Life of the South Insurance Company v. Carzell, 2017 WL 1174083 (11th Cir. March 29, 2017).
Recently, the Eleventh Circuit denied two corporate defendants’ petition to appeal because the companies’ dual citizenship was an insufficient basis to create federal diversity jurisdiction under CAFA when they shared a state of citizenship with all of the plaintiffs.
In Life of the South, the plaintiffs filed a putative class action in the Superior Court of Georgia against the defendant insurance companies (hereinafter “defendants”) that alleged a variety of state law violations including breach of contract, unjust enrichment, negligence, and bad faith.
The defendants, which were both incorporated in Georgia and both maintained their principal places of business in Florida, removed the action to the district court. Subsequently, the plaintiffs voluntarily dismissed their complaint and refiled it in state court after limiting the plaintiff class to include only “Georgia citizens” who were sold certain insurance policies by the defendants, were owed refunds based on relevant insurance policies issued by the defendants, or had purchased insurance policies from the defendants for vehicles that were already insured.
The defendants, again, timely removed the action the District Court pursuant to CAFA. The defendants asserted that they maintained their principal places of business in Florida, making them minimally diverse from the Georgia-citizen class members, and the class members included citizens of foreign countries, establishing minimal diversity. The district court determined that minimal diversity did not exist and remanded the case to state court. The defendants sought permission to appeal, which the Eleventh Circuit denied.
The Eleventh Circuit noted that in § 1332(d)(2)(A), CAFA provides for federal jurisdiction in certain civil actions when “any member of a class of plaintiffs is a citizen of a State different from any defendant.” In the instant case, it was undisputed that the plaintiffs were citizens of Georgia, and that because the defendants were incorporated in Georgia and maintained their principal places of business in Florida, they were citizens of both states. The defendants, however, maintained that due to their Florida citizenship, they were diverse from the Georgia-citizen plaintiffs. The plaintiffs argued that the parties were not diverse because they were all citizens of Georgia.
The Eleventh Circuit noted that to show that “any member of the class of plaintiffs is a citizen of a State different from any defendant,” the defendants must prove that they are not Georgia citizens. The Eleventh Circuit, however, found that the record unambiguously established that the defendants were incorporated in Georgia. The Eleventh Circuit thus opined that the defendants were Georgia citizens, just like the plaintiffs. Because the defendants could not establish that the plaintiffs and the defendants were not all citizens of Georgia, the Eleventh Circuit ruled that federal diversity jurisdiction did not exist.
Alternatively, the defendants argued that minimal diversity jurisdiction still existed because some of the putative class members were foreign citizens who maintained dual citizenship with the United States and a foreign country. The Eleventh Circuit, however, disagreed with the defendants’ claim that they had established minimal diversity. The Eleventh Circuit noted that the courts of appeals have uniformly held that, for diversity purposes, courts should consider only the United States citizenship of individuals who are dual citizens. The Eleventh Circuit thus ruled that an individual who is a dual citizen of the United States and another nation is only a citizen of the United States for the purposes of diversity jurisdiction under § 1332(a).
The defendants nevertheless argued that the complete diversity jurisdiction provision in § 1332(a) is different from CAFA’s minimal diversity jurisdiction provision found in § 1332(d)(2)(B). The Eleventh Circuit, however, saw no reason to treat dual citizens differently under § 1332(d)(2)(B) than under § 1332(a), and stated that both provisions furthered the goals of diversity jurisdiction avoiding any claimed bias against out-of-state or foreign defendants.
The Eleventh Circuit, therefore, concluded that because all of the plaintiffs and all of the defendants were citizens of Georgia, the district court correctly determined that diversity jurisdiction did not exist and, properly remanded the action to state court.
Accordingly, the Eleventh Circuit denied the defendants’ petition to appeal the district court’s order remanding the case to state court.
By: T. Dylan Reeves