Adrianne Adams v. West Marine Products, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ADRIANNE ADAMS, Individually and No. 20-15444
on behalf of others similarly situated,
and as a private attorney general, D.C. No.
Plaintiff-Appellee, 3:19-cv-01037-
VC
v.
WEST MARINE PRODUCTS, INC., a OPINION
California corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Vince Chhabria, District Judge, Presiding
Argued and Submitted April 14, 2020
San Francisco, California
Filed May 13, 2020
Before: Richard A. Paez and Richard R. Clifton, Circuit
Judges, and M. Douglas Harpool, * District Judge.
Opinion by Judge Paez
*
The Honorable M. Douglas Harpool, United States District Judge
for the Western District of Missouri, sitting by designation.
2 ADAMS V. WEST MARINE PRODUCTS
SUMMARY **
Class Action
The panel affirmed the district court’s order remanding
a putative class action to state court after it was removed to
federal court under the Class Action Fairness Act (“CAFA”),
pursuant to 28 U.S.C. § 1332(d).
A former West Marine Products, Inc. employee filed the
putative class action on behalf of herself and other similarly
situated current and former employees, alleging violations of
California wage and hour laws.
The local controversy exception, and the home state
exception (sometimes called the “home state controversy
exception”), provide exceptions to CAFA jurisdiction.
Under the discretionary base of the home state exception, the
district court may decline to exercise jurisdiction where
more than one-third of the putative class, and the primary
defendants, are citizens of the state where the action was
originally filed. Invoking the discretionary home state
controversy exception, the district court declined to exercise
jurisdiction and ordered the case remanded to state court.
The panel held that the district court reasonably inferred
from the facts in evidence that it was more likely than not
that more than one-third of class members were California
citizens. The panel held further that the district court did not
err in raising sua sponte an exception to CAFA jurisdiction.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
ADAMS V. WEST MARINE PRODUCTS 3
Although the local controversy and home state exceptions
are not jurisdictional, the exceptions are treated as a form of
abstention that a court may raise sua sponte.
The panel held that the district court provided the parties
with an adequate opportunity to address whether the home
state exception to CAFA jurisdiction applied when the
district court invited briefing on the home state exception to
CAFA jurisdiction, which encompasses both the mandatory
and discretionary bases for remand. The district court
considered the six factors to determine whether it should
exercise its discretion to remand to state court. 28 U.S.C.
§ 1332(d)(3). The panel concluded that the district court did
not abuse its discretion in concluding that remand was
appropriate.
COUNSEL
Ashley Farrell Pickett (argued) and Mark D. Kemple,
Greenberg Traurig LLP, Los Angeles, California, for
Defendant-Appellant.
Heather Davis (argued), Amir Nayebdadash, and Priscilla
Gamino, Protection Law Group LLP, El Segundo,
California, for Plaintiff-Appellee.
4 ADAMS V. WEST MARINE PRODUCTS
OPINION
PAEZ, Circuit Judge:
West Marine Products, Inc. (“West Marine”) appeals the
district court’s order remanding plaintiff Adrianne Adams’s
putative class action to state court. Adams originally filed
her wage and hour action in San Mateo County Superior
Court, and West Marine removed the case to federal court
under the Class Action Fairness Act (“CAFA”). Invoking
the discretionary home state controversy exception to CAFA
jurisdiction, the district court declined to exercise
jurisdiction and ordered the case remanded to state court.
On appeal, West Marine principally challenges whether
the district court erred in concluding that Adams met her
burden of showing by a preponderance of the evidence that
greater than one-third of the putative class members were
California citizens at the time of removal to federal court—
a prerequisite to the court’s exercise of its discretion. In
addition, West Marine contends that the district court erred
in sua sponte invoking the discretionary home state
exception to CAFA jurisdiction without giving West Marine
the opportunity to brief or argue the issue. We reject both
arguments and affirm the district court’s order remanding the
action to state court.
I.
Adams, a former West Marine employee, filed this
putative class action on behalf of herself and other similarly
situated current and former West Marine employees in state
court. The complaint alleged violations of California wage
and hour laws and defined the putative class as “[a]ll current
and former non-exempt employees of Defendants within the
State of California at any time commencing four (4) years
ADAMS V. WEST MARINE PRODUCTS 5
preceding the filing of Plaintiff’s complaint up until the time
that notice of the class action is provided to the class.”
West Marine timely removed the action to federal court,
pursuant to 28 U.S.C. § 1332(d). Adams promptly moved to
remand the action to state court. The district court
subsequently ordered the parties to file supplemental briefs
addressing the applicability of the home state exception to
CAFA jurisdiction and, after receiving the parties’ briefing,
granted Adams’s request for leave to take jurisdictional
discovery to establish the applicability of the exception. The
district court also denied the motion to remand without
prejudice to filing a renewed motion.
In response to Adams’s discovery requests, West Marine
produced a list of contact information (including name,
phone number, last known personal address, hire date, and,
where relevant, termination date) in its possession for the
1,810 putative class members. 1 The list revealed 1,714
putative class members with a last known address in
California; and 96 with a last known non-California address,
61 of whom were transferred to one of West Marine’s
branches outside California. West Marine cross-checked a
sample of these addresses against the addresses listed on
class members’ most recent wage statements and Form W-
2s and confirmed their accuracy. 2 West Marine declined to
1
The list included 1,813 putative class members but Adams’s
counsel identified three duplicates.
2
Specifically, West Marine’s sampling revealed a “95.5% accuracy
rate” and, “[f]or the putative class members whose previously-provided
contact information did not match their most recent W-2 form [or wage
statement], [West Marine] confirmed that the . . . . information provided
. . . [previously] is in fact the most up-to-date contact information for
these putative class members.”
6 ADAMS V. WEST MARINE PRODUCTS
provide Adams the other information she sought—namely,
“information relating to payroll, taxes, schedules, wage
statements, human resources, and/or benefits”—and claimed
that such information was either irrelevant or too
burdensome to produce.
Following completion of discovery, Adams renewed her
motion to remand the case to state court under the home state
and local controversy exceptions to CAFA jurisdiction. In
support of her motion, she offered her own sworn
declaration, which detailed her onboarding experience as a
new hire and her experience onboarding other West Marine
employees as a store manager. 3 West Marine opposed the
motion to remand.
The district court granted Adams’s renewed motion to
remand. The court found that Adams met her burden of
showing by a preponderance of the evidence that more than
one-third of the class members were California citizens.
West Marine timely petitioned for permission to appeal
under 28 U.S.C. § 1453(c), which a motions panel granted.
This appeal followed.
II.
We have jurisdiction pursuant to 28 U.S.C. § 1453(c). A
district court’s factual findings are reviewed for clear error.
Mondragon v. Capital One Auto Fin., 736 F.3d 880, 886 (9th
Cir. 2013). Ordinarily, “[w]e review a district court’s
remand order de novo.” Id. at 883. Where, as here, a district
court orders remand pursuant to the discretionary home state
3
Adams offered an additional declaration to which West Marine
objected. Because the record evidence is sufficient to support the district
court’s remand order without reliance on the declaration, we do not
consider it here.
ADAMS V. WEST MARINE PRODUCTS 7
exception, we join our sister circuits in reviewing the court’s
exercise of discretion under an abuse of discretion standard.
See, e.g., Speed v. JMA Energy Co., 872 F.3d 1122, 1128
(10th Cir. 2017) (“We review for abuse of discretion the
district court’s order remanding under the discretionary
exception in § 1332(d)(3).”); Preston v. Tenet Healthsystem
Mem’l Med. Ctr., Inc., 485 F.3d 804, 809 (5th Cir. 2007)
(“We review the district court’s remand order [under the
discretionary provision] for abuse of discretion.”). “An
abuse of discretion will be found if the district court based
its decision on an erroneous legal standard or clearly
erroneous finding of fact.” All. for the Wild Rockies v.
Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (quotation
marks omitted).
III.
A.
CAFA provides, in relevant part, that federal district
courts shall have original jurisdiction over civil class actions
where the matter in controversy exceeds five million dollars
and “any member of a class of plaintiffs is a citizen of a State
different from any defendant[.]” 28 U.S.C. § 1332(d)(2).
“Congress enacted CAFA in 2005 to ‘curb perceived abuses
of the class action device which, in the view of CAFA’s
proponents, had often been used to litigate multistate or even
national class actions in state courts.’” Corber v. Xanodyne
Pharm., Inc., 771 F.3d 1218, 1222 (9th Cir. 2014) (en banc)
(quoting Tanoh v. Dow Chem. Co., 561 F.3d 945, 952 (9th
Cir. 2009)). “Because a party bringing suit in its own State’s
courts might (seem to) enjoy . . . a home court advantage
against outsiders, federal diversity jurisdiction provides a
neutral forum for parties from differing States[.]” Ehrman
v. Cox Comms., Inc., 932 F.3d 1223, 1226 (9th Cir. 2019)
(internal quotation marks and citations omitted). Thus,
8 ADAMS V. WEST MARINE PRODUCTS
“CAFA was intended to strongly favor federal jurisdiction
over interstate class actions.” King v. Great Am. Chicken
Corp, Inc., 903 F.3d 875, 878 (9th Cir. 2018) (emphasis
added).
Congress provided exceptions to CAFA jurisdiction,
however, to allow truly intrastate class actions to be heard in
state court. See Bridewell-Sledge v. Blue Cross of Cal.,
798 F.3d 923, 928 (9th Cir. 2015). There are two exceptions
relevant here: (1) the local controversy exception and (2) the
home state exception (sometimes called the “home state
controversy exception”). Under the local controversy
exception, a district court “shall” decline to exercise
jurisdiction when more than two-thirds of the putative class
members are citizens of the state where the action was filed,
the principal injuries occurred in that same state, and at least
one significant defendant is a citizen of that state. 28 U.S.C.
§ 1332(D)(4)(A).
The home state exception accords two bases for remand:
one mandatory and the other within the district court’s
discretion. Under the first, the district court “shall” decline
to exercise jurisdiction where “two-thirds or more of the
members of all proposed plaintiff classes in the aggregate,
and the primary defendants, are citizens of the State in which
the action was originally filed.” 28 U.S.C. § 1332(d)(4)(B)
(the “mandatory home state exception”). Under the second,
a district court “may, in the interests of justice and looking
at the totality of the circumstances, decline to exercise
jurisdiction” when more than one-third of the putative class,
and the primary defendants, are citizens of the state where
the action was originally filed. 28 U.S.C. § 1332(d)(3) (the
“discretionary home state exception”). CAFA enunciates six
factors for a district court to consider in deciding whether to
ADAMS V. WEST MARINE PRODUCTS 9
decline jurisdiction under this discretionary home state
exception. 28 U.S.C. § 1332(d)(3)(A)–(F).
Somewhat perplexingly, both the mandatory and
discretionary home state exceptions are often referred to by
the same name—that is, simply, as the “home state
exception.” See e.g., 14C Wright & Miller, Fed. Prac. &
Proc. (Rev. 4th ed.) § 3724; 2 Newberg on Class Actions
(5th ed.) § 6:21. Indeed, the legislative history of CAFA
likewise reveals that the term “home state exception” was
used to refer to both the mandatory and discretionary
exceptions to CAFA jurisdiction. See, e.g., S. Rep. 109-14,
at 28 (Feb. 28, 2005), as reprinted in 2005 U.S. Code Cong.
& Admin. News 3, 28 (“[CAFA] includes several provisions
ensuring that where appropriate, state courts can adjudicate
certain class actions that have a truly local focus. The first
is the ‘Home State’ exception. Under this provision, if two-
thirds or more of the class members are from the defendant’s
home state, the case would not be subject to federal
jurisdiction . . . . For cases brought in a defendant’s home
state in which between one-third and two-thirds of the class
members were citizens of that state, federal jurisdiction
would also exist; however, a federal judge would have the
discretion, in the interests of justice, to decline to exercise
that jurisdiction . . . . In addition, [the bill] contains a ‘Local
Controversy Exception’ . . . . ”). For clarity, we refer to the
first home state exception as “the mandatory home state
exception” and the second as “the discretionary home state
exception.”
Once CAFA jurisdiction has been established, see
28 U.S.C. § 1332(d)(2) and (d)(5), the burden falls on the
party seeking remand—here, Adams—to show that an
exception to CAFA jurisdiction applies. See Serrano,
478 F.3d at 1021–22. “To meet this burden, the moving
10 ADAMS V. WEST MARINE PRODUCTS
party must provide some facts in evidence from which the
district court may make findings regarding class members’
citizenship.” Brinkley v. Monterey Fin. Servs., Inc.,
873 F.3d 1118, 1121 (9th Cir. 2017) (quotation marks
omitted) (emphasis added). Citizenship is determined “as of
the date the case became removable[.]” Mondragon,
736 F.3d at 883; 28 U.S.C. § 1332(d)(7). “A district court
makes factual findings regarding jurisdiction under a
preponderance of the evidence standard.” Id. at 884.
Although such a finding must be based on more than mere
“guesswork,” id., we have repeatedly cautioned that the
burden of proof on a plaintiff “should not be exceptionally
difficult to bear.” Id. at 886.
“To be a citizen of a state, a natural person must first be
a citizen of the United States . . . . [Her] state citizenship is
then determined by her state of domicile[.]” Kanter v.
Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).
One’s domicile is her “permanent home”—that is, where
(i) she resides, (ii) “with the intention to remain or to which
she intends to return.” Id. At minimum, a person’s residence
constitutes some evidence of domicile. Mondragon,
736 F.3d at 886. “[A] party with the burden of proving
citizenship may rely on the presumption of continuing
domicile, which provides that, once established, a person’s
state of domicile continues unless rebutted with sufficient
evidence of change.” Id. at 885.
B.
Here, the district court reasoned that, while it “must
remand the case if two-thirds or more” class members are
citizens of California, “since the result here would be the
same under either [the mandatory or discretionary home
state exception] provision, the Court will focus on whether
the class meets the lower [one-third] citizenship threshold of
ADAMS V. WEST MARINE PRODUCTS 11
section § 1332(d)(3)[,]” under which it may remand. Given
that “[t]he last known addresses of over 90% of class
members are in California,” the district court concluded that
“[f]ar more likely than not, the class exceeds that [one-third]
threshold.”
West Marine argues that the district court erred in
inferring that more than one-third of the putative class
members were California citizens. We disagree.
1.
We have on several occasions addressed the evidence
that a plaintiff must adduce to meet her burden of
demonstrating class member citizenship. In Mondragon, we
vacated the district court’s remand order where the plaintiff
failed to produce any evidence of putative class members’
citizenship and relied solely on his proposed class
definitions. Id. at 882–83. We concluded that the class
definitions standing alone—without any evidence
proffered—were insufficient to satisfy the plaintiff’s burden:
We imagine that some automobiles were
purchased and registered in California by
members of the military, by out-of-state
students, by owners of second homes, by
other temporary residents who maintained
legal citizenship in other states, and by
persons who live in California but are not
U.S. citizens . . . . and we imagine that at least
some purchasers who were California
citizens at the time of purchase subsequently
moved to other states, such that they were not
California citizens as of [the removal date].
There is simply no evidence in the record to
support a finding that the group of citizens
12 ADAMS V. WEST MARINE PRODUCTS
outnumbers the group of non-citizens by
more than two to one.
Id. at 884.
In King, we again vacated a remand order where the
defendant stipulated that at least two-thirds of the putative
class had last known addresses in California. 903 F.3d
at 876. We determined that such a stipulation was
insufficient, without more, to meet the plaintiff’s burden to
show that more than two-thirds of class members were
domiciled in California. Id. at 880. Such a stipulation would
have required us to assume that nearly 100% of class
members with last known addresses in California were also
California citizens—an assumption that would have
amounted to little more than guesswork. Id. This we
declined to do:
[G]iven the narrow cushion provided by the
stipulation, the likelihood that some putative
class members were legally domiciled in or
subsequently relocated to another state, and
the probability that some class members were
not United States citizens, we cannot
conclude that there was sufficient evidence to
support a finding that greater than two-thirds
of the putative class members were
California citizens.
Id. at 879–80.
2.
The record evidence here far exceeds that in Mondragon
and King. Unlike in Mondragon, Adams did not rely solely
on her proposed class definition. Rather, she put forth
ADAMS V. WEST MARINE PRODUCTS 13
evidence demonstrating that more than 90% of putative class
members had last known mailing addresses in California. In
addition, she offered her own sworn declaration that she had
been required upon hire to certify her California (and United
States) citizenship to West Marine; and that, as a West
Marine store manager, she was “required to ask applicants
whether they were citizens of California[.]”
Unlike the “narrow cushion” relied upon by the plaintiffs
in King, Adams offered evidence showing that more than
90% of class members had last known mailing addresses in
California—a percentage far greater than the one-third (or
roughly, 33%) required for remand. Of course, last known
mailing addresses are not a direct proxy for residence, and
residence is not a direct proxy for citizenship: As the district
court recognized, “[s]ome of the verified California
addresses probably belong to people who are not California
citizens, or even citizens of the United States.”
Nevertheless, given the substantial cushion afforded by the
percentage of class members with last known California
addresses, as compared to the percentage of class member
citizens required for a discretionary remand, Adams readily
met her burden.
West Marine’s contention that Adams failed to offer
evidence of putative class members’ United States
citizenship—a prerequisite to establish California
citizenship—is unconvincing. See Kanter, 265 F.3d at 857.
As noted above, the record includes Adams’s sworn
declaration, which states that she (1) was required to ask job
applicants whether they were United States citizens; (2) was
herself asked upon hire to certify her United States
citizenship; (3) never herself hired a “foreign worker” under
an employment-related visa; and (4) never heard of anyone
at West Marine hiring a “foreign worker” under an
14 ADAMS V. WEST MARINE PRODUCTS
employment-related visa. We find nothing illogical in the
district court’s determination that a sufficient number of
class members—90% of whom had last known addresses in
California—are more likely than not United States citizens.
We caution that CAFA does not demand a plaintiff show
the citizenship of each class member with certainty beyond
a reasonable doubt. And, as the Fifth Circuit observed,
requiring a district court to “examin[e] the domicile of every
proposed class member before ruling on the citizenship
requirement” would render class actions “totally
unworkable.” Preston, 485 F.3d at 816 (internal citations
omitted). Rather, CAFA requires only that a plaintiff show,
by a mere preponderance of the evidence, that the citizenship
requirement is met. This burden should not be
“exceptionally difficult to bear,” Mondragon, 736 F.3d at
886, and should be considered with the goal of CAFA in
mind: to keep interstate actions in federal court and truly
intrastate actions in the state courts. King, 903 F.3d at 878.
In sum, we hold that the district court reasonably inferred
from the facts in evidence that it was more likely than not
that more than one-third of class members were California
citizens.
C.
West Marine next argues that the district court abused its
discretion by sua sponte raising the discretionary home state
exception. West Marine reasons that because the exceptions
to CAFA jurisdiction are not jurisdictional, but rather rooted
in the abstention doctrine, the district court should not have
raised the exception on its own.
The local controversy and home state exceptions are not
jurisdictional. See, e.g., Visendi v. Bank of Am., N.A.,
ADAMS V. WEST MARINE PRODUCTS 15
733 F.3d 863, 869 (9th Cir. 2013). Rather, as West Marine
recognizes, we treat the local controversy and home state
exceptions as a form of abstention. We may raise abstention
sua sponte. See, e.g., Bellotti v. Baird, 428 U.S. 132, 143
n.10 (1976); H.C. ex rel. Gordon v. Koppel, 203 F.3d 610,
613 (9th Cir. 2000); Columbia Basin Apt. Ass’n v. City of
Pasco, 268 F.3d 791, 799 (9th Cir. 2001). Thus, although
not required to do so, see Kuxhausen v. BMW Fin. Servs. NA
LLC, 707 F.3d 1136, 1139 n.1 (9th Cir. 2013), a district court
may raise sua sponte an exception to CAFA jurisdiction.
The district court did not err.
D.
Finally, West Marine argues that the district court abused
its discretion by relying on the discretionary home state
exception without inviting briefing on the applicability of the
exception. We find that the record does not support this
contention.
Six months before issuing the remand order, the district
court invited briefing on the home state exception to CAFA
jurisdiction. The home state exception encompasses both
the mandatory and the discretionary bases for remand. See,
e.g., Wright & Miller, Fed. Prac. & Proc. § 3724 (“CAFA
also contains a provision for the discretionary decline of
jurisdiction—the home-state exception.”); Newberg on
Class Actions § 6:21 (“While CAFA’s local controversy
exception requires a federal court to decline jurisdiction, the
defendant’s home-state exception allows the trial court judge
discretion to remand the suit[.]”) (emphasis in original);
S. Rep. 109-14, at 28 (same). Accordingly, we conclude the
district court provided the parties with an adequate
opportunity to address whether the exception applied.
16 ADAMS V. WEST MARINE PRODUCTS
We note also that it is unclear what additional evidence
or arguments West Marine could have offered had it chosen
to brief the discretionary home state exception. West Marine
does not say. The primary difference between the mandatory
and discretionary bases for remand (aside from the
citizenship threshold) is the requirement that a district court
consider six factors, no one of which is dispositive, to
determine whether it should in the “interests of justice”
exercise its discretion to remand the case to state court.
28 U.S.C. § 1332(d)(3). The factors—which include
“whether the claims asserted involve matters of national or
interstate interest”; “whether the claims asserted will be
governed by laws of the State in which the action was
originally filed or by the laws of other States”; and “whether
the action was brought in a forum with a distinct nexus with
the class members, the alleged harm, or the defendants”—
would seem here to mostly, if not exclusively, support
remand. Id. § 1332(d)(3)(A), (B), (D). The district court
considered the six factors and determined that remand was
appropriate. 4 We cannot say that the court abused its
discretion in so concluding.
IV.
In sum, we hold that the district court neither erred in
finding that it was more likely than not that greater than one-
third of the putative class were California citizens nor abused
its discretion in declining to exercise jurisdiction pursuant to
4
Notably, West Marine does not appear to challenge the district
court’s analysis of the six factors.
ADAMS V. WEST MARINE PRODUCTS 17
the discretionary home state exception. We affirm the order
remanding this case to state court.
AFFIRMED.