Silent CAFA Is Everlasting

Mills v. Foremost Ins. Co., No. 806-CV-00986-EAK-AEP, 2011 WL 440163 (M.D. Fla. Jan. 31, 2011).

Given CAFA’s nondescriptive nature on the issue–whether post removal decertification divests a federal court of jurisdiction, a District Court in Florida, relying on Vegav. T-Mobile addressed the impact of post removal events in regards to jurisdiction, and declined to remand the action.

The plaintiffs, Dale Mills and Diane Mills (“the Millses”), brought a putative class action in state court on behalf of Florida citizens who own a mobile home that was insured by the defendant, Foremose Insurance Company “Foremost”), under a “Mobile Home Insurance Policy.”

The mobile home of the Millses, and the homes of the putative class members were damaged as a result of 2004 Florida Hurricanes. The Millses alleged that Foremost paid less than what they were entitled to under their insurance policy for their submitted claims.

Foremost removed the action to the District Court based on diversity jurisdiction pursuant to CAFA, 28 U.S.C. §1332(d). Following the denial of class certification, the Millses filed a motion to remand which the District Court denied.

At the very outset, the Court remarked that, upon examination of the express language contained within CAFA, it became clear that the issue of whether retention of the Millses’ individual claims was proper, given the post-removal decertification order and the current amount in controversy (individual claims of just $1,864.36), was one that could not be resolved by the statute alone.

The Court maintained that while CAFA does create federal jurisdiction prior to class certification, the statute fails to address whether post-removal denial of a class divests a federal court of jurisdiction. More specifically, §1332(d) does not expressly require class certification for retention of federal jurisdiction, nor does §1453 expressly require remand upon denial of class certification. Section 1332(d)(8) states that the statute, “shall apply to any class action before or after the entry of a class certification order by the court with respect to that action.” What CAFA does not expressly address is the affects of the denial of class certification in regard to its impact upon jurisdiction. If Congress had truly intended that a class action properly removed to federal court was to be remanded upon the decertification of that class, Congress could have expressly stated such.

Foremost thus submitted that the Court should retain jurisdiction over the Millses’ individual state law claims under Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 (11th Cir.2009) in which the Eleventh Circuit held that “jurisdictional facts are assessed at the time of removal; and post-removal events (including non-certification, de-certification, or severance) do not deprive federal courts of subject matter jurisdiction.”

Given CAFA’s nondescriptive nature on the issue currently before it, the Court examined the context of previously established opinions. While the Millses argued that Vega’s finding was obiter dicta because it was found within a parenthetical, within a footnote, citing to Allen-Wright v. Allstate Ins. Co., No. 07-cv-4087, 2009 WL 1285522, at *5 (E.D. Pa. May 5, 2009), the Court found that the Millses failed to mention that the end result in Allen-Wright was to deny the motion for remand. The Court noted that Allen-Wright, facing a similar issue as here, had concluded so based upon the plain language of CAFA and the Supreme Court’s decision in St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938), that “events occurring subsequent to the removal which reduce the amount recoverable, whether beyond the plaintiff’s control of the result of his violation, do not oust the district court’s jurisdiction once it has been attached.”

The Court noted that several district courts around the country have concluded that jurisdiction is determined at the time a complaint is filed or at the time of removal, and although the denial of class certification is a change in a jurisdictional fact, that changes in jurisdictional facts do not affect jurisdiction. However, other district courts have concluded that the denial of class certification is not a post-filing or post-removal change in jurisdictional facts, but instead a legal determination that the plaintiffs’ claims did not constitute an actual or potential class action. These courts ultimately conclude that denial of class certification is effectively a determination that there is not and never was CAFA jurisdiction.

The Court stated that Seventh Circuit, in addition to the Eleventh Circuit, has dealt with the issue presently before this Court. The Eleventh Circuit in Vega cited to Bullard v. Burlington N. Santa Fe Ry. Co., 535 F.3d 759, 761 (7th Cir.2008) when addressing the impact of post removal events in regards to jurisdiction. (Editors’ Note: See the CAFA Law Blog analysis of Bullard posted on August 31, 2009).

The Seventh Circuit more recently addressed the issue in Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806-07 (7th Cir.2010), when presented with the identical issue to the one currently before this Court, and ultimately agreed with the Eleventh Circuit’s opinion in Vega. (Editors’ Note: See the CAFA Law Blog analysis of Cunningham Charter Corp. posted on February 3, 2010).

In Cunningham, the Seventh Circuit reasoned in retention of the claims in federal court, “for if a state happened to have different criteria for certifying a class from those of Fed. R. Civ. P. 23, the result of a remand because of the federal court’s refusal to certify the class could be that the case would continue as a class action in state court. That result would be contrary to the Act’s purpose of relaxing the requirement of complete diversity of citizenship so that class actions involving incomplete diversity can be litigated in federal court.”

Similarly, in United Steel v. Shell Oil Co., 602 F.3d 1087, 1089 (9th Cir.2010), the Ninth Circuit joining with the Seventh Circuit, concluded that “if the putative class action was properly removed to begin with, the subsequent denial of Rule 23 class certification does not divest the district court of jurisdiction.” (Editors’ Note: See the CAFA Law Blog analysis of United Steel posted on August 13, 2010).

Although the amount in controversy was now minimal compared to that originally plead, the Court did not find that remand of the Millses individual claims was within the text of CAFA or the law as established above, specifically under Vega. Accordingly, the Court denied the Millses’ motion for remand.