Randall v. Evamor, Inc., 2010 WL 1727977 (E.D. Mo. Apr 29, 2010) (No. 4:09CV01756 ERW).
While declining to exercise jurisdiction under CAFA’s home-state exception, a District Court in Missouri found that a putative class member’s last-known residence is the best reasonably available means of ascertaining his citizenship.
The plaintiffs filed a class action in a Missouri state court alleging violations of the Missouri Merchandising Practices Act against Evamor, Inc., a Missouri corporation. Evamor was a DirectBuy franchisee from whom the plaintiffs purchased their DirectBuy membership.
Evamor then removed the case to federal court pursuant to CAFA based on a showing that several putative class members were not Missouri citizens. In a limited discovery for the purpose of establishing the citizenship of the proposed class–consisting of all persons who purchased a membership at Evamor’s DirectBuy center, Evamor’s records revealed that it had a total of 5,522 members in the relevant time period, and that for 5,240 (95%) of those members– the last-known address on file was located in Missouri.
Based on this information, the District Court wondered if it must decline to exercise jurisdiction over this class action pursuant to CAFA’s “home state exception,” 28 U.S.C. § 1332(d)(4)(B). The Court noted that the plaintiffs were required to establish that more than two-thirds of the class members were Missouri “citizens.”
The plaintiffs, citing Tonnies v. Southland Imports, Inc., 2009 WL 3172565, at *3 n.2 (E.D. Mo. 2009), and other cases, argued that at least 95% of the potential class members had last-known addresses in Missouri. Thus, there was a rebuttable presumption that those individuals were Missouri citizens for purposes of the home state exception. (Editors’ Note: See the CAFA Law Blog analysis of Tonnies posted on February 11, 2010.)
Although, residency is not equivalent to citizenship, the Court, in absence of contrary proof by Evamor that even one of the presumed Missouri citizens was not in fact a resident of the state, found that evidence of a putative class member’s last-known residence is the best reasonably available means of ascertaining his presumptive state of citizenship, and stated that Evamor had not meaningfully distinguished any of the cases cited by the plaintiffs that have reached that conclusion.
Further, the Court noted that Evamor, while removing based on minimal diversity, referred to its records of last-known customer addresses in arguing that addresses indicating out-of-state residency presented a rebuttable presumption of out-of-state citizenship. Thus, the Court remarked that Evamor offered no principled rationale as to why that presumption should apply when establishing minimal diversity, but not for purposes of the home state exception.
Next, the Court found that the remaining requirement of the home state exception was satisfied because Evamor, the only defendant in this case is a Missouri citizen. While holding so, the Court rejected Evamor’s argument that its franchisor, DirectBuy, Inc., an Indiana corporation, was the true defendant to the plaintiffs’ claims. The Court observed that DirectBuy, as a franchiser, might be responsible for some unknown extent for the business practices at issue in this case, but DirectBuy was not the plaintiffs’ ‘primary focus’ as they did not seek any relief against them. And even if DirectBuy imposed policies requiring Evamor to employ the allegedly fraudulent business practices, the plaintiffs dealt directly with Evamor, making Evamor a party ‘whose alleged conduct formed a significant basis for the plaintiffs’ claims.
Finally, the Court found that the plaintiffs’ decision not to sue DirectBuy did not amount to “fraudulent non-joinder” because Menz v. New Holland N. Am., Inc., 440 F.3d 1002, 1004 (8th Cir. 2006) held that joinder is fraudulent when there is no supporting a claim against the ‘resident defendants.’ The Court noted that Evamor did not assert that the plaintiffs had no factual or legal basis for asserting claims against it; instead, it argued that DirectBuy was a more culpable defendant, because it was ultimately responsible for the alleged wrongdoing and might be required to satisfy any judgment the plaintiffs might obtain against Evamor. The Court thus maintained that subject to the rules governing joinder, plaintiffs are free to name as defendants only those parties whom they wish to sue, regardless of whether they might have valid claims against additional parties.
Accordingly, concluding that Evamor was the primary defendant, the Court remanded the action to state court.