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

Successful Class Certification Is Not A Prerequisite To CAFA Jurisdiction

Posted in Case Summaries

Slocum v. International Paper Company, 2016 WL 6543301 (E.D. La. Nov. 4, 2016).

A Louisiana District Court denied the plaintiffs’ motion to remand in a consolidated class action, finding that the defendant was not required to demonstrate that class certification would be successful in order to establish CAFA jurisdiction.

The plaintiffs brought putative class action lawsuits alleging that the defendant failed to provide complete and accurate information about the chemical composition and known risks presented by “black liquor” that was allegedly discharged from a ruptured evaporator tank at the Bogalusa Paper Mill, which resulted in injuries to the plaintiffs.

The defendants removed the four consolidated class actions to the federal court, asserting federal jurisdiction pursuant to CAFA.  The plaintiffs moved to remand, but the District Court denied their motion.

The plaintiffs did not dispute that the requirements establishing jurisdiction under CAFA were satisfied, but they argued that the defendant failed to demonstrate that the plaintiffs’ class would be approved, or in the alternative, that the District Court should exercise its discretion to remand the action in the interest of justice.

The District Court found that the defendant was not required to demonstrate that the plaintiffs would be certified as a class in order to establish CAFA jurisdiction.  The District Court found that CAFA jurisdiction applies to any class action before or after the entry of a class certification order.  The District Court further found that if a civil action is filed under Rule 23 and meets the requirements of CAFA, a court can retain jurisdiction even if the class certification is later denied.  Accordingly, the defendants had no obligation to demonstrate that the plaintiffs would prevail on their class certification.

Next, the District Court found that the discretionary exception to CAFA did not apply in the instant case. The discretionary exception provides that a district court may decline to exercise jurisdiction over a class action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate, and the primary defendants,  are citizens of the State in which the action was originally filed based on consideration of whether the claims asserted involve matters of national or interstate interest.

The District Court found that there was no dispute that the defendant International Paper Company was the primary defendant, which is a New York corporate citizen with a principal place of business in Tennessee.  The District Court further found that because the instant action was filed in Louisiana, the “primary defendants” were not “citizens of the state in which the action was originally filed.”  Consequently, the District Court held that it could not decline to exercise jurisdiction over the instant matter, even if the claims involved matters of predominantly local interests.

Next, the plaintiffs argued that the federal court lacked jurisdiction because a defendant, Louisiana Department of Environmental Quality (“LDEQ”), was a state entity, and exercising jurisdiction would violate sovereign immunity under the Eleventh Amendment.  The District Court, however, found that while the LDEQ was named in the complaint, they had not yet been served.  The District Court further found that the plaintiffs, and not the state, raised arguments based on sovereign immunity.  The District Court noted that a federal court may ignore sovereign immunity until the state asserts it.  The District Court accordingly held that because the LDEQ had not objected to its jurisdiction, exercising jurisdiction over the state defendant would not violate sovereign immunity.

Ultimately, the District Court ruled that the defendants met the requirements of CAFA jurisdiction and denied the plaintiffs’ motion to remand.

Posted by Amanda Laviage