CAFA Jurisdiction: More on Judge Posner's Decision in Santamarina v. Sears

    By Brian Wolfman

    On October 23, 2006, I blogged briefly about Judge Richard A. Posner’s Class Action Fairness Act (CAFA) decision in Santamarina v. Sears, Roebuck & Co.  I described dicta in that case that Judge Posner had offered to his readers “for future reference,” and I suggested that, under his view, federal courts might assume federal jurisdiction under CAFA where none existed.  My earlier post was opaque, so I am writing now to elaborate.   

    Santamarina noted that an erroneous decision not to remand to state court a case removed under CAFA is not “jurisdictional.”   As Judge Posner put it, that kind of error “would not be so grave a mistake—so usurpative an assumption of federal jurisdiction withheld by Congress—that we would have an independent duty to correct it even if no party complained.”  Judge Posner cited no authority for that proposition, and it struck me as unusual.  If “federal jurisdiction is withheld by Congress,” doesn’t that mean that it’s, well, withheld by Congress?  And, if it has been withheld, doesn’t that mean a federal court cannot exercise it?  Let’s explore this a bit.

    The way I see it, CAFA remands fall into at least four categories.  The first involves cases that don’t really have anything to do with CAFA because, like Santamarina, they were filed in state court before CAFA’s effective date.  (Some of these cases, as in Santamarina, present the question whether post-CAFA amendments relate back to the original complaint.)  Presumably, after removal, those cases must be remanded to state court if there is no other basis for federal jurisdiction.  Second, there are cases that don’t meet CAFA’s basic jurisdictional requirements:  $5 million in controversy, 100 class members, and minimal diversity.  28 U.S.C. 1332(d)(2), (d)(5)(B).  Those cases, too, must be remanded to state court after removal.

    The third and fourth categories are a bit different.  Both have been called “exceptions” to CAFA’s grant of jurisdiction because they allow for remand even where the basic prerequisites have been met.  The third category sets out circumstances in which a district court “shall decline” to exercise jurisdiction.  28 U.S.C. 1332(d)(4).  The circumstances in which this category is triggered are complicated and fact bound (and are definitely not worth getting into).  To me, this category does not really comprise an “exception” to CAFA; it’s just a further, albeit unusual, definitional limit on jurisdiction akin to the $5 million, 100-class-member, and minimal diversity limits.  Finally, in the fourth category, the court exercises its discretion, within certain defined parameters and based on an evaluation of six factors, to decline jurisdiction in cases that are within CAFA’s grant of federal jurisdiction.  28 U.S.C. 1332(d)(3).

    It seems to me that for cases falling within the first three categories, the question whether the district court has (or had) jurisdiction cannot be forfeited or affirmatively waived, and any federal court is obligated to note a lack of jurisdiction on its own.  That is the normal rule because, as the Supreme Court has put it, “[f]ederal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.”  Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986).  As one who has had his doubts about the wisdom of CAFA, I’m not thrilled about the idea of federal courts expanding CAFA's jurisdictional reach (or, put more accurately, ignoring its jurisdictional limits).  I can’t think of a reason why the normal rule requiring federal courts to question jurisdiction on their own would not apply in CAFA cases.  Can you?   Please comment.

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