District Court Errs in Analyzing Citizenship Under CAFA Local-Controversy Exception: Eighth Circuit | Practical Law

District Court Errs in Analyzing Citizenship Under CAFA Local-Controversy Exception: Eighth Circuit | Practical Law

In Hood v. Gilster-Mary Lee Corp., the US Court of Appeals for the Eighth Circuit reversed a district court's order remanding a class action back to state court because the plaintiffs failed to meet their burden of proof regarding citizenship, and therefore did not qualify for the local-controversy exception to federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA).

District Court Errs in Analyzing Citizenship Under CAFA Local-Controversy Exception: Eighth Circuit

by Practical Law Litigation
Published on 05 May 2015 • USA (National/Federal)
In Hood v. Gilster-Mary Lee Corp., the US Court of Appeals for the Eighth Circuit reversed a district court's order remanding a class action back to state court because the plaintiffs failed to meet their burden of proof regarding citizenship, and therefore did not qualify for the local-controversy exception to federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA).
On May 1, 2015, in Hood v. Gilster-Mary Lee Corp., the US Court of Appeals for the Eighth Circuit reversed a district court's order remanding a class action back to state court because the plaintiffs failed to meet their burden of proof as to the potential class members' citizenship, and therefore did not qualify for the local-controversy exception to federal jurisdiction under CAFA (No. 15-1458, (8th Cir. May 1, 2015)).
The plaintiffs, former and current employees of defendant Gilster-Mary Lee Corporation (GML), filed a class action suit in Missouri state court against GML. Among other claims, they alleged negligence and fraudulent concealment of their exposure to butter-flavoring products, which resulted in lung impairment. GML removed the action to federal court under CAFA. After the plaintiffs dismissed all defendants except GML, the district court remanded the case back to state court based on CAFA's local-controversy exception, which requires a federal district court to decline jurisdiction where "greater than two-thirds of the members of all proposed plaintiff classes...are citizens of the State in which the action was originally filed" (28 U.S.C. § 1332(d)(4)(A)(i)(I)). Under CAFA, the burden of proof for establishing this exception falls on the party seeking remand, and any doubt regarding its applicability must be resolved against the party seeking remand.
After GML's appeal, the Eighth Circuit reversed the district court's order and found that the employees did not meet their burden of proof on CAFA's local-controversy exception, in part because a majority of potential class members failed to submit an affidavit confirming their citizenship. The court also faulted the district court's process for determining which potential class members were citizens of Missouri because the court:
  • Was only able to clearly determine citizenship for less than half of the potential class members.
  • Relied on last-known addresses of some potential class members and also extrapolated from the citizenship of individuals who responded with affidavits to determine the citizenship of the remaining members who did not respond.
  • Provided no indication of a disciplined approach to accurately determining potential class members' citizenship.
Instead, the Eighth Circuit held that the proper method was that adopted by the Seventh Circuit, under which plaintiffs may meet their burden by either:
  • Affidavit evidence or statistically significant surveys showing that two-thirds of the class members are local citizens.
  • Redefining the class as only local citizens.
(See In re Sprint, 593 F.3d 669 (7th Cir. 2010).)
Because the employees failed to meet their burden of proof for the CAFA local-controversy exception and the district court used improper methods for determining citizenship, the Eighth Circuit held that the district court erred in remanding the case.