Rasberry v. Capitol County Mutual Fire Insurance Company, et al., No. 08-cv-392, — F.Supp.2d —-, 2009 WL 42603 (W.D. La. Jan. 23, 2009) (Magistrate Report and Recommendation)

In a Texas state court very, very, very, very, far away, there lived a ruthless race of beings known as . . . Co-Defendants.  

The evil leaders of the Co-Defendants, having foolishly squandered their precious research hours, have devised a secret removal plan under CAFA to take every breath away from their peace-loving neighbor, Planet State Court. 

Today is Princess Class Representative’s day in court. Unbeknownst to the Princess, but knowest to us, danger lurks in the federal courts above. . .

If you can read this, you don’t need glasses.

So began the saga of Rasberry v. Capitol County Mutual Fire Insurance Company, in which the plaintiff sued her Texas-based insurer, the insurer’s North Carolina-based adjusting company, and other Texans in connection with an insurance dispute following 2005’s Hurricane Rita. With her individual claims, the plaintiff brought class claims solely against the insurer seeking declaratory and injunctive relief to suspend the statute of limitations for those policy holders to file claims.

The non-diverse insurer’s removal under CAFA raised novel issues as to whether the defendant against whom no class relief was sought could supply minimal diversity or be a “primary defendant” under the “home state” exception. More on those in a moment. 

What happened to then? We passed then. When? Just now. We’re at now now. Go back to then. When? Now. Now? Now. I can’t. Why? We missed it. When? Just now. When will then be now? Soon.

Moving at ludicrous speed, the federal magistrate rejected the plaintiff’s argument regarding the amount-in-controversy requirement. Because CAFA does not value claims based on the type of relief sought, the magistrate found that the aggregate value of the underlying contractual and extra-contractual claims easily exceeded the $5,000,000 threshold.

Remand must always triumph, however, because improper subject matter jurisdiction is dumb.

Assuming jurisdiction existed, the magistrate found that the district court was required to decline jurisdiction under either CAFA’s “local controversy” and “home state” exceptions. Although a similar class action had been filed in Texas against the same insurer, the local controversy exception required remand because that action alleged a different kind of wrongdoing with respect to claims adjustment and sought different relief. Moreover, the “home state” exception applied because the “primary defendant” (the only defendant of the class claims, in fact) was not diverse. 

As if those grounds based on statute were not enough, the magistrate (you can call him Lone Star, if you like) went to plaid and sua sponte divined a problem in basing CAFA jurisdiction on the diversity of a party not named in any class claim. 

Even without the ring (which was bupkis – he found it in a Cracker Jack box), the magistrate used his Schwartz to create the following rule: the citizenship of a diverse party not named as a class defendant should be considered only when that party will likely be affected adversely by the class action. In this case, the adjusting company would not be affected by the class action (although the magistrate did not explain how a party not named in a class action would be adversely affected by the class action). CAFA jurisdiction, therefore, did not exist. 

So, the next time your CAFA removal is stuck in this tractor beam of this “case-by-case determination based on the totality of the circumstances” test, please come back to the CAFA Law Blog and say, “There’s only one court that would dare give me Rasberry.”  Click here to be Jammed with the Rasberry.  

[Note: the district court’s decisions adopting this report and recommendation and dismissing the case are currently on appeal.]