United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union v. Shell Oil Co.United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union v. Shell Oil Co.
Defendants removed this putative class action from state court pursuant to the Class Action Fairness Act of 2005 (CAFA),
1
Procedural Background
Plaintiffs United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO, CLC (USW), Richard Floyd, and Eduardo Carbajal filed their class action against Shell Oil Company, Equilon Enterprises LLC, and Tеsoro Refining and Marketing Company in California state, court. The complaint asserts that defendants’ oil refineries violated California Business & Professions Code § 17200 and failed tо provide meal periods, rest periods, timely and accurate wage statements, and wages due at the time of termination in violation of
The defendants removed thе case to federal court, asserting jurisdiction under
(2) The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or valuе of $5,000,000, exclusive of interest and costs, and is a class action in which—
(A) any member of a class of plaintiffs is a citizen of a State different from any defendant;
(B) any member of а class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or
(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.
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[.]
This subseсtion shall apply to any class action before or after the entry of a class certification order by the court with respect to that action[.]
Putative class actions satisfying the class action definition and the numerоsity requirement of
After removal, plaintiffs sought certification of two classes of employees from the three refineries owned by defendants. The district court denied certification, concluding that class resolution was not superior to other methods of adjudication, as must be found under Rule 23(b)(3) as a prerequisite to class certification. The district court reasoned that a сlass action would be difficult to manage and that damages would be difficult to calculate for two classes involving at least seven job titles and three refineries owned by different companies with different collective bargaining agreements.
The district court then granted plaintiffs’ motion to remand, holding that the case no longer satisfied CAFA’s jurisdictionаl requirements because there was “no reasonably foreseeable possibility” that a class action would be certified and no other basis for federal jurisdiction. Thе district court reasoned that a denial of class certification is not a post-removal change of a jurisdictional fact, but rather a legal conclusion that CAFA jurisdiction never existed.
Then the jurisdictional ping-pong game began. After the district court bounced the case back to state court, plaintiffs filed two new class actions in statе court and moved to amend the remanded action, creating three separate pending putative class actions in state court. Defendants then volleyed the two new cases back to federal court by removing them once again, and the state court stayed the remanded action pending this appeal. Presumably, if the federal сourt again denies class certification, the federal cases will bounce back to state court once more, if that is what the statute bizarrely permits.
Jurisdiction and Standards of Review
We have jurisdiction pursuant to
Discussion
Congress passed the Class Action Fairness Act “primarily to curb perceived abuses of the class action device which, in the view of CAFA’s proponents, had often been used to litigate multi-state or even national class actions in state courts.”
Tanoh v. Dow Chem. Co.,
Even though CAFA indisputably creates original federal jurisdiction prior to class certification, the statute does not say whether the post-removal denial of class certification divests the federal courts of jurisdiction — or, as plaintiffs argue, whether class certification is a necessary condition to continued jurisdiction.
Only the Seventh and Eleventh Circuits have squarely considered this issue, and both have held that the post-removal denial of class certification does not divest federal courts of jurisdiction.
See Cunningham, Charter Corp. v. Learjet, Inc.,
In
Vega,
the Eleventh Circuit held that the district court abused its discretion by certifying the class, vacated the certification order, and remanded fоr Vega’s claims to proceed as individual claims.
In
Cunningham,
the Seventh Circuit followed
Vega
and reasoned that, when the statutory text is read in context, the federal jurisdictional question must be analyzed as of when the suit is
filed
as a class action, not when the class is or is not
certified.
As the court observed, the idea that a putative class action, once properly removed, stays removed,
vindicates the general principle that jurisdiction once proрerly 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. E.g., St. Paul Mercury Indemnity Co. v. Red Cab Co.,303 U.S. 283 , 293-95,58 S.Ct. 586 ,82 L.Ed. 845 (1938). The general principle is applicable to this case because no one suggests that a class action must be certified before it can be removed to federal court under the Act;section 1332(d)(8) scotches any such inference.
Id. at 807 (citation omitted).
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 longstanding principles apply — post-filing developments do not defeat jurisdiction if
Conclusion
In sum, we hold that continued jurisdiction under
REVERSED AND REMANDED.
Notes
. Pub.L. No. 109-2, §§ 4-5, 119 Slat. 4, 9-13 (2005).
. The number of members of all proposed plaintiff classes in the aggregate must be at least 100.
. We recognize, as the Cunningham court did, exceptions to the general rule of "once jurisdiction, always jurisdiction” — such as when a case becomes moot in the course of litigation or when there was no jurisdiction to begin with because the jurisdictional allegations were frivolous from the start. See 592 F.3d at 807.