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Class Action Defense Cases–Evans v. Walter Industries: Plaintiff Bears Burden Under Class Action Fairness Act of 2005 (CAFA) Of Establishing Local Controversy Exception To Removal of Class Action

CAFA (Class Action Fairness Act of 2005) Places Burden of Proof on Plaintiff to Establish Local Controversy Exception to Removal Eleventh Circuit Holds

CAFA contains several provisions that still require judicial interpretation. On May 22, 2006, the Eleventh Circuit considered as a matter of first impression for any Circuit Court of Appeals “the specific question of which party should bear the burden of proof on CAFA’s local controversy exception.” Evans v. Walter Industries, Inc., 449 F.3d 1159, 1164 (11th Cir. 2006). Evans “hold[s] that the plaintiffs bear the burden of proving the local controversy exception,” id., at 1165 (italics added). The Court noted that this “places the burden on the party most capable of bearing it” because “plaintiffs have defined the class and have better access to information about the scope and composition of the plaintiff class.” Id., at 1164 n.3.

The Eleventh Circuit analyzed the evidence presented to the district court and found it wholly inadequate to establish a local controversy. See Evans, at 1164-68. The court rejected the purported showing that two-thirds of the plaintiff class are Alabama citizens, and rejected further that the token Alabama corporation was a “significant defendant” within the meaning of CAFA. In so doing, Evans appears to have adopted (or at the least to have applied) the test “that a class seeks ‘significant relief’ against a defendant when the relief sought against that defendant is a significant portion of the entire relief sought by the class.” Id., at 1167 (citations omitted).

NOTE: The Eleventh Circuit expressly noted that its opinion concerns only the local controversy exception in 28 U.S.C. § 1332(d)(4)(A), and does not reach the question of the local controversy exception in 28 U.S.C. § 1332(d)(4)(B). Evans, at 1163 n.2.

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