KRUEGER et al v. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

Filing 14

ORDER denying 6 Motion to Remand signed by CHIEF JUDGE STEPHAN P MICKLE on 11/9/10. (tss)

-GRJ KRUEGER et al v. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

Doc. 14

IN THE UNITED STATES DISTRICT COURT F O R THE NORTHERN DISTRICT OF FLORIDA G A IN E S V IL L E DIVISION

B E V E R L Y E. KRUEGER, P l a in t if f ,

vs. C A S E NO.: 1:10-CV-00128-SPM

N O R T H W E S T E R N MUTUAL L IF E INSURANCE COMPANY, D e f e n d a n t. __________________________/

O R D E R DENYING MOTION TO REMAND T H IS CAUSE comes before the Court upon Plaintiff's "Motion to Remand" (doc. 6 ) filed J u ly 28, 2010, and memorandum in support thereof (doc. 7). The Court has also considered the a rg u m e n ts raised in Defendant's Memorandum in Opposition to Motion to Remand (doc. 8) and a ll attachments and exhibits in support thereof. For the following reasons, the Court finds the m o tio n to remand must be denied.

B AC K G R O U N D

T h is case is an action involving annuity policies issued by Defendant prior to 1985 that w e re sold through Defendant's independent contractor agents in all fifty states. The annuity c o n tra c ts provided policyholders with a share of Defendant's divisible surplus, called "dividend." Plaintiff brought this action on behalf of purchasers of annuity policies and alleges that D e f e n d a n t breached the annuity contracts and breached the fiduciary duties to the policyholders w h e n Defendant changed the methodology for allocating dividends beginning in 1985. The P a rtie s indicated that a certified class of W is c o n s in residents pursues a parallel lawsuit, initiated

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by a W is c o n s in annuitant, against Defendant. Although this case was originally filed in Florida c irc u it court, Defendant removed the case to federal court, claiming that this action has met re q u ire m e n ts for removal to federal court under the Class Action Fairness Act [hereinafter C A F A ], 28 U.S.C. § 1332(d)(2). Plaintiff now seeks to remand the case.

ANALYSIS

C A F A broadens the federal diversity jurisdiction statute, 28 U.S.C. § 1332, by e s ta b lis h in g lower threshold requirements for jurisdiction and abrogating long-established p re c e d e n t. See Lowery v. Alabama Power Co., 483 F.3d 1184, 1193 (11th Cir. 2007). Subject to c e rta in exceptions, § 1332(d)(3) to (5), CAFA provides federal courts with jurisdiction over class a c tio n s provided that: (1) any member of the plaintiff class is diverse from any defendant, § 1 3 3 2 (d )(2 ); (2) the aggregate of the claims of individual class members exceeds $5 million e x c lu s iv e of interests and costs, § 1332(d)(2), (6); and (3) the number of plaintiffs in all p ro p o s e d plaintiff classes exceeds one hundred, § 1332(d)(5)(b); Lowery, 483 F.3d at 1193-94; s e e also Miedema v. Maytag Corp., 450 F.3d 1322, 1327 (11th Cir. 2006); Evans v. W a lte r In d u s ., Inc., 449 F.3d 1159, 1163 (11th Cir.2006). CAFA does not change the traditional rule th a t the party seeking to remove the case to federal court bears the burden of establishing f e d e ra l jurisdiction. Evans, 449 F.3d at 1164 (quoting Brill v. Countrywide Home Loans, Inc., 4 2 7 F.3d 446 (7the Cir. 2005)); see also Miedema, 450 F.3d at 1328.

P la in tif f is a resident and citizen of the State of Florida; Northwestern is a W is c o n s in m u tu a l insurance corporation with its principal place of business in W is c o n s in . The Complaint d o e s not seek a specific amount of damages. Defendant's Affidavit (exhibit 4) attached to D e f e n d a n t's Notice of Removal (doc. 1) states that damages claimed in the Complaint would be m o re than $ 5 million. Plaintiff alleges two putative classes: a Florida-resident "State Class" and

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a "National Class" of Northwestern annuity policyholders, and that "the members of each of the C la s s e s number in excess of one thousand." As the minimum diversity of citizenship exists b e tw e e n the parties, the amount in controversy exceeds $ 5 million, and the number of class m e m b e rs exceeds one hundred, the requirements of 28 U.S.C § 1332(d) are satisfied.

Plaintiff argues, relying on 28 U.S.C. § 1332(d)(9)(B) that this action should be re m a n d e d to the state court because the "internal affairs" exception to CAFA specifically e x c lu d e s federal jurisdiction over this action (doc. 6). Following removal of a case to federal c o u rt, plaintiff can seek remand of an action back to state court. See 28 U.S.C. 1447(c). The E le v e n th Circuit Court of Appeals has specifically decided that when a party seeks to avail itself o f an express statutory exception to federal jurisdiction granted under CAFA, the party seeking re m a n d bears the burden of proof with regard to that exception. See Evans, 449 F.3d at 1164; s e e also PHLD P'ship v. Arch Specialty Ins. Co., 565 F. Supp. 2d 1342, 1343 (S.D. Fla. 2008). N e ith e r the Supreme Court of the United States nor the Eleventh Circuit Court of Appeals has s p e c if ic a lly decided whether the "internal affairs" exception to CAFA should be narrowly c o n s tru e d . However, the Eleventh Circuit Court of Appeals has states that CAFA's language f a v o rs federal jurisdiction over class actions. Evans, 449 F.3d at 1163 (quoting S.Rep. No. 1091 4 at 42, U.S.Code Cong. & Admin. News 3, 40)("The language and structure of CAFA itself in d ic a te s that Congress contemplated broad federal court jurisdiction . . . with only narrow e x c e p tio n s ." ) .

The internal affairs exception is found at 28 U.S.C. § 1332(D)(9)(b) and provides: Paragraph (2) shall not apply to any class action that solely involves a c la im ...

(B) that relates to the internal affairs or governance of a corporation or o th e r form of business enterprise and that arises under or by virtue of

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the laws of the State in which such corporation or business enterprise is in c o rp o ra te d or organized[.]

Thus, the internal affairs exception precludes federal jurisdiction over class action only if tw o conditions are met::the class action solely involves a claim (1) that relates to corporate in te rn a l affairs; and (2) that arises under the laws of the state where the company is in c o rp o ra te d . 28 U.S.C. § 1332(D)(9)(b). "The internal affairs doctrine is a conflict of laws p rin c ip le , which recognizes that only one State should have the authority to regulate a c o rp o ra tio n 's internal affairs-matters peculiar to the relationships . . . -because otherwise a c o rp o ra tio n could be faced with conflicting demands." Edgar v. MITE Corp., 457 U.S. 624, 645 (1 9 8 2 ).

Plaintiff argues that this action solely involves a claim that arises under the laws of W is c o n s in , because Defendant as a W is c o n s in mutual company must comply with W is c o n s in s ta tu te s , because provisions of W is c o n s in statutes are the basis for receiving a share of D e f e n d a n t's divisible surplus, and because Defendant's obligations under annuity contracts also a ris e under W is c o n s in insurance laws; therefore, it would be irrational to suggest any other law o th e r than W is c o n s in 's would apply.

However, under identical circumstances, the courts in W is c o n s in , the state with the in te re s t in Defendant's internal affairs, have already determined that state laws other than W is c o n s in apply to this dispute. See Noonan v. Northwestern Mut. Life Ins. Co., Appeal No. 2 0 0 5 A P 1 6 5 3 ¶ 18-19 (W is . App. 2005). In the parallel lawsuit, the W is c o n s in trial court denied m o tio n for nationwide class certification, which was affirmed by the W is c o n s in Court of Appeals. Id . ¶ 18-19. The Court of Appeals upheld the lower court's decision, based in part on the lower c o u rt's recognition that the laws of many states could govern the claims, thus rendering the a c tio n unmanageable. See id. ¶ 7. More precisely, the Court of Appeals held that the breach of

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fiduciary duty laws of W is c o n s in do not clearly apply to all national class members' claims. Id. ¶ 1 8 . The Court of Appeals likewise found that multiple states laws may apply to the same breach o f contract claims Plaintiff has asserted on behalf of the national class. Id. ¶ 19.

A t this time it is not clear that solely W is c o n s in law would apply to the claims asserted by P la in tif f on behalf of putative class members. Thus, this Court adopts the W is c o n s in courts d e te rm in a tio n that laws other than W is c o n s in may apply to claims asserted by Plaintiff on behalf o f a national class .Based on this finding, the Court need not reach the arguments presented as to whether claims relate to corporate internal affairs. Since multiple state laws may apply to the s a m e claims asserted by the Plaintiff on behalf of the class, the "internal affairs" exception does n o t preclude federal jurisdiction over this action.

CONCLUSION

A f te r careful consideration, the Court concludes that Defendant's removal of the case w a s not precluded by 28 U.S.C. § 1332(D)(9)(b). Consequently, because the requirements of 28 U .S .C . § 1332(d) are satisfied, Plaintiff's motion to remand is DENIED.

S O ORDERED this ninth day of November, 2010.

s/ Stephan P. Mickle
Stephan P. Mickle Chief United States District Judge

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