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Class Action Fairness Act (CAFA) Bars Federal Court's Exercise of Jurisdiction in Alabama Red Light Scam

by David Reutter

The Eleventh Circuit Court of Appeals upheld a federal district court's decision to remand a class action suit back to the state court. The Eleventh Circuit agreed that the "home state" exception of the Federal Class Action Fairness Act (CAFA), 28 U.S.C. § 1332 (d), barred the exercise of federal jurisdiction.

Charles Hunter and Mike Henderson brought a class action suit against the City of Montgomery, Alabama and American Traffic Solutions, Inc. (ATS), alleging a violation of the Alabama Constitution by the legislature's creation of a "civil violation' city ordinance. It was created so that ATS could implement its red light program to catch and fine drivers who had run red lights in that city. The system used cameras to photograph and identify the red light violators. It also alleged that yellow lights were intentionally made shorter so that more people would unintentionally run red lights.

The suit was removed to the district court because it continued a federal claim, but that claim was amended from federal request for attorney's fees, to reliance on the common fund doctrine alone. The district court also addressed the amended CAFA exceptions. CAFA was established to address class actions with interstate implications. That provision barred a federal court's exercise of jurisdiction with a showing of "local controversy" or "home state" exception.

The Eleventh Circuit addressed only the "home state exception," which required that two-thirds of the class be citizens of state and the "primary defendants" be citizens. All parties agreed that two-thirds of the class are citizens. The deciding factor was ATS's standing as a primary defendant.

The Eleventh Circuit addressed the "primary defendant" element on appeal. It first ruled that it had jurisdiction to conduct its appellate review because CAFA did not remove its jurisdiction, but merely restricted the exercise of that jurisdiction. Therefore, it maintained jurisdiction on appeal.

The Eleventh Circuit found the term “primary defendants" ambiguous. It looked to the Senate Judiciary Committee's report to hold that "primary defendants" referred to the "real targets" who would incur substantial exposure to monetary loss if liability were found.

The Eleventh Circuit concluded that the city was the only primary defendant because it was the only defendant exposed to monetary damages. It was sued for the refund of funds unlawfully collected. ATS was only sued for injunctive relief. They were to be directed to stop the use of the red light program. If they were subjected to financial loss, or monetary damages, it would only occur if the city sued to recover some of its loss. ATS would only suffer secondary loss.

Where the class members and the primary defendants were both citizens of the state, the home state exception did apply. The Eleventh Circuit upheld the federal district court's decision to decline to exercise federal jurisdiction.

See v. City of Montgomery. Case no: 16-15861, F. 3d (11th Cir. 2017).

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Related legal case

Hunter v. City of Montgomery



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