Understanding the State of Origin Exception to CAFA Diversity Jurisdiction – Litigation, Mediation and Arbitration

The Class Action Fairness Act (“CAFA”), enacted in 2005, expanded federal jurisdiction over class actions. However, CAFA contains certain exceptions or instances where a federal court cannot exercise jurisdiction. One such exception is the “home state exception,” which requires a district court to decline to exercise jurisdiction if two-thirds or more of the members of a proposed class, as well as “main defendants”, are citizens of the state in question. which the action is brought.1 It is “designed to strike a delicate balance between providing a federal forum for truly national litigation and allowing state courts to hold cases where the controversy is strongly state-specific.”2 The citizenship of the proposed category as a whole determines whether the exception applies.3

The exception does not remove jurisdiction but rather imposes abstention

Several circuits have interpreted the home state exception to require that a district court refrain from exercising jurisdiction if the conditions of the exception are met. In other words, if the exception applies, even if the district court has jurisdiction to hear the dispute, it must refrain from exercising such jurisdiction. For example, the Seventh Circuit has ruled that the exception “does not by itself diminish federal jurisdiction. It directs district judges to ‘decline to exercise’ jurisdiction otherwise present and is therefore akin to forbearance.”4 The Eighth Circuit distinguished between surrender of jurisdiction and forbearance, explaining that the home state exception is set forth separately from the jurisdictional requirements of the statute and “intrinsically recognizes [that] the district court has jurisdiction over the matter by ordering the court to “decline to exercise” that jurisdiction when certain conditions are met.”5 The exception “operates as a doctrine of forbearance, which does not divest the court of its jurisdiction in the matter”.6

The Second Circuit ruled that “the home state exception was not jurisdictional because the language of the ‘refusal to practise'” is inherently recognized [that] the district court has jurisdiction over the matter but must actively decline to exercise it if the conditions of the exception are met.”7 The Fifth Circuit also recognized that the home state exception requires “the forbearance of the exercise jurisdiction” and is “not truly jurisdictional in nature.8 The Sixth and Ninth Circuits came to the same conclusion.9 Although the Third Circuit did not use the words “mandatory forbearance” when discussing the home state exception, it found that and the local controversy exception to be exceptions. mandatory.ten

Burden of proof

The party invoking the exception of the State of origin bears the burden of proof,11 and must prove by a preponderance of the evidence that the exception applies.12The moving party must present evidence that will allow the court to determine the citizenship of the class members as of the date the case was filed in federal court.13 If a party does not raise the home state objection, the court is not obligated or required to do so spontaneouslyalthough at least the Ninth Circuit ruled that a district court had the ability to do so.14

When to invoke the exception.

The CFAA does not impose a time limit before which a party must invoke the home state exception. However, several circuits, including second, eighth, ninth and tenth, have ruled that the exception can be waived if not lifted within a “reasonable time.”15The Seventh Circuit said the requesting party “[has]the right, by proper investigation, to explore the facts within the jurisdiction of the court as the case progresses”, including the place of residence of the parties.16 Further, the CFAA legislative history indicates that a party should invoke the home state exception after a limited, non-binding discovery.17

Who is a main defendant?

The CAFA does not define the term “lead defendants” and courts in different circuits have adopted different constructions of the term. In a case with multiple defendants, it is important to understand how the circuit in which the case is pending defines the term, if they have done so at all. For example, the Ninth Circuit refused to address the issue,18but circuit district courts have found that a primary defendant is one: “(1) who has the greatest risk of liability; (2) is most able to satisfy a potential judgment; (3) is sued directly, as opposed to by proxy, or for contribution or indemnity; (4) is the subject of a substantial portion of the claims brought by the plaintiffs; or (5) is the sole named defendant in a particular cause of action. “19 The Third Circuit, on the other hand, has adopted a simpler definition of the term, holding that “primary defendants” include all “who are directly liable to the proposed class, as opposed to being vicariously or secondarily liable to the basis of the theories of contribution or compensation.”20

Proof of putative class citizenship

Knowing how the circuit in which the case is pending determines the citizenship of the proposed class prior to remand or removal based on the exception is key to prevailing on said petition as different circuits have also handled differently the determination of citizenship of the putative class. For example, the Fifth Circuit has ruled that an applicant’s residency is prima facie proof of domicile and sufficient proof of citizenship, unless rebutted.21 Courts in other circuits, however, have held that a proposed class’s citizenship cannot be determined based on their residence, mailing address, or telephone number.22


How the home state exception will affect a case is, in many ways, circuit-specific and sometimes court-specific. Understanding how a court handles each of the above considerations is crucial before invoking the exception or responding to plaintiffs’ invocation of the exception.


1 28 USC § 1332(d)(4)(B).

Hart vs. FedEx Ground Package Sys., Inc.457 F.3d 675, 682 (7th Cir. 2006).

3 See Morrison v. YTB ​​Intern., Inc.649 F.3d 533, 536 (7th Cir. 2011) (“But the wording of s. 1332(d)(4) does not suggest that this principle applies to a subset of claimants; it considers the ” proposed group” as If the lawsuit is primarily interstate, the district court must decide the whole.”).


Graphic Communications Union v CVS Caremark Corp.636 F.3d 971, 973 (8th Cir. 2011).


Gold c. New York Life Ins. Co.730 F.3d 137, 142 (2nd Cir. 2013).

Watson v. Town of Allen, Tx.821 F.3d 634, 639 (5th Cir. 2016).

Mason v. Lockwood, Andrews & Newman, PC842 F.3d 383, 386-87 (6th Cir. 2016) (“If [the elements of the
exception] are present, the high court must refrain from hearing the case, although it has jurisdiction.”); Adams vs. West Marine Products, Inc.958 F.3d 1216, 1223 (9th Cir. 2020) (“Local controversy and source state exceptions are not jurisdictional. Rather, we deal with the [exceptions] as a form of abstention.” (internal citations omitted)).

Kaufman vs. Allstate New Jersey Ins. Co.561 F.3d 144, 149 (3d Cir. 2009) (stating that the exceptions “require a district court to decline jurisdiction where the controversy is only local and does not reach multiple states.”).

Vodenichar vs. Halcon Energy Properties, Inc.733 F.3d 497, 503 (3d Cir. 2013); Frazier vs. Pioneer Americas, LLC455 F.3d 542, 546 (5th Cir. 2006); Stag at pages 681-81;
Serrano v.180 Connect, Inc.478 F.3d 1018, 1022-1023 (9th Cir. 2007); Evans vs. Walter Indus., Inc.449 F.3d 1159, 1164 (11th Cir. 2006).

Hollinger v. Home State Mut. Ins. Co.654 F.3d 564, 596-70 (6th Cir. 2011); In re Sprint Nextel Corp.593 F.3d 669, 673 (7th Cir. 2010).

Myrick c. WellPoint, Inc.764 F.3d 662, 665 (7th Cir. 2014).

Adam, 958 F.3d at 1223-24.

See, for example, Gold v. New York Life Ins. Co.730 F.3d 137, 142 (2nd Cir. 2013); Graphic Communications Union v CVS Caremark Corp.636 F.3d 971, 975 (8th Cir. 2011).

Stag at 682.

17 S.Rep. 109-14, p. 44 (2005) (“[T]The Committee cautions that these jurisdictional determinations should be made largely on the basis of readily available information. Permitting substantial and binding discovery on jurisdictional issues would be contrary to the intent of these provisions. “).

Serrano478 F.3d at 1024-25.

Marino vs. Countrywide, 26 F. Supp. 3d 949, 952-53 (CD Cal. 2014); Matthews vs. United Teachers Los Angeles2018 WL 59999591, *4 (CD Cal. 15 November 2018).

Vodenichar733 F.3d to 504.

Hollinger v. State of origin. Mut. Ins.654 F.3d 564, 571 (5th Cir. 2011).

In re Sprint Nextel Corp.593 F.3d to 673 (“[A]the court cannot draw inferences about the citizenship of class members based on things like their phone numbers and mailing addresses.”); Hood vs. Gilster-Mary Lee Corp.785 F.3d 263, 266 (8th Cir. 2015) (holding that citizenship of class members could not be determined by their last known address);
Mondragon versus Capital One Auto Fin.736 F.3d 880, 884 (9th Cir. 2013) (“Any [class member] may have a residential address in California does not mean that person is a citizen of California.”)

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Thelma J. Longworth