In Mason v. Lockwood, Andrews & Neuman, a split panel of the Sixth Circuit affirmed a district court’s decision to remand a class action to state court under the “local controversy” exception to the Class Action Fairness Act. CAFA requires a court to “decline” jurisdiction over a class action that otherwise qualifies for federal court if the class action meets three requirements. One of these is that more than two thirds of the class members must be “citizens of the State in which the action was originally filed.”
In Mason, the plaintiff class consisted of “residents and property owners in the City of Flint,” Michigan, who used water from the Flint River from April 25, 2014 and onward. The district court relied largely on the principle that an allegation of residency creates a rebuttable presumption of domicile, and therefore citizenship. The Sixth Circuit acknowledged that—rebuttable presumption notwithstanding—alleging residence is insufficient to establish citizenship for the purpose of creating federal subject matter jurisdiction, but distinguished the “local controversy” exception as “not jurisdictional.” Thus, the court explained, a party seeking to establish citizenship for purposes of the local controversy exception did not face “the unrelenting headwinds of limited federal jurisdiction,” and could rely on the rebuttable residency-domicile presumption to establish citizenship. The court declined to follow contrary decisions from other circuits because they “extended the ‘mere averment of residency’ principle without accounting for its underlying rationale.”
Judge Kethledge dissented, pointing out, among other things, that “every circuit to have considered the issue—five so far—has held that ‘there must ordinarily be at least some facts in evidence from which the district court may make findings regarding the class members’ citizenship for purposes of CAFA’s local-controversy exception.’” He also characterized the case as presenting a question of “abstention,” which is only permitted with the “clearest of justifications.”
It is important to note that the majority in this case did not rely exclusively on “the presumptive force of residency,” but also noted “other attributes . . . that bolster the inference.” The court noted that the class definition required members to “have continuously resided in Flint . . . for several years,” that there were no circumstances that suggested a large number of the class members would be transient (students, vacationers, etc.), that property ownership is a strong indicator of domicile, and that Flint is “nowhere near a state line.” It will be interesting to see how future panels applying Mason will use these additional “attributes” in their analyses. And, of course, given that Mason appears to create a circuit split, we will be looking out for a cert petition.