Published By

Handforth v. Stenotype Institute of Jacksonville, Inc., 2010 WL 55578, *1+ (M.D.Fla. Jan 04, 2010) (NO. 309-CV-361-J-32MCR).

You’ve got to have at least minimal diversity! If you don’t, why bother filing in federal court?

The Florida District Court dismissed the state law class action complaint without prejudice holding that the plaintiff failed to establish minimal diversity--that out-of-state “class members” were “citizens” of that state.

The plaintiff brought a state law putative class action directly in the District Court, seeking declaratory and injunctive relief against the defendants, Stenotype Institute of Jacksonville, Inc. and Gloria J. Wiley, for their alleged violations of the Florida Deceptive and Unfair Trade Practices Act.

Stenotype is a vocational school based in Florida, which specializes in stenography training for individuals seeking to become court reporters.  Wiley, a Florida citizen, has been Stenotype’s principal shareholder since 2004.  In 2006, Stenotype began to offer a two-year ‘Basic Machine Shorthand’ court reporting training program alongside its more traditional options, which contemplate completion in four or five years.  Between 2006 and 2009, 477 individuals enrolled in the two-year program. 

The plaintiff, a Florida citizen, enrolled in Stenotype’s two-year program in May 2007 but was unable to complete it within two years.  The plaintiff alleged that the two-year offering was virtually impossible to complete within the stated time-frame and was therefore a ‘bait-and-switch’ which forced enrollees to either drop the program or expend additional money to achieve the proficiency standard required for completion.  

Despite the state law nature of the claim and a lack of diversity between the named parties, the plaintiff filed her complaint in the District Court pursuant to CAFA. The District Court sua sponte raised the question of whether CAFA jurisdiction over this matter was proper and ordered limited discovery on the issue.

The defendants did not dispute CAFA’s jurisdiction, except it did not agree that that any member of the putative class of plaintiffs was diverse from either defendant.

The District Court remarked that while the named parties rule applies in the “complete diversity” context, CAFA’s “minimal diversity” standard does not require that the diverse plaintiff be a named party. Following limited discovery on the jurisdictional issue, the plaintiff learned that pursuant to Stenotype’s records, eight of the 477 potential class members had a last known address outside the state of Florida.  The Court observed that last known residence and citizenship are not synonymous, because an allegation of residence is insufficient to establish diversity jurisdiction. Thus, it found that the plaintiff must allege citizenship.

The Court stated that although the complaint alleged the citizenship of two putative class members, the plaintiff failed to meet her burden of persuasion as to their citizenship.  Further, the plaintiff made no mention of these potential class members in her supplemental brief and instead rested entirely on the out-of-state residency of eight putative class members.  

Thus, the Court found that these allegations, without further evidence as to the citizenship of the eight potential out-of-state class members, were insufficient to satisfy CAFA’s minimal diversity requirement.

Posted By McGlinchey Stafford at 05:30 AM | Comments / Questions (0)