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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

“Commonsense” Works In Invoking Home State Exception to CAFA

Posted in Case Summaries

Durfee v. McClatchey Newspapers, Inc., No. 2:15-cv-01891-TLN-EFB, 2016 WL 3181200 (E.D. Cal. June 7, 2016).

In this case, the plaintiffs, newspaper subscribers, brought a putative class action in the state court alleging that the defendant corporation owns several newspapers throughout California involved in false and misleading billing practices in connection with newspaper subscriptions.

The plaintiffs alleged violations of California’s Automatic Renewal Law, Unfair Competition Law, and Consumer Legal Remedies Act, and sought to represent a class of “all persons in California who subscribed to any of the defendant’s newspapers from January 1, 2010 to the date of final judgment.”

The defendant removed the action to the District Court pursuant to CAFA, and the plaintiffs moved to remand.  The Court ultimately remanded the action to the state court finding that the home state exception to CAFA, 28 U.S.C. § 1332(d)(4)(B), applied.

In order to invoke the home state exception, the plaintiffs must establish that “two-thirds or more of the members of all proposed plaintiff classes in the aggregate” were citizens of California.  The Court noted that there was a dispute over what persons were covered under the class definition.  In their reply, the plaintiffs stated that the proposed class was limited to “current citizens of California”.  Looking at the class definition, the defendant argued that the class could include non-California citizens—such as newspaper subscribers who are currently living outside of California.

The Court did not accept a new definition given by the plaintiffs in their motion to remand and reply, because the complaint did not define the class expressly in terms of California citizens, which would have required remand by definition.  The Court thus analyzed the parties’ arguments based upon the stated definition in the complaint, with its accompanying ambiguity.  The Court found that, despite this ambiguity, the plaintiffs established that the home state exception applied.

First, the plaintiffs argued that common sense supported the inference that their lawsuit involved at least two-thirds of a class composed of California citizens.  The plaintiffs underscored that this matter involved: “(1) California citizens (2) suing a California defendant; (3) on behalf of a California class; (4) for violations of California statutes; (5) relating to home delivery subscriptions for California newspapers delivered to California homes.”

Although the Court remarked that it would not simply accept the plaintiffs’ assertion regarding citizenship, which would rewrite the complaint’s definition, it was commonsensical that a class of “all persons in California” who subscribed to local California newspapers would likely consist of at least two-thirds California citizens.

Second, the plaintiffs submitted an expert declaration from a demographer.  The demographer analyzed “American Community Survey estimates of state-to-state migration during the period 2010–2014” and investigated “the shares of persons living in California in 2010 who did and did not move out of that state between 2010 and 2014.”  She concluded that more than 90 percent of persons living in California still lived in that state in 2014.  She also concluded that “it is extremely unlikely that at least one third of the defendant’s newspaper subscribers who subscribed to papers while California residents no longer reside within California.”

The Court found that the expert’s declaration—buttressed by a statistical analysis—supported the plaintiffs’ commonsense argument.  Further, the defendant had submitted no contrary data that negated this common sense argument.  The defendant also identified no information about its subscriber base which would cast doubt on the commonsense inference that more than two-thirds of the putative class – defined as “all persons in California” who subscribed to the defendant’s local California newspapers – was composed of California citizens.

The defendant pointed out that numerous circuits have rejected an equivalence of “residency” to “citizenship.”  The Court stated, however, that here there was no express statement of “residency” within the complaint’s class definition.  Nor were the plaintiffs’ arguments in support of remand reliant upon residency.  The plaintiffs had stated variously that the phrase “all persons in California” meant persons located in California, residents of California, or citizens of California.  Thus, the Court found that it was inaccurate to impute to the plaintiffs the argument that this CAFA exception depended upon California residency.

Accordingly, the court concluded that based upon the class definition in the complaint, the three causes of action (all stating violations of California statutes), the plaintiffs’ expert declaration, the additional clarification given by the plaintiffs in their motion to remand, and common sense, the plaintiffs had demonstrated by a preponderance of the evidence that two thirds or more of the putative class consisted of California citizens so as to invoke the home state exception to CAFA.

Accordingly, the District Court remanded the action to the state court.