Litigating California Wage & Hour and Labor Code Class Actions

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 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. 315
Defendants eager to remove a case should also consider the possibility of sanctions
in the event their removal petition is deemed unreasonable. The Supreme Court has
noted that an award of costs and fees is permissible under Section 1447(c), when
“such an award is just” and “the removing party lacked an objectively reasonable
basis for removal.” 316 The Ninth Circuit has also previously stated that an award of
attorney fees is permitted even when defendant’s removal was “fairly supportable,”
but wrong as a matter of law. 317 But, a California federal district court has previously
held that all a defendant may need to support the removal is an argument “that is not
irrational or implausible.” 318
D. Exceptions to CAFA Jurisdiction
There are narrow exceptions to CAFA jurisdiction. 319 The party that is seeking remand
back to the state court bears the burden of proof in establishing any exceptions to CAFA
jurisdiction. 320
1. Local-Controversy Exception
Under the local controversy exception, a federal court must decline jurisdiction
where: (1) greater than 2/3 of the proposed class members are citizens of the forum
state, (2) at least one “significant” defendant (i.e., from whom significant relief is
sought and whose alleged conduct forms a significant basis for the claims asserted
by the class) is a citizen of the forum state, (3) the principal injuries caused by the
315
316
317
318
319
320
Id. at 692 (citing S. Rep. No. 109-14, at 44, 2005 U.S.C.C.A.N. at 42 (emphasis added)).
Martin v. Franklin Capital Corp., 546 U.S. 132 (2005); see also Mosaic Sys., Inc. v. Bechtolsheim, No. C 07-3892-SI,
2007 WL 3022581, at *5 (N.D. Cal. Oct. 15, 2007) (denying request for fees and costs given “objectively reasonable”
basis for removal); Gardner v. UICI, 508 F.3d 559, 561-62 (9th Cir. 2007) (reversing award of fees and costs where
removing party had “an objectively reasonable basis for removal;” if a “reasonable litigant . . . could have concluded that
federal court was the proper forum” a request for fees and costs must be denied).
Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1106 n.6 (9th Cir. 2000).
Hornung v. City of Oakland, No. C-05-4825 EMC, 2006 WL 279337, at *4 (N.D. Cal. Feb. 3, 2006).
28 U.S.C. § 1332(d)(4)(A)-(B).
Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).
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