Dunham v. Coffeyville Resources, LLC No. 07-1186-JTM, 2007 WL 3283774 (D. Kansas Nov. 6, 2007),

The United States District Court for the District of Kansas considered the defendant’s Motion to Dismiss for lack of subject matter jurisdiction. The sole issue was whether the court had jurisdiction to hear the case under CAFA. 

The defendants are limited liability companies organized pursuant to Delaware law, with their principal place of business in Kansas. Id. at *1-2. The putative class consisted of “residents, domiciliaries and property owners of Coffeyville, Kansas” who allegedly suffered damages in connection with a July 2007 flood at an oil refinery in Coffeyville, Kansas. Id. That must have been a mess.

There was no dispute that the $5 million amount in controversy was met, but the two exceptions to jurisdiction under CAFA – the local controversy and home state exception were potentially applicable.

Under the local controversy exception, CAFA will not provide jurisdiction (i) over a class action in which –

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least one defendant is a defendant –

(aa) from whom significant relief is sought by members of the plaintiff class;

(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and

(cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed;


(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.

28 U.S.C. § 1332(d)(4)(A).

Under the home state exception, the court must decline CAFA jurisdiction if “two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.” 28 U.S.C. §1332(d)(4)(B).

The plaintiff cited a number of cases holding that a court should not apply the local controversy or home state exceptions in the absence of discovery and direct evidence as to the citizenship of the class. Id. at *2. The court distinguished those cases because this action arose from a single incident which has been shown to affect only a single locality and held that dismissal was required and that further discovery was not warranted. Id. at *3. The court noted that the plaintiff’s own characterization of the case showed that purely local nature of the class. Id.

The parties disputed whether two thirds of the putative plaintiff class were citizens of Kansas. The court applied a standard used in other cases when interpreting whether a CAFA exception applies, stating that the exception would apply as long as it is “reasonably likely” or “reasonably probable” that two thirds of the putative class members are citizens of the forum. Id.

The plaintiff also challenged the applicability of the CAFA exceptions on the ground that the defendants have failed to show either (a) a defendant is a “primary defendant” as defined in the home state exception or one “from whom significant relief is sought” or whose conduct forms a “significant basis for the claims asserted” under the local controversy exception, or (b) is also a citizen of Kansas. Id. The court found this argument without merit because it held that it was obvious that Coffeyville Resources Refining and Marketing, LLC (“CRRM”) was “by any reasonable understanding both a primary defendant in the action and a defendant from whom significant relief is sought.” Id. 

The court similarly had no trouble concluding that the CRRM was a dual citizen of Kansas and Delaware, despite the plaintiff’s argument that CRRM should be considered only a citizen of Delaware. The court relied on 28 U.S.C. §1332(d)(10), which states that “an unincorporated association [is] deemed to be a citizen of the State where it has it principal place of business and the State under whose law it is organized.”   (Emphasis added). Id. at *4. The court held that there was no dispute that CRRM had its principal place of business in Kansas.

By Rose Marie L. Fiore