Ehrman v. Cox Commc'ns, Inc., 19-55658

• Decision Date: 08 August 2019
• Docket Number: No. 19-55658,19-55658
• Citation: 932 F.3d 1223
• Parties: David EHRMAN, individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. COX COMMUNICATIONS, INC.; COXCOM, LLC; Cox Communications California, LLC, and Does, 1 through 25, inclusive, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

932 F.3d 1223

David EHRMAN, individually and on behalf of all others similarly situated, Plaintiff-Appellee,

v.COX COMMUNICATIONS, INC.; COXCOM, LLC; Cox Communications California, LLC, and Does, 1 through 25, inclusive, Defendants-Appellants.

No. 19-55658

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 11, 2019 Pasadena, California

Filed August 8, 2019

Katherine Tracy Van Dusen (argued), Richard R. Patch, Scott C. Hall, and Philip D.W. Miller, Coblentz Patch Duffy & Bass LLP, San Francisco, California, for Defendants-Appellants.

Jamin S. Soderstrom (argued), Soderstrom Law PC, Irvine, California, for Plaintiff-Appellee.

Before: MILAN D. SMITH, JR. and MICHELLE T. FRIEDLAND, Circuit Judges, and MICHAEL H. SIMON,^* District Judge.

M. SMITH, Circuit Judge:

When a defendant removes a case to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d), how much evidence of the parties’ citizenships must it provide? If the defendant’s citizenship allegations are unchallenged factually, the answer is none. In such cases, all a removing party must do is provide a short and plain statement of the grounds for removal. Because Defendants Cox Communications’ (and related entities’) notice of removal did just that, and because Plaintiff David Ehrman did not factually attack Cox’s jurisdictional allegations, we reverse the district court’s grant of Ehrman’s motion to remand.

FACTUAL AND PROCEDURAL BACKGROUND

Ehrman filed a class action complaint against Cox in Orange County Superior Court, alleging that Cox had engaged in unlawful business practices related to the advertisement and sale of residential internet services. Ehrman brought the case on behalf of himself and "all consumers in California who paid for [Cox’s] residential Internet services within four years from the date this action was filed."

Cox removed the case to the district court pursuant to CAFA. Cox alleged in its notice of removal that Ehrman’s suit met CAFA’s removal requirements because it was a putative class action with more than 100 class members, that there was minimal diversity between the parties, and that the amount in controversy exceeded $5,000,000, exclusive of interest and costs. Cox, a purported citizen of Delaware and Georgia, asserted based on information and belief that Ehrman and all class members are citizens of California.

Ehrman then moved to remand the case to state court. Asserting a facial challenge to Cox’s notice of removal, Ehrman argued that Cox had failed to adequately plead the existence of minimal diversity. He claimed that Cox’s allegations of citizenship were insufficient because they relied "purely on an allegation of residency and [on] ‘information and belief.’ "

The district court granted Ehrman’s motion to remand. It reasoned:

In the absence of instruction from the Ninth Circuit ... this Court declines to find that the complaint alone created a rebuttable residency-domicile presumption of removability. ... [T]he Court finds that Cox’s reliance on the residency allegation in the complaint [ ] amounted to mere sensible guesswork such that it is insufficient for establishing minimal diversity.

We granted Cox’s motion for leave to appeal to provide guidance on what a defendant must allege, and what evidence it must provide, when removing a case pursuant to CAFA.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1453(c)(1), which allows us to "accept [a timely] appeal from an order of a district court granting or denying a motion to remand a class action to the State court."

"We review de novo a district court’s decision to remand a removed case and its determination that it lacks subject matter jurisdiction." Lively v. Wild Oats Mkts., Inc. , 456 F.3d 933, 938 (9th Cir. 2006).

ANALYSIS

Congress enacted CAFA with the "intent ... to strongly favor the exercise of federal diversity jurisdiction over class actions with interstate ramifications." S. Rep. No. 109-14, at 35 (2005), as reprinted in 2005 U.S.C.C.A.N. 3, 34. Because "a party bringing suit in its own State’s courts might (seem to) enjoy ... a home court advantage against outsiders," Home Depot U.S.A., Inc. v. Jackson , ––– U.S. ––––, 139 S. Ct. 1743, 1751, 204 L.Ed.2d 34 (2019) (Alito, J., dissenting), federal diversity jurisdiction provides " ‘a neutral forum’ for parties from different States," id. at 1746 (quoting Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) ). To this end, CAFA confers jurisdiction on federal district courts over class actions when, among other things, "any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2)(A). Unlike the complete diversity of citizenship generally required by § 1332(a), therefore, CAFA requires only "minimal diversity." Bush v. Cheaptickets, Inc. , 425 F.3d 683, 684 (9th Cir. 2005).

Simply because a class action satisfies the requirements of CAFA, however, does not mean that it must be filed in federal court. Such cases may also be filed in state courts, which enjoy concurrent jurisdiction over such actions. See Tafflin v. Levitt , 493 U.S. 455, 458, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). A defendant in state court who wishes to litigate in federal court may therefore remove a class action that satisfies CAFA’s requirements. See Home Depot , 139 S. Ct. at 1746. At issue here is what that removing defendant must plead in its notice of removal.

As the removing party, Cox had the burden of pleading minimal diversity. See Abrego Abrego v. Dow Chem. Co. , 443 F.3d 676, 685 (9th Cir. 2006). Accordingly, Cox had to file in the district court a notice of removal "containing a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a). "Congress, by borrowing the familiar ‘short and plain statement’ standard from Rule 8(a), intended to ‘simplify the "pleading" requirements for removal’ and to clarify that courts should ‘apply the same liberal rules [to removal allegations] that are applied to other matters of pleading.’ " Dart Cherokee Basin Operating Co. v. Owens , 574 U.S. 81, 135 S. Ct. 547, 553, 190 L.Ed.2d 495 (2014) (alteration in original) (quoting H.R. Rep. No. 100-889, at 71 (1988), as reprinted in 1988 U.S.C.C.A.N. 5982, 6031–32). A party’s allegation of minimal diversity may be based on "information and belief." Carolina Cas. Ins. Co. v. Team Equip., Inc. , 741 F.3d 1082, 1087 (9th Cir. 2014). The pleading "need not contain evidentiary submissions." Dart Cherokee , 135 S. Ct. at 551.

In its notice of removal, Cox alleged that it was a citizen of Delaware and Georgia. It also alleged:

As admitted in the Complaint, [Ehrman] is a resident of California. [Cox] is informed and believes, and on that basis alleges, that [Ehrman] is a citizen of the state in which he resides, as alleged in the Complaint.

[Cox] is informed and believes, and on that basis alleges, that all purported class members are citizens of California, as alleged in the Complaint.

Ehrman argues, and the district court agreed, that Cox’s allegations of citizenship were insufficient because they relied on allegations that Ehrman or other class members reside in California.

We agree that residency is not equivalent to citizenship. A "natural person’s state citizenship is [ ] determined by her state of domicile, not her state of residence." Kanter v. Warner-Lambert Co. , 265 F.3d 853, 857 (9th Cir. 2001). "A person’s domicile is her permanent home, where she resides with the intention to remain or to which she intends to return. A person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state." Id. (citations omitted).

Here, however, Cox did not merely allege residency. It alleged that Ehrman and all putative class members were citizens of California. That Cox’s notice of removal mentioned Ehrman’s residency is immaterial to our analysis. Cox did not have to explain why it believed Ehrman or the putative class members were citizens of California. As we explained above, a defendant’s allegations of citizenship may be based solely on information and belief. See Carolina Cas. , 741 F.3d at 1087. Because Cox provided a short and plain statement alleging that Ehrman and the putative class members were citizens of California, its jurisdictional allegations were sufficient—at least in the absence of a factual or as-applied challenge.

The district court also erred by placing on Cox a burden to prove its jurisdictional allegations in response to Ehrman’s facial challenge. "[A]t the pleading stage, allegations of jurisdictional fact need not be proven unless challenged." NewGen, LLC v. Safe Cig, LLC , 840 F.3d 606, 614 (9th Cir. 2016) ; see also Dart Cherokee , 135 S. Ct. at 553 ("[T]he defendant’s amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court."). Because "no antiremoval presumption attends cases invoking CAFA," Dart Cherokee , 135 S. Ct. at 554, courts should be especially reluctant to sua sponte challenge a defendant’s allegations of citizenship.

Ehrman did not factually challenge Cox’s jurisdictional allegations. Instead, his motion to remand asserted a facial challenge...