Consumer Protection – Citizenship Evidence Questioned for Removal

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Scott v. Cricket Communications LLC (Lawyers Weekly No. 001-160-17, 14 pp.) (Duncan, J.) No. 16-2300, July 28, 2017; USDC at Baltimore, Md. (Russell, J.) 4th Cir.

Holding: In this class action suit alleging plaintiff purchased two Samsung Galaxy S4 cell phones that could only operate on a Code Division Multiple Access network, which defendant Cricket Communications was shutting down, the district court erred in remanding the case under the Class Action Fairness Act; the 4th Circuit orders reconsideration of the issue of purchasers’ citizenship under CAFA.

Remand Rules

CAFA relaxes diversity jurisdiction requirements and provides district courts authority over class actions with more than 100 class members, an amount in controversy over $5 million and minimally diverse parties.

Plaintiff moved to remand the case to state court, arguing that Cricket did not satisfy its burden to allege jurisdiction under CAFA because the class Cricket described in its notice of removal is broader than plaintiff’s defined class. Plaintiff contends that Cricket’s assertion that it sold 50,000 handsets that were shipped to and activated in Maryland fails to meet CAFA’s requirements because the class only consists of Maryland citizens who purchased a CDMA phone.

The district court granted plaintiff’s motion to remand, finding that Cricket had not proven jurisdiction by a preponderance of the evidence. It held that Cricket’s proffered evidence – a declaration that Cricket sold 47,760 CDMA-locked phones during the relevant time period to customers who listed a Maryland address – was “over-inclusive” because the class included only Maryland citizens, but Cricket’s evidence pertained to all consumers who provided Maryland addresses. The district court relied on this court’s precedent that residency is not tantamount to citizenship.

Citizenship

Cricket appealed, claiming that its declaration shows it is more likely than not that the putative class includes more than 100 members and the amount in controversy exceeds $5 million. Whether remand is appropriate depends on whether the district court had subject matter jurisdiction under CAFA. Because no anti-removal presumption attends cases invoking CAFA, a defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. If plaintiff challenges removal, however, defendant bears the burden of demonstrating that removal jurisdiction is proper.

We agree with the district court that Cricket’s initial statement that it sold at least 50,000 CDMA mobile telephones that were shipped to and activated in Maryland during the relevant time period suffices to allege jurisdiction under CAFA.

However, because the district court committed legal error in disregarding Cricket’s evidence as over-inclusive, we are unable to review whether Cricket met its burden to prove jurisdiction. That the evidence is over-inclusive is not, as the district court reasoned, dispositive. To meet its burden, Cricket must provide enough facts to allow a court to determine, not speculate, that it is more likely than not that the class action belongs in federal court. Many factors relevant to the domicile inquiry are publicly available, including business and professional licensures, property ownership, property taxes and voter registration.

We vacate the district court judgment and remand for reconsideration.