McMullen v. Synchrony Bank, 128 F.Supp.3d 180 (D.C. 2015)

In this action, the District Court declined to remand the case back to the superior court based on the local controversy exception to the Class Action Fairness Act (“CAFA”). The District Court found that after limited discovery regarding the citizenship of the putative class members, it became apparent that at best, sixty percent of the putative class members were citizens of the District of Columbia, thus falling below the two-thirds requirement mandated by the local controversy exception under CAFA.

Valerie McMullen (“Plaintiff”) filed this action in the Superior Court of the District of Columbia against Wayne Bullen, Karim Steward, Bullen Wellness, Washington Chiropractic, One World Fitness, Synchrony Bank (“Synchrony”) and JP Morgan Chase (“Chase”) (collectively, “Defendants”) based on their alleged participation in a fraudulent scheme involving lines of healthcare-related credit.After Plaintiff amended her complaint to add class allegations, Chase removed the action to the United States District Court for the District of Columbia (“District Court”) under CAFA. Plaintiff responded with a motion to remand, arguing that the District Court lacked jurisdiction, and even if it had jurisdiction, it would be barred from exercising it by the local controversy exception to CAFA.

In a prior order, the District Court concluded that CAFA afforded it jurisdiction over the action. However, because the District Court was unable to establish whether two thirds of the putative class members were citizens of the District of Columbia, it reserved final judgment on whether the local controversy exception applied and ordered limited jurisdictional discovery focused on that issue.

The District Court’s discovery order instructed Synchrony and Chase to submit declarations to Plaintiff indicating the total number of accounts opened through Bullen, Steward and their affiliated companies, the date each account was opened, and the name and last known address associated with each. Defendants were also ordered to produce a copy of each individual’s driver’s license, to the extent such documents were already in their possession.

The District Court noted that the most comprehensive evidence came from Synchrony and Chase, as their declarations provided the last known addresses for 892 putative class members, all of whom had accounts opened through either Bullen Wellness or Washington Chiropractic. Plaintiff conceded that even after resolving eight inconsistencies between the declarations and patient records in favor of D.C. citizenship, only sixty percent of these individuals were last linked to the District of Columbia.

Plaintiff, however, pointed to a different source of evidence in support of her motion to remand – the Bullen defendants’ patient records. These records included addresses of 93 individuals named in the declarations, of which eighty percent were located in the District of Columbia. According to Plaintiff, the patient records represent the only “verifiable documentation of citizenship of the putative class members”, and therefore, “establish a sufficient basis for the Court to remand this case under the local controversy exception.” The District Court noted that by posing this argument, Plaintiff implied that Synchrony and Chase’s evidence cannot be relied upon. Plaintiff reaffirms this theme when she noted that Synchrony and Chase did not provide driver’s licenses for the putative class members.

The District Court rejected Plaintiff’s implication that it must choose between the declarations and the patient records, because the two sources of evidence were broadly consistent. Further, because the declarations included almost 10 times as many putative class members as the patient records, they were more likely to provide a more accurate assessment of the class’s composition. Moreover, the District Court stated that Plaintiff’s insinuations were conclusory at best, as she failed to explain why patient records were more verifiable than the declarations nor has Plaintiff detailed why the declarations’ evidentiary value should be undermined by the lack of production of the class’s driver’s licenses.

Ultimately, the District Court found that Plaintiff failed to offer evidence showing that more than two thirds of the class members were citizens of the District of Columbia. For the vast majority of the class members, the record provided a single address that there was no reason to reject. Moreover, the District Court noted that even if Plaintiff could satisfy the citizenship requirement, she would struggle to prove that this was true at the time relevant under the statute. The District Court explained that when determining the local controversy exception, the courts are also tasked to assess class members’ citizenship as of the date of filing of the pleading that indicated the existence of federal jurisdiction.

Here, the pleadings first indicated the existence of a federal jurisdiction on October 31, 2014, when the plaintiff amended her initial complaint to add class allegations. But by that point, much of the evidence had grown somewhat stale as it reflects accounts opened between November 2008 and April 2012. The District Court noted that many of the class members may have moved between the time their addresses were recorded and when Plaintiff initiated her class action. The District Court found that as the party responsible for proving that the local controversy exception applied, Plaintiff failed to do so.

Accordingly, the District Court denied Plaintiff’s motion to remand, and exercised federal jurisdiction over this action.

-Mike Aleali