Wilbur Fuller, individually and on behalf of all others similarly situated v. Home Depot Services, LLC, Home Depot U.S.A., Inc., The Home Depot, Inc., and John Does 1 & 2, Civ. Action No. 1:07-CV-1268, U.S.D.C., N.D. Ga. Aug. 14 2007.

“You Can’t Do It. We Can’t Help” is the slogan for this home improvement retailer, at least according to a beleaguered class plaintiff seeking remand of a CAFA lawsuit. The plaintiff alleges that the home-improvement retailer Home Depot tricked him into purchasing a “damage protection plan” on rented tools.

In this March 2007 Georgia class action against Home Depot, the named plaintiff alleged fraud and misrepresentation based on the defendant’s tool rental services offered at many Home Depot retail stores in the Atlanta area. The plaintiff complained that Home Depot schemed to deceive its customers by automatically charging an additional ten percent fee for a “damage protection plan” on rental tools, without disclosing that such protection was already provided by each tool manufacturer’s warranty, and Home Depot’s own warranty.

Home Depot removed the action under 28 U.S.C. § 1332(d)(2), which confers original jurisdiction under CAFA where: (1) the plaintiff alleges that there are 100 or more members in the proposed class; (2) the matter in controversy exceeds $5 million, exclusive of interests and costs; and (3) the parties are minimally diverse – that is, where any member of the class of plaintiffs is a citizen of a State different from any defendant. The plaintiff moved to remand, asserting that Home Depot failed to show minimal diversity of citizenship or, alternatively, that CAFA’s “local controversy” exception applied. The plaintiff did not dispute that Home Depot satisfied CAFA’s numerosity and amount-in-controversy requirements. 

Originally, the plaintiff sought to represent a class consisting of “all consumers who rented tools from Home Depot’s tool Rental Center and were defrauded into purchasing ‘Damage Protection Service’ over the past ten (10) years from Home Depot stores located in Georgia.” The plaintiff did not limit the proposed class to only Georgia citizens who rented tools from Home Depot, but instead alleged that the class included all persons who rented tools from Home Depot stores located in Georgia, regardless of where those persons might be citizens. Along with the Motion to Remand, the plaintiff filed an Amended Complaint, purporting to represent only Georgia citizens who rented tools from Home Depot stores in Georgia during the past ten years.

CAFA Construction 101: Defendant’s Burden of Proof for Invoking Minimal Diversity:

Any CAFA aficionado worth his or her salt is aware of the decisions of the various circuit courts imposing on removing CAFA defendants the draconian burden of proving federal jurisdiction – despite CAFA’s plain legislative history to the contrary.

For now anyway, it appears that the removing defendant bears the initial burden of alleging facts that give rise to federal subject matter jurisdiction under CAFA. CAFA, therefore, establishes a “no jurisdiction presumption.” Thus, even though the plaintiff has not presented the court with any facts entitling it to the presumption, it exists by operation of law because the removing CAFA defendant seeks to invoke federal subject matter jurisdiction. Because federal courts presume that they do not have jurisdiction, ultimately, the removing CAFA defendant must prove by a preponderance of the evidence that subject matter jurisdiction is proper. 

The district court’s inquiry into subject matter jurisdiction, however, does not end if a removing CAFA defendant overcomes the no-jurisdiction presumption. When the plaintiff asserts a factual attack to the removing defendant’s allegation of federal subject matter jurisdiction, the plaintiff is required to produce evidence that makes a prima facie case that the removing defendant’s basis for invoking federal subject matter jurisdiction is barred by one of CAFA’s jurisdictional conditions.

Thus, if the removing defendant overcomes the no-jurisdiction presumption and the CAFA plaintiff meets its burden of producing evidence that the defendant has failed to meet a jurisdictional condition of CAFA, the removing defendant has the ultimate burden of persuading the federal district court that it has subject matter jurisdiction over the action. 

CAFA Plaintiff Falls Off the Ladder, Failing to Challenge Home Depot’s Evidence of Minimal Diversity.

Under CAFA, minimal diversity is present when “any member of a class of plaintiffs is a citizen of a State different from any defendant. 28 U.S.C. Sec. 1332(d)(2)(A). As the removing party, Home Depot had the burden of proving by a preponderance of the evidence that any putative class member is a citizen of a State different from a State in which Home Depot is a citizen.

Although an individual may be a citizen of only one State, a corporation may have dual citizenship – it is a citizen of the State in which it is incorporated and of the State where it has its principal place of business. 28 U.S.C. § 1332(c). The plaintiff admitted that Home Depot was incorporated in Delaware and that Home Depot had its principal place of business in Georgia. The plaintiff thus readily conceded that Home Depot was a citizen of both Delaware and Georgia. The plaintiff argued that minimal diversity was lacking because all of the class members and Home Depot were citizens of Georgia.

True enough, said the trial court. Unfortunately, the shortsighted plaintiff overlooked the obvious: Assuming from the Amended Complaint that the plaintiff and all potential class members were citizens of only Georgia, Home Depot satisfied minimal diversity because it was also citizen of a different State – can you say – Delaware? Plainly, Home Depot’s dual citizenship made it diverse from at least one member of the proposed class of Georgia citizens. Voila, minimal diversity. Nailed it.

The original Complaint, however, did not limit the purported class to Georgia citizens. The trial court went one step further, examining Home Depot’s proffered evidence in support of minimal diversity. Home Depot submitted the rental agreements of nine customers who rented tools, and who listed an out-of-state billing address and driver’s license. Once more, the hapless plaintiff dropped a hammer on his own foot by admitting that these nine customers “resided” outside of Georgia. What’s more, the witless plaintiff offered absolutely no contradictory evidence, arguing that Home Depot’s “evidence” of residence was insufficient to establish the customers’ citizenship.

For diversity purposes citizenship means domicile, and not mere residence. Stine v. Moore, 213 F.2d 446, 448 (5th Cir. 1954); Preston v. Tenet Healthsystem Mem. Med. Ctr., 485 F.3d 793, 799 (5th Cir. 2007). (Editors’ Note: See the CAFA Law Blog analysis of Preston posted on June 5, 2007).  A party’s residence in a State alone does not establish domicile. Preston, 485 F.3d at 798 (citing Mas v. Perry, 489 F.2d 1396, 1399 (5th Cir. 1974)). According to the Supreme Court, domicile requires both residence in the State and an intent to remain in the State. Mississippi Bank of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989).

To satisfy its burden of establishing citizenship, Home Depot essentially argued that proof of citizenship based on a party’s “residence” alone permitted the trial court to assume that a person’s State of residence and State of Citizenship were the same unless rebutted with sufficient evidence by the plaintiffs. The trial court agreed, declaring that evidence of the nine putative class members’ residence created a rebuttable presumption; if the presumption was not contested by the opposing party, then residency established citizenship for CAFA jurisdictional purposes. The trial court in Fuller declared that, “absent any contradictory evidence, [the plaintiffs’] place of residence is their ‘domicile.’” 

Based upon this unrebutted presumption of residence, the trial court concluded that “Home Depot’s evidence of putative class members’ out-of-state driver’s licenses and billing addresses is sufficient evidence to show that there are class members domiciled outside Georgia and, consequently, have citizenship diverse from Home Depot.” 

CAFA Plaintiff Misses the Nail Head on CAFA’s ‘Local Controversy’ Exception —

Again Fails to Offer Any Evidence To Satisfy His Burden of Proof.

Once Home Depot established minimal diversity jurisdiction, the burden of proof shifted to the plaintiff to prove the “local controversy” exception to CAFA jurisdiction. The plaintiff argued that the “local controversy” exception required the trial court to decline jurisdiction because more than two thirds of the putative class members were citizens of Georgia, the State in which the class action was filed. In determining whether two-thirds of the putative class members are in-state citizens, the plaintiff, as the party moving for remand, must prove the statutory citizenship requirement by a preponderance of the evidence. Preston, 485 F.3d at 797.

By now, it is well established that a plaintiff invoking an exception to CAFA has the burden of proving the elements of the exception. Frazier v. Pioneer Americas, LLC, 455 F.3d 542, 546 (5th Cir. 2006); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164-65 (11th Cir. 2006). (Editors’ Note: See the CAFA Law Blog analysis of Frazier posted on August 17, 2006.  Also, see the CAFA Law Blog analysis of Evans posted on May 25, 2006 and the critique of Evans posted on May 26, 2006). Once more, the hapless plaintiff offered absolutely no evidence showing the citizenship of any member of the putative class. 

Rather than marshaling his own evidence to meet his burden of proof, the plaintiff concocted what has to be one of the most bizarre arguments in recent CAFA lore. It goes something like this: Because Home Depot did not prove that less than two-thirds of plaintiffs were Georgia citizens, “it must be true that more than two-thirds are Georgia citizens.”  Say what?

The trial court’s response was terse and merciful: “The plaintiff’s argument is that because Home Depot’s evidence does not disprove his assertion, then his assertion must be true. Such logic, however, would turn the burden of proof for invoking the exception to CAFA on its head.”

When it comes to DIY, this CAFA plaintiff was SOL.