state in which the action was originally filed. The second exception, commonly known as the “home controversy” excep- tion (28 U.S.C. § 1332(d)(4)(B)), requires two-thirds or more of the mem- bers of all proposed plaintiff classes (in the aggregate) and the primary defen- dants to be citizens of the same state where the action was originally filed. These exceptions are dependent on
factual issues because they require discov- ering each party’s citizenship. One of the first questions to be litigated in the feder- al appellate courts concerning the two exceptions has been allocation of the burden of establishing the exception. Following the Supreme Court’s decision in Breuer v. Jim’s Concrete Brevard Inc. (2004) 538 U.S. 691, which stated that a party opposing removal is tasked with the burden of establishing exceptions, the Ninth Circuit has concluded that the bur- den falls upon the party seeking to invoke the exception. (Serrano v. 180 Connect Inc., (9th Cir. 2007) 478 F.3d 1018, 1021-22.) Beyond burden allocation, the
Circuit courts have also begun to address the standard-of-proof governing the exceptions. For example, the Fifth Circuit has held that, in establishing whether the statutory exceptions have been met, proof by preponderance of the evidence is the appropriate evidentiary standard. (See e.g., Preston v. Tenet Healthsystems Memorial Medical Center Inc., (5th Cir. 2007) 485 F.3d 804, 813.) The Fifth Circuit has also suggested that limit- ed jurisdictional discovery could be avail- able to ascertain citizenship for purposes of these exceptions.(Ibid.) Plaintiffs can avoid removal by defin-
ing the putative class in a manner that falls under one of these exceptions. For example, class counsel can include forum state citizenship as a prerequisite to class membership. (See Summerhill v. Terminix, Inc. (D. Ark. 2008) 2008 U.S. Dist. LEXIS 91939; Sorrentino v. ASN Roosevelt Ctr., LLC (E.D.N.Y. 2008) 588
F.Supp.2d 350.) In other words, class counsel who wish to ensure that a class action will remain in state court will need to limit their class
definition to essentially just the forum state and sue only forum defendants. It is also important to pay close attention to the language of these exceptions. For example, the “local controversy” excep- tion requires that during the three-year period preceding the filing of the class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons. (28 U.S.C. § 1332(d)(4)(A)(ii).) Thus, the inquiry is whether similar factual alle- gations have been made against the defendant in multiple class actions, regardless of whether the same causes of action were asserted or whether the pur- ported plaintiff classes were the same (or even overlapped in significant respects). (See Jadeja v. Redflex Traffic Systems, Inc. (
N.D.Cal.,2010) 2010 WL 4916413, *3.)
Class size and other preclusions to federal jurisdiction under CAFA
There are other exceptions to
CAFA’s expanded diversity jurisdiction in class actions. For instance, CAFA does not apply if the primary defendants are states, state officials, or certain other gov- ernmental entities. (28 U.S.C. § 1332(d)(5).) Additionally, CAFA does not apply if there are fewer than 100 pro- posed plaintiffs in the class. (Ibid.) This is particularly relevant for class counsel seeking to certify a class action on a much smaller scale. Some courts have held that the bur-
den to show that there are 100 or more class members rests on defendant. Particularly, a dispute exists whether the removing party has the burden to estab- lish jurisdictional requirements and whether the party seeking remand has the burden to prove exceptions. (Hart v. FedEx Ground Package System Inc., (7th Cir. 2006) 457 F.3d 675, 679.) The court in Hart implied that proving a class has an aggregate of more than 100 members is part of CAFA’s jurisdictional require- ments and not one of CAFA’s exceptions, like the home-state or local-controversy provisions. Other appellate courts dis- agree. (Compare Serrano v. 180 Connect,
Inc., supra, 478 F.3d at p. 1020 fn. 3 [“[S]atisfaction of § 1332(d)(5) serves as a prerequisite, rather than as an excep- tion, to jurisdiction under § 1332(d)(2)”] with Frazier v. Pioneer Americas LLC (5th Cir. 2006) 455 F.3d 542, 546 [treating the 100 or more member requirement as an exception]; see also, Cunningham Charter Corp. v. Learjet, Inc. (
S.D.Ill. Aug. 13, 2008) 2008 WL 3823710, at *3 [(stating without much discussion that the remov- ing party has the burden to show 100 or more potential class members].) Thus, it appears that the burden of providing that there are 100 or more class members under 28 U.S.C. § 1332(d)(5)(B) is a jurisdictional element that the defendant (or the party asserting federal jurisdic- tion) must establish.
Conclusion Since its enactment, CAFA has
achieved its primary goal of expanding federal subject matter jurisdiction over employment class actions, thereby mak- ing it easier for defendants to remove class actions to federal court. In light of this steady increase in wage-and-hour liti- gation, the plaintiffs’ bar and defense bar will continue to confront novel CAFA issues in wage-and-hour cases, since the struggle over venue is often a key indica- tor of an employer’s exposure and may ultimately determine whether the class action is certified. Shawn Khorrami is the founding
partner of Khorrami, LLP. His practice focuses on mass torts, class actions, toxic torts, product liability, personal injury, civil rights and labor and employment cases throughout the nation. He can be reached at
skhorrami@kpalawyers.com. Crystal S. Yagoobian is an associate
attorney at Khorrami, LLP in Los Angeles, working in the firm’s class-action practice, spe- cializing in consumer fraud and wage-and- hour litigation. She received her undergradu- ate degree from University of California, Los Angeles and her J.D. from Pepperdine University School of Law.
APRIL 2011 The Advocate Magazine — 31
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