Schwartz v. Comcast Corp., No. 05-2340, 2006 WL 487915 (E.D. Pa. Feb. 28, 2006).
In this follow-up to his July 28, 2005 opinion addressing CAFA’s burden of proof, U. S. District Judge Thomas N. O’Neill, Jr., addressed CAFA’s seldom argued (so far) and rarely invoked exceptions to diversity jurisdiction – the “home state controversy” exception, the “local controversy” exception, and the “interests of justice” exception. (Editor’s Note: See the CAFA Law Blog case summary of Schwartz I posted on November 6, 2005). The case originated in Pennsylvania state court on April 18, 2005, when Schwartz filed a complaint alleging that Comcast had violated certain terms of his contract with the company, including the company’s promise to provide service “24 hours a day, 7 days per week, 365 days per year.” Comcast timely removed the action to the Eastern District of Pennsylvania. The plaintiffs filed their motion to remand, and Judge O’Neill declined to shift the burden of proving jurisdiction to the party opposing removal, as CAFA’s legislative history dictates, and instead, granted the plaintiffs’ request to engage in discovery to disprove diversity. That was the prequel, known as Schwartz I, to the current release.
Reiterating that Comcast bore the burden of proof in establishing jurisdiction under CAFA, Judge O’Neill first focused on the issue that would be applicable to all three exceptions to the general diversity rule (home state controversy, local controversy, and interests of justice): whether one third of the plaintiff’s putative class members were citizens of the same state, Pennsylvania. If more than one third of the class were citizens of Pennsylvania, then at least one of the exceptions would apply. However, if less than one third were domiciled in Pennsylvania, none of the exceptions would preclude federal jurisdiction under CAFA.
Comcast argued that the determination should be made based on the information currently in front of the court due to the CAFA Senate Report Committee’s statements to that effect. Although Judge O’Neill was hesitant to follow CAFA’s legislative history, as he demonstrated in Schwartz I, he begrudgingly agreed to “make a jurisdictional determination based upon the evidence available at this stage of litigation.”
Schwartz’s argument that more than one third of the class consisted of Pennsylvania citizens was essentially that “residence is an effective proxy for domicile,” and therefore, since more than one third of the class resided in Pennsylvania, the requirement was satisfied. Judge O’Neill was not, however, persuaded. Implicitly placing the burden of proving the exceptions on the plaintiff, Judge O’Neill concluded that Schwartz failed to prove the requisite intent required for a showing of domicile — an intent to remain in the state — and thus, failed to satisfy any of the three exceptions. Moreover, Judge O’Neill found that granting federal jurisdiction was also supported by a “national interest in protecting the millions of citizens from many states whose contractual rights were allegedly violated by Comcast’s nationwide service disruption.” Despite the fact that one should never underestimate the power of the Schwartz (with condolences to Mel Brooks), the motion for remand was denied. As Dark Helmet might say, “There are two sides to every Schwartz. He got the upside, I got the downside.”