## United States Court of Appeals
FOR THE EIGHTH CIRCUIT

___________
No. 10-2635

___________ Marlene Westerfeld, *

* Plaintiff - Appellee, *

* v. * * Appeal from the United States Independent Processing, LLC; * District Court for the * Eastern District of Missouri. Defendant, *

* Provident Funding Associates, LP, *

* Defendant - Appellant. *

___________ Submitted: September 7, 2010 Filed: September 20, 2010

___________ Before SMITH, BOWMAN, and GRUENDER, Circuit Judges.

___________ BOWMAN, Circuit Judge.

Marlene Westerfeld, a Missouri resident, f iled this class action in Missouri state court against Independent Processing, LLC , a Missouri limited liability company that processed residential mortgage documents , and Provident Funding Associates, LP, a California limited partnership that provided re sidential mortgages. Westerfeld alleged that when Independent and Provident ch arged her and other Missouri residents a "broker processing fee" and an "administr ative fee," respectively, in residentialmortgage financing transactions, the two entities engaged in the unauthorized practice of law and violated the Missouri Mercha ndising Practices Act, Mo. Rev. Stat. §§ 407.010–407.1500. Provident removed the case to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA). 1 Westerfeld then moved to remand the case based on an exception to CAFA jurisdic tion, the local-controversy exception, 28 U.S.C. § 1332(d)(4)(A). The District Court granted Westerfeld's motion, ordering the case remanded to the Circuit Court of St. Louis County. Provident filed a timely petition with this Court under 28 U.S.C. § 1453(c)(1) for leave to appeal the District Court's remand order. We granted Provide nt's motion, and reviewing the District Court's interpretation of CAFA de novo, see Iowa 80 Grp., Inc. v. IRS , 406 F.3d 950, 952 (8th Cir. 2005) (standard of review), we now vacate the judgment of the District Court and remand the case for further cons ideration consistent with this opinion.

Because of perceived "abuses of the class action device," Congress enacted CAFA to provide, inter alia , for "Federal court consideration of interstate cases of national importance." Class Action Fairness Act of 2005, Pub. L. No. 109-2, § 2, 119 Stat. 4. Accordingly, CAFA grants broa d federal jurisdiction over class actions and establishes narrow exceptions to such jurisdiction. See S. Rep. No. 109-14, at 43 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 41 (CAFA "is intended to expand substantially federal court ju risdiction over class actions. Its provisions should be read broadly, with a strong preference that inte rstate class actions should be heard in a federal court if properly re moved by any defendant."). "The language and structure of CAFA . . . indicate[] that Congress c ontemplated broad federal court jurisdiction with only narrow exceptions." Evans v. Walter Indus. , 449 F.3d 1159, 1164 (11th Cir. 2006) (citation omitted); seeS. Rep. No. 109-14, at 39, reprinted in 2005 U.S.C.C.A.N. 3, 38 (emphasizing that th e local-controversy exception to CAFA

1 Pub. L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.).

-2-jurisdiction "is a narrow exception that was car efully drafted to ensure that it does not become a jurisdictional loophole").

Under CAFA, federal courts have jurisdiction over cl ass actions in which the amount in controversy exceeds $5,000,000 in the aggregate; there is minimal (as opposed to complete) diversity among the parties, i.e., any class member and any defendant are citizens of different states; and there are at least 100 members in the class. 28 U.S.C. § 1332(d). Despite this broad grant of jurisdiction, Congress established two mandatory exceptions to federal jurisdiction under CAFA, only one of which is relevant here. Under the local-controversy ex ception, a district court must decline to exercise jurisdiction over a cla ss action in which more than two-thirds of the class members in the aggregate are citi zens of the state in which the action was originally filed, at least one defendant "from whom significant relief is sought by members of the plaintiff class" and "whos e alleged conduct forms a significant basis for the claims asserted by the proposed plainti ff class" is a citizen of the state in which the class action was originally filed, the principal injuries were incurred in the state in which the action was filed, and no other class action alle ging similar facts was filed in the three years prior to the commencement of the current class action. 28 U.S.C. § 1332(d)(4)(A).

Although CAFA expanded federal jurisdiction over class actions, it did not alter the general rule that the party seeking to remove a case to fe deral court bears the burden of establishing federal jurisdiction. Kaufman v. Allstate N.J. Ins. Co. , 561 F.3d 144, 151 (3d Cir. 2009); Amoche v. Guarantee Trust Life Ins. Co. , 556 F.3d 41, 48 (1st Cir. 2009); Serrano v. 180 Connect, Inc. , 478 F.3d 1018, 1021 (9th Cir. 2007);
Evans , 449 F.3d at 1164. Once CAFA's initial jurisdictional requirements have been established by the party seeking removal, however, the burden shifts to the party seeking remand to establish that one of CAFA's express jurisdictional exceptions applies. Serrano , 478 F.3d at 1024 ("[O]nce federal ju risdiction has been established under [§ 1332(d)(2)], the objecting party b ears the burden of proof as to the

-3-applicability of any express statut ory exception . . . ."); Kaufman , 561 F.3d at 154 (same); Hart v. FedEx Ground Package Sys. Inc. , 457 F.3d 675, 681 (7th Cir. 2006) (same); Frazier v. Pioneer Ams. LLC , 455 F.3d 542, 546 (5th Cir. 2006) (same) (citing Evans ); Evans , 449 F.3d at 1164 (same).

Here, Provident bore the initial burden of establishing that CAFA's fundamental jurisdictional requirements weremet, and the District Court so stated, noting correctly that "[t]he party seeking rem oval . . . has the burden to es tablish federal subject matter jurisdiction." Mem. & Order of June 17, 2010, at 3. After discussing the application of the local-controversy exception, howev er, the court stated that "[e]ven if [application of the exception] was not as clear as it is, any doubt . . . must be resolved in favor of remand." Id. at 6. Provident argues that this was a misstatement of the law, and we agree. Once Provident satisfiedCAFA's basic jurisdictional requirements (and Westerfeld does not conte nd on appeal that Provident failed to do so), the burden shifted to Westerfeld to establish that CAFA's local-controversy exception applied. The District Court erred by resolving any doubt regarding applicability of the localcontroversy exception in favor of remand, i. e., in favor of Westerfeld, the party who was invoking the exception to federal jurisd iction and the party who was required to establish that the exception applied. We ag ree with Provident that the party bearing the burden of proof is not entitled to the be nefit of the doubt. On remand, the District Court should resolve any doubt about the applicability of CAFA's local-controversy exception against Westerfeld, the party who seeks remand and the party who bears the burden of establishing that the exception applies.

Provident next argues that the DistrictCourt erred in c oncluding that CAFA's local-controversy exception precluded the court' s exercise of fede ral jurisdiction over the action. The local-controversy exception requi res, as relevant here, that an in-state defendant—in this case, Independent—be a so-called "significant" defendant, one "from whom significant relief is sought by members of the plaintiff class" and one

-4-"whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class." 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa) & (bb).

In her amended complaint, Westerfeld asserted two state-law claims against Independent and two identical state-law clai ms against Provident on behalf of two separate plaintiff classes. Specifically, in Counts I and II of her amended complaint, Westerfeld asserted state-la w claims against Independent and requested certification of a plaintiff class against Independent. In Counts III and IV, she asserted identical state-law claims against Provident and reque sted certification of a separate plaintiff class against Provident. After Provident removed the action, Westerfeld filed her motion to remand, arguing that the District Court was prohibited from exercising jurisdiction over the action by virtue of CAFA's local-controversy exception.

Provident opposed remand, arguing that the local-controversy exception did not apply because Independent, the in-state de fendant, did not qualify as a significant defendant under the exception. In support of its argument, Provident submitted the declaration of Independent's sole proprieto r, who stated that Independent provided services in connection with only 56 loans in Missouri, as well as the declaration of its own compliance manager, who stated thatProvident had originated 3,894 loans in Missouri. Based on this information and th e dollar amount of the contested fees paid by Westerfeld, Provident estimated thatIndependent charge d $16,800 and Provident charged $2.7 million in contested fees. 2Provident urged the District Court to determine whether Independent was a significant defendant under CAFA by considering the class action as a whole a nd not by considering the claims on a classby-class basis. According to Provident's preferred analysis, because Independent "participated in less than 1.5% of the loan s at issue, and generated six tenths of one

2 Westerfeld does not dispute that Provident satisfied its burden to establish CAFA's $5,000,000 amount-in-controversy requirement—Westerfeld sought actual damages, treble damages, punitive damages, and statutory attorney fees—and we need not discuss the issue in further detail.

-5-percent of the fees," Br. of Appellant at 15, Westerfeld was not seeking significant relief from Independent, Inde pendent's conduct did not form a significant basis for Westerfeld's claims, Independent did not qualify as a significant defendant, and thus the local-controversy exception did not appl y to defeat federal jurisdiction.

The District Court rejected Provident 's arguments, concluding that because Westerfeld filed her claims against Indepe ndent "as an individua l class," Independent was necessarily a significant defendant with re spect to the claims asserted against it. Mem. & Order of June 17, 2010, at 6. Adopting Westerfeld's argument, the court concluded that because the plain langua ge of 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa) and (bb) refers to the plaintiff class and the proposed plaintiff class, respectively, whether a defendant is significant for purposes of the exception must be determined by reference to "only one plaintiff class (rather than an aggregate of all the classes in a lawsuit)." Id. The court analyzed the significan t defendant issue separately for each class defined by Westerfeld and, not surprisingly, concluded that with respect to Counts I and II, each of which defined a class and assertedclaims against Independent alone, Independent was a significant defendant . Thus the court ru led that the localcontroversy exception applied and the case had to be remanded.

While "the starting point for interpreting a statute is the language of the statute itself," Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc. , 447 U.S. 102, 108 (1980), federal courts engaging in statutory construction must "interpret the words of the[] statute[] in light of the purposes Congress sought to serve." Chapman v. Houston Welfare Rights Org. , 441 U.S. 600, 608 (1979), quoted in Norfolk Redev. & Hous. Auth. v. Chesap eake & Potomac Tel. Co. , 464 U.S. 30, 36 (1983). Our task, therefore, is to avoid interpreting a statute in a manner that renders any section of the statute superfluous or fails to give effectto all of the word s used by Congress. Windsor on the River Assocs. v. Balcor Real Estate Fin., Inc. , 7 F.3d 127, 130 (8th Cir. 1993).

-6-"Class" is defined under CAFA as " all of the class members in a class action." 28 U.S.C. § 1332(d)(1)(A) (emphasis added). By definition, therefore, "the plaintiff class " described in § 1332(d)(4)(A)(i)(II)(aa) (emphasis added) and "the proposed plaintiff class " described in § 1332(d)(4)(A)(i)(II)( bb) (emphasis added) include all of the class members in the class action as a whole . It follows, then, that whether an in-state defendant is a significant defendant for purposes of the local-controversy exception must be determined by considering the claims of "all of the class members in [the] class action" and notby considering the claims of class members on a classby-class basis.

In Kaufman , the Third Circuit analyzed the "significant basis" element of the local-controversy exception and stated, "Wheth er the [in-state] defendant's alleged conduct is significant cannot be decided w ithout comparing it to the alleged conduct of all the Defendants. . . . The local defendant's alleged conduct must be an important ground for the asserted claims in view of the alleged conduct of all the Defendants." 561 F.3d at 157. We believe this is the be tter reading of the st atute. The District Court's construction of the significant defe ndant requirement esse ntially strips the requirement of any substantive meaning—if an in-state defendant's significance is determined on a class-by-class basi s, the in-state defendant will always be significant with respect to the classes and the claims asse rted against it. This reading of the localcontroversy exception would allow class-action plaintiffs to avoid federal jurisdiction under CAFA simply by pleading their claims ag ainst an in-state defendant as separate counts on behalf of a separate class. We cannot conceivethat Congress intended this result—particularly given its admonition that the local-controversy exception was "a narrow exception that was carefully drafte d to ensure that it does not become a jurisdictional loophole." S. Rep. No. 109-14, at 39, reprinted in2005 U.S.C.C.A.N. 3, 38. Accordingly, we conclude that th e District Court erred in ruling that CAFA's local-controversy exception applied in this case to preclude federal jurisdiction. On remand the court should determine whether I ndependent is a significant defendant for

-7-purposes of the local-controversy exception by considering all the claims in the action and not by considering the claims on a class-by-class basis.

For the foregoing reasons, the judgment of the District Court is vacated and the case is remanded for further consider ation consistent with this opinion.

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