United States Court of Appeals

for the Fifth Circuit ____________

No. 22-30553

____________

State of Louisiana, By and Through its Division of Administration; 

East Baton Rouge Law Enforcement District; 

Claiborne Parish Law Enforcement District; Rapides 

Parish Law Enforcement District; East Feliciana 

Parish Law Enforcement District; West Feliciana 

Parish Law Enforcement District; Grant Parish Law 

Enforcement District; Acadia Parish Law Enforcement 

District; Tangipahoa Parish Law Enforcement 

District; Franklin Parish Law Enforcement District; 

Ascension Parish Law Enforcement District; Sid J. 

Gautreaux, III, in his official capacity as Sheriff of East Baton Rouge 

Parish; Samuel A. Dowies, in his official capacity as Sheriff of Claiborne 

Parish; Mark Wood, in his official capacity as Sheriff of Rapides Parish; 

Jeff Travis, in his official capacity as Sheriff of East Feliciana Parish; 

Brian Spillman, in his official capacity as Sheriff of West Feliciana 

Parish; Steven McCain, in his official capacity as Sheriff of Grant Parish; 

K. P. Gibson, in his official capacity as Sheriff of Acadia Parish; Daniel 

Edwards, in his official capacity as Sheriff of Tangipahoa Parish; Kevin 

Cobb, in his official capacity as Sheriff of Franklin Parish; Bobby Webre, 

in his official capacity as Sheriff of Ascension Parish, 

Plaintiffs—Appellees, 

versus

i3 Verticals Incorporated; i3 Verticals, L.L.C.; i3-

Software & Services, L.L.C.; 1120 South Pointe 

Properties, L.L.C., formerly known as Software and Services 

of Louisiana, L.L.C.; Gregory Teeters; Scott 

Carrington, 

United States Court of Appeals

Fifth Circuit

FILED

September 1, 2023

Lyle W. Cayce

Clerk

Case: 22-30553 Document: 00516882126 Page: 1 Date Filed: 09/01/2023
2

Defendants—Appellants.

______________________________

Appeal from the United States District Court 

for the Middle District of Louisiana

USDC No. 3:21-CV-572

______________________________

Before Elrod, Ho, and Oldham, Circuit Judges.

James C. Ho, Circuit Judge:

The Class Action Fairness Act excludes federal jurisdiction over class 

actions with “less than 100” plaintiff class members. See 28 U.S.C. 

§ 1332(d)(5)(B). In this class action brought by Louisiana sheriffs and law 

enforcement districts, we hold that the law enforcement districts are separate 

entities from the sheriffs, and that together, they bring the total number of 

Plaintiffs over the hundred-plaintiff threshold.

We nevertheless conclude that this class action does not belong in 

federal court. That’s because the Act also establishes a local controversy 

exception to federal jurisdiction. 28 U.S.C. § 1332(d)(4). This exception 

requires at least one in-state defendant “whose alleged conduct forms a 

significant basis for the claims asserted” and “from whom significant relief 

is sought.” Id. § 1332(d)(4)(A)(i)(II).

Plaintiffs allege harm from unlawful conduct spanning from 2015 to 

2020. Defendants include an in-state business allegedly responsible for all of 

Plaintiffs’ harms until 2018, when it was acquired by an out-of-state business. 

We must decide whether the in-state Defendants’ conduct forms a 

“significant basis” for Plaintiffs’ claims, and whether Plaintiffs are seeking 

“significant relief” from the in-state Defendants. We answer yes to both 

questions and therefore affirm the district court in remanding this case to 

state court under the local controversy exception.

Case: 22-30553 Document: 00516882126 Page: 2 Date Filed: 09/01/2023
No. 22-30553

3

I.

This is a class action brought by Louisiana sheriffs and Louisiana law 

enforcement districts against purveyors of software. The sheriffs and law 

enforcement districts allege that the software purveyors sold them defective 

software and then failed to administer the software properly. This failure to 

service the software properly took place continuously over a period from 

2015 to 2020. 

Crucially for this appeal, Defendants include both in-state and out-ofstate software purveyors. From 2015 to late 2018, only in-state Defendants 

were responsible for the alleged wrongdoing—South Pointe, a Louisiana 

company, and its owner, Gregory Teeters, a Louisiana individual. In late 

2018, out-of-state company i3-Software and Services acquired South 

Pointe’s software business. As a result, i3-Software and Services—together 

with its alter egos, out-of-state entities i3 Verticals, LLC and i3 Verticals, 

Inc., and its Louisiana owner, Scott Carrington—bears responsibility for the 

alleged conduct after 2018. 

Plaintiffs originally sued in Louisiana state court. But Defendants 

removed to federal district court. Plaintiffs then sought remand to Louisiana 

state court, arguing that the local controversy exception to the Class Action 

Fairness Act applied. The magistrate issued a report that recommended 

remand under the local controversy exception. The district court adopted 

the magistrate’s report. Defendants now appeal the district court’s remand 

to state court.

II.

To be heard in federal court, a class action must have at least a 

hundred plaintiff class members. That’s because the Class Action Fairness 

Act excludes federal subject-matter jurisdiction over a class action where 

“the number of members of all proposed plaintiff classes in the aggregate is 

Case: 22-30553 Document: 00516882126 Page: 3 Date Filed: 09/01/2023
No. 22-30553

4 

less than 100.” 28 U.S.C. § 1332(d)(5)(B). See Mississippi ex rel. Hood v. AU 

Optronics Corp., 571 U.S. 161, 169 (2014) (“CAFA provides that in order for 

a class action to be removable, ‘the number of members of all proposed 

plaintiff classes’ must be 100 or greater.”). 

Plaintiffs argue that this class action is not removable to federal court 

because it has fewer than a hundred class members. This argument goes to 

subject-matter jurisdiction, so we are duty-bound to consider it, even though

Plaintiffs raise it for the first time on appeal. See Capron v. Van Noorden, 6 

U.S. 126, 126–27 (1804). 

As Plaintiffs explain, you can reach the hundred-person jurisdictional 

threshold only by adding the sixty-four Louisiana law enforcement districts 

to the sixty-four Louisiana sheriffs. And Plaintiffs urge that the law 

enforcement districts are not separate entities capable of suit. Instead, 

Plaintiffs claim, each law enforcement district is one with its sheriff. Take 

away the law enforcement districts as separate juridical persons, and you’re 

left with the sixty-four sheriffs—far fewer than the hundred plaintiffs 

required for federal jurisdiction.

State law determines whether a local government entity, such as a law 

enforcement district, is a person capable of suit. Under the Federal Rules, an 

entity’s “[c]apacity to sue or be sued is determined . . . by the law of the state 

where the court is located.” Fed. R. Civ. P. 17(b)(3). See Edmiston v. 

Louisiana Small Business Development Center, 931 F.3d 403, 406 (5th Cir. 

2019) (“[T]he capacity of an entity which is neither an individual nor a 

corporation to be sued in federal court is determined by state law.”); Darby 

v. Pasadena Police Dep’t, 939 F.2d 311, 313 (5th Cir. 1991) (applying Texas 

state law to determine whether a Texas local government entity had the 

capacity to sue or be sued in an appeal from the Southern District of Texas). 

Case: 22-30553 Document: 00516882126 Page: 4 Date Filed: 09/01/2023
No. 22-30553

5

This is an appeal from the Middle District of Louisiana. So Louisiana 

state law governs whether the Louisiana law enforcement districts can sue as 

plaintiffs, distinct from the Louisiana parish sheriffs. 

“Under Louisiana law, a governmental entity is an independent 

juridical entity when ‘the organic law grants it the legal capacity to function 

independently and not just as the agency or division of another governmental 

entity.’” Edmiston, 931 F.3d at 407 (quoting Roberts v. Sewerage & Water Bd.

of New Orleans, 634 So. 2d 341, 347 (La. 1994)). 

Louisiana law, including the organic law that establishes the law 

enforcement districts, grants the districts the capacity to function 

independently from the sheriffs. So the law enforcement districts are distinct 

juridical persons capable of suit. 

The sheriffs and the law enforcement districts stem from distinct 

sources of organic law. The state constitution directly creates the office of 

parish sheriff. See La. Const. art. 5, § 27 (“In each parish a sheriff shall 

be elected for a term of four years. He shall be the chief law enforcement 

officer in the parish.”). The law enforcement districts, by contrast, are 

creatures of statute. See La. Stat. Ann. § 13:5901 (“There is hereby 

created, in each parish . . . a special district to be known as a law enforcement 

district for the purpose of providing financing to the office of sheriff for that 

parish.”). 

State statute empowers law enforcement districts to “execute . . .

contracts and other instruments.” La. Stat. Ann. § 13:5904(A)(1). And 

it makes those contracts “binding upon the district . . . notwithstanding that 

the term of such contract . . . extends beyond the expiration of the term of the 

current ex officio chief executive officer,” that is, the sheriff. Id.

§ 13:5904(B).

Case: 22-30553 Document: 00516882126 Page: 5 Date Filed: 09/01/2023
No. 22-30553

6

As the state Attorney General has explained, this means that a law 

enforcement district is distinct from the sheriff. The organic statutes “create 

a public entity known as the ‘Law Enforcement District’ for each parish, 

separate from the Sheriff, which has perpetual existence and which is 

therefore capable of entering into obligations exceeding the term of a 

Sheriff.” Louisiana Attorney General Opinion No. 09-0003 (Apr. 30, 2009), 

2009 WL 1416444, at *2 (quoting Louisiana Attorney General Opinion No. 

08-0072 (Apr. 10, 2008)).

A sheriff’s contracts only bind that sheriff, and not his successor. By 

contrast, a law enforcement district’s contracts may bind that district even 

past the current sheriff’s term of office. See id. at *2–3. And that’s why the 

state legislature created separate law enforcement districts: as a workaround 

for the problem of a sheriff’s contracts binding only the current sheriff. Id.

at *2. 

So a law enforcement district can enter contracts that bind the district 

beyond the sheriff’s term. Similarly, a law enforcement district can own 

property, see La. Stat. Ann. § 13:5522(D)—property that the sheriff 

himself does not own, see Cozzo v. Tangipahoa Parish Council, 279 F.3d 273, 

283 (5th Cir. 2002). So it would be surprising if a law enforcement district 

lacked the capacity to sue and be sued as a distinct juridical person. 

Unsurprisingly, Louisiana courts treat law enforcement districts as 

capable of suit. See, e.g., Law Enforcement District of Jefferson Parish v. Mapp 

Construction, LLC, 296 So. 3d 1260, 1262 (La. Ct. App. 2020) (law 

enforcement district sues contractor for breach); Natchitoches Parish Law 

Enforcement District v. Decimal, Inc., 124 So. 3d 549, 553 (La. Ct. App. 2013)

(affirming sanctions against defendant in suit brought by law enforcement 

district).

Case: 22-30553 Document: 00516882126 Page: 6 Date Filed: 09/01/2023
No. 22-30553

7

By contrast, a sheriff’s office has no status independent from that of 

the sheriff himself. See Edmiston, 931 F.3d at 407 (“Louisiana sheriffs are 

juridical entities that can be sued, but Louisiana sheriff’s offices are not.”). 

Accordingly, when a sheriff’s office is listed as a defendant, Louisiana courts 

either dismiss claims against the sheriff’s office, see Markley v. Town of Elton, 

829 So. 2d 1213, 1214 n.1 (La. Ct. App. 2002), or they substitute the sheriff 

as the correct defendant, see Chandler v. Ouachita Parish Sheriff’s Office, 121 

So. 3d 1216, 1219 n.1 (La. Ct. App. 2013).

Plaintiffs here argue that a law enforcement district, like a sheriff’s 

office, is one with the sheriff. That’s because the sheriff is “ex officio the 

chief executive officer of the district,” which is “coterminous with the 

boundaries of the parish.” La. Stat. Ann. § 13:5901. But the fact that 

the sheriff is the CEO of the law enforcement district does not vitiate the 

district’s separate juridical personhood. Unlike the sheriff’s office, which is 

“simply an office operated by the Sheriff . . . whose authority is derived from 

the state constitution,” Edmiston, 931 F.3d at 407 (quoting Ferguson v. 

Stephens, 623 So. 2d 711, 715 (La. Ct. App. 1993)), the law enforcement 

district is a separate creation of the state legislature. 

The law enforcement district’s distinct organic law, La. Stat. 

Ann. § 13:5901–5912, grants it capacities distinct from those of the sheriff 

himself—including, implicitly, the capacity to sue. This means that the

Louisiana law enforcement districts can be plaintiffs, bringing the number of 

Plaintiffs past the hundred-plaintiff minimum jurisdictional threshold.

Accordingly, we reject Plaintiffs’ contention that we must remand to state 

court for lack of subject-matter jurisdiction under § 1332(d)(5)(B).

III.

Nevertheless, Plaintiffs are right that remand is appropriate under 

CAFA’s local controversy exception to federal jurisdiction. This exception 

Case: 22-30553 Document: 00516882126 Page: 7 Date Filed: 09/01/2023
No. 22-30553

8

requires that federal courts decline to hear certain class actions of a local 

nature. It ensures that a state court will hear a class action that, among other 

requirements, involves largely in-state plaintiffs and at least one in-state 

defendant. See 28 U.S.C. § 1332(d)(4).

CAFA’s local controversy exception, 28 U.S.C. § 1332(d)(4)(A),

reads as follows:

A district court shall decline to exercise jurisdiction . . . over a 

class action in which . . . 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; [and] . . . at 

least 1 defendant is a defendant . . . from whom significant relief 

is sought by members of the plaintiff class; . . . whose alleged 

conduct forms a significant basis for the claims asserted by the 

proposed plaintiff class; and . . . who is a citizen of the State in 

which the action was originally filed.

To put it simply, “the local controversy exception requires a local 

defendant (a) from whom significant relief is sought; and (b) whose alleged 

conduct forms a significant basis for the claims asserted.” Williams v. 

Homeland Ins. Co. of N.Y., 657 F.3d 287, 291–92 (5th Cir. 2011) (citing 28 

U.S.C. § 1332(d)(4)(A)(i)(II)). These are known as the “significant relief” 

and “significant basis” prongs of the local controversy exception. The 

exception also requires, inter alia, a supermajority of in-state plaintiffs, but it 

is undisputed that Plaintiffs have met that requirement. 

When the district court remands a case to state court under the local 

controversy exception, we review the remand de novo. Arbuckle Mountain 

Ranch of Tex., Inc. v. Chesapeake Energy Corp., 810 F.3d 335, 337 (5th Cir. 

2016). Where, as here, the plaintiffs are seeking remand, “[t]he plaintiffs 

bear the burden of establishing that they fall within CAFA’s local controversy 

exception.” Opelousas Gen. Hosp. Auth. v. FairPay Sols., Inc., 655 F.3d 358, 

360 (5th Cir. 2011) (per curiam).

Case: 22-30553 Document: 00516882126 Page: 8 Date Filed: 09/01/2023
No. 22-30553

9

Defendants allege that the district court erred by remanding to state 

court under the local controversy exception. Defendants argue that the 

district court applied a more lenient burden of proof to Plaintiffs’ allegations

than what CAFA allows. Defendants also deny that Plaintiffs have satisfied 

the “significant basis” prong. The in-state Defendants’ conduct, they argue, 

does not form a “significant basis” of the claims. Finally, Defendants deny 

that Plaintiffs satisfied the “significant relief” prong of the local controversy 

exception. Plaintiffs, they argue, do not seek “significant relief” from the instate Defendants. 

We reject Defendants’ arguments against remand to state court. 

A.

Defendants argue that the district court erred by holding Plaintiffs to 

a more lenient burden of proof than CAFA allows. On Defendants’ view, 

circuit precedent requires plaintiffs to prove the applicability of the local 

controversy exception “with reasonable certainty.” Arbuckle, 810 F.3d at 

338. By using a “preponderance of the evidence” standard, the district court

(so the argument goes) flouted precedent.

We reject Defendants’ argument. We hold that a preponderance of 

the evidence suffices to establish the applicability of the local controversy 

exception. 

To be sure, our court’s panel in Arbuckle observed that “[i]f the 

applicability of an exception [to CAFA] is not shown with reasonable 

certainty, federal jurisdiction should be retained.” Id. 

But caselaw prior to Arbuckle stated the standard as “preponderance 

of the evidence.” See, e.g., Hollinger v. Home State Mut. Ins. Co., 654 F.3d 

564, 569–70 (5th Cir. 2011) (“CAFA requires federal courts to decline 

jurisdiction over a proposed class action if . . . the [local controversy] 

Case: 22-30553 Document: 00516882126 Page: 9 Date Filed: 09/01/2023
No. 22-30553

10

exception[] is proven by a preponderance of the evidence.”). And under our 

circuit’s rule of orderliness, Arbuckle was bound by this previous panel

decision. See Gahagan v. USCIS, 911 F.3d 298, 302 (5th Cir. 2018). 

Likewise, our caselaw since Arbuckle has continued to state the 

standard as “preponderance of the evidence.” See, e.g., Stewart v. Entergy 

Corp., 35 F.4th 930, 932 (5th Cir. 2022) (“The party seeking remand bears 

the burden of establishing, by a preponderance of the evidence, that the local 

controversy . . . requirements are met.”).

As we now read Arbuckle, it simply restates the same preponderance 

standard in different language. After all, “the language of an opinion is not 

always to be parsed as though we were dealing with the language of a statute.” 

Brown v. Davenport, 142 S. Ct. 1510, 1528 (2022). We need not take 

“reasonable certainty” to mean something different from “preponderance 

of the evidence.” 

Arbuckle itself equivocates between “reasonable certainty” and 

“preponderance of the evidence.” Compare 810 F.3d at 338 (exception must 

be shown “with reasonable certainty”) with id. at 339 (requirement must be 

proven “by a preponderance of the evidence”). 

And circuit precedent treats the two terms as synonyms in other 

contexts. See Mobil Expl. & Producing U.S., Inc. v. Cajun Constr. Servs., Inc., 

45 F.3d 96, 101–02 (5th Cir. 1995) (“[T]he plaintiff must prove damages with 

reasonable certainty, but this merely means that the plaintiff must prove 

damages by a preponderance of the evidence as in other civil contexts.”)

(footnote omitted). So here too we hold that this circuit’s invocation of 

“reasonable certainty” simply means “preponderance of the evidence” 

when it comes to the burden of proof for the local controversy exception.

Case: 22-30553 Document: 00516882126 Page: 10 Date Filed: 09/01/2023
No. 22-30553

11

B.

For the local controversy exception to apply, an in-state defendant’s 

alleged conduct must “form[] a significant basis for the claims asserted by 

the proposed plaintiff class.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(bb). 

Plaintiffs and Defendants agree that our decision in Opelousas

provides the correct standard for the “significant basis” prong of the local 

controversy exception. Under Opelousas, the plaintiffs must provide 

“information about the conduct of [an in-state defendant] relative to the 

conduct of the other defendants.” 655 F.3d at 361. That is, they must 

“distinguish[]” an in-state defendant’s alleged conduct and “estimate” the 

alleged conduct attributable to an in-state defendant versus the out-of-state 

defendant. Id. at 362. By doing all this “in the allegations of the complaint,” 

the plaintiffs can “establish that [the in-state defendant’s] conduct forms a 

significant basis of [their] claims.” Id.

In their first amended petition, the operative complaint, Plaintiffs 

allege that “Sheriffs unknowingly purchased defective cybersecurity 

hardware and software products . . . . The Products were purchased 

exclusively, or almost exclusively, from [in-state] defendants 1120 South 

Pointe and Gregory R. Teeters.”

The original sale contracts stipulated that in-state Defendants South 

Pointe and Teeters “would provide, for a limited time after the delivery of 

the Products, cybersecurity services in support of the Products.” And, 

“[a]fter the obligation to deliver such cybersecurity services in the 

Products[’] sale contracts expired by their terms, The Sheriffs made new 

agreements with [in-state Defendants] 1120 South Pointe and Gregory R. 

Teeters for the sole purpose of delivering cybersecurity services.”

Only “[i]n 2018 [was] the business of [in-state defendant] 1120 South 

Pointe . . . acquired from [in-state-defendant] Gregory Teeters by [out-ofCase: 22-30553 Document: 00516882126 Page: 11 Date Filed: 09/01/2023
No. 22-30553

12

state] defendants i3-Software & Services, i3-Verticals, Inc., and i3-Verticals, 

LLC.” Following this acquisition, “[out-of-state defendant] i3-Software & 

Services and [in-state defendant] Scott Carrington assumed [in-state 

defendant] 1120 South Pointe’s prior role as the provider of cybersecurity 

services to the Sheriffs.”

Thus, while the petition alleges that “[a]t times between 2015 and 

2020, the Cybersecurity Administrators and their employees engaged in the 

following [unlawful] activities,” all the unlawful conduct prior to the 2018 

acquisition is attributable solely to in-state defendants South Pointe and 

Teeters. And after the 2018 sale, the unlawful conduct is partially 

attributable to in-state Defendant Carrington, who “personally negotiated 

and/or signed” service agreements with Sheriffs and oversaw the company’s 

activities.

1

Moreover, the sheriffs bring their redhibition claim—a claim for the 

sale of a defective product, see La. Civ. Code Ann. art. 2520 et. seq.—

solely against in-state Defendants South Pointe and Teeters. That’s because 

only the in-state Defendants were responsible for the sale of the defective 

products, which occurred prior to the 2018 acquisition.2

As to claims involving deficient cybersecurity services, Plaintiffs 

allege that “[a]ll class members . . . received substantially the same 

cybersecurity services from all Defendants.” The “deficient conduct, 

_____________________

1 Because the dissent believes that the post-acquisition conduct is most important, 

it characterizes this a “dispute . . . predominantly between Louisiana plaintiffs and i3 

Verticals, which is a citizen of Delaware and Tennessee.” Post, at _. This ignores the fact 

that, even after the 2018 acquisition, a Louisiana defendant was at the helm of the out-ofstate business and thus was allegedly responsible for the unlawful conduct as well.

2 In arguing that “South Pointe’s conduct was far from a significant portion of 

plaintiffs’ claims,” post, at _, the dissent glosses over this redhibition claim.

Case: 22-30553 Document: 00516882126 Page: 12 Date Filed: 09/01/2023
No. 22-30553

13

practices, and protocols of Defendants . . . equally impacted and caused 

damage to all class members.”

Plaintiffs, then, easily satisfy our circuit’s standard for the “significant 

basis” prong. From 2015 to 2018, in-state Defendants South Pointe and 

Teeters were solely responsible for the defective cybersecurity practices. 

Only in 2018 did out-of-state Defendants i3-Software & Services, i3

Verticals, Inc., and i3 Verticals, LLC acquire the cybersecurity business and 

became responsible for the unlawful cybersecurity practices. Of the 

continuous unlawful conduct between 2015 to 2020, all conduct prior to the 

2018 acquisition is attributable solely to in-state Defendants—as is the initial 

unlawful sale of the defective products. 

The 2018 business acquisition cleanly “distinguishes” the conduct 

attributable solely to the in-state Defendants from that attributable to out-ofstate Defendants. Opelousas, 655 F.3d at 362. And this dividing line likewise 

provides an “estimate” of how much unlawful conduct is on the in-state 

Defendants versus the out-of-state Defendants. Id. 

As Plaintiffs explained in the district court below, “Louisiana 

Defendants (1120 South Pointe and Gregory Teeters) were exclusively 

responsible for the sale of defective software products, and all negligent and 

wrongful conduct related to the provision of cybersecurity services, 

occurring between 2015 and ‘late 2018.’” The “harm . . . caused by this . . . 

conduct was ongoing, and continued unabated until 2020.” Out of some five 

years of continuous unlawful conduct, about three are attributable solely to 

the in-state Defendants.

The dissent alleges that we are treating “time [as] the basis of 

comparison,” when “Congress told us to evaluate the relative significance of 

South Pointe’s conduct.” Post, at _. But we are not looking to time instead 

of the in-state Defendants’ conduct. We are looking to time to determine the 

Case: 22-30553 Document: 00516882126 Page: 13 Date Filed: 09/01/2023
No. 22-30553

14

significance of the in-state Defendants’ conduct. Time is relevant to the 

inquiry in a case such as this one, where Plaintiffs allege a continuing tort, 

with in-state Defendants and out-of-state Defendants responsible for that 

continuous unlawful conduct at different times. 

We hold that Plaintiffs have satisfied the “significant basis” prong of 

the local controversy exception. 

C.

The local controversy exception also requires at least one in-state 

defendant “from whom significant relief is sought by members of the plaintiff 

class.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa). Defendants argue that the instate defendant must have a “greater ability to pay” than the out-of-state 

defendants. In other words, they say the in-state defendant must have “deep 

pockets.” We disagree. 

When it comes to CAFA’s local controversy exception, the

“significant relief” prong means what it says. Any plaintiff who seeks 

significant relief from an in-state defendant satisfies the prong, regardless of 

how much the in-state defendant can actually pay. 

The interpretation of the “significant relief” prong is an issue of first 

impression in our circuit. We begin where we always do—with the text. And 

all the text requires is that “significant relief is sought” from an in-state 

defendant. Id. It says nothing about the in-state defendant’s ability to pay.

That’s enough to end our inquiry. But it’s worth noting that our sister 

circuits have taken the same view. See Coffey v. Freeport McMoran Copper & 

Gold, 581 F.3d 1240, 1245 (10th Cir. 2009) (per curiam) (“The statutory 

language is unambiguous, and a ‘defendant from whom significant relief is 

sought’ does not mean a ‘defendant from whom significant relief may be 

obtained.’”); Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1016 (9th 

Case: 22-30553 Document: 00516882126 Page: 14 Date Filed: 09/01/2023
No. 22-30553

15

Cir. 2011) (rejecting the argument that “a determination whether ‘significant 

relief is sought’ against the local defendant under subsection (aa) requires a 

factual determination about the respective ability of the various defendants 

to satisfy a judgment”); Walsh v. Defs., Inc., 894 F.3d 583, 592 (3rd Cir. 2018) 

(“[B]ased on the plain language of the statute, ‘a defendant from whom 

significant relief is sought does not mean a defendant from whom significant 

relief may be obtained.’”) (quoting Coffey); Smith v. Marcus & Millichap, Inc., 

991 F.3d 1145, 1161 (11th Cir. 2021) (“Nothing in the statute indicates that 

district courts must conduct a factual inquiry into whether a defendant has 

the financial means to pay the damages alleged in the complaint. CAFA does 

not require the district court to examine a defendant’s ability to pay based on 

the unambiguous plain meaning of the statute’s text.”). The dissent’s 

contrary view would create a circuit split. We decline to break with our sister 

circuits, which have thoughtfully analyzed the relevant statutory language.

So we hold that an in-state defendant’s ability to pay is irrelevant to 

the “significant relief” prong of the local controversy exception. All that 

matters is what the plaintiffs seek in damages—not whether there’s any 

likelihood that they will obtain what they seek. If plaintiffs seek significant 

relief from an in-state defendant, then they satisfy the prong. 

Under this standard, Plaintiffs have easily shown that they are seeking 

significant relief from the in-state Defendants. In their petition for damages, 

Plaintiffs have alleged that all class members were harmed by the in-state 

Defendants’ actions between 2015 and 2018. The in-state Defendants were 

solely responsible for the harm to Plaintiffs during that period—over half of 

the time period, from 2015 to 2020, during which Plaintiffs allege continuing 

injury. Thus, as the district court found, at least half of the damages Plaintiffs 

allege are sought from the in-state Defendants. 

Case: 22-30553 Document: 00516882126 Page: 15 Date Filed: 09/01/2023
No. 22-30553

16

The dissent claims that we are misconstruing the term “sought.” We 

certainly agree with the dissent that “hyper-literalism is bad textualism.” 

Post, at _. But we reject the notion that our reading of “sought” is hyperliteralistic. We are simply applying the ordinary meaning of the verb “to 

seek.”

As used by Subparagraph (aa), “to seek” means “[t]o ask for, 

demand, request (from a person).” Oxford English Dictionary

(2nd ed. 1989), s.v., seek, sense 1.8.a. See also Matthew 7:7 (“Ask, and it 

shall be given you; seek, and ye shall find; knock, and it shall be opened unto 

you.”). And although the Bible teaches that those who seek from the Lord 

shall find, when we seek something from our fellow man, we don’t always get 

it.

The dissent theorizes that no one ever “seeks” anything “without at 

least an infinitesimal hope of finding” it. Post, at _. But that defies common 

usage of the term.

When a prospective student applies to an academic program, we say 

that he is “seeking” admission. See, e.g., Applications Remain High, Harv. 

Gazette (Feb. 3, 2014) (“This year, 34,295 people sought admission to the 

Class of 2018. Last year, a record 35,023 applied . . . .”); Lindsay Ellis, Justice 

Dept. Slams Harvard Admissions in Affirmative-Action Filing, Chron.

Higher Educ. (Aug. 30, 2018) (discussing “a lawsuit brought on behalf 

of Asian-American students who had sought admission to the university”). 

And that is so even though it’s common knowledge that an applicant with 

grades and test scores below a certain level may not have even an 

“infinitesimal hope” of obtaining the admission he seeks. So too here: A

plaintiff without realistic hope of getting the defendant to transfer money into 

his account can still seek significant relief from that defendant. This is 

Case: 22-30553 Document: 00516882126 Page: 16 Date Filed: 09/01/2023
No. 22-30553

17

especially so because the court has the power to award a judgment of money 

damages even against an insolvent defendant.

The dissent’s understanding of the term “seek” also runs into 28 

U.S.C. § 1332 itself. Consider § 1332(d)(3)(C). That provision directs courts 

to consider “whether the class action has been pleaded in a manner that seeks 

to avoid Federal jurisdiction” when deciding if they should decline to 

exercise jurisdiction. Id. Surely a pleading that aims to avoid Federal 

jurisdiction falls within the reach of this provision, even if that goal is unlikely 

to succeed.3

We hold that Plaintiffs have easily satisfied the “significant relief” 

prong of the local controversy exception. 

* * *

We affirm.

_____________________

3 We also disagree with the dissent as a factual matter. The dissent claims that it is 

“literally impossible” for Plaintiffs to recover from South Pointe. But South Pointe 

remains a limited liability company in good standing. We do not presume to know what 

additional employees or assets the company might acquire in the future. 

Case: 22-30553 Document: 00516882126 Page: 17 Date Filed: 09/01/2023
No. 22-30553

18

Andrew S. Oldham, Circuit Judge, dissenting:

I agree with the majority that this case satisfies the Class Action 

Fairness Act’s (“CAFA’s”) 100-plaintiff requirement. See 28 U.S.C. 

§ 1332(d)(5)(B). But my esteemed colleagues and I part ways on the rest. 

This dispute is predominantly between Louisiana plaintiffs and i3 Verticals, 

which is a citizen of Delaware and Tennessee. That means this case belongs 

in federal court. 

In holding otherwise, the majority points to CAFA’s local controversy 

exception, id. § 1332(d)(4)(A). That exception provides that federal 

jurisdiction sometimes does not extend to a class action involving a local 

defendant—that is, a defendant who is a citizen of the State where the class 

action was filed. See id. § 1332(d)(4)(A)(i)(II)(cc). To prevent artful pleading 

that would destroy CAFA jurisdiction, however, Congress placed careful 

limits on which local defendants trigger the exception. Two of those limits 

are relevant here. First, to belong in state court, the action must involve a 

local defendant “from whom significant relief is sought by members of the 

plaintiff class.” Id. § 1332(d)(4)(A)(i)(II)(aa). And second, to belong in state 

court, the action must involve a local defendant “whose alleged conduct 

forms a significant basis for the claims asserted by the proposed plaintiff 

class.” Id. § 1332(d)(4)(A)(i)(II)(bb).

Here, the purportedly local defendant is “South Pointe,” a defunct 

shell LLC in Louisiana with no assets, facilities, business, or employees. In 

my view, South Pointe does not satisfy either (I) the “seeks significantrelief” 

requirement of Subparagraph aa or (II) the “significant conduct” 

requirement of Subparagraph bb.

Case: 22-30553 Document: 00516882126 Page: 18 Date Filed: 09/01/2023
No. 22-30553

19

I.

A.

Start with the “seeks significant relief” prong in Subparagraph (aa). 

For the exception to apply, the defendant must be one “from whom 

significant relief is sought by members of the plaintiff class.” Id. 

§ 1332(d)(4)(A)(i)(II)(aa). “Sought” is the past tense and past participle of 

“seek.” And “seek” means “to go in search of,” “to try to reach or come 

to,” or “to endeavor to make discovery of.” Seek, Webster’s New 

International Dictionary 2266 (2d. ed. 1934; 1950) [hereinafter 

“Webster’s Second”]. Each of these definitions features a referent 

object—“of” or “to” [the object]. The actor “go[es] in search of” 

[something], or “endeavor[s] to make discovery of” [something] or “tr[ies] 

to reach” [something or somewhere]. Said differently, no one seeks without 

at least an infinitesimal hope of finding. Likewise, when we consider what a 

plaintiff “seeks,” we ought not blind ourselves to their literal impossibility of 

finding.

It is literally impossible for plaintiffs to get any relief (let alone 

significant relief) against South Pointe. It is true, I suppose, that plaintiffs 

could be said to “seek relief” from South Pointe in the sense that they sued 

that defunct shell with no assets, facilities, business, or employees. But if that 

is what Subparagraph (aa) means, then Subparagraph (aa) means nothing 

because a plaintiff can always sue someone for something—even if they are 

guaranteed with 100% certainty to recover nothing. That turns the limit on 

artful pleading in Subparagraph (aa) into a nullity. And in the process, it 

offends both the surplusage canon and hyper-literalist canon. See Wash. Mkt.

Co. v. Hoffman, 101 U.S. 112, 115–16 (1879) (“As early as in Bacon’s 

Abridgment, sect. 2, it was said that ‘a statute ought, upon the whole, to be 

so construed that, if it can be prevented, no clause, sentence, or word shall be 

Case: 22-30553 Document: 00516882126 Page: 19 Date Filed: 09/01/2023
No. 22-30553

20

superfluous, void, or insignificant.’”); United States v. Palomares, 52 F.4th 

640, 648–49 (5th Cir. 2022) (Oldham, J., concurring in the judgment) 

(hyper-literalism is bad textualism).

B.

The majority opinion counters that my reading of Subparagraph (aa) 

“defies common usage of the term [seek]” and would create a circuit split. 

See ante, at 14–16. I’m not persuaded by either contention. 

First, the majority opinion’s examples support my understanding of 

Subparagraph (aa). The Bible says “seek, and ye shall find” precisely because 

God gives us hope and faith, Matthew 7:7—two things that plaintiffs do 

not have in “seeking” to recover from a defunct shell company. And when a 

student “seeks” admission to a college or university, he or she obviously 

hopes to get in even if the odds are long—again, a hope that plaintiffs do not 

have in “seeking” to recover from a defunct shell company. True, a plaintiff 

can “seek” to get rich by playing the lottery, even “without any realistic hope 

of” winning it. Ante, at 16. But even the lottery player has a non-zero chance 

of winning, which is more than plaintiffs’ chance of recovering from South 

Pointe. 

Second, the majority opinion notes other circuits have said a 

defendant’s ability to pay is irrelevant to the “significant relief” inquiry. See 

ante, at 14–15 (citing Coffey v. Freeport McMoran Copper & Gold, 581 F.3d 

1240, 1245 (10th Cir. 2009) (per curiam); Coleman v. Estes Exp. Lines, Inc., 

631 F.3d 1010, 1020 (9th Cir. 2011); Walsh v. Defenders, Inc., 894 F.3d 583, 

592 (3rd Cir. 2018); Smith v. Marcus & Millichap, Inc., 991 F.3d 1145, 1161 

(11th Cir. 2021)). But one of those cases involved an entity whose ability to 

satisfy a judgment was not in question. See Walsh, 894 F.3d at 592 (noting 

only that defendant’s liability might technically be satisfied through another 

entity by virtue of a corporate reorganization). And the others involved 

Case: 22-30553 Document: 00516882126 Page: 20 Date Filed: 09/01/2023
No. 22-30553

21

persons or entities of uncertain financial status, such that it would have 

required jurisdictional mini-trials to determine the defendants’ abilities to 

pay. See Coffey, 581 F.3d at 1245 (inquiring about defendant’s financial status 

would require a “mini trial[ ] involving consideration of multiple insurance 

coverage litigation settlement agreements, the solvency of different carriers, 

pollution and other policy exclusions, etc.”); Coleman, 631 F.3d at 1020 

(“There is nothing in the complaint to suggest that [defendant] is a nominal 

defendant, or that [defendant] has so few assets . . . that [plaintiff] is not 

seeking significant monetary relief from it.”); Marcus & Millichap, 991 F.3d 

at 1160 (noting nothing indicated the defendant lacked means to satisfy any 

potential judgment). And it was wariness of these factual inquiries that 

motivated the courts’ holdings. See, e.g., Coffey, 581 F.3d at 1245 (“[T]here 

is nothing in the language of the statute that indicates Congress intended 

district courts to wade into the factual swamp of assessing the financial 

viability of a defendant as part of this preliminary consideration . . . .”). 

South Pointe, by contrast, is a defunct, asset-less, shell company that 

obviously cannot pay. We do not need a mini-trial or any factual inferences 

to determine whether plaintiffs can recover anything (let alone something 

significant) because the facts are undisputed. And while the Ninth Circuit 

held evidence of a defendant’s ability to pay should not be considered in the 

“significant relief” inquiry, it also explained defendants (like South Pointe) 

who obviously lack any ability to pay would not satisfy the test. Coleman, 631 

F.3d at 1019–20. So it’s unclear that my reading of Subparagraph (aa) would 

create a circuit split. 

II.

Next consider the significant conduct prong in Subparagraph (bb). 

That prong requires that, for a suit to belong in state court, the class action 

must involve a local defendant “whose alleged conduct forms a significant 

Case: 22-30553 Document: 00516882126 Page: 21 Date Filed: 09/01/2023
No. 22-30553

22

basis for the claims asserted” by plaintiffs. See 28 U.S.C. 

§ 1332(d)(4)(A)(i)(II)(bb). 

Significant means something with significance. See Significant, 

Webster’s Second, supra, at 2335. And significance means having 

“importance” or “weight.” Significance, Webster’s Second, supra, at 

2335. Ideas like “importance” or “weight” invite relativistic comparison, 

which makes sense in this context. CAFA’s local controversy exception tasks 

us with deciding whether the character of the controversy is holistically local, 

not whether any fiber of it might be. 

The majority seems to agree with me, so far. That is presumably why 

the majority bases its judgment on a relativistic comparison: the length of 

time of South Pointe’s alleged involvement versus that of i3 Verticals’ 

involvement. Plaintiffs allege the hazy contours of various misdeeds from 

2015 to 2020; South Pointe was the relevant defendant for more than half 

that five-year interval. The majority looks at the resulting fraction (above 1⁄2) 

and deems South Pointe significant. See ante, at 11–13.*

But I am not sure that’s right. Congress did not say time is the basis of 

comparison. Rather, Congress told us to evaluate the relative significance of 

South Pointe’s conduct. See 28 U.S.C. § 1332(d)(4)(A)(i)(II)(bb) (“whose 

alleged conduct forms a basis for the claims asserted” (emphasis added)). To 

evaluate the relative significance of South Pointe’s conduct, we look at the 

complaint. Ibid. (“the claims asserted”). And the complaint makes clear that 

_____________________

* The majority also deems it relevant that Scott Carrington, a Louisiana resident, 

managed i3 Verticals from 2018–2020. Ante, at 12 & n.1. But the complaint does not explain 

what, other than managing i3, Carrington did wrong. And without “detailed allegations or 

extrinsic evidence” demonstrating the significance of Carrington’s conduct relative to the 

other defendants, the fact that he ran the Company during the time period in question 

simply has no bearing on the “significant conduct” inquiry. Opelousas Gen. Hosp. Auth. v.

FairPay Sols., Inc., 655 F.3d 358, 363 (5th Cir. 2011). 

Case: 22-30553 Document: 00516882126 Page: 22 Date Filed: 09/01/2023
No. 22-30553

23

South Pointe’s conduct was far from a significant portion of plaintiffs’ 

claims. According to the complaint, South Pointe periodically bypassed

antivirus programs, failed to moderate third-party comments on a website, 

failed to renew an email filtering subscription, and used EU- instead of USAlicensed software. ROA.618–20 (plaintiff’s Amended Petition). While that 

conduct may fall short of upright deportment, plaintiffs barely allege, much 

less show, that any of those supposed transgressions have any causal 

connection whatsoever to the millions of dollars in damages plaintiffs 

demand. Cf. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 570 (2007) 

(plaintiffs should state a claim “plausible on its face” and “show” their case 

for relief).

So where, if not from South Pointe’s misadventures, do plaintiffs’ 

millions in claimed damages originate? Plaintiffs’ complaint does contain one 

specific thread of facts, detailing the fallout from a cybersecurity incident that 

plaintiffs trace back to December 2019—more than a year after South Pointe 

had ceased business with the plaintiffs. This incident, and its remediation, 

forms the near-entirety of plaintiffs’ demands for relief. See ROA.620–25. 

Plaintiffs’ counterparty for this specific narrative, for this one thread of facts 

with arguable connection to plaintiff’s damages, was i3 Verticals. In other 

words, the conduct underlying the claims asserted appears almost exclusively 

attributable to i3 Verticals—a decidedly non-local defendant. Far from being 

“significant,” South Pointe’s conduct is all but irrelevant. 

And even if the complaint alleges that plaintiffs’ claimed damages 

arise from a continuing tort, see ante, at 14, 15, it still fails to connect South 

Pointe’s conduct to plaintiffs’ injuries in any meaningful way. It is hard to see 

how general assertions that South Pointe’s actions somehow harmed 

plaintiffs count as the “detailed allegations” required by our precedent to 

satisfy the “significant conduct” test. See Opelousas, 655 F.3d at 363.

Case: 22-30553 Document: 00516882126 Page: 23 Date Filed: 09/01/2023
No. 22-30553

24

* * * 

Even if all of that is wrong, we must resolve any doubt “in favor of 

exercising [CAFA] jurisdiction over the case.” Opelousas, 655 F.3d at 360 

(citations omitted). With deepest respect for my learned colleagues, I think 

this case belongs in federal court.

I respectfully dissent.

Case: 22-30553 Document: 00516882126 Page: 24 Date Filed: 09/01/2023