Fifth Circuit Applies CAFA's Discretionary Jurisdiction Provision and Local Controversy Exception

BNA's U.S. Law Week is reporting on two consolidated cases in the Fifth Circuit in which the court had the opportunity to apply the discretionary jurisdiction provision and the local controversy exception of the Class Action Fairness Act (CAFA). Here is an excerpt from BNA's article:

One class action alleging tort claims on behalf of patients who were hospitalized in New Orleans when Hurricane Katrina struck is heading back to Louisiana court under an exception to removal under the Class Action Fairness Act, but another case is not, under opinions in consolidated appeals issued April 25 by the U.S. Court of Appeals for the Fifth Circuit (Preston v. Tenet Healthsystem Memorial Medical Center Inc., 5th Cir., No. 07-30132, 4/25/07, revised 4/30/07; Weems v. Touro Infirmary, 5th Cir., No. 07-30160, 4/25/07, revised 4/30/07).

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In Preston the court upheld remand to state court under the discretionary jurisdiction provision, 28 U.S.C. § 1332(d)(3), under which a district court "may in the interests of justice and looking at the totality of the circumstances, decline to exercise jurisdiction ... over a class action" if more than one-third (but less than two-thirds) of the proposed class members are residents of the state in which the suit was filed.

In contrast, the court in Weems rejected remand under the local controversy exception, 28 U.S.C. § 132(d)(4)(A), under which a case shall be remanded to state court if more than two-thirds of the class members and at least one significant defendant are residents of the state and the case essentially involves state law.

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