Thursday, January 25, 2007

Second and Third Circuits Hold that Defendant Has Burden of Proving CAFA Jurisdiction

BNA's Class Action Litigation Report (1/12/07, Vol. 8, no. 1) recently reported on two circuit decisions touching on the issue of who has the burden of establishing jurisdiciton under the Class Action Fairness Act (2005). Here is an excerpt from BNA's article on the decisions:

Two federal appeals courts ruled unanimously in December 2006 that the burden of proving federal jurisdiction in a case removed under the Class Action Fairness Act falls on the defendant (Blockbuster Inc. v. Galeno, 2d Cir., No. 05-8019, 12/26/06; Morgan v. Gay, 3d Cir., No. 06-4497, 12/15/06).

Both courts rejected arguments by the removing defendant that language in the U.S. Senate's legislative history meant CAFA placed the burden on the party opposing removal, usually the plaintiff. Finding that established law on removal puts the burden on the removing party, the two courts said that only specific legislative action could shift the burden to the other party.
Writing for the U.S. Court of Appeals for the Second Circuit in the Dec. 26, 2006, decision in Blockbuster Inc. v. Galeno, Judge Richard J. Cardamone said, "We assume that the drafters of CAFA were well aware of the statutory language necessary to express an intent to shift the burden of proof to the plaintiff, especially in light of long-standing judicial rules placing the burden on the defendant."

In the Dec. 15, 2006, opinion for the U.S. Court of Appeals for the Third Circuit in Morgan v. Gay, Judge D. Brooks Smith made a similar ruling:

It should take more than a few lines in a Senate Judicial Committee Report and some vague language in a statute's "Findings and Purposes" section to reverse the well-established proposition that the party seeking removal carries the jurisdiction-proving burden. Second, and related, as a general matter this Court need not look to legislative history at all when the text of the statute is unambiguous and there is no indication that Congress, for example, made a typographical error in drafting this part of the statute.

Both courts pointed out that every federal appeals court that has addressed the issue has found that CAFA did not shift the burden of proving jurisdiction in a removal situation.

BNA Subscribers may access the full story by clicking here.

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