Today, the Seventh Circuit issued an opinion holding that even though some class members’ claims lack federal jurisdiction, the district court must consider whether it has jurisdiction over the remaining members’ claims under the Class Action Fairness Act (“CAFA”).
In this case, the plaintiff lost an arbitration over a credit card debt and the Illinois state court entered an award enforcing the judgment. The plaintiff believed that the law firm collecting the debt, Mann Bracken, LLP, and the National Arbitration Forum “secretly are under common control,” and asked the state judge to vacate the award. The judge vacated the award and dismissed the case without prejudice, but did not provide the reasons. The plaintiff then filed a state court class action against Mann Bracken and the issuer of her credit card on behalf of all persons who have claims arbitrated before the National Arbitration Forum with Mann Bracken representing the creditor.
The Defendants immediately removed the case under CAFA. The district court, however, remanded the case back to the state court under the Rooker-Feldman doctrine, which ”prevents federal adjudication of any claim that seeks to invalidate judgments entered by state courts.” The district court held that because the plaintiff was seeking relief on behalf of individuals whose claims are barred by the Rooker-Feldman doctrine, only the state court could resolve the entire dispute. The Seventh Circuit granted the defendants’ petition for appellate review.
The Seventh Circuit held that the plaintiff’s claim was not barred by Rooker-Feldman, because her state court judgment was invalidated by the state court. The court then found three potential subclasses from her class definition: (1) persons who lost in state court (award confirmed); (2) persons who won in state court (award set aside); and (3) persons who have neither won nor lost. The plaintiff cannot represent anyone in subclass 1 because those claims are barred by Rooker Feldman. Therefore, the Seventh Circuit remanded the case so the district court can determine if subclasses 2 and 3 can meet the jurisdictional elements of CAFA “in a properly defined class.”