Green v. SuperShuttle Intern., Inc., Slip Copy, 2010 WL 419964 (D. Minn., Jan 29, 2010)(NO. CIV. 09-2129 ADM/JJG).

Do you hate having to share a van full of strangers as you try to get from your hotel to the airport? Little did you know that your driver may have been a franchisee.

In this case, the Minnesota District Court refused to remand the action to state court holding that to be a significant/primary defendant under CAFA’s local and home state controversy exceptions, the local defendant must have the ability to satisfy any putative judgment.

The defendants, SuperShuttle International, Inc.; SuperShuttle Franchise Corporation; and SuperShuttle of Minnesota, Inc., own and operate a shared-ride shuttle service to the Twin Cities International Airport using an integrated network of transportation, communication, and dispatch facilities. The plaintiffs, current and former drivers, brought a class action in state court alleging that as a condition of employment, the defendants required them to enter into franchise agreements specifying the rights and obligations of the parties and improperly characterized them as “franchisees” rather than as “employees,” in violation of the Minnesota Fair Labor Standards Act.  The plaintiffs sought to recover lost wages, employment benefits, and restitution of franchise fees.

The defendants removed the action to the federal court under CAFA and the plaintiffs moved to remand.

First, the District Court noted that minimal diversity existed between the parties.

Second, the Court found that the defendants established that the plaintiffs’ restitution claim alone satisfied CAFA’s amount in controversy because the defendants had received in excess of $5 million in franchise fees since January 2006. In addition, the plaintiffs sought damages for wages and benefits of more than $2 million civil penalties and attorney’s fees.

Third, the Court observed that although Minnesota Statute § 541.07(5) governs two or three-year statute of limitations for the lost wages and employee benefits claims, the plaintiffs’ claim for restitution–recovery of franchise fees they paid to the defendants–was not a claim for lost wages and benefits, thus the applicable statute of limitations was six years under § 541.05. And under a six-year statute of limitations, CAFA’s class member requirement was satisfied because there had been 130 drivers operating under the defendants’ trademarks between July 2003 and July 2009—the date the complaint was filed.

Next, the Court refused to decline federal jurisdiction under CAFA’s local controversy exception, 28 U.S.C. § 1332(d)(4)(A). The Court noted that Minnesota defendant, SuperShuttle Minnesota, was not a profitable entity and had an accumulated deficit of more than $1,000,000, thus, Shuttle Minnesota entirely depended on SuperShuttle International for its continued viability. As a result, the Court compared each defendant’s apparent ability to satisfy a judgment, and found that the plaintiffs did not seek ‘significant’ relief from SuperShuttle Minnesota because the lion’s share of any putative judgment would likely be borne by SuperShuttle International, a resident of Delaware, and SuperShuttle Franchise, a resident of Arizona.

As two cases–Reid, et al. v. SuperShuttle International, Inc., No. 08-4854 (E.D.N.Y.) (filed Feb.12, 2009) and Kairy, et al. v. SuperShuttle International, Inc., No. 3:08-cv-02993-JSW (N.D. Cal.) (filed Sept.16, 2008)–had been filed recently against SuperShuttle International asserting similar allegations, the Court concluded that the plaintiffs’ also failed to meet the fourth element of CAFA’s ‘local controversy’ exception.

Concerning CAFA’s home-state controversy exception under § 1332(d)(4)(B), although more than two-thirds of the proposed class members were Minnesota citizens, the Court found that SuperShuttle International and SuperShuttle Franchise were the “primary defendants,” who were not Minnesota citizens. The Court found that although SuperShuttle International and SuperShuttle Franchise conducted business through SuperShuttle Minnesota, a Minnesota citizen, SuperShuttle Minnesota would likely be unable to satisfy a judgment in this action.  In addition, in the complaint, the plaintiffs made no distinction among the defendants in asserting their allegations.

Thus, the District Court refused to decline its jurisdiction.