9th C grabs class actions it denies are class actions

I suppose this is one of those issues that only law students (and big corporate defendants) could love.

The ninth circuit, the local Federal appellate level, just decided that a law that allows the Federal courts to "remove" a class action lawsuit asking for more than $5 million from a state court should be interpreted to keep the case in the Federal court system even after concluding that it was never properly a class action case to begin with, and if properly brought, was originally ineligible to be considered by the Federal courts.

The court was United Steel (Union) v. Shell Oil Co.

Usually the Federal courts only have jurisdiction if a Federal law is involved, or if no defendant is from the same state as the plaintiffs and the amount in controversy exceeds a particular level. Under the law in question the rules for diversity are much looser if it is a class action and the amount in controversy is $5 million.

The court reasoned that once a Federal court takes a "diversity case", jurisdiction continue even though, for example one of the parties moves, or the amount in controversy falls below the required limit. However here the court considers the preliminary matter: does the case constitute a class action?, and decides it doesn’t, but keeps jurisdiction under a law that only applies if it does.

The judicial decision admitted that the law as written does not demand this result, but goes along with two other appellate circuits.

Since this decision favors big corporate defendants who are the most likely targets of class action suits, do not expect the tea party types to challenge this new expansion of Federal power at the expense of the states, just as they have not challenged diminution of individual rights represented by the the Supreme Court's Citizens United case that gave unlimited rights to corporations to buy election advertising.