D.N.D. Weighs in on Circuit Split re Burden of Proof on Remand under CAFA

The court in Ongstad v. Piper Jaffray & Co., --- F.Supp.2d ----, 2006 WL 14399 (D.N.D. Jan. 04, 2006), has rejected an argument that CAFA shifts the burden of proof on a motion to remand to the plaintiff. Here is an extended exerpt from the case that discusses this issue:

Following removal of a case to federal court, a plaintiff can seek remand of the action back to state court. See28 U.S.C. 1447(c). Removal statutes are strictly construed in favor of state court jurisdiction and federal district courts must resolve all doubts concerning removal in favor of remand. The removing party bears the burden of showing that removal was proper. Although CAFA does not address the issue, courts are currently split on whether the new Class Action Fairness Act of 2005 shifts that burden of proof to the party seeking remand.

Several courts have held that CAFA shifts the burden to the party seeking remand. See Harvey v. Blockbuster, Inc., 384 F.Supp.2d 749, 752 (D.N.J.2005); In re Textainer Partnership Sec. Litigation, No. C 05-0969 MMC, 2005 WL 1791559, *3 (N.D.Cal. Jul.27, 2005); Waitt v. Merck & Co., Inc., No. C05-0759L, 2005 WL 1799740, *2 (W.D.Wash. Jul.27, 2005); Yeroushalmi v. Blockbuster, Inc., No. CV 05-225-AHM(RCX), 2005 WL 2083008, *3 (C.D.Cal. Jul. 11, 2005); Berry v. Am. Express Pub., Corp., 381 F.Supp.2d 1118, 1122-23 (C.D.Cal.2005). In doing so, most point to the legislative history of CAFA. An oft-quoted Senate Judiciary Committee report reads, in relevant part, as follows: “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. 14, 109th Cong. 1st Sess. 42 (2005). Under such a framework, the plaintiff would bear the burden of establishing the lack of federal jurisdiction. Conversely, other courts have held that CAFA does nothing to alter the traditional rule of law that the party opposing remand bears the burden of establishing federal jurisdiction. See Plummer v. Farmers Group, Inc., 388 F.Supp.2d 1310, 1317-18 (E.D.Okla.2005); Judy v. Pfizer, Inc., No. 4:05CV1208RWS, 2005 WL 2240088, *2 (E.D.Mo. Sep.14, 2005); Schwartz v. Comcast, Corp., No. Civ .A. 05-2340, 2005 WL 1799414, *4 (E.D.Pa. Jul.28, 2005); In re Expedia Hotel Taxes and Fees Litigation, 377 F.Supp.2d 904, 905 (W.D.Wash.2005); Sneddon v. Hotwire, Inc., No. C 05-0951 SI, C 05-0952 SI, C 05-0953 SI, 2005 WL 1593593, *1 (N.D.Cal. Jun.29, 2005). Most notably, the Seventh Circuit has so concluded. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005).

The United States Supreme Court and the Eighth Circuit Court of Appeals have not yet addressed this issue. Despite the absence of binding precedent, Piper Jaffray urges the Court to adopt the burden-shifting approach requiring the Plaintiffs to establish federal court jurisdiction. Piper Jaffray points to the legislative history of CAFA, as well as the trend of bringing securities-related litigation within federal jurisdiction.As it stands, the removing party bears the burden of establishing federal jurisdiction. See In re Business Men's Assur. Co. of America, 992 F.2d 181, 183 (8th Cir.1993). The express language of CAFA does nothing to disrupt that maxim, nor should its legislative history. A recent decision out of the Eastern District of Missouri accurately summarizes the reason that is so.[A]lthough the CAFA is silent about the burden of proof in cases removed under the Act, a Committee Report, S.Rep. No. 109-14, at 44 (2005), contemplates the shifting of the burden to the plaintiff seeking remand. See Berry v. American Express Pub., Corp. ., 2005 WL 1941151, *3 (C.D.Cal. June 15, 2005).

At the time of the enactment of the CAFA, Congress was presumed to be aware of the well settled case law regarding the burden of proof in removed actions. Contract Freighters, Inc. v. Secretary of U.S. Dept. of Transp., 260 F.3d 858, 861 (8th Cir.2001) (Congress is presumed to know the legal background in which it is legislating). A court may resort to legislative history to interpret a statute when it contains an ambiguity. Absent some ambiguity in the statute, there is no occasion to look to legislative history. Neosho R-V School Dist. v. Clark, 315 F.3d 1022, 1032 (8th Cir.2003). The omission of a burden of proof standard in the CAFA does not create an ambiguity inviting courts to scour its legislative history to decide the point. By failing to specifically address the burden of proof in the Act, especially in light of discussing the issue in a Committee Report, Congress is deemed to have not intended to change the settled case law on that issue. Had Congress wished to change which party bears the burden of proof in a removal action under the CAFA it could have explicitly done so.Judy v. Pfizer, Inc., No. 4:05CV1208RWS, 2005 WL 2240088, *1-2 (E.D.Mo. Sep.14, 2005). The Seventh Circuit also endorsed such an approach.

Countrywide maintains that the Class Action Fairness Act reassigns that burden to the proponent of remand. It does not rely on any of the Act's language, for none is even arguably relevant. Instead it points to this language in the report of the Senate Judiciary Committee: “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 provisions are not satisfied).” S. Rep. 14 109th Cong. 1st Sess. 42 (2005). This passage does not concern any text in the bill that eventually became law. When a law sensibly could be read in multiple ways, legislative history may help a court understand which of these received the political branches' imprimatur. But when the legislative history stands by itself, as a naked expression of “intent” unconnected to any enacted text, it has no more force than a poll of legislators less, really, as it speaks for fewer. Thirteen Senators signed this report and five voted not to send the proposal to floor. Another 82 Senators did not express themselves on the question; likewise 435 Members of the House and one President kept their silence.We recognized that a dozen or so district judges have treated this passage as equivalent to a statute and reassigned the risk of non-persuasion accordingly. See e.g., Berry v. American Express Publishing, Corp., 381 F.Supp.2d 1118 (C.D.Cal.2005); Natale v. Pfizer, Inc., 379 F.Supp.2d 161 (D.Mass.2005), affirmed on other grounds, 424 F.3d 43 (C.A.1 (Mass.) 2005). But naked legislative history has no legal effect, as the Supreme Court held in Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988). A Committee of Congress attempted to alter an established legal rule by a forceful declaration in a report; the Justices concluded, however, that because the declaration did not correspond to any new statutory language that would change the rule, it was ineffectual. Just so here. The rule that the proponent of federal jurisdiction bears the risk of non-persuasion has been around for a long time. To change such a rule, Congress must enact a statute with the President's signature (or by a two-thirds majority to override a veto). A declaration by 13 Senators will not serve.

This Court is persuaded by the holdings in Judy and Brill. The Court will decline Piper Jaffray's invitation to break from the well-established rule of law that the removing party bears the burden of establishing federal subject-matter jurisdiction. There is simply nothing in CAFA that contemplates such a change.