Opinion ID: 3168084
Heading Depth: 2
Heading Rank: 2

Heading: Contextual Clues

Text: Under the federal rules, we construe pleadings in their entirety when assessing their sufficiency. See, e.g., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007). Likewise, under Texas rules, pleadings must give an opponent fair notice of the plaintiff’s claims after looking at the allegations as a whole. See, e.g., Dallas Area Rapid Transit v. Morris, 434 S.W.3d 752, 760 (Tex. App.—Dall. 2014, no pet.). We may perform a similar review of the entire pleading when assessing CAFA jurisdiction. Still, in determining the class definition, we are limited to those allegations set out in the plaintiff’s petition at the time of removal. The “application of the local controversy exception depends on the pleadings at the time the class action is removed.” Cedar Lodge Plantation, 768 F.3d at 426. Congress intended to confer broad federal jurisdiction through CAFA, and so “[a]llowing [a plaintiff] 9 Case: 15-10955 Document: 00513334221 Page: 10 Date Filed: 01/07/2016 No. 15-10955 to avoid federal jurisdiction through a post-removal amendment would” conflict with the policy underlying CAFA. Id. at 429. Reviewing Arbuckle’s petition as a whole, we find at most one other paragraph that supports the narrow definition in paragraph 14 and is inconsistent with the broader language of paragraph 23. It is found in the part of the petition identifying the five causes of action, which are labeled as “Counts.” Only the language in one paragraph, in one count, supports the view that only current owners are in the class. Alleging trespass in Count 3, Arbuckle claims “Plaintiff, and the Class, is the rightful owners of the mineral estates of the Properties by virtue of a valid foreclosure action.” Arbuckle’s employment of the present tense (even if also the singular verb) supports that Arbuckle intended its class to include only current owners. The dissent finds further support for the narrow definition in paragraphs 42 and 43, which are found in Count 3. We disagree. In paragraph 42, Arbuckle alleges that the defendants’ acts of trespass “have caused, and continue to cause damage to Plaintiff and the Class.” The dissent contends this sentence could be interpreted to mean that all proposed class members continue to experience damage. The stated language, however, is not at all inconsistent with the broad definition. It might just as easily mean damage was previously caused to some class members and continues to occur for others. Further, in paragraph 43, Arbuckle “seeks injunctive relief for themselves and the Class” to prevent further acts of trespass. Conceivably, injunctive relief for all class members implies that all class members continue to suffer acts of trespass. True, the proposed class may seek different remedies: former owners will seek money damages for past harms, and current owners will seek money damages for past and current harms plus injunctive relief. The district court may eventually have to decide whether the class can and/or must be split into 10 Case: 15-10955 Document: 00513334221 Page: 11 Date Filed: 01/07/2016 No. 15-10955 subclasses pursuant to Federal Rule of Civil Procedure 23(c)(4). Still, “the fact that a class is overbroad and should be divided into subclasses is not in itself a reason for refusing to certify the case as a class action,” let alone a reason to divest a federal court of jurisdiction. See Culver v. City of Milwaukee, 277 F.3d 908, 912 (7th Cir. 2002). In none of the other four Counts is there support for either class definition. Count 1, seeking termination of the leases, asserts that each class member has an interest under a deed or contract, and that the prior oil and gas leases do not bind the member. Count 2 seeks an injunction and an accounting for production taken under invalid leases, and an order that proceeds from future production go to the class. Count 4 alleges conversion, and claims that class members are the rightful owners of proceeds of production. Finally, Count 5 claims that defendants have unpaid royalties due to the class. None of these remaining Counts shed any light on the correct class definition. The petition is ambiguous. Arbuckle asks us to rely on one of our recent unpublished opinions as authority that a narrow definition trumps a broad definition. See In re Chinese-Manufactured Drywall Prods. Liab. Litig., No. 14-31355, 2015 WL 5771919 (5th Cir. Oct. 2, 2015). The case interprets the scope of a settlement class to determine whether a new claim is precluded under the terms of former settlement agreements. On appeal, we noted that the past settlement agreements contained conflicting language about the scope of the settlement classes, defining the class broadly in parts and narrowly in others. Id. at . We noted that, when reviewing the scope of a settlement agreement, “the ‘Class Member’ definitions are not considered in isolation; instead they are to be considered in the context of the agreements as a whole.” Id. at . We then relied on other provisions in the settlement agreement to 11 Case: 15-10955 Document: 00513334221 Page: 12 Date Filed: 01/07/2016 No. 15-10955 show the class was intended to be limited. These other provisions, governing the allocation of settlement funds, could not be properly effectuated under the defendants’ proposed broader definition. Chinese-Manufactured Drywall does not affect our analysis. First, it involves interpretation of a settlement agreement, i.e., a contract, not pleadings. More importantly, it stands for the uncontroversial idea that context matters. We should look to the entire relevant document when interpreting ambiguous class size definitions. That guiding principle does not dictate how this panel should resolve the present action, where two equally plausible class size definitions are included in the same petition. Finally, that opinion deemed it “nonsensical” to find the class included members who were “never entitled to a benefit under” the settlement agreements: “It spurns simple reasoning to require individuals to opt out of a settlement agreement under which they were never entitled to compensation.” Id. at . Conversely, in our case, Arbuckle’s petition seeks money damages for all production “since the later of 2004 or from the first production,” which if awarded would benefit both former and current owners. We summarize the conflicting indications in Arbuckle’s petition. The formal class definition includes “all” those who were purchasers of interests as a result of foreclosure. A different part of the petition limits the class to current owners. One paragraph in one of the causes of action is written in terms that seem reasonably limited, primarily, but not entirely, to current owners. The other causes of action include no self-contained limitations and would equally apply to the broad or narrow definition. 12 Case: 15-10955 Document: 00513334221 Page: 13 Date Filed: 01/07/2016 No. 15-10955 III. Ambiguity and the Rule Favoring Federal Jurisdiction A party seeking removal must establish federal jurisdiction. See Hood ex rel. Miss. v. JP Morgan Chase & Co., 737 F.3d 78, 84–85 (5th Cir. 2013). When CAFA’s basic requirements are satisfied, as they are in this case, and where a party seeks remand under an exception to federal jurisdiction, that party “must prove that the CAFA exceptions to federal jurisdiction divest the district court of subject matter jurisdiction.” Preston, 485 F.3d at 797. Underlying our analysis is our need to resolve lingering doubts in favor of exercising federal jurisdiction when an exception to jurisdiction is asserted. See Opelousas, 655 F.3d at 360. Arbuckle’s petition contains two conflicting class definitions. After reviewing Arbuckle’s petition, the parties’ briefs, and the record, we have no basis to conclude the class is only of current owners, or conversely that it covered all post-foreclosure owners including interim owners. Further, plaintiffs concede there is no evidence that, under the broad definition, over two-thirds of the class are Texas citizens. Because the class that the petition at the time of removal sought to have certified is not clearly limited to current owners, and with inadequate evidence of the citizenship of the interim owners in the broader class, Arbuckle has not proven that the exception for local controversies applies. We REVERSE the judgment of the district court remanding this case to state court. The case is REMANDED to district court, and we DIRECT that the case be reinstated on that court’s docket. 13 Case: 15-10955 Document: 00513334221 Page: 14 Date Filed: 01/07/2016 No. 15-10955