International Society of Primerus Law Firms

The Class Action Fairness Act of 2005: Jurisdictional and Removal Provisions

On February 18, 2005, President Bush signed into law the Class Action Fairness Act
of 2005 (CAFA).1 At its signing, the President prescribed that CAFA would keep out
of state businesses, workers, and shareholders from being dragged before unfriendly local
juries, or forced into unfair settlement.2 Under CAFA, federal courts now have jurisdiction
over some class actions that previously could not be filed in or removed to federal court.
In the body of the text, Congress also articulated a number of findings regarding the status
and purpose of class actions. Those findings state that abuses in class actions undermined
the national judicial system, the flow of interstate commerce, and the concept of diversity
jurisdiction. The underlying congressional purpose which prompted CAFA was the expansion
of federal jurisdiction over qualifying class actions by allowing their removal to federal
court. Congress enacted CAFA to ease the diversity jurisdiction requirements for certain
class action suits. The express purpose of CAFA is to benefit society by encouraging innovation
and lowering consumer prices and by providing for federal court consideration of
interstate cases of national importance under diversity jurisdiction.3
Submitted by the author on behalf of the FDCC Class Action and Multidistrict Litigation Section.
1 Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4.
2 President George W. Bush, Remarks at Presidential Signing of the Class Action Fairness Act of 2005
(Feb. 18, 2005) (transcript available at www.whitehouse.gov).
3 Richina v. Maytag Corp., No. Civ. S05-1281MCEKJM, 2005 WL 2810100, at *2 (E.D. Cal. Oct. 26,
2005) (citations omitted).
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136
Gray T. Culbreath is the managing shareholder of Collins
& Lacy, P.C. in Columbia, South Carolina. He received his
B.A. from Wofford College and his J.D. from the University
of South Carolina School of Law. His litigation practice is
largely devoted to the defense of complex personal injury
and products liability matters, as well as class actions and
excess insurance claims. He is a member of the American
Board of Trial Advocates, the Federation of Defense and
Corporate Counsel, the International Association of Defense
Counsel, and Lawyers for Civil Justice.
While CAFA effects an important change in class action practice, that change is not
without limitation. Several of the significant terms and phrases remain undefined by the
statutes, which also fail to address a number of issues that typically arise in disputes over
diversity jurisdiction, removal, and remand practice. To resolve these issues, defense counsel
should pay particular attention to the legislative history, which is analyzed in subsequent
discussion throughout this article. In that regard, the Sponsors Statement, which was
placed in the official House record on February 17, 2005,4 assumes particular relevance.
This statement of intent was added to guide courts and parties on statutory application, and
thus remains the most significant discussion of legislative intent.5
In the Findings and Purposes statement of the Class Action Fairness Act of 2005,
Congress articulated the reasons supporting the enactment of CAFA. As stated, its purposes
were threefold: (1) to assure fair and prompt recoveries for plaintiffs with legitimate claims;
(2) to restore the intent of the framers of the Constitution by providing for federal court
consideration of interstate cases of national importance under diversity jurisdiction; and (3)
to benefit society by encouraging innovation and lowering consumer prices.6 To achieve
these purposes, CAFA focused on two principal areas: diversity jurisdiction and settlement
practices. Accordingly, this article will focus on CAFAs expansion of class action removal
and the corresponding federal diversity jurisdiction over class action cases.
4 See 151 Cong. Rec. H723, 727-729 (daily ed. Feb. 17, 2005) (statement of Rep. Sensenbrenner).
5 Additional legislative intent information may be found in the Historical and Statutory Notes following
28 U.S.C.A. 1711 (West 2006).
6 See 28 U.S.C.A. 1711 note (West 2006) (Findings and Purposes).
Class Action Fairness Act – Jurisdiction and Removal
137
II.
The Effective Date of Commencement under CAFA
Effective as of February 18, 2005, CAFA provides that the Act shall apply to any civil
action commenced on or after the date of enactment of this Act.7 Since its enactment, the
largest body of case law has developed over when an action is commenced so as to trigger
CAFA.
Because of the benefits CAFA affords to defendants, it is not surprising that many class
actions were removed after CAFA was signed into law. Thus began the first round of litigation
over CAFA when is an action commenced so as to trigger its application. The
legislative history does not provide clear definition to the term commenced.8 However,
in Brown v. Kerkhoff, 9 the legislative history as it relates to commencement under CAFA
was summarized as follows:
CAFAs legislative history, an instructive interpretive tool, Pritchett [v. Office
Depot, Inc.,] 420 F.3d [1090,] 1095-96 [(10th Cir. 2005)], is in accord. The Tenth
Circuit recently summarized:
When the Act was originally introduced in the House, the removal provision
applied both to cases commenced on or after the enactment date
and to cases in which a class certification order is entered on or after the
enactment date. See H.R. 516, 109th Cong. 7 (2005). In contrast, neither
the Senate version of the bill nor the final statute passed by both houses of
Congress provided for removal of actions certified on or after the enactment
date. See S. 5, 109th Cong. 9 (2005); 9, 119 Stat. at 14. The Senate version
and the final statute provided only for application of the Class Action
Fairness Act to civil actions commenced on or after the date of the Act.
S. 5; 9, 110 Stat. at 14. It is thus clear that Congress initially started out
with broader language that could have included a number of then-pending
lawsuits in state courts. By excising the House provision, Congress signaled
an intent to narrow the removal provisions of the Act to exclude currently
pending suits.
7 Class Action Fairness Act of 2005, Pub. L. No. 109-2, 9, 119 Stat. 4, 14.
8 See In re Expedia Hotel Taxes & Fees Litigation, 377 F. Supp. 2d 904, 906 (W.D. Wash. 2005) (Finally,
although CAFA seeks to expand federal diversity jurisdiction, inquiry into Congress understanding of the
term commence is uninstructive because CAFAs legislative history provides no definitive guidance.).
9 No. 4:05 CV 00274 JEG, 2005 WL 2671529 (S.D. Iowa Oct. 19, 2005).
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138
Further, we note that the Congressional Record contains two statements
from sponsoring legislators indicating that the bill was not designed to apply
to currently pending lawsuits. See 151 Cong. Rec. S1080 (daily ed. Feb. 8,
2005) (statement of Sen. Dodd) ([The Act] does not apply retroactively,
despite those who wanted it to. A case filed before the date of enactment
will be unaffected by any provision of this legislation.); 151 Cong. Rec.
H753 (daily ed. Feb. 17, 2005) (statement of Rep. Goodlatte) (Since the
legislation is not retroactive, it would have absolutely no effect on the 75
class actions already filed against Merck in the wake of the Vioxx withdrawal.).
Ordinarily, individual floor statements are entitled to little weight,
but here, where they are consistent with and cast light upon the meaning of
a specific change in the language between an earlier version of the bill and
the final Act, the statements confirm our construction of the Act. Id. (footnotes
omitted). This choice infers Congress wished the statute to apply to
cases actually begun after CAFA became effective. Thus, while legislative
history often contains posturing and political explanations which impair its
accuracy, here it allows for some precision.10
The absence of a definition as to when an action is commenced under CAFA has produced
varying arguments with equally varying results. Recent decisions of the federal circuit
courts of appeal have interpreted the term commencement according to its traditional
meaning, i.e., that the filing of the complaint constitutes commencement, since the Act does
not otherwise define the term.11
The district courts to date also have confronted wide and varying arguments regarding
when an action is commenced under CAFA, and the results often differ within a given
circuit. The findings and holdings below are illustrative.
10 Id. at *6 n.12.
11 See, e.g., Pritchett v. Office Depot, Inc., 420 F.3d 1090 (10th Cir. 2005) (a cause of action is commenced
for the purposes of CAFA when it is originally filed in state court, not when it is removed to federal district
court); Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 806-07 (7th Cir. 2005) (commencement occurs for
the purposes of CAFA when it is filed in state court and not when some later step occurs in its prosecution;
however, a new claim for relief, . . . the addition of a new defendant, or any other step sufficiently
distinct that courts would treat it as independent for limitations purposes, could well commence a new
piece of litigation for federal purposes even if it bears an old docket number for state purposes); Schorsch
v. Hewlett-Packard Co., 417 F.3d 748 (7th Cir. 2005); Pfizer, Inc. v. Lott, 417 F.3d 725 (7th Cir. 2005);
Schillinger v. Union Pac. R.R., 425 F.3d 330 (7th Cir. 2005); Bush v. Cheaptickets, Inc., 425 F.3d 683 (9th
Cir. 2005); Natale v. Pfizer, Inc., 424 F.3d 43 (1st Cir. 2005).
Class Action Fairness Act – Jurisdiction and Removal
139
A. Generally
1. A plaintiff cannot amend a pre-CAFA class action to add CAFA jurisdictional
claims or other claims to bring the case within the terms of CAFA.12
2. An action filed in Madison County, Illinois, on February 17, 2005, was not
commenced so as to trigger CAFA.13
3. The consolidation of three class action lawsuits filed prior to CAFAs effective
date does not commence an action under CAFA.14
4. The amendment of a complaint to clarify the class definition and add new
class members does not commence an action under CAFA.15
5. Removal of a case is not commencement.16
6. Substituting the correct defendant in a pre-CAFA lawsuit does not constitute
commencement for CAFA purposes.17
7. CAFA does not have retroactive application.18
8. Adding a new defendant to a pre-CAFA action does not commence a new
action for the purposes of CAFA.19
9. Amendment to seek a nationwide class action is not commencement under
CAFA.20
12 McAnaney v. Astoria Fin. Corp., No. 04-CV-1101, 2005 WL 2857715 (E.D.N.Y. Nov. 1, 2005).
13 Alsup v. 3-Day Blinds, No. Civ. 05-287-GPM, 2005 WL 2094745 (S.D. Ill. Aug. 25, 2005).
14 In re Expedia Hotel Taxes & Fees Litigation, 377 F. Supp. 2d 904 (W.D. Wash. 2005).
15 Phillips v. Ford Motor Co., No. 05-CV-503-DRH, 2005 WL 2654247 (S.D. Ill. Oct. 17, 2005). But see
Senterfitt v. SunTrust Mortgage, Inc., 385 F. Supp. 2d 1377 (S.D. Ga. 2005).
16 Zuleski v. Hartford Accident & Indem. Co., No. Civ. A. 2:05-0490, 2005 WL 2739076 (S.D. W. Va.
Oct. 24, 2005).
17 Eufaula Drugs, Inc. v. ScripSolutions, No. 2:05CV370-A, 2005 WL 2465746 (M.D. Ala. Oct. 6, 2005);
New Century Health Quality Alliance, Inc. v. Blue Cross & Blue Shield of Kansas City, Inc., No. 05-0555-
CVWSOW, 2005 WL 2219827 (W.D. Mo. Sept. 13, 2005).
18 Carlson v. Long Island Jewish Med. Ctr., 378 F. Supp. 2d 128 (E.D.N.Y. 2005).
19 Morgan v. Am. Intl Group, Inc., No. C-05-2798MMC, 2005 WL 2172001 (N.D. Cal. Sept. 8, 2005).
But see Adams v. Fed. Materials Co., No. Civ. A. 5:05CV-90-R, 2005 WL 1862378 (W.D. Ky. July 28,
2005) (the addition of a defendant after the effective date of CAFA allows removal because the addition
of a new defendant constitutes the commencement of a new action).
20 Weekley v. Guidant Corp., 392 F. Supp. 2d 1066 (E.D. Ark. 2005).
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140
10. Responding to creative lawyering, two Oklahoma district courts ruled that
an action was commenced under CAFA so long as it was filed on February
18, 2005; removal was not defective because the action was filed prior to
11:46 a.m., when President Bush signed CAFA into law.21
11. Responding to another instance of creative lawyering, a Maine district court
held that a pre-CAFA action that adds defendants after the effective date of
CAFA can be removed, even if the plaintiff subsequently dismisses the new
defendants.22
B. Filing of Complaint as Commencement
1. Complaints faxed to the state court the day before CAFA became law were
commenced on that date and not subject to removal, notwithstanding the
fact that plaintiffs had not paid the filing fee.23
2. An action was commenced on the date of filing (eleven days before CAFA
became law), and not the date of removal or the date that defendant was
served with the complaint.24
3. Where the plaintiff filed the complaint pre-CAFA but did not file the summons
until after the effective date of CAFA, the actions were not commenced
since the delayed filing of a summons did not commence the action.25
4. The date of filing, not the date of removal, is the date of commencement
under CAFA.26
5. An action filed before February 18, 2005 is not removable under CAFA.27
21 Isaacs v. Pfizer, Inc., No. Civ. 05-0426-HE (W.D. Okla. June 21, 2005), available at http://www.mcglinchy.
com/images/pdf/intAG.PDF; Awaida v. Pfizer, Inc., No. Civ. 05-425-W (W.D. Okla. June 7, 2005),
available at http://www.mcglinchy.com/images/pdf/int8C.PDF.
22 Dinkel v. Gen. Motors Corp., 400 F. Supp. 2d 289, 294 (D. Me. 2005) (It is the action that is removable,
not claims against particular defendants. When the Removal Defendants removed this class action
to federal court they did not remove only the claims against them; they removed the entire class action.
Dinkel cannot now unring the bell by dismissing the Removal Defendants and trying to return the lawsuit
to its status on February 17, 2005.).
23 Patterson v. Morris, 337 B.R. 82 (E.D. La.), affd, 448 F.3d 736 (5th Cir. 2006).
24 Hensley v. Computer Sciences Corp., No. 05-CV-4081, 2006 WL 662463 (W.D. Ark. Mar. 15, 2006).
25 Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F. Supp. 2d 1317 (M.D. Ala. 2005).
26 Smith v. Pfizer, Inc., 05-CV-0112-MJR, 2005 WL 3618319 (S.D. Ill. Mar. 24, 2005).
27 Beasley v. Prudential Gen. Ins. Co., No. 05-4026 (W.D. Ark. Oct. 31, 2005), available at http://www.
mcglinchy.com/images/pdf/int7C.PDF.
Class Action Fairness Act – Jurisdiction and Removal
141
6. An Illinois court denied the plaintiffs motion to remand, holding that the
effective date of CAFA was the date of its signature into law (February 18,
2005), and not the time of its signing that day.28
7. The filing of a complaint after the enactment of CAFA, which had earlier
been dismissed by the federal court before CAFA was enacted, commenced
a new and independent action under CAFA.29
C. Amendment of Complaint as Commencement
1. In a multiple-amendment situation, a New York court ruled that the original
complaint commenced the action rather than the plaintiffs fifth amended
complaint, filed after the effective date of CAFA, which added two plaintiffs,
other causes of action, and a refined definition of the class.30
2. For purposes of CAFA, a pre-CAFA case was held to have commenced when
plaintiffs added new claims against the same defendant: [A] novel claim
tacked on to an existing case commences new litigation for the purposes of
the Class Action Fairness Act.31
3. Analyzing commencement under CAFA, a Missouri district court held
that amended petitions related back to the pre-CAFA actions, resulting in
remand.32
4. In a thorough analysis of the jurisdictional and removal issues under CAFA,
the Southern District of Texas concluded that an amended complaint relates
back so as to trigger remand.33
5. In granting the plaintiffs motion to remand, an Arkansas court held that
a relation back analysis is irrelevant to the commencement analysis under
CAFA.34
28 Driscoll v. Pfizer, Inc., No. 05-252-GPM (S.D. Ill. Oct. 25, 2005), available at http://www.mcglinchy.
com/images/pdf/int1F.PDF.
29 Steinberg v. Nationwide Mut. Ins. Co., 418 F. Supp. 2d 215 (E.D.N.Y. 2006).
30 In re MTBE Prods. Liab. Litig., No. 1:00-18908, MDL 1358 (SAS), M21-88, 2006 WL 1004725
(S.D.N.Y. April 17, 2006).
31 Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755, 758 (7th Cir. 2006).
32 Berry v. Volkswagen of Am., Inc., No. 05-1158, 2006 WL 344774 (W.D. Mo. Feb. 15, 2006).
33 Werner v. KPMG LLP, 415 F. Supp. 2d 688 (S.D. Tex. 2006).
34 Smith v. Collingsworth, No. 4:05CV01382, 2005 WL 3533133 (E.D. Ark. Dec. 21, 2005).
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142
6. Examining whether an amendment triggers the protections of CAFA, an
Arkansas district court rejected a relation back analysis in deciding the
issue. Relying on other Arkansas precedents, the court reasoned that since
CAFA did not explicitly preclude its applicability to actions in which the
complaint was amended after February 18, 2005, amendment and relation
back do not matter.35
7. The original complaint, filed in February of 2000, commenced the action,
and not the plaintiffs fourth amended complaint.36
8. Despite the filing of a fifth complaint after the effective date of CAFA, a
Kansas district court held that the original complaint filed four days
before CAFA became law was the commencement date, thereby barring
removal.37
9. An action filed pre-CAFA, without class allegations, and then amended to
plead class allegations after the effective date of CAFA, is not commenced
by the amendment.38
10. The Illinois district court determined that the amendment of the class definition
did not commence a new action under CAFA. 39
D. Addition of Plaintiff
1. In an amendment twist, the Seventh Circuit Court of Appeals held that
the addition of new plaintiffs relates back to the pre-CAFA complaint, so
as to require remand.40
2. An Illinois district court held that the addition of a new plaintiff class representative
did not commence a new action so as to trigger CAFA.41
35 Hot Spring County Solid Waste Auth. v. United Health Group, No. 05-6065, 2006 WL 376545 (W.D.
Ark. Jan. 13, 2006).
36 Comes v. Microsoft Corp., 403 F. Supp. 2d 897 (S.D. Iowa 2005).
37 Prime Care of Ne. Kansas, LLC v. Blue Cross & Blue Shield of Kansas City, Inc., No. 05-2227-KHV,
2006 WL 2734469 (D. Kan. Sept. 25, 2006).
38 Brown v. Lee, No. 4:05CV01076 GH (E.D. Ark. Oct. 21, 2005), available at http://www.mcglinchy.
com/images/pdf/int1589.PDF.
39 Knudsen v. Liberty Mut. Ins. Co., 405 F. Supp. 2d 916 (N.D. Ill. 2005), vacated by 435 F.3d 755 (7th
Cir. 2006).
40 Phillips v. Ford Motor Co., 435 F.3d 785 (7th Cir. 2006).
41 Bemis v. Allied Prop. & Cas. Ins. Co., No. 05-CV-751-DRH, 2006 WL 1064067 (S.D. Ill. April 20,
2006).
Class Action Fairness Act – Jurisdiction and Removal
143
42 Plubell v. Merck & Co., 434 F.3d 1070 (8th Cir. 2006).
43 Braud v. Transp. Serv. Co. of Ill., 445 F.3d 801 (5th Cir. 2006).
44 Tiffany v. Hometown Buffet, Inc., No. C 06-2524 SBA, 2006 WL 1749557 (C.D. Cal. June 22,
2006).
45 Miller v. Hypoguard USA, Inc., No. 05-CV-0186-DRH, 2006 WL 1285343 (S.D. Ill. May 8, 2006).
46 Robinson v. Holiday Universal, Inc., No. 05-5726, 2006 U.S. Dist. LEXIS 7252 (E.D. Pa. Feb. 27,
2006).
47 Cima v. Wellpoint Healthcare Networks, Inc., No. 05-cv-4127 (S.D. Ill. Feb. 3, 2006), available at
http://www.mcglinchy.com/images/pdf/intB6.PDF.
48 Santamaria v. Sears, Roebuck & Co., No. MDL-1703, 05 C 4742, 05 C 4743, 2006 WL 1517779 (N.D.
Ill. May 24, 2006).
E. Dismissal or Substitution of Plaintiff
1. The substitution of a class representative relates back to the pre-CAFA action,
although the original class representative was determined to have no
claim.42
F. Addition of Defendant
1. The Fifth Circuit Court of Appeals determined that the addition of a new
defendant commences an action for CAFA purposes when the defendant is
added after the effective date of CAFA.43
2. Ruling that the addition of a new defendant does not relate back to the
original complaint, a California district court held that CAFA applied and
the plaintiffs motion to remand was denied.44
3. Addressing the addition of a new defendant, the Illinois district court held
that the proper analysis for commencement was whether the doctrine of
relation back was applicable.45
4. Filing a post-CAFA complaint against a new defendant opens a new window
of removal, and post-removal dismissal of the new defendant will not destroy
the courts jurisdiction.46
5. Addressing the addition of new defendants post-CAFA, and the relation back
doctrine under Illinois law, the federal district court held that a new action
was commenced.47
G. Amendment of Class Definition
1. The amendment of a pre-CAFA complaint to broaden the class definition
did not commence a new action under CAFA; instead, it related back to the
original filing.48
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144
II.
CAFAs Change to Existing Removal Practice
The removal and jurisdictional requirements of CAFA are codified.49 Any changes
to removal practice prompted by CAFA were directly linked to its revisions of diversity
jurisdiction. Because CAFA is new, it must be consulted in every case. Furthermore, the
availability and the desirability of removal under CAFA must be evaluated in the context
of the particular case. However, because a number of these provisions vest discretion in
the district court, and others provide for the immediate appeal of rulings under CAFA, the
litigation that is certain to ensue can be expected to further clarify its effects. Additionally,
district court rulings interpreting CAFA to date demonstrate the existence of differing positions
on the issue of removal and are as varied as those discussing commencement.
It should be noted as well that CAFA does not change federal question and existing
diversity jurisdiction. Furthermore, the pre-CAFA rules as to diversity and removal still
control those class actions which do not satisfy the requirements of CAFA.
A. Removal of Class Actions under 28 U.S.C. 1453
One of the most significant changes found in CAFA is the change in removal practice
for class actions defined by 28 U.S.C. 1332(d)(1). According to the sponsors statement,
these removal standards were designed to put an end to the type of gaming engaged by
plaintiffs lawyers to keep cases in State courts. They should thus be interpreted with this
intent in mind.50
Removal under CAFA (28 U.S.C. 1453 in particular) differs from existing removal
standards in three significant ways:
(1) The one-year limitation on removal for diversity does not apply;
(2) Class actions may be removed under 1453 without regard to whether any
defendant is a citizen in the state in which the action is brought; thus, the
presence of a forum defendant will not prevent removal of a class action;
and
(3) Class actions may be removed by any defendant without the consent of all
defendants.51
49 See 28 U.S.C.A. 1332, 1453 (West 2006).
50 151 Cong. Rec. H723, 729 (daily ed. Feb. 17, 2005) (statement of Rep. Sensenbrenner).
51 28 U.S.C.A. 1453(b) (West 2006).
Class Action Fairness Act – Jurisdiction and Removal
145
B. The Burden of Proof on Remand
Though not articulated in 28 U.S.C. 1453 or in any other provision of CAFA, issues
exist regarding the burden of proof on a motion to remand. Thus, the legislative history and
concomitant statutory silence have produced litigation over which party has the burden of
proof on a motion to remand.
One cluster of cases has held that CAFA shifts the burden of proof to the party seeking
remand. In Berry v. American Express Publishing Corp.,52 for example, the court invoked
the legislative history of CAFA as essential to resolution, finding that legislative committee
reports are the authoritative source for finding the Legislatures intent.53 While CAFA itself
lacks specific language or directive, the legislative history specifies a legislative intent to
shift the burden to the party seeking remand:
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 about whether all matters in controversy
in a purported class action do not in the aggregate exceed the sum or value of
$5,000,000.00, the court should err in favor of exercising jurisdiction over the
case.54
The Senate Committee on the Judiciary also prescribed that: It is the committees intention
with regard to each of these exceptions that the party opposing federal jurisdiction shall
have the burden of demonstrating the applicability of an exemption.55
52 381 F. Supp. 2d 1118 (C.D. Cal. 2005).
53 Id. at 1121 (quoting Garcia v. United States, 469 U.S. 70, 76 (1984)).
54 S. Rep. No. 109-14, at 42 (2005).
55 S. Rep. No. 109-14, at 44. See also S. Rep. No. 109-14, at 43 ([T]he named plaintiff(s) should bear the
burden of demonstrating that a case should be remanded to state court.). However, the statutory text of
CAFA does not address this issue. Under the Act, the burden of removal is on the party opposing removal
to prove that remand is appropriate. Natale v. Pfizer, Inc., 379 F. Supp. 2d 161, 168 (D. Mass. 2005).
Prior to the enactment of the CAFA, a removing defendant bore the burden of proving the existence of
jurisdictional facts and there was a strong presumption against removal jurisdiction. Berry v. Am. Express
Pub. Corp., 381 F. Supp. 2d 1118, 1120 (C.D. Cal. 2005). See also Lussier v. Dollar Tree Stores, Inc.,
No. CV 05-768-BR, 2005 WL 2211094 (D. Or. Sept. 8, 2005); In re Textainer Pship Sec. Litig., No. C
05-0969MMC, 2005 WL 1791559 (N.D. Cal. July 27, 2005); Waitt v. Merck & Co., Inc., No. C05-0759L,
2005 WL 1799740 (W.D. Wash. July 27, 2005); Harvey v. Blockbuster, Inc., 384 F. Supp. 2d 749 (D.N.J.
2005).
FDCC Quarterly/Winter 2007
146
On the other hand, the Seventh, Ninth, and Eleventh Circuits have rejected the argument
that CAFAs legislative history alters the rule that a proponent of federal jurisdiction bears
the burden of establishing subject matter jurisdiction, concluding that if Congress intended
to change the burden of proof, it would have addressed the issue within CAFAs statutory
text.56 And some federal district courts simply have held that CAFA did not effect a change
in the burden of proof.57
C. Discretionary Appeals under 28 U.S.C. 1453(c)
Another significant change in removal practice under CAFA is the addition of a provision
for discretionary appellate review of remand orders, found at 28 U.S.C. 1453(c). CAFA
affords the appellate courts discretion to review orders either granting or denying motions
to remand cases that were removed under 1453.58 However, at least one circuit has held
that CAFAs provisions for appellate review of remand orders only apply to removals based
on CAFAs grant of federal jurisdiction.59
The provisions of 28 U.S.C. 1453(c)(1) provide that a party may appeal an order
of the district court granting or denying a motion to remand a class action, provided the
appeal is taken not less than seven days after entry of the order. This statute thus provides
an exception to 28 U.S.C. 1447(d), which severely limits the ability to appeal a remand
order. The committee report indicates that any application for appeal was intended to be filed
immediately so as not to delay the case.60 In Pritchett v. Office Depot,61 however, the court
reviewed the legislative history and statement of intent, holding that 1453(c) contained a
typographical error and should be read as providing that an appeal is permissible if filed
56 See Miedema v. Maytag Corp., 450 F.3d 1322 (11th Cir. 2006); Abrego Abrego v. Dow Chem. Co., 443
F.3d 676 (9th Cir. 2006); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005).
57 See Lanier v. Norfolk S. Corp., No. 1:05-cv-03476-MBS, 2006 WL 1878984 (D. S.C. July 6, 2006)
(holding that the burden of proof did not shift and that a committee report cannot serve as an independent
statutory source having force of law); Rodgers v. Cent. Locating Serv., Ltd., 412 F. Supp. 2d 1171 (W.D.
Wash. 2006) (rejecting the CAFA legislative history and holding that the defendant retains the burden of
proof in a CAFA based removal); Adams v. Ins. Co. of N. Am., 426 F. Supp. 2d 356 (S.D. W. Va. 2005)
(relying on the Seventh Circuit decision in Brill and holding that the burden did not shift, as it was not
expressly provided for in the legislation); Schwartz v. Comcast Corp., No. Civ. A. 05-2340, 2005 WL
1799414 (E.D. Pa. July 28, 2005); Judy v. Pfizer, Inc., No. 4:05CV1208RWS, 2005 WL 2240088 (E.D.
Mo. Sept. 14, 2005); Plummer v. Farmers Group, Inc., 388 F. Supp. 2d 1310 (E.D. Okla. 2005).
58 See, e.g., Miara v. First Allmercia Fin. Life Ins. Co., 379 F. Supp. 2d 20 (D. Mass. 2005).
59 See Wallace v. La. Citizens Prop. Ins. Corp., 444 F.3d 697 (5th Cir. 2006).
60 See S. Rep. No. 109-14 (2005).
61 420 F.3d 1090 (10th Cir. 2005).
Class Action Fairness Act – Jurisdiction and Removal
147
not more than seven days after entry of the remand order.62 Meeting this seven-day deadline
has already spawned litigation. In Pritchett, for example, the Tenth Circuit determined
that the appeal must be taken within seven days of the remand order. And the Ninth Circuit
Court of Appeals interpreted 1453(c)(1) to require parties to seek an appeal not more
than seven court days after the district courts order, despite CAFAs unadorned language
stating not less than seven.63
Though seemingly unclear, orders granting or denying remand of class actions removed
on federal question or bankruptcy grounds also may be immediately appealable under this
provision. In the event the circuit court accepts an appeal, that court must decide the jurisdictional
issue within sixty days of the filing of the appeal, unless an extension is granted.64
At least one court has determined that this sixty-day time limit for conclusion of all action
on CAFA appeals runs from the date the appellate court accepts the appeal, not the date
on which the appeal is filed.65 If no extension is granted and the court of appeals does not
decide the case within sixty days, the appeal is deemed to be denied.66 It should be noted
that extensions for any period of time on the appeal may be granted if all parties agree to
the extension, and extensions for up to ten days may be granted for good cause shown in
the interest of justice.67
D. Exceptions to the Removal Provisions of 28 U.S.C. 1453
The CAFA statute carries a provision excepting the removal provisions found in 28
U.S.C. 1453 from certain class actions which are, for the most part, securities related.
Stated more particularly, the exceptions include:
(1) a claim concerning a covered security as defined under section 16(f)(3) of
the Securities Act of 1933 (15 U.S.C. 78P(f)(3)) and section 28(f)(5)(E)
of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));68
62 Id. at 1093 n.2.
63 Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140, 1141
(9th Cir. 2006).
64 28 U.S.C.A. 1453(c) (West 2006).
65 Amalgamated Transit Union Local 1309, AFL-CIO, 435 F.3d 1140; Hart v. FedEx Ground Package Sys.
Inc., 457 F.3d 675 (7th Cir. 2006).
66 28 U.S.C.A. 1453(c)(4) (West 2006).
67 See, e.g., Bush v. Cheaptickets, Inc., 425 F.3d 683 (9th Cir. 2005).
68 28 U.S.C.A. 1453(d)(1) (West 2006).
FDCC Quarterly/Winter 2007
148
(2) a claim that relates to the internal affairs or governance of a corporation or
other form of business enterprise and arises under or by virtue of the laws
of the State in which such corporation or business enterprise is incorporated
or organized;69 and
(3) a claim that relates to the rights, duties (including fiduciary duties) and
obligations relating to or created by or pursuant to any security (as defined
under 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and
the regulations issued thereunder.70
IV.
CAFA Amendments Affecting Diversity Jurisdiction
Assuming that a matter is removable under 28 U.S.C. 1453, the viability of removal
depends on several additional factors. In that regard, removal depends on whether or not
the plaintiffs complaint satisfies the diverse citizenship requirements of CAFA, meets the
CAFA amount in controversy requirements, and is not subject to any of the conditions under
which the court might also decline to exercise jurisdiction under CAFA.
Likewise, CAFA amends 28 U.S.C. 1332 to add subparagraph (d), expanding diversity
jurisdiction over certain class actions. Some commentators have described this provision
as a minimal diversity jurisdictional standard since it eliminates the existing requirement
of complete diversity for class actions meeting certain requirements.
CAFA also expands diversity jurisdiction and provides the district courts with original
jurisdiction where the amount in controversy exceeds the sum or value of $5,000,000.00
exclusive of interest and costs.71 At least one court has ruled that the failure to plead CAFAs
$5 million minimum is a fatal defect to alleging subject matter jurisdiction.72 In that regard,
however, CAFA allows plaintiff class members to aggregate their claims in order to reach
the $5 million amount in controversy requirement, though it offers no explicit guidance as
69 Id. 1453(d)(2). See also In re Textainer Pship Sec. Litig., No. C05-0969MMC, 2005 WL 1791559
(N.D. Cal. July 27, 2005) (holding that a class action brought on behalf of the holders of limited partnership
units against the general partners over a proposed sale of the partnerships assets alleging a breach of
fiduciary duty fits within this exception).
70 Id. 1453(d)(3). See also Ind. State Dist. Council of Laborers & Hod Carriers Pension Fund v. Renal
Care Group, Inc., No. Civ. 3:05-0451, 2005 WL 2000658 (M.D. Tenn. Aug. 18, 2005).
71 28 U.S.C.A. 1332(d)(2) (West 2006).
72 Holland v. Cole Natl Corp., No. 7:04-CV-246, 2005 WL 1242349 (W.D. Va. May 24, 2005).
Class Action Fairness Act – Jurisdiction and Removal
149
to the burden of proof on the amount-in-controversy requirement, or how that amount is
to be calculated.73 In cases that lie outside the scope of CAFA, the claims of the individual
class members may not be aggregated unless a single res is at issue.74
The changes to 28 U.S.C. 1332 also eliminate the complete diversity requirement.
Unlike prior practice, where a $5 million amount in controversy is satisfied, diversity is
satisfied if: (a) any member of the plaintiff class is a citizen of a state different from any
defendant; (b) any member of the plaintiff class is a foreign state or citizen or subject of a
foreign state and any defendant is a citizen of a state; or (c) any member of the plaintiff class
is a citizen of a state and any defendant is a foreign state or a citizen or subject of a foreign
state.75 The new diversity rules do not apply in class actions where the primary defendants
are states, state officials, or other governmental entities against whom a federal court may
be precluded from ordering relief.76
V.
Home State Exception
Although a defendant may remove a class action under CAFA within the amended diversity
provisions, 28 U.S.C. 1332(d)(3) provides that a party may ask the court to decline
an exercise of the subject matter jurisdiction afforded by CAFA. Further, according to what
had been called the home state exceptions to the rules expanding federal jurisdiction over
class actions, a district court may decline to exercise jurisdiction under some circumstances
and might be precluded from exercising jurisdiction under others. This analysis focuses first
on the citizenship of the parties.
73 In re Intel Corp. Microprocessor Antitrust Litig., No. MDL 05- 1717-JJF, 2006 WL 1431214 (D. Del.
May 22, 2006) (court found that each of two class actions was worth more than the $5 million threshold,
though it did not reach the issue of which party bore the burden of proof); Wheeler v. Allstate Floridian
Indem. Co., No. 3:05cv208/MCR/EMT, 2006 WL 1133249 (N.D. Fla. Apr. 26, 2006) (defendant was unable
to establish by a preponderance of the evidence that the $5 million amount in controversy was established);
Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F. Supp. 2d 1323 (M.D. Ala. 2006) (rejecting the legislative
history and holding that the defendants bear the burden of proving the requisite amount in controversy);
Chavis v. Fidelity Warranty Servs., Inc., 415 F. Supp. 2d 620 (D. S.C. 2006) (plaintiffs complaint, which
alleged an amount in controversy as much as $50,000 per plaintiff, was sufficient to establish the requisite
$5 million amount in controversy); Ongstad v. Piper Jaffrey & Co., 407 F. Supp. 2d 1085 (D. N.D. 2006)
(burden of proof remains with the removing party but defendant failed to satisfy its burden to establish the
$5 million amount in controversy requirement); Fiore v. First Am. Title Ins. Co., No. 05-CV-474-DRH,
2005 WL 3434074 (S.D. Ill. Dec. 13, 2005) (denying the plaintiffs motion to remand and holding that the
$5 million amount in controversy was satisfied, notwithstanding plaintiffs claims that total damages were
less than $5 million and each class member was entitled to less than $75,000).
74 See, e.g., Natale v. Pfizer, Inc., 379 F. Supp. 2d 161 (D. Mass. 2005).
75 28 U.S.C.A. 1332(d)(2) (West 2006).
76 Id. 1332(d)(2). See also Harvey v. Blockbuster, Inc., 384 F. Supp. 2d 749 (D. N.J. 2005).
FDCC Quarterly/Winter 2007
150
77 Id. 1332(a)(4).
78 Id. 1332(d)(3).
79 Id. 1332(d)(3)(A)-(F).
A. Mandatory Remand
Under the home state exception to CAFA, the district court must decline to exercise
jurisdiction if two-thirds or more of the plaintiff class members are citizens of the state in
which the action originally was filed, and the primary defendants are citizens of the state in
which the action originally was filed.77
B. Discretionary Remand
If between one-third and two-thirds of the plaintiff class members are citizens of the
state in which the action originally was filed and the primary defendants are citizens of
the state in which the action originally was filed, the district court may decline to exercise
jurisdiction.78 In deciding a remand motion under the discretionary remand provision of the
home state exception, the district court must consider the following factors:
(a) whether the claims asserted involve matters of national or interstate interest;
(b) whether the claims asserted will be governed by the laws of the state in
which the action originally was filed;
(c) whether the class action has been pleaded so as to avoid federal jurisdiction;
(d) whether the action was brought in a state having a distinct nexus with the
class members, the alleged harm, or the defendants;
(e) whether plaintiff class members from one state substantially outnumber those
of another state, and the citizenship of class members is widely dispersed
among the states; and
(f ) whether similar class actions have been filed within a three-year period
preceding the commencement of the action.79
Within this analysis, it is significant that the terms primary defendants and significant
relief are undefined. Therefore, in cases involving multiple defendants, it can reasonably
be expected that there will be disagreement concerning which defendants are the primary
Class Action Fairness Act – Jurisdiction and Removal
151
80 See Schwartz v. Comcast Corp., No. 05-2340, 2006 WL 487915 (E.D. Pa. Feb. 28, 2006). After concluding
that the burden did not shift to the plaintiff, the court considered the home state exception. Ultimately, it
did not rule on the home state exception, the local controversy exception or the interest of justice exception
because it found that less than one-third of the putative class members were citizens of Pennsylvania. Id.
81 449 F.3d 1159 (11th Cir. 2006).
82 See also Schwartz, 2006 WL 487915 (explaining the local controversy exception, as well as the interest
of justice exception, but declining to rule on these exceptions, finding instead that less than one-third
of the putative class members were citizens of Pennsylvania); Robinson v. Cheetah Transp., No. Civ. A.
06-0005, 2006 WL 468820 (W.D. La. Feb. 27, 2006) (denying plaintiffs motion to remand under the local
controversy exception after considering CAFAs legislative history and concluding that the plaintiffs
bore the burden of establishing the exception); In re FedEx Ground Package Sys., No. 3:05-MD-527 RM,
(MDL-1700), 2006 U.S. Dist. LEXIS 1219 (N.D. Ind. Jan. 13, 2006) (holding that a plaintiff who asserts
the local controversy exception bears the burden of establishing the exception and rejecting the plaintiffs
motion to remand).
defendants, and from which defendants significant relief is being sought. As evidenced
by the split of authority on various issues to date, it is likely that these terms will be variously
defined across the country.80
VI.
Local Controversy Exception
CAFA also includes what has been termed a local controversy exception to the
rules expanding the district courts jurisdiction over class actions. Located at 28 U.S.C.
1332(d)(4), the district court must decline to exercise jurisdiction if: (a) greater than twothirds
of the plaintiff class members are citizens of the state in which the action was filed;
(b) the plaintiffs principal injuries occurred in the state in which the class action originally
was filed; (c) no similar class actions have been filed against any of the defendants within
the three-year period prior to the commencement of the action; and (d) there is at least one
defendant from whom the plaintiff class seeks significant relief whose alleged conduct forms
a significant basis for the claims in the action, and who is a citizen of the state in which the
action originally was filed.
In Evans v. Walter Industries, Inc.,81 the court determined that the local controversy
exception was to be narrowly construed, with all doubts resolved in favor of federal jurisdiction.
It reversed the district courts decision to remand the case to the Alabama state court. In
doing so, it decided that the plaintiffs bore the burden of establishing the local controversy
exception. Addressing the significant defendant test as well,82 the court observed that any
determination affecting the burden of proof on the local controversy exception would not
change the general burden of proof as to remand under CAFA.
FDCC Quarterly/Winter 2007
152
83 1332(d)(11)(B)(ii).
84 443 F.3d 676 (9th Cir. 2006).
85 1332(d)(11)(B)(ii).
VI.
Mass Actions
CAFA also applies to mass actions, which are defined by 28 U.S.C. 1332(d)(11)(B)
to be civil actions in which monetary relief claims of 100 or more persons are proposed to
be tried jointly on the ground that the plaintiffs claims involve common questions of law
or fact. While they do not technically qualify as class actions, these cases involve more
than 100 plaintiffs who are joined in the same action, with each plaintiff seeking more than
$75,000 in relief (federal courts will have no jurisdiction over any plaintiff who does not
meet the jurisdictional amount). A mass action would be removable as a class action under
CAFA, with some exceptions. More particularly, there is no jurisdiction where a mass action
would not be removable if the claims arise from an event or occurrence in the state in which
the action was filed and the alleged injuries occurred either in that state or a contiguous state;
the claims are joined upon motion of the defendant; the claims are asserted on behalf of the
general public pursuant to a state statute; or the claims are consolidated solely for pretrial
purposes.83
A mass action removed under the Act may not be transferred to another federal court
under the multi-district litigation statute unless a majority of the plaintiffs request such
transfer. In Abrego Abrego v. Dow Chemical Co.,84 which is the only decision to address
the mass action provisions of CAFA to date, the court found that Dow Chemical failed to
meet its burden of proving that the action was a mass action under the provisions of section
1332(d)(ii). Under these provisions, federal jurisdiction exists only over those plaintiffs
whose mass action claims satisfy the jurisdictional amount in controversy requirements
specified by section 1332(a).85
VI.
Conclusion
The changes to diversity jurisdiction removal under CAFA will continue to evolve as
cases are appealed to the federal circuits in the effort to resolve the affect of CAFA on class
actions. Until then, the most effective weapon for counsel seeking to defend these actions is
the legislative history discussed throughout this article. Additionally, if some of these issues
cannot be resolved in that venue, industry may return to Congress for clarification of those
CAFA provisions which appear at this point to be undefined or without some interpretive
limits.

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