judge Standish of the Western District of Pennsylvania. In Lewis v. Ford Motor Co., Case No. 09-164, 2010 U.S. Dist. LEXIS 372 (W.D. Pa. Jan. 5, 2010), Judge Standish looked at the legislative history of CAFA in determining whether subject matter jurisdiction continued to exist after class certification had been denied. Specifically, he noted that an earlier draft of the legislation contained a provision that provided for cases to be remanded to state court if class certification was denied. That provision was deleted during negotiation of CAFA’s final form, with Senator Christopher Dowd explaining the amendment was necessary to address the “merry-go-round” problem of cases going back and forth between state and federal courts. Id. at *28-29, citing 149 Cong. Rec. S16, 102-103 (daily ed. Dec. 9, 2003). Judge Standish found this persuasive evidence Congress intended that disputes remain in federal court after they have been properly removed under CAFA.
Undoubtedly, further appellate decisions on this issue will be forthcoming. Until it is resolved, either through consistent Court of Appeals rulings or a definitive pronouncement by the Supreme Court, the possibility of vanishing jurisdiction under CAFA will remain an important tactical concern for class action litigators.