9th Cir: Remand (Not Dismissal) Proper If Plaintiff Lacks Standing

In Polo v. Innoventions International, the Ninth Circuit recently issue an opinion requiring district courts to remand, rather than dismiss, cases where the named plaintiff is deemed to lack standing.

The plaintiff had initiated the suit in California state court and alleged four class claims, including a CLRA claim. After removing the case, the defendant sought to “pick off” the named plaintiff by providing her with a full refund. The district court held that as a result, the plaintiff lacked Article III standing, granted summary judgment in defendant’s favor, and dismissed the case.

The Ninth Circuit did not address whether the district court was correct in holding that the refund deprived plaintiff of standing – though the court did drop a footnote suggesting the holding was “questionable.” (Compare Chen v. Allstate Insurance Co.). However, the Ninth Circuit did hold that “upon determining that it lacked jurisdiction, the district court should have remanded the case to state court pursuant to 28 U.S.C. § 1447(c)” rather than dismissing it. As the court explained:

the district court generally must remand the case to state court, rather than dismiss it. Bruns v. Nat’l Credit Union Admin., 122 F.3d 1251, 1257 (9th Cir. 1997). Remand is the correct remedy because a failure of federal subject matter jurisdiction means only that the federal courts have no power to adjudicate the matter. State courts are not bound by the constraints of Article III. ASARCO Inc. v. Kadish, 490 U.S. 605, 617 (1989).

The Ninth Circuit went on to reject the argument that dismissal was proper in this instance because remand would have been futile. The court noted that the Supreme Court has emphasized that the literal words of § 1447(c), on their face, “give no discretion to dismiss rather than remand an action.” And the court noted that “a number of other circuits have expressly rejected the futility doctrine.” Finally, the court held that even if the futility doctrine remains in effect, remand would not necessarily have been futile:

Under California law … [the] picking off” of class plaintiffs is ineffective: “[O]nce a person has been the victim of a proscribed practice under the CLRA and makes a demand on behalf of a class, remedying the plaintiff’s individual complaint does not disqualify her as class representative.” Meyer v. Sprint Spectrum, L.P., 200 P.3d 295, 300 (Cal. 2009). Instead, to defeat a class action based on practices proscribed under the CLRA, the defendant “must adequately notify the members of the class and provide an opportunity for an appropriate remedy for the defective goods or services.” Id. (citing Cal. Civ. Code § 1782(c)).