Dennison v. Carolina Payday Loans, Inc.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge TRAXLER joined. Judge AGEE wrote a separate opinion concurring in part, dissenting in part, and concurring in the judgment.

Carrie Dennison, a citizen of South Carolina, filed an action on behalf of herself and all other “citizens of South Carolina,” who were similarly situated, against Carolina Payday Loans, Inc., alleging that Carolina Payday, in making “payday loans” to Dennison, violated South Carolina Code § 37-5-108 (prohibiting unconscionable loans) and South Carolina common law duties of good faith and fair dealing. Alleging minimal diversity under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2)(A), Carolina Payday removed the action to federal court under 28 U.S.C. § 1453(b). It claimed that it satisfied the requirements for minimal diversity, as defined in § 1332(d)(2)(A), either (1) because it is a citizen of Georgia, where it claims it has its principal place of business, even though it is also a citizen of South Carolina, where it is incorporated, or (2) because some of the class members had moved from South Carolina and were citizens of other States.

On Dennison’s motion to remand, the district court found that Carolina Payday failed to establish minimal diversity under § 1332(d)(2)(A) because even though Carolina Payday might be a citizen of Georgia, it is also a citizen of South Carolina, and the plaintiff and class members are citizens of South Carolina. The court further found that the class action fell within the “home-state exception” to CAFA jurisdiction set forth in 28 U.S.C. § 1332(d)(4) because in a class limited by definition to “citizens of South Carolina,” at least two-thirds of the class members necessarily are citizens of South Carolina. Accordingly, the district court remanded the case to state court. We granted Carolina Payday’s petition for permission to appeal the remand order under 28 U.S.C. § 1453(c).

The facts and issues raised in this case are substantively identical to those raised in Johnson v. Advance America, Cash Advance Centers of South Carolina, Inc., 549 F.3d 932 (4th Cir.2008). Carolina Payday is a citizen of South Carolina, albeit also a claimed-to-be citizen of another State, and the class is defined to include only citizens of South Carolina, thus excluding persons who may have moved from South Carolina and established citizenship elsewhere at the time the action was commenced. For the reasons given in Advance America, therefore, we conclude that Carolina Payday cannot carry its burden of demonstrating that any member of the plaintiffs class is a citizen of a State “different from” Carolina Payday, as required by 28 U.S.C. § 1332(d)(2)(A). Accordingly, we affirm the district court’s remand order.

At oral argument, which took place on the same day that Advance America was argued, Carolina Payday emphasized facts that might distinguish this case from Advance America in several respects. First, Carolina Payday argues that the class definition in this case can be read to include persons who were citizens of South Carolina at the time of transactions with Carolina Payday but who have since become citizens of other States. It points to the class definition here, which includes “all citizens of South Carolina” and is unlike the definition of the class for injunc-tive relief in Advance America, which purportedly limited the class to include only “citizens of South Carolina who are domiciled in South Carolina.” Advance America, 549 F.3d at 934 (emphasis added).1 This distinction in language, however, is *943immaterial because an individual must be domiciled in a State in order to be a citizen of that State. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989). Thus, the domicile requirement injected in the injunctive-relief class definition in Advance America was surplusage. The definitions of the classes in Advance America and here are substantively identical, each limiting the class to citizens of South Carolina at the time the action was commenced.

Like in Advance America, if one of Carolina Payday’s customers had in fact established a domicile outside of South Carolina before the action was commenced, the customer would not be a “citizen of South Carolina” and therefore not a member of the proposed class. Likewise, if the customer moved from South Carolina after the action was commenced, that fact would not alter federal jurisdiction, which is fixed at the time the complaint or notice of removal is filed. See Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 539, 6 L.Ed. 154 (1824); see also Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570-71, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004); 28 U.S.C. § 1332(d)(7).

Carolina Payday also argues that unlike the affidavits in Advance America, its proffered affidavit stated that “one or more customers of Carolina Payday entered into loan agreements with Carolina Payday while citizens of South Carolina but are now citizens of other StatesIts affidavit, however, does not support the argument that a class member can be someone other than a citizen of South Carolina at the time the complaint was filed. See 28 U.S.C. § 1332(d)(7). If a South Carolina citizen entered into a loan agreement with Carolina Payday and then moved from the State before the action was commenced, the fact that the person was not a citizen of South Carolina at the time the action was commenced simply means that the person does not qualify as a member of the class. Dennison defined the class to constitute only citizens of South Carolina, and Carolina Payday cannot redefine the class to include non-citizens.

Finally, Carolina Payday argues in its brief that this case is distinguishable from Advance America because in Advance America, the class members, as citizens of South Carolina, were not diverse from the defendant that had its principal place of business in South Carolina. Carolina Payday points out that in this case, the class members, also citizens of South Carolina, are in fact diverse from Carolina Payday because it has its principal place of business, as it claims, in Georgia.2 It argues that even though Carolina Payday is incorporated in South Carolina, the minimal diversity analysis under § 1332(d)(2)(A) should differ when the defendant’s principal place of business is in a State different from the State of the class members’ citizenship. Carolina Payday reasons that focusing on a corporation’s principal place of business for purposes of *944citizenship would reduce forum shopping because a corporation would not be inclined to choose its principal place of business to establish CAFA jurisdiction. But Carolina Payday cites no authority to support its argument. Section 1332(c)(1) provides that “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1) (emphasis added). The statute does not give greater weight to a corporation’s principal place of business than to its place of incorporation. For purposes of diversity jurisdiction, Carolina Payday is a citizen of both South Carolina, its State of incorporation, and Georgia, assuming it is able to demonstrate that its principal place of business is in Georgia. Whether it is a citizen of Georgia, however, is immaterial as it is indisputably a citizen of South Carolina and therefore cannot show that it is not a citizen of South Carolina.

Like the defendant in Advance America, Carolina Payday cannot sustain its burden of establishing, as required by § 1332(d)(2)(A), that “any member of [the] class of plaintiffs is a citizen of a State different from any defendant.” As we pointed out in Advance America, “[t]he language of the statute imposes a requirement on [Carolina Payday] to prove the negative — i.e. that it is not a citizen of South Carolina — and that it cannot do.” Advance America, 549 F.3d at 936. It was incorporated in South Carolina and therefore is a citizen there.

Because Carolina Payday Loans has not established the existence of minimal diversity, we do not reach whether the home-state exception of 28 U.S.C. § 1332(d)(4) applies to defeat federal jurisdiction in this case.

On the reasoning of Advance America, we affirm the order of the district court in this case, remanding the case to state court for lack of diversity jurisdiction under CAFA.

AFFIRMED