Seventh Circuit Sides with Eleventh Circuit, Rules that Federal Jurisdiction Under the Class Action Fairness Act Is Not Dependent on Class Certification

In Cunningham Charter Corp. v. Learjet, Inc., __ F. 3d __, 2010 WL 199627 (7th Cir. Jan. 22, 2010), the Seventh Circuit has ruled that federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d)(5), does not depend on whether the class is certified. In so holding, the Seventh Circuit joins the Eleventh Circuit’s view in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (2009), and tacitly rejects the Second Circuit’s position in County of Nassau v. Hotels.com, 577 F.3d 89 (2d Cir. 2009).

In Cunningham, the Seventh Circuit panel reversed a district court’s order remanding a putative class action to state court. The district court had reasoned that its denial of the plaintiffs’ motion for class certification eliminated federal jurisdiction under CAFA. In an opinion authored by Judge Posner, the panel explained that such a remand would run afoul of “the general principle that jurisdiction once properly invoked is not lost by developments after a suit is filed.” The panel noted, however, that if the plaintiff’s class allegations were completely frivolous, the district court could remand on that ground. 

When the class allegations are not frivolous, however, the panel explained that remand could undermine the policies underlying CAFA. If, after remand, the state court were to grant a renewed motion to certify the class, Congress’s intent to have such lawsuits proceed in federal court under the federal rules would be undermined. To be sure, if the state court were to certify a class, the case would then become removable under CAFA. But because “litigation is not ping-pong,” the panel reasoned that retaining federal jurisdiction over these cases is more efficient than shuttling them back and forth between state and federal court.