Stevens v. Divericare Leasing Corp., 2009 WL 1212488 (W.D. Ark.)

Grandma: Sir, can I trouble you for a glass of warm milk? It helps put me to sleep.

Nursing Home Orderly: You can trouble me for a warm glass of shut-the-hell-up. Now, you will go to sleep or I will put you to sleep. Check out the name tag. You’re in my world now, grandma.

Grandma may have been at the nursing home’s mercy in Happy Gilmore, but the district court in Stevens v. Divericare Leasing Corp., decided the defendants are in Grandma’s world now and that world is an Arkansas state court.

While the nursing home operator was able to prove to the court that the case satisfied CAFA’s $5,000,000 amount in controversy (28 U.S.C. § 1332(d)(2)) and number of class member (28 U.S.C. § 1332 (d)(5)(B)) requirements, it could not overcome CAFA’s local controversy exception (28 U.S.C. § 1332(d)(4)(A)).

Under the local controversy exception a federal district court won’t take jurisdiction over a case if at least one defendant from whom significant relief is sought and whose alleged conduct forms a significant basis for the claims asserted is a citizen of the state in which the action was filed. 28 U.S.C. § 1332(d)(4)(A).

In this case the Arkansas plaintiffs, nursing home residents, had joined the nursing home administrator, also an Arkansas resident, as a defendant in the case along with the Tennessee corporate nursing home owner. The defendants argued that the administrator was fraudulently joined solely to defeat diversity of citizenship requirements.

The court disagreed finding that while the administrator would not be liable under the Arkansas statute holding only the corporate nursing home licensee liable for damages, the residents might have viable claims against the administrator under other theories of liability. The court found that administrator was not fraudulently joined and that his alleged conduct formed a significant basis for the claims that the residents sought significant relief from. Therefore, the court found that CAFA’s local controversy exception applied and remanded the case to Arkansas state court.

By: Gregory LaBorde