FILED
FOR PUBLICATION JAN 25 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRADFORD COLEMAN, individually, No. 10-56852
and on behalf of other members of the
general public similarly situated, and as D.C. No. 2:10-cv-02242-ABC-
aggrieved employee pursuant to the AJW
Private Attorneys General Act (“PAGA”),
Plaintiff - Appellee, OPINION
v.
ESTES EXPRESS LINES, INC., a
Virginia Corporation; ESTES WEST, a
business entity form unknown;
G.I. TRUCKING COMPANY, FKA DOE
1, DBA Estes West,
Defendants - Appellants.
Appeal from the United States District Court
for the Central District of California
Audrey B. Collins, Chief District Judge, Presiding
Argued and Submitted January 10, 2011
Pasadena, California
Filed
Before: O’SCANNLAIN, W. FLETCHER, and CLIFTON, Circuit Judges.
1
Opinion by Judge William A. Fletcher
W. FLETCHER, Circuit Judge:
Under the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2,
119 Stat. 4 (2005), defendants may remove a diversity class action from state to
federal court when, among other conditions, the parties are minimally diverse and
the amount in controversy exceeds $5,000,000. 28 U.S.C. §§ 1332(d)(2), 1453(b).
However, plaintiffs may obtain a remand to state court if the suit involves a local
controversy. Id. § 1332(d)(4)(A)(i). The question before us is whether a federal
district court is limited to the complaint in deciding whether two of the criteria for
the local controversy exception are satisfied. We hold that the district court is so
limited.
I. Background
Estes Express is a Virginia corporation. It acquired G.I. Trucking, a
California corporation, in 2005. After the acquisition, G.I. Trucking was renamed
Estes West (d/b/a G.I. Trucking) but remained a California corporation. Bradford
Coleman, who was employed as a pickup and delivery driver by G.I. Trucking and
then by Estes West from 2004 to 2009, brought a putative class action against
Estes West and Estes Express (collectively, “Estes”) in Los Angeles County
Superior Court based on multiple alleged violations of California law.
2
Coleman alleged in his complaint that Estes West and Estes Express (1)
failed to pay overtime, (2) failed to provide meal and rest periods, (3) failed to
timely pay earned wages after discharging employees, (4) failed to pay earned
wages to current employees, (5) failed to provide wage statements, and (6) engaged
in unlawful business practices, all in violation of California law. On behalf of the
proposed class, Coleman requested that Estes West and Estes Express pay unpaid
overtime and other wages, pay one hour of wages for each day that a meal break
was not provided and an additional hour for each day that rest breaks were not
provided, and pay miscellaneous civil penalties. Coleman also requested
injunctive relief against Estes West and Estes Express.
Coleman alleged that both Estes West and Estes Express violated California
law. He alleged that
each and all of the acts and omissions alleged herein was [sic]
performed by, or is attributable to [Estes Express Lines, Inc. and/or
Estes West and Doe Defendants], each acting as the agent for the
other, with legal authority to act on the other’s behalf. . . . At all
relevant times herein mentioned, Defendants, and each of them,
ratified each and every act or omission complained of herein. At all
times herein mentioned, Defendants, and each of them, aided and
abetted the acts and omissions of each and all the other Defendants in
proximately causing the damages herein alleged.
The remainder of the complaint referred to actions taken by “Defendants,” rather
than actions taken separately by Estes Express or Estes West.
3
Estes removed to federal court under CAFA. 28 U.S.C. §§ 1332(d),
1453(b). Coleman moved to remand to state court, arguing that the case was a
local controversy under CAFA.
A plaintiff whose putative class action has been removed can obtain a
remand to state court under any of three exceptions to the district court’s subject
matter jurisdiction under CAFA. Id. § 1332(d)(3), (d)(4)(A), (d)(4)(B). The local
controversy exception, upon which Coleman relies, provides that a federal district
court “shall decline to exercise [removal] jurisdiction . . . over a class action in
which – ”
(I) greater than two-thirds of the members of all proposed plaintiff classes in
the aggregate are citizens of the State in which the action was originally
filed;
(II) at least 1 defendant is a defendant –
(aa) from whom significant relief is sought by members of the
plaintiff class;
(bb) whose alleged conduct forms a significant basis for the claims
asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action was originally
filed; and
(III) principal injuries resulting from the alleged conduct or any related
conduct of each defendant were incurred in the State in which the action was
originally filed[.]
28 U.S.C. § 1332(d)(4)(A)(i). A plaintiff seeking remand has the burden of
showing that the local controversy exception applies. Serrano v. 180 Connect,
4
Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).
Estes opposed remand, arguing that two of the criteria for the local
controversy exception were not satisfied. First, Estes argued that Estes West had
insufficient funds to satisfy a judgment, and that “significant relief” therefore had
not been “sought” from it. See 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa). Second, Estes
argued that Estes Express had almost complete control over the operations of Estes
West, and that Estes West’s “alleged conduct” therefore did not “form a significant
basis for the claims asserted by the proposed plaintiff class.” Id. §
1332(d)(4)(A)(i)(II)(bb). If either of Estes’s arguments is correct, Coleman is not
entitled to a remand under the local controversy exception.
In support of its arguments, Estes filed a declaration by Brenda Gerczak,
Director of Human Resources for Estes Express. With respect to funds from which
Estes West could satisfy a judgment, Ms. Gerczak declared:
Estes West does not have the funds to satisfy a potential judgment in
the lawsuit brought by Bradford Coleman; only Estes Express would possess
such funds. Although, in compliance with California law, Estes maintains a
bank account in California for payroll purposes, the account is funded
entirely by Estes Express from its own funds. . . .
Estes West has no source of revenue. Estes Express supplies all funds
needed for the operation of the Estes West region. Revenue in Estes’
trucking operation is derived from bills submitted to customers who use
Estes to transport freight. . . . All monies paid by customers on account of
these invoices are paid directly to Estes Express and retained by Estes
Express except for the money needed to fund the payroll account for Estes
5
West. . . . Estes West receives no income from any other source.
With respect to Estes Express’s control over the operations of Estes West,
Ms. Gerczak declared:
Estes Express assumed complete control over payroll practices and functions
immediately after it completed its acquisition of Estes West. Since the
acquisition, Estes Express has directed every aspect of the payroll function
in California, including establishing pay periods, pay days and pay rates for
all employees in California and elsewhere in the Estes West region. . . .
In addition to matters of payroll, Estes Express maintains control over
all other general terms of employment for California employees. . . . In sum,
Estes Express possesses and maintains complete control over every
significant term of employment for every Estes employee in the State of
California. Local managers in the Estes West region give day to day
instructions to employees, but such instructions are given strictly within the
operating rules and guidelines established by Estes Express in Virginia.
The district court held that it could not look beyond the allegations in the
complaint in deciding whether Coleman “sought” “significant relief” from Estes
West. Looking only to the complaint, it held that Coleman had satisfied the
significant relief requirement of § 1332(d)(4)(A)(i)(II)(aa). The district court did
not resolve the question of whether it could look beyond the complaint in deciding
whether Estes West’s “alleged conduct form[ed] a significant basis” for Coleman’s
claims. It held that regardless of whether it considered Ms. Gerczak’s declaration,
Coleman had satisfied the conduct requirement of § 1332(d)(4)(A)(i)(II)(bb). The
district court therefore remanded Coleman’s putative class action to state court.
6
Under CAFA, a party may seek to appeal to the court of appeals a remand
order of the district court. The court of appeals has discretion whether to accept
the appeal. 28 U.S.C. § 1453(c)(1). On November 30, 2010, we granted Estes
permission to appeal. Coleman v. Estes Express, __ F.3d __ (9th Cir. 2010) (per
curiam), 2010 U.S. App. LEXIS 24434. In granting permission, we noted that the
question whether a district court may look beyond the allegations of the complaint
in determining the applicability of the local controversy exception had not been
resolved in this circuit. We therefore concluded that “appellate review would be
useful.” Id. at *8.
II. Standard of Review
We review issues of statutory interpretation de novo. Rodriguez v. Smith,
541 F.3d 1180, 1183 (9th Cir. 2008).
III. Discussion
A. The Text
We begin with the words of the statute. United States v. Nader, 542 F.3d
713, 717 (9th Cir. 2008). “When the words of a statute are unambiguous . . . this
first canon is also the last: judicial inquiry is complete.” Conn. Nat’l Bank v.
Germain, 503 U.S. 249, 253-54 (1992) (internal quotation marks omitted). We
hold that CAFA’s language unambiguously directs the district court to look only to
7
the complaint in deciding whether the criteria set forth in § 1332(d)(4)(A)(i)(II)(aa)
and (bb) are satisfied.
The first criterion is whether “significant relief is sought” from a defendant
who is a citizen of the state in which the suit is filed. 28 U.S.C. §
1332(d)(4)(A)(i)(II)(aa) (emphasis added). The word “sought” focuses attention
on the plaintiff’s claim for relief — that is, on what is “sought” in the complaint —
rather than on what may or may not be proved by evidence. The second criterion
is whether the defendant’s “alleged conduct forms a significant basis for the claims
asserted by the proposed plaintiff class.” Id. § 1332(d)(4)(A)(i)(II)(bb) (emphasis
added). Like the word “sought,” the word “alleged” makes clear that the second
criterion is based on what is alleged in the complaint rather than on what may or
may not be proved by evidence.
There is a revealing contrast between the language in subsections (aa) and
(bb) and the language in subsection (cc). All three subsections specify criteria that
must be satisfied before the local controversy exception to CAFA jurisdiction
applies. Subsection (cc) requires that the defendant from whom relief is sought
and whose alleged conduct is at issue be a defendant “who is a citizen of the State
in which the action was originally filed.” Id. § 1332(d)(4)(A)(i)(II)(cc) (emphasis
added). Unlike the words “sought” and “alleged,” used in subsections (aa) and
8
(bb), the word “is,” used in subsection (cc), indicates that an actual fact must be
established.
The decision of the Tenth Circuit in Coffey v. Freeport McMoran Copper &
Gold, 581 F.3d 1240, 1244-45 (10th Cir. 2009), illustrates the distinction between
“sought” in subsection (aa) and “is” in subsection (cc). In Coffey, plaintiffs’
putative class action had been removed to federal court under CAFA. They moved
to remand under the local controversy exception. Defendants opposed remand,
contending that the criteria of subsections (aa) (relief sought from the defendant)
and (cc) (citizenship of the defendant) had not been satisfied. In addressing the
question of relief under subsection (aa), the court held that the district court had
properly looked only to the complaint. It wrote:
The statutory language is unambiguous, and a “defendant from whom
significant relief is sought” does not mean a “defendant from whom
significant relief may be obtained.” There is nothing in the language
of the statute that indicates Congress intended district courts to wade
into the factual swamp of assessing the financial viability of a
defendant as part of this preliminary consideration[.]
Id. at 1245. By contrast, in addressing citizenship under subsection (cc), the court
upheld the district court’s factual determination of citizenship, writing that the
defendants “ha[d] failed to show that the district court’s decision on [the
corporation]’s citizenship was clearly erroneous.” Id. at 1246.
9
Estes argues that our understanding of the words “sought” and “alleged” in
subsections (aa) and (bb) is inconsistent with the common practice of considering
extrinsic evidence and making factual determinations in resolving questions of a
federal court’s subject matter jurisdiction. It is true that some questions of subject
matter jurisdiction are questions of fact, the determination of which may depend on
evidence. For example, as just noted, in CAFA itself a district court may rely on
evidence to determine the citizenship of a defendant under subsection (cc). A
district court may also consider evidence in deciding whether CAFA’s $5,000,000
amount-in-controversy requirement has been satisfied. See Lowdermilk v. U.S.
Bank Nat’l Ass’n, 479 F.3d 994, 1000-01 (9th Cir. 2007); 28 U.S.C. § 1332(d)(2)
(“The district courts shall have original jurisdiction of any civil action in which the
matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest
and costs[.]”). Further, a district court may consider evidence in determining
citizenship and amount-in-controversy under general provisions of the diversity
jurisdictional statute, 28 U.S.C. § 1332(a), (c). See Guglielmino v. McKee Foods
Corp., 506 F.3d 696, 701 (9th Cir. 2007) (affirming district court’s factual finding
on amount in controversy); Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090,
1094 (9th Cir. 1990) (looking to extrinsic evidence to determine corporation’s
citizenship).
10
However, for three reasons, we do not believe that this practice should apply
to determinations under subsections (aa) and (bb). First, as just discussed, the
plain language of these subsections indicates, through the use of the words
“sought” and “alleged,” that the district court is to look to the complaint rather than
to extrinsic evidence.
Second, though district courts sometimes consider evidence in making some
subject matter jurisdiction determinations, they do not always do so. For example,
under long-established law, the district court looks to the “well-pleaded
complaint,” rather than to any subsequent pleading or evidence, in determining
whether there is federal question subject matter jurisdiction under 28 U.S.C. §
1331. See, e.g., Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545
U.S. 308, 312-13 (2005); Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804,
808 (1986); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672 (1950);
Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152-53 (1908).
Third, factual determinations under subsections (aa) and (bb) are likely to be
more expensive and time-consuming than factual determinations of citizenship and
amount-in-controversy. Congress was particularly concerned that subject matter
jurisdiction determinations be made quickly under CAFA. A party must seek
permission from the court of appeals to bring an appeal from a district court’s
11
remand decision under CAFA, and such permission is granted sparingly. Coleman,
2010 U.S. App. LEXIS 24434, at *6-7; Coll. of Dental Surgeons of P.R. v. Conn.
Gen. Life Ins. Co., 585 F.3d 33, 37-39 (1st Cir. 2009). Then, if permission is
granted, the court of appeals is required to render its decision in sixty days. See 28
U.S.C. § 1453(c)(2).
If a determination whether “significant relief is sought” against the local
defendant under subsection (aa) requires a factual determination about the
respective ability of the various defendants to satisfy a judgment, that
determination has the potential to be expensive and time-consuming. For example,
in Coffey the district court would have had to determine, as a factual matter, not
only the defendants’ financial situation but that of their insurance carriers. 581
F.3d at 1244-45. We agree with the Tenth Circuit’s statement in Coffey that
“nothing in the language of the statute . . . indicates Congress intended the district
courts to wade into the factual swamp of assessing the financial viability of a
defendant as part of this preliminary consideration[.]” Id. at 1245.
A factual determination whether the “alleged conduct” of the local defendant
“forms a significant basis for the claims asserted” by plaintiffs under subsection
(bb) is particularly likely to be expensive and time-consuming. Such a
determination necessarily implicates the merits of the case. We see nothing in
12
CAFA that indicates a congressional intention to turn a jurisdictional determination
concerning the local defendant’s “alleged conduct” into a mini-trial on the merits
of the plaintiff’s claims.
B. Legislative History
Because we hold that the text is unambiguous, we need not consult the
legislative history. We discuss that history only because several courts have relied
on a Report of the Senate Judiciary Committee to support a conclusion that the
district court is not limited to the complaint in deciding whether the criteria of
subsections (aa) and (bb) are satisfied. See, e.g., Green v. SuperShuttle Int’l, Inc.,
No. 09-2129, 2010 U.S. Dist. LEXIS 7456, at *10 (D. Minn. Jan. 29, 2010); Casey
v. Int’l Paper Co., No. 07-421, 2008 U.S. Dist LEXIS 1298, at *16-19 (N.D. Fla.
Jan. 7, 2008); Robinson v. Cheetah Transp., No. 06-0005, 2006 U.S. Dist. LEXIS
10129, at *11-12 (W.D. La. Feb. 27, 2006).
The Committee briefly addressed the issue of jurisdictional fact-finding in a
report accompanying CAFA:
The Committee understands that in assessing the various
criteria established in all these new jurisdictional provisions, a federal
court may have to engage in some fact-finding, not unlike what is
necessitated by the existing jurisdictional statutes. The Committee
further understands that in some instances, limited discovery may be
necessary to make these determinations. However, the Committee
cautions that these jurisdictional determinations should be made
13
largely on the basis of readily available information. Allowing
substantial, burdensome discovery on jurisdictional issues would be
contrary to the intent of these provisions to encourage the exercise of
federal jurisdiction over class actions.
S. Rep. No. 109-14, at 44 (2005).
This paragraph is consistent with our conclusion that a district court cannot
look beyond the complaint in determining whether the criteria of subsections (aa)
and (bb) have been satisfied. The first sentence provides that under CAFA “a
federal court may have to engage in some fact-finding, not unlike what is
necessitated by the existing jurisdictional statutes.” Id. (emphasis added). Fact-
finding is “necessitated by the existing jurisdictional statutes” on questions of
citizenship and amount-in-controversy. See 28 U.S.C. § 1332(a), (c); Guglielmino,
506 F.3d at 701; Indus. Tectonics, Inc., 912 F.2d at 1094. There is jurisdictional
fact-finding under CAFA on precisely those two questions. There is fact-finding
on the question of citizenship under § 1332(d)(4)(A)(i)(II)(cc). Coffey, 581 F.3d at
1245-46. And there is fact-finding on the question of amount-in-controversy under
§ 1332(d)(2). Lowdermilk, 479 F.3d at 998-1000. However, there is no fact-
finding under CAFA on the questions posed in subsections (aa) and (bb) — relief
sought and alleged conduct. These jurisdictional questions are unique to CAFA.
That is, questions posed under subsections (aa) and (bb) are unlike the questions
14
posed under existing jurisdictional statutes.
With respect to the local controversy exception to CAFA jurisdiction, the
Committee wrote that the exception requires that one “real” defendant must be
local. S. Rep. No. 109-14, at 29. The Committee gave two examples of “how the
Committee intends [the local controversy] provision to work.” Id. at 41. The first
example is:
A class action is brought in Florida against an out-of-state
automobile manufacturer and a few in-state dealers, alleging that a
certain vehicle model is unsafe because of an allegedly defective
transmission. The vehicle model was sold in all fifty states but the
class action is only brought on behalf of Floridians. This case would
not fall within the Local Controversy Exception for two reasons. First,
the automobile dealers are not defendants whose alleged conduct
forms a significant basis of the claims or from whom significant relief
is sought by the class. Even if the plaintiffs are truly seeking relief
from the dealers, that relief is just small change compared to what
they are seeking from the manufacturer. Moreover, the main
allegation is that the vehicles were defective. In product liability
cases, the conduct of a retailer such as an automobile dealer does not
form a significant basis for the claims of the class members. [Second,
the principal injuries from selling the defective product were
“incurred in all fifty states,” even if though this particular action was
brought by citizens of the same state.]
Id.
Some courts have taken this example, in particular the “small change”
phrase, to mean that a district court, as part of its jurisdictional determination,
should make a factual decision as to which defendant or defendants will actually
15
pay the bulk of any damage award. See, e.g., Robinson, 2006 U.S. Dist. LEXIS
10129, at *12. We do not believe that the example supports this interpretation, for
reading the complaint in such a case would tell any experienced lawyer or judge all
she needs to know. First, because liability is premised on an allegedly defective
transmission common to all cars of a particular model, the conduct of the local
dealers will not form a significant basis for the plaintiffs’ claims. Second, the
manufacturer will be liable to every member of the class, whereas individual
dealers will only be liable to, at most, the particular class members with whom they
interacted. Thus, it is obvious in this case that the great bulk of any damage award
is sought from the manufacturer of the cars rather than from the local dealers. In
this example, the determination whether the relief sought from a particular
defendant is “small change” can reasonably be made solely on the basis of the
allegations in the complaint.
The second example is:
A class action is brought in Florida state court against a Florida
funeral home regarding alleged wrongdoing in burial practices. Nearly
all the plaintiffs live in Florida (about 90 percent). The suit is brought
against the cemetery, a Florida corporation, and an out-of-state parent
company that was involved in supervising the cemetery. No other
class action suits have been filed against the cemetery. This is
precisely the type of case for which the Local Controversy Exception
was developed. Although there is one out-of-state defendant (the
parent company), the controversy is at its core a local one, and the
16
Florida state court where it was brought has a strong interest in
resolving the dispute. Thus, this case would remain in state court.
S. Rep. No. 109-14, at 41. In this example, too, the jurisdictional determinations
under subsections (aa) and (bb) can be made based on the complaint. There is
nothing in this example to suggest that evidence and a factual determination are
necessary.
C. Disagreement among Federal Courts
Federal courts have disagreed on the question whether a district court may
look only to the complaint in determining whether the criteria of subsections (aa)
and (bb) have been satisfied. Two other circuit courts that have addressed the
question reached the same conclusion we do today. Coffey, 581 F.3d at 1245
(holding that the district court may look only to the complaint in addressing
subsection (aa)); Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 157 (3d Cir.
2009) (directing lower court to focus on allegations in complaint, not extrinsic
evidence).
On the other hand, the Eleventh Circuit has considered extrinsic evidence in
addressing prong (bb). Evans v. Walter Indus., Inc., 449 F.3d 1159, 1167-68 (11th
Cir. 2006). In Evans, however, the court never discussed whether such evidence
was properly before it, so it is possible that the parties did not raise that issue.
17
There is also a line of cases in the district courts that consider extrinsic
evidence, the most prominent of which is the unpublished decision in Robinson v.
Cheetah Transportation, No. 06-0005, 2006 U.S. Dist. LEXIS 10129 (W.D. La.
Feb. 27, 2006). In Robinson, a commercial truck driver struck a bridge in
Louisiana, requiring closure of the bridge. Plaintiff sued in state court in Louisiana
on behalf of a proposed class of those affected by the closure, naming as
defendants the driver, his employer, the employer’s insurance company, and the
owner of the truck’s payload. The defendants removed to federal court under
CAFA. The truck driver was the only defendant who was a citizen of Louisiana.
Plaintiff sought a remand to state court under the local controversy exception. The
district court held that plaintiff had failed to “provide any evidence” that
“significant relief” was sought from the driver within the meaning of subsection
(aa). 2006 U.S.Dist. LEXIS 10129, at *14. Some courts have followed Robinson
and have looked outside the complaint to determine whether the criteria of
subsections (aa) and (bb) have been satisfied. See, e.g., Evans, 449 F.3d at 1167-
68 (quoting Robinson and considering extrinsic evidence on “significant basis”
prong); Green v. SuperShuttle Int’l, Inc., No. 09-2129, 2010 U.S. Dist. LEXIS
7456, at *10 (D. Minn. Jan. 29, 2010); Kurth v. Arcelormittal USA, Inc., No. 09-
108, 2009 U.S. Dist. LEXIS 99126, at *33-37 (N.D. Ind. Oct. 14, 2009); Casey v.
18
Int’l Paper Co., No. 07-421, 2008 U.S. Dist LEXIS 1298, at *19-20 (N.D. Fla. Jan.
7, 2008). For the reasons given above, we disagree with these decisions.
We note that it is unclear whether the court in Robinson understood that
there might be any controversy about its ability to go outside the complaint in
making its determination under subsection (aa). In the actual case before it, the
district court did indicate that plaintiff had “failed to provide any evidence” that
significant relief was available against the truck driver, but we are not sure that the
court fully understood the significance of its reference to the lack of evidence. The
court could easily have held, based solely on the complaint, that the criterion of
subsection (aa) was not satisfied, for any experienced lawyer or judge reading the
complaint would have known that “significant relief” was not being sought against
the truck driver. There was no need to go beyond the complaint in order to
determine that any relief against the driver would have been, in the phrase used by
the Senate Judiciary Committee, “small change.”
D. Application
We hold that Coleman’s complaint seeks sufficient relief against Estes West
to satisfy subsection (aa). The complaint seeks damages equally from Estes West
and Estes Express. There is nothing in the complaint to suggest that Estes West is
a nominal defendant, or that Estes West has so few assets (including, for instance,
19
buildings and trucks) that Coleman is not seeking significant monetary relief from
it. Further, the complaint seeks injunctive relief against Estes West. There is
nothing in the complaint to suggest either that the injunctive relief sought is itself
insignificant, or that Estes West would be incapable of complying with an
injunction.
Coleman’s complaint also sufficiently alleges conduct of Estes West that
forms a significant basis for the claims asserted on behalf of the class under
subsection (bb). The complaint alleges that Estes West employed the putative
class members during the relevant period, and that Estes West has violated
California law in a number of ways with respect to those employees. The
complaint also alleges that Estes Express has violated the same provisions of
California law, but the allegations against Estes Express in no way make the
allegations against Estes West, the actual employer, insignificant.
We note that we are not convinced that the statements in Ms. Gerczak’s
declaration, even if we were to consider them, would carry the day for Estes. With
respect to “significant relief” under subsection (aa), Estes contends that because
Estes West has only a small bank account in California and because all billing is
done through Estes Express, Estes West has insufficient funds to satisfy a damage
judgment against it. This contention ignores the possibility that other assets of
20
Estes West would also be available to satisfy a judgment. It also ignores the fact
that Coleman sought not only damages but also injunctive relief against Estes
West, as to which the assets of Estes West are irrelevant. With respect to
“conduct” under subsection (bb), Estes contends that because Estes Express
controls all important actions of Estes West, the conduct of Estes West does not
“form a significant basis for the claims” asserted by Coleman. This contention
ignores the fact that the conduct of Estes West, even if controlled by Estes Express,
nonetheless remains the conduct of Estes West, for which Estes West may be held
liable. But we leave Ms. Gerczak’s declaration to one side as irrelevant to our
decision.
We conclude that Coleman has satisfied the criteria of 28 U.S.C. §
1332(d)(4)(A)(i)(II)(aa) and (bb). It is undisputed that Coleman has satisfied the
other criteria for the local controversy exception to federal court jurisdiction under
CAFA. The district court was therefore correct in remanding Coleman’s putative
class action to state court.
E. Possible Amended Complaint
We are aware of the difficulties that can be created by different pleading
requirements in state and federal courts. A plaintiff filing a putative class action in
state court need satisfy only the pleading standards of that court. It is therefore
21
possible that if a putative class action is removed from state to federal court under
CAFA the complaint, as originally drafted, will not answer the questions that need
to be answered before the federal court can determine whether the suit comes
within the local controversy exception to CAFA jurisdiction. In that circumstance,
the district court may, in its discretion, require or permit the plaintiff to file an
amended complaint that addresses any relevant CAFA criteria.
Conclusion
For the foregoing reasons, we affirm the district court’s remand to California
state court.
AFFIRMED.
22
COUNSEL LISTING
Robert Ebert Byrnes, Mark Paul Estrella, Sue Jin Kim, Darrel Menthe, David M.
Medby, Mirian Leigh Schimmel, Glenn Danas (argued)
Initiative Legal Group APC, Los Angeles, CA
Payam Shahian
Strategic Legal Practices APC, Los Angeles, CA
for Plaintiff-Appellee
Timothy M. Freudenberger, Sarah Drechsler, Garrett V. Jensen
Carlton Disante & Freudenberger LLP, San Francisco, CA
David Lee Terry, David L. Woodard (argued)
Poyner Spruill LLP, Raleigh, NC
for Defendants-Appellants
23
FILED
Coleman v. Estes Express Lines, Inc., No. 10-56852 JAN 25 2011
MOLLY C. DWYER, CLERK
O’SCANNLAIN, J., concurring: U.S. COURT OF APPEALS
I concur in the opinion and judgment except as to Part III.B. As the opinion
itself notes, “‘[w]hen the words of a statute are unambiguous, . . . judicial inquiry is
complete.’” Op. at 8 (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254
(1992) (internal quotation marks omitted)). Because we conclude that the text of
CAFA’s local controversy exception is unambiguous, I see no need to engage in a
lengthy discussion of its legislative history. In my view, the extended quotation
and discussion of the legislative history will only serve to obscure our reading of
the plain text of CAFA. See Ratzlaf v. United States, 510 U.S. 135, 147–48 (1994)
(“[W]e do not resort to legislative history to cloud a statutory text that is clear.”).
In any event, I am skeptical that Senate Report No. 109–14 even qualifies as
“legislative history,” given that it “was not submitted until eighteen days after the
Senate had passed the bill, eleven days after the House had passed the bill, and ten
days after the President signed the bill into law.” Amalgamated Transit Union
Local 1309 v. Laidlaw Transit Servs., Inc., 448 F.3d 1092, 1096 (9th Cir. 2006)
(Bybee, J., dissenting from denial of rehearing en banc). “The Report is therefore
of minimal, if any, value in discerning congressional intent, as it was not before the
Senate at the time of CAFA’s enactment.” Tanoh v. Dow Chem. Co., 561 F.3d
945, 954 n.5 (9th Cir. 2009). For this reason alone, we can reject any decisions
relying on this Report without having to parse its examples.
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