100 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com F. After Removal and Effect of Denial of Class Certification A long-standing rule set out by the United States Supreme Court (the “Red Cab rule“) is that “events occurring subsequent to 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 attached.”610 Although courts have disagreed over whether denial of class certification affects federal jurisdiction, the trend is to apply the Red Cab rule in this context as well. A number of courts have held that denial of class certification eliminates CAFA jurisdiction as to that federal court, especially if it is not “reasonably foreseeable” that a class will be certified in the future.611 Other courts have held that denial of class certification does not destroy CAFA jurisdiction, because jurisdiction is determined at the moment the case was removed and thus any subsequent changes do not affect the court’s continued jurisdiction.612 Initially, the decisions were split on this issue among the various California federal district courts. In In re HP Inkjet Printer Litigation, a federal district court extended the Red Cab rule to CAFA jurisdiction. The court held that it continued to have subject matter jurisdiction even after denying the motion to certify a nationwide class.613 But in Arabian v. Sony Electronics, a federal district court held otherwise, dismissing the case for lack of subject matter jurisdiction because a class could not be certified, nor was certification likely in the foreseeable future.614 And in Darneal v. Allied Waste Transp., Inc., a defendant employer attempted to obtain remand to state court because it realized it had erroneously calculated the number of potential class members when it originally removed the case.615 The federal district court refused to remand, holding that the question of the number of potential class members is a factual inquiry that is likely to be resolved through continued litigation. The Ninth Court resolved this split in United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union v. Shell Oil Co.616 In that case, the defendant, represented by Seyfarth Shaw, defeated plaintiffs’ motion for class certification, and plaintiffs thereafter obtained remand to state 610 St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293 (1938); Chavez v. JPMorgan Chase & Co., No. 1655957, 2018 WL 1882908, at *3 (9th Cir. Apr. 20, 2018) (“when the amount in controversy is satisfied at removal, any subsequent amendment to the complaint or partial dismissal that decreases the amount in controversy below the jurisdictional threshold does not oust the federal court of jurisdiction”). 611 McGaughey v. Treistman, 2007 WL 24935 at *3-4 (S.D.N.Y. 2007); Gonzalez v. PepsiCo, Inc., 2007 WL 1100204, at *4 (D. Kan. 2007). 612 Vega v. T-Mobile, USA, Inc., 564 F.3d 1256, 1268 at n. 12 (11th Cir. 2009); Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010); Falcon v. Phillips Electronics N.A., Corp., 489 F. Supp. 2d 367 (S.D.N.Y. 2007); In re HP Inkjet Printer Litig., 2009 U.S. Dist. LEXIS 12271 (N.D. Cal. Feb. 5, 2009); Giannini v. Schering-Plough Corp., 2007 U.S. Dist. LEXIS 48392, at *7-8 (N.D. Cal. June 26, 2007) (holding that jurisdiction was not necessarily divested upon post-removal action and that supplemental jurisdiction provided the basis for retaining subject matter jurisdiction of the claim at hand). 613 In re HP Inkjet Printer Litig., 2009 WL 282051, at *1 (N.D. Cal. Feb. 5, 2009). 614 Arabian v. Sony Elecs. Inc., 2007 WL 2701340 (S.D. Cal. 2007). 615 Darneal v. Allied Waste Transp., Inc., 2010 WL 5292341 (E.D. Cal. Dec. 17, 2010). 616 602 F.3d 1087, 1091-92 (9th Cir. 2010).
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