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

Generic Demand For Damages Does Not Justify Local Controversy Exception to CAFA

Posted in Case Summaries

Robertson v. Sun Life Financial, 2:17-cv-02148-SSV-JVM (E.D. La. Jan. 22, 2018)

In this action, a Louisiana District Court denied a motion to remand, finding that the Plaintiff’s generic demand for damages from a “local” defendant was insufficient to justify remanding the case pursuant to CAFA’s Local Controversy exception.

Plaintiff brought a lawsuit against an individual defendant (“Pizzolato”) for forging a check, and against Sun Life (and associated entities) for permitting the withdrawal of funds from his account without contacting him to verify the transaction. He eventually amended to include class action, RICO claims against Sun Life, alleging that its agent conspired with Pizzolato, his son, to transfer money from several individual investment accounts to fraudulent companies and accounts. Sun Life removed, but once the RICO claims were dismissed as time-barred, Plaintiff sought remand. Although the prima facie requirements for CAFA jurisdiction existed, Plaintiff sought remand pursuant to the Local Controversy exception.

The Local Controversy exception requires federal courts to decline jurisdiction when: (1) more than two-thirds of the proposed class members are citizens of the original forum state; (2) the plaintiff class seeks “significant relief” from at least one defendant who is a citizen of the original forum and whose alleged conduct forms a significant basis for the claims asserted; (3) the “principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred” in the original forum; and (4) no similar class action has been filed in the three-year period preceding the filing of the class action. 28 U.S.C. § 1332(d)(4)(A).

Here, while the District Court acknowledged that Pizzolato’s conduct formed a significant basis for the class claims, it found that Plaintiff had not established that the class sought significant relief from him. The District Court noted that the complaint named defendants Sun Life Financial, Sun Life Assurance Company, and Sun Life Administrators as “Racketeering Defendants,” but not Pizzolato. Moreover, the class action allegations were directed at the Racketeering Defendants, not Pizzolato individually.  Further, Plaintiff’s RICO Case Statement confirmed that Sun Life was the sole RICO defendant. In fact, the District Court noted that Plaintiff appeared to have abandoned his claims against Pizzolato under Louisiana law, as he had failed to take any steps to prosecute his case against Pizzolato for over three years before filing his class action complaint, and as Pizzolato had never participated in the litigation, nor taken any steps in his defense.

The District Court found that Plaintiff’s conclusory statement, that “petitioner seeks significant relief from a defendant that is in the State of Louisiana, namely, [Pizzolato]” failed to satisfy his burden of proof to show the applicability of the Local Controversy exception. In the absence of an identifiable class-wide cause of action against Pizzolato, the District Court opined that this generic demand for damages was insufficient to demonstrate that the class sought significant relief from a local defendant.

Accordingly, the District Court held that this matter did not satisfy the requirements of the Local Controversy exception, and denied Plaintiff’s motion to remand.