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

Individual Claims Removed Along with Class Claims Retain CAFA Jurisdiction Independent of Any Subsequent Dismissal or Transfer of Class Claims

Posted in Case Summaries

Ellison v. Autozone, Inc., 2012 WL 5177478 (9th Cir. Oct. 19, 2012).

In this racial discrimination and state wage laws violation action, the Ninth Circuit reiterated that the federal courts are not deprived of jurisdiction over individual claims through a subsequent dismissal or transfer of class claims when jurisdiction was proper at the time of removal.

The plaintiff, an African American employed by the defendant in sales/customer service, brought class and individual actions in state court. The plaintiff alleged that the defendant failed to promote African American employees, paid lower wages. and scheduled them for fewer work hours. The plaintiff further alleged that the defendant failed to provide lawful meal periods and rest breaks to all non-exempt employees working in California, not limited to African American employees.

The defendant removed the action to District Court, pursuant to CAFA, on the grounds that diversity of citizenship existed between the parties, and the plaintiff’s class claims exceeded $5 million amount in controversy threshold.

All but one of the plaintiff’s class claims were severed and transferred to another forum, and the plaintiff dismissed her only remaining class claim voluntarily. The plaintiff’s single, individual claim was left before the District Court, which then was remanded sua sponte to state court for lack of jurisdiction.

The defendant appealed the order.  The Ninith Circuit had jurisdiction to hear the appeal under CAFA, and it reveresed the District Court’s order.

In reviewing the District Court’s remand order de novo, the Ninth Circuit referred to its earlier holding in United Steel v. Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir.2010) whereby it held that, if jurisdiction was proper at the time of removal, then subsequent dismissal or transfer of class claims does not defeat the District Court’s CAFA jurisdiction over remaining individual claims.  (Editors’ Note: see the CAFA Law Blog analysis of Shell Oil posted on August 13, 2010).

The Ninth Circuit, therefore, held that the District Court erred in remanding the case for lack of jurisdiction. The Ninth Circuit reasoned that, if the Court had ordered the parties to show cause why the case should not be remanded, then the Court undoubtedly would have elicited the authorities which showed that it was not deprived of jurisdiction.

Accordingly, the Ninth Circuit vacated the District Court’s order and remanded for further proceedings consistent with its opinion.

By:  Kimberly Higginbotham