On April 21, 2010, the Ninth Circuit Court of Appeals confirmed that a putative class action removed to federal court under the Class Action Fairness Act (CAFA) does not lose federal jurisdiction just because the court denies class certification. The case, United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO, et al. v. Shell Oil Company, et al., No. 10-55269, ___ F.3d ____ (9th Cir. Apr. 21, 2010), began as a putative class action in California state court. Plaintiffs alleged that defendants’ oil refineries violated California’s Unfair Competition Law, Business & Professions Code § 17200, and failed to provide meal periods, rest periods, timely and accurate wage statements and wages due at the time of termination. Defendants removed the case to federal court under CAFA, 28 U.S.C. § 1332(d)(2), which provides removal jurisdiction if any member of the putative class is diverse from any defendant, if the amount in controversy exceeds $5,000,000.

After removal, plaintiffs sought certification of two classes. The district court denied class certification and then granted plaintiffs’ motion to remand, on the basis that the case no longer satisfied CAFA’s jurisdictional requirements. The parties then engaged in a series of procedural volleys that resulted in two new putative class actions in federal court and the remanded action stayed in state court. Against that procedural backdrop, the Ninth Circuit addressed the question “whether post-removal denial of class certification divests the federal courts of jurisdiction—or, as plaintiffs argue, whether class certification is a necessary condition to continued jurisdiction.” The answer is NO.

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