Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca11-15-14967/USCOURTS-ca11-15-14967-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 15-14967

Non-argument Calendar

________________________

D.C. Docket No. 0:12-cv-62498-WJZ

LISA HILL,

individually and on behalf of all those 

similarly situated,

 Plaintiff–Appellee,

versus

NATIONAL INSURANCE UNDERWRITERS, INC.,

DIRECT GENERAL INSURANCE AGENCY, INC.,

 Defendants–Appellants.

________________________

Appeal from the United States District Court

for the Southern District of Florida

________________________

(January 14, 2016)

Before WILSON, JORDAN, and JULIE CARNES, Circuit Judges.

JULIE CARNES, Circuit Judge:

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Defendants National Insurance Underwriters, Inc. (“NIU”) and Direct 

General Insurance Agency, Inc. (“Direct General”) appeal the district court’s 

decision to remand this case to a Florida state court based on the “localcontroversy” exception of the Class Action Fairness Act (“CAFA”), Pub. L. No. 

109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.). Plaintiff 

Lisa Hill argues that this Court lacks jurisdiction to consider the appeal, but that 

even if we did, the district court correctly ruled that the local-controversy 

exception applies and therefore properly remanded the case. After careful review 

of the record and the parties’ briefs, we conclude that we have jurisdiction over the 

appeal, and we further hold that the district court failed to apply the correct legal 

standard in evaluating the merits of Plaintiff’s motion to remand. Accordingly, we 

vacate the district court’s order and remand for further proceedings. 

I. Background

A. Factual Background

Prior to filing the present action, class counsel for Plaintiff filed a class 

complaint in Florida state court against Direct General, as well as other “local” 

Florida defendants, claiming that class members had been sold worthless surplus 

automobile insurance and seeking damages. Based on CAFA, the defendants in 

Lemy v. Direct General Finance Co., No. 8:11-cv-2722-T-23AEP (M.D. Fla.), 

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removed the case to the Middle District of Florida and the plaintiffs then moved to 

remand the case to state court, citing the “local-controversy exception” to CAFA. 

The district court (“the Lemy court”) denied the motion to remand, finding that the 

plaintiffs had not shown that the local defendants’ conduct formed a significant 

basis for the action at issue nor that the plaintiffs sought significant relief against 

these defendants—both of which showings are necessary for the exception to 

apply. Ultimately, the Lemy court dismissed with prejudice the complaint, 

concluding that the plaintiffs had failed to state a claim. See Lemy v. Direct Gen.

Fin. Co., 885 F. Supp. 2d 1265 (M.D. Fla. 2012) and 884 F. Supp. 2d 1236 (M.D.

Fla. 2012). We affirmed both decisions. Lemy v. Direct Gen. Fin. Co., 559 F. 

App’x 796 (11th Cir. 2014). 

On November 16, 2012, a few months after the Lemy court had denied the 

plaintiffs’ motion for reconsideration, class counsel filed a second putative class 

action, this time in the Seventeenth Judicial Circuit in Broward County, Florida, 

and named as defendants two of the defendants in Lemy: Direct General and NIU. 

Plaintiff alleges that NIU, a Florida corporation, markets insurance products to 

insurance companies and agencies in Florida, which then sell the policies to the 

public. One such insurance agency is Direct General, a Tennessee corporation that 

sells automobile insurance policies to Florida citizens. 

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Plaintiff alleges that she purchased two insurance products from Direct 

General: (1) a personal injury protection and property damage (“PIP/PD”) 

automobile insurance policy and (2) Accident Medical Protection (“AMP”), an 

ancillary insurance product underwritten by Certain Underwriters at Lloyd’s, 

London. The State of Florida requires that automobile owners purchase “minimum 

financial responsibility” PIP/PD insurance in order to legally operate their vehicles 

on Florida roads. According to Plaintiff, NIU and Direct General worked together 

to use a customer’s purchase of this required “minimum financial responsibility”

PIP/PD insurance as an opportunity to sell the customer ancillary insurance 

products, such as AMP. NIU was the producing agent for the sale of the AMP 

policies, but Direct General, as the insurance agent, sold the policies through its 

offices. Direct General was therefore a fiduciary for its insureds. 

Plaintiff does not argue that there was anything unlawful or defective about 

the insurance products themselves; instead she focuses on “the manner in which 

these products were sold.” Specifically, Direct General allegedly accepted $25 

policy fees, in addition to commissions, for the sale of PIP/PD insurance policies. 

Moreover, Direct General accepted commissions that were well in excess of 

Lloyd’s standard rates and terms for the AMP policies it sold. And each year an 

AMP policy was renewed, the insured was charged a $25 policy fee. The $25 

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policy fees on both these insurance products were charged in breach of the 

contracts between Direct General and its customers. 

Plaintiff accuses NIU of “aid[ing] and abett[ing] Direct General in the 

latter’s violation of its insureds’ loyalty and trust, and/or . . . charg[ing] an 

unlawful policy fee for the AMP policy in violation of Florida law.” Elsewhere in 

her complaint, Plaintiff alleges that NIU accepted as compensation a $25 policy fee 

for each ancillary insurance product, which she believes NIU was not permitted to 

charge or collect under Florida law. At bottom, Plaintiff accuses Defendants of 

wrongfully charging policy fees and accepting commissions for both PIP/PD and 

AMP insurance policies. 

Based on the above allegations, Plaintiff sues Direct General for breach of 

contract (Count II) and breach of fiduciary duty (Count III). She seeks a judgment 

declaring that NIU cannot charge or accept the AMP fee and must return all such 

fees charged or accepted (Count I). Other claims against NIU include breach of 

contract (Count V), breach of the implied covenant of good faith and fair dealing 

(Count VI), and breach of fiduciary duty (Count VII)—all premised on vicarious 

liability—as well as a claim of aiding and abetting Direct General’s breach of 

fiduciary duty (Count VIII). 

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Plaintiff purports to represent two classes, which are defined as follows in 

her complaint:

a. The PIP/PD Class. All Florida citizens that purchased 

PIP/PD insurance policies through Direct General in the 

five-year period before the complaint was filed (“the 

Class Period”) under which Direct General charged a 

yearly $25 “policy fee.”

b. The Ancillary Product Class. All Florida citizens that 

purchased an Ancillary Insurance Product underwritten 

by Certain Underwriters at Lloyd’s, London from Direct 

General during the Class Period who have not made a 

claim under any of the ancillary products. 

B. Procedural Background

On December 17, 2012, Direct General timely removed this action to federal 

court pursuant to CAFA. Under CAFA, federal courts have original jurisdiction 

over class actions in which there is minimal diversity—which is satisfied if at least 

one plaintiff and one defendant are from different states—and the amount in 

controversy exceeds $5 million. 28 U.S.C. § 1332(d)(2). Nevertheless, if a case is 

truly local in nature, as defined by CAFA, “[a] district court shall decline to 

exercise jurisdiction.” § 1332(d)(4). As discussed in more detail in Part III, for the 

“local-controversy” exception to apply: (1) at least one defendant must be a citizen 

of the forum state, (2) the plaintiff class must seek “significant relief” from that 

defendant, (3) the local defendant’s conduct must form a “significant basis” for the 

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claims asserted, and (4) no other class action based on the same or similar factual 

allegations can have been filed against any defendant in the past three years. See

§ 1332(d)(4)(A)(i)(II), (d)(4)(A)(ii). 

After Direct General removed this action to federal court, Plaintiff moved to 

remand under the local-controversy exception. In her response to NIU’s motion 

for an extension of time to respond to the motion to remand, Plaintiff observed that 

NIU was not even entitled to respond because it had not joined the notice of 

removal. Nonetheless, Plaintiff did not oppose an extension nor did she move to 

remand on this ground.

A couple of weeks later, the district court issued an order remanding the case 

to state court. But instead of granting Plaintiff’s motion, or even mentioning the

ground that Plaintiff had asserted in her motion (the local-controversy exception),

the court characterized its order as being issued sua sponte and based the remand 

on another reason altogether. Specifically, the court cited the general requirement 

that all defendants must consent to removal, see Russell Corp. v. Am. Home Assur. 

Co., 264 F.3d 1040, 1044 (11th Cir. 2001), and remanded the action to state court 

because NIU had not joined in the removal. 

The next day, Direct General filed an emergency motion for reconsideration, 

explaining to the court that CAFA permits “remov[al] by any defendant without 

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the consent of all defendants.” 28 U.S.C. § 1453(b); see also Lowery v. Ala. Power 

Co., 483 F.3d 1184, 1196 (11th Cir. 2007) (finding that “one defendant may 

remove the entire action, including claims against all defendants”). The day after 

Direct General’s emergency motion, the district court vacated its sua sponte

remand order, leaving pending Plaintiff’s motion to remand based on the localcontroversy exception. 

In that motion, Plaintiff argued that she met the “significant relief” prong of 

the local-controversy exception because, according to her calculations, over 65% 

of the class members had claims against NIU (the Florida defendant) accounting 

for 81% of the total damages in the case. NIU’s conduct also formed a “significant 

basis” of her claims, as also required by the exception, because NIU was the butfor cause of Direct General’s offer of ancillary insurance products. 

Defendants submitted evidence rebutting Plaintiff’s assertion that NIU was a

significant local defendant. Plaintiff submitted documents relating to an ancillary 

insurance product not at issue in this action (vehicle protection insurance), 

including the corresponding disclosure forms that apparently omitted the fee

referenced in the class complaint. 

Finally, Defendants asserted that the local-controversy exception was 

inapplicable because a previous class action, Lemy v. Direct General Finance Co., 

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No. 8:11-cv-2722-T-23AEP (M.D. Fla.), relied on the same or similar facts as the 

present case and had been filed within the last three years. See 28 U.S.C. 

§ 1332(d)(4)(A)(ii). 

On May 22, 2015, the district court granted Plaintiff’s motion to remand, 

finding that the local-controversy exception applied. Defendants appeal.

II. Appellate Jurisdiction

As a threshold matter, Plaintiff argues that this Court lacks jurisdiction to 

hear this appeal because, once the district court sua sponte remanded the case 

shortly after its removal, the district court lacked jurisdiction to reconsider its 

decision or to later enter the second remand order that is the subject of this appeal. 

Were that the case, we would be required to dismiss this appeal. But we find 

Plaintiff’s argument unpersuasive and conclude that we have jurisdiction to 

consider this appeal. 

We review jurisdictional issues de novo. United States v. Lopez, 562 F.3d 

1309, 1311 (11th Cir. 2009). Ordinarily, an order remanding a case to state court 

“is not reviewable on appeal or otherwise.” 28 U.S.C. § 1447(d). Further, this 

language has been read to mean that district courts are barred from even 

reconsidering such orders once they are issued. See Bender v. Mazda Motor Corp., 

657 F.3d 1200, 1203–04 (11th Cir. 2011) (holding that “even if the district court 

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erroneously remanded the case to state court, § 1447(d) prohibits the district court 

from reconsidering its remand order because the district court no longer had 

jurisdiction over the case”).

But not all remand orders are immune from review. The Supreme Court has 

held that § 1447(d)’s broad language must be construed together with § 1447(c). 

See Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345–46 (1976), 

abrogated on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 

714–15 (1996). Section 1447(c) provides:

A motion to remand the case on the basis of any defect other than lack 

of subject matter jurisdiction must be made within 30 days after the 

filing of the notice of removal . . . . If at any time before final 

judgment it appears that the district court lacks subject matter 

jurisdiction, the case shall be remanded.

Reading these subsections together, we have found that “§ 1447(d) is tightly 

circumscribed to cover only remand orders within the scope of 28 U.S.C. 

§ 1447(c).” Corp. Mgmt. Advisors, Inc. v. Artjen Complexus, Inc., 561 F.3d 1294, 

1296 (11th Cir. 2009) (internal quotation marks omitted). Thus, a remand order is 

unreviewable only if it is “openly based” on (1) a lack of subject matter 

jurisdiction or (2) a timely motion to remand the case on the basis of a defect in 

removal procedure. See In re Bethesda Mem’l Hosp., Inc., 123 F.3d 1407, 1409 

(11th Cir. 1997). If the district court’s first remand order had been based on either 

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of these grounds, the court lacked authority to reconsider it. On the other hand, if 

the remand order did not invoke a ground authorized by § 1447(c), it was 

reviewable. See id. 

Plaintiff contends that the order can be read to fall into either of the above 

categories. First, she argues that the district court purported to rule on the ground 

of subject matter jurisdiction because its order included a few passing comments 

reflecting the court’s criticism of those who have acted to expand federal 

jurisdiction under Article III beyond the bounds that the court believed to have 

been intended by the Founding Fathers. Plaintiff concedes that, in fact, the district 

court could not have properly dismissed or remanded based on lack of subject 

matter jurisdiction because a defendant’s failure to join in a removal petition is, at 

best, only a procedural defect. See id. at 1410. Nonetheless, Plaintiff notes, § 

1447(d) bars review of a remand purporting to be based on jurisdictional grounds 

“even though the district court may have ‘employed erroneous principles in 

concluding that it was without jurisdiction.’” Bregman v. Alderman, 955 F.2d 660, 

665 (11th Cir. 1992) (quoting Gravitt v. Sw. Bell Tel. Co., 430 U.S. 723, 723 

(1977)). 

We are unpersuaded by Plaintiff’s argument that the district court premised 

its original remand order on a lack of subject matter jurisdiction. The court made it 

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clear that it was remanding on what it perceived to be a violation of a procedural

requirement set out in § 1446(a),

1 which requires all defendants to join in a notice 

of removal. Further, when Defendants filed their motion to vacate the remand 

order, they specified only two errors: (1) the court’s misapprehension of a duty by 

all defendants joined in a class action to consent to removal and (2) the inability of 

a court to remand sua sponte even when it discovers an actual procedural defect. 

Only a day later, the district court entered an order summarily vacating its remand 

order. Nothing in the proceedings reasonably suggests that the court based its 

initial remand order on any notion that it lacked jurisdiction over the case. While 

the court commented on the limited scope of federal jurisdiction, we read that 

comment as a reiteration of the requirement that removal statutes be construed 

narrowly. See, e.g., Russell Corp., 264 F.3d at 1049 (“Like all rules governing 

removal, this unanimity requirement must be strictly interpreted and enforced 

because of the significant federalism concerns arising in the context of federal 

 1 There was a misnomer in the court’s statutory reference to § 1446(a). It is § 1446(b)(2)(A) 

that requires all defendants who have been properly joined and served to join in or consent to the 

removal of an action. But the provision, by its terms, applies only to a civil action that “is 

removed solely under section 1441(a).” Of course, as Defendants pointed out in their motion to 

vacate the court’s original remand order, per § 1453(b), there is no requirement that all 

defendants consent to removal of a class action. 

In turn, § 1441(a) is the section that permits removal of cases to federal court if the latter has 

original jurisdiction. Section 1441(b) and (c) specifically reference removals based on the 

familiar grounds for removal: diversity of citizenship and actions involving a federal question. 

But § 1453 governs actions removed under CAFA and, as noted above, § 1453(b) states that

unanimous consent is not required in the removal of a class action.

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removal jurisdiction.”). Indeed, in its remand order, the court concluded that it 

“cannot exercise its jurisdiction” over the case, indicating that the court recognized 

it had subject matter jurisdiction but concluded that a procedural defect compelled 

remand. 

Because remand was not based on a lack of subject matter jurisdiction, we 

turn to the second category of unreviewable orders under § 1447(c): those openly 

based on a timely motion to remand for a procedural defect. See In re Bethesda 

Mem’l Hosp., 123 F.3d at 1409. Plaintiff argues that the remand order qualifies 

under this exception because Plaintiff had filed a motion to remand before the 

court remanded on a procedural ground. There are two problems with Plaintiff’s 

argument: (1) she never filed a motion to remand for a procedural defect and (2) 

the district court did not base its remand order on any such motion. As to the 

second problem, the court itself characterized its order identifying a procedural 

defect as being a sua sponte order. We have made clear that “§ 1447(c) does not 

authorize any sua sponte remand order not based on subject matter jurisdiction.” 

Whole Health Chiropractic & Wellness, Inc. v. Humana Medical Plan, Inc., 254 

F.3d 1317, 1319 (11th Cir. 2001) (emphasis in original). 

As to the other problem with Plaintiff’s argument, she never filed a motion 

to remand based on a procedural defect. To the contrary, Plaintiff’s motion to 

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remand relied entirely on the applicability of the “local-controversy” exception.2

That being so, the motion was not authorized by § 1447(c) and, because it was not 

authorized, it is reviewable. Again, § 1447(c) provides that an order on procedural 

grounds must be based on “[a] motion to remand the case on the basis of any 

defect other than lack of subject matter jurisdiction.” 28 U.S.C. § 1447(c); see also

Artjen, 561 F.3d at 1296 (holding that, for review to be barred, the order must be 

based on “a defect in removal other than lack of subject matter jurisdiction that 

was raised by the motion of a party” (quoting Ellenburg v. Spartan Motors 

Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008))); Schexnayder v. Entergy La., 

Inc., 394 F.3d 280, 285 (5th Cir. 2004) (“So long as a procedurally-based motion 

for remand is timely filed, and the order is not affirmatively based on a non-

§ 1447(c) ground, we will not review a district court’s remand order.”). 

We have interpreted the words “any defect” in § 1447(c) as applying only to 

“any ‘defect’ in the removal [process] itself,” not to “any removable ground.” 

Snapper, Inc. v. Redan, 171 F.3d 1249, 1253 (11th Cir. 1999). Thus, because 

remand motions based on alleged defects outside the removal process are not 

covered by § 1447(c), orders granting such motions are not barred from review by 

 2

 It is true that in its response to NIU’s motion for an extension of time to respond to the motion 

to remand, Plaintiff asserted that NIU had “waived its right” to challenge the motion to remand 

because it had not joined in the removal of the action. But that observation hardly constitutes a 

motion to remand based on a procedural defect. 

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§ 1447(d). Id. at 1260. Plaintiff’s motion was grounded in the local-controversy 

exception, which has nothing to do with removal procedure. Indeed, courts have 

held that the local-controversy exception is akin to an abstention doctrine because 

§ 1332(d)(4) “inherently recognizes the district court has subject matter 

jurisdiction by directing the court to ‘decline to exercise’ such jurisdiction when 

certain requirements are met.” Graphic Commc’ns v. CVS Caremark Corp., 636 

F.3d 971, 973 (8th Cir. 2011); see also Gold v. N.Y. Life Ins. Co., 730 F.3d 137, 

142 (2d Cir. 2013); Morrison v. YTB Int’l, Inc., 649 F.3d 533, 536 (7th Cir. 2011). 

In Snapper, we specifically recognized that a motion to remand on abstention 

grounds is not a motion specified in § 1447(c). See 171 F.3d at 1254–59 

(reviewing the historical interpretation of § 1447(c) and holding that Congress’s 

use of the broad term “any defect” “was not meant to bring within [§ 1447(c)’s] 

scope remands in the contexts of forum selection clauses, abstention, or 

supplemental jurisdiction”). That being so, any order on a motion invoking the 

local-controversy exception could not have been an order on a “motion to remand 

based on any procedural defect,” as required by § 1447(c). 

Plaintiff nonetheless insists that our opinion in Velchez v. Carnival Corp., 

331 F.3d 1207 (11th Cir. 2003), forecloses review of the district court’s order. 

Based on that case, she asserts that once a plaintiff moves to remand, a court is 

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allowed to remand for a procedural defect it identifies on its own, even if the 

motion did not raise it. In Velchez, the plaintiff identified a procedural defect in his 

remand motion, but the district court granted the motion on a different procedural 

ground it had identified on its own. Id. at 1209–10. The defendant thus argued 

that the court acted sua sponte outside of § 1447(c). Id.; see also Whole Health, 

254 F.3d at 1319. We rejected that argument because the plaintiff’s motion had, in 

fact, first raised a procedural defect, as § 1447(c) requires. Velchez, 331 F.3d at 

1210. So, even though the court relied on a procedural defect other than the one 

specified in the motion, that order was nevertheless “prompted” by a § 1447(c) 

“procedural defect” motion and was unreviewable. See id.

Velchez is distinguishable from this case because here Plaintiff’s motion to 

remand never identified a procedural defect within the meaning of § 1447(c). And 

what it did raise—the local-controversy exception—does not fit within the purview 

of § 1447(c)—meaning that any ruling based on the motion is reviewable. In 

short, the district court remanded based on a procedural defect that it raised sua 

sponte, and the motion for remand filed by Plaintiff did not raise a ground covered 

by §1447(c). Either fact was sufficient to permit review of the first remand order, 

meaning that the district court possessed the power to vacate its order. As a result, 

the court had jurisdiction when it entered the second remand order based on the 

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local-controversy exception, from which order Defendants now appeal. For the 

above reasons, we reject Plaintiff’s argument that we lack jurisdiction over this 

appeal.

III. Local-Controversy Exception

A. Standard of Review and Statutory Backdrop 

We have jurisdiction to review an order granting or denying a motion to 

remand a class action. 28 U.S.C. § 1453(c)(1). We review a district court’s 

decision to remand de novo. Evans v. Walter Indus., Inc., 449 F.3d 1159, 1161 

(11th Cir. 2006). Further, although “CAFA does not change the traditional rule 

that the party seeking to remove the case to federal court bears the burden of 

establishing federal jurisdiction,” id. at 1164, its “language favors federal 

jurisdiction over class actions and CAFA’s legislative history suggests that 

Congress intended the local controversy exception to be a narrow one, with all 

doubts resolved ‘in favor of exercising jurisdiction over the case.’” Id. at 1163 

(quoting S. Rep. No. 109-14, at 42 (2005), as reprinted in 2005 U.S.C.C.A.N. 3, 

40). Finally, as the party seeking remand, Plaintiff bears the burden of proving that 

the local-controversy exception applies. Id. at 1164–65.

The parties agree that this case falls within CAFA’s expanded federal 

jurisdiction for class actions. But they disagree over whether this case fits within

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CAFA’s local-controversy exception, which requires courts to decline to exercise

jurisdiction in cases that are truly local in nature. The local-controversy exception 

provides:

(4) A district court shall decline to exercise jurisdiction under 

paragraph (2)–

(A)(i) over a class action in which–

(I) greater than two-thirds of the members of all proposed 

plaintiff classes in the aggregate are citizens of the State in 

which the action was originally filed;

(II) at least 1 defendant is a defendant–

(aa) from whom significant relief is sought by members 

of the plaintiff class;

(bb) whose alleged conduct forms a significant basis for 

the claims asserted by the proposed plaintiff class; and 

(cc) who is a citizen of the State in which the action was 

originally filed; and

(III) principal injuries resulting from the alleged conduct or any 

related conduct of each defendant were incurred in the State in 

which the action was originally filed; and

(ii) during the 3-year period preceding the filing of that 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).

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All of the above requirements must be met for the exception to apply, and it 

is the plaintiff’s burden to meet them. The parties disagree over whether (1) local 

defendant NIU’s conduct forms a “significant basis” for Plaintiff’s claims, (2) 

whether Plaintiff seeks “significant relief” from NIU, and (3) whether the Lemy

action, which was filed less than three years prior to this action, was based on the 

“same or similar factual allegations against any of the defendants.” 

§ 1332(d)(4)(A)(i)(II)(aa)–(bb), (d)(4)(A)(ii).

We affirm the district court’s decision as to the latter two issues—the 

“significant relief” and “similar factual allegations” prongs. We, however, reverse 

the district court’s determination that NIU’s conduct formed a significant basis for 

the class’s claims, and we remand for the court to consider that question anew, 

applying the applicable legal standard and setting out the reasoning that supports 

its conclusion. 

B. “Significant Basis” Prong of Local-Controversy Exception 

As noted, Defendants contend that although it was Plaintiff’s burden to 

establish that local defendant NIU met the “significant basis” prong of the localcontroversy exception, the district court did not hold Plaintiff to that burden. 

Rather, Defendants argue, the court credited bare assertions by Plaintiff over actual 

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evidence presented by Defendants, and neglected to explain why it did so. We find 

merit in Defendants’ observation. 

The central conduct for which NIU stood accused in the complaint was its 

acceptance of a $25 policy fee for ancillary insurance products that it provided to 

Direct General, which then marketed those products to customers who sought to 

purchase the minimum level of PIP/PD automobile insurance required by Florida 

law.3

 Defendants, however, pointed out to the district court that Plaintiff’s own 

summary exhibit attached to her complaint contradicted the position she took 

during the remand proceedings. According to Defendants, this exhibit showed that 

Plaintiff had only been charged a single $25 policy fee for the PIP/PD insurance, 

and no fee for the ancillary AMP policy designed by NIU. Defendants further 

submitted their own evidence, in the form of declarations by corporate employees, 

which they characterize as showing that Direct General had not charged a policy 

fee for the AMP insurance at issue, nor did it remit any portion of the PIP/PD 

policy fee to NIU. Defendants therefore argue that their evidence stands 

unrebutted. 

 3 Oddly, although Plaintiff alleges that NIU accepted a $25 fee for each ancillary product sold, 

the complaint’s definition of its Ancillary Product Class contains no indication that members of 

the class must have paid a $25 fee for the product. This omission stands in sharp contrast to the 

definition of the PIP/PD class, which limits the class to only those customers who paid a $25 

policy fee for that policy.

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The district court’s order, however, never acknowledged the existence of 

this evidence. It is true that Plaintiff attempted to rebut this evidence in her reply 

brief to Defendants’ opposition to the motion to remand, when she proffered an 

exhibit that purportedly showed that NIU had received a policy fee. But as 

Defendants pointed out, the exhibit was for a different ancillary product at issue in 

the Lemy action and was not bought by Plaintiff. Whether or not Plaintiff’s 

exhibit could fairly be interpreted as rebutting Defendants’ evidence, the district 

court’s order neither referenced nor attempted to resolve any evidentiary dispute. 

In addition, although the district court recited the correct legal standard at 

the beginning of its order, which standard places the burden on the plaintiff to 

establish the applicability of the local-controversy exception, it is not clear that the

court actually applied that standard here. In addressing the “significant basis” 

prong of the exception, the district court stated that it was “not persuaded that 

NIU’s involvement is insignificant here, based on the allegations set forth by 

Plaintiff.” (emphasis added) But under Evans, it was Plaintiff’s burden to prove 

NIU’s “significance,” not Defendants’ burden to prove that NIU’s conduct was 

insignificant. 

For the above reasons, we remand this case to the district court to determine 

whether Plaintiff has met her burden to prove the “substantial basis” element. We 

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note that we are not requiring the court to hold an evidentiary hearing. Instead, the 

court should proceed as courts typically do when resolving a motion to dismiss for 

lack of subject matter jurisdiction under Rule 12(b)(1), or a motion to remand for 

lack of subject matter jurisdiction. See, e.g., Morrison v. Amway Corp., 323 F.3d 

920, 924–25 (11th Cir. 2003); Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 

755, 772–74 (11th Cir. 2010). But the court should either make specific findings 

of fact or provide an explanation why Defendants’ evidence on this point is not 

persuasive, mindful that Plaintiff bears the burden of proof. 

IV. Conclusion

For the above reasons, we vacate the district court’s remand order and 

remand the case for further proceedings consistent with this opinion. 

VACATED and REMANDED.

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