Allen-Wright v. Allstate Ins. Co., Slip Copy, 2009 WL 1285522 (E.D.Pa., May 05, 2009)(NO. CIV.A. 07-CV-4087)
The plaintiff filed a class action and Allstate removed it to federal court under CAFA. The plaintiff did not move for remand at that time. Subsequently, the plaintiff moved for class certification. The Eastern District of Pennsylvania denied class certification, finding that the plaintiff failed to establish commonality, typicality, predominance and superiority. Consequently, the only remaining claim was plaintiff’s individual claim against defendant for alleged underpayment of certain policy benefits.
In response to Allstate’s motion for summary judgment on the individual claim, the plaintiff requested that the Court sua sponte remand the action to state court pursuant to 28 U.S.C. §1447(C) for lack of subject matter jurisdiction. The Court treated the request as motion for remand. After a noting that the Third Circuit has not squarely addressed the issue of whether denial of class certification deprives a federal court of subject matter jurisdiction in an action removed under CAFA, the Court cited to various District Court decisions nationwide that were divided as to the outcome.
Some District Courts have based their remand decisions on Fed.R.Civ.P. 12(h)(3), which requires a court to dismiss an action if it determines at any time that it lacks subject matter jurisdiction. Other courts have looked to a provision within CAFA, 28 U.S.C. §1332(d)(8), which states that CAFA “shall apply to any class action before or after the entry of a class certification order by the court with respect to the action” and reasoned that, by negative implication, where there is no class action order, the court is divested of jurisdiction. Still other courts have held the inverse: that this same provision weighs in favor of retaining the case because the provision does not require a certification order for CAFA to apply.
The Court ultimately concluded that both the statutory language of CAFA and well-settled law regarding removed actions weigh in favor or retaining jurisdiction. Specifically, the Court noted that CAFA defines a “class action” as any civil action filed under Rule 23 of the Federal Rules of Civil Procedure. Given this language, the Court held that an action in which class certification is later denied would still be defined as a “class action” because it was filed as such. Therefore, the Court held that it had original jurisdiction over the action when it was removed because it was “filed” as a class action.
Next the Court looked to the well-settled rule articulated by the United States Supreme Court in St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938), which holds that “events occurring subsequent to the removal which reduce the amount recoverable, whether beyond the plaintiff’s control or the result of his volition, do not oust the district court’s jurisdiction once it has been attached.” The Court also relied on cases interpreting CAFA which have held that jurisdictional facts are to be assessed at the time of removal and case “developments” subsequent to removal do not generally alter jurisdiction under CAFA.
Finally, the Court noted that since denial of class certification is not a final judgment, the potential procedural hurdles of appealing certification upon a final judgment while in state court weighed in favor of retaining the action.
Allstate was in the good hands of Ballard Spahr Andrews & Ingersoll LLP attorneys Mark J. Levin and Marc Jacob Weinstein, and attorney Mark L. Hanover.