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

Burden Of Proof Of A Party Invoking The Local Controversy Exception Is By A “Preponderance” – Or More Than 50% – Of The Evidence

Posted in Case Summaries

McAllister v. The St. Louis Rams, LLCNo. 4:16-cv-00172 (E.D. Mo. Feb. 12, 2018).

In this action, while remanding a case to state court, a district court in Missouri found that the plaintiffs’ burden of proof, as the party invoking the local controversy exception, is by a “preponderance” or more than 50% of the evidence.

This consolidated action consisted of four cases all pertaining to the St. Louis Rams football team’s move from Missouri to California in 2016. Tens of thousands of St. Louis Rams season ticket holders purchased at great expense Personal Seat Licenses (“PSLs”) that gave them the right to buy St. Louis Rams season tickets through the 2024 season. However, in January 2016, the defendants announced that they were moving to Los Angeles, rendering these PSLs valueless. The defendants had not reimbursed PSL owners for what they paid for the portion of the PSLs that were now unusable. The plaintiff, a PSL owner, thus brought a putative class action in the state court of Missouri to recover the value of the unusable portion of their PSLs.

The defendants removed the action to the federal court citing diversity jurisdiction generally and, in the alternative, “minimal diversity” under CAFA. The plaintiff moved to remand, which the District Court denied. Subsequently, the plaintiff moved to reconsider, which the District Court granted.

The plaintiff argued that, in light of the District Court’s conclusion that the CAFA jurisdictional elements had been established, the District Court should have applied the local controversy exception to the facts of the case. The District Court noted that the parties’ dispute pertained to the first factor of the local controversy exception, whether more than two-thirds of the class members were Missouri citizens.

The plaintiff retained Dr. Charles Cowan as their expert in statistics and survey design and implementation, who took a random sample of potential class members and ascertained their citizenship or domicile. Dr. Cowan determined that 86.7% of putative class members had Missouri citizenship. The defendants submitted an expert report from Dr. Stephen Cacciola that disputed much of Dr. Cowan’s conclusion, but without offering a competing calculation of Missouri citizens versus Missouri residents. Dr. Cowan later responded and refuted the defendants’ criticisms. The District Court found Dr. Cowan’s analysis and opinion persuasive, even in the face of the defendants’ arguments to the contrary.

First, the defendants argued that Dr. Cowan did not obtain a representative sample of proposed class members. Dr. Cowan responded that the nature of his sampling frame was accounted for in his results to ensure accuracy based on his experience, education, and training and in accordance with standards in his field. The defendants also argued that Dr. Cowan’s data did not include tickets sold at the ticket window on game days. Dr. Cowan, however, concluded that, as with other factors, there was no statistical basis to differentiate the citizenship rate of Missouri residents who purchased online versus those who purchased at the ticket window.

Second, the defendants pointed out that Dr. Cowan’s survey asked about Missouri citizenship as of the date of the filing of the case rather than its date of removal. Although Dr. Cowan opined that statistically, the 29–day difference had no relevance or impact, he applied the date of removal to his survey and found that the rate of Missouri citizenship actually went up to 89.9%.

Finally, the defendants argued that Dr. Cowan could not reliably extrapolate from the survey results to the proposed class. The plaintiff responded that Dr. Cowan used standard procedures within his profession and that the correction of the few errors the defendants found resulted in a drop in the Missouri citizenship rate from 86% to 85%.

The District Court thus found that Dr. Cowan’s opinion resulted in finding a Missouri citizenship rate significantly larger than two-thirds at a 95% confidence level. The District Court further found that the defendants did not suggest that Dr. Cowan was not qualified as an expert in these matters, nor was there any apparent basis for the defendants to do so. The District Court opined that Dr. Cowan’s opinion easily supported that more than two-thirds of the plaintiff class comprised of Missouri citizens. The Court held that the plaintiffs’ burden of proof is by a “preponderance”–or more than 50%–of the evidence. Thus, the Court found that the plaintiffs’ approach was disciplined and reliable so as to meet this burden.

The District Court thus concluded that the local controversy exception applied to this case, and accordingly, remanded the action to the state court.

-Melissa M. Grand