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

CAFA Used to Maintain a Non-Class Case in Federal Court!

Posted in Case Summaries

The CAFA Law Blog is pleased to publish a post by a guest columnist today. Please welcome Tracy D. Rezvani of Finkelstein Thompson, LLP. Ms. Rezvani and Finkelstein Thompson prosecute antitrust, securities and consumer class actions on behalf of consumers, investors, non-profit organizations, and businesses located in the United States and abroad. Ms. Revzani, a partner in the firm, is located in the firm’s Washington, D.C. office.

Please give a warm CAFA Law Blog welcome to Tracy.

Bruce Levitt v. Fax.com, No. WMN-05-949, Slip op. at 1-2 & n.2 (D. Md. Oct. 6, 2008)(“Levitt Remand II”).

The trials and tribulations of this action have yielded numerous opinions at the state and federal level. The suit was originally filed in Circuit Court for Baltimore City Maryland where it was certified as a class action. Thereafter, it was removed to federal court under the Class Action Fairness Act. After an unsuccessful remand attempt, the court decertified the class, in part, because Fax.com had gone out of business making the information it would have for the class unavailable

In its decertification decision, the court addressed the plaintiff’s argument that decertification would divest the court of jurisdiction. Citing the sole decision (at that time) addressing post-removal certification or decertification and its impact on jurisdiction, the court, held that “decertification of the class will not divest this Court of jurisdiction over Plaintiff’s now lone claim.” Bruce Levitt v. Fax.com, No. WMN-05-949, (D. Md. May 25, 2007)(citing Hill v. Blind Indus. & Serv. of Md., 179 F.3d 754 (9th Cir. 1991)). This holding, the court noted, was in line with long standing jurisprudence that determines diversity jurisdiction at the time the action commences. Id. A federal court maintains jurisdiction even if the amount in controversy subsequently drops below the minimum threshold. Id.

The plaintiff sought discovery with the goal of adding new plaintiffs and seeking certification anew. The plaintiff was denied the additional discovery and trial was set for his lone claim.  

Thereafter, he renewed his motion for remand. In the intervening time, numerous district courts had analyzed this issue as it pertains to CAFA and had firmly split. Courts finding divestiture of jurisdiction hold that if class certification is denied on a basis that “precludes even the reasonably foreseeable possibility of subsequent class certification in the future,” then CAFA jurisdiction is divested. Levitt Remand II, Slip op. at 4-5, 8 & n.3 (collecting cases and citing FRCP 12(h)(3)). 

However, if certification is denied on some ground that is “inherently tentative”, it would not deprive the court of jurisdiction under CAFA. Id. at 6. Courts finding that divestiture cannot happen rely on the principal that the complaint governs jurisdiction and post-removal events are irrelevant. Id. at 6 & n.3. Since CAFA defines “class action” as any civil action filed under FRCP 23, then class certification cannot be considered a prerequisite to federal jurisdiction. Id. at 6.

Ultimately, the Levitt court rejected the nebulous distinction between “inherently tentative” and “reasonably foreseeable possibility” drawn in the former line of cases and instead relied on a 7th Circuit decision analyzing a similar issue in holding that its post-removal decertification did not impact jurisdiction. Levitt Remand II, at 5 (citing Bullard v. Burlington Northern Santa Fe Railway Co., 535 F.3d 759 (7th Cir. 2008)(Bullard plaintiffs request to a stipulation to a trial covering fewer than 100 plaintiffs required under CAFA for an action to be deemed a “mass action” did not impact CAFA jurisdiction.). 

Additionally, Levitt saw significant pragmatic difficulties in applying a rule that required one to determine when the potential for certification fell outside of a “reasonably foreseeable possibility”. Levitt Remand II, at 6. 

Finally, it would anomalous if a court was permitted to maintain or destroy its jurisdiction by discretionary decisions which, by their nature, are also inherently tentative, i.e. adequacy of a class representative. Id. at 7.

For these reasons, remand was denied. Trial is set for November 13, 2008.