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

Post-Removal Dismissal of Class Claims Does Not Eliminate Otherwise-Proper CAFA Jurisdiction

Posted in Case Summaries

Loehn v. Lumber Liquidators Inc., 2016 WL 722002 (E.D. La. Feb. 24, 2016).

Here, the Eastern District of Louisiana denied remand finding that the post-removal event—plaintiffs’ voluntary dismissal of their class claims—did not deprive the court of jurisdiction, which was properly established at the time of removal under CAFA.

The plaintiffs brought suit in Louisiana state court for redhibition—a Civil law basis for voidance of a sale when the product purchased is so defective as to be useless—and damages against the defendants Lumber Liquidators Inc. (“LLI”) and Liberty Mutual Insurance Company, alleging that they sustained property damage upon the defendants’ false recommendation and installation of certain wood flooring that did not suit the plaintiffs’ purpose. Their initial suit was filed solely on behalf of Plaintiffs and did not request specific damages. After LLI answered, Plaintiffs amended their petition to include putative class-action claims on behalf of anyone else in Louisiana who suffered similar damages.

Then LLI removed the suit to the Eastern District of Louisiana based on CAFA. The matter was then transferred to the Eastern District of Virginia to be included in the National Class Multidistrict Litigation (“MDL”), following a transfer order by the Judicial Panel on Multidistrict Litigation.

In the transfer order, the Judicial Panel established a list of products that was to be included in the items to be considered by the MDL Panel. Because the Plaintiffs’ products were not included in that listing, they did not have a MDL claim against LLI. So they dismissed their class-action allegations against LLI and filed a motion to remand. The Eastern District of Virginia denied their motion to remand, finding that the matter was properly removed under CAFA. But the Virginia U.S. District Court recognized because those claims were no longer within the scope of the MDL, it remanded the case to the Eastern District of Louisiana.

Plaintiffs moved to remand to state court, contending that because the matter was not part of the MDL, there was never any basis for removal to federal court under 28 U.S.C. § 1332 diversity jurisdiction because the amount in controversy was less than $75,000. The defendants argued that federal jurisdiction was properly determined at the time the removal was filed, and Plaintiffs could not eliminate federal jurisdiction by amending their pleading to omit the class action claims that were the basis for removal under CAFA.

The Louisiana U.S. District Court noted that numerous other courts have found that post-removal events, including amending a complaint to reduce the amount in controversy or eliminate a federal question, generally did not divest district court of CAFA jurisdiction. Such reflects the court’s “sound policy” against forum manipulation. In light of those authorities, the Louisiana U.S. District Court found that it had CAFA jurisdiction at the time of removal because all other criteria—including number of putative class members and the alleged amount in controversy—were met.

Accordingly, the Louisiana U.S. District Court denied the plaintiffs’ motion to remand.

–Barry A. McCain