Opinion ID: 6345126
Heading Depth: 1
Heading Rank: 1

Heading: CAFA Jurisdiction

Text: “CAFA provides the federal district courts with ‘original jurisdiction’ to hear a ‘class action’ if the class has more than 100 members, the parties are minimally diverse, and the ‘matter in controversy exceeds the sum or value of $5,000,000.’” Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013) (quoting 28 U.S.C. § 1332(d)(2), (d)(5)(B)). However, under the local controversy and home state exceptions to CAFA, a “district court shall decline to exercise jurisdiction” over a class action in which “greater than two-thirds” of proposed class members are citizens of the state in which the action was originally filed, and certain other procedural requirements are 2 Case: 22-30177 Document: 00516336407 Page: 3 Date Filed: 05/27/2022 No. 22-30177 met. 28 U.S.C. § 1332(d)(4).1 The party seeking remand bears the burden of establishing, by a preponderance of the evidence, that the local controversy and home state citizenship requirements are met. Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc. (Preston I), 485 F.3d 804, 814 (5th Cir. 2007). Plaintiffs concede that CAFA’s statutory requirements are met but assert that the local controversy and home state exceptions preclude federal jurisdiction. Concluding, among other things, that more than two-thirds of the proposed class members are Louisiana citizens, the district court agreed and granted Plaintiffs’ remand motion. We review that jurisdictional determination de novo but review factual findings regarding the citizenship of parties for clear error. See Williams v. Homeland Ins. Co., 657 F.3d 287, 290 (5th Cir. 2011); Preston I, 485 F.3d at 809. To determine whether two-thirds of a proposed class are citizens of the state in which a class action was originally filed, we must first define the class. To do so, we review the allegations set out in Plaintiffs’ petition at the time of removal. See Arbuckle Mountain Ranch, Inc. v. Chesapeake Energy Corp., 810 F.3d 335, 341 (5th Cir. 2016). Here, the petition asserts that the class action is brought “on behalf of all residents of the East Bank of Jefferson Parish and all residents of Orleans Parish.” The petition then states: “Until 1 The local controversy exception requires remand if Plaintiffs establish that (1) greater than two-thirds of the class members are citizens of Louisiana; (2) at least one defendant “from whom significant relief is sought” and “whose alleged conduct forms a significant basis for the claims” is a citizen of Louisiana; (3) the principal injuries complained of occurred in Louisiana; and (4) “during the 3-year period preceding the filing of the class action, no other class action has been filed asserting the same or similar factual allegations” against any of the defendants. See 28 U.S.C. § 1332(d)(4)(A). The home state exception requires remand when “two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants” are citizens of Louisiana. See id. § 1332(d)(4)(B). Because only the two-thirds citizenship requirement is in dispute on this appeal, our analysis is limited to that issue. 3 Case: 22-30177 Document: 00516336407 Page: 4 Date Filed: 05/27/2022 No. 22-30177 a more precise determination is made of all residents of the East Bank of Jefferson Parish and all residents of Orleans Parish affected by the failure of the Transmission System, the Plaintiffs allege that the class consists of all persons affected by power outages and residing in the Parishes of within the service area of [sic] Entergy who sustained personal, mental, and economic damages and/or inconvenience as a result of the failure of the Transmission System resulting from Hurricane Ida.” We conclude that, whatever the Plaintiffs may have meant, we must construe the petition as written and the proper reading of these two paragraphs, the first one limiting the class to portions of Jefferson and all of Orleans parish and the second one referencing those parishes and then referring to “the Parishes,” i.e., those parishes, means that the class definition is quite limited in scope: it consists of Louisiana residents and businesses in the East Bank of Jefferson and Orleans Parishes affected by the relevant power outages. Focusing narrowly on the phrase “all persons” and the allegation that Entergy “provide[s] services to 3 million customers in 4 states,” Entergy argues that the class definition must include persons residing outside Louisiana. That interpretation, however, is belied by a plain reading of the petition. Even if one could read the petition more broadly than the conclusion above, of the four states served by Entergy, only Louisiana uses the word “parish” to describe its geographic subdivisions. This should end the matter, but even if we set this compelling fact aside (as Entergy urges us to do) our conclusion remains the same. The petition states that the class action is brought on behalf of residents of two specific parishes; makes repeated references to Louisiana generally and southeast Louisiana specifically; 2 and 2 In addition to the petition’s many references to Louisiana, we note its eleven references to southeast Louisiana specifically. The petition alleges that: (1) Entergy’s 4 Case: 22-30177 Document: 00516336407 Page: 5 Date Filed: 05/27/2022 No. 22-30177 describes how Entergy’s alleged negligence affected the Ninth Ward, the French Quarter, and the Central Business District—all neighborhoods located within New Orleans. Even if, as Entergy suggests, the class might include residents outside East Bank of Jefferson and Orleans Parishes, it is still limited to those residents in parishes served by Entergy (i.e., those in Louisiana). Considering the petition as a whole, we cannot determine that other states are involved. With the class defined, we next determine if the district court clearly erred in concluding that two-thirds of proposed class members are Louisiana citizens. A person’s domicile, demonstrated by residence and the intent to remain, “serves a dual function as his state of citizenship.” Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc. (Preston II), 485 F.3d 793, 797–98 (5th Cir. 2007). At the preliminary stages of a class action, the evidentiary standard for establishing the domicile of more than 100 plaintiffs “must be based on practicality and reasonableness.” Preston I, 485 F.3d at 816. Accordingly, a district court “may make a reasonable assumption of CAFA’s citizenship transmission system failure “left southeast Louisiana without power”; (2) Entergy is aware of climate change affecting southeast Louisiana; (3) Entergy made the decision to service southeast Louisiana; (4) Entergy chose not to invest in underground electricity transmission, which “could have assured regular, consistent, and sustained protected service” in southeast Louisiana; (5) Entergy is the sole provider of electricity to southeast Louisiana; (6) Entergy’s transmission system provides electricity to southeast Louisiana; (7) a 2010 Department of Energy study was directed in part to Entergy’s transmission system in southeast Louisiana; (8) prior to Hurricane Ida, Entergy asserted that its southeast Louisiana systems could withstand winds of 150 mph; (9) Hurricane Ida passed through southeast Louisiana; (10) Entergy’s failure to exercise reasonable care resulted in the widespread outages in southeast Louisiana; and (11) the citizens of southeast Louisiana are not liable for any contributory negligence for the power outages or corresponding damages. Moreover, the petition provides background information on Entergy—specifically that Entergy has forty electric power plants in twelve states and provides service to customers in four states—but it does not discuss damages occurring in any other state. 5 Case: 22-30177 Document: 00516336407 Page: 6 Date Filed: 05/27/2022 No. 22-30177 requirement from evidence that indicates the probable citizenship of the proposed class.” Williams, 657 F.3d at 291 (internal quotation marks and citation omitted). Moreover, “where a proposed class is discrete in nature, a commonsense presumption should be utilized in determining whether citizenship requirements have been met.” Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 573 (5th Cir. 2011) (per curiam). As aforementioned, based on the class definition and facts alleged, it’s evident that this class will consist overwhelmingly of Louisiana citizens and corporations. To support that reasonable assumption, Plaintiffs adduced an informal survey establishing that many of the proposed class members are indeed Louisiana citizens.3 Entergy takes issue with the survey, asserting that its informal nature renders it “essentially useless” in assessing the citizenship of the full proposed class. We understand Entergy’s arguments regarding the survey’s methodology and reliability, but its conclusions merely support what a commonsense presumption based on the class definition and the factual allegations dictates. At the very least, it was not clearly erroneous for the district court to rely on the survey in reaching its conclusion that at least two-thirds of the proposed class members are Louisiana citizens. Our decision today accords with our prior precedent holding that a class action stemming from a hurricane hitting southeast Louisiana was a truly local controversy.4 See Preston I, 485 F.3d at 821–22. Here, we similarly 3 The survey results established that eighty-two proposed class members are Louisiana citizens: those individuals are physically present in Louisiana; work in Louisiana; and exercise civil and political rights, pay taxes, own property, maintain bank accounts, and belong to churches and clubs in Louisiana. These are all factors used to determine domicile. See Coury v. Prot, 85 F.3d 244, 251 (5th Cir. 1996). 4 Preston II was a companion case to Preston I involving the same class and the same factual circumstances but asserting claims against a different defendant hospital. 485 F.3d 6 Case: 22-30177 Document: 00516336407 Page: 7 Date Filed: 05/27/2022 No. 22-30177 conclude that “the crux of this case revolves around a narrowly defined class and claims stemming from a localized chain of events.” Id. at 821. It’s quite clear this controversy uniquely affects Louisiana to the exclusion of other states. Accordingly, the district court did not clearly err in assuming that at least two-thirds of proposed class members are Louisiana citizens. CAFA’s local controversy and home state exceptions therefore apply, and this case was properly remanded to state court.