Heaphy v. State Farm Mutual Automobile Insurance Co., No. C 05-5404, 2005 WL 1950244 (W.D. Wash. Aug. 15, 2005).
An state court-ordered arbitration which ended in an award against the plaintiffs disposing of their contract-based claims, converted a post Class Action Fairness Act amended complaint into a new action for CAFA jurdictional purposes, according to a Washington state federal judge in this litigation against State Farm Mutual Automobile Insurance Company. Denise Heaphy and others first filed suit in Washington State court in August, 2001, and State Farm was ultimately successful in forcing Heaphy to arbitrate her claims, which finally resulted in an arbitrator’s award against her on all counts decided in April, 2005, after the Class Action Fairness Act became law. Heaphy then, before State Farm was able to reduce the arbitration award to judgment in state court, amended her initial complaint to add a new plaintiff and new causes of action. State Farm immediately removed the case to federal court, where the remand battle focused on whether Heaphy’s amended complaint related back to the original filing.
U. S. District Judge Ronald B. Leighton made some noteworthy conclusions and observations along the way to his decision that the removal was proper and that plaintiffs’ remand motion should be denied. Judge Leighton deftly side-stepped the issue of whether CAFA switches the burden of proof of establishing federal jurisdiction by saying that there was no real dispute about the underlying factual context concerning removal, but noted nonetheless that State Farm’s argument that CAFA placed the burden of proof on the plaintiffs challenging federal jurisdiction “appears to be correct in light of CAFA’s legislative history . . .”. Judge Leighton also noted, “It is clear that Congress intended CAFA as an expansion of this court’s jurisdiction, and a vehicle for directing class action lawsuits to federal court.” The court mentioned the parties’ mutual accusations of gamesmanship over the forum, adding, “The court is not particularly offended by, and is not persuaded by, the tactical maneuvering evident in the procedural history of this case.”
Regarding the relation-back issue, the court concluded that the arbitration award in favor of State Farm effectively wiped out Heaphy’s case before she amended her complaint, so her new filing “commenced” a new action for CAFA jurisdictional purposes, noting, “The theoretical existence of a class which did have viable claims did not resurrect her claims, or keep the class action ‘alive’ an awaiting the appointment of additional representatives (or the assertion of new claims).” The court also invoked Knudsen in support of its ultimate finding that the first amended complaint “must be treated as fresh litigation.”