The Eleventh Circuit recently denied a petition to appeal an order remanding a putative class action to state court, finding the defendant corporations’ dual citizenship defeated minimal diversity under the Class Action Fairness Act (CAFA). Plaintiffs filed the lawsuit in Georgia state court against two insurance companies, alleging a variety of state law claims and limiting the class to include only Georgia citizens. The defendant companies removed under CAFA. Both were incorporated in Georgia but had their principal places of business in Florida, making them citizens of both states. They claimed that minimal diversity existed because defendants were citizens of Florida and therefore diverse from the Georgia class members under 28 U.S.C. § 1332(d)(2)(A) and because the putative class included individuals who were citizens of foreign countries, also satisfying minimal diversity under 28 U.S.C. § 1332(d)(2)(B).
The Eleventh Circuit disagreed, holding minimal diversity did not exist because all parties were citizens of Georgia. The court noted that, under the language of the statute, defendants were required to prove they were not Georgia citizens, which they could not do. It found persuasive a decision by the Fourth Circuit which held a corporation could not utilize its dual citizenship to create minimal diversity in this way, as it had “dual, not alternative, citizenship.” Additionally, the court noted that the purpose of diversity jurisdiction — ensuring fairness to an out-of-state defendant in state court — did not apply, since the defendants were themselves citizens of the forum state. The court thus concluded, that “[g]iving meaning to its plain words, we read the statute to bar corporate defendants from relying on only one citizenship when their other citizenship would destroy minimal diversity.”
The court similarly held that the dual citizenship of certain putative class members was insufficient to create minimal diversity. Although some class members held dual citizenship with a foreign country, because the class was restricted to Georgia citizens, they were also necessarily U.S. citizens domiciled in the state. As such, proceeding in the state court did not present any risk of bias. The court therefore held, in line with its own precedent and decisions by the Second, Third, Fifth, Sixth, Seventh, and Ninth Circuits, that only the U.S. citizenship of dual citizens matters for diversity purposes. Under both provisions, therefore, minimal diversity did not exist, and the lawsuit could proceed in state court.
Life of the South Ins. Co. v. Carzell, No. 16-90006 (11th Cir. Mar. 29, 2017).