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Federal district court in NY holds CAFA’s Home State Exception is not jurisdictional, and CAFA imposes no deadline for raising the exception when an action is originally filed in federal court

In Gold v. New York Life Ins. Co., No. 09-cv-3210, 2012 U.S. Dist. Lexis 67211 (S.D. N.Y. May 14, 2012), the plaintiff filed suit in federal court on behalf of a putative class of insurance agents asserting claims against their employers for alleged violations of New York state labor laws. The defendants moved to dismiss the complaint for lack of subject matter jurisdiction under the home sate exception to CAFA.  The defendants argued two thirds or more of the members of the class in the aggregate and the primary defendants were all citizens of the state where the action originally was filed.  The plaintiff agreed, but argued that the exception is not jurisdictional, and that defendants waived their right to assert the exception by their delay in asserting it.  The district court agreed with the plaintiff that CAFA’s home state exception was not jurisdictional.  The court noted that while there was no Second Circuit opinion addressing the issue, both the Seventh and Eighth Circuits had determined that another CAFA exception — the local controversy exception — is not jurisdictional because it does not divest the court of jurisdiction, but rather operates as an abstention doctrine. This conclusion is based on the clear language of the statute which inherently recognizes that the court has subject matter jurisdiction, but directs the court to decline to exercise it in certain circumstances.

The plaintiff then argued that because the home state exception is not jurisdictional, the defendants had only thirty days under 28 U.S.C. §1447(c) to raise the exception or else waive it.  The litigation had been pending two years when the defendants raised the exception.  The court declined to impose the thirty day deadline because the statutory deadline in 28 U.S.C. §1447(c) applies to removed cases, not cases originally filed in federal court.  Furthermore, the court noted that CAFA contains no time limit on when a party may raise the home state exception, and the court may not sua sponte create one.  The court commented, however, that Congress would be well served to impose a time limit so that courts would not expend substantial resources on such cases.  The court also observed that the defendants’ delay in raising the exception was more likely the result of the court’s discovery plan than a ploy to gain a litigation advantage over the plaintiff.  Ultimately, the court denied the defendants’ motion to dismiss for lack of subject matter jurisdiction, but granted the defendants’ motion requesting that the court decline to exercise jurisdiction pursuant to the CAFA exception.

© 2022 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume II, Number 228
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About this Author

Gabrielle Hils, Complex Litigation Lawyer, Dinsmore, law firm
Partner

Gabrielle Hils’ diverse experience and knowledge of complex litigation, including class action proceedings, has allowed her to guide a variety of clients through the legal labyrinth, ranging from small manufacturers to multinational corporations. With a thorough understanding of multidistrict, class action, and mass tort proceedings, Gabrielle is adept at tailoring her approach to meet the unique needs of her clients. She has developed her skills over many years of service as a lead case management attorney directing pretrial discovery and motion practice in products...

513-977-8175
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