Moore, et al. v. The State of Louisiana Through the Insurance Rating Commission, et al., Civil Action No. 05-374-JJB c/w Civil Action No. 05-1008-JJB, United States District Court, Middle District of Louisiana, October 19, 2006.
Plaintiffs in a recent Louisiana putative class action apparently loaded too many 1970s disco remixes on their ipods when they led the defendants – and the federal court – on a circuitous “wild goose chase” in and out of three state court suits, simply to avoid CAFA jurisdiction.
“Moore, Moore, Moore,
How Do You Like It,
How Do You Like It . . . .”
Moore I: Removal by “Primary” Versus “Nominal” Defendants Under CAFA.
On May 11, 2005, a putative class of plaintiff-homeowners filed suit in Louisiana state court seeking a judgment against two State Farm insurance companies (“State Farm”), and three “nominal” state entities, the Louisiana Insurance Rating Commission (“LIRC”), the Louisiana Department of Insurance (“LDI”), and the State Attorney General (”Moore I”). Plaintiffs alleged that State Farm wrongfully converted certain homeowners’ insurance policy forms into one policy form, which significantly increased their premiums. Plaintiffs requested a declaratory judgment that State Farm’s conversion of the policy forms violated Louisiana law. Plaintiffs asked the state court to enjoin State Farm from such illegal activity, and order State Farm to return the allegedly excessive premiums. Because plaintiffs sought relief primarily from the non-diverse State Farm defendants, State Farm timely removed the action pursuant to CAFA § 1332(d)(2)(A). Naturally, plaintiffs moved for a remand.
Moore II: Are Plaintiffs Attempting to Subvert CAFA by Filing a Second Class Action in State Court?
On July 19, 2005, two months after filing Moore I, these same plaintiffs filed a second class action in state court against State Farm and LIRC, requesting that the court enjoin State Farm from unlawfully converting the policy forms (“Moore II”). Even though plaintiffs now asserted that LIRC was a “primary” (and not “nominal”) defendant, State Farm timely removed Moore II under CAFA. Surprisingly, plaintiffs again filed a Motion to Remand.
Moore III: The CAFA Plot Thickens . . .
On May 31, 2005, LIRA filed a Supplemental Petition for Declaratory Judgment against State Farm in state court, and the identical Moore I and Moore II plaintiffs intervened (“Moore III”). LIRA’s Petition merely sought a declaration from the state court regarding the rating procedure to be followed when an insurer such as State Farm implements a policy conversion. LIRA expressly asserted in its Petition that “[n]othing should be construed as an allegation that State Farm acted illegally or outside of the rules and regulations of the LIRC, or the laws of the State of Louisiana.”
“So Please Don’t Go.
Don’t Go Away.
Please Don’t Go.
I’m Begging You to Stay.”
Moore I: District Court Keeps Plaintiffs In Federal Court Under CAFA
On November 1, 2005, the Magistrate denied plaintiffs’ Motion to Remand in Moore I, on the grounds that the plaintiffs’ remedies were directed at State Farm, which was the party directly liable for the actual relief sought, and that the plaintiffs’ remedies against LIRA and LDI were merely “tangential.” On June 28, 2006, the District Court entered an order adopting the Magistrate’s denial of remand. Plaintiffs did not appeal the order, despite CAFA’s right to appeal under § 1453(c)(1).
“Go On Now, Go Walk Out the Door.
Just Turn Around Now.
‘Cause You’re Not Welcome Anymore.”
Moore I and Moore II: District Court Sends “Nominal” State Defendants Back to State Court, But Keeps “Primary” State Farm Defendants.
On November 16, 2005, the State defendants in Moore I and Moore II filed motions to sever and remand plaintiffs’ claims against them on the grounds of Eleventh Amendment immunity. On December 13, 2005, the Magistrate recommended that the motions be granted, severing and remanding all claims against the State defendants in Moore I and Moore II, and retaining jurisdiction over the claims against State Farm. On June 28, 2006, the District Court agreed, leaving State Farm as the sole remaining defendant in federal court. Plaintiffs did not appeal this order either.
In August 2006, State Farm filed Rule 56 Motions for Summary Judgment in Moore I and Moore II, and the District Court stayed class certification deadlines pending resolution of these dispositive motions.
“Ain’t No Stoppin’ Us Now!
We’re on the Move!
Ain’t No Stoppin’ Us Now!
We’ve Got the Groove! "
Moore III: Let the Real Shenanigans Begin . . .
Even though plaintiffs’ only remaining putative class claims were against State Farm in federal court, plaintiffs returned to the state-court action in Moore III, and filed a: (1) Motion to Consolidate Moore I, Moore II, and Moore III; (2) Motion for Class Certification under the consolidated caption; and (3) Motion to Reset a “Preliminary Injunction” hearing against State Farm that had been scheduled in Moore I before it was removed to federal court. The plaintiffs submitted a proposed order that would have directed State Farm to appear in state court and show cause why a motion for class certification should not be granted.
“So I’d Like to Know Where You Got the Notion.
Said I’d Like to Know Where You Got the Notion.
To Rock the Boat, Don’t Rock the Boat Baby.
Rock the boat, Don’t Tip the Boat Over.
Rock the Boat, Don’t Rock the Boat Baby.
Rock the Boat-t-t-t-t.”
Not surprisingly, State Farm was taken aback by plaintiffs’ machinations in state court, and responded with a motion to enjoin the state court from taking further action against State Farm in Moore I and Moore II. State Farm argued that, because the federal court denied remand of the plaintiffs’ class claims against State Farm in Moore I and Moore II, and plaintiffs did not appeal those orders, the federal court had jurisdiction over plaintiffs’ class claims against State Farm. According to State Farm, having lost their motions to remand, and facing dispositive motions in federal court, plaintiffs were attempting to subvert CAFA jurisdiction by improperly injecting State Farm in the state court proceedings. Not only were plaintiffs asking the state court to certify a class action that was pending only in federal court, they were also requesting that the state court decide plaintiffs’ substantive class claims against State Farm for conversion of the policy forms.
“Shame, Shame, Shame.
Hey Shame on You.
If You Can’t Appeal Too.
I Say Shame, Shame, Shame
Shame, Shame on You.
If You Can’t Appeal Too!”
The District Court was not fooled by plaintiffs’ procedural shenanigans. The Court readily determined that jurisdiction over plaintiffs’ claims against State Farm was in federal court, and not in state court. According to the Court, because plaintiffs failed to exercise their express right under CAFA § 1453(c)(1) to appeal the orders denying plaintiffs’ motions to remand their claims against State Farm in Moore I and Moore II, “they should not now be permitted to litigate their claims against State Farm in state court.”
“Don’t Blame it On Sunshine
Don’t Blame it On Moonlight
Don’t Blame it On Good Times
Blame it On the Comity Boogie.”
In its October 19, 2006 Ruling and Order on State Farm’s request for injunctive relief, the District Court acknowledged that 28 U.S.C. § 1446(d) gave the federal court express Congressional authorization to enjoin the Moore III state court from moving forward with respect to plaintiffs’ claims against State Farm in Moore I and Moore II. Surprisingly, however, the District Court declined to exercise this power. The District Court concluded that, because the state court had not actually moved forward on the pending cases, “an injunction is inappropriate at this time.” Citing “important principles” of federalism and comity, the District Court declared that the state court should decide whether to halt its own proceedings, and the federal court “must defer to the state court’s ability to handle its cases.” According to the District Court, State Farm would not suffer irreparable injury because “it is not required to appear in state court and litigate the suit on the merits if the state court exercises jurisdiction in defiance of removal.” The District Court, therefore, denied State Farm’s request for injunctive relief.
“Whether You’re a Brother or Whether You’re a Mother,
You’re Stayin Alive, Stayin’ Alive.
Feel the City Breakin’ and Ev’rybody Shakin’
And We’re Stayin’ Alive, Stayin’ Alive.
Ah, Ha, Ha, Ha, Stayin’ Alive.”
It remains to be seen whether the state court, as the District Court predicted, will apply § 1446(d) “appropriately,” and not purport to assert jurisdiction over the claims against State Farm in either Moore I and Moore II. And it also remains to be seen whether plaintiffs will continue to manipulate the state court actions in an effort to avoid federal jurisdiction under CAFA. Only time will tell if disco is really dead or not. In any event, despite CAFA, the jurisdictional issue in Moore appears to be “stayin’ alive.”