Fifth Circuit Issues Decision On CAFA's "Local Controversy" Provision

By Brian Wolfman

   

Last week, in Preston v. Tenet Healthsystem Memorial Medical Center, Inc., No. 07-30132, 07-30160 (Apr. 25, 2007), the Fifth Circuit issued a decision concerning the “local controversy” provision of the Class Action Fairness Act, 28 U.S.C. 1332(d)(4).  CAFA devotees ought to look at this one.  It’s actually readable: only 17 pages and in plain English.

    In the original class action complaint filed in Louisiana state court, the plaintiffs alleged injuries and deaths caused by unreasonably dangerous conditions at defendants’ medical facilities during Hurricane Katrina.  The defendants removed under CAFA, but the district court remanded under the local controversy provision.  The Fifth Circuit reversed, holding that the plaintiffs had failed to show that at least two-thirds of the proposed class members were domiciled in Louisiana when the class action was filed.  Under the local controversy provision, the district court “shall decline to exercise jurisdiction” if “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” and several other facts are present.

    This decision seems noteworthy for two reasons.  First, it illustrates that placing the burden of proof on the party seeking remand (rather than on the removing defendant seeking to establish federal jurisdiction) can make a difference.  The Fifth Circuit placed the burden on the party seeking remand.  To see why that may be wrong, go to this earlier post.  Imagine how the case would have come out if, once the plaintiffs pled facts meeting the terms of the local controversy provision, the defendant had the burden of showing that those facts were not correct.

    Second, the Fifth Circuit did not accept the plaintiffs’ evidence as sufficient to establish the two-thirds requirement, even though they provided an affidavit from a hospital administrator that 242 of 299 patient-class members had listed a Louisiana address as their primary residence.  This was not enough, the court said, because “residence” means only, well, “residence,” while “domicile” “requires residence in the state and an intent to remain in the state.  Under this ruling, any thoughts about what class members will have to do to show that they are domiciled in-state?