Court filing
Exhibit Exhibit A -Order Rule Show Cause — Agent Fee Litigation (Dkt. 177.1)
Summary
Exhibit A to Document 177-1 in MDL No. 2950, filed June 17, 2020, reproduces an Order to Show Cause entered June 9, 2020 by the U.S. District Court for the District of Hawaii in Aloha Accounting and Tax LLC v. First Hawaiian Bank, et al., Civil No. 20-00254 JAO-RT. The order notes the plaintiff filed a Class Action Complaint on June 2, 2020 invoking the Class Action Fairness Act, 28 U.S.C. § 1332(d). It finds the jurisdictional allegations deficient because the complaint does not state the named parties' citizenships or what proportion of class members are Hawai'i citizens. It discusses the local controversy and home state exceptions under 28 U.S.C. § 1332(d)(4). The plaintiff is ordered to respond by June 23, 2020, or the action will be dismissed without prejudice.
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Case MDL No. 2950 Document 177-1 Filed 06/17/20 Page 1 of 6
EXHIBIT A
Case Case MDL
1:20-cv-00254-JAO-RT
No. 2950 Document
Document6177-1
Filed Filed
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06/17/20
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ALOHA ACCOUNTING AND ) CIVIL NO. 20-00254 JAO-RT
TAX LLC, )
) ORDER TO SHOW CAUSE WHY THIS
Plaintiff, ) ACTION SHOULD NOT BE
) DISMISSED WITHOUT PREJUDICE
vs. )
)
FIRST HAWAIIAN BANK; )
BANK OF HAWAII; )
CENTRAL PACIFIC BANK; )
HAWAIIAN ELECTRIC, INC. dba )
“American Savings Bank”; and )
KABBAGE, INC., )
)
Defendants. )
)
)
)
)
ORDER TO SHOW CAUSE WHY THIS ACTION
SHOULD NOT BE DISMISSED WITHOUT PREJUDICE
On June 2, 2020, Plaintiff Aloha Accounting and Tax LLC (“Plaintiff”) filed
a Class Action Complaint asserting the Class Action Fairness Act (“CAFA”), 28
U.S.C. § 1332(d), as the basis for subject matter jurisdiction. Compl. ¶ 8. “Courts
have an independent obligation to determine whether subject-matter jurisdiction
exists, even when no party challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94
(2010). Federal courts are presumed to lack subject matter jurisdiction, and the
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plaintiff bears the burden of establishing that subject matter jurisdiction is proper.
See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). If the court
lacks subject matter jurisdiction, an action must be dismissed. Fed. R. Civ. P.
12(h)(3).
Under CAFA, “district courts . . . have original jurisdiction of any civil
action in which the matter in controversy exceeds the sum or value of $5,000,000,
exclusive of interest and costs, and is a class action in which . . . any member of a
class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C.
§ 1332(d)(2)(A); Adams v. W. Marine Prods., Inc., 958 F.3d 1216, 1220 (9th Cir.
2020). Plaintiff alleges that there are more than 100 persons or entities in the
proposed class and that the claims of the class exceed $5,000,000 in the aggregate.
See Compl. ¶ 8. With respect to the parties’ citizenships, Plaintiff alleges that: (1)
its sole member is Jennifer Drout; (2) Defendants First Hawaiian Bank, Bank of
Hawaii, Central Pacific Bank, and Hawaiian Electric, Inc. dba American Savings
Bank, are Hawaiʻi corporations headquartered in Hawai‘i; (3) Defendant Kabbage,
Inc. is a privately held company with its headquarters in Atlanta, Georgia; and (4)
“at least some members of the proposed Class have different citizenship[s] from
Defendant(s).” See id. ¶¶ 2–6, 8.
These allegations are deficient. First, Plaintiff has not provided the named
parties’ citizenships. Corporations are citizens of “(1) the state where its principal
2
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place of business is located, and (2) the state in which it is incorporated.”1 Johnson
v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (citing 28
U.S.C. § 1332(c)(1)). By contrast, an LLC shares the citizenships of all of its
owners/members. Id. at 899, 902 (“[A]n LLC is a citizen of every state of which
its owners/members are citizens.”). While Plaintiff identified its sole member, it
did not disclose her citizenship.2
Second, although CAFA requires only minimal diversity, see 28 U.S.C.
§ 1332(d)(2)(A), there are two exceptions to CAFA jurisdiction:3 “(1) the local
controversy exception and (2) the home state exception.” Adams, 958 F.3d at 1220
A district court “shall” decline to exercise jurisdiction under the local controversy
exception “when more than two-thirds of the putative class members are citizens of
the state where the action was filed, the principal injuries occurred in that same
state, and at least one significant defendant is a citizen of that state.” Id. (citing 28
1
Plaintiff alleges that the banks are Hawai‘i corporations but does not identify
their “principal places of business.”
2
The Court emphasizes that “the diversity jurisdiction statute, 28 U.S.C. § 1332,
speaks of citizenship, not of residency.” Kanter v. Warner-Lambert Co., 265 F.3d
853, 857 (9th Cir. 2001).
3
The exceptions are not jurisdictional. See Adams, 958 F.3d at 1223. The Ninth
Circuit treats the exceptions as a form of abstention, which the Court may raise sua
sponte. See id.
3
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U.S.C. § 1332(d)(4)(A)). The home state exception is comprised of mandatory and
discretionary components:
Under the first, the district court “shall” decline to exercise
jurisdiction where “two-thirds or more of the members of all
proposed plaintiff classes in the aggregate, and the primary
defendants, are citizens of the State in which the action was
originally filed.” 28 U.S.C. § 1332(d)(4)(B) (the “mandatory
home state exception”). Under the second, a district court “may,
in the interests of justice and looking at the totality of the
circumstances, decline to exercise jurisdiction” when more than
one-third of the putative class, and the primary defendants, are
citizens of the state where the action was originally filed. 28
U.S.C. § 1332(d)(3) (the “discretionary home state exception”).
See id. Because Plaintiff only alleges that “at least some members of the proposed
Class have different citizenship[s] from Defendant(s),” Compl. at ¶ 8, without
indicating what proportion of the class members are Hawai‘i citizens, the Court is
unable to ascertain whether it must decline to exercise CAFA jurisdiction.
And while Plaintiff alleges that the unnamed class members will be obtained
through Defendants’ databases, it does not explain why these members’
citizenships will differ from Defendants’.
Accordingly, Plaintiff is ORDERED TO SHOW CAUSE why this action
should not be dismissed without prejudice. Plaintiff must file a response to this
Order to Show Cause by June 23, 2020, providing the named parties’ citizenships
and allegations concerning the citizenships of the putative class members that will
enable the Court to ascertain whether it should or can exercise jurisdiction pursuant
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to § 1332(d)(3)–(4). Failure to timely respond to this Order to Show Cause will
result in the dismissal of this action without prejudice.
IT IS SO ORDERED.
DATED: Honolulu, Hawai‘i, June 9, 2020.
CV 20-00254 JAO-RT, Aloha Accounting LLC v. First Hawaiian Bank, et al.; ORDER TO SHOW
CAUSE WHY THIS ACTION SHOULD NOT BE DISMISSED WITHOUT PREJUDICE
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