Source: https://www.uclpractitioner.com/class_action_fairness_act/
Timestamp: 2019-04-23 06:48:07+00:00

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Posts categorized "Class Action "Fairness" Act"
New Ninth Circuit CAFA opinion: Chan Healthcare Group, PS v. Liberty Mut. Fire Ins. Co.
In Chan Healthcare Group, PS v. Liberty Mutual Fire Insurance Co., ___ F.3d ___ (Jan. 3, 2017), the Ninth Circuit construed the CAFA provision governing appealability of remand orders.
This consolidated appeal presents an issue of first impression in our circuit, namely the scope of appellate jurisdiction to review a district court’s remand order in a class action case founded on federal question jurisdiction. Remand orders are not appealable as a matter of course. 28 U.S.C. § 1447(d). Nonetheless, as part of the Class Action Fairness Act of 2005 (“CAFA”), Congress created an exception under 28 U.S.C. § 1453(c)(1) that permits courts of appeals to accept appeals from remand orders in cases that are removed “under this section.” Joining our sister circuits, we conclude that this interlocutory review provision is limited to orders granting or denying remand of diversity class actions brought and removed under CAFA.
Ninth Circuit addresses "local controversy" exception to CAFA: Allen v. Boeing Co.
In Allen v. Boeing Co., 821 F.3d 1111 (9th Cir. May 5, 2016), the Ninth Circuit held that the district court had correctly applied the "local controversy" exception to CAFA jurisdiction, and that the case, a mass tort class action, was correctly remanded to state court.
Urging the inapplicability of the "local controversy" exception put the out-of-state defendant in the odd position of arguing that it bore greater responsibility for the alleged harm than its co-defendant, who was local. See id. at 1116-21. The Ninth Circuit concluded that the plaintiffs did, in fact, seek "significant relief" from the local defendant, and that the local defendant's conduct formed a "significant basis" for the plaintiff's claims. Id. The out-of-state defendant also argued that the plaintiffs failed to state a valid claim against the local defendant -- another very strange thing to hear a defendant asserting. See id. at 1121-23. The court disagreed, without addressing the threshold question of whether a defendant can escape application of the "local controversy" exception by attacking the merits of the underlying claim. Id.
It seems like this case has a long history, even though it is just getting started. This is the second CAFA-related appeal heard by the Ninth Circuit. I reported on the earlier Ninth Circuit opinion here.
The rule that a removed case in which the plaintiff lacks Article III standing must be remanded to state court under § 1447(c) applies as well to a case removed pursuant to CAFA as to any other type of removed case.
Plaintiff and California Class members suffered injuries caused by Defendants’ misrepresentations about DiabeStevia because: (a) Plaintiff and the California Class members would not have purchased DiabeStevia on the same terms had they known the true facts; (b) Plaintiff and the California Class paid a premium price due to the false and misleading advertising of DiabeStevia; and (c) DiabeStevia did not have the level of safety, quality, effectiveness or value as promised.
Polo’s standing to bring her CLRA claim does not depend upon her allegation that taking DiabeStevia made her diabetes worse. Indeed, with respect to Polo’s CLRA claim, when Polo ceased taking her diabetes medication—or whether she had diabetes at all—is irrelevant. What matters are her allegations that she thought she had diabetes; that Innoventions marketed DiabeStevia as a treatment for diabetes; and that but for that marketing, she would not have bought DiabeStevia.
Were that the end of the allegations, Polo would likely have standing under Article III. See Hinojos, 718 F.3d at 1104 n.3. But the district court held that because Innoventions fully compensated Polo for “her entire purchase price,” her CLRA claim is moot.5 Under California law, however, that sort of “picking off” of class plaintiffs is ineffective: “[O]nce a person has been the victim of a proscribed practice under the CLRA and makes a demand on behalf of a class, remedying the plaintiff’s individual complaint does not disqualify her as class representative.” Meyer v. Sprint Spectrum, L.P., 200 P.3d 295, 300 (Cal. 2009). Instead, to defeat a class action based on practices proscribed under the CLRA, the defendant “must adequately notify the members of the class and provide an opportunity for an appropriate remedy for the defective goods or services.” Id. (citing Cal. Civ. Code § 1782(c)).
Polo made a demand on behalf of a class on April 6, 2012. Innoventions refunded Polo’s purchase price on May 11, 2012, but does not contend that it provided the notice and remedy to class members required by the CLRA. See Cal. Civ. Code § 1782(c); Meyer, 200 P.3d at 300. Thus, Polo likely retains standing under California law. At a minimum, we cannot say with “absolute certainty” that remand would be futile. Therefore, the district court should have remanded this case to state court pursuant to 28 U.S.C. § 1447(c).
Slip op. at 10-12 (footnote 4 omitted).
It seems to me that the district court erred by dismissing the action in the first place. The "no-pickoff" rule applies in federal court, too. See Gomez v. Campbell-Ewald Co., 768 F.3d 871, 874-75 (9th Cir. 2014) (discussed here); Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948 (9th Cir. 2013) (discussed here); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) (discussed here). Even if the medication did not worsen plaintiff's diabetes, if she purchased the mislabeled product, she probably has a viable CLRA claim, and if she doesn't, the defendant can't eliminate the case by picking her off, regardless of whether the case is in federal or state court. The good news is the plaintiff can now proceed with the case in state court, which is where she wanted to be in the first place. It's too bad about all the wasted time and effort in federal court, though.
In Yocupicio v. PAE Group, Inc., ___ F.3d ___ (9th Cir. Jul. 30, 2015), the Ninth Circuit held that the amounts sought in plaintiff's non-class PAGA claim could not be added to the amounts sought in plaintiff's class claims in order to meet the $5 million threshold for CAFA jurisdiction. Slip op. at 6-9, 11. The Court determined that "in enacting CAFA, Congress was focused on class actions rather than on all representative actions or on cases where a class claim was only a part, perhaps a small part, of a civil action." Id. at 7.
No doubt all class claims are representative in nature. However, not all representative claims are class claims; to say that they are would be a logical fallacy. See Washington v. Chimei Innolux Corp., 659 F.3d 842, 848 (9th Cir. 2011).
Many thanks to the blog reader who forwarded this opinion.
The defendant's removal petition was predicated on CAFA, but the district court remanded because the petition contained only allegations, and not evidence, that the requirements for federal removal jurisdiction -- namely, the $5 million amount-in-controversy requirement -- had been satisfied. Owens v. Dart Cherokee Basin Operating Co., 2013 WL 2237740 (D. Kan. May 21, 2013). The Tenth Circuit denied permission to appeal.
This court owes a duty to the bench and bar to provide guidance regarding the procedural requirements of the Class Action Fairness Act of 2005 (CAFA). Yet it has let stand a district-court decision that will in effect impose in this circuit requirements for notices of removal that are even more onerous than the code pleading requirements that I had thought the federal courts abandoned long ago.
SCOTUSblog's case page has links to the cert. petition and other filings.
In Baumann v. Chase Investment Services, ___ F.3d ___ (9th Cir. Mar. 14, 2014), the Ninth Circuit held that a representative action under PAGA (the Labor Code Private Attorneys General Act of 2004) is not a "class action" subject to removal under CAFA.
In Mondragon v. Capital One Auto Finance, ___ F.3d ___ (9th Cir. Nov. 27, 2013), the Ninth Circuit considered the "local controversy" exception to federal jurisdiction under CAFA, and reversed the district court's remand order.
We conclude that there must ordinarily be facts in evidence to support a finding that two-thirds of putative class members are local state citizens, which is one of the local controversy exception’s requirements, if that question is disputed before the district court. A pure inference regarding the citizenship of prospective class members may be sufficient if the class is defined as limited to citizens of the state in question, but otherwise such a finding should not be based on guesswork. In reaching this conclusion, we join the other circuits that have considered the issue.
Slip op. at 4 (emphasis added). The court held that defining the class as all persons who "purchased a vehicle in California for personal use to be registered in the State of California" was not enough to support an evidentiary inference that two-thirds of the class members were California citizens, as the "local controversy" exception requires. Id. at 8-12. The panel remanded to allow the plaintiff an opportunity to prove, as an evidentiary matter, that the exception applied. Id. at 12-14.
The opinion did not address whether the plaintiff could simply opt to amend the class definition to include only California citizens.
In Rodriguez v. AT&T Mobility Services LLC, ___ F.3d ___ (9th Cir. Aug. 27, 2013), the Ninth Circuit construed the U.S. Supreme Court's first, and so far only, CAFA decision, Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345 (2013) (discussed in this blog post).
Standard Fire addressed whether the plaintiff could avoid federal jurisdiction under CAFA by stipulating that classwide damages did not exceed $5 million or by attempting to waive damages above that figure. The answer was no, although this did not relieve the defendant (as the removing party) of its burden to prove that the amount-in-controversy requirement was met.
In Rodriguez, the parties agreed that Standard Fire required reversal of the district court's remand order, which was issued before the opinion in Standard Fire. The Ninth Circuit directed the district court to reconsider the remand motion. Slip op. at 7.
A lead plaintiff of a putative class cannot reduce the amount in controversy on behalf of absent class members, so there is no justification for assigning to the allegation weight so significant that it affects a defendant's right to a federal forum under § 1332(d)(2). Our reasons for applying a legal certainty standard are now clearly irreconcilable with intervening Supreme Court authority. Accordingly, Lowdermilk has been effectively overruled by Standard Fire.
Slip op. at 14, 15.
Back when Standard Fire was first handed down, a blog reader emailed me to suggest that it overruled Lowdermilk. It turns out this reader was right on according to Rodriguez.
Another Ninth Circuit CAFA opinion: Watkins v. Vital Pharmaceuticals, Inc.
In Watkins v. Vital Pharmaceuticals, Inc., ___ F.3d ___ (9th Cir. Jul. 2, 2013) (per curiam), the Ninth Circuit reversed another remand order after holding that the district court had jurisdiction under CAFA. This time, the opinion addresses the $5 million amount-in-controversy requirement and how it is established.
Judge Fisher filed a separate opinion concurring and dissenting in part.
In Roth v. CHA Hollywood Medical Center L.P., ___ F.3d ___ (9th Cir. Jun. 27, 2013), the Ninth Circuit reversed the district court's remand order, finding that the federal courts had jurisdiction under CAFA and that the defendants' removal petition was not untimely.
Recent U.S. Supreme Court activity of interest: Sears, Roebuck & Co. v. Butler and Mississippi ex rel. Hood v. AU Optronics Corp.
On June 3, 2013, the U.S. Supreme Court granted cert., vacated the opinion, and remanded for reconsideration in a third post-Comcast case: Sears, Roebuck & Co. v. Butler, no. 12-1067.
Butler is a consumer case in which the Seventh Circuit reversed the district court's order denying class certification of a breach of warranty claim involving mold growth in front-load washing machines. Butler v. Sears, Roebuck & Co., 702 F.3d 359 (7th Cir. 2012) (Posner, J.). My original post on the opinion is here.
This is the third case that I'm aware of in which the Supreme Court directed reconsideration in light of Comcast. The other two cases are Whirlpool Corp. v. Glazer, no. 12-322 (also involving front-load washers; see this blog post), and RBS Citizens, N.A. v. Ross, no. 12-165 (involving unpaid overtime wages; see this blog post).
It will be interesting to see what the Sixth and Seventh Circuits do in these cases on remand.
Whether a state's parens patriae action is removable as a "mass action" under the Class Action Fairness Act when the state is the sole plaintiff, the claims arise under state law, and the state attorney general possesses statutory and common-law authority to assert all claims in the complaint.
The case arose out of the LCDs price-fixing litigation. The Fifth Circuit reversed the remand order, finding the public prosecutor action removable under CAFA. Mississippi ex rel. Hood v. AU Optronics Corp., 701 F.3d 796 (5th Cir. 2012).
The Supreme Court's only other CAFA-related case to date is The Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345 (2013), discussed in this blog post.
On Tuesday, the U.S. Supreme Court handed down an opinion in which it considered CAFA for the first time. The Standard Fire Ins. Co. v. Knowles, ___ S.Ct. ___ (Mar. 19, 2013).
As applied here, the statute tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the definition of Knowles’ proposed class and determine whether the resulting sum exceeds $5 million. If so, there is jurisdiction and the court may proceed with the case. The District Court in this case found that resulting sum would have exceeded $5 million but for the stipulation.
And we must decide whether the stipulation makes a critical difference. In our view, it does not. Our reason is a simple one: Stipulations must be binding. [Citations.] The stipulation Knowles proffered to the District Court, however, does not speak for those he purports to represent.
Because his precertification stipulation does not bind anyone but himself, Knowles has not reduced the value of the putative class members’ claims. For jurisdictional purposes, our inquiry is limited to examining the case “as of the time it was filed in state court,” Wisconsin Dept. of Corrections v. Schacht, 524 U. S. 381, 390 (1998). At that point, Knowles lacked the authority to concede the amount-in-controversy issue for the absent class members. The Federal District Court, therefore, wrongly concluded that Knowles’ precertification stipulation could overcome its finding that the CAFA jurisdictional threshold hadbeen met.
The opinion suggests that no pre-certification stipulations or concessions can ever bind absent class members. Such a holding could have ramifications that extend far beyond the context of CAFA jurisdiction.
Knowles argues in the alternative that a stipulation is binding to the extent it limits attorney’s fees so that the amount in controversy remains below the CAFA threshold. We do not consider this issue because Knowles’ stipulation did not provide for that option.
Slip op. at 7. Although not mentioned in the opinion, apparently the $5 million threshold was reached in this case only by adding a potential attorneys' fees award to the potential class members' potential damages. The district court will have to consider on remand whether the attorneys' fees should be counted in the calculation (and if so, what amount should be assumed). In other words, even disregarding the stipulation, the defendant will still have to establish as a factual matter that the amount in controversy exceeds $5 million.
A blog reader emailed me to suggest that Knowles overruled the Ninth Circuit's opinion in Lowdermilk v. United States Bank, N.A., 479 F.3d 994 (9th Cir. 2007) (discussed in this blog post). I have not had an opportunity to go back to the Lowdermilk opinion and consider that idea.
SCOTUSblog had a very interesting post on the opinion by Professor Debra Lyn Bassett of Southwestern Law School.
This morning, the U.S. Supreme Court handed down its opinion in a CAFA case, The Standard Fire Ins. Co. v. Knowles, ___ S.Ct. ___ (Mar. 19, 2013).
In sum, the stipulation at issue here can tie Knowles’ hands, but it does not resolve the amount-in-controversy question in light of his inability to bind the rest of the class. For this reason, we believe the District Court, when following the statute to aggregate the proposed class members’ claims, should have ignored that stipulation. Because it did not, we vacate the judgment below and remand the case or further proceedings consistent with this opinion.
As I explained in this post, the question was whether the plaintiff could defeat CAFA removal by "stipulating" that the amount in controversy did not exceed $5 million. Based on the paragraph quoted above, it sounds like the Supreme Court's answer is no.
I will have more on the opinion in a later post.
In Kuxhausen v. BMW Financial Services NA LLC, ___ F.3d ___ (9th Cir. Feb. 25, 2013), the Ninth Circuit held that the defendant's removal petition was timely filed under CAFA. The Complex Litigator has a detailed post on the opinion.
Today at 10:00 a.m. Eastern, the U.S. Supreme Court is scheduled to hear oral argument in The Standard Fire Ins. Co. v. Knowles, No. 11-1450. In Standard Fire, the Court will consider whether a class action plaintiff can avoid removal under CAFA by stipulating that the action does not seek to recover more than $5 million, which is the minimum amount in controversy required for federal diversity jurisdiction.
Ordinarily, oral argument transcripts are posted to the Court's website later the same day. When the Standard Fire argument transcript is posted online, it should be available at this link.
When a named plaintiff attempts to defeat a defendant's right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a "stipulation" that attempts to limit the damages he "seeks" for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the "stipulation," exceeds $5 million, is the "stipulation" binding on absent class members so as to destroy federal jurisdiction?
UPDATE: The oral argument transcript is now available at the link above. Also, SCOTUSblog had this argument preview last Friday.
On Friday, August 31, 2012, the U.S. Supreme Court granted cert. in a CAFA case involving the $5 million amount-in-controversy requirement for federal diversity jurisdiction over putative class actions. The Standard Fire Ins. Co. v. Knowles, No. 11-1450.
the burden shifts to Plaintiff to prove to a legal certainty that his claim falls under the $5 million threshold for remand to state court. The question is whether a plaintiff may meet his burden of proof by stipulating at the time the complaint is filed that he will not seek more than the federal jurisdictional minimum for himself and the putative class. Even though the Bell court did not specifically reference the legal certainty burden, it did conclude that a clear stipulation would meet the requirements for defeating removal. It follows, therefore, that if a stipulation is legally binding and made in good faith, it can satisfy the plaintiff's legal certainty burden and defeat removal. Bell [v. Hershey Co.], 557 F.3d [953,] 956 [(8th Cir. 2009)]; see also Tuberville v. New Balance Athletic Shoe, Inc., 2011 WL 1527716, *3 (W.D. Ark., April 21, 2011).
Defendant believes Plaintiff has exhibited bad faith in seeking to limit the as-yet-unknown class members to damages over a two-year period, rather than the full five years of damages potentially recoverable under the statute of limitations. See Doc. 9, p. 13. As the master of his complaint, Plaintiff may choose what claims to bring and what claims to leave out. “[A] removing defendant can't make the plaintiff's claim for him; as master of the case, the plaintiff may limit his claims (either substantive or financial) to keep the amount in controversy below the threshold.” Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449 (7th Cir.2005). Defendant fails to cite any authority which states that a plaintiff may not seek to recover damages for a period of time shorter than the statute of limitations provides. Nor is the Court persuaded that Plaintiff's temporal limitation on recovery evidences his bad faith.
Defendant cites to the case of Bass v. Carmax Auto Superstores, Inc., 2008 WL 441962 (W.D. Mo., Feb. 14, 2008), for the proposition that a class plaintiff has no right to limit recovery for a class without court approval. However, the Bass case was decided before Bell, and the holding in Bass contradicts both the plain language and the spirit of the Eighth Circuit's holding in Bell. Furthermore, putative class members may simply opt out of the class and pursue their own remedies if they feel that the limitations placed on the class by Plaintiff are too restrictive. See Murphy, 2011 WL 1559234 at *3 (“... the plaintiffs in state court who choose not to opt out of the class must live with it,” quoting Morgan v. Gay, 471 F.3d 469, 477-78 (3rd Cir.2006), cert. denied, 128 S.Ct. 66 (2007)).
According to the cert. petition, the Eighth Circuit denied the defendant's petition for permission to appeal, and then denied both panel and en banc rehearing.
Consumer Law & Policy Blog has a post on the case.
In State of Nevada v. Bank of America Corp., ___ F.3d ___ (9th Cir. Mar. 2, 2012), the Ninth Circuit confirmed again that parens patriae actions brought by the government are neither "class actions" nor "mass actions" and therefore are not removable under CAFA.
In October, it reached the same conclusion in Washington v. Chimei Innolux Corp., 659 F.3d 843 (9th Cir. 2011), discussed in this blog post.
Another new Ninth Circuit CAFA opinion: Coleman v. Estes Express Lines, Inc.
In Coleman v. Estes Express Lines, Inc., ___ F.3d ___ (9th Cir. Nov. 30, 2010), the Ninth Circuit addressed the "criteria to determine when it is appropriate to hear discretionary appeals under CAFA." Slip op. at 19022.
New Ninth Circuit CAFA opinion: Lewis v. Verizon Communications, Inc.
In Lewis v. Verizon Communications, Inc., ___ F.3d ___ (9th Cir. Nov. 18, 2010), the Ninth Circuit addressed CAFA's $5 million amount in controversy requirement.
Today the Eleventh Circuit handed down a new opinion on rehearing in the Cappuccitti case. Cappuccitti v. DirecTV, ___ F.3d ___ (11th Cir. Oct. 15, 2010). More on this new opinion later.
On July 19, 2010, we issued an opinion in this case. Cappuccitti v. DirecTV, Inc., No. 09-14107, slip op. (11th Cir. July 19, 2010). We based our decision on our interpretation of the jurisdictional requirements of the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.), which we have elsewhere called a “statutory labyrinth.” Lowery v. Ala. Power Co., 483 F.3d 1184, 1199 (11th Cir. 2007). Subsequent reflection has led us to conclude that our interpretation was incorrect. Specifically, CAFA’s text does not require at least one plaintiff in a class action to meet the amount in controversy requirement of 28 U.S.C. § 1332(a). Accordingly, we construe both parties’ petitions for rehearing en banc to include petitions for panel rehearing, vacate our earlier opinion, and replace it with this one.
Slip op. at 2 (footnote omitted) (emphasis added).
The opinion's ensuing discussion of the jurisdiction question is very short, simple and straightforward; nothing surprising about it, this time. Id. at 4-7. The opinion then goes on to address the substantive issue on appeal. It reverses the district court's order denying the defendant's motion to compel arbitration, and remands the case for further proceedings. Id. at 7-17.
In In re DirecTV Early Cancellation Litig., ___ F.Supp.2d ___, 2010 WL 3633079, *9-*10 (C.D. Cal. Sept. 7, 2010), Judge Guilford of the Central District joined Judge Alsup of the Northern District in declining to follow Cappuccitti v. DirecTV, Inc., 611 F.3d 1252 (11th Cir. 2010), calling the decision "misguided in both the reasoning and result."
Two petitions for en banc rehearing have been filed in Cappuccitti. The defendant's rehearing petition is here and the plaintiffs' petition is here (both links via CAFA Law Blog).
Three new federal decisions on class action issues: Wolin v. Jaguar Land Rover, Avritt v. Reliastar Life Ins. Co., and Cappuccitti v. DirecTV, Inc.
In Wolin v. Jaguar Land Rover North America LLC, ___ F.3d ___ (9th Cir. Aug. 17, 2010), the Ninth Circuit reversed an order denying class certification of vehicle defect claims brought under Michigan and Florida consumer protection laws.
In Avritt v. Reliastar Life Ins. Co., ___ F.3d ___ (8th Cir. Aug. 12, 2010), the Eighth Circuit affirmed an order denying class certification of UCL and other consumer protection claims.
In Cappuccitti v. DirecTV, Inc., ___ F.3d ___ (11th Cir. Jul. 19, 2010), the Eleventh Circuit dismissed a putative class action for lack of jurisdiction under CAFA. This opinion (which I think badly misinterprets CAFA and probably won't be followed in other Circuits) has generated a lot of buzz. Judge Alsup has already declined to follow it in one CAFA case, Gutierrez v. Wells Fargo Bank, N.A., ___ F.Supp.2d ___, 2010 WL 3155934 (N.D. Cal. Aug. 10, 2010) (slip op. at 82). The CAFA Law Blog reported last Friday that a petition for panel or en banc rehearing was filed on August 9, 2010.
By the way, the extended deadline for the cert. petition in Dukes v. Wal-Mart is this coming Thursday, August 26. I will post about that and link to the petition as soon as it becomes available online.
New Ninth Circuit CAFA opinion: United Steel v. Shell Oil Co.
Defendants removed this putative class action from state court pursuant to the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. §§ 1332(d), 1453. After denying class certification, the district court concluded that it no longer had jurisdiction and remanded the case to state court. We accepted defendants’ appeal to consider whether the denial of class certification divests federal courts of jurisdiction over cases removed under § 1332(d). Today we join the Seventh and Eleventh Circuits in holding that it does not. If the putative class action was properly removed to begin with, the subsequent denial of Rule 23 class certification does not divest the district court of jurisdiction. The case remains removed and is not to be remanded to state court.
Only the Seventh and Eleventh Circuits have squarely considered this issue, and both have held that the post-removal denial of class certification does not divest federal courts of jurisdiction. See Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806-07 (7th Cir. 2010); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n.12 (11th Cir. 2009).
For purposes of CAFA, and the diversity statute generally, a corporation is deemed a "citizen" of its state of incorporation and "the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1). A corporate defendant's citizenship is key to whether diversity (complete or minimal) exists and whether CAFA's "local controversy" or "home state" exceptions apply. See id. § 1332(d)(2)(A), (d)(3), (d)(4).
We conclude that “principal place of business” is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its headquarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).
Slip op. at 14. As the Court points out, this test does have the benefit, with many potential corporate defendants, of simplicity and predictability. Id. at 15-16. The Court also observes, however, that "under the 'nerve center' test we adopt today, there will be hard cases." Id. at 17. The opinion remands the action for further consideration of whether, applying the "nerve center" test, Hertz is a citizen of New Jersey rather than California. Id. at 19.
My original post on the Ninth Circuit's opinion in Hertz is here.
Yesterday, the Supreme Court handed down its opinion in the CAFA case, Hertz Corp. v. Friend, ___ U.S. ___ (Feb. 23, 2010).
Today, the Court of Appeal (Third Appellate District) handed down its opinion in McAdams v. Monier, Inc., ___ Cal.App.4th ___ (Feb. 24, 2010), once again reversing the order denying class certification of the CLRA and UCL claims.
I will have more on these opinions later.
Yesterday, the U.S. Supreme Court heard oral argument in a CAFA case, Hertz Corp. v. Friend, no. 08-1107. Here is my earlier blog post discussing that case. The plaintiffs' position was argued by none other than fellow SFTLA and CAOC Board member Todd M. Schneider of Schneider Wallace in San Francisco. The transcript is already available online (via SCOTUSblog), and press coverage appears in articles from the National Law Journal, CNNMoney.com, and Courthouse News Service, as well as in today's Daily Journal (no link available).
Being more accustomed to California Supreme Court practice, it's amazing to me how quickly the federal Supreme Court hears cases. Cert. was granted in June 2009, and argument was heard in November 2009, just five months later. In the California Supreme Court it takes years to get to the same point.
Whether, for purposes of determining principal place of business for diversity jurisdiction citizenship under 28 U.S.C. § 1332, a court can disregard the location of a nationwide corporation's headquarters - i.e., its nerve center.
Hertz's Notice of Appeal makes clear that Hertz removed this class action under the Class Action Fairness Act (CAFA). 28 U.S.C. § 1453(c). Therefore, even assuming we lack authority “to accept an appeal from the denial of a motion to remand when a class action has been removed to federal court on the basis of traditional diversity jurisdiction,” Saab v. Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir.2006), rather than pursuant to CAFA, we have jurisdiction over Hertz's timely appeal from the district court's order remanding this class action to state court. 28 U.S.C. § 1453(c)(1).
The district court correctly applied the “place of operations” test to determine Hertz's principal place of business. Tosco Corp. v. Communities for a Better Env't., 236 F.3d 495 (9th Cir.2001); Industrial Tectonics v. Aero Alloy, 912 F.2d 1090 (9th Cir.1990). Taking the facts as set forth in the Declaration of Krista Memmelaar, Hertz's relevant business activities are “significantly larger” in California than in the next largest state, Florida. Although the difference between the amount of Hertz's business activity in California and the amount of its activity in Florida is not as large as the difference deemed to be significant in Tosco, California nevertheless “contains a substantial predominance” of Hertz's operations. Tosco Corp., 236 F.3d at 500.
Neither Tosco nor Industrial Tectonics supports Hertz's argument that we must consider the comparative population of states in which a corporation operates to determine whether activities are significantly larger in one state than another. Id.; Industrial Tectonics, 912 F.2d at 1092. Nor do policy concerns mandate the application of a per capita calculation. With its extensive California contacts and business activities, Hertz is not in jeopardy of being mistreated in California courts.
Because California is Hertz's principal place of business under the “place of operations” test, we do not apply the nerve center test. Tosco, 236 F.3d at 500.
(Footnote omitted.) Another Ninth Circuit case, Davis v. HBSC Bank Nevada, N.A., 557 F.3d 1026 (2009), will probably be impacted as well. See this blog post for more on Davis. The petitioner devoted an entire supplemental brief to a discussion of Davis.

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