Main Drug v. Aetna-Class Action Defense Cases: Alabama Federal Court Holds That Burden Of Proving Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Remains With Defense And That Burden Was Met

Dec 29, 2006 | By: Michael J. Hassen

CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff but Defense Established Requisite Amount In Controversy so Alabama Federal Court Denies Motion to Remand Class Action to State Court

Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies “according to an agreed-upon formula for brand name prescriptions dispensed to Defendants’ insureds.” Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1323, 1324 (M.D. Ala. 2006). Defense attorneys removed the action to federal court asserting, inter alia, federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id. The district court held that even under CAFA the defense bears the burden of establishing removal jurisdiction, but concluded that the defense had satisfied the amount in controversy requirement.

The federal court began its discussion by addressing the issue of whether under CAFA the removal-requesting defendant bore the burden of establishing federal court jurisdiction or whether the remand-requesting plaintiff must demonstrate that such jurisdiction does not exist. Main Drug, at 1326-27. The district court’s analysis led it to “apply the traditional burden” that requires the defense “to show by a preponderance of the evidence that the amount in controversy has been met.” Id., at 1327. The court also concluded that the defense had met its burden of proof in showing that the amount in controversy exceeds $5 million, id., at 1327-28.

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