Commercial Litigation and Arbitration

Class Action Fairness Act — Local Controversy Exception — Proving Citizenship

Hurricane Katrina generated the class action filed in Preston v. Tenet HealthSystem Memorial Med. Ctr. , 2007 U.S. App. LEXIS 9451 (5th Cir. April 25, 2007), which sought damages for injuries and deaths allegedly caused by defects and unreasonably dangerous conditions at the medical facilities of certain defendants, and their failure to have an adequate evacuation plan for patients. The plaintiffs defined the putative class to consist of: ‛All persons, except Defendants' employees, who sustained injury and/or damage a result of unreasonable dangerous conditions and/or defects in and/or on the premises of [defendants] on or about August 29, 2005, and/or as a result of the failure of [defendants] to attain, maintain, and/or provide an adequate means of transportation to timely and/or safely move persons off its premises in the wake of Hurricane Katrina.“

The plaintiffs filed in state court, and the defendants removed under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d)(2) & 1453(b). The plaintiffs did not contest that the threshold requirements for removal under § 1332(d)(2) were met — the aggregate amount in controversy exceeded $5 million and there was minimal diversity. Plaintiffs sought remand under the local controversy exception, § 1332(d)(4)(A), which requires, among other things, 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.“

To prove that more than two-thirds of the plaintiffs were Louisiana citizens, the plaintiffs relied on an affidavit from the director of medical records of one of the defendants establishing that 200 of the 242 patients in the defendants’ medical facilities (82%) had provided an Orleans Parish address as their primary residence. The plaintiffs cited cases holding that proof of residence creates a rebuttable presumption of citizenship (domicile), and that domicile, once established, is presumed to continue absent evidence to the contrary. This, the Fifth Circuit held, was inadequate.

The Fifth Circuit stressed the importance to its decision of the enormous dislocation caused by Hurricane Katrina. ‛[Plaintiffs] ask this court to presume, despite the forced mass relocation of Orleans Parish citizens after Hurricane Katrina, that the patients' primary billing addresses listed in the medical records accurately reflect their domicile at the time of the filing of this action, August 4, 2006, nearly a year after the hurricane.“ In rejecting this contention, however, the Court went further — it held that medical records, alone, were an inadequate proxy for proof of domicile. Instead, it required evidence of objective indicators of domicile: ‛the places where the litigant exercises civil and political rights, pays taxes, owns real and personal property, has driver's and other licenses, maintains bank accounts, belongs to clubs and churches, has places of business or employment, and maintains a home for his family. These indicators of a person's citizenship are often a matter of public record easily accessed by attorneys and investigators“ (internal quotation and citation omitted).

Perhaps most tellingly, Judge Carl Stewart emphasized that, ‛as master of the complaint with the creative license for defining the putative class, the plaintiffs are in the best position to establish citizenship and produce probative evidence.“ In other words, the plaintiffs could have defined the class to consist exclusively of Louisiana citizens and avoided this threshold issue altogether.

The burden of proof allocation should not be overlooked. The Fifth Circuit placed on the plaintiff the burden of proving the facts requisite to its motion to remand. ‛As the movants, [plaintiffs] must present some modicum of evidence in the record that is directly aimed at the statutory required time frame, i.e. the date of the filing of the suit.“

This ruling is not necessarily the end of the story, however. Section 1332(d)(7) sets forth three separate times for determining the citizenship of the plaintiff class members — ‛as of the date of filing of the complaint or amended complaint, or, if the case stated by the initial pleading is not subject to Federal jurisdiction, as of the date of service by plaintiffs of an amended pleading, motion, or other paper, indicating the existence of Federal jurisdiction.“ Plaintiffs need only amend their complaint and re-move. There is, therefore, ample opportunity for the plaintiffs to get this case back to state court where they want it, if the facts are there.

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