Hargett_v._St_Bernard’s_Hospital_Inc.. et al., 2017 WL 1405034 (8th Cir. April 14, 2017).
The United States Court of Appeals for the Eighth Circuit (the “Eighth Circuit”) found that under the Class Action Fairness Act of 2005’s (“CAFA”) local-controversy exception citizenship can be ascertained either through irrefutable evidence, or through class definition before removal. If a Federal District Court allows the plaintiff to redefine the class to restrict it to a particular state post removal, then this will not divest a Federal District Court from exercising its jurisdiction.
Plaintiff Tammy Hargett (“Plaintiff”) was injured in a car wreck, and received medical treatment from defendant St. Bernard’s Hospital (“St. Bernard’s”). St. Bernard’s contracted with co-defendant RevClaims, LLC (“RevClaims”) to pursue any claim the Plaintiff might have against the driver responsible for her injuries. This was in lieu of collecting a reduced but certain payment from Arkansas Medicaid, which insured the Plaintiff. The Plaintiff contended this practice was in violation of the Arkansas law. Thus, she brought a class action representing all persons who were Arkansas Medicaid-eligible beneficiaries, who were treated at one of the defendant hospitals, and who had similar liens on their third-party claims by RevClaims.
The defendants removed the action pursuant to CAFA, and the Plaintiff moved to remand. The District Court granted the motion to remand, finding that the proposed class was defined as “all persons who were Arkansas residents at the time the medical services . . . were provided to them.” Further, the District Court directed the Plaintiff to amend her complaint to explicitly restrict the proposed class definition to include only Arkansas citizens. In light of the District Court’s ruling, the defendants appealed to the Eighth Circuit.
At the very outset, the Eighth Circuit observed the local-controversy exception was narrow, i.e., a District Court should resolve any doubt about the applicability of the exception. Additionally, the Eighth Circuit remarked that the term ‘citizen’ has long meant something different from “resident”, as it requires permanence and residency is a more fluid concept. Therefore, a complaint or notice of removal resting on residency will not establish citizenship for diversity jurisdiction.
In support of its distinction between the definitions of “citizen” and “resident”, the Eighth Circuit referred to In re Sprint Nextel Corporation, 593 F.3d 669 (7th Cir. 2010). There, the Seventh Circuit noted two ways plaintiffs could have established citizenship: (1) by presenting evidence of citizenship; and (2) by defining the class as all Kansas citizens who purchased the text messaging. (Editor’s Note: See the CAFA Law Blog analysis of Sprint posted on March 28, 2010). The Eighth Circuit also referred to its opinion in Hood v. Gilster-Mary Lee Corp., 785 F.3d 263 (8th Cir. 2015), where it reversed the District Court’s finding that a class comprising of workers at a particular Missouri plant was more than 2/3rds Missourian by citizenship. (Editor’s Note: See the CAFA Law Blog analysis of Hood posted on July 30, 2015). In so doing, the Hood opinion reiterated Sprint’s two ways to establish predominantly local citizenship: (1) sound evidence; and (2) defining the class as local citizens.
The Eighth Circuit found Hood and Sprint persuasive in this instance. It explained that generally, plaintiffs remained free to meet their burden through evidence or through a class explicitly limited to local citizens, but they were not free to rest on guesswork. The Eighth Circuit opined the District Court’s requirement that the Plaintiff clarify her class definition suggested not only guesswork, but also resolved doubt in the her favor.
In addition, the Eighth Circuit found the District Court cited to no authority for ordering the Plaintiff to restrict her class definition through an amended complaint before remand. The Plaintiff attempted to rely on Hood and she argued she could redefine the class as only local citizens. The Eighth Circuit, however, found that the “redefine” language was not part of Hood’s reasoning. Both Hood and Sprint spoke of defining the class in the first instance, i.e., before removal to include only local citizens, and did not authorize redefining of the class post removal.
In the end, the Eighth Circuit found the District Circuit erred in allowing Plaintiff to redefine the class, and accordingly, reversed the order remanding the action to the state court.