Albury et al v. Daymar Colleges Group, LLC, et al

Filing 18

MEMORANDUM OPINION & ORDER denying 8 Motion to Remand Telephone Conference set for 2/16/2012 at 2:30 PM before Senior Judge Thomas B. Russell. Signed by Senior Judge Thomas B. Russell on 2/14/2012. cc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CASE NO: 3:11-CV-573
ANGELA ALBURY, et al.

PLAINTIFFS

v.
DAYMAR COLLEGES GROUP, LLC, et al.

DEFENDANTS

MEMORADUM OPINION AND ORDER
MEMORANDUM OPINION AND ORDER
A telephonic conference was held on February 10, 2012.
This matter is before the Court on the Plaintiffs’ Motion to Remand. Docket Number
(“DN”) 8. The Defendants have responded. DN 11. The Plaintiffs have replied. DN 12. Additionally,
a telephonic conference of the parties was held on February 10, 2012. For the purposes of the present
motion the parties have also agreed to rely on the supplemental briefs and jurisdictional discovery
submitted in the companion cases of Lancaster, et al. v. Daymar Colleges Group, LLC, et al., 3:11-CV157-R, and Wiggins, et al. v. Daymar Colleges Group, LLC, et al., 5:11-CV-36-R. The parties have
further agreed that no additional jurisdictional discovery is required in this case. The motion to remand
is now ripe for adjudication. For the following reasons the Plaintiffs’ Motion to Remand is DENIED.
BACKGROUND
The Plaintiffs seek to bring a class action on behalf of themselves and as representatives
of a proposed plaintiff class, consisting of “current and prior attendees of the various Daymar
Colleges in Kentucky, Indiana and Ohio (the ‘Class’).” Compl., DN 1-7, ¶ 1072. According to
the Complaint, “[t]he Class is composed of present and former students of Daymar who have
been fraudulently solicited to attend Daymar educational institutions with the promise of
receiving Degrees transferrable to the vast majority of institutions of higher learning, and for
whom these representations were both false and the Degrees and credits non-transferrable.” Id.
The Plaintiffs also seek to represent a class who secured loans to pay for degrees, who were
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promised jobs in their field of study following graduation, and who were misled regarding the
terms and availability of financial aid. Id. at ¶¶ 1073-1075. The Plaintiffs’ claims are “based on
violations of KRS Chapter 165A et seq., the Kentucky Consumer Protection Act, Kentucky
antitrust laws, and common law misrepresentation, fraud, fraudulent inducement, breach of
contract, breach of implied contract, conspiracy, and injunctive and declaratory relief.” Pl.’s
Mot. Abeyance, DN 9, p. 1.
The Plaintiffs filed suit in Jefferson County on September 21, 2011, against Daymar
Colleges Group, LLC, Daymar Learning of Paducah, Inc., Daymar Learning of Ohio, Inc., Mark
A. Gabis, Daymar Learning, Inc., and The Daymar Foundation, Inc. The Defendants removed
the case to this Court on October 14, 2011 on the basis of diversity jurisdiction under the Class
Action Fairness Act. In response to removal, the Plaintiffs filed a motion to remand. Pls.’ Mot.
Remand, DN 8. The Court now considers the Plaintiffs’ motion.
STANDARD
The Class Action Fairness Act (“CAFA”) provides that “[t]he district court shall have
original jurisdiction of any civil action in which the matter in controversy exceeds the sum or
value of $5,000,000, exclusive of interest and costs, and is a class action in which . . . any
member of a class of plaintiffs is a citizen of a State different from any defendant . . . .” 28
U.S.C. § 1332(d)(2). Additionally, the proposed class must contain 100 or more individuals. 28
U.S.C. § 1332(d)(5)(B). The party asserting jurisdiction pursuant to CAFA - a defendant
removing from state court in most circumstances - bears the burden of proving, by a
preponderance of the evidence, that the statute’s jurisdictional requirements have been met.
Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 404-05 (6th Cir. 2007) (citations
omitted). If these requirements are met, the district court has jurisdiction to hear the case.

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A district court’s jurisdiction under CAFA is not without exception, however. CAFA
prescribes three statutory circumstances in which a court can or must decline jurisdiction. Under
the “home state” exception, a court is divested of jurisdiction if more than two-thirds of the
members of the proposed class and the primary defendants are citizens of the state where the
action was originally filed. 28 U.S.C. § 1332(d)(4)(B). Under the “local-controversy”
exception, a court’s jurisdiction is removed if two-thirds of the members of the proposed class
are citizens of the state in which the action was originally filed; the plaintiffs seek significant
relief from at least one defendant who is from the state where the action was originally filed and
whose conduct forms a significant basis for the plaintiffs’ claims; and the injuries resulting from
the alleged conduct were incurred in the state in which the action was originally filed. 28 U.S.C.
§ 1332(d)(4)(A). Finally, a court is permitted, but is not required, to decline jurisdiction under
the “discretionary” exception. 28 U.S.C. § 1332(d)(3). If more than one-third but less than twothirds of the proposed plaintiffs’ class and the primary defendants are citizens of the state in
which the action was originally filed, the court may decline jurisdiction after examining the
“totality of the circumstances” and several factors explicitly listed in the statute. Id. If a court is
barred from exercising jurisdiction or declines to do so under any of the three CAFA exceptions,
it must dismiss the action - if an original federal action - or remand to the state court from which
it was removed.
A party seeking remand must show that one of the CAFA exceptions applies by a
preponderance of the evidence. See In Re Sprint Nextel Corp., 593 F.3d 669, 673 (7th Cir. 2010)
(home state exception must be proven by preponderance of the evidence); Preston v. Tenet
Healthsystem Mem’l Med. Ctr. Inc., 485 F.3d 793, 797 (5th Cir. 2007) (local controversy
exception must be proven by a preponderance of the evidence); Serrano v. 180 Connect, Inc.,

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478 F.3d 1018, 1024 (9th Cir. 2007) (“[O]nce federal jurisdiction has been established under [§
1332(d)(2)], the objecting party bears the burden of proof as to the applicability of any express
statutory exception under §§ 1332(d)(4)(A) and (B).”); Evans v. Walter Indus., 449 F.3d 1156,
1164 (11th Cir. 2006) (“[W]hen a party seeks to avail itself of an express statutory exception to
federal jurisdiction granted under CAFA, as in this case, we hold that the party seeking remand
bears the burden of proof with regard to that exception.”). In sum, the party asserting
jurisdiction under CAFA bears the burden of proof. Once jurisdiction is established, however,
the burden shifts to the party opposing jurisdiction to prove that one of the CAFA exceptions
applies.
DISCUSSION
The Court must determine if this case is properly removed pursuant to the requirements
set forth in the CAFA. In order for a case to be properly brought into federal court pursuant to
the CAFA, the defendant seeking removal must establish: the amount in controversy exceeds
five million dollars, exclusive of interests and costs; there is minimal diversity; and Plaintiffs’
proposed class would exceed 100 individuals. Kaufman v. Allstate N.J. Ins., 561 F.3d 144, 151
(3d Cir. 2009) (holding the “party seeking to remove to federal court [must] demonstrate federal
jurisdiction.”); 28 U.S.C. §1332(d)(2)–(5)(B). Plaintiffs do not dispute that the proposed class
would exceed 100 individuals. Plaintiffs argue, however, that Defendants have not established
that the amount in controversy exceeds five million dollars. Additionally, Plaintiffs argue that
although there is minimal diversity, one of the CAFA exceptions applies and permits or requires
remand to the state court.
I.

Amount in Controversy

First, Plaintiffs argue that Defendants have failed to establish by a preponderance of the

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evidence that the amount in controversy is greater than $5 million. See Smith v. Nationwide
Prop. & Cas. Ins. Co., 505 F.3d 401, 404 (6th Cir. 2007) (“CAFA does not alter the fact that ‘the
removing defendant has the burden of demonstrating, by a preponderance of the evidence, that
the amount in controversy requirement has been met.’”); Gafford v. Gen. Elec. Co., 997 F.2d
150, 158 (6th Cir. 1993) (where plaintiff seeks recovery of an unspecified amount of damages,
burden is on defendant to prove the threshold jurisdictional amount by a preponderance of the
evidence).
[The preponderance of the evidence test] does not place upon the defendant the
daunting burden of proving, to a legal certainty, that the plaintiff’s damages are
not less than the amount in controversy requirement. Such a burden might well
require the defendant to research, state and prove the plaintiff’s claim for
damages. On the other end of the spectrum, requiring the defendant to prove that
the amount in controversy “may” meet the federal requirement would effectively
force the plaintiff seeking remand to prove in rebuttal that only a relatively small
amount of damages is legally possible.
Gafford, 997 F.2d at 159. Plaintiff seeks an unspecified amount of damages in this case. The
Complaint notes only that Plaintiffs seek “an amount exceeding the jurisdictional requirements
of this Court.” Compl., DN 1-7, ¶ 1107. As this case was originally filed in Jefferson County
Circuit Court, the applicable jurisdictional amount is $5,000.00. See Ky. Rev. Stat. Ann. §§
23A.010(1), 24A.120(1).
Defendants note that Plaintiffs have alleged there are thousands of putative class
members. See Compl., DN 1-7, ¶ 1076 (“Plaintiffs are informed and believe, and on that basis
allege, that thousands of persons are members of the Class through numerous Daymar Colleges
in Kentucky, Indiana, and Ohio.”). Additionally, Defendants point out that Plaintiffs are seeking
compensatory damages for time lost, reimbursement of “all loan amounts,”1 pain and suffering,

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The Defendants’ response to the Motion to Remand notes that “[t]he average loan amount of a student attending
Daymar exceeds $5,000 alone.” Defs.’ Resp., DN 11, p. 11. This information does not appear to have been
available to the Defendants at the time of removal. The Court may consider, however, post-removal materials so

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and lost income opportunities. Id. at ¶ 1105. Plaintiffs also seek punitive damages, injunctive
relief, and attorneys’ fees. Id. at p. 164 (prayer for relief). Thus, based upon the requested
damages and the number of class members alleged in the Complaint, Defendants assert that “the
aggregate amount Plaintiffs have placed in controversy is in excess of $5 million.” Notice of
Removal, DN 1, ¶ 43.
The Court finds that Defendants have proven the jurisdictional amount of $5 million by a
preponderance of the evidence. Plaintiffs’ Complaint indicates that the class will be composed
of thousands of people. Thus, at the very least, Defendants can estimate the class size to be at
least 2,000. In addition, Plaintiffs seek reimbursement of “all loan amounts.” Defendants note
that the average loan amount for a Daymar student is $5,000. Multiplying these numbers
presents $10 million in damages alone. Plaintiffs claim this estimate is too high. Plaintiffs’
Complaint, however, notes that Plaintiffs have become indebted “to the extent of thousands of
dollars . . . .” In addition, many of the named Plaintiffs have acquired “significant educational
debt.” Even at $2,000 for 2,000 class members, the class would claim $4 million in damages for
reimbursement of loan amounts. This figure must then be added to the additional damages
Plaintiffs seek, including compensatory damages for time lost and lost income opportunities,
pain and suffering, punitive damages, injunctive relief, and statutory attorneys’ fees. The Court
finds that this is more than enough to satisfy the jurisdictional amount. Accordingly, Defendants
properly removed this action under the CAFA.

long as the information contained within those materials was relevant at the time of removal. See, e.g., Williams v.
Best Buy Co., Inc., 269 F.3d 1316, 1319 (11th Cir. 2001) (“If the jurisdictional amount is not facially apparent from
the complaint, the court should look to the notice of removal and may require evidence relevant to the amount in
controversy at the time the case was removed.”); Harmon v. OKI Sys., 902 F. Supp. 176, 178 (S.D. Ind. 1995)
(“[P]ost-removal admissions by parties opposing federal jurisdiction may be considered if they are probative of the
amount in controversy at the time of removal.”).

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II.

The CAFA Exceptions

The Court has found that the Defendants properly removed to this Court under CAFA.
The Plaintiffs now seek to remand this case to state court and assert two grounds for doing so.
First, they claim that the Court is divested of jurisdiction by CAFA’s “home state” exception
found in 28 U.S.C. § 1332(d)(4)(B) because more than two-thirds of the members of the
proposed class are citizens of Kentucky. In the alterative, the Plaintiffs would have the Court
decline jurisdiction under the “discretionary” exception. The Court addresses each of these
arguments in turn.
A. The “Home State” Exception.
A federal district court is divested of jurisdiction under CAFA where two-thirds or more
of the members of the proposed plaintiffs’ class and the primary defendants are citizens of the
state in which the action was originally filed. 28 U.S.C. § 1332(d)(4)(B). The parties agree that
the primary defendants are citizens of Kentucky. The real issue in this case is whether two-thirds
of the members of the proposed class are citizens of Kentucky. The Plaintiffs bear the burden of
proving class citizenship by a preponderance of the evidence. See In Re Sprint Nextel Corp., 593
F.3d at 673. The Plaintiffs contend that they have presented evidence showing that more than
two-thirds of the members of the proposed class are citizens of Kentucky.
1. Standard for Citizenship.
Before examining the Plaintiffs’ evidence, the Court finds it necessary to discuss and
review how courts determine citizenship for the purposes of the diversity statute, including
CAFA. The citizenship of a natural person is equated with his or her domicile. Certain
Interested Underwriters at Lloyd’s v. Layne, 26 F.3d 39, 41 (6th Cir. 1994); Von Dunser v.
Aronoff, 915 F.2d 1071, 1072 (6th Cir. 1990) (“State citizenship for the purpose of the diversity

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requirement is equated with domicile.”); see 15 Moore's Federal Practice § 102.34 (Matthew
Bender 3d Ed. 2011) (in the context of diversity, “‘citizenship’ of a state and ‘domicile’ are
synonymous terms”). “To acquire domicile within a particular state, a person must be physically
present in the state and must have either the intention to make his home there indefinitely or the
absence of an intention to make his home elsewhere.” Stifel v. Hopkins, 477 F.2d 1116, 1120
(6th Cir. 1973); see Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989) (“For
adults, domicile is established by physical presence in a place in connection with a certain state
of mind concerning one’s intent to remain there.”). Thus, a person’s citizenship or domicile is
composed of an objective and subjective component.
The objective component of citizenship is fulfilled by showing one’s physical presence in
a state. The subjective component of citizenship - the intent to remain in a particular state - is the
more difficult inquiry. Although a person’s place of residence is an indicia of his or her
domicile, “‘[d]omicile’ is not necessarily synonymous with ‘residence,’ and one can reside in
one place but be domiciled in another.” Holyfield, 490 U.S. at 48 (citations omitted). It has
repeatedly been held that “[a] party’s residence in a state alone does not establish domicile.”
Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 798 (5th Cir. 2007); see,
e.g., Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000) (noting that residency without intent to
remain fails to establish domicile). Indeed, an individual’s residence is but one of many factors
courts examine when determining a person’s domicile. See Garcia Perez v. Santeaella, 364 F.3d
348, 351 (1st Cir. 2004) (when determining domicile a court should consider factors like current
residence, voting registration and voting practices, locations of personal and real property, place
of employment, driver’s licenses, and payments of taxes); Stifel, 477 at 1122 (“[I]ndicia of intent
[to remain] include affidavits of intention . . . opening bank accounts, addressing tax returns,

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motive for establishing domicile, and other physical facts evidencing [a] desire to remain . . . .”).
An objective showing of a person’s place of residence is insufficient to establish his or her
domicile without evidence of subjective intent to remain in a particular state.
2. The Plaintiffs’ Evidence of the “Home State” Exception.
At all times in this litigation the Plaintiffs have maintained that two-thirds of the
members of the proposed class are citizens of Kentucky. In support of this position the Plaintiffs
submitted evidence purporting to show that the Court is divested of jurisdiction under the “home
state” exception. The Court now examines this evidence and concludes that it fails to
demonstrate that two-thirds of the members of the proposed class are citizens of Kentucky. The
evidence is insufficient because the Plaintiffs have wrongly assumed that they may prove the
citizenship of the proposed class by establishing the residence of its members.
a. Evidence Submitted with the Motion to Remand.
The Plaintiffs’ original motion to remand included a table of data purporting to show that
65.95% of students attending the Defendants’ schools in Kentucky, Indiana, and Ohio during the
2009 school year were citizens of Kentucky. Pls.’ Mot. to Remand, DN 8-1, p. 10-11. Through
exhibits attached to their motion, the Plaintiffs submitted the data used to create the table. See
DN 8-10; DN 8-11. The Court has examined this data and finds that the conclusions drawn from
it are flawed for three reasons. First, and most troubling of all, the Plaintiffs claim that certain
percentages in the table show the percentage of in-state citizens attending each campus in 2009.
By way of example, the table shows that 77% of the students attending the Daymar campus in
Louisville were citizens of Kentucky. The Plaintiffs draw this conclusion from reports of the
National Center for Education Statistics (NCES). The NCES report for Daymar’s Louisville
campus lists the total number of students attending in the fall of 2009 and also provides a graph

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of “undergraduate student residence.” DN 8-11, p. 62 (emphasis added). This graph shows that
77% of Daymar’s Louisville students were residents of Kentucky. As discussed above,
residence, alone, does not equate to citizenship. See Holyfield, 490 U.S. at 48. Although the
NCES reports may show what percentage of Daymar’s Louisville students are objectively
present in Kentucky, it does nothing to demonstrate their subjective intent to stay in the state.
Therefore, the Plaintiffs’ reliance on the NCES data is misplaced. The NCES data is not
evidence that members of the proposed class are citizens of Kentucky.
Second, although the Plaintiffs present the percentages on the NCES forms as data from
2009, an examination of the forms shows that the in-state residency percentages are actually
reported for 2008. Every NCES form states, just below the graph showing the percentage of
“undergraduate student residence,” that “Residence data are reported for first-time
degree/certificate-seeking undergraduates, Fall 2008.” DN 8-11, pp. 4, 11, 18, 25, 32, 39, 46,
54, 62, 70, 76 (emphasis added). The Plaintiffs attempt to determine the number of Kentucky
citizens attending Daymar’s campuses by multiplying the total number of Daymar students on
each campus in 2009 by the percentage of “undergraduate student residence” for 2008. This type
of cross-year multiplication voids any measure of validity in the data. The Court can draw no
conclusions about the citizenship of the class when total numbers from 2009 are multiplied by
percentages from 2008.
Finally, the table in the Plaintiffs’ motion to remand uses two different sources to
establish the total number of students attending Daymar campuses in 2009. The total numbers of
students attending Daymar’s schools in Ohio, as well as the campus in Madisonville, Kentucky,
are drawn from the NCES reports. DN 8-11, pp. 3, 10, 17, 24, 31. Although enrollment
numbers for the other campuses are also available from the NCES reports, the Plaintiffs choose

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to supplement the numbers for Daymar’s Kentucky campuses with enrollment statistics from the
Kentucky State Board for Proprietary Education (KYSBPE). DN 8-10. The Plaintiffs provide
no explanation why the KYSBPE numbers should be substituted for the numbers provided by the
NCES. An explanation is readily apparent, however. For unexplained reasons, the total number
of Daymar students in the KYSBPE report is greater than the total number in the NCES reports.
Multiplying the larger KYSBPE numbers by the NCES residency percentages naturally results in
a greater number of Daymar attendees who are supposedly Kentucky citizens. The Plaintiffs
provide no explanation why the Court should accept the greater total numbers provided by the
KYSBPE while retaining the NCES numbers for Daymar’s Ohio and Madisonville campuses.
Overall, the Court finds that the data submitted with the Plaintiffs’ motion to remand is
inconclusive and unreliable for determining the citizenship of the proposed class. The data
confuses residence with citizenship, compares statistics from two different years, and includes
data from two different sources without providing any justification for doing so. The Court’s
jurisdiction is not removed by this data.
b. Supplemental Jurisdictional Discovery Submitted in the
Lancaster and Wiggins Companion Cases.
In the companion cases of Lancaster and Wiggins, the Court found that the Defendants
had properly removed to federal court but allowed the Plaintiffs to amend their complaint and
conduct jurisdictional discovery in order to determine the citizenship of the proposed plaintiff
class. Subsequent to completing discovery in those cases the Plaintiffs submitted a second
supplemental reply in which they claim to have proven that more than 70% of the members of
the proposed class are citizens of Kentucky. The parties have agreed that the Court should
consider this evidence when ruling on the motion to remand in the present case.
Attached to their second supplemental replies in Lancaster and Wiggins, the Plaintiffs
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included data derived from Integrated Post-Secondary Education Data Systems (“IPEDS”)1
reports, which contain multiple years of enrollment information across eleven Daymar campuses
in Kentucky, Ohio, and Daymar’s online program.2 Lancaster, DN 44-6. According to the
Plaintiffs, the IPEDS reports contain citizenship statistics about all first-time Daymar enrollees.
Although the proposed Plaintiffs’ class includes all current and former Daymar students in
Kentucky, Ohio, and Indiana, and not just first-time enrollees, the Plaintiffs claim that “there is
no evidence to suggest the citizenship statistics [of non-first-time enrollees] would vary
significantly from students included in the IPEDS reports.” Lancaster, Pls.’ Second
Supplemental Reply, DN 44, p. 7 n.19. After examination, the Court finds that the report
attached to the Plaintiffs’ second supplemental reply suffers from the same primary deficiency as
the data attached to the motion to remand. The new report wrongly supposes that a person’s
state of residence is analogous to his or her state of citizenship.
The Defendants filed a second supplemental reply in which they attack the Plaintiffs’
reliance on the statistics derived from the IPEDS reports. In particular, the Defendants included
two noteworthy exhibits with their reply. The first is a sample IPEDS report containing no data.
Lancaster, DN 45-3. The second is a completed IPEDS report for the Owensboro campus
containing enrollment data for the fall of 2008. Lancaster, DN 45-5. Both of these documents
contain a section in which the campus is required to report the “Residence of first-time
undergraduate students.” Lancaster, DN 45-3, pp. 14-17 (emphasis added); Lancaster, DN 45-5,
pp. 7-10 (emphasis added). The Plaintiffs claim that the IPEDS reports demonstrate the

1

The IPEDS reports contain data the Defendants submitted to the U.S. Department of Education. The reports were
produced through discovery in the related case of Wiggins v. Daymar College Group, LLC, 5:11-CV-00036-R.
2
The aggregated data submitted by the Plaintiffs cover Daymar’s campuses in Madisonville, Owensboro, Paducah,
Bellevue, and Scottsville, Kentucky. The data also cover Daymar’s online program and the physical campuses at
Lancaster, Jackson, Chillicothe, and New Boston Ohio. The data available are varied, but generally cover different
enrollment periods from 2005 to 2010.

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citizenship of first-time enrollees, but this is simply not the case. As with the previous evidence
submitted in this case, the Plaintiffs have wrongfully equated residence with citizenship.
Because the IPEDS reports only show that 70% of first-time enrollees are residents of Kentucky,
the Plaintiffs have failed to prove that two-thirds or more of the members of proposed class are
citizens of Kentucky. The “home state” exception is inapplicable because the Plaintiffs have
failed to show that two-thirds or more of the members of the proposed class are citizens of
Kentucky.
3. Other CAFA cases have refused to equate residency with citizenship.
The Court has determined that evidence regarding the citizenship of the proposed
Plaintiffs’ class is insufficient to trigger the “home state” exception. Although the Plaintiffs have
put forth evidence regarding the residence of the class members, residence alone is insufficient to
establish citizenship. This position is supported by numerous cases addressing the CAFA
exceptions.
In Sprint Nextel Corp., the plaintiffs sought to bring a class action in state court on
“behalf of themselves and ‘all Kansas residents’ who purchased text messaging from Sprint
Nextel . . . between January 2005 and October 2008[.]” In re Sprint Nextel Corp., 593 F.3d at
671. The plaintiffs limited their class to “those who (1) had a Kansas cell phone number, (2)
received their cell phone bill at a Kansas mailing address, and (3) paid a Kansas ‘USF fee,’
which is applied to all long-distance calls within Kansas.” Id. The defendant removed the case
to federal court under the provisions of CAFA, and the plaintiffs sought to remand under the
“home state” exception. Id. The district court granted removal because “the class definition
itself, keyed as it is to Kansas cell phone numbers and mailing addresses, made it more likely
than not that two-thirds of the putative class members are Kansas citizens.” Id. at 673. Although

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the Seventh Circuit Court of Appeals was “inclined to think that at least two-thirds of those who
have Kansas cell phone numbers and use Kansas mailing addresses for their cell phone bills are
probably Kansas citizens,” the court reversed the decision to remand. Id. at 674. The court’s
assumption about the citizenship of the class was “[s]ensible guesswork based on a sense of how
the world works, but guesswork nonetheless.” Id. The court refused to remand and agreed “with
the majority of district courts that a court may not draw conclusions about the citizenship of class
members based on things like their phone numbers and mailing addresses.” Id.
In Preston v. Tenet Healthsystem, the plaintiffs sought to bring a class action on behalf of
patients who were injured or killed as a result of unreasonably dangerous conditions on the
premises of the defendants’ hospital in the wake of Hurricane Katrina. Preston, 485 F.3d at 79596. The defendants removed from state court pursuant to CAFA, but the district court remanded,
finding that “the best evidence that is available at this time indicates that more than two-thirds of
the proposed class are citizens of Louisiana.” Id. at 796. The plaintiffs used the pre-Katrina
addresses of the hospitalized patients and their medical records as evidence of their citizenship.
Id. at 798. The defendants even “confirmed that 200 of the 242 patients listed in [one plaintiff’s]
affidavit provided an Orleans Parish address as their primary residence.” Id. In spite of this fact,
the Fifth Circuit Court of Appeals reversed because “[the plaintiffs] presented no evidence . . . to
demonstrate that these patients not only resided in Orleans Parish at the given addresses but also
were domiciled in Louisiana at the time of Hurricane Katrina. A party’s residence in a state
alone does not establish domicile.” Id. (emphasis original) (citation omitted). Domicile requires
evidence of intention to remain in a place, and without “evidence of intent . . . the district court
could not make the requisite credible estimate to remand . . . .” Id. at 801. “Without anything
more than the patients [sic] primary billing addresses, the district court lacked grounds for

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making a credible estimate that at least two-thirds of the patients and other proposed class
members were citizens of Louisiana during the relevant time period.” Id.
In McMorris v. TJX Cos., the McMorris class sought to represent “[r]esidents of
Massachusetts who made purchases and paid by credit or debit card or check or who made a
return at one of more [of the defendant’s stores] in the United States from 2002 to the end of
2006.” McMorris v. TJX Cos., 493 F. Supp. 2d 158, 161 (D. Mass 2007). The court refused to
remand under the “home state” exception because the class definition was overly broad. Use of
terms “residents” instead of “citizens” in the class made is so that the class might “include
foreign citizens who resided in Massachusetts during that period and who made purchases at
TJX.” Id. at 162. Furthermore, the court rejected the plaintiffs’ argument that “residence and
citizenship are to be used interchangeably for the purposes of ascertaining diversity jurisdiction
under CAFA.” Id. Finally, it was insufficient for the plaintiffs to assert that all the named
plaintiffs were citizens of Massachusetts and extrapolate that at least two-thirds of the class were
also. Id. at 165-66.
In Anthony v. Small Tube Mfg. Corp., 535 F. Supp. 2d 506, 508-09 (E.D. Pa. 2007), the
plaintiffs’ class was defined as “[a]ll current and former employees of the U.S. Gauge facility
who have been exposed to one or more of the Defendants’ beryllium-containing products for a
period of at least one (1) month while employed at the U.S. Gauge facility.” The class was
alleged to “consist of at least several thousand members,” and the plaintiffs sought remand under
the “home state” exception. Id. at 509. The court declined to remand because the composition
of the class was speculative and “the citizenship of the entire class was never defined.” Id. at
517. Most importantly, the class was composed of employees who worked at the facility during
a 35-year period, and the plaintiffs provided no evidence that the thousands of members of the

15

proposed class “were ever, or have remained domiciled in Pennsylvania. Though this may be a
reasonable inference, it does not satisfy the plaintiff’s burden of proof.” Id.
Finally, in Nicholas v. Progressive Direct Ins. Co., Civil Action No. 06-146-DLB, 2007
U.S. Dist. LEXIS 29689, at *9-10 (E.D. Ky. March 31, 2007), the court denied a motion to
remand under the “home state” exception. The court refused to remand because the class was
proposed to cover five years and “to conclude that over this period at least two-thirds of these
persons remained citizens of the state would be sheer speculation at this stage.” Id. at *10.
All of these cases are instructive in the present case. In Sprint Nextel and Preston, the
plaintiffs sought to establish the citizenship of the class by presenting the court with the mailing
and billing addresses of its members. Both courts found that addresses alone, as evidence of
residence, were insufficient to establish domicile. In the present case, the Plaintiffs claim to
show citizenship by relying on evidence of residence as detailed above. This evidence is not
sufficient and fails to establish domicile. In McMorris, remand was not warranted when the
plaintiffs asserted a class on behalf of Massachusetts residents and claimed that all of the named
plaintiffs were Massachusetts citizens. In the present case, even the named Plaintiffs fail to
allege that they are citizens of Kentucky. The complaint, which identifies the 137 named
plaintiffs, states that 73 of the named plaintiffs are residents, not citizens, of Kentucky. Compl.,
DN 1-1, ¶¶ 1-4, 7-10, 12-17, 19-20, 22-23, 25-27, 30-32, 34-35, 37-41, 43-44, 50-53, 55-56, 58,
60, 62-64, 66-92; DN 1-2, ¶¶ 135, 137. The other named plaintiffs are alleged to be residents of
various other states, including: Ohio (DN 1-1, ¶¶ 5-6, 11, 24, 28-29, 33, 36, 45-49, 54, 57, 59,
61, 65, 93-94, 97-98, 101, 103-105, 107-108; DN 1-2, ¶¶ 110, 112-134, 136); Florida (DN 1-1,
¶¶ 18, 21, 106); Indiana (DN 1-1, ¶¶ 99, 102; DN 1-2, ¶¶ 109, 111); Illinois (DN 1-1, ¶¶ 42, 95);
Tennessee (DN 1-1, ¶ 96); and North Carolina (DN 101, ¶ 100). There is no reference to their

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citizenship. Furthermore, the proposed class is silent as to citizenship. It is asserted only on
behalf of “current and prior attendees of the various Daymar Colleges in Kentucky, Indiana, and
Ohio.” Compl., DN 1-7, ¶ 1076. Finally, the scope and duration of the proposed classes in
Anthony and Nicholas rendered the “home state” exception inapplicable. In Anthony, the class
was comprised of employees who worked at a facility over a 35-year period, and in Nicholas it
was composed of individuals who bought insurance during a 5-year span. In the present case,
the evidence presented by the Plaintiffs spans approximately 5 years. In the words of Nicholas,
“[t]o conclude that over this period at least two-thirds of these persons remained citizens of the
state would be sheer speculation . . . .” Nicholas, 2007 U.S. Dist. LEXIS 28689, at *10. Overall,
the Court holds that the Plaintiffs have failed to prove that two-thirds of the members of the
proposed class are citizens of Kentucky. The “home state” exception will not divest the Court of
jurisdiction.
B. The “Discretionary” Exception.
In addition to the “home state” exception, the Plaintiffs ask this Court to decline
jurisdiction under CAFA’s “discretionary” exception. The “discretionary” exception allows a
court, after considering a number of statutory factors, to decline jurisdiction if “greater than onethird but less than two-thirds of the members of all proposed plaintiffs classes in the aggregate
and the primary defendants are citizens of the State in which the action was originally filed . . . .”
28 U.S.C. § 1332(d)(3). The Court need not spend much time analyzing whether it should
decline jurisdiction under the “discretionary exception.” This exception does not apply.
For the present case, the “discretionary” exception requires the Plaintiffs to show that
more than one-third of the members of the proposed class are citizens of Kentucky. As
demonstrated above, the Plaintiffs have only submitted evidence regarding the residence of the

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members of the proposed class, not their citizenship. As such, the Court cannot determine
whether more than one-third of the members of the proposed class are citizens of Kentucky, a
factor that must be present to trigger the discretionary analysis. The Court holds that it will not
decline jurisdiction under the “discretionary” exception because the Plaintiffs have failed to
present evidence that more than one-third of the members of the proposed class are citizen of
Kentucky.
CONCLUSION
For the foregoing reasons the Plaintiffs’ Motion to Remand (DN 8) is DENIED.
IT IS HEREBY ORDERED that a telephonic conference of the parties is set for
February 16, 2012, at 2:30pm EST. The Court shall initiate the call.

P/10
February 14, 2012

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