IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
May 5, 2009
ESSENCE ALLEN-WRIGHT, PLAINTIFF,
ALLSTATE INSURANCE CO., DEFENDANT.
The opinion of the court was delivered by: Joyner, J.
MEMORANDUM AND ORDER
Before this Court is Defendant's Motion for Summary Judgment (Doc. No. 30), Plaintiff's Response in Opposition asking for Remand to the State Court and, in the alternative, for Leave to Brief the Issue Raised as to the UTPCL Count (Doc. No. 42), Defendant's Response to Plaintiff's Suggestion that Subject Matter Jurisdiction is Lacking (Doc. No. 47), Plaintiff's Memorandum of Law in Support of Request for Remand for Lack of Subject Matter Jurisdiction (Doc. No. 49), and Defendant's Response to Plaintiff's Motion to Remand (Doc. No. 51). For the reasons contained in the following memorandum, we DENY plaintiff's request for remand.
Plaintiff Essence Allen-Wright filed the instant action on behalf of herself and other similarly situated proposed class members in state court on September 6, 2007. The action was then removed to this Court on September 28, 2007, by the defendant, pursuant to the jurisdictional grant of the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d)(2). Plaintiff did not move for remand at that time. Therefore, this Court had jurisdiction over the action pursuant solely to the diversity jurisdiction of CAFA.*fn1 Plaintiff subsequently moved for class certification on October 8, 2008, but this Court denied certification on December 19, 2008, finding that the plaintiff had failed to establish commonality, typicality, predominance and superiority. Thus, at this time, the only remaining claim is plaintiff's individual claim against defendant for underpayment of policy benefits for general contractor's overhead and profit. On October 20, 2008, defendant moved for summary judgment and plaintiff responded, asking this Court to sua sponte remand the action to state court pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction.*fn2 In addition, plaintiff submitted an affidavit attesting that she did not seek damages greater than $75,000.*fn3 Plaintiff and defendant were then given leave to fully brief the issue of this Court's subject matter jurisdiction following the denial of class action certification.
I. Subject Matter Jurisdiction
The central issue in this matter is whether, in an action removed pursuant to the jurisdictional grant of CAFA, the denial of class certification deprives a federal court of subject matter jurisdiction. CAFA, itself, does not specifically address this question. Plaintiff argues that following the denial of class action certification, jurisdiction no longer exists under CAFA and, thus, the federal court has no jurisdiction over the action. However, defendant argues that this Court retains jurisdiction post-denial, as jurisdiction was established at the time of removal and is not lost subsequent to class action denial. In exhaustively reviewing the case law on this issue, it does not appear that any federal court in the Third Circuit has squarely addressed it and the Eleventh Circuit is the only circuit court to have touched on the issue.*fn4 District courts nationwide are divided as to the outcome.*fn5
Thus, we will conduct a review of this case law in deciding whether the instant action should be dismissed for lack of subject matter jurisdiction.
As plaintiff contends, multiple district courts have ruled that subject matter jurisdiction no longer exists following denial of class certification.*fn6 Courts deciding as such have generally held that, pursuant to the text of Fed.R.Civ.P. 12(h)(3),*fn7 they no longer have the subject matter jurisdiction granted exclusively to class actions under CAFA and can no longer retain the case. See Giovanniello v. The New York Law Publishing Co., No. 07-1990, 2007 U.S. Dist. LEXIS 56694, 2007 WL 2244321, at *11-13 (S.D.N.Y. Aug. 6, 2007) (rejecting the conclusion of Genebacher v. Cetruytel Fiber Co. by arguing that the court in Genebacher ignored the language of Fed.R.Civ.P. 12(h)(3)). In a slightly different textualist approach, the court in Ronat v. Martha Stewart Living Omnimedia, No. 05-520, 2008 U.S. Dist. LEXIS 91814, 2008 WL 4963214, at *22-23 (S.D. Ill. Nov. 12, 2008), 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. Interestingly, other courts have held the inverse: that this provision of CAFA weighs in favor of retaining the case because the provision did not require an order for CAFA to apply. In re Welding Fume Prods. Liab. Litig., 245 F.R.D. 279, 316-317 (N.D. Ohio 2007); Garcia v. Boyar & Miller, P.C., No. 06-1936, 2007 U.S. Dist. LEXIS 39072, 2007 WL 1556961, at *17-18 (N.D. Tex. May 30, 2007).
Other courts denying jurisdiction have taken a fact-specific approach, ruling that class certification is not a prerequisite to subject matter jurisdiction, but that when class certification is denied and there is no "reasonably foreseeable possibility of subsequent class certification," the court loses subject matter jurisdiction. Falcon v. Philips Electronics N.A. Corp., No. 06-6090, 489 F.Supp. 2d 367, 368 (S.D.N.Y. 2007). See also Claustnizer, 2008 U.S. Dist. LEXIS 76941, at *13; Arabian v. Sony Electronics, Inc., No. 05-1741, 2007 U.S. Dist. LEXIS 67769, 2007 WL 2701340, at *12-13 (S.D. Cal. Sept. 13, 2007). Linked to this reasoning, the court in Arabian concluded that without class action certification, then "there is not -- and never was -- diversity jurisdiction." 2007 U.S. Dist. LEXIS 67769, at *15. This conclusion has become the prevalent holding among those court denying jurisdiction. In reaching this conclusion, they generally reason that the denial of class certification is not a change in a jurisdictional fact, like citizenship or the amount in controversy, but a legal conclusion alleged in the complaint and decided by the court that means that jurisdiction never properly existed. Id.; Jones v. Jeld-Wen, Inc., 2008 U.S. Dist. LEXIS 85145, 2008 WL 4541016, at *11 (S.D. Fl. October 2, 2008); Clausnitzer, 2008 U.S. Dist. LEXIS 76941, at *11-12; Salazar v. Avis Budget Group, Inc., No. 07-0064, 2008 U.S. Dist. LEXIS 94610, 2008 WL 5054108, at *14-15 (S.D. Cal. Nov. 20, 2008). Plaintiff urges this Court to accept this reasoning.*fn8
However, both the statutory language of CAFA and well-settled law regarding removal actions weigh in favor of retaining jurisdiction in the matter. As is required, we first look to the text of the statute in examining the issue. See Riegel v. Medtronic, Inc., 128 S.Ct. 999, 1008-09, 169 L.Ed. 2d 892 (2008); Exxon Mobil Corp. v. Allapatah Servs., Inc., 545 U.S, 546, 568, 125 S.Ct. 2611, 162 L.Ed. 2d 502 (2005). The jurisdictional grant in CAFA provides, "[t]he district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant . . . ." 28 U.S.C. § 1332(d)(2)(A).*fn9 CAFA goes on to define a "class action" as "any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State stature or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action." 28 U.S.C. § 1332(d)(1)(B) (emphasis added). Looking at the plain language of the words, an action in which class certification is later denied would still be defined as a "class action" because it was filed as such. Garcia, 2007 U.S. Dist. LEXIS 39072, at *18-19. In this definition, the statute appears to recognize that not every action filed as a class action will meet the criteria set out for certification, but does not then hinge jurisdiction upon the certification of the class, but only upon the filing of a class action.*fn10 We find this analysis persuasive, as this Court had "original jurisdiction" over the action when it was removed because it was "filed" as a class action.*fn11
Coupled with this plain language of the statute, this Court looks to the well-settled law articulated by the Supreme Court in St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938), 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." In re HP Inkjet, 2009 U.S. Dist. LEXIS 12271, at *4; Colomar, 2007 U.S. Dist. LEXIS 52659, at *8; Garcia, 2007 U.S. Dist. LEXIS 39072, at *7; Genebacher, 500 F. Supp. 2d 1014, 1017. Similarly, the Third Circuit has clearly held that "the nature of the plaintiff's claim must be evaluated, and the propriety of remand decided, on the basis of the record as it stands at the time the petition for removal is filed." Westmoreland Hospital Association v. BlueCross of Western Pennsylvania, 605 F.2d 119, 123 (3d Cir. 1979). In maintaining this standard, "[c]ase developments subsequent to removal do not generally alter the jurisdiction under CAFA." Anthony v. Small Tube Mfg. Corp., 535 F.Supp. 2d 506, 512 (E.D. Pa. 2007) (citing Robinson v. Holiday Universal, Inc., No. 05-5726, 2006 U.S. Dist. LEXIS 7252, 2006 WL 470592, at *3-4 (E.D. Pa. Feb. 23, 2006); Colomar v. Mercy Hospital, Inc., No. 05-22409, 2007 U.S. Dist. LEXIS 52659, 2007 WL 2083562, at *3 (S.D. Fl. July 20, 2007)). We find this reasoning applicable to the instant case where a post-removal denial is a subsequent development. Certainly a denial of class certification is distinct from a change in citizenship or amount in controversy, but with no specific provision contained in the statute, we rely on the common law to assess "developments" post-removal. Jurisdiction attached to this case at its time of removal and, without specific direction from Congress, we cannot find that a change in the circumstances of the action divests this Court of jurisdiction. As the court in Falcon noted, "CAFA does not list class certification as a prerequisite to federal jurisdiction[;]" thus, we decline to hold that denial immediately triggers the loss of jurisdiction. 489 F. Supp. 2d at 368. In a recent opinion, the Eleventh Circuit noted in a footnote in reference to class action certification that, [T]he plaintiff's failure to make a showing of numerosity with respect to the Florida-only class, which gives rise to the possibility that there are fewer than 100 members of the newly-narrowed Florida-only class, does not divest the federal courts of subject matter jurisdiction under the CAFA. . . . Even if it were 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.
Vega v. T-Mobile USA, Inc., No. 07-13864, 2009 U.S. App. LEXIS 7682, 2009 WL CITE, at *25-26 n.12 (11th Cir. Apr. 7, 2009) (emphasis added) (citing Cooper v. R.J. Reynolds Tobacco Co., 586 F. Supp. 2d 1312, 1318-22 (M.D. Fla. 2008); Bullard v. Burlington N. Santa Fe Ry. Co., 535 F.3d 759, 762 (7th Cir. 2008); S. Rep. No. 109-14, at 70-71 (2005), as reprinted in 2005 U.S.C.C.A.N. 3, 66)). While the court was not considering the same situation as is currently before us, its commentary suggests that "non-certification" of a class would not deprive the federal court of subject matter jurisdiction.
Finally, we must take into consideration the fact that, as defendant contends, denial of class certification is not a final judgment. Fed.R.Civ.P. 23(c)(1)(C) ("An order that grants or denies class certification may be altered or amended before final judgment."). As the denial of class certification is an interlocutory order, it may be appealed once a final judgment has been entered. Guiterrez v. Johnson & Johnson, 523 F.3d 187, 199 (3d Cir. 2008) (citing Asher v. Baxter Int'l Inc., 505 F.3d 736, 740 (7th Cir. 2007); Jenkins v. BellSouth Corp., 491 F.3d 1288, 1292 (11th Cir. 2007)). Thus, while plaintiff has not filed an interlocutory appeal pursuant to Fed.R.Civ.P. 23(f), the denial could be appealed upon final order of this Court and gives us pause upon considering the procedural repercussions of remanding it to state court. The potential procedural hurdles of appealing a certification upon a final judgment while in state court weigh in favor of retaining the action.
While recognizing that this is a close issue with conflicting rulings, we hold that this court maintains jurisdiction over the present action despite the denial of class certification. The textual reading of CAFA and well-settled law lead us to hold that this Court is not divested of subject matter jurisdiction. While the plaintiff is now only seeking a relatively small amount, we cannot find that remanding the action is within the text of the statute or the common law controlling our decisions regarding post-removal developments. As plaintiff, in effect, moved for remand in response to defendant's motion for summary judgment, we now grant plaintiff leave to respond substantively to defendant's motion for summary judgment, including, but not limited to a briefing on the UTPCL issues.
An appropriate Order follows.