Terry v . Chicago Title 06-CV-288-SM 02/28/07
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Peter Terry; Elaine Terry;
and Gary Campbell, on behalf of
themselves and all others
similarly situated,
Plaintiffs
v. Civil N o . 06-cv-288-SM
Opinion N o . 2007 DNH 025
Chicago Title Insurance Company,
Defendant
O R D E R
In June of 2006, plaintiffs filed this class action suit
against Chicago Title Insurance Company in state court.
Subsequently, invoking the provisions of the Class Action
Fairness Act, 28 U.S.C. § 1332(d)(2)(A), Chicago Title removed
the action to this court. Plaintiffs move the court to remand
the proceeding to state court. Chicago Title objects.
Discussion
I. The Burden of Proof.
The Class Action Fairness Act (“CAFA”) provides, in
pertinent part, that 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.” 28 U.S.C. § 1332(d)(2). Although the
statute makes no reference to which party bears the burden of
establishing the requisite amount in controversy, Chicago Title
asserts that the statute imposes on plaintiffs, as the parties
seeking remand, the obligation to demonstrate that the amount in
controversy is less than $5,000,000.
In support of its position, Chicago Title points to a
portion of CAFA’s legislative history, in which a group of
thirteen senators expressed the following opinion:
If a purported class action is removed pursuant to
these jurisdictional provisions, the named plaintiff(s)
should bear the burden of demonstrating that removal
was improvident (i.e., that the applicable
jurisdictional requirements are not satisfied). And if
a federal court is uncertain about whether “all matters
in controversy” in a purported class action “do not in
the aggregate exceed the sum or value of $5,000,000,”
the court should err in favor of exercising
jurisdiction over the case.
Defendant’s memorandum (document n o . 7 ) at 5 (quoting S . Rep. N o .
109-14 at 42-44 (2005)). As Chicago Title notes, a few district
courts have embraced the view that, despite its silence on the
issue, CAFA should be construed as departing from the usual rule
in this area and imposing on a plaintiff seeking remand the
burden of demonstrating that federal jurisdiction is lacking.
This court is unpersuaded.
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It has long been firmly established that a party invoking a
federal court’s subject matter jurisdiction - regardless of
whether it is a plaintiff who initially files federally, or a
defendant who has removed an action from state court - bears the
burden of demonstrating jurisdiction. See, e.g., Kokkonen v .
Guardian Life Ins. C o . of Am., 511 U.S. 375, 377 (1994); Danca v .
Private Health Care Sys., Inc.,
185 F.3d 1 , 4 (1st Cir. 1999).
Nothing in the text of CAFA suggests that Congress intended to
depart from that well-established principle. The contrary views
of some senators, as expressed in the Congressional Record, are
insufficient to erase years of firmly-rooted judicial precedent,
absent some indication in the statute itself that Congress
intended that result. That point was articulately expressed by
Judge Easterbrook who, joined by Judges Posner and Rovner, noted:
That the proponent of jurisdiction bears the risk of
non-persuasion is well established. Whichever side
chooses federal court must establish jurisdiction; it
is not enough to file a pleading and leave it to the
court or the adverse party to negate jurisdiction. And
the rule makes practical sense. . . . When the
defendant has vital knowledge that the plaintiff may
lack, a burden that induces the removing party to come
forward with the information - so that the choice
between state and federal court may be made accurately
- is much to be desired.
[Plaintiff] 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
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Committee . . . [That] 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 an opinion poll of
legislators - less, really, as it speaks for fewer.
Thirteen Senators signed this report and five voted not
to send the proposal to the floor. Another 82 Senators
did not express themselves on the question; likewise
435 Members of the House and one President kept their
silence.
We recognize that a dozen or so district judges have
treated this passage as equivalent to a statute and
reassigned the risk of non-persuasion accordingly. But
naked legislative history has no legal effect, as the
Supreme Court held in Pierce v . Underwood, 487 U.S.
552, 566-68 (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 twothirds majority to override a veto). A declaration by
13 Senators will not serve.
Brill v . Countrywide Home Loans, Inc., 427 F.3d 446, 447-48 (7th
Cir. 2005) (citations omitted).
Moreover, this court (DiClerico, J.) recently agreed with
the view embraced by the Seventh Circuit and held that,
“[d]espite the new requirements under the Class Action Fairness
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Act, the burden remains on the defendant in a removed case to
establish that federal subject matter jurisdiction exists.”
Scott v . First Am. Title Ins. Co., 2007 DNH 0 0 7 ,
2007 WL 135909
at *1 (D.N.H. Jan. 1 7 , 2007). Chicago Title has not pointed to
any principled reason to depart from the court’s holding in Scott
and, therefore, bears the burden of establishing that federal
subject matter jurisdiction exists over plaintiff’s claims.
II. Federal Subject Matter Jurisdiction is Lacking.
Chicago Title acknowledges that it cannot reliably
“determine the amount placed in controversy by plaintiffs’
allegations in this action.” Affidavit of Jeffrey B . Pallin,
Vice President of Chicago Title (document n o . 7-2) at para. 3 .
In their original state court writ, plaintiffs alleged that a
reasonable estimate of their damages was in the “range of $1-2
million.” Writ of Summons (document n o . 1 , Exh. 1 ) at para. 1 1 .
While plaintiffs acknowledge that Chicago Title asserts (without
any reliable bases) that the amount in controversy exceeds $5
million, they specifically note, in their second amended
complaint, that they “dispute defendant’s jurisdictional
allegations.” Id. at para. 1 7 .
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In summary, then, Chicago Title has expressly stated that it
cannot accurately determine whether the amount in controversy in
this case exceeds $5 million. Plaintiffs, on the other hand,
specifically deny that it does, suggesting that a reasonable
estimate of their damages is in the range of $1 to $2 million.
Plainly, Chicago Title has failed to carry its burden of proof
and the matter must be remanded to state court. Chicago Title’s
assertions to the contrary are unavailing and its reliance on the
Scott opinion is misplaced.
In Scott, after the matter was removed from state court,
plaintiffs filed an amended complaint in which they specifically
alleged that the amount in controversy exceeded $5 million. See
Scott v . First Am. Title Ins. Co., Case. N o . 06-cv-286, Second
Amended Complaint (document n o . 1 3 ) , at para. 17 (“the matter in
controversy exceeds $5 million, exclusive of interest and
costs”). When plaintiffs subsequently moved the court to remand
the matter to state court, alleging that the amount in
controversy likely failed to exceed the jurisdictional limit set
by CAFA, the court held them to the representations made in their
amended complaint. Accordingly, it concluded that it could
properly exercise subject matter jurisdiction over plaintiffs’
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complaint and that the matter had been properly removed from
state court.
In this case, however, the plaintiffs have not alleged that
the amount in controversy exceeds $5 million; in fact, they have
consistently insisted that the amount in controversy is far less.
The facts in Scott are, then, plainly distinguishable. Chicago
Title does not surrender lightly. It points to factual
allegations concerning the amount in controversy that were made
in yet another case - Campbell v . Chicago Title Insurance, Case
N o . 06-cv-246-SM - and says the Campbell case “was expressly
formulated to invoke and did invoke this Court’s subject matter
jurisdiction under [CAFA], and [this case] now appears to have
been expressly formulated to foreclose this Court’s subject
matter jurisdiction under the CAFA. Since the class defined and
the relief sought in the two actions were identical, the amount
in controversy must have been identical.” Defendant’s memorandum
at 1 .
Chicago Title’s logic is sound, but the conclusion it draws
from the evidence presented is not. What Chicago Title fails to
discuss is the fact that counsel for the plaintiffs in the
Campbell case withdrew that complaint and dismissed the action
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when, upon further investigation, he concluded that the amount in
controversy likely did not exceed $5 million and, therefore,
federal subject matter jurisdiction was lacking. He made that
point clear in an affidavit submitted in this case:
I was counsel for plaintiff and the proposed class in
Campbell v . Chicago Title Ins. Co., 06-cv-246-SM. On
behalf of M r . Campbell, I voluntarily dismissed
Campbell on August 2 , 2006, when it became relatively
clear to me that the federal court lacked jurisdiction
because the amount in controversy almost certainly did
not exceed $5 million.
Though this factual investigation is still ongoing, and
though much of the facts and information needed to make
a well-informed estimate of the actual amount in
controversy remain known only to the defendant,
nevertheless at this time plaintiffs are very
comfortable with their conclusion that the aggregate
amount in controversy almost certainly does not exceed
$5 million.
Affidavit of Attorney Edward O’Brien (document n o . 5-3) at paras.
4 and 8 (emphasis in original).
Thus, it would seem that Chicago Title is correct in one
respect: the amount in controversy in this case and the related
Campbell case is the same. But, contrary to Chicago Title’s
assertion, that amount in controversy appears to be substantially
less than $5 million, o r , more to the point, Chicago Title has
not met its burden to establish otherwise. Absent evidence to
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the contrary from Chicago Title - the party on whom the burden of
proving the existence of federal subject matter jurisdiction
rests - this matter must be remanded to state court.
Conclusion
For the foregoing reasons, the court concludes that Chicago
Title, as the party invoking this court’s subject matter
jurisdiction under CAFA, bears the burden of demonstrating that
the amount in controversy exceeds $5 million. It has failed to
carry that burden. Accordingly, this court lacks subject matter
jurisdiction over plaintiffs’ claims and this matter, having been
improvidently removed, must be remanded to state court.
Plaintiffs’ motion to remand (document no. 5) is granted.
Defendant’s motion to dismiss (document no. 10) is denied as
moot. The Clerk of Court shall remand this case to the
Hillsborough County Superior Court, Northern District.
SO ORDERED.
^ ^ ^ ^ ^ 5 ^ * ^ / ^ — — '
__ even J . McAuliffe
/Chief Judge
February 28, 2007
cc: Edward K. O’Brien, Esq.
Daniel E. Will, Esq.
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