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

CAFA’s Local Controversy Exception Does Not Affect the District Court’s Ability to Exercise Federal Question Jurisdiction

Posted in Case Summaries

Blevins v. Aksut, 2017 WL 782288 (11th Cir. Mar. 1, 2017)

The Eleventh Circuit affirmed the trial court’s holding that CAFA’s local controversy exception does not affect the district court’s ability to exercise other forms of jurisdiction.

The plaintiff, on behalf of herself and a putative class, brought a class and mass action against the defendants alleging that they operated an unlawful scheme through which they performed and billed patients for unnecessary heart procedures.  According to the complaint, after an examination, Doctor Aksut would falsely tell a patient that the patient needed heart surgery, and then perform the procedure at a facility operated by the defendants.  Each plaintiff underwent some type of unnecessary procedure at one of the defendants’ facilities located in Selma and Montgomery, Alabama.  The plaintiff filed the action in an Alabama state court alleging that the defendants violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”).

The defendants removed the case to federal court under federal question jurisdiction.  The plaintiff filed a motion to remand contending that CAFA’s local controversy provision required the District Court to decline exercising federal-question jurisdiction under 28 U.S.C. § 1331.

The local controversy exception directs federal courts to decline to exercise CAFA jurisdiction when certain criteria are met, including when two-thirds or more the proposed class members are citizens of the state where the action was filed, the defendant is a citizen of the same stated, and the principal injuries occurred in the same state.

The District Court denied the plaintiff’s motion to remand finding that CAFA did not require it to decline jurisdiction under § 1331.  The plaintiff appealed to the Eleventh Circuit.  While it was undisputed that the plaintiff had alleged that the defendants violated federal RICO statutes, the plaintiff argued that CAFA’s local-controversy provision, and Eleventh Circuit precedent, required the district court to decline jurisdiction over all local class actions.  The plaintiff also argued that CAFA assigned jurisdiction over local class actions exclusively to the state courts.

The Eleventh Circuit affirmed the trial court and held that it was “unpersuaded that § 1332(d)(4) divests district courts of their authority under § 1331.”   The Eleventh Circuit noted that § 1332(d)(4) does not itself diminish federal jurisdiction; it directs district judges to ‘decline to exercise’ jurisdiction otherwise present and thus is akin to abstention.  Section § 1332(d)(4), however, does not restrict the district court’s ability to exercise other forms of jurisdiction.  Thus, the Eleventh Circuit concluded that § 1332(d)(4) did not divest the district courts of their authority under § 1331.

The Eleventh Circuit also reversed the trial court’s order dismissing Plaintiff’s RICO claims, which gave the District Court federal question jurisdiction.  The removal was thus proper on that basis, the Eleventh Circuit concluded.  Accordingly, the Eleventh Circuit affirmed the District Court’s denial of the plaintiff’s motion to remand.