Jennifer Mason, et al v. Lockwood, Andrews & Newnam,, et al

Filing

OPINION and JUDGMENT filed : The judgment of the district court is AFFIRMED. Decision for publication. Richard Allen Griffin (AUTHORING), Raymond M. Kethledge (DISSENTS), and Bernice Bouie Donald, Circuit Judges.

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 16a0273p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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JENNIFER MASON, et al.,
Plaintiffs-Appellees,

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v.
LOCKWOOD, ANDREWS & NEWNAM, P.C.,
a Michigan corporation; LOCKWOOD, ANDREWS
& NEWNAM, INC., a Texas corporation,
Defendants-Appellants,
LEO A. DALY COMPANY, a Nebraska corporation,
Defendant.

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No. 16-2313

Appeal from the United States District Court
for the Eastern District of Michigan at Ann Arbor.
No. 5:16-cv-10663—John Corbett O’Meara, District Judge.
Argued: November 7, 2016
Decided and Filed: November 16, 2016
Before: GRIFFIN, KETHLEDGE, and DONALD, Circuit Judges.
_________________
COUNSEL
ARGUED: S. Vance Wittie, SEDGWICK LLP, Dallas, Texas, for Appellants. Mark L.
McAlpine, MCALPINE PC, Auburn Hills, Michigan, for Appellees. ON BRIEF: S. Vance
Wittie, SEDGWICK LLP, Dallas, Texas, Robert G. Kamenec, PLUNKETT COONEY,
Bloomfield Hills, Michigan, for Appellants. Mark L. McAlpine, Jayson E. Blake, Adam T.
Schnatz, MCALPINE PC, Auburn Hills, Michigan, for Appellees.
GRIFFIN, J., delivered the opinion of the court in which DONALD, J., joined.
KETHLEDGE, J. (pp. 19–23), delivered a separate dissenting opinion.

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_________________
OPINION
_________________
GRIFFIN, Circuit Judge. This state-law professional negligence proposed class action
suit arises out of the Flint Water Crisis, a public health disaster that drew national media
coverage when the City of Flint decided to supply water to its residents using the Flint River
without implementing necessary anti-corrosion measures. The series of events precipitating the
tragedy have little to do with the issue before us on appeal. We deal, instead, with a question of
procedure: must plaintiffs litigate their claim in state or federal court? In 2005, Congress
revised the contours of federal diversity jurisdiction, making it easier to remove class actions to
federal court, while at the same time providing an exception for cases that are “truly local in
nature,” commonly called the “local controversy” exception.

The parties dispute whether

plaintiffs’ claim against defendants (civil engineering companies responsible for upgrading
Flint’s municipal water system) belongs in state court under this exception. Though the Flint
Water Crisis captured the attention of the nation, its infamy does not make it any less local.
Because plaintiffs’ suit consists of a proposed class of more than two-thirds Michigan citizens, a
significant local defendant, and injuries limited to the reach of Flint’s water system, it satisfies
the statutory requirements of the local controversy exception. We therefore affirm the district
court’s decision to remand this case to state court.
I.
In 2005, Congress enacted the Class Action Fairness Act (CAFA) in response to
“perceived abusive practices by plaintiffs and their attorneys in litigating major class actions
with interstate features in state courts.” Coffey v. Freeport McMoran Copper & Gold, 581 F.3d
1240, 1243 (10th Cir. 2009). CAFA “loosened the requirements for diversity jurisdiction,”
Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 739 (2014), authorizing federal
district courts to “hear a ‘class action’ if the class has more than 100 members, the parties are
minimally diverse, and the ‘matter in controversy exceeds the sum or value of $5,000,000.’”
Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013) (quoting 28 U.S.C.
§ 1332(d)(2), (d)(5)(B)). That expansion of diversity jurisdiction was with exceptions. See

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28 U.S.C. § 1332(d)(3), (d)(4)(A), (d)(4)(B).

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One, which Congress called the “Local

Controversy Exception,” S. Rep. No. 109-14 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 28, is
codified at § 1332(d)(4)(A). Under this exception, “[a] district court shall decline to exercise
jurisdiction . . . over a class action” if:
(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[.]
§ 1332(d)(4)(A). If these four elements are present, the district court must abstain from hearing
the case, despite having jurisdiction under § 1332(d)(2).
Like all statutes, the text of CAFA controls. Caminetti v.United States, 242 U.S. 470,
485 (1917); Vander Boegh v. EnergySolutions, Inc., 772 F.3d 1056, 1060 (6th Cir. 2014). In this
regard, its text must be read as a whole, not in isolation. United States v. Morton, 467 U.S. 822,
828 (1984). The relaxation of normal diversity requirements is coupled with an exception for
local controversies. The terms of the statute balance considerations of federalism—a balance
defined by Congress, but implemented and respected by the federal courts.

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II.
In April 2013, the City of Flint, Michigan, decided to switch its primary drinking water
provider from the Detroit Water and Sewerage Department (“DWSD”) to the newly formed
Karegnondi Water Authority (“KWA”). The KWA would not be operational for another three
years, however, so Flint needed an interim source of drinking water. It decided to draw from the
Flint River, which had previously supplied back-up water services to the City. Relying on the
Flint River, however, posed a few problems. According to several reports, the river was a highly
sensitive drinking water source that required anti-corrosive treatment in order to prevent heavy
metals from leaching into the water. On top of that, these issues needed to be remedied quickly,
as the City’s contract with DWSD was set to expire a year later in April 2014.
The City turned to Lockwood, Andrews & Newnam, Inc., a Texas-based corporation that
touted itself as a “national leader in the heavy civil infrastructure engineering industry,” and its
Michigan-based affiliate, Lockwood, Andrews & Newnam, P.C. (collectively, “defendants”) for
assistance. On June 26, 2013, the City entered into a contract with defendants for design
engineering services in connection with rehabilitating Flint’s Water Treatment Plant (“the
Plant”). After confirming with City officials that they could make the necessary improvements
and provide the necessary “quality control” in time for the April 2014 switch, defendants
proceeded to develop rehabilitation plans for the Plant. In April 2014, the Michigan Department
of Environmental Quality approved defendants’ rehabilitation plans. Notably, the plan did not
include necessary upgrades for anti-corrosive treatment measures. Indeed, earlier that month,
defendants and officials from the City and the Michigan Department of Environmental Quality
considered the issue, but decided that more data was advisable before implementing any
measures for “optimization for lead.”
On April 25, 2014, the City of Flint began supplying its residents drinking water from the
Flint River. The harmful effects were as swift as they were severe. Within days, residents
complained of foul smelling and tasting water. Within weeks, some residents’ hair began to fall
out and their skin developed rashes. And within a year, there were positive tests for E. coli, a
spike in deaths from Legionnaires’ disease, and worst of all, reports of dangerously high blood
lead levels in Flint children. All of this resulted, according to one expert who studied the crisis,

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because the “water from the Flint River was 19 times more corrosive than the water pumped
from Lake Huron by the DWSD, and that without corrosion control treatment, lead was leaching
out of the lead-based service lines at alarming rates and finding its way to the homes of Flint’s
residents.” In his view, it was “predictable,” but preventable.
III.
On January 25, 2016, eight Flint residents filed suit in state court, alleging one count of
professional negligence against defendants. Plaintiffs contended that defendants knew the Plant
required upgrades for lead contamination treatment, yet failed to ensure such safeguards were
implemented as part of the rehabilitation, resulting in widespread personal injuries and property
damage. They sought relief on behalf of themselves and all other similarly situated “residents
and property owners in the City of Flint” who used water from the Flint River from April 25,
2014, to the present day.
Defendants removed the action to federal court on the basis of diversity jurisdiction under
28 U.S.C. § 1332(d)(2). Plaintiffs filed a motion to remand to state court. They did not contest
the basic requirements for diversity jurisdiction under CAFA. They argued instead that the
mandatory “local controversy” exception to CAFA jurisdiction applied. Plaintiffs asserted that
the class citizenship and principal injuries elements were not in dispute, citing the allegations in
their complaint that the class consisted of Flint residents and that their injuries were suffered in
Flint. They also argued that LAN, P.C., a Michigan professional corporation, was a significant
defendant because it was the entity responsible under Michigan law for certifying that
defendants’ work satisfied applicable standards of care. Finally, they contended that no party
had filed a similar suit against defendants in the past three years.
Defendants countered that the class citizenship element was very much in dispute and
that the mere allegation of residency, alone, was not sufficient to establish citizenship.
Defendants also argued that the mere fact that LAN, P.C. certified the engineering plans does not
establish its conduct formed a significant basis of plaintiffs’ negligence claim. Rather, LAN, Inc.,
a Texas corporation, was the more significant defendant since it contracted with Flint to provide
the engineering services that plaintiffs alleged were negligently performed.

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The district court granted plaintiffs’ motion to remand. It found that more than twothirds of the putative class members were likely Michigan citizens. Relying primarily on the
rebuttable presumption of domicile based on residency and the absence of any contrary evidence,
the court also observed that the proposed class consisted of residents who, over a relatively
limited period of time, experienced a continuing injury localized in Flint. The court also found
that LAN, P.C.’s (the Michigan defendant’s) conduct formed a significant basis of plaintiffs’
claim because defendants’ engineering services were provided “through LAN, P.C.”
Defendants timely petitioned for permission to appeal, which this court granted on
September 20, 2016. In re Lockwood, Andrews & Newnam, P.C., No. 16-0102, at 2 (6th Cir.
Sept. 20, 2016). Our order initiated a 60-day clock in which we are required to issue a decision.
In re Mortg. Elec. Registration Sys., Inc., 680 F.3d 849, 853 (6th Cir. 2012).
IV.
A.
We begin our analysis on an issue that enjoys unanimity, both between the parties and
among the circuits, but which is nonetheless an important starting point: the burden of proof.
The parties and every circuit to have addressed this issue all agree that the party seeking to
remand under an exception to CAFA bears the burden of establishing each element of the
exception by a preponderance of the evidence. See Woods v. Standard Ins. Co., 771 F.3d 1257,
1262 (10th Cir. 2014); Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822 (8th Cir. 2010);
Greenwich Fin. Servs. Distressed Mortg. Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23,
26 (2d Cir. 2010); In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 564 F.3d 75, 78
(1st Cir. 2009); Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 153 (3d Cir. 2009); Serrano v.
180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007); Hart v. FedEx Ground Package Sys.
Inc., 457 F.3d 675, 680 (7th Cir. 2006); Frazier v. Pioneer Ams. LLC, 455 F.3d 542, 546 (5th
Cir. 2006); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir. 2006).
We agree with the universal wisdom of our sister circuits for two, interrelated reasons.
First, the language of “local controversy” exception indicates that it is not part of the initial
jurisdictional calculus. Section 1332(d)(4) provides that “[a] district court shall decline to

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exercise jurisdiction under paragraph (2)” if certain conditions are met. Congress’s use of
“decline” is important. It necessarily implies a prior determination of jurisdiction, since “a court
could not ‘decline’ jurisdiction that it never had in the first place.” Clark v. Lender Processing
Servs., 562 F. App’x 460, 465 (6th Cir. 2014). Second, the longstanding rule is that “whenever
the subject matter of an action qualifies it for removal, the burden is on a plaintiff to find an
express exception.” Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691, 698 (2003). Just
as nothing in CAFA alters the traditional rule that the removing party bears the burden of
establishing the jurisdictional elements, see Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d
401, 404 (6th Cir. 2007), we find nothing in the statute indicating that Congress intended to
upend Breuer’s traditional rule. We therefore hold that the party seeking to remand bears the
burden of establishing an exception to CAFA jurisdiction by a preponderance of the evidence.
Plaintiffs, as the moving party, must establish all four elements of the local controversy
exception. But, as defendants only contest the two-thirds citizenship and “significant basis”
requirements, we confine our inquiry to those elements. We take each in turn.
B.
The first element of the local controversy exception requires the movant to show that
“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[.]” § 1332(d)(4)(A)(I). “Citizen”
and its variant “citizenship” have acquired a particular meaning in our law as being equivalent to
“domicile.” Von Dunser v. Aronoff, 915 F.2d 1071, 1072 (6th Cir. 1990) (“State citizenship . . .
is equated with domicile.”); see also N.L.R.B. v. Amax Coal Co., a Div. of Amax, 453 U.S. 322,
329 (1981) (“Where Congress uses terms that have accumulated settled meaning . . . , a court
must infer, unless the statute otherwise dictates, that Congress means to incorporate the
established meaning of these terms.”). Thus, although the statute speaks in terms of citizenship,
a party invoking the local controversy exception is effectively tasked with establishing the
domicile of the proposed class members.
According to their complaint, plaintiffs seek to represent all “residents and property
owners in the City of Flint” who used water from the Flint River from April 25, 2014, to the

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Defendants

contend that the district court erred in finding that, more likely than not, two-thirds of this
proposed class were citizens of Michigan.
In evaluating defendants’ challenge, two long-standing propositions of law inform our
analysis. The first relates to our standard of review: an appellate court will not disturb a district
court’s factual findings, including those regarding the citizenship of parties, “unless the record
leaves us with the definite and firm conviction that a mistake has been committed.” Ne. Ohio
Coal. for the Homeless v. Husted, 837 F.3d 612, 625 (6th Cir. 2016) (bracketing and quotation
marks omitted); Cameron v. Children’s Hosp. Med. Ctr., 131 F.3d 1167, 1170 (6th Cir. 1997)
(recognizing that citizenship is question of fact). The second relates to the substantive law of
domicile: the law affords a rebuttable presumption that a person’s residence is his domicile.
See, e.g., D.C. v. Murphy, 314 U.S. 441, 455 (1941). Taken together, these principles lead us to
affirm the district court’s holding that plaintiffs satisfied the two-thirds citizenship requirement.
In elemental terms, domicile consists of (1) residence and (2) an intent to remain there.
Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989). In practice, however, the
law of domicile has long been one of presumptions. In his Commentaries on the Conflict of
Laws, for example, Joseph Story listed over a dozen such presumptions, including: a person’s
place of birth is presumptively their domicile; a child’s domicile is presumptively that of their
parents; and, most important for our purposes, “primâ facie, the place, where a person lives, is
taken to be his domicil, until other facts establish the contrary.” Joseph Story, Commentaries on
the Conflict of Laws, § 46 (5th ed. 1857).
In recognizing the primacy of residency in the domicile calculus, Story was simply
drawing from established legal tradition. As early as 1790, England’s House of Lords declared
that “[a] person’s being at a place is primâ facie evidence that he is domiciled at that place, and it
lies on those who say otherwise to rebut that evidence.” Bruce v. Bruce, 2 Bos. & Pull. 229, note
(a). Not long after, the presumption made its way into American law. See 10 Am. & Eng. Ency.
Law, Domicile, at 22 (2d ed.) (collecting early state and federal cases). In 1852, the United
States Supreme Court announced that “[w]here a person lives, is taken primâ facie to be his
domcil, until other facts establish the contrary.” Ennis v. Smith, 55 U.S. 400, 423 (1852). And in

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the 150 years since, the rule of thumb on residency and domicile has remained fixed: “The place
where a man lives is properly taken to be his domicile until facts adduced establish the contrary.”
Murphy, 314 U.S. at 455; Anderson v. Watts, 138 U.S. 694, 706 (1891); Mitchell v. United
States, 88 U.S. 350, 352 (1874); Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 571 (5th
Cir. 2011); Krasnov v. Dinan, 465 F.2d 1298, 1300 (3d Cir. 1972); Walden v. Broce Const. Co.,
357 F.2d 242, 245 (10th Cir. 1966); Fort Knox Transit v. Humphrey, 151 F.2d 602, 602 (6th Cir.
1945); 28 C.J.S. Domicile § 45; 39 Am. Jur. Proof of Facts 2d 587, § 8.
We emphasize the historical pedigree of the residency-domicile presumption because the
district court primarily based its finding that plaintiffs met their burden under § 1332(d)(4)(A)(I)
on the same. As a class that consists of Flint residents, the district court was correct, in light of
the long-standing authority charted above, to afford plaintiffs the rebuttable presumption that
each resident class member was domiciled there.

Rather than rebut the presumption with

evidence undermining the inference, defendants countered that merely alleging residency cannot,
as a matter of law, suffice to satisfy the burden of demonstrating citizenship.
In support of their assertion, defendants point to a competing line of case law holding that
“naked averment of . . . residence . . . is insufficient to show his citizenship.” Robertson v.
Cease, 97 U.S. 646, 648 (1878). This principle also enjoys a rich pedigree in our law. See, e.g.,
Bingham v. Cabot, 3 U.S. (3 Dall.) 382, 383–84 (1798) (“str[iking] off the docket” many cases
that alleged residence rather than citizenship); Steigleder v. McQuesten, 198 U.S. 141, 143
(1905) (“[I]t has long been settled . . . that a mere averment of residence in a particular state is
not an averment of citizenship in that state for the purposes of jurisdiction.”). More significantly
for defendants, many cases, including several from the CAFA context, have explicitly rejected
the residency-domicile presumption based on the proposition that mere averment of residency
cannot establish citizenship. See, e.g., Reece v. AES Corp., 638 F. App’x 755, 769 (10th Cir.
2016) (stating in the CAFA exception context, “To be sure, the place of residence is prima facie
the domicile. But allegations of mere residence may not be equated with citizenship” (internal
quotations omitted); Johnson v. Advance Am., 549 F.3d 932, 937 n.2 (4th Cir. 2008) (“For
purposes of diversity jurisdiction, residency is not sufficient to establish citizenship.”).

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On closer inspection, however, we are not persuaded this line of cases presents
compelling authority for rejecting the residency-domicile presumption in this case. The reason
for this lies in the context from which the “mere averment of residency” line of cases emerged—
federal subject-matter jurisdiction.
In that context, “[t]he established rule is that a plaintiff, suing in a federal court, must
show in his pleading, affirmatively and distinctly, the existence of whatever is essential to federal
jurisdiction[.]” Smith v. McCullough, 270 U.S. 456, 459 (1926). This long-settled principle
derives from the fact that federal courts are courts of limited jurisdiction. Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). As a consequence of this restriction on federal
judicial power, federal jurisdiction may not be “maintained by mere averment,” McNutt v. Gen.
Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936), “inferred argumentatively,”
Brown v. Keene, 33 U.S. 112, 115 (1834), or “supplied by inference,” La Belle Box Co. v.
Stricklin, 218 F. 529, 533 (6th Cir. 1914). Put differently, and in terms germane to the present
discussion, there is a presumption against federal jurisdiction. Kokkonen, 511 U.S. at 377;
Thomas v. Bd. of Trustees of the Ohio State Univ., 195 U.S. 207, 218 (1904); Vander Boegh,
772 F.3d at 1064.
The tension between the residency-domicile presumption and the presumption against
federal jurisdiction came to a head in Robertson v. Cease, 97 U.S. 646 (1878). In that case, the
plaintiff argued that “a general allegation of residence, without indicating the character of such
residence, whether temporary or permanent, made a prima facie case of right to sue in the
Federal courts.” Id. at 649. The Court rejected the contention because, “[a]s the jurisdiction of
the Circuit Court is limited in the sense that it has none except that conferred by the Constitution
and laws of the United States, the presumption . . . is[] that a cause is without its jurisdiction
unless the contrary affirmatively appears.” Id. at 649. From the Court’s view, in being asked to
adopt the residency-domicile presumption, it was, “in effect, asked, in support of the jurisdiction
of the court below, to infer argumentatively, from the mere allegation of ‘residence,’ that . . . [the
plaintiff] had a fixed permanent domicile in [Illinois].” Id. at 650. The Court could not accept
that proposition because, under well-settled precedent defining the federal courts’ diversity
jurisdiction, the facts establishing diversity jurisdiction could not “be inferred argumentatively

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from its averments,” id. at 650 (quoting Brown, 33 U.S. at 115), but rather must “be distinctly
and positively averred in the pleadings,” id. at 649.
By tracing the origin of the “mere averment of residency” line of cases, we see that the
residency-domicile presumption was not rejected because it was specious (indeed, Robertson
could “not . . . den[y] that there is some force in the[] suggestion[],” id.), but because, in the
unique context of federal diversity jurisdiction, a contrary presumption of constitutional import
takes precedence. See Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884) (“[T]he
rule, springing from the nature and limits of the judicial power of the United States, is inflexible
and without exception.”); Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)
(rooting federal courts’ limited jurisdiction in Article III of the Constitution).
Though the residency-domicile presumption did not prevail against the unrelenting
headwinds of limited federal jurisdiction, there is no reason it should suffer a similar fate under
the local controversy exception.

As established at the outset of our analysis, the local

controversy exception is not jurisdictional. See also Clark, 562 F. App’x at 465 (holding that
“the exceptions are not jurisdictional”); Visendi v. Bank of Am., N.A., 733 F.3d 863, 869 (9th Cir.
2013) (same); Gold v. N.Y. Life Ins. Co., 730 F.3d 137, 142 (2d Cir. 2013) (same); Morrison v.
YTB Int’l, Inc., 649 F.3d 533, 536 (7th Cir. 2011) (same); Graphic Commc’ns Local 1B Health &
Welfare Fund A v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir. 2011) (same). Thus, a
party asserting the exception does not encounter a similar countervailing presumption that
neutralizes residency’s presumptive force in establishing domicile. In this context, it would
function like a rebuttable presumption does in any other setting: shifting the burden to the
opposing party to rebut the inference and permitting, but not requiring, the district court to find
the ultimate fact. See, e.g., 2 McCormick On Evid. § 342 (7th ed.).
Indeed, the residency-domicile presumption fits particularly well in the CAFA exception
context, where the moving party is tasked with demonstrating a fact-centered proposition about a
mass of individuals, many of whom may be unknown at the time the complaint is filed and the
case removed to federal court. See Nicole Ochi, Are Consumer Class and Mass Actions Dead?
Complex Litigation Strategies After CAFA & MMTJA, 41 Loy. L.A. L. Rev. 965, 1030 (2008)
(“To achieve the objective of these [CAFA] exceptions, courts should grant plaintiffs a

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presumption of citizenship when they define their classes according to state residency.”);
Stephen J. Shapiro, Applying the Jurisdictional Provisions of the Class Action Fairness Act of
2005: In Search of a Sensible Judicial Approach, 59 Baylor L. Rev. 77, 135 (2007) (advocating
the same).

The citizenship inquiry under the local controversy exception should not be

“exceptionally difficult,” Mondragon v. Capital One Auto Fin., 736 F.3d 880, 886 (9th Cir.
2013), but instead “practical and reasonable.” Hollinger, 654 F.3d at 572. Affording the moving
party a rebuttable presumption of citizenship based on residency avoids the exceptional difficulty
of proving the citizenship of a class of over 100 individuals, given the nature and timing of the
citizenship inquiry under the local controversy exception.

See id. at 573 (5th Cir. 2011)

(“[W]here a proposed class is discrete in nature, a common sense presumption should be utilized
in determining whether citizenship requirements have been met.”).
Those circuits that have rejected the rebuttable presumption in the CAFA context have
relied on case law addressing federal subject-matter jurisdiction. See Reece, 638 F. App’x at 769
(citing Whitelock v. Leatherman, 460 F.2d 507, 514 (10th Cir. 1972) (“[A]llegations of mere
‘residence’ may not be equated with ‘citizenship’ for the purposes of establishing diversity.”));
In re Sprint Nextel Corp., 593 F.3d at 673 (citing Meyerson v. Harrah’s E. Chicago Casino,
299 F.3d 616, 617 (7th Cir. 2002) (“[R]esidence and citizenship are not synonyms and it is the
latter that matters for purposes of the diversity jurisdiction.”)); Preston v. Tenet Healthsystem
Mem’l Med. Ctr., Inc., 485 F.3d 793, 799 (5th Cir. 2007) (citing Mas v. Perry, 489 F.2d 1396,
1399 (5th Cir. 1974) (“For diversity purposes, citizenship means domicile; mere residence in the
State is not sufficient.”)). However, these decisions extended the “mere averment of residency”
principle without accounting for its underlying rationale. The sole basis for eschewing the
residency-domicile presumption in Robertson was the countervailing, “inflexible” presumption
against federal jurisdiction. Swan, 111 U.S. at 382; see Robertson, 97 U.S. at 649–50. Because
the local controversy exception is not jurisdictional, the premise of Robertson and its
jurisdictional progeny is missing here.

Given this material distinction, the line of cases

defendants rely on provides no basis for rejecting the residency-domicile presumption in this
case.

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One district court in our circuit has previously rejected the rebuttable presumption of
citizenship for a different, albeit equally unpersuasive, reason. In Lancaster v. Daymar Colleges
Grp., LLC, the district court declined to adopt the presumption as inconsistent with the
proposition that the movant bears the burden of proving citizenship. No. 3:11-CV-157-R, 2012
WL 884898, at *3 (W.D. Ky. Mar. 14, 2012). But this proves too much. Under this rationale,
rebuttable presumptions would cease to exist, since the only circumstance in which they serve
any purpose is when the beneficiary of the presumption also bears the burden of proof. 1 Jones
on Evidence § 4:2 (7th ed.) (“The underlying purpose and impact of a presumption is to affect
the burden of proving or disproving the presumed fact.”). There is nothing inconsistent with
placing the burden of proof on a particular party and also affording them a rebuttable
presumption as one way of shouldering that burden. Indeed, our law is quite familiar with the
concept. See, e.g., St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 506–07 (1993) (affording Title
VII plaintiff a rebuttable presumption of unlawful discrimination if she establishes a prima facie
case); see also 2 McCormick On Evid. § 343 (7th ed.) (listing other popular presumptions).
In a similar vein, defendants contend that our approach was rejected by the Seventh
Circuit as “guesswork. Sensible guesswork, based on a sense of how the world works, but
guesswork nonetheless.” In re Sprint Nextel Corp., 593 F.3d at 674. Again, this criticism can be
made about presumptions generally.

Presumptions are nothing more than common sense

inferences “enlightened by human knowledge and experience.” 31A C.J.S. Evidence § 204.
They are, to use Sprint’s phrase, the law’s recognition of “how the world works.” Defendants’
argument constitutes a wholesale rejection of presumptions generally, a position we are
disinclined to adopt in the absence of any reason to do so. Having distinguished the only line of
authority that other cases have cited to reject the residency-domicile presumption, we see no
reason to close our eyes to a centuries-old inference that a person’s residence is presumptively
his domicile.
The dissent takes issue with our analysis because it purportedly conflicts with the
principle of abstention that we have a “virtually unflagging obligation” to exercise jurisdiction
given to us. Because we have “no more right to decline the exercise of jurisdiction which is
given, than to usurp that which is not given,” the dissent contends, “we cannot presume a fact

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that allows us to decline jurisdiction, any more than we can presume a fact that allows us to find
that jurisdiction exists in the first place.” (first quoting Cohens v. State of Virginia, 19 U.S. 264,
404 (1821)).
The dissent’s recitation of abstention principles is accurate, but the conclusion it draws
from them does not follow.

The abstention doctrines the dissent invokes are judge-made

exceptions to the powerful default rule that Congress alone has the constitutional authority to
define the contours of federal jurisdiction. Zwickler v. Koota, 389 U.S. 241, 248 (1967). Thus,
our “virtually unflagging obligation” stems from a deep sense of prudence, if not constitutional
obedience, to listen when Congress directs federal courts to assume jurisdiction over particular
controversies. See New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S.
350, 359 (1989) (“Underlying these assertions is the undisputed constitutional principle that
Congress, and not the Judiciary, defines the scope of federal jurisdiction within the
constitutionally permissible bounds.”). But it is because common law abstention reflects a
departure from the constitutional norm that the Supreme Court placed strict rules on its use. It is
for this reason that the Supreme Court has admonished that abstention is an “extraordinary and
narrow exception,” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813
(1976), only to be invoked in “narrowly limited ‘special circumstances,’” Zwickler, 389 U.S. at
248 (1967), and on only the “clearest of justifications,” Rouse v. DaimlerChrysler Corp.,
300 F.3d 711, 715 (6th Cir. 2002) (quoting Colorado River, 424 U.S. at 819).
But all of these common law restrictions on abstention have no place here because
Congress has expressly directed courts to decline jurisdiction over local controversies. For this
reason, we disagree with the dissent’s assertion that “[w]e have nothing like a clear justification
for abstention here”—Congress has provided the all justification we need in § 1332(d)(4)(A).
We would agree with the dissent that we have a “virtually unflagging obligation” to not decline
jurisdiction when Congress’s only word on the matter is to exercise jurisdiction. But, when
Congress directs something different, our obligation remains with the Constitution and the text of
the statute enacted by Congress. And here Congress directed something different. In enacting
CAFA, Congress expanded diversity jurisdiction while carving out an exception for “local
controversies.” Read together and in harmony, CAFA’s provisions explicitly instruct federal

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district courts to remand class action cases that satisfy the elements of § 1332(d)(4)(A),
notwithstanding the fact that the jurisdictional requisites are met. In light of Congress’s explicit
directive to decline jurisdiction, the dissent’s common law abstention principles—born as they
were in the context of judicial insubordination toward Congress—are inapplicable.
Furthermore, we would be remiss if we did not also observe that defendants drew the
very same residency-domicile inference in their notice of removal. In their notice, defendants
alleged that minimal diversity existed because “Plaintiffs were citizens of the State of Michigan.”
And in support, defendants cited paragraph 2 of the first amended complaint, which merely
alleged residency, not citizenship.

Yet, defendants insist plaintiffs cannot draw the same

inference when it comes to similarly situated Flint residents. Were we to take defendants’ and
the dissent’s argument to its logical end point, we would be compelled—on the very authority
that defendants argue requires this case remain in federal court—to conclude that defendants
failed to establish the citizenship requirement of federal diversity jurisdiction.
In addition to the presumptive force of residency, there are other attributes of plaintiffs’
proposed class that bolster the inference that the putative class members, as residents of Flint,
intend to remain there indefinitely. First, according to plaintiffs’ class definition, the class
members have continuously resided in Flint, Michigan, for several years. Nat’l Artists Mgmt.
Co. v. Weaving, 769 F. Supp. 1224, 1228 (S.D.N.Y. 1991) (listing as a relevant domicile
consideration “the nature of the residence (i.e., how permanent the living arrangement
appears)”); Restatement (Second) of Conflict of Laws, Chapter 2: Domicile, Topic 2 Spec. Note
(1971) (“Residing for a considerable time in a place is persuasive evidence of domicil there
. . . .”). In this respect, the district court astutely observed, “There are no circumstances—such as
a large number of college students, military personnel, owners of second homes, or other
temporary residents—suggesting that these Flint residents are anything other than citizens of
Michigan.” Moreover, by definition, the putative class members are property owners, another
strong indicator of domicile. Edick v. Poznanski, 6 F. Supp. 2d 666, 669 (W.D. Mich. 1998)
(citing 1 Moore’s Federal Practice ¶ 0.74[3.3] (1991 & Supp. 1993)).

Finally, it bears

mentioning that Flint, Michigan, is nowhere near a state line (it lies near the crook of the thumb

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in the figurative “Michigan hand”), which further undermines the notion that the traditional
residency-domicile inference is not appropriate in this particular case.
Against this backdrop, defendants submitted no evidence to rebut the presumption that
the putative class members were citizens of Michigan. Instead, they merely relied on case law
from other circuits stating that mere allegations of residency are not sufficient to establish
citizenship. They did so at their peril. In light of the long-standing presumption of domicile
based on residency, the additional domicile factors apparent from the class definition, and the
complete absence of any evidence tending to rebut the presumption of domicile based on
residency, we hold that the district court did not clearly err in finding that, more likely than not,
more than two-thirds of the proposed class of Flint residents were Michigan citizens.
C.
Defendants also contest the district court’s finding that LAN, P.C.’s “alleged conduct
forms a significant basis for the claims asserted by the proposed plaintiff class.” 28 U.S.C.
§ 1332(d)(4)(A)(i)(II)(bb).
We have yet to interpret this provision, but those circuits that have are in general
agreement that this provision “effectively calls for comparing the local defendant’s alleged
conduct to the alleged conduct of all the Defendants.” Kaufman, 561 F.3d at 156; see also
Woods, 771 F.3d at 1266 (following Kaufman); Westerfeld, 621 F.3d at 825 (same). “The local
defendant’s alleged conduct must be an important ground for the asserted claims in view of the
alleged conduct of all the Defendants.” Kaufman, 561 F.3d at 157. After taking into account the
totality of the conduct forming the basis of plaintiff’s claims, we must consider whether “the
local defendant’s alleged conduct is a significant part of the alleged conduct of all the
Defendants[.]” Id. at 156. If so, the “significant basis” provision is satisfied.
This case involves a single claim of professional negligence against three defendants:
LAN, P.C. (a Michigan corporation), LAN, Inc. (a Texas corporation), and Leo A. Daly
Company (a Nebraska corporation). The conduct underlying plaintiffs’ claim is the provision of
engineering design services in connection with upgrades to Flint’s Water Treatment Plant,

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including drafting and implementing the engineering plans and providing “quality control”
measures.
We begin with the third defendant, Leo A. Daly Company. Plaintiffs’ complaint does not
allege that Leo A. Daly Company engaged in any engineering services. Instead, plaintiffs allege
that Leo A. Daly Company is LAN, P.C.’s and LAN, Inc.’s corporate alter ego, thereby making
Leo A. Daly Company vicariously liable for LAN’s tortious conduct. Given plaintiffs’ theory of
liability, Leo A. Daly Company’s role in plaintiffs’ negligence claim is minimal at best.
That leaves LAN, P.C. and LAN, Inc. The complaint alleges professional negligence
against both defendants and further alleges that all engineering work was conducted “through
LAN, P.C.” More specifically, the complaint alleges that LAN, P.C. was formed to conduct
LAN, Inc.’s work in Michigan, and that Flint relied on LAN, P.C.—as the LAN entity that
“work[ed] with several water systems around the state”—to “perform quality control.” The
failure to provide that quality control is the very core of plaintiffs’ professional negligence claim.
We therefore agree with the district court that LAN, P.C.’s conduct forms an “important” and
integral part of plaintiffs’ professional negligence claim.
Defendants argue that the professional services agreement with the City shows that its
professional relationship was with LAN, Inc., not LAN, P.C. Even assuming we may properly
consider this extrinsic evidence, compare Coleman v. Estes Exp. Lines, Inc., 631 F.3d 1010,
1015 (9th Cir. 2011) (limiting scope of “significant basis” inquiry to complaint), with Evans,
449 F.3d at 1167–68 (considering extrinsic evidence under “significant basis” provision), it does
not alter our conclusion. That Flint formally contracted with LAN, Inc. is not inconsistent with
plaintiffs’ allegation that LAN, Inc. provided its services “through LAN, P.C.” Moreover, the
agreement acknowledges that LAN, Inc. would not be the only entity providing the services. It
states that “all of the obligations required by [LAN, Inc.] under this Contract shall be performed
by [LAN, Inc.] or by others employed by him and working under his direction and control.”
This buttresses plaintiffs’ allegation that LAN, P.C., as the LAN entity that “work[ed] with
several water systems around the state,” was responsible for “perform[ing] quality control,” and
was the entity “through” which defendants provided their engineering services.

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Defendants also argue that, according to plaintiffs’ own complaint, LAN, P.C. conducted
a majority of its business in LAN, Inc.’s Chicago office. However, the “significant basis”
provision is not concerned with where the conduct occurred, but rather with who engaged in the
conduct. § 1332(d)(4)(A)(i)(II)(bb) (requiring that a local defendant be a defendant “whose
alleged conduct forms a significant basis for the claims . . . .” (emphasis added)). LAN, P.C. is a
Michigan corporation and its conduct—regardless of where it is carried out—is evaluated against
that of the other defendants. The allegations that LAN, P.C. was responsible for quality control,
in conjunction with the allegation that defendants’ engineering work in Flint was conducted
“through LAN P.C.,” are sufficient to establish that LAN, P.C.’s conduct forms a “significant
basis” of plaintiffs’ professional negligence claim.
V.
For the foregoing reasons, we agree with the district court that plaintiffs established the
class citizenship and significant basis requirements of the local controversy exception to CAFA.
It is also important that we not lose sight of the forest for the trees. The local controversy
exception exists to ensure that “a truly local controversy—a controversy that uniquely affects a
particular locality to the exclusion of all others”—remains in state court. S. Rep. No. 109-14, 39
(2005), reprinted in 2005 U.S.C.C.A.N. 3, 38. By that definition, and the statutory elements
Congress set forth to achieve that vision, the case before us exemplifies the quintessential local
controversy. Indeed, it defies common sense to say a suit by Flint residents against those
purportedly responsible for injuring them through their municipal water service is not a “local
controversy.”
For these reasons, we affirm the judgment of the district court.

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_________________
DISSENT
_________________
KETHLEDGE, Circuit Judge, dissenting. To meet a burden of proof, a party usually
must provide some. Here, it is common ground that the federal courts have jurisdiction over this
case and that the plaintiffs bear the burden of proving that we may lawfully abstain from
exercising that jurisdiction. The plaintiffs have not met that burden, or even tried.
By way of background, the federal courts “have a strict duty to exercise the jurisdiction
that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716
(1996). Abstention is an “extraordinary and narrow exception” to that duty. Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). Thus, only the “clearest of
justifications” will justify abstention. Rouse v. DaimlerChrysler Corp., 300 F.3d 711, 715 (6th
Cir. 2002).
We have nothing like a clear justification for abstention here.

The federal courts

undisputedly have jurisdiction over this case under the Class Action Fairness Act. See 28 U.S.C.
§ 1332(d). Instead the question here, broadly stated, is whether we may abstain from exercising
that jurisdiction per the Act’s so-called “local-controversy exception.” For that exception to
apply—and thus for us lawfully to send the case back to state court—the plaintiffs must prove,
among other things, both that more than two-thirds of the putative class-members “are citizens of
the State in which the action was originally filed” (i.e., Michigan) and that the alleged conduct of
the sole Michigan defendant “forms a significant basis for the claims” of the putative class. Id.
§ 1332(d)(4)(A)(I), (II)(bb).
The plaintiffs have proved neither. As for the first requirement, every circuit to have
considered the issue—five so far—has held that “there must ordinarily be at least some facts in
evidence from which the district court may make findings regarding the class members’
citizenship for purposes of CAFA’s local-controversy exception.” Mondragon v. Capital One
Auto Finance, 736 F.3d 880, 884 (9th Cir. 2013) (gathering cases); see also Reece v. AES Corp.,
638 Fed. App’x 755, 769-70 (10th Cir. 2016); In re Sprint Nextel Corp., 593 F.3d 669, 674-676

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(7th Cir. 2010); Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 799-801
(5th Cir. 2007); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1166 (11th Cir. 2006). Meanwhile,
as the majority correctly observes, citizenship in this context equates to domicile, and domicile
consists of both residence in a State and an intention to remain there. Maj. Op. at 7-8. Thus, to
meet this requirement, the plaintiffs must show by a preponderance of the evidence that more
than two-thirds of the putative class-members both reside in Michigan and intend to remain
there. But on those points (or any other) the plaintiffs have presented no evidence at all. Instead
they merely cite the allegations in their complaint. That, per the law of every circuit to have
addressed the issue, is reason enough to conclude that we must exercise our jurisdiction in this
case.
The majority concludes otherwise by means of a presumption. As an initial matter, the
guesswork here begins with even defining the putative class, since the plaintiffs neglected to
define it in their putative class-action complaint. But the complaint does say that the classmembers are similarly situated to the plaintiffs, and that the plaintiffs are “residents and property
owners in the City of Flint” who (or which, as the case may be) were exposed to water supplied
from the Flint River after April 25, 2014. Complaint ¶¶ 1, 84. Plaintiffs’ counsel also clarified
during oral argument that the phrase “property owners” does not modify “residents,” but instead
describes a separate group within the putative class.

Thus, taking the allegations and

clarification together, one can surmise that the class includes residents exposed to the Flint water
supply after April 25, 2014, and property owners likewise exposed.
At this point the majority’s presumption arises. According to the majority, the plaintiffs
have alleged that the class members are residents of Flint, which (in the majority’s view) creates
a presumption that they are citizens as well, which in turn throws upon the defendants the burden
of proving that one-third of the putative class are not citizens of Michigan. But this reasoning is
mistaken both factually and legally. The factual mistake is the assertion that the plaintiffs have
alleged that all the class members are Flint residents, since—per the statement of plaintiffs’
counsel at oral argument—the class includes Flint “property owners” who need not be residents
of Flint (or Michigan) to be members of the class.

Thus, the majority’s presumption of

citizenship does not apply to “property owners”—whose numbers are anyone’s guess. Even the

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majority’s presumption, therefore, does not provide us with anything near what the law would
regard as a proper basis to conclude that two-thirds—as opposed to one-third, or one-half, or
three-quarters—of the putative class-members are Michigan citizens. We thus lack the requisite
“clearest of justifications” to decline to exercise our jurisdiction here. Rouse, 300 F.3d at 715.
The majority’s legal mistake is more complicated. The majority observes, correctly, that
“there is a presumption against federal jurisdiction[,]” Maj. Op. at 10, which in any particular
case the party asserting jurisdiction must overcome. See Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). Thus, the majority reasons further, the federal courts cannot
presume in diversity cases—where the existence of the court’s jurisdiction depends on the
parties’ citizenship—that a party is a citizen of a state simply because the party is a resident of it.
For in that event the court would presume that jurisdiction exists, when instead the court must
presume that it does not. But here the situation is different, the majority reasons, because in this
case the federal courts already have jurisdiction; the question instead is whether to exercise it.
The majority thus splits with five other circuits, and concludes that we are free to presume that a
mere allegation of residency in Michigan is enough to prove citizenship there.
What the majority overlooks, however, is the “virtually unflagging obligation of the
federal courts to exercise the jurisdiction given them.” Colorado River, 424 U.S. at 817. As
Chief Justice Marshall put it nearly 200 years ago: “We have no more right to decline the
exercise of jurisdiction which is given, than to usurp that which is not given.” Cohens v.
Virginia, 19 U.S. 264, 404 (1821); see also Sprint Communications, Inc. v. Jacobs, 134 S.Ct.
584, 590-91 (2013) (same). That means we cannot presume a fact that allows us to decline
jurisdiction, any more than we can presume a fact that allows us to find that jurisdiction exists in
the first place.

Thus, just as we cannot presume that residency equals citizenship when

determining whether jurisdiction exists, neither can we apply that same presumption when
determining whether we can decline jurisdiction. And that is exactly what the majority does
here.
I would therefore dispense with all the dueling presumptions, and instead simply ask
what the other circuits ask: whether the plaintiffs have produced “evidence from which the
district court may make findings” that more than two-thirds of the putative class-members are

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citizens of the State in which the case was originally filed. Mondragon, 736 F.3d at 884. Here,
the plaintiffs have not produced such evidence, or even any evidence at all. That conclusion,
standing alone, means that we must exercise our jurisdiction in this case.
More briefly, the plaintiffs have likewise failed to show that the only Michigan defendant
in this case—Lockwood, Andrews & Newnam, P.C. (“Lockwood P.C.”)—is one “whose alleged
conduct forms a significant basis for the claims asserted by the proposed plaintiff class[.]”
28 U.S.C. § 1332(d)(4)(A)(II)(bb). As an initial matter, as the Ninth Circuit has persuasively
explained, the statutory reference to “alleged conduct” means that (in contrast to the citizenship
requirement) we look solely to the allegations in the complaint when determining whether the
plaintiffs have met this prerequisite to abstention. See Coleman v. Estes Exp. Lines, Inc.,
631 F.3d 1010, 1015 (9th Cir. 2011). Our inquiry as to this prerequisite is comparative: we ask
whether the in-state defendant’s conduct, as alleged in the complaint, is important when
compared to the conduct of the other defendants as so alleged. See, e.g., Westerfield v. Ind.
Processing LLC, 621 F.3d 819, 825 (8th Cir. 2010); Kaufman v. Allstate N.J. Ins. Co., 561 F.3d
144, 156 (3d Cir. 2009); Evans, 449 F.3d at 1167.
Here, the plaintiffs’ allegations as to the Michigan defendant—Lockwood P.C.—are an
enigma. The complaint alleges that the City of Flint retained a Texas corporation—Lockwood,
Andrews Newnam, Inc. (“Lockwood Inc.”), which is likewise a defendant here—“to conduct
studies and reports of a new water supply that was being developed” for the City. Complaint ¶ 3.
The complaint also alleges that Lockwood P.C. “was incorporated in 2008 by” Lockwood Inc.
after the latter was so retained, and that Lockwood Inc. “conducted business in Genesee County,
Michigan through” Lockwood P.C. The complaint then proceeds to define both Lockwood
entities collectively as “LAN,” which for the remainder of the complaint is the subject of every
verb describing conduct allegedly forming the basis of the plaintiffs’ claims. Thus, as in a Fifth
Circuit case, “nothing in the complaint distinguishes the conduct of [Lockwood P.C.] from the
conduct of the other defendants.” Opelousas Gen. Hosp. Auth. v. FairPay Sols., Inc., 655 F.3d
358, 362 (5th Cir. 2011). The complaint therefore “contains no information about the conduct of
[Lockwood P.C.] relative to the conduct of the other defendants[,]” and thus does not establish
that Lockwood P.C’s conduct “forms a significant basis of the plaintiff[s’] claims.”

Id.

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Moreover, the complaint never explains what the plaintiffs mean by their allegation that
Lockwood Inc. conducted business “through” Lockwood P.C. Instead, that phrase remains an
exercise in studied ambiguity. Finally, what the complaint does say about the conduct of the
defendants relative to one another affirmatively suggests that the more significant actor was the
remaining defendant, Leo A. Daly Company, a Nebraska corporation (which the complaint calls
“LAD”). Specifically, the complaint alleges that “LAN is a subsidiary of LAD,” that “LAN
exists as a separate entity from LAD in name only[,]” and that “LAN is totally reliant upon LAD
for direction with regard to all critical aspects of the issues giving rise to this lawsuit.”
Complaint ¶ 80. The complaint thus provides plenty of reason to conclude that LAD’s conduct
was significant as compared to either of the Lockwood entities, but no basis at all to conclude
that the conduct of Lockwood P.C., in particular, was significant as compared to the conduct of
the other defendants. Indeed, the district court never found that Lockwood P.C.’s alleged
conduct formed a “significant basis” for the claims of the putative class. Instead, the majority
supplies that finding for the first time in its opinion today.
It should take a better showing than this for a federal court to cast off its unflagging duty
to exercise the jurisdiction assigned to it by Congress. I respectfully dissent.