Wednesday, August 28, 2019

FYI: 9th Cir Holds Supporting Evidence Not Required for CAFA Removal

The U.S. Court of Appeals for the Ninth Circuit recently reversed a trial court order remanding a case to state court for lack of jurisdiction under the federal Class Action Fairness Act ("CAFA") because the jurisdictional allegations pled provided a short and plain statement of jurisdiction.


The Court held this was sufficient, even without supporting evidence, to confer jurisdiction.


A copy of the opinion is available at:  Link to Opinion


A plaintiff filed a class action complaint against a defendant in California state court claiming that defendant "had engaged in unlawful business practices related to the advertisement and sale of residential internet services"  Plaintiff filed the case on behalf of himself and all California consumers that paid for defendant's internet services within the last four years.


Defendant removed the putative class action to the federal trial court pursuant to CAFA.  In the notice of removal, defendant, a citizen of Delaware and Georgia, alleged that it met CAFA's jurisdictional requirements "because it was a putative class action with more than 100 class members," and "that the amount in controversy exceeded $5,000,000, exclusive of interest and costs." Defendant also alleged that that minimal diversity existed between the parties because plaintiff and all class members were California Citizens.


Plaintiff moved to remand the case to state court by making a facial challenge to the notice of removal. Specifically, plaintiff argued that defendant had not "adequately plead the existence of minimal diversity" because defendant based the citizenship allegations solely "on information and belief."


The trial court granted plaintiff's motion to remand finding that defendant's citizenship allegations were insufficient to establish minimal diversity because they were based on no more than "sensible guesswork." This appeal followed.


The Ninth Circuit began its analysis by noting that Congress enacted CAFA with the "intent . . . to strongly favor the exercise of federal diversity jurisdiction over class actions with interstate ramifications."  CAFA gives federal trial courts jurisdiction over class actions when, "any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2)(A). In contrast to section 1332(a)'s complete diversity of citizenship requirement, the Ninth Circuit observed that CAFA only requires "minimal diversity."


The issue in this appeal is what the "removing defendant must plead in its notice of removal." 


The removing defendant has the burden to plead minimal diversity by including in the notice of removal "a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a).  Congress borrowed the "short and plain statement" standard from Rule 8(a), signifying to the Ninth Circuit that courts should liberally construe removal allegations similar to other pleadings.  The Ninth Circuit also noted that the removing defendant may plead minimal diversity based on "information and belief," without submitting evidence to support the allegations.


Defendant alleged that "all putative class members were citizens of California."  The Ninth Circuit rejected plaintiff's argument that defendant had to come forth with evidence to demonstrate why it believed its citizenship allegations. 


Instead, the Court held that a removing defendant may base its citizenship allegations "solely on information and belief."  Here, defendant's notice of removal contained the required short and plain statement that the putative class members were all California citizens necessary to confer jurisdiction under CAFA.


The Ninth Circuit also determined that the trial court erred by placing the burden on the removing defendant "to prove its jurisdictional allegations in response to" plaintiff's facial challenge.  Instead, jurisdictional factual allegations at the pleading stage "need not be proven unless challenged." This is especially true, the Ninth Circuit noted, because CAFA contains "no antiremoval presumption." 


The Ninth Circuit found it significant that plaintiff's motion to remand only facially challenged the legal adequacy of the notice of removal, instead of factually challenging the jurisdictional allegations because a facial challenge accepts the removing defendant's allegations as true and then argues that the allegations on their face fail to confer jurisdiction.  As a result, the Appellate Court held it was improper for the trial court to require defendant "to present evidence in support of its allegation of minimal diversity."


Thus, the Ninth Circuit held that defendant's jurisdictional allegations, which provided a short and plain statement of the parties' citizenships based on information and belief, met its burden to plead minimal diversity. 


The Ninth Circuit therefore reversed the trial court's order remanding the case to state court.




Ralph T. Wutscher
Maurice Wutscher LLP
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