Abrego v. The Dow Chemical Co., 443 F.3d 676, No. 05-03608, 2006 WL 864300 (9th Cir. April 4, 2006).

On March 7, 2006, the Ninth Circuit Court of Appeals, in a per curiam opinion, examined a case originally filed by Panamanian banana workers in California state court, in which the workers claimed injuries from exposure to chemical pesticides banned by the Environmental Protection Agency in the United States in 1979, but still used by the company in Panama.  The case was filed in state court on May 13, 2005, and Dow removed the case some three weeks later to federal district court, asserting mass action jurisdiction under the Class Action Fairness Act.  Upon the District Court’s order to show cause as to whether the $5,000,000 amount in controversy required under CAFA had been met, Dow argued that CAFA had shifted the burden of establishing federal jurisdiction to the plaintiffs seeking remand.  Disagreeing, the District Court remanded the case, holding that Dow failed to meet its burden of proving the action was a mass action under CAFA.  Down but not out, Dow appealed the remand order to the Ninth Circuit pursuant to 28 U.S.C. § 1453(c)(1), CAFA’s provision allowing defendants to request appeal of remand orders.

After accepting Dow’s appeal, Ninth Circuit Judges Margaret McKeown and Marsha S. Berzon, together with Senior District Judge Samuel P. King sitting by designation, addressed Dow’s three contentions on appeal.  Dow argued first that the plaintiff bears the burden of refuting  a district court’s removal jurisdiction; second, that a mass action is removable regardless of whether jurisdiction is present over all plaintiffs whose claims are necessary to constitute a mass action; and third, that a district court must allow jurisdictional discovery when parties are attempting to prove CAFA’s amount in controversy.  However, after criticizing the language of §1332(d)(11)(B)(i) and other CAFA provisions regarding mass actions as “bewildering,” the panel narrowed its task to deciding only the first and third issues, stating: “Because we disagree with Dow’s position on the first and third issues, we have no reason, on the facts of this case, to resolve the second, and thorniest, question, and do not do so.”

Examining the burden of proof issue, the court held that CAFA did not shift the burden of proof for federal jurisdiction to the plaintiff, and thus, Dow did not satisfy its burden of establishing jurisdiction in federal district court.  In reaching this conclusion, the court began its opinion by discussing the complete diversity requirements of Section 1332(a), the minimal diversity requirements of Section 1332(d), and the traditional placement of the burden of establishing federal jurisdiction being on the party attempting to invoke that jurisdiction.  The court explained that in cases removed from state court, the removing defendant has “always” borne the burden of establishing federal jurisdiction, including any applicable amount in controversy requirement.  Not surprisingly, the court referenced Brill v. Countrywide for support, noting that the Seventh Circuit also rejected the position Dow set forward because “there simply is no such language in the statute regarding the burden as to remand.”  (See the CAFA Law Blog post summarizing the Seventh Circuit’s opinion in Brill posted November 2, 2005).


Although Dow apparently pointed to no mention of this potential burden shift in the text of CAFA, it relied on the oft cited language in the CAFA Committee Report that explicitly states the “plaintiff(s) should bear the burden of demonstrating that the removal was improvident.”  The court, however, refused to give the Report’s language any credence, concluding that CAFA is not ambiguous, and thus, the legislative history should not be referenced.  The court again cited Brill for Judge Easterbrook’s comments that legislative history with no textual reference “has no more force than an opinion poll of legislators – less really as it speaks for fewer.”  Further, the court counted what it perceived as CAFA’s textual silence regarding the burden of proof on removal against Dow.  The court held that because of the care taken in CAFA to reverse specific established principles but not others, the usual presumption that Congress legislates against an understanding of pertinent legal principles carries particular force.  The court concluded “CAFA’s silence, coupled with a sentence in a legislative committee report untethered to any statutory language, does not alter the longstanding rule that the party seeking federal jurisdiction on removal bears the burden of establishing that jurisdiction.”  (Editors’ Note:  It is interesting to note that the Ninth Circuit examined the history and the purposes of the traditional rule used in complete diversity cases, but did not look to the purposes behind CAFA.)

Quickly addressing the jurisdictional discovery issue, the panel held that discovery before remand – such as interrogatories to discern the amount in controversy – may be appropriate in some instances, at the court’s discretion; however such discovery is not required as asserted by Dow.  Therefore, the circuit court declined to find the district court had abused its discretion by not allowing discovery at this stage of the proceedings.

After dismissing Dow’s contentions, the court affirmed the district court’s remand order, and sent the case back to state court.

Editors’ Note:  Unfortunately, the Abrego court appears to have blindly followed the path of the Seventh Circuit in Brill, and may have been led astray.  The Ninth Circuit omitted, as did the Seventh Circuit, Section 2 of CAFA, its “Finding and Purposes,” from the court’s burden of proof analysis, while condemning the consideration of CAFA’s Senate Committee Report statement that the burden should be on the plaintiff because it was “unconnected to any text.”  However, CAFA’s legislative history directly informs the “Findings and Purposes” set forth in the text of Section 2 of the Act.  When CAFA’s text, purposes, and legislative history are read together and correctly interpreted, they combine to create a presumption in favor of finding that federal jurisdiction exists in interstate class actions under the Minimal Diversity standard, and that the burden of proof is on the party opposing federal jurisdiction.  For further discussion on the concept of Minimal Diversity and why Brill and Abrego are incorrectly decided, see the CAFA Law Blog’s recent post, Hot Off the Press,” posted May 5, 2005, which introduces a soon-to-be published law review article entitled “CAFA’s New Minimal Diversity Standard For Interstate Class Actions Creates A Presumption That Jurisdiction Exists, With The Burden Of Proof Assigned To The Party Opposing Jurisdiction,” authored by CAFA Law Blog Editors Hunter Twiford, Anthony Rollo and John Rouse.