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The Class Action Fairness Act of 2005 created a new basis for federal diversity jurisdiction over class action litigation, both as a matter of original and removal jurisdiction. 28 U.S.C. � 1332(d); Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (CAFA). The act confers federal court jurisdiction over class actions where at least one member of the plaintiff class is a citizen of a different state than any defendant and the total amount in controversy exceeds $5 million. 28 U.S.C. 1332(d)(1). This new statutory provision effects two changes in the federal courts’ diversity jurisdiction under 28 U.S.C. 1332(a). First, the class action provision authorizes federal courts to adjudicate class litigation where there is “minimal diversity” among the parties to the litigation. Hence, there need not be complete diversity for a federal court to hear a class action. Second, � 1332(d)(1) requires a different amount in controversy for class actions; the amount in controversy for ordinary diversity actions is $75,000; class action litigation must exceed $5 million. In ‘Yeroushalmi,’ plaintiffs must establish a $5M value In addition, CAFA requires that courts aggregate the claims of individual class members to determine whether the amount in controversy exceeds $5 million exclusive of costs and interest. 28 U.S.C. 1332(d)(6). This provision alters the traditional rule that did not permit aggregation of damages in class litigation to satisfy diversity jurisdiction. Similar to other aspects of CAFA, federal courts are now grappling with the appropriate standards to determine the amount-in-controversy requirement for federal class action litigation. At least one federal court has deemed this “The $5,000,000 Question: What Does CAFA Change?” Yeroushalmi v. Blockbuster Inc., 2005 U.S. Dist. Lexis 39331, 13 (C.D. Calif. July 11, 2005) (unpublished opinion). Some federal courts have concluded that CAFA, in removal cases, alters the burden of proof required to satisfy the $5 million amount-in-controversy requirement. Other courts, however, have concluded that CAFA does not alter traditional rules to satisfy the amount in controversy. Federal analyses of the CAFA amount-in-controversy requirement have occurred in removal cases. In an unpublished but lengthy opinion, a California federal district court has concluded that CAFA changes the policies and rules relating to aggregation of class action damages and which party carries the burden, in removal cases, to establish jurisdiction. Yeroushalmi, 2005 U.S. Dist. Lexis 39331, 10-11. Looking to CAFA’s legislative history, the court found dispositive the congressional intent to modify the prior nonaggregation and burden rules: “Pursuant to new subsection 1332(d)(6), the claims of individual class members in any class action shall be aggregated to determine whether the amount in controversy exceeds the sum or value of $5,000,000 (exclusive of interests and costs). The Committee intends this subsection to be interpreted expansively. If a purported class action is removed pursuant to these jurisdictional provisions, the named plaintiff(s) should bear the burden of demonstrating that the removal was improvident (i.e., that the applicable jurisdictional requirements are not satisfied). And if a federal court is uncertain whether ‘all matters in controversy’ in a purported class action ‘do not in the aggregate exceed the sum or value of $5,000,000,’ the court should err in favor of exercising jurisdiction over the case.” Yeroushalmi, id., quoting S. Rep. 109-14 at 42-44 (Feb. 28, 2005). Relying on the Senate report, the court concluded that Congress intended that a plaintiff could satisfy the $5 million amount-in-controversy requirement if the value of the litigation exceeded $5 million either from the plaintiffs’ or defendant’s viewpoint, regardless of the type of relief sought, including damages, injunctive relief or declaratory relief. Yeroushalmi, id., 2005 U.S. Dist. Lexis 39331, 11. Applying these principles, the court concluded that the plaintiff, on removal, satisfied the amount-in-controversy requirement in a class action originally filed in California state court. The state action challenged Blockbuster’s new late-return policies, and alleged claims for fraud, unjust enrichment, and violations of the California Business and Professional Code. Yeroushalmi, id., 2005 U.S. Dist. Lexis 39331, 2-3. On removal, the federal court held that the defendant’s assessment of damages lacked clarity. Instead, the court determined that it could take into account the value of compensatory damages, restitution, disgorgement, injunctive relief, punitive damages and attorney fees. The court further held that, consistent with the Senate report, consideration of the costs of injunctive relief, from the defendant’s viewpoint, was appropriate under CAFA. Yeroushalmi, id., 2005 U.S. Dist. Lexis 39331, 16. In contrast, in a class action seeking entirely injunctive relief, a California federal court found that on removal the plaintiff had met its burden of demonstrating that the amount in controversy, in the aggregate, was less than $5 million. Berry v. American Express Publishing Corp., 2005 U.S. Dist. Lexis 15514, 14 (June 15, 2005). The plaintiffs’ state court complaint specifically said that the class did not seek to recover more than $5 million. The court concluded that from the class members’ perspective, the value of injunctive relief requiring that the defendant cease charging for unsolicited magazine subscriptions was nominal, and the cost to the defendants was highly speculative. Further, the court held that even though the plaintiff, in the general prayer for relief, indicated that the plaintiff also sought statutory damages, the court had no reason to assume that the plaintiff had misstated the value of the claim to defeat federal court jurisdiction. Berry, id. Other federal courts that have considered the amount-in-controversy requirement have concluded that CAFA does not in any way change the traditional rules and principles governing establishment of the amount in controversy in federal removal cases. These courts generally reject reliance on the Senate report as legislative history to aid in interpretation of CAFA. See Rodgers v. Central Locating Service Ltd., 2006 WL 240683 (W.D. Wash. Feb. 1, 2006); Ongstad v. Piper Jaffray & Co., 2006 U.S. Dist. Lexis 140 (D.N.D. Jan. 4, 2006); Fiore v. First American Title Ins. Co., 2005 Lexis 34348 (S.D. Ill. Dec. 13, 2005); see also Chavis v. Fidelity Warranty Services Inc., 2006 WL 346425 (D.S.C. Feb. 13, 2006) (applying traditional principles in Magnusson-Moss Warranty Act class action). Most attorneys are familiar with the litany of principles governing establishment of the amount in controversy in removal cases. Accordingly, the defendant, as the moving party, carries the burden of establishing federal jurisdiction, including the amount in controversy in diversity cases. The removing defendant must establish, by a preponderance of the evidence, that the jurisdictional minimum is met. Courts may look beyond the pleadings and consider evidence relevant to the amount in controversy. 2006 WL 240683, 7. In addition, the plaintiff is considered to be the master of his complaint, and because the plaintiff instituted the litigation in state court, there is a strong presumption that the plaintiff has not claimed a large amount to confer jurisdiction in federal court. However, an alleged amount in controversy only controls if the plaintiff makes the claim in good faith. Fiore, 2005 U.S. Dist. Lexis 34348, 9, citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938). Two courts ruled defendant failed to meet burden Applying these principles, the District Court for Washington concluded that the defendant on removal had failed to meet its burden of establishing that the plaintiff’s request for an injunction would result in compliance costs exceeding $876,000, which costs would have caused the aggregated class damages to exceed $5 million. Rodgers, 2006 WL 240683 7. The North Dakota federal court similarly held that a defendant failed to satisfy its burden that the value of the class litigation exceeded $5 million, in order to grant federal diversity removal jurisdiction. Ongstad, 2006 U.S. Dist. Lexis 140. In so doing, the court refused to accept the defendant’s invitation to depart from the long-established rule that the removing party bears the burden of establishing federal jurisdiction, holding that there was nothing in CAFA that contemplated such a change. In Ongstad, the plaintiff sued a securities broker-dealer in state court alleging conversion, breach of contract, breach of fiduciary duty and negligent supervision. The plaintiffs’ complaint did not specify an exact amount of damages. The court held that where the plaintiff’s complaint does not specify damages, the removing defendant must prove the amount of damages by a preponderance of the evidence, which the defendant failed to do. The court further refused to take into account potential punitive damages or attorney fees. Ongstad, 2006 U.S. Dist. Lexis 140, 14-17. In contrast, a district court in Illinois found that the defendant did satisfy the burden of showing that the amount in controversy was met. In a class action with alleged membership exceeding 8 million claimants, the court found that “it is clear from the nature of [the plaintiff's] charges that the sum is of some significance.” Fiore, 2005 U.S. Dist. Lexis 34348, 9. The court rejected the plaintiffs’ attempts to cap damages for nonstate residents at an amount less than $5 million. Indeed, the court ruled that the plaintiff could not in good faith place a $5 million limitation on the putative class, nor could the plaintiff limit the non-Illinois residents’ recovery to less than $5 million. Fiore, id. See also Senterfitt v. Suntrust Mortgage Inc., 2005 WL 2100594 (S.D. Ga. Aug. 31, 2005) (defendant satisfies burden; uncontradicted data). Linda S. Mullenix holds the Morris and Rita Atlas chair in Advocacy at the University of Texas School of Law. She is the author of State Class Actions: Practice and Procedure.

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