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The class action Fairness Act (CAFA) is beginning to engender a considerable body of case law. Previous columns have covered issues such as the effective date of CAFA, the question of who has the burden of proving federal jurisdiction and the related questions of determining how to value claims under CAFA’s jurisdictional provisions. This column continues the discussion. The burden of proof is on the party seeking remand In Berry v. American Express Publishing Corp., 2005 U.S. Dist. Lexis 15514 (C.D. Calif. June 2005), discussed in my last column [ NLJ, Aug. 29], Judge Alicemarie Stotler held that Congress intended to shift the burden of proof on a motion to remand to the plaintiff. Across the country, Judge William Young of the U.S. District Court of Massachusetts followed Berry, holding that the burden of proof is on the party seeking remand to state court. Natale v. Pfizer Inc., 379 F. Supp. 2d 161, 168 (D. Mass.), affirmed on other grounds, 2005 U.S. App. Lexis 19912 (1st Cir. Sept. 16, 2005). On the other hand, other courts have held that the general rule that the proponent of federal jurisdiction has the burden of proving federal jurisdiction applies. See Brill v. Countrywide Home Loans, 2005 U.S. App. Lexis 22514 (7th Cir. 2005) (burden of proof does not shift under CAFA). Thus, in a removal context, the burden is on the defendant. The first court to take this position and thoroughly explore the issue is Schwartz v. Comcast Corp., 2005 U.S. Dist. Lexis 15396 (E.D. Pa. July 2005). Schwartz like Berry, involved a removal scenario. Schwartz alleged in his original complaint that Comcast breached its contract with the plaintiff and all class members by failing to deliver his high-speed Internet services as promised during an 11-day period between April 7, 2005, and April 17, 2005. The complaint defined, with some exceptions, the plaintiff class as: “All persons and entities residing or doing business in the Commonwealth of Pennsylvania who subscribed to Comcast’s high-speed internet service.” Comcast filed a notice of removal on May 18, 2005, alleging that Comcast is a citizen of both Delaware and Pennsylvania, and that the case was removable because the plaintiff’s class definition establishes the minimal diversity of citizenship required by CAFA. Schwartz subsequently amended his complaint to allege that he and all class members are citizens of Pennsylvania. He then filed a motion to remand, arguing that the case does not meet the requirements for diversity jurisdiction under CAFA. In Schwartz, Judge Thomas O’Neill Jr. first dealt with the question whether, when determining whether removal was proper, the court should look to the original complaint or the amended complaint that was filed in federal court. The court applied the general rule that a plaintiff’s claim must be evaluated based on the record as it stands at the time the notice of removal is filed. In other words, Schwartz’s attempt to “clarify” the definition of the proposed class in his amended complaint would not defeat subject-matter jurisdiction. The questions then became whether the original complaint provided the basis for federal jurisdiction under CAFA, and who had the burden of proving jurisdiction. O’Neill considered and rejected Stotler’s analysis of the burden-of-proof issue in Berry. The court began by noting that courts should not resort to legislative history when interpreting statutes unless the statute is “inescapably ambiguous,” quoting Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 395-96 (1951) (Jackson, J. concurring), or, in an “extraordinary case where a literal reading of the language produces an absurd result,” quoting Idahoan Fresh v. Advantage Produce Inc., 157 F.3d 197, 202 (3d Cir. 1998). The court found that CAFA was not ambiguous, and that applying the usual burden of proof for establishing federal jurisdiction did not produce an absurd result. The court also noted that Congress is presumed to be aware of existing law when it passes legislation. Indeed, the Senate Judiciary Committee report demonstrated that at least the senators on the committee were aware of the burden-of-proof issue. Thus, the court was hesitant to read into the statute an intent to shift the burden of proof for establishing jurisdiction, where Congress failed to legislate a provision on burden of proof, as supported by the Senate report, but expressly enacted numerous other changes discussed in the report, such as the provision permitting aggregation of individual class members’ claims. Accordingly, the court found that the defendant had the burden of proof on the motion to remand. The structure of CAFA contemplates a two-step jurisdictional inquiry. With respect to � 1441, removal is proper if a federal court would have had diversity jurisdiction under � 1332 or federal-question jurisdiction under � 1331, for example. Under � 1453, on the other hand, removal is proper if the requirements of � 1332(d)(2) (minimal diversity; $5 million amount in controversy) are met, and, if remand is not mandatory under � 1332(d)(4) or within the discretionary power of the court under � 1332(d)(3). In Schwartz, the court said that the burden of proving federal jurisdiction is on the defendant. It also decided that the court would look to the original complaint in determining whether there was jurisdiction. However, if the burden of proof is on the defendant, the defendant ought to be required to do more than rely on its pleadings. Comcast alleged minimal diversity and argued that Schwartz’s original complaint did not restrict its class members to citizens of Pennsylvania. The court correctly rejected Schwartz’s argument that allegations of “residence” should be interpreted to mean “citizenship.” It hypothesized that there may be numerous members of the class who were citizens of states other than Pennsylvania. A hypothesis, however, is not proof. Because Comcast had the burden of proof, it is curious that the court did not require Comcast to produce such proof. In other words, the court could have remanded on the ground that Comcast failed to prove minimal diversity, but rather, simply rested on allegations. Instead, because Comcast had control over the information that could establish the citizenship of members of Schwartz’s proposed class, it decided to provide Schwartz, the plaintiff, with discovery. Such discovery, of course, would be necessary to provide Schwartz with information relevant to the second phase of a CAFA jurisdictional inquiry. Assuming there were non-Pennsylvania members of the class, and that Comcast had proven as much, then the question would be whether the court may or must remand based on the class membership under � 1332(d)(3) or (4) (based on the percentage of class members who are citizens of the forum). A further burden-of-proof issue then arises: Assuming the defendant, on a motion to remand, discharges the burden of proof on whether CAFA applies and permits removal, who has the burden of proof on the question of mandatory or discretionary remand? Because these provisions are part of the jurisdictional package, courts ought to be hesitant to shift the burden of proof on these issues as well. Thus, O’Neill was correct to implicitly reject Comcast’s argument that shifting the burden of proof onto Schwartz would be consistent with the procedure used when a federal court decides whether to abstain. Those are court-made doctrines. When the courts are interpreting whether there is jurisdiction, and whether to exercise such jurisdiction under a statute, however, it makes sense for the courts to adopt the rules that Congress must have been aware of-i.e., the burden is on the proponent of jurisdiction. An important question: Does the rule make sense? Congress may have intended that the burden of proof be placed on the party resisting jurisdiction. Moreover, putting the burden of proof on a plaintiff seeking a remand to state court has the advantage of effectively insulating a district court’s decision to remand from possible reversal under CAFA’s interlocutory appeal provision. See 28 U.S.C. 1453(c) (providing discretionary interlocutory review of remand orders). On the other hand, under the Supreme Court’s statutory interpretation jurisprudence, the courts finding that congressional intent is irrelevant have the better of the argument. Most recently, in Exxon Mobil Corp. v. Allapattah Services Inc., 125 S. Ct. 2661 (2005), the Supreme Court rejected the defendants’ and the dissent’s reliance on the legislative history of the supplemental jurisdiction statute. Rather, it found that resort to legislative history was inappropriate because 28 U.S.C. 1367 itself is unambiguous. Applying Exxon‘s teaching to CAFA, the better view is that CAFA does not shift the burden of proof. First, � 1367 is somewhat ambiguous, as the Exxon majority itself recognized. CAFA, on the other hand, is not ambiguous. There is no provision on burden of proof, and under Exxon, one ought not be read into the statute based on a Senate report. Keeping the burden of proof on a defendant seeking to remove has some practical advantages. Often, under CAFA’s aggregation approach, questions pertaining to the amount in controversy when a defendant removes under CAFA will be resolved based on the purported liability of the defendant. Generally, as the Schwartz court noted, the defendant will have the information that the plaintiff may lack on that issue. Defendants in many contexts also may have more information on who their consumers are, or similar information, that will be needed to determine whether there is discretionary or mandatory remand based on the citizenship of the class members. It makes sense, therefore, to put the burden on the defendant to induce the removing party to come forward with the information needed to accurately determine whether the case ought to be in state court or federal court. Georgene M. Vairo is a professor of law and William M. Rains Fellow at Loyola Law School, Los Angeles. She can be reached at [email protected].

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