Chicago Business Litigation Lawyer Blog
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. Continue reading ›