Friday, April 14, 2006

Ninth Circuit Holds CAFA Does Not Shift Burden to Plaintiff to Prove No Removal Jurisdiction

Per Abrego v. Dow Chemical Co., --- F.3d ----, 2006 WL 864300 (9th Cir. Apr. 4, 2006):

Dow maintains that under CAFA and contrary to preexisting removal jurisdiction law: (1) plaintiffs bear the burden of refuting the district court's removal jurisdiction. . . . The disputes between the parties on these discrete issues reflect a larger disagreement over whether the changes wrought by CAFA generally are limited to those enunciated in CAFA's text, or whether courts should infer a broader transformation of jurisdictional principles than the statutory language indicates.

. . .

Dow points to no language in CAFA to support its argument. That is not surprising for, as the Seventh Circuit noted in rejecting the position Dow supports, there simply is no such language in the statute regarding the burden as to remand. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005) (noting that none of CAFA's language "is even arguably relevant" to this burden-shifting argument).

Instead, Dow relies on language from a Senate Judiciary Committee Report (the "Committee Report"), issued ten days after CAFA's passage into law, which states: "If a purported class action is removed pursuant to these jurisdictional provisions, the named plaintiff(s) should bear the burden of demonstrating that the removal was improvident (i.e., that the applicable jurisdictional requirements are not satisfied)." S.Rep. No. 109-14, at 42 (Feb. 28, 2005), as reprinted in 2005 U.S.C.C.A.N. 3, 40. Dow is correct that consideration of legislative history is appropriate where statutory language is ambiguous. Ambiguity, however, is at least a necessary condition. See Exxon Mobil, 125 S.Ct. at 2626 ("Extrinsic materials have a role in statutory interpretation only to the extent they shed a reliable light on the enacting Legislature's understanding of otherwise ambiguous terms."); Garcia v. United States, 469 U.S. 70, 76 n. 3 (1984) (" 'Resort to legislative history is only justified where the face of the Act is inescapably ambiguous ....' " (quoting Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 395- 96 (1951) (Jackson, J., concurring)).

In this instance, the statute is not ambiguous. Instead, it is entirely silent as to the burden of proof on removal. Faced with statutory silence on the burden issue, we presume that Congress is aware of the legal context in which it is legislating. See Cannon v. Univ. of Chi., 441 U.S. 677, 696-97 (1979) ("It is always appropriate to assume that our elected representatives, like other citizens, know the law...."); United States v. LeCoe, 936 F.2d 398, 403 (9th Cir.1991) ("Congress is, of course, presumed to know existing law pertinent to any new legislation it enacts.").

. . .

The legal context in which the 109th Congress passed CAFA into law features a longstanding, near-canonical rule that the burden on removal rests with the removing defendant. See Gaus, 980 F.2d at 566-67; Sanchez, 102 F.3d at 402. More generally, "[i]t is to be presumed that a cause lies outside [the] limited jurisdiction [of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted).

As we have noted, CAFA contains a series of modifications of existing principles of federal subject matter jurisdiction, both statutory and judge-created. CAFA thus evidences detailed appreciation of the background legal context. Given the care taken in CAFA to reverse certain established principles but not others, the usual presumption that Congress legislates against an understanding of pertinent legal principles has particular force.

. . .

The traditional rule of burden allocation in determining removal jurisdiction was meant to comport with what the Supreme Court has termed "[t]he dominant note in the successive enactments of Congress relating to diversity jurisdiction," that is, "jealous restriction, of avoiding offense to state sensitiveness, and of relieving the federal courts of the overwhelming burden of 'business that intrinsically belongs to the state courts' in order to keep them free for their distinctive federal business." Indianapolis v.. Chase Nat'l Bank, 314 U.S. 63, 76 (1941); see Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941) (noting that "[n]ot only does the language of the Act of 1887 evidence the Congressional purpose to restrict the jurisdiction of the federal courts on removal, but the policy of the successive acts of Congress regulating the jurisdiction of federal courts is one calling for the strict construction of such legislation"). This rule of restriction extends to removal jurisdiction, especially insofar as it is based on the diversity jurisdiction of the federal courts. See Syngenta Crop Prot., 537 U.S. at 32 ("The right of removal is entirely a creature of statute and 'a suit commenced in a state court must remain there until cause is shown for its transfer under some act of Congress.' These statutory procedures for removal are to be strictly construed." (internal citation omitted)); Gaus, 980 F.2d at 566 ("The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper."); see also Gould v. Mutual Life Ins. Co. of N.Y., 790 F.2d 769, 773 (9th Cir.1986) ( "Removal jurisdiction is statutory and strictly construed.").

We therefore hold that under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction. In Brill, the Seventh Circuit--the only circuit that has addressed the burden of proof question under CAFA--came to the same conclusion. Brill emphasized that the single passage of legislative history upon which Dow now relies, "does not concern any text in the bill that eventually became law." 427 F.3d at 448. . . .


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