CAFA (Class Action Fairness Act of 2005) Requires Defendant Establish Removal Jurisdiction in “Mass Action” Cases and Jurisdictional Discovery Discretionary Ninth Circuit Holds
CAFA greatly expands access to federal courts to class action defendants, as well as to defendants in “mass action” cases. One question federal courts have grappled with is whether Congress intended to shift the burden from a class action defendant to establish removal jurisdiction, to a class action plaintiff to prove that the matter should be remanded to state court. On April 4, 2006, the Ninth Circuit held that CAFA does not shift the burden of proof to plaintiffs in mass action cases. Abrego Abrego v. Dow Chemical Co., 443 F.3d 676 (9th Cir. 2006).
Abrego Abrego involved a mass action brought by 1160 Panamanian workers against Dow Chemical for alleged distribution and use in Panama of a pesticide banned in the United States. Dow removed the case to federal court under 28 U.S.C. § 1332(d)(11), added by CAFA to provide federal court jurisdiction over “mass actions.” (The requirements of mass actions are discussed in a separate article.) In response to plaintiffs’ motion to remand the action to state court, Dow argued:
[U]nder CAFA and contrary to preexisting removal jurisdiction law: (1) plaintiffs bear the burden of refuting the district court’s removal jurisdiction; (2) a “mass action” is removable regardless of whether there is jurisdiction over all plaintiffs whose claims are necessary to qualify the action as a mass action; and (3) the district court must allow jurisdictional discovery to determine the amount in controversy.
443 F.3d at 677-78. The district court found that Dow had failed to establish removal jurisdiction and remanded the case to state court. Id., at 679.
The Ninth Circuit affirmed. While finding the wording of the statute “clumsy,” the Court explained that “the removing defendant has ‘always’ borne the burden of establishing federal jurisdiction,” id., at 682-83 (citations omitted), and that CAFA “is entirely silent as to the burden of proof on removal,” id., at 683. After a lengthy analysis, the Court held “that under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction.” Id., at 685. The Court found support for this holding in the Seventh Circuit’s opinion in Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005) – which at that time was “the only circuit that has addressed the burden of proof question under CAFA,” id.
The Ninth Circuit then faulted Dow for failing to establish that any plaintiff asserted a claim in excess of $75,000 as required by § 1332(a). Id., at 689 (citing 28 U.S.C. § 1332(d)(11)(B)(i)). The Court further held that whether a defendant may propound jurisdictional discovery lies within the sound discretion of the district court – CAFA does not require the court to permit such discovery. Id., at 690-92.
NOTE: The Ninth Circuit did not address Dow’s claim that “under CAFA’s mass action provisions, removed mass actions remain in federal court even if the plaintiffs alleging claims in excess of $75,000 do not meet the numerosity or aggregate total amount in controversy requirement of § 1332(d),” which it characterized as the “thorniest” question presented. 443 F.3d at 682.