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

The Badlands Give a Good Opinion for CAFA Jurisdiction

Posted in Case Summaries

Calvillo v. Siouxland Urology Assocs. P.C., No. CIV. 09–4051–KES, 2011 WL 5155093 (D.S.D. Oct. 28, 2011).

In this action a District Court in South Dakota held that denial of class certification is merely a change of a jurisdictional fact and such changes do not affect the continuation of jurisdiction under CAFA.

The plaintiffs brought a tort action directly in the District Court against the defendants, Siouxland Urology Associates, Siouxland Urology Center, and other doctors.  (With a name like that..Sue Land…you would expect to be a defendant in litigation).

When the defendants moved to dismiss the complaint or, in the alternative, to strike the class allegations, the plaintiffs moved for joinder of parties and filed an amended complaint. Following its granting of the motion for joinder, the Court ordered a second amended complaint to be filed identifying the newly joined parties and any facts pertaining to those individuals. After the plaintiffs filed the second amended complaint, the Court denied the plaintiffs’ second motion for class certification. 

The plaintiffs then filed the third amended complaint, which included claims against the defendants for negligence, medical malpractice, intentional and negligent infliction of emotional distress, battery, fraudulent concealment and misrepresentation, informed consent, unjust enrichment, and violation of South Dakota’s deceptive trade practices and consumer protection act.  

The complaint alleged that the plaintiffs, as patients, were harmed when the defendants reused bags of irrigation fluid and plastic tubing for their cystoscopy procedures, which raised the possibility of exposure to blood infections or blood-borne illnesses. The plaintiffs again included class-wide claims even though class certification had been denied.  

The defendants again moved to strike the class allegations from plaintiffs’ third amended complaint, which the Court granted. The Court held that its order denying certification of the class was final, and plaintiffs’ inclusion of class allegations in its third amended complaint was redundant, immaterial, and no longer connected to the subject matter being litigated.

The plaintiffs argued that if the Court found that the class certification determination was final then it should dismiss the case because it lacked subject matter jurisdiction under CAFA. The defendants, however, contended that the Court retains jurisdiction because subject matter jurisdiction existed under CAFA at the time the complaint was filed and continues even if a jurisdictional fact changes. The Court remarked that this issue was not clear, and the Eighth Circuit has not addressed whether CAFA-given subject matter jurisdiction survives a denial of class certification absent diversity or federal question jurisdiction.  

The Court noted that the Seventh Circuit, in Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir.2010),determined that CAFA extends original jurisdiction to class actions, and that jurisdiction does not depend upon certification of the class. The Seventh Circuit, and other circuits who have retained jurisdiction over these types of cases, have determined that jurisdiction depends “on whether the action was filed as a class action, and not on whether the action was eventually certified as a class action.”  (Editors’ Note: See CAFA Law Blog analysis of Cunningham posted on Feb. 3, 2010.). 

In Cunningham, the court found support for retaining jurisdiction in the language of CAFA, § 28 U.S.C. 1332(d)(1)(C), which defines “class certification order” as “an order issued by a court approving the treatment of some or all aspects of a civil action as a class action.” The court said that this language standing alone could suggest that without such an order the suit is not a class action. The court stated that jurisdiction attaches when a suit is filed as a class action, and that invariably precedes certification, and this section merely means “that a suit filed as a class action cannot be maintained as one without an order certifying the class.” The court concluded that this language does not necessarily imply that the court loses jurisdiction just because the class is not certified. The Ninth Circuit, in United Steel, Paper & Forestry, Rubber Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union v. Shell Oil Co., 602 F.3d 1087, 1091–92 (9th Cir.2010), also recognized this reasoning, stating that it is likely that “Congress intended that the usual and long-standing principles apply … post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.” The Eleventh Circuit, in Vega v. T–Mobile USA, Inc., 564 F.3d 1256, 1268 n. 12 (11th Cir.2009), stated thatplaintiffs’ failure to meet numerosity requirement for certification did not strip the court of its jurisdiction under CAFA. (Editors’ Note: See CAFA Law Blog analysis of Shell Oil posted on Aug. 13, 2010 and the CAFA Law Blog analysis of Vega posted on May 19, 2011.). 

The Court explained that other courts have found that denial of class certification is merely a change of a jurisdictional fact and such changes do not affect the continuation of jurisdiction. If an alternate conclusion was reached and the court found that jurisdiction did not exist, then jurisdiction would always be in flux. That would mean that prior to class certification, jurisdiction would neither exist nor not exist. Instead, the lawsuit would float in some kind of suspended animation. Only when a court decides whether to certify a class would the court and the parties know whether the court has jurisdiction over the lawsuit. If certification were denied, then not only would the court have no jurisdiction going forward, but the court would be deemed to have never had jurisdiction. If certification were granted, then the court would have jurisdiction-both retroactively and prospectively-unless the court later changed its mind and decertified the class, in which case jurisdiction would again disappear retroactively. Specifically, in Rheuport v. Ferguson, 819 F.2d 1459, 1467 n. 13 (8th Cir.1987), the Eighth Circuit held that the existence of federal jurisdiction is determined as of the time the complaint is filed. 

The Court noted that this action was originally filed in federal court with CAFA as its source of jurisdiction. Jurisdiction attached when the plaintiffs filed the claim and included class action claims, and the Court’s denial of class certification is nothing more than a change in jurisdictional fact. The purpose and intent of CAFA is for minimally diverse parties to bring their class claims in federal court, and there is nothing explicit in the text that would strip the court of its subject matter jurisdiction because of a change in circumstances not under the party’s control.   Had Congress meant for such a result it could have said CAFA jurisdiction applies to any action certified under Fed. R. Civ. P. 23 instead of saying that CAFA applies to any action filed. 

For all these reasons, the Court retained subject matter jurisdiction after denying class certification, and denied the plaintiffs’ request to dismiss this action for lack of subject matter jurisdiction.