The Class Action Fairness Act of 2005 (CAFA) broadened federal jurisdiction over class actions but excepted controversies that are primarily local in nature. District courts must decline to exercise jurisdiction over these matters. Congress has defined the features of a local controversy. As relevant to this appeal, a class action is a local controversy if local citizens predominate over non-locals in the class membership — that is, if more than two-thirds of the class members are “citizens of the State in which the action was originally filed.” 28 U.S.C. § 1332(d)(4)(A)(i)(I). We have long held that “resident” does not mean “citizen” in 28 U.S.C. § 1332(a). The issue in this case is whether this citizenship/residency distinction also applies to § 1332(d)(4). In other words, does “citizen” mean the same thing in § 1332(d)(4) that it means in the rest of 28 U.S.C. § 1332? We hold that it does, and that the district court therefore erred in remanding this case based on the class members’ Arkansas residency rather than citizenship.
I. Background
Tammy Hargett was injured in a car wreck. Hargett received medical treatment from St. Bernard’s Hospital. St. Bernard’s required Hargett to assign her rights as a Medicaid Beneficiary to the hospital. The hospital contracted with RevClaims, LLC to pursue any claim Hargett might have against the driver responsible for her injuries. This was in lieu of collecting a reduced but certain payment from Arkansas Medicaid, which insured Hargett. Hargett contends that this practice violates Arkansas law. She sued St. Bernard’s, Rev-Claims, and several other hospitals in Arkansas state court on behalf of a class comprising “[a]ll persons who were Arkansas Medicaid-eligible beneficiaries” who were treated at one of the defendant hospitals and who had similar liens placed on their third-party claims by RevClaims. Hargett also alleged that “hundreds, if not thousands, of people geographically dispersed across Arkansas have been damaged by Defendants’ actions.”
The defendants removed the suit to federal court under CAFA, 28 U.S.C. § 1332(d). Hargett moved to remand. She urged the district court to “decline to exercise jurisdiction” under CAFA’s local-controversy exception. 28 U.S.C. § 1332(d)(4). The district court concluded that Hargett’s suit met all the exception’s requirements, including the requirement that more than two-thirds of the proposed class be citizens of the state where the suit was filed — in this case, Arkansas. See 28 U.S.C. § 1332(d)(4)(A)(i)(I). As the district court explained:
In establishing the local controversy exception, Plaintiff has defined the class as all persons who were Arkansas residents at the time the medical services which form the basis of the Complaint were provided to them. By restricting the class members to Arkansas residents (specifically, “people geographically disbursed across Arkansas;” Document 2, para. 48), Plaintiffs have sufficiently satisfied their burden of establishing that more than 2/3 of the class members are citizens of Arkansas.
“For clarity,” though, the district court directed Hargett “to immediately amend her complaint to explicitly restrict the proposed class definition as to only include Arkansas citizens.” Hargett filed an amended complaint defining the proposed class as “[a]ll Arkansas citizens who were Arkansas Medicaid-eligible beneficiaries .... ” (emphasis added). Then the case was remanded. The hospitals and Rev-Claims sought permission to appeal under 28 U.S.C. 1453(c)(1), which we granted.
II. Discussion
We have jurisdiction to accept appeals from class-action remands. 28 U.S.C. § 1453(c)(1). The authorizing statute leaves to the “informed discretion of the reviewing court” precisely how to exercise this jurisdiction. Coll. of Dental Surgeons of P.R. v. Conn. Gen. Life Ins. Co.,
In conducting this review, we are guided by five principal considerations. First, CAFA reflects Congress’s desire for broad diversity jurisdiction over class actions. Westerfeld v. Indep. Processing, LLC,
Second, apart from the local-controversy exception, the term “citizen” in 28 U.S.C. § 1332 has long meant something different from “resident.” As we said recently, “it is simply incorrect to say [a partyj’s Arkansas residency establishes Arkansas citizenship for the purpose of’ § 1332(a)(1). Reece v. Bank of N.Y. Mellon,
A complaint or notice of removal resting on residency, then, will not establish citizenship for diversity jurisdiction. Id. This rule is not new. In Pattiz v. Schwartz, for example, we noted the “failure of the plaintiffs in their original and amended complaints to allege diversity of citizenship rather than mere diversity of residence,” and we invoked our repeated holding that this “does not satisfy the requirements for federal diversity jurisdiction under 28 U.S.C. § 1332(a)(1).”
Third, “[w]here Congress uses terms that have accumulated settled meaning under either equity or the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.” N.L.R.B. v. Amax Coal Co.,
Fourth, at least one other circuit has read the historical citizenship/residency distinction into § 1332(d)(4). In In re Sprint Nextel Corp., the Seventh Circuit refused to conclude by sensible guesswork that a class of “all Kansas residents” who purchased text messaging from a company was more than two-thirds Kansan by citizenship.
Fifth, and finally, we recently followed the Seventh Circuit’s approach, albeit without directly addressing the citizenship/residency issue embedded in that circuit’s precedents. The question in Hood v. Gilster-Mary Lee Corp. was whether a class comprising workers at a particular Missouri plant was more than two-thirds Missourian by citizenship.
We find Hood and Sprint persuasive, and we conclude that § 1332(a)’s citizenship/residency distinction applies in § 1332(d)(4). “Citizen” means the same thing in both subsections — and that meaning is not synonymous with “resident.” The district court therefore erred in holding that merely alleging a proposed class of Arkansas residents was sufficient to satisfy § 1334(d)(4). Hargett could have met her burden by producing evidence or by defining her class to include only Arkansas citizens. But merely alleging residency was not enough. (We accept the parties’ agreement that an Arkansas Medicaid beneficiary must be an Arkansas resident.)
Plaintiffs like Hargett remain free to meet their burden through evidence or through a class explicitly limited to local citizens, but they are not free to rest on guesswork.
Nor do we consider Hargett’s amended complaint, which redefined the class. The
Finally, because we have a duty to inquire into our own jurisdiction, we add that nothing we have said about residency and citizenship means that the district court lacked jurisdiction. Cf. Mason v. Lockwood, Andrews & Newnam, P.C.,
III. Conclusion
Accordingly, we reverse the district court’s remand order, and we remand this case to the district court for further proceedings.
Notes
. We do not agree with Hargett that presumptions alone may transform a challenged allegation of residency into the establishment of citizenship. See Mason v. Lockwood, Andrews & Newnam, P.C.,