Kearns v. Ford Motor Co., No. 05-5644, 2005 WL 3967998 (C.D. Cal. Nov. 21, 2005).

Foresight was 20/20 for this California federal judge, who took the position that CAFA does not shift the burden of proof to plaintiffs in remand battles some four months before the Ninth Circuit arrived at the same conclusion in Abrego v. The Dow Chemical Co. (Editors’ Note:  See the CAFA Law Blog summary of Abrego posted on May 25, 2006).  Unlike the decision in Abrego, where all the leaves were brown and the sky was grey for the defendants, in Kearns the case stayed in federal court.  Apparently, the defendants dropped down on their knees and pretended to pray.  The court refused to remand after dissecting virtually every possible exception that might have allowed the class action to slip away to state court.

Congress knew what it was doing by saying absolutely nothing in CAFA about the burden of proof, Judge Feess resolved, adding he had no leave to dig into the legislative history. It was presumed that Congress knew about the traditional burden of proof when enacting CAFA, the judge noted, taking his cue from Judge Easterbrook and the Seventh Circuit’s decision in Brill v. Countrywide.   (Editors’ Note:  See the CAFA Law Blog summary of Brill posted on  November 2, 2005).  The Judge recognized his conclusion may cause some tension in the break room, as it put him at odds with the conclusions of his district court colleagues in the Ninth Circuit in Berry, In Re Textainer, Waitt, and Lussier – each holding the statute’s ambiguity gave them carte blanche to delve into the legislative history to figure out whether Congress intended to shift the burden of proof.  (Editors’ Note:  See the CAFA Law Blog summary of Berry posted on September 5, 2005; the CAFA Law Blog summary of In Re Textainer posted on October 28, 2005; the CAFA Law Blog summary of Waitt posted on November 3, 2005; and the CAFA Law Blog summary of Lussier posted on October 13, 2005).

Once he had decided the burden of proof issue, Judge Feess got down to the nitty gritty of CAFA.  He  considered whether this particular class of plaintiffs belonged in federal court in the first place. The underlying dispute concerned claims that Ford Motor Company, a California Ford dealer, and some 350 John Doe defendants had overcharged buyers of “certified pre-owned” cars and misrepresented the advantages of the program. However, after a quick run down of the common sticking points, Judge Feess was satisfied the case should remain in federal court. The case was filed in June 2005, so there was no commencement issue. CAFA allows aggregation of claims to meet the law’s $5 million amount-in-controversy threshold, and the court found the case easily cleared that hurdle – the average alleged overcharge was $1,080 for some 79,000 certified pre-owned cars sold in California during the relevant time frame. Finally, minimal diversity worked, since Ford is a citizen of Michigan and Delaware, and the named plaintiff was a Californian.

The California dream continued, rambling through CAFA’s provisions concerning permissive and mandatory exceptions to jurisdiction. First the court turned to CAFA’s provision giving the court permission to send the case back to state court when between one and two-thirds of plaintiffs in the proposed class and the “primary defendants” share state citizenship. The parties simply assumed that the plaintiffs were fellow Californians, but the court said that a good many of them could have crossed state or international boundaries to buy cars. To define “primary defendants” the court looked at the Multiparty, Multiforum, Trial Jurisdiction Act, or MMTJA, and case law relating to it. The primary defendant is not necessarily the one with the fattest wallet, but the one with “direct liability” to the plaintiffs. Since the certified pre-owned car program was the national company’s brainchild, out-of-state Ford counted as a primary defendant and defeated application of the exception under the 1/3-2/3 provision.

Moving on to CAFA’s “home state controversy” exception, the court said that Ford Motor Company’s out-of-state status precluded remand on that score, given that the statute requires that 2/3 of the proposed plaintiff classes “and the primary defendants” are citizens of the state where the case was first filed.   

The Court turned to CAFA’s legislative history for guidance on the “local controversy” exception.   Ultimately,  the court consulted the legislative history for clues to the meaning of “principal injuries,” noting Congress’ intent that CAFA apply to all but truly local controversies. The certified pre-owned car program is national, and so are the “principal injuries,” the court said, as it denied the plaintiff’s motion to remand.