Samuel v. Universal Health Systems, Inc., No. 06-7234 SECTION “L” (4), 2011 WL 3349826 (E.D. La. Aug. 3, 2011) and related case, Rivers v. Chalmette Med. Ctr., Inc., 2011 WL 3349833 (E.D. La. Aug. 3, 2011).

In these related cases, a District Court in Louisiana held that Congress has not intended that a case removed pursuant to CAFA be some kind of “Schrödinger’s Class” subject to the vagaries of uncertain jurisdiction until such time as the court examines and rules on a motion to certify a class. 

These two putative class actions arose from the injuries to and deaths of patients at Pendleton Memorial Methodist Hospital, in New Orleans, Louisiana, following Hurricane Katrina in late August and early September of 2005.

The plaintiffs, various patients and relatives of deceased patients, brought these actions against Methodist and entities of United Health Services (UHS) in the Civil District Court for the Parish of Orleans, Louisiana. The plaintiffs alleged negligence, intentional misconduct, and premises liability resulting in unreasonably dangerous conditions/defects in and/or on the premises of UHS in the wake of Hurricane Katrina, particularly within the confines of the hospital buildings owned by UHS in New Orleans, Louisiana.

The defendants timely removed the action to the federal district court under CAFA, and the District Court later denied the plaintiffs’ motion to remand. 

Subsequently, the Court declined to certify a class. Having denied a motion to certify the class, the next question before the Court was “Now what?”

The Court noted that CAFA does not address what happens to a district court’s jurisdiction if, after removal, it denies a motion to certify a class. Until recently the federal district courts were divided on the matter. The Seventh Circuit in Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010), Ninth Circuit in U. Steel Workers Int’l Union v. Shell Oil Co., 602 F.3d 1087, 1092 (9th Cir. 2010), and Eleventh Circuit in Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n.12 (11th Cir. 2009), however, have held that a district court retains CAFA jurisdiction over a case after class certification is denied. (Editors’ Note: See the CAFA Law Blog analysis of Cunningham posted on Feb. 3, 2010, the analysis of Shell Oil posted onAug. 13, 2010, and the analysis of Vega posted on May 19, 2011.) 

In the aftermath of these circuit opinions, the tide at the district court level has shifted decisively in favor of finding jurisdiction post-denial. The Fifth Circuit, however, has not addressed the question.

First, the Court found that continuing jurisdiction follows from the plain language of the statute and well-settled jurisdictional principles. Specifically, the Court stated that CAFA’s jurisdictional elements were satisfied at the time of removal when the Court ruled on the first motion to remand. The facts as they existed at the time of removal have not changed since then; although the Court had held that the case could not in fact proceed as a class action, the case was still filed as a class action with the requisite diversity of citizenship, claimants, and amount in controversy. Thus, the Court found that denying class certification had no effect at all on the facts as they existed at the time of removal and the Court continues to have jurisdiction over this case.

The Court pointed out that additional support and confirmation was found in the well-settled principle that once a court has diversity jurisdiction, subsequent developments do not divest it of jurisdiction. CAFA is not a sui generis grant of jurisdiction, but rather a supplement to the diversity jurisdiction statute. Accordingly, the Court agreed with the circuit courts that have adopted this reasoning.

Next, the Court observed that arguments to the contrary conflict with the statutory terms and lead to absurd results.The Court noted that a number of district courts have held that whether a case is a class action is not a jurisdictional fact to be determined as of the time of removal, but rather a legal determination that the court later makes. Those courts reason that if certification is denied, the case was never a class action to begin with and the court in fact did not have jurisdiction under CAFA at the time of removal.  

The Court stated that this reasoning was unpersuasive because under § 1332(d)(1)(B) a ‘class action’ is ‘any civil action filed under Fed. R. Civ. P. 23 or similar State statute or rule of judicial procedure. The Court does not make a case a class action for the purposes of CAFA by certifying a class; plaintiffs do when they invoke Rule 23 or a similar procedural rule. Thus, the jurisdictional fact is how the case was filed, and that fact is fixed at the time of removal and will not change even though the Court determines that the case cannot actually be certified as a class.

CAFA § 1332(d)(8) states that the statute “shall apply to any class action before or after the entry of a class certification order.” Section 1332(d)(1)(C) 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.” Some courts reasoned that if a court denies class certification, it has not issued and never will issue a “class certification order,” and if a court will never enter a class certification order, then there will be no time “before or after the entry of a class certification order” for CAFA to apply. 

The Court remarked that this statutory reading ignores the much simpler interaction between subsection (d)(2), which expressly grants original jurisdiction over any civil action that is a class action, and (d)(1)(B), which defines “class action” as “any civil action filed under rule 23 … or similar State statute or rule.” Section 1332(d)(8), which states that CAFA “shall apply to any class action before or after the entry of a class certification order,” does not purport to grant jurisdiction. The Seventh Circuit offers the better interpretation of section (d)(8) stating that “probably all this means is that the defendant can wait until a class action is certified before deciding whether to remove the case to federal court.”

The Court then explained that if § 1332(d)(1)(C) is read in isolation from the rest of the Act, this could mean that in the absence of such an order a suit is not a class action. But jurisdiction attaches when a suit is filed as a class action, and that invariably precedes certification. All that § 1332(d)(1)(C) means is that a suit filed as a class action cannot be maintained as one without an order certifying the class. That needn’t imply that unless the class is certified the court loses jurisdiction of the case. While (d)(8) follows logically from the interaction of (d)(2) and (d)(1)(B), the fact that it clarifies a corollary proposition should not prompt the Court to strain to find some other meaning that directly undermines the express jurisdictional grant, the Court concluded.

Furthermore, the Court stated that absurd results would follow if denying class certification defeats jurisdiction. If the courts that have so held are correct, after a class action is removed to federal court, jurisdiction would neither exist nor not exist and would “float in some kind of suspended animation” until the court ruled one way or the other on class certification. Congress cannot have intended that a case removed pursuant to CAFA be some kind of “Schrödinger’s Class” subject to the vagaries of uncertain jurisdiction until such time as the court examines and rules on a motion to certify a class. Class certification can involve costly discovery and time-consuming briefing, and the Court will not complicate matters further when the plain language of the statute and traditional jurisdictional principles lead to a much simpler conclusion. 

Accordingly, the Court denied the plaintiffs’ motion to remand.