Court Opinion

ID: 9834554
Source: CourtListenerOpinion
Date Created: 2023-09-02 00:00:31.681754+00
Date Added: 2024-06-11T11:26:40.360515
License: Public Domain

Case: 22-30553     Document: 00516882126       Page: 1    Date Filed: 09/01/2023

           United States Court of Appeals
                for the Fifth Circuit
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                          FILED
                               ____________
                                                                  September 1, 2023
                                 No. 22-30553                        Lyle W. Cayce
                               ____________                               Clerk

   State of Louisiana, By and Through its Division of Administration;
   East Baton Rouge Law Enforcement District;
   Claiborne Parish Law Enforcement District; Rapides
   Parish Law Enforcement District; East Feliciana
   Parish Law Enforcement District; West Feliciana
   Parish Law Enforcement District; Grant Parish Law
   Enforcement District; Acadia Parish Law Enforcement
   District; Tangipahoa Parish Law Enforcement
   District; Franklin Parish Law Enforcement District;
   Ascension Parish Law Enforcement District; Sid J.
   Gautreaux, III, in his official capacity as Sheriff of East Baton Rouge
   Parish; Samuel A. Dowies, in his official capacity as Sheriff of Claiborne
   Parish; Mark Wood, in his official capacity as Sheriff of Rapides Parish;
   Jeff Travis, in his official capacity as Sheriff of East Feliciana Parish;
   Brian Spillman, in his official capacity as Sheriff of West Feliciana
   Parish; Steven McCain, in his official capacity as Sheriff of Grant Parish;
   K. P. Gibson, in his official capacity as Sheriff of Acadia Parish; Daniel
   Edwards, in his official capacity as Sheriff of Tangipahoa Parish; Kevin
   Cobb, in his official capacity as Sheriff of Franklin Parish; Bobby Webre,
   in his official capacity as Sheriff of Ascension Parish,

                                                         Plaintiffs—Appellees,

                                     versus

   i3 Verticals Incorporated; i3 Verticals, L.L.C.; i3-
   Software & Services, L.L.C.; 1120 South Pointe
   Properties, L.L.C., formerly known as Software and Services
   of Louisiana, L.L.C.; Gregory Teeters; Scott
   Carrington,
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                                          Defendants—Appellants.
                  ______________________________

                  Appeal from the United States District Court
                      for the Middle District of Louisiana
                            USDC No. 3:21-CV-572
                  ______________________________

   Before Elrod, Ho, and Oldham, Circuit Judges.
   James C. Ho, Circuit Judge:
          The Class Action Fairness Act excludes federal jurisdiction over class
   actions with “less than 100” plaintiff class members.          See 28 U.S.C.
   § 1332(d)(5)(B). In this class action brought by Louisiana sheriffs and law
   enforcement districts, we hold that the law enforcement districts are separate
   entities from the sheriffs, and that together, they bring the total number of
   Plaintiffs over the hundred-plaintiff threshold.
          We nevertheless conclude that this class action does not belong in
   federal court. That’s because the Act also establishes a local controversy
   exception to federal jurisdiction. 28 U.S.C. § 1332(d)(4). This exception
   requires at least one in-state defendant “whose alleged conduct forms a
   significant basis for the claims asserted” and “from whom significant relief
   is sought.” Id. § 1332(d)(4)(A)(i)(II).
          Plaintiffs allege harm from unlawful conduct spanning from 2015 to
   2020. Defendants include an in-state business allegedly responsible for all of
   Plaintiffs’ harms until 2018, when it was acquired by an out-of-state business.
   We must decide whether the in-state Defendants’ conduct forms a
   “significant basis” for Plaintiffs’ claims, and whether Plaintiffs are seeking
   “significant relief” from the in-state Defendants. We answer yes to both
   questions and therefore affirm the district court in remanding this case to
   state court under the local controversy exception.

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                                         I.
          This is a class action brought by Louisiana sheriffs and Louisiana law
   enforcement districts against purveyors of software. The sheriffs and law
   enforcement districts allege that the software purveyors sold them defective
   software and then failed to administer the software properly. This failure to
   service the software properly took place continuously over a period from
   2015 to 2020.
          Crucially for this appeal, Defendants include both in-state and out-of-
   state software purveyors. From 2015 to late 2018, only in-state Defendants
   were responsible for the alleged wrongdoing—South Pointe, a Louisiana
   company, and its owner, Gregory Teeters, a Louisiana individual. In late
   2018, out-of-state company i3-Software and Services acquired South
   Pointe’s software business. As a result, i3-Software and Services—together
   with its alter egos, out-of-state entities i3 Verticals, LLC and i3 Verticals,
   Inc., and its Louisiana owner, Scott Carrington—bears responsibility for the
   alleged conduct after 2018.
          Plaintiffs originally sued in Louisiana state court. But Defendants
   removed to federal district court. Plaintiffs then sought remand to Louisiana
   state court, arguing that the local controversy exception to the Class Action
   Fairness Act applied. The magistrate issued a report that recommended
   remand under the local controversy exception. The district court adopted
   the magistrate’s report. Defendants now appeal the district court’s remand
   to state court.
                                        II.
          To be heard in federal court, a class action must have at least a
   hundred plaintiff class members. That’s because the Class Action Fairness
   Act excludes federal subject-matter jurisdiction over a class action where
   “the number of members of all proposed plaintiff classes in the aggregate is

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   less than 100.” 28 U.S.C. § 1332(d)(5)(B). See Mississippi ex rel. Hood v. AU
   Optronics Corp., 571 U.S. 161, 169 (2014) (“CAFA provides that in order for
   a class action to be removable, ‘the number of members of all proposed
   plaintiff classes’ must be 100 or greater.”).
          Plaintiffs argue that this class action is not removable to federal court
   because it has fewer than a hundred class members. This argument goes to
   subject-matter jurisdiction, so we are duty-bound to consider it, even though
   Plaintiffs raise it for the first time on appeal. See Capron v. Van Noorden, 6
   U.S. 126, 126–27 (1804).
          As Plaintiffs explain, you can reach the hundred-person jurisdictional
   threshold only by adding the sixty-four Louisiana law enforcement districts
   to the sixty-four Louisiana sheriffs.         And Plaintiffs urge that the law
   enforcement districts are not separate entities capable of suit. Instead,
   Plaintiffs claim, each law enforcement district is one with its sheriff. Take
   away the law enforcement districts as separate juridical persons, and you’re
   left with the sixty-four sheriffs—far fewer than the hundred plaintiffs
   required for federal jurisdiction.
          State law determines whether a local government entity, such as a law
   enforcement district, is a person capable of suit. Under the Federal Rules, an
   entity’s “[c]apacity to sue or be sued is determined . . . by the law of the state
   where the court is located.” Fed. R. Civ. P. 17(b)(3). See Edmiston v.
   Louisiana Small Business Development Center, 931 F.3d 403, 406 (5th Cir.
   2019) (“[T]he capacity of an entity which is neither an individual nor a
   corporation to be sued in federal court is determined by state law.”); Darby
   v. Pasadena Police Dep’t, 939 F.2d 311, 313 (5th Cir. 1991) (applying Texas
   state law to determine whether a Texas local government entity had the
   capacity to sue or be sued in an appeal from the Southern District of Texas).

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          This is an appeal from the Middle District of Louisiana. So Louisiana
   state law governs whether the Louisiana law enforcement districts can sue as
   plaintiffs, distinct from the Louisiana parish sheriffs.
          “Under Louisiana law, a governmental entity is an independent
   juridical entity when ‘the organic law grants it the legal capacity to function
   independently and not just as the agency or division of another governmental
   entity.’” Edmiston, 931 F.3d at 407 (quoting Roberts v. Sewerage & Water Bd.
   of New Orleans, 634 So. 2d 341, 347 (La. 1994)).
          Louisiana law, including the organic law that establishes the law
   enforcement districts, grants the districts the capacity to function
   independently from the sheriffs. So the law enforcement districts are distinct
   juridical persons capable of suit.
          The sheriffs and the law enforcement districts stem from distinct
   sources of organic law. The state constitution directly creates the office of
   parish sheriff. See La. Const. art. 5, § 27 (“In each parish a sheriff shall
   be elected for a term of four years. He shall be the chief law enforcement
   officer in the parish.”). The law enforcement districts, by contrast, are
   creatures of statute. See La. Stat. Ann. § 13:5901 (“There is hereby
   created, in each parish . . . a special district to be known as a law enforcement
   district for the purpose of providing financing to the office of sheriff for that
   parish.”).
          State statute empowers law enforcement districts to “execute . . .
   contracts and other instruments.” La. Stat. Ann. § 13:5904(A)(1). And
   it makes those contracts “binding upon the district . . . notwithstanding that
   the term of such contract . . . extends beyond the expiration of the term of the
   current ex officio chief executive officer,” that is, the sheriff.            Id.
   § 13:5904(B).

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            As the state Attorney General has explained, this means that a law
   enforcement district is distinct from the sheriff. The organic statutes “create
   a public entity known as the ‘Law Enforcement District’ for each parish,
   separate from the Sheriff, which has perpetual existence and which is
   therefore capable of entering into obligations exceeding the term of a
   Sheriff.” Louisiana Attorney General Opinion No. 09-0003 (Apr. 30, 2009),
   2009 WL 1416444, at *2 (quoting Louisiana Attorney General Opinion No.
   08-0072 (Apr. 10, 2008)).
            A sheriff’s contracts only bind that sheriff, and not his successor. By
   contrast, a law enforcement district’s contracts may bind that district even
   past the current sheriff’s term of office. See id. at *2–3. And that’s why the
   state legislature created separate law enforcement districts: as a workaround
   for the problem of a sheriff’s contracts binding only the current sheriff. Id.
   at *2.
            So a law enforcement district can enter contracts that bind the district
   beyond the sheriff’s term. Similarly, a law enforcement district can own
   property, see La. Stat. Ann. § 13:5522(D)—property that the sheriff
   himself does not own, see Cozzo v. Tangipahoa Parish Council, 279 F.3d 273,
   283 (5th Cir. 2002). So it would be surprising if a law enforcement district
   lacked the capacity to sue and be sued as a distinct juridical person.
            Unsurprisingly, Louisiana courts treat law enforcement districts as
   capable of suit. See, e.g., Law Enforcement District of Jefferson Parish v. Mapp
   Construction, LLC, 296 So. 3d 1260, 1262 (La. Ct. App. 2020) (law
   enforcement district sues contractor for breach); Natchitoches Parish Law
   Enforcement District v. Decimal, Inc., 124 So. 3d 549, 553 (La. Ct. App. 2013)
   (affirming sanctions against defendant in suit brought by law enforcement
   district).

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          By contrast, a sheriff’s office has no status independent from that of
   the sheriff himself. See Edmiston, 931 F.3d at 407 (“Louisiana sheriffs are
   juridical entities that can be sued, but Louisiana sheriff’s offices are not.”).
   Accordingly, when a sheriff’s office is listed as a defendant, Louisiana courts
   either dismiss claims against the sheriff’s office, see Markley v. Town of Elton,
   829 So. 2d 1213, 1214 n.1 (La. Ct. App. 2002), or they substitute the sheriff
   as the correct defendant, see Chandler v. Ouachita Parish Sheriff’s Office, 121
   So. 3d 1216, 1219 n.1 (La. Ct. App. 2013).
          Plaintiffs here argue that a law enforcement district, like a sheriff’s
   office, is one with the sheriff. That’s because the sheriff is “ex officio the
   chief executive officer of the district,” which is “coterminous with the
   boundaries of the parish.” La. Stat. Ann. § 13:5901. But the fact that
   the sheriff is the CEO of the law enforcement district does not vitiate the
   district’s separate juridical personhood. Unlike the sheriff’s office, which is
   “simply an office operated by the Sheriff . . . whose authority is derived from
   the state constitution,” Edmiston, 931 F.3d at 407 (quoting Ferguson v.
   Stephens, 623 So. 2d 711, 715 (La. Ct. App. 1993)), the law enforcement
   district is a separate creation of the state legislature.
          The law enforcement district’s distinct organic law, La. Stat.
   Ann. § 13:5901–5912, grants it capacities distinct from those of the sheriff
   himself—including, implicitly, the capacity to sue. This means that the
   Louisiana law enforcement districts can be plaintiffs, bringing the number of
   Plaintiffs past the hundred-plaintiff minimum jurisdictional threshold.
   Accordingly, we reject Plaintiffs’ contention that we must remand to state
   court for lack of subject-matter jurisdiction under § 1332(d)(5)(B).
                                           III.
          Nevertheless, Plaintiffs are right that remand is appropriate under
   CAFA’s local controversy exception to federal jurisdiction. This exception

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   requires that federal courts decline to hear certain class actions of a local
   nature. It ensures that a state court will hear a class action that, among other
   requirements, involves largely in-state plaintiffs and at least one in-state
   defendant. See 28 U.S.C. § 1332(d)(4).
          CAFA’s local controversy exception, 28 U.S.C. § 1332(d)(4)(A),
   reads as follows:
          A district court shall decline to exercise jurisdiction . . . over a
          class action in which . . . greater than two-thirds of the members
          of all proposed plaintiff classes in the aggregate are citizens of
          the State in which the action was originally filed; [and] . . . at
          least 1 defendant is a defendant . . . from whom significant relief
          is sought by members of the plaintiff class; . . . whose alleged
          conduct forms a significant basis for the claims asserted by the
          proposed plaintiff class; and . . . who is a citizen of the State in
          which the action was originally filed.
          To put it simply, “the local controversy exception requires a local
   defendant (a) from whom significant relief is sought; and (b) whose alleged
   conduct forms a significant basis for the claims asserted.” Williams v.
   Homeland Ins. Co. of N.Y., 657 F.3d 287, 291–92 (5th Cir. 2011) (citing 28
   U.S.C. § 1332(d)(4)(A)(i)(II)). These are known as the “significant relief”
   and “significant basis” prongs of the local controversy exception. The
   exception also requires, inter alia, a supermajority of in-state plaintiffs, but it
   is undisputed that Plaintiffs have met that requirement.
          When the district court remands a case to state court under the local
   controversy exception, we review the remand de novo. Arbuckle Mountain
   Ranch of Tex., Inc. v. Chesapeake Energy Corp., 810 F.3d 335, 337 (5th Cir.
   2016). Where, as here, the plaintiffs are seeking remand, “[t]he plaintiffs
   bear the burden of establishing that they fall within CAFA’s local controversy
   exception.” Opelousas Gen. Hosp. Auth. v. FairPay Sols., Inc., 655 F.3d 358,
   360 (5th Cir. 2011) (per curiam).

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          Defendants allege that the district court erred by remanding to state
   court under the local controversy exception. Defendants argue that the
   district court applied a more lenient burden of proof to Plaintiffs’ allegations
   than what CAFA allows. Defendants also deny that Plaintiffs have satisfied
   the “significant basis” prong. The in-state Defendants’ conduct, they argue,
   does not form a “significant basis” of the claims. Finally, Defendants deny
   that Plaintiffs satisfied the “significant relief” prong of the local controversy
   exception. Plaintiffs, they argue, do not seek “significant relief” from the in-
   state Defendants.
          We reject Defendants’ arguments against remand to state court.
                                          A.
          Defendants argue that the district court erred by holding Plaintiffs to
   a more lenient burden of proof than CAFA allows. On Defendants’ view,
   circuit precedent requires plaintiffs to prove the applicability of the local
   controversy exception “with reasonable certainty.” Arbuckle, 810 F.3d at
   338. By using a “preponderance of the evidence” standard, the district court
   (so the argument goes) flouted precedent.
          We reject Defendants’ argument. We hold that a preponderance of
   the evidence suffices to establish the applicability of the local controversy
   exception.
          To be sure, our court’s panel in Arbuckle observed that “[i]f the
   applicability of an exception [to CAFA] is not shown with reasonable
   certainty, federal jurisdiction should be retained.” Id.
          But caselaw prior to Arbuckle stated the standard as “preponderance
   of the evidence.” See, e.g., Hollinger v. Home State Mut. Ins. Co., 654 F.3d
   564, 569–70 (5th Cir. 2011) (“CAFA requires federal courts to decline
   jurisdiction over a proposed class action if . . . the [local controversy]

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   exception[] is proven by a preponderance of the evidence.”). And under our
   circuit’s rule of orderliness, Arbuckle was bound by this previous panel
   decision. See Gahagan v. USCIS, 911 F.3d 298, 302 (5th Cir. 2018).
          Likewise, our caselaw since Arbuckle has continued to state the
   standard as “preponderance of the evidence.” See, e.g., Stewart v. Entergy
   Corp., 35 F.4th 930, 932 (5th Cir. 2022) (“The party seeking remand bears
   the burden of establishing, by a preponderance of the evidence, that the local
   controversy . . . requirements are met.”).
          As we now read Arbuckle, it simply restates the same preponderance
   standard in different language. After all, “the language of an opinion is not
   always to be parsed as though we were dealing with the language of a statute.”
   Brown v. Davenport, 142 S. Ct. 1510, 1528 (2022). We need not take
   “reasonable certainty” to mean something different from “preponderance
   of the evidence.”
          Arbuckle itself equivocates between “reasonable certainty” and
   “preponderance of the evidence.” Compare 810 F.3d at 338 (exception must
   be shown “with reasonable certainty”) with id. at 339 (requirement must be
   proven “by a preponderance of the evidence”).
          And circuit precedent treats the two terms as synonyms in other
   contexts. See Mobil Expl. & Producing U.S., Inc. v. Cajun Constr. Servs., Inc.,
   45 F.3d 96, 101–02 (5th Cir. 1995) (“[T]he plaintiff must prove damages with
   reasonable certainty, but this merely means that the plaintiff must prove
   damages by a preponderance of the evidence as in other civil contexts.”)
   (footnote omitted). So here too we hold that this circuit’s invocation of
   “reasonable certainty” simply means “preponderance of the evidence”
   when it comes to the burden of proof for the local controversy exception.

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                                          B.
          For the local controversy exception to apply, an in-state defendant’s
   alleged conduct must “form[] a significant basis for the claims asserted by
   the proposed plaintiff class.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(bb).
          Plaintiffs and Defendants agree that our decision in Opelousas
   provides the correct standard for the “significant basis” prong of the local
   controversy exception.      Under Opelousas, the plaintiffs must provide
   “information about the conduct of [an in-state defendant] relative to the
   conduct of the other defendants.” 655 F.3d at 361. That is, they must
   “distinguish[]” an in-state defendant’s alleged conduct and “estimate” the
   alleged conduct attributable to an in-state defendant versus the out-of-state
   defendant. Id. at 362. By doing all this “in the allegations of the complaint,”
   the plaintiffs can “establish that [the in-state defendant’s] conduct forms a
   significant basis of [their] claims.” Id.
          In their first amended petition, the operative complaint, Plaintiffs
   allege that “Sheriffs unknowingly purchased defective cybersecurity
   hardware and software products . . . . The Products were purchased
   exclusively, or almost exclusively, from [in-state] defendants 1120 South
   Pointe and Gregory R. Teeters.”
          The original sale contracts stipulated that in-state Defendants South
   Pointe and Teeters “would provide, for a limited time after the delivery of
   the Products, cybersecurity services in support of the Products.” And,
   “[a]fter the obligation to deliver such cybersecurity services in the
   Products[’] sale contracts expired by their terms, The Sheriffs made new
   agreements with [in-state Defendants] 1120 South Pointe and Gregory R.
   Teeters for the sole purpose of delivering cybersecurity services.”
          Only “[i]n 2018 [was] the business of [in-state defendant] 1120 South
   Pointe . . . acquired from [in-state-defendant] Gregory Teeters by [out-of-

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   state] defendants i3-Software & Services, i3-Verticals, Inc., and i3-Verticals,
   LLC.” Following this acquisition, “[out-of-state defendant] i3-Software &
   Services and [in-state defendant] Scott Carrington assumed [in-state
   defendant] 1120 South Pointe’s prior role as the provider of cybersecurity
   services to the Sheriffs.”
           Thus, while the petition alleges that “[a]t times between 2015 and
   2020, the Cybersecurity Administrators and their employees engaged in the
   following [unlawful] activities,” all the unlawful conduct prior to the 2018
   acquisition is attributable solely to in-state defendants South Pointe and
   Teeters.        And after the 2018 sale, the unlawful conduct is partially
   attributable to in-state Defendant Carrington, who “personally negotiated
   and/or signed” service agreements with Sheriffs and oversaw the company’s
   activities. 1
           Moreover, the sheriffs bring their redhibition claim—a claim for the
   sale of a defective product, see La. Civ. Code Ann. art. 2520 et. seq.—
   solely against in-state Defendants South Pointe and Teeters. That’s because
   only the in-state Defendants were responsible for the sale of the defective
   products, which occurred prior to the 2018 acquisition. 2
           As to claims involving deficient cybersecurity services, Plaintiffs
   allege that “[a]ll class members . . . received substantially the same
   cybersecurity services from all Defendants.”                The “deficient conduct,

           _____________________
           1
             Because the dissent believes that the post-acquisition conduct is most important,
   it characterizes this a “dispute . . . predominantly between Louisiana plaintiffs and i3
   Verticals, which is a citizen of Delaware and Tennessee.” Post, at _. This ignores the fact
   that, even after the 2018 acquisition, a Louisiana defendant was at the helm of the out-of-
   state business and thus was allegedly responsible for the unlawful conduct as well.
           2
              In arguing that “South Pointe’s conduct was far from a significant portion of
   plaintiffs’ claims,” post, at _, the dissent glosses over this redhibition claim.

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   practices, and protocols of Defendants . . . equally impacted and caused
   damage to all class members.”
          Plaintiffs, then, easily satisfy our circuit’s standard for the “significant
   basis” prong. From 2015 to 2018, in-state Defendants South Pointe and
   Teeters were solely responsible for the defective cybersecurity practices.
   Only in 2018 did out-of-state Defendants i3-Software & Services, i3
   Verticals, Inc., and i3 Verticals, LLC acquire the cybersecurity business and
   became responsible for the unlawful cybersecurity practices.              Of the
   continuous unlawful conduct between 2015 to 2020, all conduct prior to the
   2018 acquisition is attributable solely to in-state Defendants—as is the initial
   unlawful sale of the defective products.
          The 2018 business acquisition cleanly “distinguishes” the conduct
   attributable solely to the in-state Defendants from that attributable to out-of-
   state Defendants. Opelousas, 655 F.3d at 362. And this dividing line likewise
   provides an “estimate” of how much unlawful conduct is on the in-state
   Defendants versus the out-of-state Defendants. Id.
          As Plaintiffs explained in the district court below, “Louisiana
   Defendants (1120 South Pointe and Gregory Teeters) were exclusively
   responsible for the sale of defective software products, and all negligent and
   wrongful conduct related to the provision of cybersecurity services,
   occurring between 2015 and ‘late 2018.’” The “harm . . . caused by this . . .
   conduct was ongoing, and continued unabated until 2020.” Out of some five
   years of continuous unlawful conduct, about three are attributable solely to
   the in-state Defendants.
          The dissent alleges that we are treating “time [as] the basis of
   comparison,” when “Congress told us to evaluate the relative significance of
   South Pointe’s conduct.” Post, at _. But we are not looking to time instead
   of the in-state Defendants’ conduct. We are looking to time to determine the

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   significance of the in-state Defendants’ conduct. Time is relevant to the
   inquiry in a case such as this one, where Plaintiffs allege a continuing tort,
   with in-state Defendants and out-of-state Defendants responsible for that
   continuous unlawful conduct at different times.
          We hold that Plaintiffs have satisfied the “significant basis” prong of
   the local controversy exception.
                                          C.
          The local controversy exception also requires at least one in-state
   defendant “from whom significant relief is sought by members of the plaintiff
   class.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa). Defendants argue that the in-
   state defendant must have a “greater ability to pay” than the out-of-state
   defendants. In other words, they say the in-state defendant must have “deep
   pockets.” We disagree.
          When it comes to CAFA’s local controversy exception, the
   “significant relief” prong means what it says. Any plaintiff who seeks
   significant relief from an in-state defendant satisfies the prong, regardless of
   how much the in-state defendant can actually pay.
          The interpretation of the “significant relief” prong is an issue of first
   impression in our circuit. We begin where we always do—with the text. And
   all the text requires is that “significant relief is sought” from an in-state
   defendant. Id. It says nothing about the in-state defendant’s ability to pay.

          That’s enough to end our inquiry. But it’s worth noting that our sister
   circuits have taken the same view. See Coffey v. Freeport McMoran Copper &
   Gold, 581 F.3d 1240, 1245 (10th Cir. 2009) (per curiam) (“The statutory
   language is unambiguous, and a ‘defendant from whom significant relief is
   sought’ does not mean a ‘defendant from whom significant relief may be
   obtained.’”); Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1016 (9th

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   Cir. 2011) (rejecting the argument that “a determination whether ‘significant
   relief is sought’ against the local defendant under subsection (aa) requires a
   factual determination about the respective ability of the various defendants
   to satisfy a judgment”); Walsh v. Defs., Inc., 894 F.3d 583, 592 (3rd Cir. 2018)
   (“[B]ased on the plain language of the statute, ‘a defendant from whom
   significant relief is sought does not mean a defendant from whom significant
   relief may be obtained.’”) (quoting Coffey); Smith v. Marcus & Millichap, Inc.,
   991 F.3d 1145, 1161 (11th Cir. 2021) (“Nothing in the statute indicates that
   district courts must conduct a factual inquiry into whether a defendant has
   the financial means to pay the damages alleged in the complaint. CAFA does
   not require the district court to examine a defendant’s ability to pay based on
   the unambiguous plain meaning of the statute’s text.”). The dissent’s
   contrary view would create a circuit split. We decline to break with our sister
   circuits, which have thoughtfully analyzed the relevant statutory language.
          So we hold that an in-state defendant’s ability to pay is irrelevant to
   the “significant relief” prong of the local controversy exception. All that
   matters is what the plaintiffs seek in damages—not whether there’s any
   likelihood that they will obtain what they seek. If plaintiffs seek significant
   relief from an in-state defendant, then they satisfy the prong.
          Under this standard, Plaintiffs have easily shown that they are seeking
   significant relief from the in-state Defendants. In their petition for damages,
   Plaintiffs have alleged that all class members were harmed by the in-state
   Defendants’ actions between 2015 and 2018. The in-state Defendants were
   solely responsible for the harm to Plaintiffs during that period—over half of
   the time period, from 2015 to 2020, during which Plaintiffs allege continuing
   injury. Thus, as the district court found, at least half of the damages Plaintiffs
   allege are sought from the in-state Defendants.

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            The dissent claims that we are misconstruing the term “sought.” We
   certainly agree with the dissent that “hyper-literalism is bad textualism.”
   Post, at _. But we reject the notion that our reading of “sought” is hyper-
   literalistic. We are simply applying the ordinary meaning of the verb “to
   seek.”
            As used by Subparagraph (aa), “to seek” means “[t]o ask for,
   demand, request (from a person).” Oxford English Dictionary
   (2nd ed. 1989), s.v., seek, sense 1.8.a. See also Matthew 7:7 (“Ask, and it
   shall be given you; seek, and ye shall find; knock, and it shall be opened unto
   you.”). And although the Bible teaches that those who seek from the Lord
   shall find, when we seek something from our fellow man, we don’t always get
   it.
            The dissent theorizes that no one ever “seeks” anything “without at
   least an infinitesimal hope of finding” it. Post, at _. But that defies common
   usage of the term.
            When a prospective student applies to an academic program, we say
   that he is “seeking” admission. See, e.g., Applications Remain High, Harv.
   Gazette (Feb. 3, 2014) (“This year, 34,295 people sought admission to the
   Class of 2018. Last year, a record 35,023 applied . . . .”); Lindsay Ellis, Justice
   Dept. Slams Harvard Admissions in Affirmative-Action Filing, Chron.
   Higher Educ. (Aug. 30, 2018) (discussing “a lawsuit brought on behalf
   of Asian-American students who had sought admission to the university”).
   And that is so even though it’s common knowledge that an applicant with
   grades and test scores below a certain level may not have even an
   “infinitesimal hope” of obtaining the admission he seeks. So too here: A
   plaintiff without realistic hope of getting the defendant to transfer money into
   his account can still seek significant relief from that defendant. This is

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                                          No. 22-30553

   especially so because the court has the power to award a judgment of money
   damages even against an insolvent defendant.
           The dissent’s understanding of the term “seek” also runs into 28
   U.S.C. § 1332 itself. Consider § 1332(d)(3)(C). That provision directs courts
   to consider “whether the class action has been pleaded in a manner that seeks
   to avoid Federal jurisdiction” when deciding if they should decline to
   exercise jurisdiction. Id. Surely a pleading that aims to avoid Federal
   jurisdiction falls within the reach of this provision, even if that goal is unlikely
   to succeed. 3
           We hold that Plaintiffs have easily satisfied the “significant relief”
   prong of the local controversy exception.
                                               ***
           We affirm.

           _____________________
           3
             We also disagree with the dissent as a factual matter. The dissent claims that it is
   “literally impossible” for Plaintiffs to recover from South Pointe. But South Pointe
   remains a limited liability company in good standing. We do not presume to know what
   additional employees or assets the company might acquire in the future.

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                                    No. 22-30553

   Andrew S. Oldham, Circuit Judge, dissenting:
          I agree with the majority that this case satisfies the Class Action
   Fairness Act’s (“CAFA’s”) 100-plaintiff requirement. See 28 U.S.C.
   § 1332(d)(5)(B). But my esteemed colleagues and I part ways on the rest.
   This dispute is predominantly between Louisiana plaintiffs and i3 Verticals,
   which is a citizen of Delaware and Tennessee. That means this case belongs
   in federal court.
          In holding otherwise, the majority points to CAFA’s local controversy
   exception, id. § 1332(d)(4)(A). That exception provides that federal
   jurisdiction sometimes does not extend to a class action involving a local
   defendant—that is, a defendant who is a citizen of the State where the class
   action was filed. See id. § 1332(d)(4)(A)(i)(II)(cc). To prevent artful pleading
   that would destroy CAFA jurisdiction, however, Congress placed careful
   limits on which local defendants trigger the exception. Two of those limits
   are relevant here. First, to belong in state court, the action must involve a
   local defendant “from whom significant relief is sought by members of the
   plaintiff class.” Id. § 1332(d)(4)(A)(i)(II)(aa). And second, to belong in state
   court, the action must involve a local defendant “whose alleged conduct
   forms a significant basis for the claims asserted by the proposed plaintiff
   class.” Id. § 1332(d)(4)(A)(i)(II)(bb).
          Here, the purportedly local defendant is “South Pointe,” a defunct
   shell LLC in Louisiana with no assets, facilities, business, or employees. In
   my view, South Pointe does not satisfy either (I) the “seeks significant relief”
   requirement of Subparagraph aa or (II) the “significant conduct”
   requirement of Subparagraph bb.

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                                           I.
                                          A.
          Start with the “seeks significant relief” prong in Subparagraph (aa).
   For the exception to apply, the defendant must be one “from whom
   significant relief is sought by members of the plaintiff class.” Id.
   § 1332(d)(4)(A)(i)(II)(aa). “Sought” is the past tense and past participle of
   “seek.” And “seek” means “to go in search of,” “to try to reach or come
   to,” or “to endeavor to make discovery of.” Seek, Webster’s New
   International Dictionary 2266 (2d. ed. 1934; 1950) [hereinafter
   “Webster’s Second”]. Each of these definitions features a referent
   object—“of” or “to” [the object]. The actor “go[es] in search of”
   [something], or “endeavor[s] to make discovery of” [something] or “tr[ies]
   to reach” [something or somewhere]. Said differently, no one seeks without
   at least an infinitesimal hope of finding. Likewise, when we consider what a
   plaintiff “seeks,” we ought not blind ourselves to their literal impossibility of
   finding.
          It is literally impossible for plaintiffs to get any relief (let alone
   significant relief) against South Pointe. It is true, I suppose, that plaintiffs
   could be said to “seek relief” from South Pointe in the sense that they sued
   that defunct shell with no assets, facilities, business, or employees. But if that
   is what Subparagraph (aa) means, then Subparagraph (aa) means nothing
   because a plaintiff can always sue someone for something—even if they are
   guaranteed with 100% certainty to recover nothing. That turns the limit on
   artful pleading in Subparagraph (aa) into a nullity. And in the process, it
   offends both the surplusage canon and hyper-literalist canon. See Wash. Mkt.
   Co. v. Hoffman, 101 U.S. 112, 115–16 (1879) (“As early as in Bacon’s
   Abridgment, sect. 2, it was said that ‘a statute ought, upon the whole, to be
   so construed that, if it can be prevented, no clause, sentence, or word shall be

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                                     No. 22-30553

   superfluous, void, or insignificant.’”); United States v. Palomares, 52 F.4th
   640, 648–49 (5th Cir. 2022) (Oldham, J., concurring in the judgment)
   (hyper-literalism is bad textualism).
                                           B.
          The majority opinion counters that my reading of Subparagraph (aa)
   “defies common usage of the term [seek]” and would create a circuit split.
   See ante, at 14–16. I’m not persuaded by either contention.
          First, the majority opinion’s examples support my understanding of
   Subparagraph (aa). The Bible says “seek, and ye shall find” precisely because
   God gives us hope and faith, Matthew 7:7—two things that plaintiffs do
   not have in “seeking” to recover from a defunct shell company. And when a
   student “seeks” admission to a college or university, he or she obviously
   hopes to get in even if the odds are long—again, a hope that plaintiffs do not
   have in “seeking” to recover from a defunct shell company. True, a plaintiff
   can “seek” to get rich by playing the lottery, even “without any realistic hope
   of” winning it. Ante, at 16. But even the lottery player has a non-zero chance
   of winning, which is more than plaintiffs’ chance of recovering from South
   Pointe.
          Second, the majority opinion notes other circuits have said a
   defendant’s ability to pay is irrelevant to the “significant relief” inquiry. See
   ante, at 14–15 (citing Coffey v. Freeport McMoran Copper & Gold, 581 F.3d
   1240, 1245 (10th Cir. 2009) (per curiam); Coleman v. Estes Exp. Lines, Inc.,
   631 F.3d 1010, 1020 (9th Cir. 2011); Walsh v. Defenders, Inc., 894 F.3d 583,
   592 (3rd Cir. 2018); Smith v. Marcus & Millichap, Inc., 991 F.3d 1145, 1161
   (11th Cir. 2021)). But one of those cases involved an entity whose ability to
   satisfy a judgment was not in question. See Walsh, 894 F.3d at 592 (noting
   only that defendant’s liability might technically be satisfied through another
   entity by virtue of a corporate reorganization). And the others involved

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   persons or entities of uncertain financial status, such that it would have
   required jurisdictional mini-trials to determine the defendants’ abilities to
   pay. See Coffey, 581 F.3d at 1245 (inquiring about defendant’s financial status
   would require a “mini trial[ ] involving consideration of multiple insurance
   coverage litigation settlement agreements, the solvency of different carriers,
   pollution and other policy exclusions, etc.”); Coleman, 631 F.3d at 1020
   (“There is nothing in the complaint to suggest that [defendant] is a nominal
   defendant, or that [defendant] has so few assets . . . that [plaintiff] is not
   seeking significant monetary relief from it.”); Marcus & Millichap, 991 F.3d
   at 1160 (noting nothing indicated the defendant lacked means to satisfy any
   potential judgment). And it was wariness of these factual inquiries that
   motivated the courts’ holdings. See, e.g., Coffey, 581 F.3d at 1245 (“[T]here
   is nothing in the language of the statute that indicates Congress intended
   district courts to wade into the factual swamp of assessing the financial
   viability of a defendant as part of this preliminary consideration . . . .”).
          South Pointe, by contrast, is a defunct, asset-less, shell company that
   obviously cannot pay. We do not need a mini-trial or any factual inferences
   to determine whether plaintiffs can recover anything (let alone something
   significant) because the facts are undisputed. And while the Ninth Circuit
   held evidence of a defendant’s ability to pay should not be considered in the
   “significant relief” inquiry, it also explained defendants (like South Pointe)
   who obviously lack any ability to pay would not satisfy the test. Coleman, 631
   F.3d at 1019–20. So it’s unclear that my reading of Subparagraph (aa) would
   create a circuit split.

                                           II.
          Next consider the significant conduct prong in Subparagraph (bb).
   That prong requires that, for a suit to belong in state court, the class action
   must involve a local defendant “whose alleged conduct forms a significant

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                                         No. 22-30553

   basis       for   the   claims   asserted”      by    plaintiffs.   See    28    U.S.C.
   § 1332(d)(4)(A)(i)(II)(bb).
           Significant means something with significance. See Significant,
   Webster’s Second, supra, at 2335. And significance means having
   “importance” or “weight.” Significance, Webster’s Second, supra, at
   2335. Ideas like “importance” or “weight” invite relativistic comparison,
   which makes sense in this context. CAFA’s local controversy exception tasks
   us with deciding whether the character of the controversy is holistically local,
   not whether any fiber of it might be.
           The majority seems to agree with me, so far. That is presumably why
   the majority bases its judgment on a relativistic comparison: the length of
   time of South Pointe’s alleged involvement versus that of i3 Verticals’
   involvement. Plaintiffs allege the hazy contours of various misdeeds from
   2015 to 2020; South Pointe was the relevant defendant for more than half
   that five-year interval. The majority looks at the resulting fraction (above ½)
   and deems South Pointe significant. See ante, at 11–13. *
           But I am not sure that’s right. Congress did not say time is the basis of
   comparison. Rather, Congress told us to evaluate the relative significance of
   South Pointe’s conduct. See 28 U.S.C. § 1332(d)(4)(A)(i)(II)(bb) (“whose
   alleged conduct forms a basis for the claims asserted” (emphasis added)). To
   evaluate the relative significance of South Pointe’s conduct, we look at the
   complaint. Ibid. (“the claims asserted”). And the complaint makes clear that
           _____________________
           *
             The majority also deems it relevant that Scott Carrington, a Louisiana resident,
   managed i3 Verticals from 2018–2020. Ante, at 12 & n.1. But the complaint does not explain
   what, other than managing i3, Carrington did wrong. And without “detailed allegations or
   extrinsic evidence” demonstrating the significance of Carrington’s conduct relative to the
   other defendants, the fact that he ran the Company during the time period in question
   simply has no bearing on the “significant conduct” inquiry. Opelousas Gen. Hosp. Auth. v.
   FairPay Sols., Inc., 655 F.3d 358, 363 (5th Cir. 2011).

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   South Pointe’s conduct was far from a significant portion of plaintiffs’
   claims. According to the complaint, South Pointe periodically bypassed
   antivirus programs, failed to moderate third-party comments on a website,
   failed to renew an email filtering subscription, and used EU- instead of USA-
   licensed software. ROA.618–20 (plaintiff’s Amended Petition). While that
   conduct may fall short of upright deportment, plaintiffs barely allege, much
   less show, that any of those supposed transgressions have any causal
   connection whatsoever to the millions of dollars in damages plaintiffs
   demand. Cf. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 570 (2007)
   (plaintiffs should state a claim “plausible on its face” and “show” their case
   for relief).
           So where, if not from South Pointe’s misadventures, do plaintiffs’
   millions in claimed damages originate? Plaintiffs’ complaint does contain one
   specific thread of facts, detailing the fallout from a cybersecurity incident that
   plaintiffs trace back to December 2019—more than a year after South Pointe
   had ceased business with the plaintiffs. This incident, and its remediation,
   forms the near-entirety of plaintiffs’ demands for relief. See ROA.620–25.
   Plaintiffs’ counterparty for this specific narrative, for this one thread of facts
   with arguable connection to plaintiff’s damages, was i3 Verticals. In other
   words, the conduct underlying the claims asserted appears almost exclusively
   attributable to i3 Verticals—a decidedly non-local defendant. Far from being
   “significant,” South Pointe’s conduct is all but irrelevant.
           And even if the complaint alleges that plaintiffs’ claimed damages
   arise from a continuing tort, see ante, at 14, 15, it still fails to connect South
   Pointe’s conduct to plaintiffs’ injuries in any meaningful way. It is hard to see
   how general assertions that South Pointe’s actions somehow harmed
   plaintiffs count as the “detailed allegations” required by our precedent to
   satisfy the “significant conduct” test. See Opelousas, 655 F.3d at 363.

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                                    *        *         *
          Even if all of that is wrong, we must resolve any doubt “in favor of
   exercising [CAFA] jurisdiction over the case.” Opelousas, 655 F.3d at 360
   (citations omitted). With deepest respect for my learned colleagues, I think
   this case belongs in federal court.
          I respectfully dissent.

                                            24