Nicholson et al., v. Prime Tanning Corp., et al., No. 09-6083-CV-SJ-GAF, 2009 U.S. Dist. LEXIS 80445 (W.D. Mo. Sept. 3, 2009).

In this case, the Missouri District Court refused to remand an action holding that because the complaint failed to distinguish among defendants as to theories of liability, it considered all the defendants (including an out of state defendant) as primary defendants for the purpose of CAFA’s home state controversy exception.

The plaintiffs brought a class action in the Missouri state court against Prime Tanning Corp; Prime Holding, NBL; and Rick Ream, alleging that the defendants’ alleged land application of ‘sludge’ containing cancer-causing CR(VI) compounds resulted in damages to plaintiffs and other class members.  Missouri Prime, a Missouri resident, is a wholly-owned subsidiary of Prime Holding, a Maine corporation, with its principal place of business in Maine.  Throughout the complaint, the plaintiffs referred to Missouri Prime and Prime Holding as one, and did not distinguish the liability sought from Prime Holding as vicarious.

Not wanting to litigate in state court, Prime Holding timely removed the action to the federal court under CAFA.  Although the parties agreed that the basic elements of CAFA jurisdiction were present in this case, the plaintiffs argued that remand was required because the home state controversy exception to CAFA jurisdiction was applicable.

The District Court noted that to demonstrate that the home state controversy exception under 28 U.S.C. § 1332(d)(4)(B), applies, the plaintiffs must show (1) more than two-thirds of all plaintiffs are citizens of the state where the action is filed; and (2) all primary defendants are citizens of the state where the action is filed.  Here, there was no dispute except whether the out of state defendant, Prime Holding, was a primary defendant or not.  Thus, the District Court looked to the definition explained in Moua v. Jani-King of Minn., Inc., 613 F. Supp. 2d 1103, 1107 (D. Minn. 2009) that a ‘primary defendant,’ inter alia, is who is sued directly, as opposed to vicariously, or for indemnification or contribution. (Editors’ Note: See the CAFA Law Blog analysis of Moua posted on June 4, 2009). The District Court stated that it need only look at the complaint to make a pre-trial determination of which defendants are sued directly.

The District Court observed that although the plaintiffs argued that Prime Holding was not a primary defendant because they purportedly sought only to impose vicarious liability on it, the complaint evidenced their intention to hold Prime Holding directly liable for their damages.  Nowhere in the complaint did the plaintiffs allege that their claims against Prime Holding were based on theories of vicarious liability, indemnification, or contribution.  In fact, the plaintiffs charged all the defendants, including Prime Holding, with the conduct they alleged caused damages to them and other class members.  The plaintiffs plainly and repeatedly asserted alleged facts and legal conclusions based on theories of direct liability against all the defendants.  Because the complaint failed to distinguish among defendants as to theories of liability, the District Court considered all the defendants primary defendants for the purpose of CAFA.

As a result, the District Court concluded that the home state controversy exception was not applicable in this case.