Of the Ninth Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

No. 09-1393

IN RE: HANNAFORD BROS. CO. CUSTOMER

DATA SECURITY BREACH LITIGATION,

THOMAS T. GRIMSDALE, III,

Plaintiff, Appellee,

v.

KASH N' KARRY FOOD STORES, INC.

d/b/a SWEETBAY SUPERMARKET AND SWEETBAY LIQUORS,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge]

Before

 Lynch, Chief Judge,

Farris and Boudin, Circuit Judges. *

Clifford H. Ruprecht with whom William J. Kayatta, Gavin G.

McCarthy, and Pierce Atwood LLP were on brief for appellant.

David J. Metcalf with whom Christopher T. McRae, McRae &

Metcalf, P.A., Richard L. Coffman, and The Coffman Law Firm were on

brief for appellee.

May 1, 2009
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LYNCH, Chief Judge. This appeal presents an issue of

first impression for this circuit regarding the application of the

home state exception to federal jurisdiction under the Class Action

Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4.

Congress enacted CAFA in response to perceived abuses by

plaintiffs' counsel in keeping class action cases of national

importance out of the federal courts. See CAFA § 2(a)(4), 119

Stat. at 5; see also Amoche v. Guarantee Trust Life Ins. Co., 556

F.3d 41, 47-48 (1st Cir. 2009); Johnson v. Advance Am., 549 F.3d

932, 935 (4th Cir. 2008). Defendant's essential argument is that

the plaintiff has drawn his complaint in terms limiting the class

and the defendants in order to defeat federal jurisdiction in

violation of congressional intent. Plaintiff retorts that this

suit fits precisely into an exception to the exercise of federal

jurisdiction set forth explicitly in CAFA.

Here, a class defined to consist entirely of Florida

citizens sued a single corporation, also a Florida citizen, in

Florida state court. After defendant removed to federal court

under CAFA, plaintiff sought remand to the state court under CAFA's

home state exception, which requires a federal court to decline to

exercise jurisdiction if at least two-thirds of the members of all

proposed plaintiff classes in the aggregate and the primary

defendants are citizens of the state where the action was

originally filed. See 28 U.S.C. § 1332(d)(4)(B).
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The district court found that this case fit squarely

within CAFA's home state exception and granted the plaintiff's

motion to remand. See In re Hannaford Bros. Co. Customer Sec.

Breach Litig., 592 F. Supp. 2d 146 (D. Me. 2008). We agree and

reject, on the facts here, the defendant's argument that the

application of CAFA's home state exception depends on a broader

assessment of the claims brought by others who do not fall within

the complaint's class definition or of the claims available to the

class against other possible defendants.

I.

Defendant Kash N' Karry Food Stores, Inc. operates a

chain of grocery stores in Florida. A computer hacker stole the

credit card information of customers who had shopped at Kash N'

Karry's stores between December 2007 and March 2008. Plaintiff

Thomas Grimsdale, III regularly shopped at Kash N' Karry's stores

in Tampa, Florida during this period and paid for his purchases

using his bank debit card.

On April 4, 2008, Grimsdale sued Kash N' Karry in Florida

state court, alleging that Kash N' Karry had failed to adopt

adequate security measures to protect its customers' credit card

information. He sought to represent a class of approximately 1.6

million persons who had "used credit/debit cards at [Kash N'

Karry's] stores between December 7, 2007 and March 10, 2008 and/or

had their personal and sensitive Confidential Information stolen
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and/or compromised as a result of the [security] Breach." The

class definition explicitly excluded "any persons and entities who

are not citizens of the State of Florida."

Kash N' Karry removed the case to federal court in

Florida under CAFA on April 17, 2008. On April 25, 2008, Grimsdale

filed a motion to remand the case to state court, arguing that

CAFA's home state exception applied.

On October 8, 2008, the Judicial Panel on Multidistrict

Litigation transferred the case to the District of Maine, where

twenty-four other suits had been consolidated against entities

related to Kash N' Karry, raising similar allegations of wrongdoing

in the security breach. These related entities were Kash N'

Karry's sister corporation, Hannaford Brothers Co., and their

common corporate parent, Delhaize America, Inc. Combined, the

multidistrict litigation involved an estimated 4.2 million class

members. On December 10, 2008, the district court granted

Grimsdale's motion to remand, finding the requirements of CAFA's

home state exception satisfied. See In re Hannaford Bros., 592 F.

Supp. 2d at 148.

Kash N' Karry timely petitioned for leave to appeal the

district court's remand order under 28 U.S.C. § 1453(c). We

granted Kash N' Karry's petition on March 26, 2009. After

expedited briefing, we heard oral argument in this appeal on April

9, 2009.
Although we are required to consider first any questions 1

of Article III jurisdiction, see Steel Co. v. Citizens for a Better

Env't, 523 U.S. 83, 93-94 (1998), it is clear there is such

jurisdiction over this case. We may bypass questions of statutory

jurisdiction where, as here, there are prudential reasons to do so.

See Restoration Pres. Masonry, Inc. v. Grove Eur. Ltd., 325 F.3d

54, 60 (1st Cir. 2003) ("[A] jurisdictional inquiry is not required

here given that the question invokes statutory jurisdiction."); see

also Parella v. Ret. Bd. of the R.I. Employees' Ret. Sys., 173 F.3d

46, 53-54 (1st Cir. 1999). Here, the district court's analysis

focused on whether the home state exception to jurisdiction

applied, see In re Hannaford Bros., 592 F. Supp. 2d at 148, and so

have the parties' arguments to us. We therefore bypass the

preliminary question of whether the requisite minimal diversity

exists here for jurisdiction under 28 U.S.C. § 1332(d)(2) and

consider only whether CAFA's home state exception applies.

To remain in federal court, this case must both satisfy 2

the minimal diversity requirement for federal jurisdiction under 28

U.S.C. § 1332(d)(2) and also not fall under CAFA's home state

exception in § 1332(d)(4)(B). Kash N' Karry therefore argues that

its dual citizenship as a Delaware corporation with its principal

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II.

Congress expanded diversity jurisdiction through CAFA to

allow for federal court jurisdiction over class actions satisfying

the statute's amount in controversy and minimal diversity

requirements. See 28 U.S.C. § 1332(d)(2); see also Amoche, 556

F.3d at 47-48. Yet that grant of jurisdiction is subject to

several exceptions. Here, our focus is on the home state 1

exception, which provides:

A district court shall decline to exercise

jurisdiction [where] . . . two-thirds or more

of the members of all proposed plaintiff

classes in the aggregate, and the primary

defendants, are citizens of the State in which

the action was originally filed.

28 U.S.C. § 1332(d)(4)(B).2
place of business in Florida creates the requisite minimal

diversity for jurisdiction under § 1332(d)(2). See 28 U.S.C.

§ 1332(d)(2)(A) (granting federal jurisdiction over class actions

in which the amount in controversy exceeds $5 million and "any

member of a class of plaintiffs is a citizen of a State different

from any defendant"). We are skeptical of this argument and note

that one other circuit has rejected it. See Johnson, 549 F.3d at

936. In any event, Kash N' Karry concedes that we need not decide

whether minimal diversity exists under § 1332(d)(2) if the home

state exception applies. And Kash N' Karry admits that the home

state exception is worded differently from § 1332(d)(2) such that

it applies regardless of whether the defendant's dual citizenship

creates minimal diversity for purposes of § 1332(d)(2).

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There is a threshold question of which party bears the

burden of showing that CAFA's home state exception applies. We

hold that the burden is on the plaintiff to show that an exception

to jurisdiction under CAFA applies. This is the rule adopted by

our sister circuits. See Kaufman v. Allstate N.J. Ins. Co., 561

F.3d 144, 153 (3d Cir. 2009); Serrano v. 180 Connect, Inc., 478

F.3d 1018, 1024 (9th Cir. 2007); Hart v. FedEx Ground Package Sys.

Inc., 457 F.3d 675, 680-81 (7th Cir. 2006); Frazier v. Pioneers

Ams. LLC, 455 F.3d 542, 546 (5th Cir. 2006); Evans v. Walter

Indus., Inc., 449 F.3d 1159, 1165 (11th Cir. 2006). And it is

consistent with the Supreme Court's general approach to removal

jurisdiction. See Breuer v. Jim's Concrete of Brevard, Inc., 538

U.S. 691, 698 (2003) ("[W]henever the subject matter of an action

qualifies it for removal, the burden is on a plaintiff to find an

express exception."). Here, however, as the parties agree, the

burden of proof is largely immaterial because the outcome turns

purely on questions of law.
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At first blush, the requirements of CAFA's home state

exception appear to be satisfied here. As Grimsdale has defined

the class in his complaint, all class members are Florida citizens.

Kash N' Karry, the only defendant in this case, is also a Florida

citizen because its principal place of business is in Florida. See

28 U.S.C. § 1332(c)(1) ("[A] corporation shall be deemed to be a

citizen . . . of the State where it has its principal place of

business . . . ."). And this case was originally filed in Florida

state court.

Still, Kash N' Karry offers a different reading of CAFA's

home state exception, turning on the interpretation of the subphrase "the members of all proposed plaintiff classes in the

aggregate" within the home state exception. See id.

§ 1332(d)(4)(B) ("A district court shall decline to exercise

jurisdiction [where] . . . two-thirds or more of the members of all

proposed plaintiff classes in the aggregate, and the primary

defendants, are citizens of the State in which the action was

originally filed."). Specifically, Kash N' Karry argues that the

plain meaning of "all proposed plaintiff classes in the aggregate"

requires reference outside the four corners of the complaint in the

particular case before the court to all previously filed class

actions which arise from a core nucleus of operative facts such as
Kash N' Karry also argues, as a fallback position, that 3

its reading of the statute is supported by CAFA's legislative

history, specifically a post-enactment Senate report. Kash N'

Karry did not make this argument to the district court, and because

we hold that the plain text of the statute refutes Kash N' Karry's

position, we do not consider CAFA's legislative history.

Likewise, Kash N' Karry argues that CAFA's reference to 4

"primary defendants" requires a court to look beyond the

plaintiff's complaint to consider unnamed defendants against whom

the class could pursue a claim arising from the same core set of

facts. This claim is analytically similar to Kash N' Karry's

argument as to class membership, and we reject it for the same

reasons.

Here, the Florida state rule is similar in all relevant 5

aspects to Rule 23. See Fla. R. Civ. P. 1.220.

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to meet an "Article III case or controversy" requirement. It 3

contends that the term "aggregate" means that Congress intended to

refer beyond the plaintiff's complaint; otherwise, Congress would

have simply used the term "class members" as it did in

§ 1332(d)(1)(D). Applying this principle here, Kash N' Karry says 4

the previously filed national class actions involving Hannaford

that were consolidated by the Judicial Panel on Multidistrict

Litigation are the appropriate reference point to measure "the

members of all proposed plaintiff classes in the aggregate." 

We reject Kash N' Karry's reading as contrary to the

plain language of § 1332(d)(4)(B). The most natural reading of the

home state exception is that Congress meant § 1332(d)(4)(B) to be

read in conjunction with the federal class action rule, Fed. R.

Civ. P. 23, or similar state statutes and rules of judicial

procedure. That is made explicit by the definition of "class 5
Moreover, Kash N' Karry's reading would present serious 6

administrability problems, which Congress surely did not intend.

It would be extremely difficult to define the scope of what Kash N'

Karry calls the "Article III case or controversy." And Kash N'

Karry's own definition is arbitrary: nothing in its theory supports

its limitation to already-filed national actions. Indeed, Kash N'

Karry uses the phrase "Article III case or controversy" in ways

very different from the usual understanding of the phrase.

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action" in § 1332(d)(1)(B), which refers to Rule 23 or similar

state rules. Under Rule 23, "a class may be divided into

subclasses that are each treated as a class under this rule." Fed.

R. Civ. P. 23(c)(5). The home state exception's use of the plural

"classes," therefore, does not indicate that Congress intended an

inquiry into what Kash N' Karry has termed the broader "Article III

case or controversy" because a single complaint may contain

multiple classes.6

In rejecting Kash N' Karry's reading of § 1332(d)(4)(B),

we do not mean to say that the four corners of the plaintiff's

complaint necessarily control the question of whether CAFA's home

state exception applies. We do not rely on the maxim that the

plaintiff is the master of his own complaint -- the answer to that

question is that it depends. Indeed, as we recently recognized in

Amoche, 556 F.3d at 48-51, courts need not accept the plaintiffs'

allegations regarding the amount in controversy when it appears to

a reasonable probability that more than the jurisdictional minimum

is at issue. We can imagine situations -- for example, if the

plaintiff has omitted an indispensable defendant -- where looking
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beyond the four corners of the plaintiff's complaint may be

necessary to determine whether the home state exception applies.

But that situation is not before us here, and we leave further

consideration of it for another day.

Kash N' Karry argues that our reading, which here gives

effect to the plaintiff's choice to define the scope of the suit

narrowly, will ultimately cause the home state exception to defeat

CAFA's broader purpose of expanding federal jurisdiction. That is,

Kash N' Karry says that if courts are not allowed to consider the

existing class members and defendants in national class actions but

are limited to those described in the complaint in a single state,

plaintiffs will tailor their pleading to avoid federal jurisdiction

under CAFA.

It is common for removing defendants trying to remain in

federal court under CAFA to make this generic argument -- that the

four corners of the complaint do not control -- as to various

provisions of CAFA. For example, in Freeman v. Blue Ridge Paper

Products, Inc., 551 F.3d 405 (6th Cir. 2008), five separate state

court class actions were filed by plaintiffs from the same state

for the same injuries covering sequential time periods. Each suit

sought damages of $4.9 million, just below CAFA's $5 million

jurisdictional minimum. Id. at 406. The Sixth Circuit held that

this type of structuring is impermissible where "there is no

colorable basis" for dividing the suit "other than to frustrate
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CAFA." Id. at 409. Whether or not we would agree with Freeman,

this case is very different. Grimsdale has not artificially split

his class of Florida plaintiffs into multiple suits to avoid

federal jurisdiction.

And in Tanoh v. Dow Chemical Co., ___ F.3d ___, 2009 WL

826404 (9th Cir. Mar. 27, 2009), the court interpreted the "mass

action" provisions of CAFA, 28 U.S.C. § 1332(d)(11)(B)(i), as not

permitting aggregation of seven separate state court toxic-tort

suits against the same manufacturer, each with fewer than 100

plaintiffs, to create a basis for removal under CAFA.

There is no one-size-fits-all response to a claim of

evasion of congressional intent. The analysis will turn on the

precise language of that section of CAFA. Our job is to effectuate

the intent expressed in the plain language Congress has chosen, not

to effectuate purported policy choices regardless of language. See

Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530

U.S. 1, 5 (2000) ("[W]hen the statute's language is plain, the sole

function of the courts -- at least where the disposition required

by the text is not absurd -- is to enforce it according to its

terms." (quoting United States v. Ron Pair Enters., Inc., 489 U.S.

235, 241 (1989)) (internal quotation marks omitted)). 

In any event, we are dubious about the policy arguments.

Several factors make it unlikely that the exception will swallow

the rule entirely. In particular, CAFA's home state exception is
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fairly narrow, encompassing only those suits where at least twothirds of the class members and all of the primary defendants are

citizens of the same state. Suits involving a primary defendant

who is not a citizen of the forum state cannot qualify for the

exception. Moreover, plaintiffs potentially sacrifice a great deal

in terms of the parties they can sue and the claims they can bring

by narrowing their pleadings to fit within the home state

exception. And to the extent that the home state exception in

practice creates an undesirable loophole, Congress may choose to

amend the statute to address those problems as they arise.

Beyond that, many of the policy concerns that motivated

Congress to enact CAFA are simply not implicated where the suit

qualifies for the home state exception. As we recently recognized:

In enacting CAFA, Congress was

responding to what it perceived as abusive

practices by plaintiffs and their attorneys in

litigating major interstate class actions in

state courts, which had "harmed class members

with legitimate claims and defendants that

ha[d] acted responsibly," "adversely affected

interstate commerce," and "undermined public

respect for our judicial system."

Amoche, 556 F.3d at 47 (alteration in original) (quoting CAFA

§ 2(a), 119 Stat. at 4). According to Congress, these abusive

practices included forum shopping to take advantage of potential

state court biases against foreign defendants. See CAFA

§ 2(a)(4)(B), 119 Stat. at 5. But where, as here, the defendant is

also a citizen of the forum state, the concern for bias simply does
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not arise. Likewise, Congress in enacting CAFA was concerned that

state courts were "making judgments that impose their view of the

law on other States and bind the rights of the residents of those

States." Id. § 2(a)(4)(C), 119 Stat. at 5. But again, that

potential problem is not implicated where the class members are

largely citizens of the forum state.

Kash N' Karry has a final contention that Grimsdale has

improperly defined the class in this case by requiring that all

class members be Florida citizens. Defining the class in this way,

Kash N' Karry says, makes the class impossible to ascertain because

state citizenship depends upon a person's subjective intent.

The language of CAFA itself refutes the argument. It

requires a court to assess the citizenship of the class members

when applying the home state exception, an exercise Congress

obviously did not consider to be impossible. Moreover, at least

one other circuit has recognized that defining the class to include

only citizens of a particular state can defeat federal jurisdiction

under CAFA. See Dennison v. Carolina Payday Loans, Inc., 549 F.3d

941, 943 (4th Cir. 2008); Johnson, 549 F.3d at 937. Therefore, we

reject Kash N' Karry's argument that Grimsdale has improperly

limited his class allegations to include only Florida citizens.

III.

The district court's remand order is affirmed. Costs are

awarded to Grimsdale.