The Ninth Circuit vacated a remand order implicating the local and home-state controversy exceptions to CAFA jurisdiction in a putative class action by former California resident employees of Kentucky Fried Chicken (KFC) for state wage-and-hour law violations. The court ruled that the plaintiffs did not meet their burden to prove that "greater than two-thirds of proposed class members" were residents of California to invoke the exceptions.

Originally filed in California state court, KFC removed the case to federal court under CAFA. Plaintiff moved to remand under the local and home-state controversy exceptions to CAFA jurisdiction based on the premise that greater than two-thirds of proposed class members were California residents at the time of removal. KFC opposed plaintiff's requests for jurisdictional discovery about putative class members' last-known addresses and state citizenship and instead proposed to stipulate that "at least two-thirds" of the putative class members had last-known addresses in California, but plaintiff declined the offer. Although no formal stipulation was filed, the district court accepted the stipulation to obviate the need for jurisdictional discovery and then relied on that stipulation to grant KFC's motion to remand based on the local and home-state controversy exceptions.

On appeal, the Ninth Circuit considered whether plaintiff proved that "greater than two-thirds" of putative class members were California citizens where the district court relied on KFC's stipulation and no other evidence regarding putative class members' citizenships was presented. The opinion focused on what little "cushion" the stipulation provided over the statutorily required threshold to invoke the exceptions to CAFA jurisdiction. The court of appeals highlighted that the district court separately referenced the stipulated number as "at least two-thirds" or alternatively "at least 67%," which the appellate court noted were technically different numbers. It noted that "at least two-thirds" would be facially insufficient, because "at least" is not "greater," and that while 67 percent is technically "greater" than the 66.67 percent numerical meaning of "two-thirds, it is only "greater" by an extremely narrow margin.

More importantly, the Ninth Circuit faulted the district court's reliance on the stipulation and lack of any other evidence as to citizenship because many individuals with last-known addresses in California may still not qualify as California citizens for purposes of the exceptions. For example, individuals with California residential addresses may not be California citizens if they were out-of-state students attending college in California. The same would be true if they permanently moved to another state or were not U.S. citizens. The court repeatedly emphasized the absence of any evidence regarding putative class members' citizenship outside of the stipulation. Simply stated, the "stipulation was insufficient, and there was no other evidence to fill the gap."

Thus, the court vacated the district court's order and remanded the case with instructions for the lower court to permit plaintiff to renew her remand motion and to give her the opportunity to gather evidence via jurisdictional discovery on whether the requisite two-third of putative class members were California citizens.

King v. Great Am. Chicken Corp., Inc., No. 18-55911 (9th Cir. Sept. 6, 2018).

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