ping_pong.jpgWhat happens when a wage and hour class action, removed to federal court under the Class Action Fairness Act of  2005 (“CAFA”), 28 U.S.C. §§1332(d) and 1453 fails certification as a class action? What if after remand, the same plaintiffs revive the class claims in state court?  A growing number of  federal courts have concluded that if class certification is not granted after CAFA removal,  the litigation should stay in federal court. The most interesting example putting an end to the ping-pong of removal and remand is the Ninth Circuit’s decision in United Steel, Paper & Forestry, etc., et al v. Shell Oil Company, 602, F.3d 1087 (9th Cir.2010) (one of Seyfarth Shaw LLP’s own contributions to the ever-expanding universe of class action law). The union brought a wage and hour class action in California state court against three oil refineries, alleging violation of meal period and rest break requirements, failure to provide timely and accurate wage statements, and failure to pay wages due on termination. The refineries removed the action to federal court under CAFA. The puntative class action as originally filed more than adequately satisfied  28 U.S.C. 1332(d)’s requirements of  numerosity and $ 5 million in controversy. The district court denied plaintiffs’ motion for certification, finding that class resolution was not superior to other methods of adjudication, citing manageability issues inherent in litigating seven job classifications, three separate employers, and three different collective bargaining agreements.  Not to mention the need to determine individualized damages. Unfortunately for defendants, the district court granted plaintiffs’ motion to remand on the theory that CAFA jurisdiction never existed. Plaintiffs must have been delighted to be back where they started. The ping pong game began in earnest. Plaintiffs filed two new putative class actions in state court and moved to amend the remanded action. Defendants removed the two new cases to federal court and sought appeal of the remand order on the original case. Noting that if class certification was denied in the two new cases on the same grounds as the original case, those cases would bounce back to state court all over again, the Ninth Circuit put a stop to jurisdictional volleys.  Joining the Seventh Circuit in Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir. 2010) and  Eleventh Circuit in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009), the Ninth Circuit held that post-removal denial on class certification does not divest federal jurisdiction over matters otherwise properly removed under CAFA.  A putative class action once removed stays removed.  

The concept, which the Shell Oil case proves is not just hypothetical, that a putative class action could be removed, certification defeated, remanded, split in three, separate pieces re-removed and re-remanded, should give future Circuits pause before concluding that federal jurisdiction ends when class certification is denied.

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Dana Howells

Dana is of counsel in the Labor and Employment Department in the Los Angeles office of Seyfarth Shaw LLP. Ms. Howells focuses her practice on advising businesses on all aspects of employment relationships from pre-hire screening to terminations and reductions-in-force. Areas of concentration…

Dana is of counsel in the Labor and Employment Department in the Los Angeles office of Seyfarth Shaw LLP. Ms. Howells focuses her practice on advising businesses on all aspects of employment relationships from pre-hire screening to terminations and reductions-in-force. Areas of concentration include ERISA and employee benefits, discrimination, wage and hour, contacts, severance, compensation, FMLA and mandated leaves, disability/reasonable accommodations, harassment/internal investigations, privacy and workplace violence prevention. In addition to advising employers on compliance and problem-solving, Ms. Howells has represented employers before administrative agencies, self-regulatory agencies, in jury and bench trials, and before state and federal appellate courts. Depending on the client’s goals, she has resolved many disputes through arbitration, mediation and negotiation.