(The Return of) Ignatz, by Sam Heldman

Friday, February 11, 2005

class action bill
So the damn thing passed yesterday, and as I woke up this morning I started wondering another thing:

When a case is filed as a class action and removed to federal court, and the federal judge declines to certify the class, can/should/must the judge remand the case to state court? The statute is hopelessly unclear about this, to my eye, and in any event it's arguable that in some situations a remand would be constitutionally required. So think of the possibilities: removal, denial of certification, remand -- then the state court (using the different state-law standard for class certification, or using its discretion differently) certifies the class -- so the case is removed again, and the federal judge decertifies the class, and remands it again -- and then the state court certifies again ... a perpetual motion machine. Do I really think this will happen? I don't know; it might. But it's one more bit of proof that the authors of this bill weren't even trying to write a law that makes sense. More here and here and here, (UPDATE: and if you're really interested, comments by me at Kevin Drum's and James Joyner's blogs.)

But as I said on the lawyer radio yesterday, there will come a time when the corporations will regret this bill. Nothing is forever -- not even the current preference of corporations for federal courts over state courts. And, as long as cases are going to be in federal court, Plaintiffs' lawyers will make the most of federal laws. Magnuson-Moss Act, anyone?

posted by sam 6:30 AM 6 comments


Why doesn't 28 USC 1332(d)(7) answer your question? Or did you not read the statute?

And even if that section didn't plainly address the problem you raised, why isn't the precedent in Bridgestone/Firestone answer your question?

By Anonymous Anonymous, at 11:40 PM  

"why isn't" should read "why doesn't"

By Anonymous Anonymous, at 11:41 PM  

"Or did you not read the statute?" Please try not to be a dick in my comments section, Ted. The new (d)(7) doesn't address the question because it has nothing to do with the problem -- the core of the problem being that in at least some cases, denial of class certification will mean that the case is not one between residents of different states, and so arguably there is no constitutional basis for federal jurisdiction. Possible that courts will resolve this in a Mine Workers v. Gibbs way, saying essentially "that's ok," but who knows? Not me, not you. And why doesn't some 7th Circuit decision answer the question? Because one Seventh Circuit decision doesn't answer a question forever for the whole country, and that one seems particularly shaky to me.

By Blogger sam, at 6:25 AM  

The main reason that Seventh Circuit decision seems wrong to me -- in case you were about to ask -- is that it does not wrestle with the fact that state courts, in deciding whether to certify classes, are not interpreting Fed. R. Civ. P. 23. But that IS what a federal court is doing. So, I believe that the denial of federal class certification is, at least ordinarily, ONLY preclusive of the issue "this case can't be certified under Fed. R. Civ. P. 23," and does not forbid a state court from interpreting or applying its own Rule 23 or similar rule differently. Seems to me that should be an uncontroversial legal proposition; but it is at least a substantial one.

By Blogger sam, at 6:33 AM  

Apologies for earlier inappropriate intemperance.

Complete diversity is not a constitutional, rather than a judicial interpretation of a statutory, requirement. Strawbridge v. Curtiss, 7 U.S. 267 (1806); State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 531 (1967); Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 492 n.18 (1983). So if the statute is interpreted to grant jurisdiction over the non-certified class action, there isn't a constitutional issue.

The original form of the legislation, S. 1751 in last Congress, had a perfectly clear procedure for remanding cases after class cert denial, but it wasn't in S. 2062 or S. 5; I don't know why. But I know that Democratic senators were responsible for a number of more complicated provisions in the bill.

I'd be curious in what circumstances you think a nationwide class action can be certified in state court, but not in federal court, while complying with the due process requirements of the Constitution.

By Anonymous Anonymous, at 8:25 AM  

Ted, I know -- and everybody who studies this act from a legal perspective -- understands that complete diversity is a statutory rather than constitutional requirement, at least under current understanding of Art III. If it were otherwise, this act would be unconstitutional. But there is a constitutional issue, still, at least where the named plaintiffs and defendants are citizens of the same state and class certification has been denied. Such a case was removable before a decision on class certification if the class included putative members from more than one state; but when certification is denied, there is a serious constitutional issue.

As to your final question, I believe -- and think it pretty obvious -- that when a fed ct declines to certify a class because of "predominance" and "superiority" concerns (including "manageability" concerns), this is simply a Rule 23-based holding and does not mean anything about what "due process" requires. So, a state court is free to interpret or apply its own rule differently.

By Blogger sam, at 11:54 AM  

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