Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009).

Readers may wonder why a 2009 decision is being discussed now. It is because of its popularity, which even the judges who wrote the opinion might not have thought that the opinion they expressed on CAFA, albeit in a footnote, would be so popular and be followed by the federal courts across the US.

The opinion of the Eleventh Circuit in this case that post-removal events do not deprive federal courts of subject matter jurisdiction is being followed by almost all the federal district courts which have encountered the same issue. Among the Court of Appeals so far, the Seventh Circuit in Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir. Ill. 2010), and the Ninth Circuit in United Steel v. Shell Oil Co., 602 F.3d 1087 (9th Cir. Cal. 2010) joined the findings in this case, and found that denial of class certification does not eliminate the jurisdiction under CAFA.  (Editors’ Note: see the CAFA Law Blog analysis of Cunningham posted on February 3, 2010, and the analysis of Shell Oil posted on August 13, 2010.

In this case, the plaintiff, a former retail sales representative at a T-Mobile retail store in Miami, Florida, brought a class action in state court challenging T-Mobile’s ‘Sales Incentive Compensation Program’, which provided for paying commissions on the sale of prepaid cellular telephone accounts.

T-Mobile paid its retail sales representatives an hourly wage plus incentive-based commissions. The sales representative received monthly commission for new activations whenever their customers commenced new service plan.  If the customer deactivates his account within 180-days, T-Mobile would ‘charge back’ the amount of the incentive compensation previously paid in order to reclaim that amount from the sales representative.  

The gravamen of the plaintiff’s complaint was that, by charging back commissions advanced on sales of deactivated prepaid service plans, T-Mobile violated the terms of the compensation program, failed to pay commissions earned by the sales representatives, and was unjustly enriched by retaining the benefit of its employees’ services without fully compensating the employee for such services. 

T-Mobile removed the case to the district court on the basis of diversity jurisdiction pursuant to CAFA, 28 U.S.C. §1332 (d).  In his class certification motion, in addition to the nationwide class definition initially pled, the plaintiff alternatively sought certification of a subclass consisting of T-Mobile employees who worked in Florida.  The plaintiff also expressly excluded T-Mobile’s current employees, among others, from the class definitions proposed in his motion. The district court then certified the Florida class.

Upon T-Mobile’s appeal, the Eleventh Circuit vacated the order and remanded the case finding that the district court abused its discretion by finding that requirements under Fed. R. Civ. P. 23 were satisfied with respect to a Florida-only class.

While reversing the class certification order, the Eleventh Circuit held, albeit in a footnote that the plaintiff’s failure to make a showing of numerosity with respect to the Florida-only class, which gave rise to the possibility that there were fewer than 100 members of the newly-narrowed Florida-only class, did not divest the federal courts of subject matter jurisdiction under CAFA, 28 U.S.C. §1332(d)(5)(B).  The Eleventh Circuit maintained that even if it was later found that the narrowed, Florida-only class numbers fewer than 100, the §1332(d)(5)(B) limitation applies only to ‘proposed’ plaintiff classes (as opposed to classes actually certified or that go to trial); jurisdictional facts are assessed at the time of removal; and post-removal events (including non-certification, de-certification, or severance) do not deprive federal courts of subject matter jurisdiction.  

The Eleventh Circuit, relying on a Seventh Circuit decision in Bullard v. Burlington N. Santa Fe Ry. Co., 535 F.3d 759, 762 (7th Cir. 2008), observed that once a complaint is properly removed to federal court, the federal court’s jurisdiction cannot be ‘ousted’ by later events. (Editors’ Note: See the CAFA Law Blog analysis of Bullard posted on August 31, 2009).

As a result, the plaintiff’s individual state law claims proceeded in the district court.