This Special Report, promised in the CAFA Law Blog summary of Evans v. Walter Industries, Inc., 449 F.3d 1159, 2006 WL 1374688, No. 06-11974 (11th Cir. May 22, 2006), addresses the jurisdictional burden of proof findings in Evans. 

Evans addresses the burden of proof issue under CAFA in two different respects.  First, Evans found (with no analysis) that CAFA does not change the traditional rule that the party seeking to remove a case bears the burden of establishing federal jurisdiction, at the threshold, citing as authority Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005) (See CAFA Law Blog’s summary of Brill posted November 2, 2005) and Abrego v. Dow Chemical Co., 443 F.3d 676 (9th Cir. 2006)(See CAFA Law Blog’s summary of Abrego posted May 26, 2006).  Second, Evans held that the plaintiff bears the burden of proving the “local controversy” exception to CAFA jurisdiction under 28 USC § 1332(d)(4), once the removing defendant establishes the existence of minimal diversity jurisdiction under 28 USC § 1332(d)(2) at the threshold. 

As we explain in our article “CAFA’s New ‘Minimal Diversity’ Standard For Interstate Class Actions Creates A Presumption That Jurisdiction Exists, With The Burden of Proof Assigned To The Party Opposing Jurisdiction,” we believe that Brill and Abrego are incorrectly decided, and that correctly interpreted, CAFA’s text, purposes, and legislative history create a presumption in favor of finding that minimal diversity jurisdiction under § 1332(d)(2) exists at the threshold, with the burden of proof on the party opposing jurisdiction.  Among other reasons why, the Brill and Abrego panels completely overlooked Section 2 of CAFA’s text (“Findings and Purposes”), and rejected consideration of CAFA’s legislative history in their § 1332(d)(2) burden of proof decisions. 

The Evans decision, by simply following Brill and Abrego without any analysis, is not persuasive authority on this issue. In fact, Evans’ analysis and holding that it is the plaintiff who bears the burden of proving the local controversy exception under § 1332(d)(4) helps underscore why Brill, Abrego, and the Evans court itself reached the wrong result for CAFA’s burden of proof under § 1332(d)(2). 

Evans views CAFA jurisdictional questions as involving a two level analysis.  The first level analysis involves whether the amount in controversy and diversity of citizenship requirements under § 1332 (d)(2) are met, and if so, then minimal diversity jurisdiction exists.  Once jurisdiction is found to exist, the second level analysis involves questions relating to whether the court should decline to exercise that jurisdiction.  The Editors believe this Second Level Analysis is in the nature of an abstention analysis.  For example, see the article coauthored by CAFA Law Blog editors Anthony Rollo and Hunter Twiford, et al., characterizing Sections 1332(d)(3) and (4) of CAFA as abstention provisions, rather than jurisdictional exceptions. The article, entitled "Practitioners review ‘abstention’ procedure under Sections 1332(d)(3) and (4)," was published in the Consumer Financial Services Law Report, Vol. 9, Issue 2 (June 15, 2005), and is available on the CAFA Law Blog. See the summary posted on October 22, 2005. 

In deciding that the plaintiff bears the burden of proof in the second level analysis under § 1332(d)(4), Evans did what Brill and Abrego failed to do in their rulings:  consider the text and effect of CAFA Section 2, and seek guidance from, and view as authoritative, CAFA’s legislative history.  Specifically, Judge Anderson in writing the Evans decision noted that CAFA’s language favors federal jurisdiction over class actions and that CAFA’s legislative history suggests that Congress intended the local controversy exception to be a narrow one, and quoted from the Senate Report that all doubts be resolved “in favor of exercising jurisdiction over the case.”  Significantly, Judge Anderson also quoted from Section 2 of CAFA for the proposition that Congress contemplated broad federal court jurisdiction under CAFA by “providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction,” with only narrow exceptions.  Judge Anderson stated specifically that “[t]hese notions are fully confirmed in the legislative history.” 

Judge Anderson also looked by analogy to two non-CAFA cases to support the holding, Castleberry v. Goldome Credit Corp., 408 F.3d 773 (11th Cir. 2005) and Lazuka v. FDIC, 931 F.2d 1530 (11th Cir. 1991), which addressed removal of actions involving the FDIC under 12 USC § 1819(b)(2)(B).  Lazuka interpreted this special purpose removal provision as “creating a rebuttable presumption of federal jurisdiction” in light of Congress’ intent “to afford the FDIC every possibility of having a federal forum within the limits of Article III.”  Id. at 1535. 

All of the reasoning, logic and sources of authority relied upon in Evans to support that panel’s burden of proof holding as to the second level analysis under § 1332(d)(4), fully support the conclusion that the burden of proof for the threshold, first level jurisdictional question under § 1332(d)(2) should similarly fall upon the party contesting the existence of jurisdiction.  Brill and Abrego did not reach this conclusion due to their hostility to considering CAFA’s legislative history, and both ignored CAFA’s Section 2.  Evans, by simply following Brill and Abrego, reached the same incorrect result on the burden of proof issue under § 1332(d)(2). 

The Editors believe that the tide is slowly turning on this burden of proof issue, and it’s just a question of time before the appellate courts apply the same reasoning used by Judge Anderson in Evans on the second level burden of proof issue under § 1332(d)(4), for the threshold burden of proof question under § 1332(d)(2).