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Understanding the Home State Exception to CAFA’s Diversity Jurisdiction

The Class Action Fairness Act (“CAFA”), enacted in 2005, expanded federal jurisdiction over class actions. However, CAFA contains some exceptions, or instances when a federal court may not 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 the “primary defendants,” are citizens of the state in which the action is filed.[1] It is “designed to draw a delicate balance between making a federal forum available to genuinely national litigation and allowing the state courts to retain cases when the controversy is strongly linked to that state.”[2] The citizenship of the proposed class as a whole determines whether the exception applies.[3]

The Exception Does Not Remove Jurisdiction but Rather Mandates Abstention

Several circuits have interpreted the home state exception as mandating that a district court abstain from exercising jurisdiction if the requirements of the exception are satisfied. In other words, if the exception applies, even though the district court has subject matter jurisdiction over the controversy, it must abstain from exercising said jurisdiction. For example, the Seventh Circuit has held that the exception “does not itself diminish federal jurisdiction. It directs district judges to ‘decline to exercise’ jurisdiction otherwise present and is thus akin to abstention.”[4] The Eighth Circuit has distinguished between divestment of jurisdiction and abstention, explaining that the home state exception is set out separately from the statute’s jurisdictional requirements and “inherently recognizes [that] the district court has subject matter jurisdiction by directing the court to ‘decline to exercise’ such jurisdiction when certain requirements are met.”[5] The exception “operates as an abstention doctrine, which does not divest the court of subject matter jurisdiction.”[6]

The Second Circuit has held that “the home state exception was not jurisdictional because the ‘decline to exercise’ language ‘inherently recognized [that] the district court has subject matter jurisdiction’ but must actively decline to exercise it if the exception’s requirements are met.”[7] The Fifth Circuit has similarly recognized that the home state exception requires “abstention from the exercise of jurisdiction” and is “not truly jurisdictional in nature.”[8] The Sixth and Ninth Circuits have reached the same conclusion.[9] Though the Third Circuit has not used the words “mandatory abstention” when considering the home state exception, it has held that it and the local controversy exception are mandatory exceptions.[10]

Burden of Proof

The party invoking the home state exception bears the burden of proof,[11] and must prove by a preponderance of the evidence that the exception applies.[12] The moving party must present evidence that will allow the court to determine the class members’ citizenships on the date the case was filed in federal court.[13] If a party does not raise the home state exception, the court is not obligated or required to do so sua sponte, though at least the Ninth Circuit has held that a district court has the option of doing so.[14]

When to Invoke the Exception.

CAFA does not impose a deadline by which a party must invoke the home state exception. However, several circuits, including the Second, Eighth, Ninth, and Tenth, have held that exception is waivable if not raised within a “reasonable time.”[15] The Seventh Circuit has stated that the moving party “[has] the right, through appropriate discovery, to explore the facts relevant to the court’s jurisdiction as the case progresses,” including where parties reside.[16] Further, CAFA’s legislative history indicates that a party should raise the home state exception after limited, not burdensome, discovery.[17]

Who Is a Primary Defendant?

CAFA does not define the term “primary 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 has declined to address the issue,[18] but district courts within the circuit have found that a primary defendant is one: “(1) who has the greater liability exposure; (2) is most able to satisfy a potential judgment; (3) is sued directly, as opposed to vicariously, or for contribution or indemnity; (4) is the subject of a significant portion of the claims asserted by plaintiffs; or (5) is the only defendant named in one particular cause of action.”[19] The Third Circuit, on the other hand, has adopted a more straightforward definition of the term, holding that “primary defendants” include any “who are directly liable to the proposed class, as opposed to being vicariously or secondarily liable based upon theories of contribution or indemnification.”[20]

Proof of Citizenship of Putative Class

Knowing how the circuit in which the case is pending determines the citizenship of the proposed class before moving to remand or dismiss based on the exception is key to prevailing on said motion because different circuits have also handled the determination of the citizenship of the putative class differently. For example, the Fifth Circuit has held that a plaintiff’s residence is prima facie evidence of his or her domicile and is sufficient proof of citizenship, unless rebutted.[21] Courts in other circuits, however, have held that the citizenship of a proposed class cannot be determined based on their residence, mailing addresses, or phone numbers.[22]


How the home state exception will affect a case is, in several 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 U.S.C. § 1332(d)(4)(B).

[2] Hart v. 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 language of § 1332(d)(4) does not suggest that this principle applies to a subset of the plaintiffs; it takes the ‘proposed class’ as a given. If the suit is predominately interstate, the district court must resolve the whole.”).

[4] Id.

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

[6] Id.

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

[8] Watson v. City of Allen, Tx., 821 F.3d 634, 639 (5th Cir. 2016).

[9] Mason v. Lockwood, Andrews & Newman, P.C., 842 F.3d 383, 386-87 (6th Cir. 2016) (“If [the elements of the exception] are present, the district court must abstain from hearing the case, despite having jurisdiction.”); Adams v. West Marine Products, Inc., 958 F.3d 1216, 1223 (9th Cir. 2020) (“The local controversy and home state exceptions are not jurisdictional. Rather…we treat the [exceptions] as a form of abstention.” (internal citations omitted)).

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

[11] Vodenichar v. Halcon Energy Properties, Inc., 733 F.3d 497, 503 (3d Cir. 2013); Frazier v. Pioneer Americas, LLC, 455 F.3d 542, 546 (5th Cir. 2006); Hart at 681-81; Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1022-23 (9th Cir. 2007); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir. 2006).

[12] 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).

[13] Myrick v. WellPoint, Inc., 764 F.3d 662, 665 (7th Cir. 2014).

[14] Adams, 958 F.3d at 1223-24.

[15] See, e.g., 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).

[16] Hart at 682.

[17] S. Rep. 109-14, at 44 (2005) (“[T]he Committee cautions that these jurisdictional determinations should be made largely on the basis of readily available information. Allowing substantial, burdensome discovery on jurisdictional issues would be contrary to the intent of these provisions…”).

[18] Serrano, 478 F.3d at 1024-25.

[19] Marino v. Countrywide, 26 F. Supp. 3d 949, 952-53 (C.D. Cal. 2014); Matthews v. United Teachers Los Angeles, 2018 WL 59999591, *4 (C.D. Cal. Nov. 15, 2018).

[20] Vodenichar, 733 F.3d at 504.

[21] Hollinger v. Home State. Mut. Ins., 654 F.3d 564, 571 (5th Cir. 2011).

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