## Facts

- Instagram announced revised Terms of Use in December 2012, effective January 18, 2013, including an arbitration clause with opt-out, a California choice-of-law provision, and revised content license and account deactivation terms.
- An initial plaintiff filed suit challenging the impending changes; Lucy Rodriguez was later substituted as the named plaintiff by amended complaint.
- Rodriguez maintained an Instagram account during the revision period and did not cancel before the effective date.
- The first amended complaint asserted California-law claims (including contract and consumer-protection theories) challenging the revised terms.
- The pleading sought a class limited to California residents who used Instagram and were subject to the revised terms.
- Rodriguez invoked federal jurisdiction under the Class Action Fairness Act (CAFA), alleging the amount in controversy and diversity requirements.

## Issues

1. Whether CAFA jurisdiction was barred because the home-state controversy exception applied where two-thirds or more of the proposed class and the primary defendant were citizens of California.
2. Whether the plaintiff should be granted leave to amend to plead a nationwide class (with a California subclass) to avoid the home-state exception, or whether amendment was futile.

## Decision

- The court dismissed the action for lack of federal subject-matter jurisdiction under CAFA.
- The court concluded the CAFA home-state controversy exception required declination of jurisdiction.
- The court denied leave to file a second amended complaint expanding to a nationwide class, finding amendment futile.

## Legal Principles

- Under CAFA, a federal court must decline jurisdiction when at least two-thirds of the proposed class members and the primary defendants are citizens of the forum state. 28 U.S.C. § 1332(d)(4)(B).
- For CAFA, citizenship depends on domicile (fixed habitation with intent to remain), not mere residence; however, a class definition limited to forum-state residents may support an inference that the two-thirds citizenship threshold is met.
- Leave to amend under Rule 15 may be denied for futility, including where a proposed amendment is principally an attempt to manufacture federal jurisdiction and would create serious manageability problems (such as multi-state law variations in contract and consumer-protection claims).

## Conclusion

The court held that a putative class limited to California residents suing a California-based primary defendant triggered CAFA’s mandatory home-state exception, eliminating federal jurisdiction, and it refused amendment to a nationwide class because the proposal did not present a workable cure and was futile.


Rodriguez v. Instagram, LLC, No. C 12-06482 WHA, 2013 WL 3732883 (N.D. Cal. July 18, 2013)