Two insurance class actions will remain in state court after the Eleventh Circuit’s decision in Life of the South Insurance Co. v. Carzell, 2017 WL 1174083 (11th Cir. Mar. 29, 2017) (Marcus, J.). The court held that federal diversity jurisdiction does not exist under the Class Action Fairness Act (CAFA) if all defendants and plaintiff class members are citizens of a single state—regardless of whether corporate defendants are deemed “citizens” of multiple states or whether some plaintiffs have dual citizenship in foreign countries.
After a false start and voluntary dismissal, the plaintiffs had refiled their complaint in state court as allowed by Georgia law, O.C.G.A. § 9-2-61, asserting only state-law claims and limiting their putative class to citizens of Georgia. The defendant insurers, which both were incorporated in Georgia but had principal places of business in Florida, then removed the case to federal court by citing two of CAFA’s minimal-diversity provisions.
First, the defendants relied on 28 U.S.C. § 1332(d)(2)(A), which gives federal district courts diversity jurisdiction over large class actions in which “any member of a class of plaintiffs is a citizen of a State different from any defendant.” Despite their incorporation in Georgia, the defendants argued that maintaining their principal places of businesses in Florida meant that they were citizens of a different state from the class action’s Georgia plaintiffs.
Second, the defendants relied on § 1332(d)(2)(B), which confers jurisdiction over large class actions in which “any member of a class of plaintiffs is . . . a citizen or subject of a foreign state and any defendant is a citizen of a State.” The defendants based this argument on the assertion that some of the Georgia citizens in the plaintiffs’ proposed class maintained foreign dual citizenship.
The Eleventh Circuit rejected both of these arguments and denied the defendants’ petition for interlocutory review of an order remanding the case to state court.
With respect to the defendants’ corporate citizenship, the court held that “the defendants’ dual citizenship is an insufficient basis to create federal diversity jurisdiction under CAFA when the defendants share a state of citizenship with all of the plaintiffs.” 2017 WL 1174083, at *3. The court thus read § 1332(d)(2)(A) “to bar corporate defendants from relying on only one citizenship when their other citizenship would destroy minimal diversity.” Id.
As for the defendants’ assertion that some of the putative class members were really foreign citizens, the court held that “[i]t does not matter that some class members may hold dual citizenship with another country.” Id. “[U]nder either complete or CAFA minimal diversity, alienage jurisdiction is not available to the dual citizen who is American and thus would not suffer real or perceived bias in the state courts.” Id. at *5.
Posted by Lee Peifer.