Fisher v. Beverly Enterprises, Inc., No. 5:05CV00316 (E.D. Ark. Dec. 12, 2005).

Tedder v. Beverly Enterprises, Inc., No. 3:05CV00264 (E.D. Ark. Dec. 12, 2005).

On December 12, 2005, Eastern District of Arkansas District Judge Susan Webber Wright (the same federal judge who presided over and ultimately dismissed Paula Jones’s sexual harassment suit against then-President Bill Clinton in 1998), issued twin opinions granting both plaintiffs’ motions to remand. Judge Wright determined her court had no jurisdiction over either case, since the lawsuits were not filed under Federal Rule 23 or a similar Arkansas class action statute, which precluded the application of the Class Action Fairness Act.

Both plaintiffs, former residents of the defendant’s nursing homes, filed their complaints in Arkansas state court against Beverly Enterprises, alleging negligence, deceit, breach of contract, and other like claims after CAFA became effective February 18, 2005. In concert, the plaintiffs filed their motion for a temporary restraining order, preliminary injunction, or alternatively, for a constructive trust, filed on November 2, 2005. The plaintiffs hoped to enjoin a merger between the named defendant and North American Senior Care, Inc., alleging that the merger was an attempt by the defendants to avoid paying damages to the numerous nursing home victims bringing suit against the entity.

Beverly Enterprises quickly removed both actions to federal court filed on November 15, 2005, asserting that the plaintiffs’ complaints, if not in name, asserted class actions, and were removable under 28 U.S.C. § 1332(d). Beverly argued that if the proposed merger was enjoined, the impact of that decision would be shared by all other similarly situated plaintiffs with patient care claims against the corporation. The motion sought relief, Beverly argued, that would be certifiable as a class action under Federal Rule 23 in accordance with the expanded federal jurisdiction provided by CAFA. Essentially, the defendants alleged, “Quack, quack, quack.  And quack, quack.”

However, the court decided the defendant’s argument did not fly. The court first pointed out that the defendant in each case, as the removing party, carried the burden of establishing federal jurisdiction, despite CAFA’s legislative history to the contrary – in other words, the court must resolve all doubts in favor of remand. Judge Wright also outlined the requirements for the expanded subject matter jurisdiction under CAFA, but disagreed with the defendant’s “looks like a duck, quacks like a duck – must be a duck” theory. To the contrary, Judge Wright agreed with the plaintiffs that CAFA limits federal jurisdiction to civil actions filed under Federal Rule 23 or state class action statutes. Thus, she sent both ducks waddling back to state court.