3rd Circuit Takes Broad View on When CAFA Cases Can Move to State Court

3rd Circuit Takes Broad View on When CAFA Cases Can Move to State Court - 4/2/2009

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3rd Circuit Takes Broad View on When CAFA Cases Can Move to State Court
Sheri Qualters

Law.com. April 2, 2009
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EXCERPT: A recent precedent-setting 3rd U.S. Circuit Court of Appeals opinion takes a broad view of when Class Action Fairness Act cases can move to state court from federal court. The ruling analyzed two separate issues of first impression related to CAFA's so-called local controversy exception. The March 26 opinion by 3rd Circuit Judge D. Brooks Smith ruled that the local controversy exception doesn't require every class member to assert a claim against the local defendant in order to exempt the case from federal jurisdiction. Kaufman v. Allstate New Jersey Insurance Co., nos. 08-4911, 08-4912, 08-4913 (3rd Cir.). Smith's opinion also clarified that a CAFA case can be moved to state court if the case meets only one, not both, of two tests of the so-called principal injuries provision. Smith wrote that a case could move to state court if the principal injuries stemming from either the local defendant's alleged conduct or all the defendants' alleged conduct occurred in the state where the case was filed. "[The defendant] Liberty [Mutual Fire Insurance Co.]'s interpretation is at odds with the plain language of the provision," Smith wrote. "We need not inquire beyond that language." Smith explained that CAFA's so-called significant basis provision in the local controversy exception requires that a case name at least one local defendant whose alleged conduct forms a significant basis for all class members claims, not that the entire class assert claims against the local defendant. "The significant basis provision effectively calls for comparing the local defendant's alleged conduct to the alleged conduct of all the defendants," Smith wrote. "If the local defendant's alleged conduct is a significant part of the alleged conduct of all the defendants, then the significant basis provision is satisfied."

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