ADVANCE AMERICA, Cash Advance Centers of South Carolina, Incorporated, d/b/a Advance America Cash Advance <a href=""></a> Centers, d/b/a Advance America, Defendant-Appellant

, alleging that Advance America, in making “payday loans” to the plaintiffs, violated South Carolina law, which prohibits unconscionable loans and requires good faith and fair dealing in contracts. Alleging minimal diversity under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2)(A), Advance America removed the action to federal court under 28 U.S.C. § 1453(b). It claimed that it satisfied the requirement of “minimal diversity,” as defined in § 1332(d)(2)(A), because either (1) it is a citizen of Delaware, where it was incorporated, even though it is also a citizen of South Carolina, where it has its principal place of business, or (2) some of the class members had moved from South Carolina and were citizens of other States.

United States Court of Appeals,Fourth Circuit. Lisa A. JOHNSON; Gilbert A. Herbert, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. No. 08-2186

On the plaintiffs’ motion to remand, the district court found that Advance America failed to establish minimal diversity under § 1332(d)(2)(A) because, even though Advance America is a citizen of Delaware, it is also a citizen of South Carolina, and all members of the plaintiff class are citizens of South Carolina. The court further found that the class action fell within the “home-state exception” to CAFA jurisdiction in 28 U.S.C. § 1332(d)(4)(B) 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 Advance America’s petition for permission to appeal the remand order under 28 U.S.C. § 1453(c).

Because Advance America cannot carry its burden of demonstrating that any member of the plaintiffs’ class is a citizen of a State “different from” Advance America, as required by 28 U.S.C. § 1332(d)(2)(A), we affirm. Advance America is a citizen of South Carolina, albeit also a citizen of Delaware, 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.

In their complaint, filed in the Georgetown County Court of Common Pleas in South Carolina, Johnson and Herbert alleged that they entered into numerous payday loans with Advance America and that under the loan agreements, they agreed to repay the principal amount plus 15% interest two weeks after receiving the loan. They alleged that they currently carry open loans with Advance America, which they renew every two weeks by paying only the interest with additional payday loans. Because of fixed financial obligations, which nearly equal their incomes, they alleged that they are now unable to pay the loans.

Lisa Johnson and Gilbert Herbert, citizens of South Carolina, filed an action on behalf of themselves and all other “citizens of South Carolina,” who were similarly situated, against Advance America, Cash Advance Centers of South Carolina, Inc

Johnson and Herbert claimed that Advance America, in issuing the payday loans, violated South Carolina statutory law prohibiting unconscionable loan agreements, S.C.Code § 37-5-108, and South Carolina common law duties of good faith and fair dealing. They alleged that Advance America failed to conduct credit checks to verify customers’ finances and ability to repay loans before entering into the agreements and that the agreements contained unconscionable arbitration clauses. For relief, they seek a erica’s conduct violated South Carolina law; inerica from issuing any payday loans until it modifies its business practices; and damages.