Seventh Circuit Construes Class Action Fairness Act's "Local Controversy" Exception

The Seventh Circuit recently provided important clarity for class-action litigants. Parties seeking or opposing a remand to state court based on the "local controversy" exception, explained in more detail below, should focus their arguments on the factual allegations. Legal theories don't count.

The Class Action Fairness Act - often called CAFA - allows defendants to remove certain class-action lawsuits from state court to federal court. But CAFA contains a "local controversy" exception that prohibits removal when a suit meets the following four requirements:

1. At least two-thirds of the proposed class members must be citizens of the forum state.
2. At least one defendant whose actions form a significant basis for the claims must be a citizen of the forum state.