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Wednesday, January 8, 2014

Mondragon v. Capital One Auto Finance: Ninth Circuit Clarifies CAFA "Local Controversy" Rule

Mondragon v. Capital One Auto Finance, ___ F.3d ___ (9th Cir. 11/27/13) concerns the "local controversy" exception to the general rules of federal jurisdiction set forth in the Class Action Fairness Act of 2005 (CAFA). 

The Court gives a good overview of CAFA and the local controversy exception: 
Through CAFA, Congress broadened federal diversity jurisdiction over class actions by, among other things, replacing the typical requirement of complete diversity with one of only minimal diversity, see id. § 1332(d)(2), and allowing aggregation of class members’ claims to satisfy a minimum amount in controversy of $5 million, see id. § 1332(d)(6). However, Congress also provided exceptions allowing certain class actions that would otherwise satisfy CAFA’s jurisdictional requirements to be remanded to state court. Among these is the exception commonly referred to as the local controversy exception, set forth in 28 U.S.C. § 1332(d)(4)(A). One of the requirements of the local controversy exception is that “greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed.” Id. § 1332(d)(4)(A)(i)(I). 
Slip op. at 3-4. 

The Court held that the plaintiff failed to show that a class of people who "purchased a vehicle in California for personal use to be registered in the State of California" would necessarily be California citizens, and the district court erred in relying on an inference that more than two-thirds of such class members would be California citizens. The Court remanded with instructions that the district court allow the plaintiff an opportunity to renew his motion to remand and to take jurisdictional discovery tailored to proving that more than two-thirds of the putative class are citizens of California. 

The opinion is available here.

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