UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

BILL G. NICHOLS, on behalf of himself 

and all others similarly situated, 

 Plaintiff - Appellant, 

v. 

CHESAPEAKE OPERATING, LLC; 

CHESAPEAKE EXPLORATION, LLC, 

 Defendants - Appellees. 

No. 18-6006 

(D.C. No. 5:16-CV-01073-M) 

(W.D. Okla.) 

_________________________________ 

ORDER AND JUDGMENT*

_________________________________ 

Before LUCERO, BALDOCK, and BACHARACH, Circuit Judges. 

_________________________________ 

 Bill Nichols appeals from a district court order denying his motion to abstain and 

remand to state court in this putative class-action suit against Chesapeake Operating, 

LLC and Chesapeake Exploration, LLC (collectively, “Chesapeake”). Exercising 

jurisdiction under 28 U.S.C. § 1453(c)(1), we affirm. 

 *

 After examining the briefs and appellate record, this panel has determined 

unanimously to honor the parties’ request for a decision on the briefs without oral 

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore 

submitted without oral argument. This order and judgment is not binding precedent, 

except under the doctrines of law of the case, res judicata, and collateral estoppel. It 

may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 

and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals 

Tenth Circuit 

March 7, 2018

Elisabeth A. Shumaker 

Clerk of Court
2 

I 

 Nichols is a royalty owner in Oklahoma natural gas wells owned in part or 

operated by Chesapeake. In August 2016, he sued Chesapeake in Oklahoma state court 

for underpayment or non-payment of royalties. He sought class certification of certain 

“Oklahoma Residents,” which he defined using a four-part test: 

Persons to whom, from January 1, 2015 to the date suit was filed herein, 

(a) Chesapeake mailed or sent each monthly royalty check on an Oklahoma 

well to an Oklahoma address (including direct deposit); (b) Chesapeake 

mailed or sent a 1099 for both 2014 and 2015 to an Oklahoma address; 

(c) the Settlement Administrator in Fitzgerald Farms, LLC v. Chesapeake 

Operating, Inc., Case No. CJ-10-38, Beaver County, Oklahoma mailed or 

sent a distribution check and 1099 to an Oklahoma address; and[ ] 

(d) except for charitable institutions, were not subject to the Oklahoma 

Withholding Tax for Nonresidents on royalties paid in 2014 to the date suit 

was filed. 

 Chesapeake removed the case to federal court based on the Class Action Fairness 

Act (“CAFA”), which grants district courts original jurisdiction over class actions 

involving at least 100 proposed class members, more than $5,000,000 in controversy, and 

the presence of any plaintiff class member who is a citizen of a State different from any 

defendant. See 28 U.S.C. § 1332(d)(2)(A), (d)(5)(B). In regard to citizenship, 

Chesapeake pointed out that its principal place of business is in Oklahoma, thereby 

making it an Oklahoma citizen, see § 1332(d)(10), and that there was a class member that 

met Nichols’ resident definition—Austin College, a Texas citizen. 

 Nichols soon filed a motion arguing that CAFA’s home-state exception required 

the district court to remand the case to state court. This exception requires a district court 

to decline jurisdiction if “two-thirds or more of the members of all proposed plaintiff 
3 

classes in the aggregate, and the primary defendants, are citizens of the State in which the 

action was originally filed.” § 1332(d)(4)(B). Nichols proffered evidence to show that at 

least two-thirds of the proposed class members shared Chesapeake’s Oklahoma 

citizenship, including the declaration of statistician Joseph Kadane, Ph.D., who randomly 

selected 100 royalty owners from “a spreadsheet containing 28,929 unique records of 

royalty owners paid from Oklahoma wells and who have an Oklahoma address.” Of the 

100 royalty owners comprising Kadane’s sample, there were 13 trusts, 7 entities, and 80 

individuals. 

 To obtain citizenship information about those royalty owners, Nichols employed a 

marketing research firm and a private investigator. The research firm successfully 

surveyed 54 of the sample’s royalty owners. It asked individuals whether they 

considered themselves to be Oklahoma citizens and whether they planned to move from 

Oklahoma in the near future. And it asked businesses whether they were organized or 

headquartered in Oklahoma. The firm did not propose any questions about trustees or 

trust beneficiaries. 

 Based on the survey results, Nichols’ counsel determined that 95% of the sample’s 

royalty owners were Oklahoma citizens “because the data shows indicia of Oklahoma 

citizenship with no conflicting data of citizenship elsewhere.” Based on that 95% 

determination, Kadane performed a statistical analysis and concluded that “it is more 

likely than not that more than 67% of the members of the [entire] proposed plaintiff class 

are Oklahoma citizens.” 
4 

 The district court was not persuaded, finding three significant flaws in the 

evidence. First the district court noted that neither the survey data nor the skip-trace 

investigation provided information as to the citizenship of trust beneficiaries or trustees—

important components of a trust’s citizenship.1

 Second, the district court found that a 

number of individuals identified as Oklahoma citizens were actually deceased, with no 

information provided as to heirs’ citizenship. Finally, the district court found that 

Nichols’ counsel had an “insufficient basis” for determining that some members of the 

random sample were Oklahoma citizens.2

 Accordingly, the district court denied Nichols’ 

motion to abstain and remand, finding he had not shown the applicability of CAFA’s 

home-state exception by a preponderance of the evidence. Nichols now appeals. 

II 

 We review de novo the district court’s interpretation of CAFA’s home-state 

exception to jurisdiction. See Woods v. Standard Ins. Co., 771 F.3d 1257, 1262 

(10th Cir. 2014). “CAFA was enacted to respond to perceived abusive practices by 

plaintiffs and their attorneys in litigating major class actions with interstate features in 

state courts.” Id. (quotation omitted). Thus, “once a defendant establishes [CAFA] 

 1

 See Conagra Foods, Inc. v. Americold Logistics, LLC, 776 F.3d 1175, 1181 

(10th Cir. 2015) (explaining that “[w]hen a trustee is a party to litigation, it is the 

trustee’s citizenship that controls for purposes of diversity jurisdiction” as long as the 

trustee is a real party in interest, and “[w]hen the trust itself is party to the litigation, 

the citizenship of the trust is derived from all the trust’s ‘members,’” which “includes 

the trust’s beneficiaries”), aff’d sub nom. Americold Realty Trust v. Conagra Foods, 

Inc., 136 S. Ct. 1012 (2016). 

2

 For instance, the skip-trace reports indicated that only 35 of the sample’s 

class members had Oklahoma driver’s licenses and that 37 members had nonOklahoma addresses. 
5 

removal is proper, a party seeking remand to the state court bears the burden of showing 

jurisdiction in federal court is improper under one of CAFA’s exclusionary provisions.” 

Id. Because Nichols concedes the propriety of removal, he must show the applicability of 

a CAFA exception by a preponderance of the evidence. See Mondragon v. Capital One 

Auto Fin., 736 F.3d 880, 884 (9th Cir. 2013); Vodenichar v. Halcón Energy Props., Inc., 

733 F.3d 497, 503 (3d Cir. 2013); In re Sprint Nextel Corp., 593 F.3d 669, 673 (7th Cir. 

2010); see also Dutcher v. Matheson, 840 F.3d 1183, 1189, 1190 (10th Cir. 2016).3 “The 

preponderance of the evidence standard requires the party with the burden of proof to 

support its position with the greater weight of the evidence.” Nutraceutical Corp. v. Von 

Eschenbach, 459 F.3d 1033, 1040 (10th Cir. 2006) (footnote omitted). 

 Nichols contends that a rebuttable presumption of citizenship arises from his 

allegation that the proposed class members are Oklahoma residents. And because 

 3

 Nichols suggests that in order to meet his burden, he must make only “some 

minimal showing” that at least two thirds of the proposed class members are 

Oklahoma citizens. Reece v. AES Corp., 638 F. App’x 755, 769 (10th Cir. 2016) 

(unpublished). In Reece, a panel of this court observed, in the context of CAFA’s 

local-controversy exception, 28 U.S.C. § 1332(d)(4)(A), that although “[s]everal of 

our sister circuits have required plaintiffs to establish the elements of a CAFA 

jurisdictional exception by a preponderance of the evidence[,] [s]ome district 

courts[ ] . . . have required less proof, embracing a reasonable-probability standard or 

something akin to it.” 638 F. App’x at 768 (emphasis added; citations omitted). The 

Reece panel declined to embrace either approach, and instead selected a burden it 

found common to both, which, as Nichols posits, requires “some minimal showing of 

the citizenship of the proposed class at the time that suit was filed.” Id. at 769 

(quotations omitted). We conclude, however, that a more definitive standard is 

warranted, and we choose to follow our sibling circuits in their use of the more 

exacting preponderance-of-the-evidence standard. That standard is consistent with 

the “strong preference that interstate class actions should be heard in a federal court 

if properly removed by any defendant.” Dutcher, 840 F.3d at 1190 (quotation 

omitted). 
6 

Chesapeake did not offer evidence that more than one-third of the proposed class 

members are not Oklahoma residents, Nichols says, the district court was required to 

abstain. To support this contention, he cites the Sixth Circuit’s majority opinion in 

Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383 (6th Cir. 2016), cert. 

denied, 137 S. Ct. 2242 (2017). The Mason majority reasoned that because “the law 

affords a rebuttable presumption that a person’s residence is his domicile,” id. at 390, and 

because state citizenship is based on domicile, citizenship could be presumed from 

residence—a transitive proposition (i.e., if A = B and B = C, then A = C). The majority 

stated that this proposition was compelling from a policy standpoint: “Affording the 

moving party a rebuttable presumption of citizenship based on residency avoids the 

exceptional difficulty of proving the citizenship of a class of over 100 individuals, given 

the nature and timing of the citizenship inquiry under the local controversy exception.” 

Id. at 392-93. 

 The dissent pointed out that triggering a CAFA exception based on the mere 

allegation of residence conflicted with the federal courts’ “strict duty to exercise the 

jurisdiction that is conferred upon them by Congress.” Id. at 397 (Kethledge, J., 

dissenting) (quotation omitted). And given that abstention had long been considered “an 

extraordinary and narrow exception to that duty,” id. (quotation omitted), the dissent 

concluded the better approach was to follow other circuits and require “at least some facts 

in evidence from which the district court may make findings regarding the class 

members’ citizenship.” Id. at 397-98 (quotation omitted). It cited, among other cases, 

the Tenth Circuit’s unpublished decision in Reece v. AES Corp., in which a panel of this 
7 

court applied in the CAFA-exception context the longstanding view that “allegations of 

mere residence may not be equated with citizenship.” 638 F. App’x at 769 (unpublished) 

(quotations omitted). Thus, the Reece panel said, such allegations must be accompanied 

by “some persuasive substantive evidence (extrinsic to the amended petition) to establish 

the [requisite] citizenship of the class members.” Id. 

 The Eighth Circuit has similarly “read the historical citizenship/residency 

distinction into” the CAFA mandatory exception statute and rejected the assertion that 

“presumptions alone may transform a challenged allegation of residency into the 

establishment of citizenship.” Hargett v. RevClaims, L.L.C., 854 F.3d 962, 966 & n.2 

(8th Cir. 2017) (citing Mason, 842 F.3d at 397-99 (Kethledge, J., dissenting); Reece, 638 

F. App’x at 769-70; and Mondragon, 736 F.3d at 884). 

 We agree with the dissent in Mason, this court’s non-precedential decision in 

Reece, and the other circuits that reject the applicability of a rebuttable presumption of 

citizenship in the context of a CAFA exception invoked based on the mere allegation of 

residence. There is a “strong preference that interstate class actions should be heard in a 

federal court if properly removed by any defendant.” Dutcher, 840 F.3d at 1190 

(quotation omitted). Further, “[a]n individual’s residence is not equivalent to his 

domicile and it is domicile that is relevant for determining citizenship.” Siloam Springs 

Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1238 (10th Cir. 2015); see, e.g., 

Bingham v. Cabot, 3 U.S. (3 Dall.) 382, 383 (1798) (“A citizen of one state may reside 

for a term of years in another state, of which he is not a citizen; for, citizenship is clearly 
8 

not co-extensive with inhabitancy.”).4

 Congress no doubt “mean[t] to incorporate the 

established meaning of these terms,” NLRB v. Amax Coal Co., 453 U.S. 322, 329 

(1981), into the CAFA exceptions premised on “citizenship,” 28 U.S.C. § 1332(d)(4). 

See Hargett, 854 F.3d at 966. We therefore turn to the evidence Nichols submitted to 

show that two-thirds or more of the proposed plaintiff class members were Oklahoma 

citizens. 

III 

 We review for clear error the district court’s factual findings concerning the 

applicability of CAFA’s home-state exception. See Mondragon, 736 F.3d at 886; see 

also Middleton v. Stephenson, 749 F.3d 1197, 1201 (10th Cir. 2014) (indicating that 

domicile and citizenship findings are reviewed for clear error). Under the clear-error 

standard, “we may reverse only if the district court’s finding lacks factual support in the 

record or if, after reviewing all the evidence, we have a definite and firm conviction that 

the district court erred.” Middleton, 749 F.3d at 1201. 

 Nichols maintains that he provided enough evidence of the putative class 

members’ Oklahoma citizenship to require remand. He presented business records 

provided by Chesapeake of its royalty owners along with their Oklahoma addresses; 

identified class members as being exempt from non-resident withholding tax; selected a 

representative sample of class members and obtained citizenship data on those members; 

 4

 Domicile requires both residence in a State and intent to remain there 

indefinitely. Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014). 
9 

and employed a statistician to draw conclusions about the composition of the class based 

on a random sample. Further, he stresses that his evidence was unrebutted. 

 We acknowledge the significant effort Nichols employed to show that at least twothirds of the class members shared Chesapeake’s Oklahoma citizenship. But we note that 

the need for this evidence was of Nichols’ own making: he chose to define the class in 

terms of residence rather than citizenship. See In re Sprint Nextel Corp., 593 F.3d at 676 

(stating that CAFA’s home-state exception would have been satisfied had the plaintiffs 

simply limited the class to Kansas citizens because “it doesn’t take any evidence to 

establish that Kansas citizens make up at least two-thirds of the members of a class that is 

open only to Kansas citizens”). By defining the class in terms of residence, Nichols 

saddled himself with an evidentiary burden, one which he sought to meet through 

admittedly imperfect evidence. 

 In particular, Kadane reached his conclusion that two-thirds or more of the class 

members are Oklahoma citizens by extrapolating from a flawed sample. As the district 

court observed, trusts—which make up nearly 15% of the sample—were not properly 

accounted for. Further, the sample included deceased individuals without providing 

further identifying citizenship information. And finally, the district court alluded to 

information in the skip-trace reports inconsistent with Oklahoma citizenship for some of 

the sample’s members. Nichols does not dispute these problems or otherwise explain 

how Kadane’s evidentiary extrapolation remains statistically viable. 

 Given the clear-error standard of review, we must affirm the district court’s 

conclusion that Nichols failed to prove at least two-thirds of the proposed plaintiff class 
10 

members were Oklahoma citizens by a preponderance of the evidence. The district court, 

therefore, properly determined that CAFA’s home-state exception to exercising 

jurisdiction did not apply. 

IV 

AFFIRMED. 

Entered for the Court 

Carlos F. Lucero 

Circuit Judge