The Seventh Circuit remanded an Instagram user’s appeal after the court found that Groupon’s notice of removal did not allege the citizenship of any diverse member of the putative class. The decision highlights the importance of actually alleging the minimal diversity requirement for removal under the Class Action Fairness Act (CAFA).
The plaintiff, Christine Dancel, obtained permission under Federal Rule of Civil Procedure 23(f) to appeal the lower court’s denial of class certification in her claim alleging that Groupon violated the Illinois publicity statute by using her Instagram photos for advertisement purposes without her permission. While the sole issue before the Seventh Circuit was the denial of class certification, the proceedings below drew the court’s attention to “a critical hole” in the notice of removal: it did not allege the citizenship of a single diverse member of the putative class. “[E]ven on interlocutory review,” the court said, it must “be assured that the district court has jurisdiction” before deciding the merits of an appeal.
CAFA permits removal of a proposed class action to federal court as long as there is minimal diversity; meaning just one member of the plaintiff class needs to be a citizen of a state different from any one defendant. In its notice of removal, Groupon – a citizen of Delaware and Illinois – only stated that the class “undoubtedly would include at least some undetermined number of non-Illinois and non-Delaware citizens as class plaintiffs.” Initially, Dancel did not challenge minimal diversity in her motion for remand at the trial court level but “changed her tune” in her reply in support of remand. Although Groupon insisted that it could easily cure the deficiency, the district court denied the motion to remand and did not address minimal diversity or direct Groupon to cure its allegations. The Seventh Circuit found that Groupon’s allegation of “negative citizenship” failed to satisfy the minimal diversity requirement. Groupon countered that Dancel had waived her opportunity to contest the issue. However, the Seventh Circuit held that subject-matter jurisdiction cannot be waived, and only an unchallenged factual determination that supports jurisdiction is subject to waiver. The court found that Groupon’s allegations in the notice of removal did not have any necessary factual content.
Groupon’s omission did not mean that the case had to be immediately remanded to state court as the Seventh Circuit held that “[a]s long as the existence of subject-matter jurisdiction is either apparent from the record or cured through amendment of the notice of removal, we can proceed to the class-certification issue.” Thus, the court directed the district court to permit discovery to “whatever extent the court deems necessary for Groupon to allege that at least one member of the putative class” was a non-Illinois or non-Delaware resident at the time of the case’s removal. The Seventh Circuit retained its jurisdiction over the appeal pending resolution of the issue.
Dancel v. Groupon, Inc., No. 19-1831 (7th Cir. Oct. 9, 2019).