Opinion ID: 613226
Heading Depth: 1
Heading Rank: 5

Heading: Home State Mandatory Abstention

Text: CAFA's home state mandatory abstention provision states: (4) A district court shall decline to exercise jurisdiction under paragraph (2) [over a class action in which]  (B) 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). In other words, the home state mandatory abstention provision prevents a federal district court from exercising subject matter jurisdiction when 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).
Jurisdictional determinations should be made largely on the basis of readily available information. S. REP. NO. 109-14, at 44, 2005 U.S.C.C.A.N. 3, 38; accord Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 692 (9th Cir. 2006); Hirschbach v. NVE Bank, 496 F.Supp.2d 451, 460 (D.N.J.2007). The court has wide, but not unfettered, discretion to determine what evidence to use in making its determination of jurisdiction. Coury, supra, 85 F.3d at 249; accord Preston II, 485 F.3d at 817; see, e.g., Preston v. Tenet Healthsys. Mem'l Med. Ctr., Inc., 463 F.Supp.2d 583, 592-93 (E.D.La.2006) (district court ordered the defendants to produce additional evidence regarding the citizenship of the putative class). This court has held that the party objecting [6] to CAFA jurisdiction must prove that the CAFA exceptions to federal jurisdiction divests the district court of subject matter jurisdiction. Preston II, supra, 485 F.3d at 813-14; see also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir.2007); Frazier v. Pioneer Ams. LLC, 455 F.3d 542, 546 (5th Cir. 2006). Here, the Insurance Companies bore the burden of proof as to each element of the local controversy and home state mandatory abstention provisions of CAFA. See, e.g., Preston II, 485 F.3d at 813. Since both of the two mandatory abstention provisions require proof, by a preponderance of the evidence, that two-thirds or more of the members of the proposed class are citizens of the state where the action is filed, the dispositive issue here is whether the Insurance Companies proved the two-thirds element of the CAFA mandatory abstention provisions by a preponderance of the evidence. See 28 U.S.C. § 1332(d)(4)(A)(i)(I); 28 U.S.C. § 1332(d)(4)(B).
In determining diversity jurisdiction, the state where someone establishes his domicile serves a dual function as his state of citizenship. A person's state of domicile presumptively continues unless rebutted with sufficient evidence of change. Domicile requires the demonstration of two factors: residence and the intention to remain. Preston I, 485 F.3d at 797-98 (internal cites omitted). Evidence of a person's place of residence, however, is prima facie proof of his domicile. Preston I, 485 F.3d at 799 (citing Stine v. Moore, 213 F.2d 446, 448 (5th Cir.1954)); Martin, 548 F.Supp.2d at 273 n. 22. Furthermore, once established, [a] person's state of domicile presumptively continues unless rebutted with sufficient evidence of change. Preston I, 485 F.3d at 798; see also Acridge v. Evangelical Lutheran Good Samaritan Society, 334 F.3d at 444, 448 (5th Cir.2003). Here, the Insurance Companies moved to dismiss the Insured' class action based on the local controversy and home state mandatory abstention exceptions to CAFA diversity jurisdiction pursuant to 28 U.S.C. § 1332(d)(4)(A)-(B). The only elements at issues are whether greater than two-thirds (28 U.S.C. § 1332(d)(4)(A)(i)(I)) or two-thirds or more (28 U.S.C. § 1332(d)(4)(B)) of the members of all of the proposed Insured's classes are citizens of Texas and the United States.
United States census data is an appropriate and frequent subject of judicial notice. See United States v. Esquivel, 88 F.3d 722, 726-27 (9th Cir.1996) ; see also Bennett v. Board of Commissioners for East Jefferson Levee District, 2007 WL 2571942, -5 (E.D.La.2007) (using United States Census Bureau data in CAFA analysis); O'Toole v. Northrop Grumman Corp., 499 F.3d 1218, 1225 (10th Cir.2007) (concluding that the failure to take judicial notice was an abuse of discretion when the party opposing judicial notice did not dispute its accuracy and did not request a hearing on the appropriateness of judicial notice); In re Sprint Nextel Corp., 593 F.3d 669, 675-76 (7th Cir.2010) (surveys of a representative sample of the proposed class might be sufficient evidence). Here, the district court took judicial notice that the relocation rate of American citizens of all ages and races out of Texas was about 5.2% between 2007 and 2009  the relevant time period. United States Census Bureau Statistics / Estimates 2006-08 (excerpt), Appendix 3. In addition, a smaller percentage of people move out of Texas than from any other state. See Pew Research Center Report, American Mobility. Who Stays Put? Where's Home? Social & Demographic Trends (December 17, 2008). Appendix 1, Appendix 2. The Insurance Companies put forth further statistical support showing by a preponderance of the evidence  i.e., that it is more likely than not  that greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of Texas and of the United States. For example, more than 99% of the automobiles that the County Mutuals insure are located in Texas. Also, only about 11% of Texas residents are not United States citizens. Although the Insurance Companies' statistics about Texas residents are not specific to the Insured, these statistics are nonetheless probative, particularly in the absence of any contrary showing by the Insured. Cf. Caruso, supra, 469 F.Supp.2d at 368 (Although there well may be proposed classes where detailed proof of the two-thirds citizenship requirement is required, the Court finds that common sense should prevail in this closed-end class involving people who, as noted, hold an asset that is a measure of domicile, their home.); see also Coury, supra, 85 F.3d at 251(noting that factors for determining domicile include places where the litigant ... owns real and personal property). Even more so, the anti-discrimination provision of the Texas Insurance Code is the statutory basis for this action. Likewise, the Insured limit their proposed class to persons who purchased an automobile insurance policy in Texas.  Indeed, the principal injuries resulting from the alleged conduct or any related conduct of each of the Insurance Companies occurred in Texas. Additionally, the County Mutuals are citizens of Texas and only issue policies in Texas. The County Mutuals are the primary defendants, because all putative class members, by definition, have claims against the County Mutuals, and as the entities that issued the insurance policies, the County Mutuals have a primary role in the alleged discrimination. A preponderance of the evidence (statistical and otherwise) thus shows that the Insured's proposed class were domiciled in Texas at the time the complaint was filed.
The evidentiary standard for establishing citizenship and domicile at this preliminary stage must be practical and reasonable: The requisite showing under CAFA prompts this court to reconcile congressional intent, our precedent for determining citizenship, and judicial economy. Thus, the evidentiary standard for establishing the domicile of more than one hundred plaintiffs must be based on practicality and reasonableness. Preston II, supra, 485 F.3d at 813. Citizenship, for purposes of proving an exception to CAFA, must be analyzed as of the date the complaint or amended complaint was filed. 28 U.S.C. § 1332(d)(7); Preston I, 485 F.3d at 798; Martin v. Lafon Nursing Facility, 548 F.Supp.2d 268, 271 (E.D.La.2008). In Joseph v. Unitrin, Inc. ( Unitrin ), 2008 WL 3822938,  (E.D.Tex.), the district court addressed whether a claim against insurers for cancellation of insurance coverage for dwellings, household goods, and wearing apparel should be remanded to state court. The class action plaintiffs in Unitrin, like the Insurance Companies here, argued that the local controversy exception to class action diversity jurisdiction, 28 U.S.C. § 1332(d)(4)(A), prevented the court from exercising jurisdiction because greater than two-thirds of the proposed class members were citizens of Texas. Unitrin, supra, at 2. The insurance companies in Unitrin responded that the insured had failed to offer sufficient proof that more than two-thirds of the proposed class members were Texas citizens. Id. In Unitrin, the court analyzed the evidence of citizenship and noted that the proposed class was made up of Texas residents who are policyholders whose policies were cancelled and there was no evidence of a mass exodus of more than one-third of the proposed class from Texas during the applicable time period. Id. The court also noted that one of the insurer defendants, like the County Mutuals here, was limited by Texas law to writing homeowners insurance only in Texas. Id. The court reasoned that [b]ecause the putative class members are alleged to be Texas residents, logic dictates that their homes, and by extension, their domicile, remain in Texas. Id. The court further noted that because the policies cover both the residence and the household affects, it can be assumed that the members of the putative class own both real and personal property in Texas. Id. Ultimately, the court held that [i]n light of these factors and the discrete nature of the proposed class, [the class action plaintiffs] need not produce additional evidence in order to demonstrate that more than two-thirds of the potential plaintiffs are Texas citizens. Id. Like the class action plaintiffs in Unitrin, the Insurance Companies here produced evidence of (1) insurance of personal property (motor vehicles  likely garaged at the residence of the owner) located in Texas and (2) authority of county mutual insurers under Texas law to write auto insurance only for vehicles located in Texas. See Tex. Ins.Code § 912.151 (A county insurance company that qualifies for statewide operation may write all lines of automobile insurance. (Emphasis added.).) Additionally, the courts have acknowledged that where a proposed class is discrete in nature, a common sense presumption should be utilized in determining whether citizenship requirements have been met. See Bennett, 2007 WL 2571942, at ; Caruso v. Allstate Insurance Company, 469 F.Supp.2d 364, 368 (E.D.La. 2007). For example, in Caruso, the plaintiffs sought to represent a class that included all Louisiana homeowners who had purchased homeowner's policies from one of six insurance companies named as defendants to the action. Id. at 367. Because owning a home is an indicium of a person's domicile, the court held that the plaintiff's own characterizations of the class, particularly plaintiffs' assertions that they represented a class of individuals covered by homeowner's policies for homes located in Louisiana, created a reliable presumption that the class was comprised of Louisiana citizens. Id.; Dunham v. Coffeyville Res., L.L.C., 2007 WL 3283774, at  (D.Kan. Nov. 6, 2007) (finding that plaintiffs' characterization of class as residents, domiciliaries, and property owners of Coffeyville, Kansas demonstrated its local nature). The Insured, more likely than not (or by a preponderance of the evidence), garaged their cars in Texas. Registering a motor vehicle and insuring it in Texas is some evidence of an intent to remain in Texas  at least for a while. Unlike owning a second home, a vehicle owner is more likely than not inclined to wait until actual relocation to register and insure a vehicle. The Insured produced no evidence that any potential class member intended to establish a domicile outside of Texas. Based on the statistical evidence produced by the Insurance Companies, the district court correctly concluded that two-thirds or more of the Insured's proposed class of insurance policy holders were citizens of Texas with both residency and the intention to remain in Texas, by a preponderance of the evidence, at the time the Insured filed their complaint.