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CAFA Law Blog

Information, cases and insights regarding the Class Action Fairness Act of 2005

Pleading Under the Federal Rule 12(B)(6) Standard is not a Requirement in Assessing the Applicability of CAFA’s “Local Controversy” Exception

Posted in Case Summaries

MD Haynes, Inc. v. Valero Marketing and Supply Co., 2017 WL 1397744 (S.D. Tex. Apr. 19, 2017).

In this action, a federal court in Texas found that while the plaintiffs did not plead according to federal standards or explicitly distinguish the conduct of individual defendants in their complaint, they had no obligation to do so for CAFA’s local-controversy exception to apply. Accordingly, the court granted plaintiffs’ motion to remand.

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A Court Cannot Accept A Plainly Overbroad Reading Of The Complaint To Conclude That The Amount In Controversy Is Satisfied

Posted in Case Summaries

Slocum_v_Gerber_Products_Co, 2016 WL 3983873 (W.D. Mo. July 25, 2016).

In this action, the United States District Court, Western District of Missouri, Central Division (the “District Court”) granted the plaintiff’s Motion to Remand finding defendant Gerber Products Co. (“Gerber”) failed to demonstrate, by a preponderance of the evidence, the amount in controversy excees $5 million.

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Defective Affidavit of Defendant’s Employee, Without More, Is Insufficient Evidence To Support Assertion Of Federal Jurisdiction Under CAFA

Posted in Case Summaries

 Strembitskyy v. American Family Mutual Insurance Company, No. C16-0691RSL, 2016 WL 3640315 (W.D. Wash. July 8, 2016).

The plaintiff brought a putative class action in the state court asserting claims for breach of contract, violation of the Washington Consumer Protection Act, bad faith, and conversion. The plaintiff alleged that the defendant AmFam failed to fully compensate him for the property damage he suffered in an accident.

The plaintiff was involved in a car accident, wherein the plaintiff’s vehicle sustained damage. The plaintiff’s vehicle had Collision coverage provided by AmFam, with a deductible of $400 (for purposes of this accident). The damage exceeded the $400 deductible. So, when the plaintiff had the vehicle repaired, he paid $400 out of pocket, and AmFam paid the rest. AmFam sought to recover these repair costs from the liability coverage of the other vehicle involved. AmFam decided that liability would be split on a 90/10 basis, attributing 90% fault to the other vehicle. As a result, AmFam secured reimbursement for 90% of the total cost to repair the plaintiff’s vehicle. After securing this 90% reimbursement, AmFam sent the plaintiff a check for $360, representing 90% of the plaintiff’s collision deductible. This left the other $40 of plaintiff’s deductible as uncompensated property damage.

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Plaintiff as “Master of the Claim” May Base his Claims on Only State Law to Avoid Federal Jurisdiction under CAFA

Posted in Case Summaries

Steven Archavage v Professional Account Services, 2017 WL 1162911 (M.D. Penn. March 29, 2017).

In this action, while remanding the case to the state court, the United States District Court, Middle District of Pennsylvania (the “District Court”), found that where the plaintiff expressly limited his claim below the Class Action Fairness Act’s (“CAFA”) $5,000,000.00 amount in controversy requirement in the complaint, and applying the maxim that the plaintiff is the master of his own complaint, the proponent of jurisdiction (i.e., the defendant in this case) must show, to a legal certainty, that the amount in controversy exceeded the statutory threshold.

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CAFA’s Local Event Exception Does Not Constrain the Event or Occurrence to a Discrete Moment in Time

Posted in Case Summaries

Samuel Adams et al v International_Paper_Company_et_al, 2017 WL 1828908 (S.D. Ala. May 5, 2017).

In this action, while remanding the case to the Circuit Court of Mobile County, Alabama (the “Circuit Court”), the United States District Court, Southern District of Alabama (the “District Court”) found that because the defendants were alleged to have participated in a single event or occurrence in different ways, it did not necessitate a conclusion that there were actually multiple events or occurrences.

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District Court Holds Defendant Has No Independent Duty To Investigate Whether A Case Is Removable Under CAFA

Posted in Case Summaries

Portnoff v Janssen Pharmaceuticals Inc, 2017 WL 708745 (E.D. Penn. Feb. 22, 2017).

A Pennsylvania District Court found that although a defendant must apply a “reasonable amount of intelligence” when ascertaining removability based on a plaintiff’s initial petition and “other paper,” a defendant has no independent duty to investigate and can rely on the plaintiffs pleadings and “other papers” in determining whether or not an action is removable. Here, the court determined the action was properly removed under CAFA.

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District Court Remands to State Court When Defendant Fails to Show by a Preponderance of the Evidence that the Amount in Controversy Exceeded $5 million

Posted in Case Summaries

Carranza v Nordstrom Inc., 2014 WL 10537816 (C. D. Cal. Dec. 12, 2014).

A federal district court in California refused to exercise jurisdiction in a wage and hour action brought for violations of the California Labor Code and other state laws and seeking PAGA penalties, finding that the evidence proffered by the defendant fell short of the preponderance of the evidence standard espoused in the United States Supreme Court’s Standard Fire decision to establish the amount in controversy in CAFA cases. Continue Reading

Plaintiff’s Failure to Show that it is Legally Impossible to Recover More Than $5,000,000 Defeats Remand

Posted in Case Summaries

Dammann v. Progressive Direct Insurance Company, 856 F.3d 580 (8th Cir. May 11, 2017).

In this action, while affirming the judgment of a district court which denied the plaintiffs’ motion to remand, the Eighth Circuit found that after the party seeking to remove has shown CAFA’s jurisdictional minimum by a preponderance of the evidence, remand is only appropriate if the plaintiff can establish to a legal certainty that the claim is for less than the requisite amount.

The plaintiffs, purchasers of automobile insurance policies from the defendant Progressive Direct Insurance Company, brought a class action in Minnesota state court alleging that the defendant sold insurance policies with benefits below the statutory minimum required by Minnesota law. The Minnesota No-Fault Act requires all Minnesota automobile drivers to obtain insurance plans that provide coverage for $20,000 medical expenses loss and $20,000 for economic loss. The plaintiffs in this case were those who incurred medical expenses of $20,000 or more, but received only $19,900 in benefit payments, which is $100 below the statutory minimum.

The defendant timely removed the case to federal court pursuant to CAFA. The plaintiffs moved to remand on the ground that CAFA’s amount in controversy requirement did not exceed $5,000,000which the district court denied. On appeal, the Eighth Circuit affirmed.

The plaintiffs argued that the district court erred when it determined that the amount in controversy exceeded $5,000,000. Specifically, the plaintiffs argued that the district court should have restricted its analysis of the amount in controversy to what could be recovered by the class of individuals who had actually made claims for covered losses and were paid less than the statutory minimum. The district court calculated the amount in controversy relying on premiums collected on all the defendant policies which included the challenged deductibles, regardless of whether the policyholders had made claims which led to application of the deductibles.

The district court noted that the facts in the instant case were similar to those in Raskas v. Johnson & Johnson, 719 F.3d 884, 886 (8th Cir. 2013). In Raskas, a group of plaintiffs filed a lawsuit in Missouri state court alleging that various manufacturers of medications had conspired to deceive customers into throwing away medications after their expiration dates, despite the defendants’ knowledge that the medications were still safe and effective. The defendants removed to federal court based on their sales revenue in Missouri during the class period. The plaintiffs argued that the defendants’ evidence in support of the amount in controversy was over-inclusive because it encompassed more than just the sales attributable to the challenged practice. The Raskas court rejected the plaintiffs’ argument and held that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they were. (Editor’s Note: See the CAFA Law Blog analysis of Raskas posted on December 16, 2013).

As in Raskas, the plaintiffs argued here that the evidence provided by the defendant to satisfy CAFA’s amount in controversy requirement was over-inclusive because it included all premiums collected on policies with the challenged deductibles, not just the premiums collected from members of the narrowly defined class. The Eighth Circuit ruled that the district court correctly concluded that the instant case was like Raskas and that the defendant carried its burden of establishing by a preponderance of the evidence that the amount in controversy exceeded CAFA’s jurisdictional minimum.

The Eighth Circuit found that after the party seeking to remove has shown CAFA’s jurisdictional minimum by a preponderance of the evidence, remand is only appropriate if the plaintiff can establish to a legal certainty that the claim is for less than the requisite amount. The Eighth Circuit in Raskas, pointed out that even if it was highly improbable that the plaintiffs would recover the amounts defendants had put into controversy, it did not meet the legally impossible standard. The Eighth Circuit ruled that the plaintiffs here failed to show that it is legally impossible for them to recover more than $5,000,000. The Eighth Circuit explained that while they put the defendant’s sales practices at issue and sought a refund of their premium payments, they had not offered evidence to establish the amount they collectively paid in premiums. The Eighth Circuit stated that without such information, it could not determine whether it would be legally impossible for them to recover $5,000,000.

The Eighth Circuit therefore concluded that the district court properly denied the motion for remand and accordingly, affirmed its decision.

John T. Rouse

Evidence of Proposed Class Members’ Residency Sufficient to Show Citizenship for Home State and Local Controversy Exceptions, Even Without Residency-Domicile Presumption

Posted in Case Summaries

Ellis v. Montgomery County, 2017 WL 440737 (E.D. Penn. Jan. 27, 2017)

A Pennsylvania District Court found it more likely than not that over two-thirds of a proposed class’s members were citizens of Pennsylvania, triggering CAFA’s home state exception, based primarily on evidence that 90% of those individuals resided in Pennsylvania. The Third Circuit has not ruled on whether a residency-domicile presumption should be recognized in these circumstances, as the Sixth Circuit did recently. But here, the District Court found it didn’t matter. Under either the residency-domicile presumption or the more holistic factual approach required by the Fifth and Ninth Circuits, the court found the defendants’ evidence satisfied their burden. It was undisputed that the other elements of CAFA’s home state exception were met, and accordingly the court declined jurisdiction and dismissed the action. Continue Reading

California Waiting Time Penalties May Benefit Employers in Establishing the Amount in Controversy

Posted in Case Summaries, Wage and Hour

Mackall v. Healthsource Global Staffing, Inc. Case No. 16-cv-03810 (N.D. Cal. Sept. 2, 2016).

A district court in California found that allegations of wilful failure to timely pay wages are sufficient to support estimations of waiting time penalties at a 100% rate.

The plaintiff, Karen Mackall, filed this putative class action in the Superior Court of California, county of Alameda, on behalf of a class of all current and former non-exempt hourly Registered Nurses employed by the defendant. The plaintiff alleged causes of action for failure to pay minimum wages; failure to pay overtime compensation; failure to provide meal and rest periods; failure to keep accurate payroll records; and failure to pay wages of terminated or resigned employees etc. The plaintiff also asserted a claim under PAGA.

The defendant removed the action under CAFA asserting minimal diversity claiming that it was a citizen of California, whereas, the home mailing addresses for the putative class members established that many them were citizens of other states. The defendant asserted that the class consisted of at least 1,242 putative class members and the amount-in-controversy exceeded $5 million.

The plaintiff responded with a motion to remand arguing that the defendant failed to prove that the amount-in-controversy exceeded CAFA’s statutory requirement of $5 million. The amount-in-controversy was the only dispute between the parties. Continue Reading