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While it may be an overstatement to say that the U.S. courts of appeals have been swamped with Class Action Fairness Act (CAFA) cases, they surely have had to pay increased attention to vagaries of that complex statute. By now, everyone knows that the purpose of CAFA is to provide expanded federal jurisdiction over class actions and other complex state claim-based litigation. CAFA expanded federal jurisdiction over class actions by substituting a minimal diversity and an aggregate $5 million amount in controversy requirements (28 U.S.C. 1332(d)(2)) for the complete diversity and $75,000 amount in controversy required under 28 U.S.C. 1332(a). It further contains a removal provision that allows for any such case filed as a class action in state court to be removed to federal court (28 U.S.C. 1453). This removal provision eliminates some of the more stringent removal provisions that limited defendants right to remove under 28 U.S.C. 1441(a), the general removal statute. Burden of proofstill vexes the courts One issue that continues to vex the courts is burden of proof. Because CAFA’s arcane provisions are ambiguous and/or inscrutable, the party bearing the burden of proof may have a tough time proving whether there is jurisdiction, or whether the court ought to exercise its jurisdiction. Last year, this column discussed the first two district court opinions on this subject. In Berry v. American Express Publishing, Corp., 381 F. Supp. 2d 1118 (C.D. Calif. June 2005), Judge Alicemarie Stotler held that because Congress intended to expand federal jurisdiction, it intended to shift the burden of proof on a motion to remand to the plaintiff. On the other hand, most courts have now held the general rule is that the proponent of federal jurisdiction has the burden of proving federal jurisdiction. The first court to take this position and thoroughly explore the issue in the CAFA context was Schwartz v. Comcast Corp., 2005 U.S. Dist. Lexis 15396 (E.D. Pa. July 2005). Accordingly, the burden of proving CAFA jurisdiction is on a removing defendant. Several courts of appeals opinions since then have dealt with the issue and have refined the analysis. See, e.g., Brill v. Countrywide Home Loans, 2005 U.S. App. Lexis 22514 (7th Cir. 2005); Miedema v. Maytag Corp., 450 F.3d 1322 (11th Cir. 2006); Hart v. FedEx Ground Package System Inc., 2006 U.S. App. Lexis 20431 (7th Cir. 2006). We will focus on the latest case, Hart, to explicate the how the law is evolving on the burden of proof and related issues. With respect to the burden-of-proof issue, CAFA is a unique jurisdictional statute because it can be characterized as a purely jurisdictional statute, or as a jurisdictional statute containing mandatory and discretionary abstention provisions. This distinction is important to keep in mind as one considers the question of who has the burden of proof. In other words, as the Schwartz opinion explains, the structure of CAFA contemplates a two-step jurisdictional inquiry. Under � 1453, a removed case will stay in federal court 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). Beyond the question of who has the burden of proof is the question of the standard for determining whether the party with the burden has met the burden of proof. Hart deals with all of these issues, and an additional question pertaining to appellate review. This column will address the burden-of-proof issue; while the next column will focus on the other issues. Hart brought a class action against FedEx in Pennsylvania state court, and FedEx removed the case to federal court under CAFA. The case was later transferred to the Northern District of Indiana for pretrial proceedings under 28 U.S.C. 1407, the multidistrict litigation statute. While there, Hart unsuccessfully moved to return the case to Pennsylvania state court, under the “home-state controversy” or “local controversy” exceptions to CAFA. The 7th U.S. Circuit Court of Appeals affirmed. There was little question that the case was properly removed under CAFA’s first step-although Hart and FedEx were both citizens of Pennsylvania for diversity purposes, thereby destroying complete diversity under � 1332(a), some members of the class likely were citizens of other states. The 7th Circuit acknowledged Congress’ power to expand federal jurisdiction on the basis of minimal diversity, as it had in CAFA. It then noted that when Congress qualified the complete-diversity rule for most cases to permit diversity jurisdiction in class actions based on minimal diversity, it also decided to qualify its minimal-diversity rule for class actions that were essentially local in nature. The 7th Circuit said: “If the minimal diversity rule of CAFA is an exception to the normal rule in � 1332 requiring complete diversity, then the home-state and local controversy provisions of � 1332(d)(4) are the exceptions to the exception.” Hart relied on the exception contained in Section 1332(d)(4)(B), which provides that “[a] district court shall decline to exercise jurisdiction” if “two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed. He argued that federal jurisdiction was lacking in his case “because the defendant and greater than two-thirds of the members of the plaintiff class, if not all of the members of the plaintiff class, are citizens of Pennsylvania.” The 7th Circuit began its analysis by stating the general rule that the proponent of federal jurisdiction bears the burden of proving its existence. The question then becomes: Who has the burden of proof on whether the local exception applies? The 5th and 11th circuits had agreed with FedEx Ground’s position that once the removing defendants prove the amount in controversy and the minimal diversity, the burden shifts to the plaintiffs to prove that the local-controversy exception to federal jurisdiction should apply. See Frazier v. Pioneer Americas LLC, 2006 U.S. App. Lexis 16848 (5th Cir. 2006); Evans v. Walter Indus., 449 F.3d 1159, 1165 (11th 2006). The 11th Circuit decision, followed by the 5th Circuit, was based on three reasons: first, it analogized exceptions to jurisdiction under CAFA to exceptions to removal jurisdiction under the general removal statute. In Breuer v. Jim’s Concrete of Brevard Inc., 538 U.S. 691 (2003), the Supreme Court ruled that the opponent of removal under 28 U.S.C. 1441(a) must prove that there is an express exception to removability. Second, it predicted that the plaintiff was best positioned to collect the relevant evidence, at least when the citizenship of class members is in issue. Finally, it treated CAFA-like cases involving removal of actions involving the Federal Deposit Insurance Corporation in which the opponent of removal must prove the “state action” exception to federal jurisdiction. Although it was not persuaded that the 11th and 5th circuits’ second and third reasons provided much support, the 7th Circuit agreed with the result. Specifically, the 7th Circuit believed that the earlier decisions missed an important legislative interpretation step by failing to examine the language of CAFA. That language, together with the Supreme Court’s Breuer decision, led the 7th Circuit to the conclusion that the party seeking to take advantage of the home-state or local exception to CAFA jurisdiction has the burden of showing that it applies. District courts have ‘original jurisdiction’ The basic statutory provision conferring CAFA jurisdiction, � 1332(d)(2), states that “[t]he district courts shall have original jurisdiction,” and then provides the relevant criteria. The next subsection, (d)(3), then describes situations in which the district court is permitted to “decline to exercise jurisdiction . . . in the interests of justice and looking at the totality of the circumstances.” The next subsection, (d)(4), is worded differently. It commands the district courts to decline jurisdiction under (d)(2) when either the “local” or the “home state” factors are present. Subsection (d)(5) also contains mandatory language making CAFA inapplicable to class actions in which the primary defendants are states, state officials, or other governmental entities against whom the district court may be foreclosed from granting relief and class actions involving less than 100 members. The court then explains: “Although the match is not perfect, the relation between (d)(2) and (d)(4) of CAFA is analogous to the structure of 28 U.S.C. � 1441(a), which the Supreme Court examined in Breuer. CAFA expressly states that the district court ‘shall decline to exercise jurisdiction’ in two particular situations. It is reasonable to understand these as two ‘express exceptions’ to CAFA’s normal jurisdictional rule, as the Supreme Court used that term in Breuer. The case might be different if Congress had put the home-state and local controversy rules directly into the jurisdictional section of the statute, � 1332(d)(2), but it did not. We acknowledge that the language of � 1332(d)(4) is mandatory, in contrast with the permissive language of � 1332(d)(3), but that alone proves little. Nothing indicates that the kinds of exceptions to which the Supreme Court referred in Breuer were permissive only.” Hart, 2006 U.S. App. Lexis 20431 at 16-17. The 7th Circuit also noted that its result is consistent with the legislative history of CAFA. The Senate Judiciary Committee report expressly stated that the burden of proving whether a case ought to be remanded was intended to be placed on the plaintiff. Similarly, its holding is consistent with the stated purposes of CAFA-the intent to prevent abuses of the class action by eliminating certain forms of forum shopping by plaintiffs. 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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