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9th Cir. Holds Supporting Evidence Not Required for CAFA Removal

The U.S. Court of Appeals for the Ninth Circuit recently reversed a trial court order remanding a case to state court for lack of jurisdiction under the federal Class Action Fairness Act (CAFA) because the jurisdictional allegations pleaded provided a short and plain statement of jurisdiction.

The Court held this was sufficient, even without supporting evidence, to confer jurisdiction.

A copy of the opinion in Ehrman v. Cox Communications, Inc. is available at:  Link to Opinion.

A plaintiff filed a class action complaint against a defendant in California state court claiming the defendant “had engaged in unlawful business practices related to the advertisement and sale of residential internet services.”  The plaintiff filed the case on behalf of himself and all California consumers that paid for the defendant’s internet services within the last four years.

The defendant removed the putative class action to the federal trial court pursuant to CAFA.  In the notice of removal, the defendant, a citizen of Delaware and Georgia, alleged that it met CAFA’s jurisdictional requirements “because it was a putative class action with more than 100 class members,” and “that the amount in controversy exceeded $5,000,000, exclusive of interest and costs.” The defendant also alleged that minimal diversity existed between the parties because the plaintiff and all class members were California citizens.

The plaintiff moved to remand the case to state court by making a facial challenge to the notice of removal. Specifically, the plaintiff argued that the defendant had not “adequately plead[ed] the existence of minimal diversity” because the defendant based the citizenship allegations solely “on information and belief.”

The trial court granted the plaintiff’s motion to remand finding that the defendant’s citizenship allegations were insufficient to establish minimal diversity because they were based on no more than “sensible guesswork.” This appeal followed.

The Ninth Circuit began its analysis by noting that Congress enacted CAFA with the “intent . . . to strongly favor the exercise of federal diversity jurisdiction over class actions with interstate ramifications.”  CAFA gives federal trial courts jurisdiction over class actions when “any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A). In contrast to section 1332(a)’s complete diversity of citizenship requirement, the Ninth Circuit observed that CAFA only requires “minimal diversity.”

The issue in this appeal is what the “removing defendant must plead in its notice of removal.” 

The removing defendant has the burden to plead minimal diversity by including in the notice of removal “a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a).  Congress borrowed the “short and plain statement” standard from Rule 8(a), signifying to the Ninth Circuit that courts should liberally construe removal allegations similar to other pleadings.  The Ninth Circuit also noted that the removing defendant may plead minimal diversity based on “information and belief,” without submitting evidence to support the allegations.

The defendant alleged that “all putative class members were citizens of California.”  The Ninth Circuit rejected the plaintiff’s argument that the defendant had to come forth with evidence to demonstrate why it believed its citizenship allegations. 

Instead, the Court held that a removing defendant may base its citizenship allegations “solely on information and belief.”  Here, the defendant’s notice of removal contained the required short and plain statement that the putative class members were all California citizens necessary to confer jurisdiction under CAFA.

The Ninth Circuit also determined that the trial court erred by placing the burden on the removing defendant “to prove its jurisdictional allegations in response to” plaintiff’s facial challenge.  Instead, jurisdictional factual allegations at the pleading stage “need not be proven unless challenged.” This is especially true, the Ninth Circuit noted, because CAFA contains “no antiremoval presumption.” 

The Ninth Circuit found it significant that the plaintiff’s motion to remand only facially challenged the legal adequacy of the notice of removal, instead of factually challenging the jurisdictional allegations because a facial challenge accepts the removing defendant’s allegations as true and then argues that the allegations on their face fail to confer jurisdiction.  As a result, the Appellate Court held it was improper for the trial court to require the defendant “to present evidence in support of its allegation of minimal diversity.”

Thus, the Ninth Circuit held that the defendant’s jurisdictional allegations, which provided a short and plain statement of the parties’ citizenships based on information and belief, met its burden to plead minimal diversity. 

The Ninth Circuit therefore reversed the trial court’s order remanding the case to state court.

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Ernest Wagner practices in Maurice Wutscher's Commercial Litigation and Consumer Litigation groups, and leads the firm’s Insurance Recovery and Advisory group. Based in Chicago, he also supports the firm’s litigation matters in its Miami office. Ernest has substantial experience in various types of commercial and insurance recovery litigation. He has conducted more than 35 jury trials, and more than 150 arbitrations for plaintiffs and defendants. He has also successfully represented clients in numerous appeals, in various jurisdictions. Ernest earned his Juris Doctor from Emory University School of Law in Atlanta, Georgia, and his Bachelor of the Arts from the University of Iowa.

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