Plaintiffs appear to be increasingly focused on keeping certain types of class actions, including cases brought under the California Invasion of Privacy Act (CIPA), in California state court, likely seeking to take advantage of less rigorous pleading and class certification requirements. Some plaintiffs are even bringing individual claims and affirmatively alleging that less than $75,000 is at stake to avoid removal under CAFA or diversity jurisdiction, while purporting to reserve the right to add class allegations at a later stage. See, e.g., Casillas v. Hanesbrands Inc., 2024 WL 1286188 (C.D. Cal. Mar. 22, 2024) (remanding individual CIPA claim to state court).
A recent decision in the Central District of California, Doe v. PHE, Inc., 2024 WL 1639149 (C.D. Cal. Apr. 15, 2024), should help defendants seeking to remove putative class actions to federal court under CAFA.
CAFA Jurisdiction and the Local Controversy Exception
CAFA grants federal courts jurisdiction if (1) the aggregate amount in controversy exceeds $5,000,000, (2) there are at least 100 class members, and (3) at least one plaintiff is diverse from any one defendant. 28 U.S.C. § 1332(d)(2).
There are several exceptions to CAFA jurisdiction, including a mandatory local controversy exception, 28 U.S.C. § 1332(d)(4), which applies if the party seeking remand establishes that:
(1) more than two-thirds of class members are citizens of the state in which the action was filed;
(2) at least one defendant from whom significant relief is sought and whose alleged conduct creates a significant basis for the class’s claims is a citizen of the state in which the action was filed;
(3) the principal injuries resulting from the alleged conduct or related conduct of each defendant occurred in the state where the action was filed; and
(4) no other class action asserting the same or similar allegations against any defendant has been filed within the three years preceding the filing of the action.
Doe Court Strictly Construes Elements of the Local Controversy Exception
In Doe, the plaintiff brought CIPA claims on behalf of a California class against PHE and Google based on the use of Google Analytics by the PHE website. The defendants removed the case to federal court, and the plaintiff moved to remand. The court denied the motion to remand after finding the plaintiff had not established multiple elements of the local controversy exception:
Injury Substantially Occurring in California. First, the court rejected the plaintiff’s argument that the principal injuries occurred in California. Noting that the Ninth Circuit has not yet addressed this issue, the court followed other district courts in the Ninth Circuit in holding that this element of the local controversy exception is not satisfied when the injuries are suffered nationwide. 2024 WL 1639149, at *2-3. Because the defendant’s website was not limited to California, the court found the principal injury requirement was not met.
No Similar Cases in Prior Three Years. Next, the court found that another similar case had been brought against Google within the past three years. Here, the plaintiff alleged that PHE (a manufacturer of adult products) shared her “private sexual information” with Google, which the court found “strikingly similar” to another case alleging that a women’s health app shared “intimate details about their sexual health, menstruation cycles, gynecological health” with Google. Id. at *3.
Citizenship. Finally, the court rejected the plaintiff’s argument that the two-thirds citizenship requirement was satisfied based on the class being limited to California residents, because “[s]tate citizenship is determined by a person’s domicile, not their residence.” Id. at *2. Because plaintiff did not put forward any evidence related to the citizenship of putative class members, she did not satisfy her burden on this element.
Conclusion
Doe’s strict reading of the limits on the local controversy exception should help defendants remove class actions to federal court and keep them there, particularly when the claims are based on nationally available websites or applications or involve defendants who are repeatedly sued on similar theories, such as third-party analytics providers in the CIPA context. Further, this case is a good reminder (a) that the “no similar cases” requirement extends to similar cases and not just identical ones, and (b) that even if a putative class is limited to residents of a single state, that alone cannot demonstrate that the citizenship requirement of the exception is satisfied.