In a recent decision, a Ninth Circuit Court of Appeals Panel affirmed a district court order remanding a putative class action to state court after the defendants’ initial removal under CAFA (Class Action Fairness Act). The case involved claims on behalf of users of the Golden Gate Bridge against three defendants for violations of California’s privacy statutes concerning the collection and sharing of personally identifiable information. Specifically, the plaintiffs alleged that after collecting information of persons who drove over toll bridges, the defendants shared the personal information of class members with third parties. The defendants included Bay Area Toll Authority (“BATA”), Golden Gate Bridge Highway and Transportation District (“GGB”), and Conduent State and Local Solutions, Inc. (“Conduent”).

After the case was initially removed to the Northern District of California under CAFA, the plaintiffs moved to remand the case arguing that removal was precluded under CAFA’s exception immunizing state, local, and other governmental entities. Because BATA and GGB were state entities, the district court addressed whether Conduent could be considered an instrumentality of the state by way of extension. Ultimately, the district court found that the exception applied since Conduent was essentially “exercising the authority of the state” when it processed bridge tolls, collected fines, and imposed penalties.

Seeking a reversal, Conduent appealed the decision to remand to the Ninth Circuit, arguing that the district court erred in its determination that Conduent should be considered a government entity. The Ninth Circuit Panel considered several tests to assess the district court’s finding but ultimately decided that the case law did not provide a clear answer. Instead, the court relied on CAFA’s local controversy exception to affirm the decision to remand, noting that the purpose of the exception is to “keep smaller and more local issues in state court.” One judge dissented, asserting that the plain language of CAFA required that the case remain in federal court.

Kendrick v. Conduent State and Local Solutions, No. 18-16988 (9^th Cir. Dec. 13, 2018).