The Southern District of Illinois recently confirmed that traditional diversity jurisdiction and jurisdiction under the Class Act Fairness Act (CAFA) provide two separate means of obtaining federal jurisdiction over class action lawsuits—though, in this case, defendants failed to satisfy either.
Two plaintiffs brought a putative class action lawsuit in state court alleging that their employer failed to pay overtime wages. The defendant, an Indiana citizen, removed the case to federal court on the basis of diversity jurisdiction, which requires complete diversity and an amount in controversy that exceeds $75,000. Plaintiffs, both Illinois citizens, argued that only CAFA provides federal jurisdiction over class actions, and remand was proper because defendant failed to meet CAFA’s requirements: although there were 100 or more putative class members and minimal diversity, the amount in controversy did not exceed $5 million (a similar lawsuit had been brought against the defendant in federal court and then voluntarily dismissed for this same reason). Yet the court disagreed, noting that CAFA’s intent was to expand federal jurisdiction over class action lawsuits: “CAFA does not supplant traditional diversity jurisdiction; it supplements it.” Therefore, class actions may properly be removed to federal court on either ground.
Unfortunately for defendant, the court found jurisdiction was lacking. Defendant argued only for traditional diversity jurisdiction under 28 U.S.C.A. § 1332(a), and, although it satisfied complete diversity, defendant could not show the requisite amount in controversy, as putative class members’ potential damages may not be aggregated for this purpose. Defendant argued that an exception applied, permitting aggregation because the putative class members sought to enforce a “common and undivided interest.” However, because plaintiffs could bring individual actions against their employer without implicating the other employees, the court found no such interest existed. Thus, despite the fact that damages to the class amounted to $400,000, neither named plaintiff had a claim exceeding $75,000. The court therefore remanded the action to state court.