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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Amend All You Want, But The Case Stays In Federal Court, Says the Second Circuit.

Posted in Case Summaries

In Touch Concepts, Inc. v. Cellco P’ship, 788 F.3d 98 (2nd Cir. 2015).

The Second Circuit held that a post-removal amendment dropping the class allegations does not divest a district court of the federal jurisdiction.

In this case, the plaintiff was a former retail sales agent.  He brought a putative class action in the New York state court asserting several state and common law violations against the defendants after they terminated his and other agents’ sales-agent relationship.  After the defendants removed the case under CAFA, the plaintiff filed an amended complaint and dropped all class action allegations. Despite the lack of any federal claims, lack of complete diversity, and lack of any class allegations, the District Court still maintained subject-matter jurisdiction and ultimately dismissed several claims on the merits.  The plaintiff voluntarily dismissed the remaining claims, then appealed.

At the outset, the Second Circuit noted that when a plaintiff files a case in federal court and voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction.  The Second Circuit remarked that, if this case was filed originally in federal court, the District Court would have to dismiss it as soon as the plaintiff amended the complaint dropping all class action allegations, because the only basis for federal jurisdiction was no longer present.

In removal cases, however, the Second Circuit explained that a post-removal amendment that reduces the amount-in-controversy below the statutory threshold does not impair diversity jurisdiction.  Because a post-removal amendment does not defeat federal jurisdiction premised on a federal question or on diversity, the Second Circuit concluded that the District Court properly maintained subject matter jurisdiction over the first amended complaint.  The Second Circuit therefore affirmed the dismissal of complaint in its entirety.

-Melissa M. Grand