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

Plaintiff Must Present Persuasive Substantive Evidence To Establish The Citizenship Of The Class Members

Posted in Case Summaries

Nichols v. Chesapeake Operating LLCNo 5:16-cv-01073-M (W.D. Ok. Sept. 13, 2017).

In this action, a district court in Oklahoma denied the plaintiff’s motion to abstain under the home-state mandatory abstention exception to CAFA finding that the plaintiff cannot rely solely on the allegations in his class action petition to establish that two-thirds or more of the members of the proposed class are citizens of Oklahoma, but must make some minimal evidentiary showing of the citizenship of the proposed class.

The plaintiff brought a putative class action for breach of lease, breach of fiduciary duty, fraud, deceit and constructive trust against the defendants in the state court of Beaver County, Oklahoma. The class claims related to royalty payments for gas and its constituents.

The defendants removed the action to the federal court pursuant to CAFA. After the District Court denied the plaintiff’s motion to remand, the plaintiff moved for an order abstaining from jurisdiction over the putative class action and remanding the case under the home state exception to diversity jurisdiction under CAFA.  The District Court denied the motion.

It was undisputed that the two defendants in this case were citizens of Oklahoma for purposes of CAFA and that the instant action was originally filed in Oklahoma state court. The only disputed issue was whether two-thirds or more of the members of the proposed class were citizens of Oklahoma.

The plaintiff submitted a declaration of its expert Joseph B. Kadane attesting to his generation of a random sample of the proposed class, to his statistical analysis of the data provided by the plaintiff’s counsel, and to his conclusion that more than two-thirds of the proposed class were citizens of Oklahoma. The plaintiff also submitted survey data regarding the random sample of the proposed class, a skip-trace investigation of the random sample of the proposed class; and its counsel’s data compilation and conclusions regarding whether a particular member of the random sample of the proposed class was an Oklahoma citizen.

First, the District Court found that neither the plaintiff’s data nor plaintiff’s counsel’s conclusions regarding whether a particular member of the random sample was an Oklahoma citizen properly addressed the requisite analysis for determining the citizenship of a trust. The District Court further found that neither the survey data nor the skip-trace investigation documents provided any information as to either the trustee’s citizenship or the trust beneficiaries’ citizenship.

Second, the District Court found that a number of individuals that were found to be Oklahoma citizens on the plaintiff’s counsel’s data compilation that the skip-trace investigation documents indicated were deceased. The District Court opined that if an individual is deceased, an additional analysis would necessarily need to be conducted to determine the citizenship of any heirs, etc.

Finally, the District Court found that there was an insufficient basis for the plaintiff’s counsel’s determination of Oklahoma citizenship for a few of the members of the random sample. The District Court therefore found that Mr. Kadane’s conclusion could not be relied upon and that without Mr. Kadane’s conclusion, and sufficient reliable data, it could not find by a preponderance of the evidence that two-thirds or more of the members of the proposed class were citizens of Oklahoma.  The District Court thus concluded that the home state exception to CAFA did not apply in this case.

Accordingly, the District Court denied the plaintiff’s motion to abstain under the home-state mandatory abstention exception to CAFA.

-Melissa M. Grand