Moua v. Jani-King of Minnesota, Inc., Slip Copy, 2009 WL 212425 (D.Minn. Jan. 27, 2009)

In Moua certain Jani-King franchisees filed a class action in state court against Jani-King International (“JKI”) and some of its subsidiaries. Jani-King International (“JKI”) is a Texas corporation that sells franchises to individuals across the United States entitling the franchisee to cleaning or janitorial service accounts from Jani-King customers. 

The suit alleged, among other things, that defendants breached the franchise agreements and engaged in fraud and misrepresentation.

Defendants removed the case to the United States District Court for the District Minnesota under CAFA, and, as you would expect, plaintiffs filed a moved to remand. 

Plaintiffs argued that CAFA’s home state controversy exception applied, which requires a federal district court to decline jurisdiction over a class action in which “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 parties did not dispute that more than two thirds of the proposed class members were Minnesota citizens, but the defendants argued that the exception did not apply because JKI was a Texas citizen, and therefore all of the “primary defendants” were not Minnesota citizens. Plaintiffs attempted to argue that JKI was not a primary defendant.

Noting that the term “primary defendant’ is not expressly defined in CAFA, the court relied, among other authority, on a Report of the Senate Judiciary Committee, issued after CAFA’s enactment, which interprets the term primary defendant to mean defendants who are the “targets” of the lawsuit and have substantial exposure to the vast majority of the proposed class members. See id. at *3 and n. 4.  

The court rejected plaintiffs’ argument that JKI was not a primary defendant because it found no principled distinction in the complaint among the various defendants’ status.