In this case, the United States District Court for the District of Colorado held that once a case is properly removed under CAFA, the subsequent striking of class allegations does not divest a federal court of subject matter jurisdiction.
The plaintiff brought a putative class action in Colorado state court, seeking damages and injunctive relief based on the defendants’ alleged deceptive and unlawful conduct in manufacturing, marketing, distributing, and selling a defectively designed video game. The plaintiff alleged, among other things, that the defendants violated the Colorado Consumer Protection Act and breached the implied warranty of merchantability.
The gravamen of the plaintiff’s complaint was that the defendants created a video game – The Elder Scrolls IV: Oblivion (“Oblivion”) – containing a supposed design defect, which the plaintiff dubbed “a universal animation defect.” This defect produced devastating results: Once manifested, it ended the player’s game, thereby forcing him or her to restart Oblivion from scratch with a new character. The plaintiff alleged that he, and similarly situated consumers, purchased Oblivion expecting “open-ended gameplay.” The animation defect, however, limited Oblivion’s gameplay after moderate use, resulting in the plaintiff and other consumers receiving a product that was less valuable than they paid for and expected.
The complaint sought to certify a class of “[a]ll persons or entities residing in the State of Colorado who purchased any version of the Elder Scrolls IV: Oblivion video game.” The defendants removed the case under CAFA. The federal district court then struck the class allegations in the plaintiff’s complaint and denied the plaintiff’s Motion for Leave to File Amended Class Action Complaint. The complaint, therefore, was limited to the plaintiff’s individual claims.
Thereafter, the defendants renewed a Rule 12(b)(6) motion to dismiss various counts in the complaint. While the district court ultimately denied the defendants’ 12(b)(6) motion, the court first had to determine whether it retained subject matter jurisdiction under CAFA after striking the plaintiff’s class allegations. Although this was a res nova issue in the Tenth Circuit, the district court noted that the Sixth, Seventh, Eighth, Ninth, and Eleventh Circuits have held that, following the denial of class certification or the striking of class allegations, a federal district court retains jurisdiction over a case properly filed or removed under CAFA. Furthermore, the district court noted that the United States District Court for the District of Kansas predicted “that the Tenth Circuit would follow the other courts of appeal that have considered whether the denial of class certification divests the federal courts of jurisdiction in a case properly removed under CAFA.” Burdette v. Vigindustries, Inc., No. 10-1083, 2012 WL 5505095, at * 2 (D. Kan. Nov. 13, 2012).
The district court agreed with these authorities and found that the denial of a motion for class certification or the striking of class allegations does not divest a federal court of subject matter jurisdiction in a case properly removed under CAFA. Accordingly, the district court concluded that it retained subject matter jurisdiction over the case.
It appears that a growing number of federal courts, both on the circuit and district court level, are in accord that denying class certification or striking class allegations does not divest a federal court of subject matter jurisdiction in a case properly filed or removed under CAFA. See, e.g., Metz v. Uizan Bank, 649 F.3d 492, 500–01 (6th Cir. 2011); Buetow v. A.L.S. Enter., Inc., 650 F.3d 1178, 1182 n.2 (8th Cir. 2011); Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n.12 (11th Cir. 2009); Louisiana v. AAA Ins., No. 07-5528, 2011 WL 5118859, at * 5–7 (E.D. La. Oct. 28, 2011) (“[D]istrict courts within the Fifth Circuit have consistently held that federal jurisdiction under CAFA is not dependent on class certification.”). This is an encouraging development for defendants removing putative class actions from state courts under CAFA, because, once removed, those cases should stay in federal court, regardless of whether the class is ultimately certified or the district court strikes the plaintiff’s class allegations.