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Plaintiff in Class Action Bears the Burden of Proving Case Belongs in State Court 7th Circuit Rules

Under the Class Action Fairness Act (CAFA), defendants in a class action lawsuit are able to have the case moved to federal court. This law was enacted to prevent plaintiffs from “forum shopping”, or filing their lawsuit in the court that they knew would be most favorable to their side. There are limits to the law though. If the claims of a class action lawsuit amount to less than $5 million, or if at least two thirds of the class members are residents of one state, then the lawsuit can proceed in a district court of that state.

According to a recent ruling by the Seventh Circuit Court of Appeals, the plaintiff bears the burden of providing evidence that allows the court to determine the citizenship of the putative class members as of the date that the case was removed to federal court. The ruling came out of a class action lawsuit that was filed against an Illinois insurance company for allegedly violating relevant state laws when it pulled out of the market in 2002 and cancelled all of its policies. The defendants had the case removed to federal court, but the plaintiffs argued that it belonged in Illinois state courts under the home-state exemption.

The plaintiffs argue that the lawsuit belongs in Illinois state court based on the fact that the defendants’ policy was offered only to people who represented that they lived in Illinois or, for group policies, to employers who represented that most of their beneficiaries lived in Illinois. The plaintiffs assert that, assuming that former policyholders left Illinois at the normal rate of 2% per year since 2002, about 87% of the putative class members were Illinois residents when the case was removed to federal court.

The district court denied the plaintiffs’ motion to remand the case back to state court. The plaintiffs appealed and the case went before the Seventh Circuit Court of Appeals, which upheld the ruling of the lower court. In its ruling, the appellate court noted that the plaintiffs had failed to produce any evidence that at least two-thirds of the putative class members were citizens of Illinois. Instead, the plaintiffs’ arguments relied on assumptions that the plaintiffs had not bothered to verify.

The court pointed out that the plaintiffs expected the court to infer (1) that the policies were only issued to Illinois residents; (2) that all Illinois residents are also Illinois citizens; (3) that the defendants’ policy holders were no more likely to move than the average individual; and (4) that the employers who purchased group policies were all citizens of Illinois. The court noted that the suppositions may or may not be correct, but that is not the point. The point is that the plaintiffs failed to provide hard evidence to back up their assertion that at least two-thirds of the members of the putative class are Illinois citizens.

The plaintiffs argued that acquiring evidence of the state citizenship of all of the putative class members was too expensive. The court rejected this argument, pointing out that if the representatives cannot carry the burden of proof, then they are not adequate representatives. The court also pointed out that the plaintiffs could get the citizenship status of a random sampling of the putative class members and extrapolate the data to the rest of the class. If needed, they could acquire a statistician to testify that the results of the sampling are reliable.

Our Joilet, Illinois consumer rights private law firm handles individual and class action predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at DiTommaso Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Skokie and Park Ridge consumer attorneys provide assistance in fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Skokie consumer protection attorneys who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.