In Cunningham Charter Corp. v. Learjet, Inc., the 7th Circuit Court of Appeals joins the 11th circuit in resolving a jurisdictional question posed by the Class Action Fairness Act of 2005, 28 U.S.C. §§ 1332(d), 1453, and 1711-1715. That Act creates federal diversity jurisdiction over certain class actions in which at least one member of the class is a citizen of a different state from any defendant (that is, in which diversity may not be complete).
The Court held that where a class action has been transferred to federal court under the Act, but class certification is denied, the federal court retains jurisdiction. While the Act applies “to any class action [within the Act’s scope] before or after the entry of a class certification order,” the use of the term “a class certification order” rather than “the class certification order ” indicates the provisions refers only to timing, and does not create a requirement that the class be certified to retain federal jurisdiction.
Authored by Judge Richard Posner, the opinion ends what he called the potential for "ping-pong" between the federal and state courts. The Court “vindicate[d] the general principle that jurisdiction once properly invoked is not lost by developments after a suit is filed, such as a change in
the state of which a party is a citizen that destroys diversity.”
The 9th Circuit has not yet ruled on the issue. In unpublished decisions, the Southern and Central Districts of California have ruled that jurisdiction under CAFA never existed if class certification is denied.
