When a class action is filed in state court, most defendants first evaluate whether the case can be removed to federal court. The Class Action Fairness Act (CAFA) offers a broader avenue to remove cases to federal court than traditional diversity jurisdiction. Removal under CAFA is permissible if (1) the amount in controversy exceeds $5,000,000 (which can include treble and punitive damages), (2) there are 100 or more putative class members, and (3) any class member is a citizen of a different state from any defendant.

But what happens if a defendant removes a case to federal court under only CAFA and successfully opposes class certification?

On this question, Judge Bell recently observed:

The Fourth Circuit has not decided the questions of whether Article III permits jurisdiction to be conferred on a federal court when an action is merely alleged to fall within CAFA jurisdiction, but has been held not actually to do so. Or, put somewhat differently, must a district court, on finding that a case cannot proceed as a class action, still adjudicate state law claims rather than remand them to state court.

Simpson v. StoneMor GP, LLC, No. 323CV00217KDBSCR, 2024 WL 1340561, at *9 (W.D.N.C. Mar. 28, 2024).

In Simpson, thousands of putative class members asserted the defendants committed misconduct in operating Charlotte’s oldest African-American cemetery, York Memorial Cemetery, where their next of kin were buried, or where they had purchased burial plots. The Complaint made “very serious allegations” that included failing to maintain records of burials and burial sites, desecrating  graves, losing deceased bodies, and placing markers on the wrong gravesites. Id. at *3, 19.

After providing a thorough analysis under Rules 23(a), 23(b)(1), and 23(b)(3), the Court declined to certify the two putative classes. The Court found that the class members were not ascertainable, plaintiffs could not satisfy the typicality requirement, and plaintiffs failed both the predominance and superiority prongs of Rule 23(b)(3).

Because the case had been removed to federal court under CAFA, the Court then analyzed whether it could rule on the pending motion to dismiss. Recognizing that the Fourth Circuit had not yet weighed in on this question, the Court turned to cases from Minnesota, Illinois, California, Florida, and New York.

Because federal courts are of limited jurisdiction, the Court held that “a determination that a class cannot be certified defeats subject matter jurisdiction under CAFA.” Id. at *9.  “Otherwise, actions could be removed and maintained in federal court with no basis other than inadequate allegations of a putative class.” Id.

The Court remanded the case to state court under 28 U.S.C. § 1447(c), which requires remand “[i]f at any time before final judgment it appears that the district court lacks subject-matter jurisdiction.” The Court also denied as moot the motions to dismiss. The Court found that “[w]ithout federal class action status, there can be no justification for the exercise of further jurisdiction, especially in ruling on whether Plaintiffs’ claims should be dismissed or allowed to proceed.” Id. at *10. The Court further noted the case was a “particularly local concern” “governed by state law and alleged state public policy” with similar cases already pending in state court, all of which further favored remand.

Defendants should pay close attention to these issues when removing actions to federal court under CAFA. If removal is appropriate under diversity jurisdiction or other grounds for the named plaintiff’s individual claim, seeking removal on an alternative basis may help keep the case in federal court.