Lisa Hill v. National Insurance Underwriters, Inc., et al.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14967
Non-argument Calendar
________________________
D.C. Docket No. 0:12-cv-62498-WJZ
LISA HILL,
individually and on behalf of all those
similarly situated,
Plaintiff–Appellee,
versus
NATIONAL INSURANCE UNDERWRITERS, INC.,
DIRECT GENERAL INSURANCE AGENCY, INC.,
Defendants–Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(January 14, 2016)
Before WILSON, JORDAN, and JULIE CARNES, Circuit Judges.
JULIE CARNES, Circuit Judge:
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Defendants National Insurance Underwriters, Inc. (“NIU”) and Direct
General Insurance Agency, Inc. (“Direct General”) appeal the district court’s
decision to remand this case to a Florida state court based on the “local-
controversy” exception of the Class Action Fairness Act (“CAFA”), Pub. L. No.
109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.). Plaintiff
Lisa Hill argues that this Court lacks jurisdiction to consider the appeal, but that
even if we did, the district court correctly ruled that the local-controversy
exception applies and therefore properly remanded the case. After careful review
of the record and the parties’ briefs, we conclude that we have jurisdiction over the
appeal, and we further hold that the district court failed to apply the correct legal
standard in evaluating the merits of Plaintiff’s motion to remand. Accordingly, we
vacate the district court’s order and remand for further proceedings.
I. Background
A. Factual Background
Prior to filing the present action, class counsel for Plaintiff filed a class
complaint in Florida state court against Direct General, as well as other “local”
Florida defendants, claiming that class members had been sold worthless surplus
automobile insurance and seeking damages. Based on CAFA, the defendants in
Lemy v. Direct General Finance Co., No. 8:11-cv-2722-T-23AEP (M.D. Fla.),
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removed the case to the Middle District of Florida and the plaintiffs then moved to
remand the case to state court, citing the “local-controversy exception” to CAFA.
The district court (“the Lemy court”) denied the motion to remand, finding that the
plaintiffs had not shown that the local defendants’ conduct formed a significant
basis for the action at issue nor that the plaintiffs sought significant relief against
these defendants —both of which showings are necessary for the exception to
apply. Ultimately, the Lemy court dismissed with prejudice the complaint,
concluding that the plaintiffs had failed to state a claim. See Lemy v. Direct Gen.
Fin. Co., 885 F. Supp. 2d 1265 (M.D. Fla. 2012) and 884 F. Supp. 2d 1236 (M.D.
Fla. 2012). We affirmed both decisions. Lemy v. Direct Gen. Fin. Co., 559 F.
App’x 796 (11th Cir. 2014).
On November 16, 2012, a few months after the Lemy court had denied the
plaintiffs’ motion for reconsideration, class counsel filed a second putative class
action, this time in the Seventeenth Judicial Circuit in Broward County, Florida,
and named as defendants two of the defendants in Lemy: Direct General and NIU.
Plaintiff alleges that NIU, a Florida corporation, markets insurance products to
insurance companies and agencies in Florida, which then sell the policies to the
public. One such insurance agency is Direct General, a Tennessee corporation that
sells automobile insurance policies to Florida citizens.
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Plaintiff alleges that she purchased two insurance products from Direct
General: (1) a personal injury protection and property damage (“PIP/PD”)
automobile insurance policy and (2) Accident Medical Protection (“AMP”), an
ancillary insurance product underwritten by Certain Underwriters at Lloyd’s,
London. The State of Florida requires that automobile owners purchase “minimum
financial responsibility” PIP/PD insurance in order to legally operate their vehicles
on Florida roads. According to Plaintiff, NIU and Direct General worked together
to use a customer’s purchase of this required “minimum financial responsibility”
PIP/PD insurance as an opportunity to sell the customer ancillary insurance
products, such as AMP. NIU was the producing agent for the sale of the AMP
policies, but Direct General, as the insurance agent, sold the policies through its
offices. Direct General was therefore a fiduciary for its insureds.
Plaintiff does not argue that there was anything unlawful or defective about
the insurance products themselves; instead she focuses on “the manner in which
these products were sold.” Specifically, Direct General allegedly accepted $25
policy fees, in addition to commissions, for the sale of PIP/PD insurance policies.
Moreover, Direct General accepted commissions that were well in excess of
Lloyd’s standard rates and terms for the AMP policies it sold. And each year an
AMP policy was renewed, the insured was charged a $25 policy fee. The $25
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policy fees on both these insurance products were charged in breach of the
contracts between Direct General and its customers.
Plaintiff accuses NIU of “aid[ing] and abett[ing] Direct General in the
latter’s violation of its insureds’ loyalty and trust, and/or . . . charg[ing] an
unlawful policy fee for the AMP policy in violation of Florida law.” Elsewhere in
her complaint, Plaintiff alleges that NIU accepted as compensation a $25 policy fee
for each ancillary insurance product, which she believes NIU was not permitted to
charge or collect under Florida law. At bottom, Plaintiff accuses Defendants of
wrongfully charging policy fees and accepting commissions for both PIP/PD and
AMP insurance policies.
Based on the above allegations, Plaintiff sues Direct General for breach of
contract (Count II) and breach of fiduciary duty (Count III). She seeks a judgment
declaring that NIU cannot charge or accept the AMP fee and must return all such
fees charged or accepted (Count I). Other claims against NIU include breach of
contract (Count V), breach of the implied covenant of good faith and fair dealing
(Count VI), and breach of fiduciary duty (Count VII)—all premised on vicarious
liability—as well as a claim of aiding and abetting Direct General’s breach of
fiduciary duty (Count VIII).
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Plaintiff purports to represent two classes, which are defined as follows in
her complaint:
a. The PIP/PD Class. All Florida citizens that purchased
PIP/PD insurance policies through Direct General in the
five-year period before the complaint was filed (“the
Class Period”) under which Direct General charged a
yearly $25 “policy fee.”
b. The Ancillary Product Class. All Florida citizens that
purchased an Ancillary Insurance Product underwritten
by Certain Underwriters at Lloyd’s, London from Direct
General during the Class Period who have not made a
claim under any of the ancillary products.
B. Procedural Background
On December 17, 2012, Direct General timely removed this action to federal
court pursuant to CAFA. Under CAFA, federal courts have original jurisdiction
over class actions in which there is minimal diversity—which is satisfied if at least
one plaintiff and one defendant are from different states—and the amount in
controversy exceeds $5 million. 28 U.S.C. § 1332(d)(2). Nevertheless, if a case is
truly local in nature, as defined by CAFA, “[a] district court shall decline to
exercise jurisdiction.” § 1332(d)(4). As discussed in more detail in Part III, for the
“local-controversy” exception to apply: (1) at least one defendant must be a citizen
of the forum state, (2) the plaintiff class must seek “significant relief” from that
defendant, (3) the local defendant’s conduct must form a “significant basis” for the
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claims asserted, and (4) no other class action based on the same or similar factual
allegations can have been filed against any defendant in the past three years. See
§ 1332(d)(4)(A)(i)(II), (d)(4)(A)(ii).
After Direct General removed this action to federal court, Plaintiff moved to
remand under the local-controversy exception. In her response to NIU’s motion
for an extension of time to respond to the motion to remand, Plaintiff observed that
NIU was not even entitled to respond because it had not joined the notice of
removal. Nonetheless, Plaintiff did not oppose an extension nor did she move to
remand on this ground.
A couple of weeks later, the district court issued an order remanding the case
to state court. But instead of granting Plaintiff’s motion, or even mentioning the
ground that Plaintiff had asserted in her motion (the local-controversy exception),
the court characterized its order as being issued sua sponte and based the remand
on another reason altogether. Specifically, the court cited the general requirement
that all defendants must consent to removal, see Russell Corp. v. Am. Home Assur.
Co., 264 F.3d 1040, 1044 (11th Cir. 2001), and remanded the action to state court
because NIU had not joined in the removal.
The next day, Direct General filed an emergency motion for reconsideration,
explaining to the court that CAFA permits “remov[al] by any defendant without
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the consent of all defendants.” 28 U.S.C. § 1453(b); see also Lowery v. Ala. Power
Co., 483 F.3d 1184, 1196 (11th Cir. 2007) (finding that “one defendant may
remove the entire action, including claims against all defendants”). The day after
Direct General’s emergency motion, the district court vacated its sua sponte
remand order, leaving pending Plaintiff’s motion to remand based on the local-
controversy exception.
In that motion, Plaintiff argued that she met the “significant relief” prong of
the local-controversy exception because, according to her calculations, over 65%
of the class members had claims against NIU (the Florida defendant) accounting
for 81% of the total damages in the case. NIU’s conduct also formed a “significant
basis” of her claims, as also required by the exception, because NIU was the but-
for cause of Direct General’s offer of ancillary insurance products.
Defendants submitted evidence rebutting Plaintiff’s assertion that NIU was a
significant local defendant. Plaintiff submitted documents relating to an ancillary
insurance product not at issue in this action (vehicle protection insurance),
including the corresponding disclosure forms that apparently omitted the fee
referenced in the class complaint.
Finally, Defendants asserted that the local-controversy exception was
inapplicable because a previous class action, Lemy v. Direct General Finance Co.,
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No. 8:11-cv-2722-T-23AEP (M.D. Fla.), relied on the same or similar facts as the
present case and had been filed within the last three years. See 28 U.S.C.
§ 1332(d)(4)(A)(ii).
On May 22, 2015, the district court granted Plaintiff’s motion to remand,
finding that the local-controversy exception applied. Defendants appeal.
II. Appellate Jurisdiction
As a threshold matter, Plaintiff argues that this Court lacks jurisdiction to
hear this appeal because, once the district court sua sponte remanded the case
shortly after its removal, the district court lacked jurisdiction to reconsider its
decision or to later enter the second remand order that is the subject of this appeal.
Were that the case, we would be required to dismiss this appeal. But we find
Plaintiff’s argument unpersuasive and conclude that we have jurisdiction to
consider this appeal.
We review jurisdictional issues de novo. United States v. Lopez, 562 F.3d
1309, 1311 (11th Cir. 2009). Ordinarily, an order remanding a case to state court
“is not reviewable on appeal or otherwise.” 28 U.S.C. § 1447(d). Further, this
language has been read to mean that district courts are barred from even
reconsidering such orders once they are issued. See Bender v. Mazda Motor Corp.,
657 F.3d 1200, 1203–04 (11th Cir. 2011) (holding that “even if the district court
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erroneously remanded the case to state court, § 1447(d) prohibits the district court
from reconsidering its remand order because the district court no longer had
jurisdiction over the case”).
But not all remand orders are immune from review. The Supreme Court has
held that § 1447(d)’s broad language must be construed together with § 1447(c).
See Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345–46 (1976),
abrogated on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706,
714–15 (1996). Section 1447(c) provides:
A motion to remand the case on the basis of any defect other than lack
of subject matter jurisdiction must be made within 30 days after the
filing of the notice of removal . . . . If at any time before final
judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.
Reading these subsections together, we have found that Ҥ 1447(d) is tightly
circumscribed to cover only remand orders within the scope of 28 U.S.C.
§ 1447(c).” Corp. Mgmt. Advisors, Inc. v. Artjen Complexus, Inc., 561 F.3d 1294,
1296 (11th Cir. 2009) (internal quotation marks omitted). Thus, a remand order is
unreviewable only if it is “openly based” on (1) a lack of subject matter
jurisdiction or (2) a timely motion to remand the case on the basis of a defect in
removal procedure. See In re Bethesda Mem’l Hosp., Inc., 123 F.3d 1407, 1409
(11th Cir. 1997). If the district court’s first remand order had been based on either
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of these grounds, the court lacked authority to reconsider it. On the other hand, if
the remand order did not invoke a ground authorized by § 1447(c), it was
reviewable. See id.
Plaintiff contends that the order can be read to fall into either of the above
categories. First, she argues that the district court purported to rule on the ground
of subject matter jurisdiction because its order included a few passing comments
reflecting the court’s criticism of those who have acted to expand federal
jurisdiction under Article III beyond the bounds that the court believed to have
been intended by the Founding Fathers. Plaintiff concedes that, in fact, the district
court could not have properly dismissed or remanded based on lack of subject
matter jurisdiction because a defendant’s failure to join in a removal petition is, at
best, only a procedural defect. See id. at 1410. Nonetheless, Plaintiff notes, §
1447(d) bars review of a remand purporting to be based on jurisdictional grounds
“even though the district court may have ‘employed erroneous principles in
concluding that it was without jurisdiction.’” Bregman v. Alderman, 955 F.2d 660,
665 (11th Cir. 1992) (quoting Gravitt v. Sw. Bell Tel. Co., 430 U.S. 723, 723
(1977)).
We are unpersuaded by Plaintiff’s argument that the district court premised
its original remand order on a lack of subject matter jurisdiction. The court made it
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clear that it was remanding on what it perceived to be a violation of a procedural
requirement set out in § 1446(a),1 which requires all defendants to join in a notice
of removal. Further, when Defendants filed their motion to vacate the remand
order, they specified only two errors: (1) the court’s misapprehension of a duty by
all defendants joined in a class action to consent to removal and (2) the inability of
a court to remand sua sponte even when it discovers an actual procedural defect.
Only a day later, the district court entered an order summarily vacating its remand
order. Nothing in the proceedings reasonably suggests that the court based its
initial remand order on any notion that it lacked jurisdiction over the case. While
the court commented on the limited scope of federal jurisdiction, we read that
comment as a reiteration of the requirement that removal statutes be construed
narrowly. See, e.g., Russell Corp., 264 F.3d at 1049 (“Like all rules governing
removal, this unanimity requirement must be strictly interpreted and enforced
because of the significant federalism concerns arising in the context of federal
1 There was a misnomer in the court’s statutory reference to § 1446(a). It is § 1446(b)(2)(A)
that requires all defendants who have been properly joined and served to join in or consent to the
removal of an action. But the provision, by its terms, applies only to a civil action that “is
removed solely under section 1441(a).” Of course, as Defendants pointed out in their motion to
vacate the court’s original remand order, per § 1453(b), there is no requirement that all
defendants consent to removal of a class action.
In turn, § 1441(a) is the section that permits removal of cases to federal court if the latter has
original jurisdiction. Section 1441(b) and (c) specifically reference removals based on the
familiar grounds for removal: diversity of citizenship and actions involving a federal question.
But § 1453 governs actions removed under CAFA and, as noted above, § 1453(b) states that
unanimous consent is not required in the removal of a class action.
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removal jurisdiction.”). Indeed, in its remand order, the court concluded that it
“cannot exercise its jurisdiction” over the case, indicating that the court recognized
it had subject matter jurisdiction but concluded that a procedural defect compelled
remand.
Because remand was not based on a lack of subject matter jurisdiction, we
turn to the second category of unreviewable orders under § 1447(c): those openly
based on a timely motion to remand for a procedural defect. See In re Bethesda
Mem’l Hosp., 123 F.3d at 1409. Plaintiff argues that the remand order qualifies
under this exception because Plaintiff had filed a motion to remand before the
court remanded on a procedural ground. There are two problems with Plaintiff’s
argument: (1) she never filed a motion to remand for a procedural defect and (2)
the district court did not base its remand order on any such motion. As to the
second problem, the court itself characterized its order identifying a procedural
defect as being a sua sponte order. We have made clear that Ҥ 1447(c) does not
authorize any sua sponte remand order not based on subject matter jurisdiction.”
Whole Health Chiropractic & Wellness, Inc. v. Humana Medical Plan, Inc., 254
F.3d 1317, 1319 (11th Cir. 2001) (emphasis in original).
As to the other problem with Plaintiff’s argument, she never filed a motion
to remand based on a procedural defect. To the contrary, Plaintiff’s motion to
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remand relied entirely on the applicability of the “local-controversy” exception.2
That being so, the motion was not authorized by § 1447(c) and, because it was not
authorized, it is reviewable. Again, § 1447(c) provides that an order on procedural
grounds must be based on “[a] motion to remand the case on the basis of any
defect other than lack of subject matter jurisdiction.” 28 U.S.C. § 1447(c); see also
Artjen, 561 F.3d at 1296 (holding that, for review to be barred, the order must be
based on “a defect in removal other than lack of subject matter jurisdiction that
was raised by the motion of a party” (quoting Ellenburg v. Spartan Motors
Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008))); Schexnayder v. Entergy La.,
Inc., 394 F.3d 280, 285 (5th Cir. 2004) (“So long as a procedurally-based motion
for remand is timely filed, and the order is not affirmatively based on a non-
§ 1447(c) ground, we will not review a district court’s remand order.”).
We have interpreted the words “any defect” in § 1447(c) as applying only to
“any ‘defect’ in the removal [process] itself,” not to “any removable ground.”
Snapper, Inc. v. Redan, 171 F.3d 1249, 1253 (11th Cir. 1999). Thus, because
remand motions based on alleged defects outside the removal process are not
covered by § 1447(c), orders granting such motions are not barred from review by
2 It is true that in its response to NIU’s motion for an extension of time to respond to the motion
to remand, Plaintiff asserted that NIU had “waived its right” to challenge the motion to remand
because it had not joined in the removal of the action. But that observation hardly constitutes a
motion to remand based on a procedural defect.
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§ 1447(d). Id. at 1260. Plaintiff’s motion was grounded in the local-controversy
exception, which has nothing to do with removal procedure. Indeed, courts have
held that the local-controversy exception is akin to an abstention doctrine because
§ 1332(d)(4) “inherently recognizes the district court has subject matter
jurisdiction by directing the court to ‘decline to exercise’ such jurisdiction when
certain requirements are met.” Graphic Commc’ns v. CVS Caremark Corp., 636
F.3d 971, 973 (8th Cir. 2011); see also Gold v. N.Y. Life Ins. Co., 730 F.3d 137,
142 (2d Cir. 2013); Morrison v. YTB Int’l, Inc., 649 F.3d 533, 536 (7th Cir. 2011).
In Snapper, we specifically recognized that a motion to remand on abstention
grounds is not a motion specified in § 1447(c). See 171 F.3d at 1254–59
(reviewing the historical interpretation of § 1447(c) and holding that Congress’s
use of the broad term “any defect” “was not meant to bring within [§ 1447(c)’s]
scope remands in the contexts of forum selection clauses, abstention, or
supplemental jurisdiction”). That being so, any order on a motion invoking the
local-controversy exception could not have been an order on a “motion to remand
based on any procedural defect,” as required by § 1447(c).
Plaintiff nonetheless insists that our opinion in Velchez v. Carnival Corp.,
331 F.3d 1207 (11th Cir. 2003), forecloses review of the district court’s order.
Based on that case, she asserts that once a plaintiff moves to remand, a court is
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allowed to remand for a procedural defect it identifies on its own, even if the
motion did not raise it. In Velchez, the plaintiff identified a procedural defect in his
remand motion, but the district court granted the motion on a different procedural
ground it had identified on its own. Id. at 1209–10. The defendant thus argued
that the court acted sua sponte outside of § 1447(c). Id.; see also Whole Health,
254 F.3d at 1319. We rejected that argument because the plaintiff’s motion had, in
fact, first raised a procedural defect, as § 1447(c) requires. Velchez, 331 F.3d at
1210. So, even though the court relied on a procedural defect other than the one
specified in the motion, that order was nevertheless “prompted” by a § 1447(c)
“procedural defect” motion and was unreviewable. See id.
Velchez is distinguishable from this case because here Plaintiff’s motion to
remand never identified a procedural defect within the meaning of § 1447(c). And
what it did raise—the local-controversy exception—does not fit within the purview
of § 1447(c)—meaning that any ruling based on the motion is reviewable. In
short, the district court remanded based on a procedural defect that it raised sua
sponte, and the motion for remand filed by Plaintiff did not raise a ground covered
by §1447(c). Either fact was sufficient to permit review of the first remand order,
meaning that the district court possessed the power to vacate its order. As a result,
the court had jurisdiction when it entered the second remand order based on the
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local-controversy exception, from which order Defendants now appeal. For the
above reasons, we reject Plaintiff’s argument that we lack jurisdiction over this
appeal.
III. Local-Controversy Exception
A. Standard of Review and Statutory Backdrop
We have jurisdiction to review an order granting or denying a motion to
remand a class action. 28 U.S.C. § 1453(c)(1). We review a district court’s
decision to remand de novo. Evans v. Walter Indus., Inc., 449 F.3d 1159, 1161
(11th Cir. 2006). Further, although “CAFA does not change the traditional rule
that the party seeking to remove the case to federal court bears the burden of
establishing federal jurisdiction,” id. at 1164, its “language favors federal
jurisdiction over class actions and CAFA’s legislative history suggests that
Congress intended the local controversy exception to be a narrow one, with all
doubts resolved ‘in favor of exercising jurisdiction over the case.’” Id. at 1163
(quoting S. Rep. No. 109-14, at 42 (2005), as reprinted in 2005 U.S.C.C.A.N. 3,
40). Finally, as the party seeking remand, Plaintiff bears the burden of proving that
the local-controversy exception applies. Id. at 1164–65.
The parties agree that this case falls within CAFA’s expanded federal
jurisdiction for class actions. But they disagree over whether this case fits within
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CAFA’s local-controversy exception, which requires courts to decline to exercise
jurisdiction in cases that are truly local in nature. The local-controversy exception
provides:
(4) A district court shall decline to exercise jurisdiction under
paragraph (2)–
(A)(i) over a class action in which–
(I) greater than two-thirds of the members of all proposed
plaintiff classes in the aggregate are citizens of the State in
which the action was originally filed;
(II) at least 1 defendant is a defendant–
(aa) from whom significant relief is sought by members
of the plaintiff class;
(bb) whose alleged conduct forms a significant basis for
the claims asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action was
originally filed; and
(III) principal injuries resulting from the alleged conduct or any
related conduct of each defendant were incurred in the State in
which the action was originally filed; and
(ii) during the 3-year period preceding the filing of that class
action, no other class action has been filed asserting the same or
similar factual allegations against any of the defendants on behalf
of the same or other persons.
28 U.S.C. § 1332(d).
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All of the above requirements must be met for the exception to apply, and it
is the plaintiff’s burden to meet them. The parties disagree over whether (1) local
defendant NIU’s conduct forms a “significant basis” for Plaintiff’s claims, (2)
whether Plaintiff seeks “significant relief” from NIU, and (3) whether the Lemy
action, which was filed less than three years prior to this action, was based on the
“same or similar factual allegations against any of the defendants.”
§ 1332(d)(4)(A)(i)(II)(aa)–(bb), (d)(4)(A)(ii).
We affirm the district court’s decision as to the latter two issues—the
“significant relief” and “similar factual allegations” prongs. We, however, reverse
the district court’s determination that NIU’s conduct formed a significant basis for
the class’s claims, and we remand for the court to consider that question anew,
applying the applicable legal standard and setting out the reasoning that supports
its conclusion.
B. “Significant Basis” Prong of Local-Controversy Exception
As noted, Defendants contend that although it was Plaintiff’s burden to
establish that local defendant NIU met the “significant basis” prong of the local-
controversy exception, the district court did not hold Plaintiff to that burden.
Rather, Defendants argue, the court credited bare assertions by Plaintiff over actual
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evidence presented by Defendants, and neglected to explain why it did so. We find
merit in Defendants’ observation.
The central conduct for which NIU stood accused in the complaint was its
acceptance of a $25 policy fee for ancillary insurance products that it provided to
Direct General, which then marketed those products to customers who sought to
purchase the minimum level of PIP/PD automobile insurance required by Florida
law.3 Defendants, however, pointed out to the district court that Plaintiff’s own
summary exhibit attached to her complaint contradicted the position she took
during the remand proceedings. According to Defendants, this exhibit showed that
Plaintiff had only been charged a single $25 policy fee for the PIP/PD insurance,
and no fee for the ancillary AMP policy designed by NIU. Defendants further
submitted their own evidence, in the form of declarations by corporate employees,
which they characterize as showing that Direct General had not charged a policy
fee for the AMP insurance at issue, nor did it remit any portion of the PIP/PD
policy fee to NIU. Defendants therefore argue that their evidence stands
unrebutted.
3 Oddly, although Plaintiff alleges that NIU accepted a $25 fee for each ancillary product sold,
the complaint’s definition of its Ancillary Product Class contains no indication that members of
the class must have paid a $25 fee for the product. This omission stands in sharp contrast to the
definition of the PIP/PD class, which limits the class to only those customers who paid a $25
policy fee for that policy.
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The district court’s order, however, never acknowledged the existence of
this evidence. It is true that Plaintiff attempted to rebut this evidence in her reply
brief to Defendants’ opposition to the motion to remand, when she proffered an
exhibit that purportedly showed that NIU had received a policy fee. But as
Defendants pointed out, the exhibit was for a different ancillary product at issue in
the Lemy action and was not bought by Plaintiff. Whether or not Plaintiff’s
exhibit could fairly be interpreted as rebutting Defendants’ evidence, the district
court’s order neither referenced nor attempted to resolve any evidentiary dispute.
In addition, although the district court recited the correct legal standard at
the beginning of its order, which standard places the burden on the plaintiff to
establish the applicability of the local-controversy exception, it is not clear that the
court actually applied that standard here. In addressing the “significant basis”
prong of the exception, the district court stated that it was “not persuaded that
NIU’s involvement is insignificant here, based on the allegations set forth by
Plaintiff.” (emphasis added) But under Evans, it was Plaintiff’s burden to prove
NIU’s “significance,” not Defendants’ burden to prove that NIU’s conduct was
insignificant.
For the above reasons, we remand this case to the district court to determine
whether Plaintiff has met her burden to prove the “substantial basis” element. We
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note that we are not requiring the court to hold an evidentiary hearing. Instead, the
court should proceed as courts typically do when resolving a motion to dismiss for
lack of subject matter jurisdiction under Rule 12(b)(1), or a motion to remand for
lack of subject matter jurisdiction. See, e.g., Morrison v. Amway Corp., 323 F.3d
920, 924–25 (11th Cir. 2003); Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744,
755, 772–74 (11th Cir. 2010). But the court should either make specific findings
of fact or provide an explanation why Defendants’ evidence on this point is not
persuasive, mindful that Plaintiff bears the burden of proof.
IV. Conclusion
For the above reasons, we vacate the district court’s remand order and
remand the case for further proceedings consistent with this opinion.
VACATED and REMANDED.
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