Grosshart v State Farm Mutual Automobile Insurance Co., 2016 WL 5661526 (W.D. Mo. Sept. 29, 2016).
In an action brought against an insurance company and its claims representatives, the United States District Court, Western District of Missouri (the “District Court”) found the claims representatives were not significant defendants under the Class Action Fairness Act’s (“CAFA”) local controversy exception because each claim representative would have had contact with only a few of the class members. Accordingly, the District Court retained jurisdiction over the action, and it denied Plaintiff’s remand motion.
Plaintiff Quentin Grosshart (“Plaintiff”) brought a putative class action alleging the defendants engaged in a scheme in which they undertook to pay class members’ liens, and then paid more to medical providers than they were legally required under Missouri law. Plaintiff was injured in an automobile accident and received medical treatment. He then made a claim upon an insurance policy issued by the defendant State Farm Mutual Automobile Insurance Company to non-party William Hall. After negotiations, Plaintiff agreed to settle his claims for $11,600. Defendant Leana Massey (State Farm’s representative) provided Plaintiff a full and final release and informed him that if he executed the release, State Farm would forward him a payment of $4,395, and it would also forward $7,205 to the applicable lien holder.
Plaintiff specifically alleged the defendants violated Missouri Revised Statute § 430.225 by: (1) directly paying his medical lien holders without first obtaining his permission, and by (2) improperly paying those lien holders more than 50% of his settlement.
Defendants removed the action to the District Court from the Circuit Court of Cass County, Missouri. Thereafter, Plaintiff moved to remand based on CAFA’s local controversy exception.
Defendants contended the local controversy exception was not applicable because defendant Massey and the unnamed John/Jane Doe defendants, who were allegedly citizens of Missouri, were not significant defendants.
After reviewing the record and the parties’ arguments, the District Court found that Massey and the John/Jane Doe defendants were not significant defendants under CAFA’s local controversy exception. The District Court explained that the Eighth Circuit has held that whether an in-state defendant is significant for the purposes of the local controversy exception must be determined by considering the claims of all the class members in the class action.
In this case, the District Court explained the record did not show that a significant number of class members would have a claim against Massey and/or against one of the John/Jane Doe defendants. Significantly, Plaintiff failed to show that any of the individual defendants were a claim representative for a significant number of class members. The District Court agreed with State Farm that only the putative class members whose claims were handled by the defendant Massey (and/or a Doe defendant) could assert a claim against them, and there was no basis in the law to hold an individual defendant jointly and severally liable for the alleged harm suffered by a putative class member whose claims such defendant did not handle.
Here, the District Court found that each individual claim representative would have had contact with only some of the purported class members and thus, would not be a person from whom significant relief would be sought by the plaintiff class.
Accordingly, the District Court found the local controversy exception was not applicable in this action, and it denied Plaintiff’s remand motion.