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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

No CAFA for You! Allstate Remanded to the District Court … and It Didn’t Even Get Bread!

Posted in Case Summaries

Apodaca v. Allstate Ins. Co., No. 07-cv-00937-EWN-MEH, 2008 WL 113844 (D. Colo. Jan. 8, 2008).

There was Allstate and the plaintiffs, waiting to place their orders with the Judge. While the parties chatted in line together, surely talking about the issues of the day (you know, the Dollar, the election, the Yankees-Red Sox feud), their conversation soon centered on the lightning rod issue captivating coffee houses, cigar bars, and little league bleachers country wide. You got it, CAFA jurisdiction. As most of these conversations in lunch lines do, this conversation impacted what Allstate and the plaintiffs would order.  

Allstate arrived at the counter and ordered first: “I’ll have the federal jurisdiction jambalaya, please. Does that come with removal relish?” The Voice replied, “5 million dollars.” “5 million dollars?” Allstate screeched.

The room stopped. Guffaws of disbelief rained down on Allstate as every eye in the room looked directly to Judge Nottingham (the Soup Nottzi), the owner of the very deli where the parties stood (the Colorado Cup-o-Court).

The plaintiffs, fearful for Allstate and themselves, mumbled under their breath: “Let it go, just order the remand roux and be happy!” Allstate trembled, as did the plaintiffs. Had it followed the proper ordering procedure? Had it had deviated from the well worn path that all patrons knew they must follow? Ohh calamity! What would the Soup Nottzi do?

“NO JURISDICTION FOR YOU!”

The other patrons feared for their own orders. “What did they do?” “How will I know that I am doing everything I’m supposed to be doing?” 

The Soup Nottzi explained. Allstate and the plaintiffs were repeat customers. Their “order” involved insurance policies. The plaintiffs believed their policies, issued by Allstate, should be reformed to provide maximum coverage. The plaintiffs claimed to be visiting the Cup-o-Court on behalf of others who would be entitled to the same benefits, people with similar policies. They had been to Cup-o-Court once before, and the Soup Nottzi remanded. Before coming back to court, the plaintiffs amended their complaint. Based on this amendment, Allstate again attempted to visit the Colorado Cup-o-Court. Allstate was sadly mistaken. The amended complaint brought 17 total claims, 14 that applied only to the named plaintiffs and 3 that applied to a purported class. Allstate tried to meet its $5 million amount in controversy by (1) combining the purported amount in controversy for the individual and class claims; and (2) aggregating common class claims.

The Cup-o-Court rejected both arguments. Allstate argued that the phrase from CAFA that “the claims of the individual class members shall be aggregated to determine” jurisdictional amount meant that the named plaintiffs’ individual claims must be combined with common class claims. The court rejected this argument. 

With the combination argument rejected, the Cup-o-Court rejected Allstate’s argument that common class claims passed the jurisdictional amount threshold. The Court noted that Allstate never claimed the allegations in the second amended complaint resolved the amount in controversy issue, and therefore the Court looked to the notice of removal to determine the question. The focus was paragraphs related to reformation of all policies in Colorado at issue; punitive damage potential; and individual named plaintiffs’ reformation of insurance policies. 

Allstate claimed that there were almost 15,000 such policies in Colorado, and that reformation of each would lead to an amount due in between one and five million dollars. The Court rejected this argument due to Allstate’s failure to provide some statistical analysis or “guesstimate” as to how many of the potential class claimants would even avail themselves of the additional benefits. Allstate claimed that potential punitive damages could exceed the jurisdictional amount, and the Court similarly rejected this argument for failure to provide any guess as to how many claimants would seek punitives and in what amount. Finally, the Court noted that even if the two individual named plaintiffs reformed policies were the basis of the amount in controversy, it would fail to cross the $5 million threshold.

In memoriam of these events, a new flavor was placed on the menu: Not Enough “Dough” Noodles!