Friday, August 22, 2014
In a recent decision authored by Judge Easterbrook, the 7th Circuit suggested that plaintiffs looking to prove that their case falls under the "home state exception" to CAFA can use sampling and extrapolation to prove their allegations. The case is Myrick v. WellPoint, Inc., 2014 BL 229924, 7th Cir., No. 12-3882 , 8/19/14 (citation is to Bloomberg, the Westlaw cite is 2014 WL 4073065). The case concerns allegations about a health insurance policy sold in Illinois.
Judge Easterbrook, explaining that the burden of proving the home state exception is on the party assserting it in the 7th Circuit, explained a potential procedure as follows:
Counsel for the proposed class assumed that there were only two options: determine the citizenship of every policyholder (expensive) or rely on assumptions (cheap). But there's at least one more option: take a random sample of policyholders (100, say), ascertain the citizenship of each of these on the date the case was removed, and extrapolate to the class as a whole. If the sample yields a lopsided result (say, 90% Illinois citizens or only 50% Illinois citizens) then the outcome is clear without the need for more evidence. (The more lopsided the result, the smaller the sample needed to achieve statistical significance.) If the result is close to the statutory two-thirds line, then do more sampling and hire a statistician to ensure that the larger sample produces a reliable result.