Burdens of Jurisdictional Proof Lonny Sheinkopf Hoffman Abstract

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1 Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.).

2 Richard A. Nagareda, Aggregation and its Discontents: Class Settlement Pressure, Class-wide Arbitration and CAFA, 106 Colum. L. Rev. 1872, 1876 (2006) (“By moving nationwide class actions involving state-law claims into federal court, the defense-side backers of CAFA were not engaged in a mere shell game. The point of moving such classes into federal court is to subject them to a distinctively federal body of class certification principles, and in so doing, to alter the outcomes of class certification decisions from what they otherwise would have been--at least in some courts within some state judicial systems.”).

3 Compare A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 555 (1935) (“This is clear from the provisions of section 7(a) of the act (15 U.S.C.A. §707(a), with its explicit disclosure of the statutory scheme. Wages and the hours of labor are essential features of the plan, its very bone and sinew.”); Legal Tender Cases, 10 Wall. 457, 564 (1871) (“The heart of the nation must not be crushed out. The people must be aided to pay their debts and meet their obligations. The debtor interest of the country represent its bone and sinew, and must be encouraged to pursue its avocations.”)

4 Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); McNutt v. General Motors Acceptance Corp., 298 U.S. 178,189 (1936).

5 See infra note ___.

6 [list here percentage count of win/loss rates, as measured by remands and dismissals compared against denials of same, in CAFA cases. Query (to editors): should an appendix of these cases also be included?]

7 Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007) (emphasizing claimant’s obligations under Fed. R. Civ. P. 8 and 11, as well as defendant’s pleading obligations in its notice of removal, and further determining that no jurisdictional discovery is permissible under CAFA)

8 Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct 1955 (2007) (holding that to survive a motion to dismiss the plaintiff’s antitrust claim must allege facts that “plausibly” suggest existence of a conspiracy); see generally Scott Dodson, Pleading Standards After Bell Atlantic Corp. v. Twombly, 93 Va. L. Rev. In Brief 121 (2007) (available at http://www.virginialawreview.org/inbrief/2007/07/09/dodson.pdf).

9 See Kevin Clermont and Theodore Eisenberg, Do Case Outcomes Really Reveal Anything About the Legal System? Win Rates and Removal Jurisdiction, 83 Cornell L.J. 581 (1998) (providing empirical evidence that forum selection between state and federal court impacts case outcomes); see also Georgene M. Vairo, Judge-Shopping, Nat. L. J., Nov. 27, 2000 at A16 (“Any good plaintiff's lawyer should consider what forum is best for resolving a client's dispute, and a good defense attorney disserves a client if no attention is paid to removing or transferring or otherwise shifting the case to a different jurisdiction that would be a better forum for protecting the client's interests.”); Thomas E. Willging and Shannon R. Wheatman, Attorney Choice of Forum in Class Action Litigation: What Difference Does it Make, 81 Notre Dame L. Rev. 591, 591 (2006) (observing that “[l]awyers commonly perceive that choosing a forum in a class action is a critical element of litigating such a case.”).

10 Lonny Sheinkopf Hoffman, The Commencement Problem: Lessons From a Statute’s First Year, 40 U.C. Davis L. Rev. 469, 472 (2006) (“By its intended effect the statute [CAFA] authorizes the removal of state class action suits previously outside the jurisdictional reach of the federal courts.”); Nagareda, supra note __, at 1876 (observing that the “primary thrust of CAFA is simply to amend the federal diversity jurisdiction statute in order to make it easier for defendants to remove class actions involving state-law claims—particularly nationwide class actions—from state court to federal court”).

11 For one discussion of how forum selection can influence case outcomes, see Lonny Sheinkopf Hoffman, Removal Jurisdiction and the All Writs Act, 148 U. Pa. L. Rev. 401 (1999) (cited, inter alia, in Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 35 n.1 (2003) (Stevens, J., concurring)).

12 28 U.S.C. § 1332(d)(2) (West 2006). The section provides in full:

(2) The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which --

(A) any member of a class of plaintiffs is a citizen of a State different from any defendant;

(B) any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or

(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.

13 28 U.S.C. § 1453 (West 2006).

14 See supra note __; see also Steele Co. v. Citizens for a Better Env’t., 523 U.S. 83, 94-95 (1998) (“The requirement that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the judicial power of the United States' and is ‘inflexible and without exception’”) (citations omitted). Because we regard federal courts as courts of limited jurisdiction, Owens Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978), that means we must begin with a presumption against the existence of federal court jurisdiction. See McNutt, 298 U.S. at 189. This presumption is what produces the heavy burden that the party seeking to invoke federal jurisdiction bears. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); McNutt, 298 U.S. at 189.

15 See, e.g., Dinkel v. Gen. Motors Corp., 400 F. Supp. 2d 289, 295 (D. Me. 2005); Berry v. American Express Pub. Corp., 381 F.Supp. 2d 1118, 1122-23 (C.D. Ca. 2005). Several lawyers prominent in CAFA debates argued that these early courts got it right and that the threshold jurisdictional burden should shift to the party opposing jurisdiction. See H. Hunter Twiford III, Anthony Rollo & John T. Rouse, CAFA’s New “Minimal Diversity” Standard for Interstate Class Actions Creates a Presumption that Jurisdiction Exists, with Burden of Proof Assigned to the Party Opposing Jurisdiction, 25 Miss. Co. L. Rev. 7 (2005). For a discussion of all of these early cases see generally Lonny Sheinkopf Hoffman, In Retrospect, A first Year Review of the Class Action Fairness Act of 2005, 39 Loy. L.A. L. Rev. 1135 (2006) (cataloguing and discussing cases); Linda S. Mullenix, CAFA Cacophony, Nat. L.J. Jan. 27 2007 at 13.

16 Morgan v. Gay, 471 F.3d 469, 473 (3d Cir. 2006); DiTolla v. Doral Dental IPA of New York, LLC, 469 F.3d 271 (2d Cir. 2006); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005); Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 683; Miedema v. Maytag Corp., 450 F.3d 1332, 1328-1329 (11th Cir. 2006); Evans v. Walters Indus. Inc., 449 F.3d 1159, 1164 (11th Cir. 2006); Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007); Blockbuster v. Galeno, 472 F.3d 53, 58 (2d Cir. 2006).

17 Abrego Abrego, 443 F.3d at 684.

18 Morgan, 471 F.3d at 473.

19 DiTolla, 469 F.3d at 275 (brackets in original); see also Miedema, 450 F.3d at 1329. Relatedly, most courts interpreting the new statute have similarly found that, consistent with the interpretation of other removal provisions the Congress has previously enacted, the removal portions in CAFA should be strictly construed against removal, and all doubts construed in favor of remand. See, e.g., Abrego Abrego, 443 F.3d at 685; Tiffany v. Hometown Buffet, 2006 WL 1749577 (N.D. Cal., June 22, 2007) at *4.

20 DiTolla, 469 F.3d at 275 (citing Cannon v. University of Chicago, 441 U.S. 677, 699 (1979).

21 Brill, 427 F.3d at 448 (citing S. Rep. 14, 109th Cong. 1st Sess. 42 (2005)).

22 Id.; see also id. (commenting that “naked legislative history has no legal effect. . . . The rule that the proponent of federal jurisdiction bears the risk of non-persuasion has been around for a long time”); Miedema 450 F.3d at 1328-29 (“‘While a committee report may ordinarily be used to interpret unclear language contained in a statute, a committee report cannot serve as an independent statutory source having the force of law’”) (quoting United States v. Thigpen, 4 F.3d 1573, 1577 (11th Cir.1993)).

23 See, e.g., Exxon Mobil v. Allapattah Services, 545 U.S. 546, 568 (2005) (“Judicial reliance on legislative materials like committee reports, which are not themselves subject to the requirements of Article I, may give unrepresentative committee members—or, worse yet, unelected staffers and lobbyists—both the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text”).

24 S. Rep. 14, 109th Cong. 1st Sess. 42 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 28; see also Hart, 457 F.3d 675, 682 (observing that the “local controversy” and “home state” “exceptions are designed to draw a delicate balance between making a federal forum available to genuinely national litigation and allowing the state courts to retain cases when the controversy is strongly linked to that state”),

25 28 U.S.C. §1332(d)(4)(A). This section provides that a “district court shall decline to exercise jurisdiction under paragraph (2)--

(A)(i) over a class action in which--

(I) 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;

(II) at least 1 defendant is a defendant--

(aa) from whom significant relief is sought by members of the plaintiff class;

(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and

(cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and

(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.

26 28 U.S.C. §1332(d)(4)(B). Under this section, 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.”

27 Id.

28 See, e.g., Caruso v. Allstate Ins. Co., 469 F. Supp. 2d 364, 369 (E.D. La. 2007).

29 28 U.S.C. §1332(d)(4)(B).

30 Section §1332(d)(5) provides that “Paragraphs (2) through (4) shall not apply to any class action in which (A) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief.”

31 28 U.S.C. §1332(d)(9)(A) and (C). Section 1332(d)(9) provides, in full:

(9) Paragraph (2) shall not apply to any class action that solely involves a claim--

(A) concerning a covered security as defined under 16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));

(B) that relates to the internal affairs or governance of a corporation or other form of business enterprise and that arises under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized; or

(C) that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the regulations issued thereunder.

32 28 U.S.C. §1332(d)(9)(B).

33 28 U.S.C. §1332(d)(3).

34 The leading circuit court cases, to date, are: Evans v. Walter Indus., Inc., 449 F.3d 1159 (11th Cir. 2006); Frazier 455 F.3d 542; Hart v. Fedex Ground Package Sys., Inc., 457 F.3d 675 (7th Cir 2006); Serrano v. 180 Connect, Inc., 478 F.3d 1018 (9th Cir. 2007); Preston v. Tenet Healthsystem Memorial Medical Center, Inc., 485 F.3d 793, 795 (5th Cir. 2007). There have been very few dissenters. See Lao v. Wickes Furniture Co., Inc., 455 F. Supp. 2d 1045 (C.D. Ca. 2006); Serrano v. 180 Connect, Inc., 2006 WL 2348888, at *1 (N.D. Ca., Aug. 11, 2006), overruled by , 478 F.3d 1018 (9th Cir. 2007); Kearns v. Ford Motor Co., 2005 WL 3967998 (C.D. Ca., Nov. 21, 2005), overruled by 478 F.3d 1018 (9th Cir. 2007).

35  See Serrano, 478 F.3d 1018, 1022 (“Implicit in both subsections (d)(3) and (d)(4) is that the court has jurisdiction, but the court either may or must decline to exercise such jurisdiction.”); Lao v. Wilkes, 455 F Supp. 2d at 1057 (citing Defs’ Opp. Brief at 10 n. 7) (“’Merely declining to exercise subject matter jurisdiction presumes that subject matter jurisdiction exists to begin with. How else could a court decline to do something unless there were in fact something—in this case jurisdiction—to decline?’”).

36 For example, in Hogge v. A.W. Chesterton Co., 2007 WL 1674088 (N.D. Ca., June 8, 2007), the court observed that §1441(b) “further provides that if the basis for federal jurisdiction is diversity of citizenship, removal is available only if no defendant is a citizen of the forum state. As the party seeking to remove the action, the defendant bears the burden of establishing that subject matter jurisdiction exists. Because the Court strictly construes the removal statute against removal, if there is any doubt as to the existence of federal jurisdiction, the Court should remand the matter to state court.” Id. at *1.The court then held that “because the record before the Court does not establish that binding settlement agreements have eliminated all non-diverse Defendants from the state court action, complete diversity did not exist as of the time of removal. Accordingly, this Court is without subject matter jurisdiction.” Id.

37 See, e.g., Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir. 1993).

38 Abrego Abrego, 443 F.3d at 681.

39 Id. at 686.

40 Lao v. Wilkes 455 F. Supp. 2d at 1048

41 Evans, 449 F. 3d at 1164 n.3.

42 Frazier, 455 F.3d at 546.

43 In Mattera v. Clear Channel Communications, Inc., 239 F.R.D. 70 (S.D.N.Y. 2006), the court rejected the suggestion that that the plaintiff should carry the jurisdictional burden of proof as to one of the carve-out sections where the plaintiff had filed suit initially in federal court and the defendant argued for dismissal. The court observed:
I am not convinced that a plaintiff who files an action in federal court asserting CAFA jurisdiction must not only make a prima facie showing of jurisdiction under the statute, but should also negate the applicability of the statutory exceptions. It seems contrary to CAFA's stated purpose of expanding federal court jurisdiction over class actions to allocate to the plaintiff the burden of proving that a CAFA exception does not apply, where the plaintiff, having demonstrated minimal diversity and the requisite class size and amount in controversy under CAFA, has already established a basis for federal jurisdiction. . . .
Congress, through enactment of CAFA, sought to encourage federal jurisdiction over interstate class actions. I conclude that placing the burden of establishing the applicability of a CAFA exception on the party challenging federal jurisdiction, rather than on the party invoking federal jurisdiction at the outset, better protects against the risk of state courts adjudicating class actions with national ramifications. This is precisely the harm that Congress sought to alleviate in enacting the statute. Accordingly, the Court holds that the party seeking to avail itself of an exception to CAFA jurisdiction over a case originally filed in federal court bears the burden of proving the exception applies. Here, Defendants shoulder the burden.
Mattera, 239 F.R.D. 70, 79.

44  See generally Lonny Sheinkopf Hoffman, Access to Information, Access to Justice: The Role of Presuit Investigatory Discovery, 40 Univ. Mich. J. L. Ref. 217, 220-21 (2007) (discussing asymmetries of information in civil litigation).

45 Hart, 457 F.3d at 680; Serrano, 478 F.3d 1018, 1024 n.8.

46 See, e.g., Hart, 457 F.3d at 681 (finding support for its textual reading of statute in legislative history, observing that “it is also worth noting that this outcome is consistent with the legislative history of CAFA. The Senate Judiciary Committee unambiguously signaled where it believed the burden should lie”) (quoting from Senate Committee Report); see also Frazier, 455 F.3d at 545 n.5; Evans, 449 F.3d at 1163; see also Twiford, Rollo and Rouse, supra note __ at __ (arguing that “Congress’s ‘Findings and Purposes’ expressly reflect a goal of changing the jurisdictional status quo for class actions” even as to the threshold jurisdictional burden under subsection (d)(2) of the Act).

47 Id. at 682 (“Our holding that the plaintiff has the burden of persuasion on the question whether the home-state or local controversy exceptions apply is also consistent with the stated purposes of the statute. . . . These exceptions are designed to draw a delicate balance between making a federal forum available to genuinely national litigation and allowing the state courts to retain cases when the controversy is strongly linked to that state” (quotation from Findings and Purposes omitted).

48 See, e.g., Hart, 457 F.3d at 681-82 (“Our holding that the plaintiff has the burden of persuasion on the question whether the home-state or local controversy exceptions apply is also consistent with the stated purposes of the statute. Congress made the following findings when it enacted CAFA. . .”).

49 Compare McMorris v. TJX Companies, Inc., --- F Supp.2d ----, 2007 WL 1885137 (D.Mass. 2007) (“Whatever the actual social benefits of class action litigation, however, CAFA is generally regarded as reflecting skepticism about the work of plaintiffs' class action attorneys.”).

50 313 U.S. 487 (1941).

51 Steve Burbank, Aggregation on the Couch, 106 Colum. L. Rev. 1924 (2006); Douglas Floyd, The Inadequacy of the Interstate Commerce Justification for the Class Action Fairness Act of 2005, 55 Emory L.J. 487, 507-20 (2006).

52 Brill, 427 F.3d at 428; see also Frazier, at n.5 (citing to legislative history and observing that “[t]he relevant statements show an intent to burden plaintiffs both as to prima facie jurisdiction, and as to the exceptions”) (citations omitted).

53  Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005).

54 See, e.g., Serrano, 478 F.3d at 1024 (finding that the text suggested a congressional intent to shift the burden of jurisdictional proof but commenting that “[a]s we observed in Abrego, we do not think that Congressional silence on the burden of proof results in ambiguity in the statute, and thus we do not rely on the legislative history as the basis for our holding”) (citation omitted).

55 455 F. Supp. 2d 1045, 1058-59 (C.D. Ca. 2006) (quoting S. Rep. No. 109-14 at 28 (emphasis added by court). 

56 See United States v. American College of Physicians, 475 U.S. 834, (1986) (observing that while the legislative history seemed to endorse a per se rule, “we are hesitant to rely on that inconclusive legislative history either to supply a provision not enacted by Congress ..., or to define a statutory term enacted by a prior Congress”).

57 See supra text accompanying notes __ - __.

58 A still further difficult is that use of this particular legislative history is especially “problematic” because the senate committee report was not finalized and published until two weeks after CAFA was enacted. The Court has given little weight to such post-hoc reports. See Lao (citing Public Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158, 168, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989)(‘‘the interpretation given by one Congress (or a committee or Member thereof) to an earlier statute is of little assistance in discerning the meaning of that statute’’); Sullivan v. Finkelstein, 496 U.S. 617, 631– 32, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990)(Scalia, J., concurring).

59 Lowery v. Alabama Power Co., 483 F.ed 1184, 1205 (11th Cir. 2007).

60 Allapattah, 545 U.S. at567 (noting, inter alia, that “[t]he proponents of the alternative view §1367 insist that the statute is at least ambiguous and that we should look to other interpretive tools, including the legislative history of §1367, which supposedly demonstrate Congress did not intend §1367 to overrule
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