On November 22, the Eleventh Circuit clarified that Class Action Fairness Act (CAFA) jurisdiction is not eliminated when the class claims are dismissed before the class is certified.
The plaintiff, an Alabama trucking company that had a fuel-discount with Pilot, filed a class action alleging that Pilot systematically shortchanged trucking companies with which it had discount arrangements by failing to give them the agreed-upon benefits.
The class claims were dismissed because Pilot reached a class action settlement in a rival action which deprived the plaintiff of standing to pursue its class claims. Meanwhile, several related suits filed by parties who had opted out of the class settlement were consolidated into an MDL proceeding in Kentucky district court. However, the MDL court discovered that it lacked diversity jurisdiction because Pilot had a sub-sub-sub-sub member who was an Alabama citizen. The MDL court remanded the case to Alabama district court, which dismissed the remaining claims. The court rejected Pilot’s argument that it retained CAFA jurisdiction as “irrelevant” because the only remaining claims were state claims. It declined to exercise “supplemental jurisdiction” over those claims.
The Eleventh Circuit reversed. It reinforced its prior decision in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009) that jurisdictional facts are assessed at the time of removal, and post-removal events do not deprive the federal court of subject matter jurisdiction. It noted that the Second, Fifth, Sixth, Seventh, Eighth, and Ninth Circuits, every circuit to consider the question, had agreed with the reasoning of Vega. Two possible exceptions to this rule did not apply. First, there was no suggestion that the plaintiff’s complaint contained “frivolous” attempts to invoke CAFA jurisdiction. In that instance, the federal court would never have CAFA jurisdiction to begin with. Second, the court left open whether a plaintiff’s amendments after filing in federal court (as opposed to removal) can divest the court of CAFA jurisdiction. That possibility did not apply when no action by the plaintiff resulted in the dismissal of the class claims. Because CAFA jurisdiction remained, there was no reason for the district court to analyze the state law claims under the rubric of supplemental jurisdiction.