Flath v. Barnes-Jewish Hospital et al

Filing 48

MEMORANDUM AND ORDER re: 38 First MOTION to Remand Case to State Court to State Court filed by Plaintiff Adam Flath motion is GRANTED. This action is remanded to the Circuit Court of the City of St. Louis, Missouri, pursuant to 28 U.S .C. Section 1447(d). (certified copy sent to: M. Jane Schweitzer, Clerk, Circuit Court of the City of St. Louis, State of Missouri, 10 North Tucker, St. Louis, MO 63101 this date.) Signed by District Judge E. Richard Webber on October 10, 2012. (MCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
ADAM FLATH
Plaintiff,
BARNES JEWISH HOSPITAL, et al.
Defendants.

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Case No. 4:12CV00721 ERW

MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiffs’ Motion to Remand [ECF No. 38].
I.

PROCEDURAL AND FACTUAL BACKGROUND
This proposed class action was originally filed in the Circuit Court of the City of St.

Louis, Missouri, on March 8, 2012, and was styled Adam Flath v. Barnes-Jewish Hospital, et al.,
Civil Action No. 1222-CC01280. In his state-court petition, Plaintiff, Adam Flath, in his
personal capacity and on behalf of all others similarly situated, asserted a cause of action under
the Missouri Merchandising Practices Act (“MMPA”), Mo. Rev. Stat. § 407.010 et seq., alleging
injuries resulting from undisclosed facility fees charged by multiple defendants, including
Barnes-Jewish Hospital, BJC Healthcare, and Washington University [ECF Nos. 1, 10].
Defendant Barnes-Jewish Hospital subsequently removed the case to the United States
District Court, Eastern Division, alleging fraudulent misjoinder of non-diverse defendants, and
the case was assigned to this Court [ECF No. 1]. Thereafter, Plaintiff moved for limited
jurisdictional discovery [ECF No. 15]. During the hearing on Plaintiff’s discovery motion, the
parties announced that they had reached an agreement ,and this Court approved the parties’ joint
Consent Motion for Limited Jurisdictional Discovery on May 22, 2012 [ECF No. 26].
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After receiving Defendants’ responses to his written discovery requests, Plaintiff sought
remand to state court on July 17, 2012, asserting that the Court lacked jurisdiction and that
removal was required under the “Home State Exception” set forth in 28 U.S.C. § 1332(d)(4)(B)
[ECF No. 38]. The “Home State Exception” provides, in pertinent part, that a district court shall
decline to exercise jurisdiction over a class action in which “two thirds or more of the members
of all the proposed plaintiff class 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)(4)(B). Plaintiff states that
the parties’ limited discovery exchanges show that all three Defendants, and at least sixty-six
(66) percent of the plaintiffs in the proposed class, are Missouri residents. Plaintiff further states
that the information supplied by Defendants concerned only plaintiffs who were charged facility
fees during 2011. Plaintiff asserts that Defendants failed to respond fully to his discovery
requests, and argues that this less than full response leads to the conclusion that the percentage of
Missouri residents for the proposed class would be larger if Defendants had fully produced the
requested documents. Plaintiff urges this Court to remand, even if it determines the “Home State
Exception” is not met, based on the discretionary power granted districts courts by 28 U.S.C.
§1332(d)(3) (providing that district courts may, in interests of justice and looking at totality of
circumstances, decline to exercise jurisdiction under paragraph (2) of 28 U.S.C. § 1332 (d), over
a class action in which greater than 1/3, but less than 2/3's, of the members of all proposed
plaintiff classes in aggregate, and the primary defendants, are citizens of the State in which action
was originally filed, based on consideration of six enumerated factors). Alternatively, Plaintiff
moves to engage in further jurisdictional discovery.
In their opposition to Plaintiff’s Motion to Remand, Defendants argue that less than two2

thirds of the proposed class are citizens of Missouri, because only 66.14% of the proposed class
members are citizens of Missouri [ECF No. 46]. Defendants also assert that the discretionary
exception contained in 28 U.S.C. § 1332(d)(3) should not apply, based on the circumstances of
the case, and the relevant balancing test of the six statutory factors.
II.

STANDARD FOR FEDERAL JURISDICTION
“Federal courts are courts of limited jurisdiction. They possess only that power authorized

by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).
Where so authorized, the courts have a “virtually unflagging obligation . . . to exercise the
jurisdiction given them.” Barzilay v. Barzilay, 536 F.3d 844, 849 (8th Circ. 2008) (alteration in
original) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817
(1976)). However, if a federal court takes action in a dispute over which it lacks subject matter
jurisdiction, that action is a nullity. See Hart v. Terminex Int’l, 336 F.3d 541, 541-42 (7th Cir.
2003) (stating that it was “regrettable” that the case had to be dismissed for lack of subject matter
jurisdiction “rendering everything that has occurred in [the] eight years [of litigation] a nullity”).
A claim may be removed to federal court only if it could have been brought in federal
court originally; thus, the diversity and amount in controversy requirements of 28 U.S.C. § 1332
must be met, or the claim must be based upon a federal question pursuant to 28 U.S.C. § 1331.
Peters v. Union Pac. R.R. Co., 80 F.3d 257, 260 (8th Cir. 1996). The party invoking jurisdiction
bears the burden of proof that the prerequisites to jurisdiction are satisfied. Green v. Ameritrade,
Inc., 279 F.3d 590, 596 (8th Cir. 2002); In re Bus. Men’s Assurance Co. of Am., 992 F.2d 181,
183 (8th Cir. 1993). The Class Action Fairness Act of 2005 (“CAFA”) was enacted to expand
federal court jurisdiction over class actions. Westerfeld v. Indep. Processing, LLC, 621 F.3d 819,
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822 (8th Cir. 2010). If a CAFA exception raises any doubt, the applicability must be resolved
against the party seeking remand. Id. at 823. The court must favor federal jurisdiction if
application of the CAFA exception raises any doubt. Id.
The removal statute at issue here creates an exception for removal on the basis of
diversity, providing that, if more than two-thirds of a proposed class in a class action are citizens
of the state which the action was originally filed, then a district court will decline to exercise
jurisdiction over the class action. 28 U.S.C. § 1332 (d)(4)(B). Further, removal statutes must be
strictly construed because they impede upon states’ rights to resolve controversies in their own
courts. Nichols v. Harper Venture, Inc., 284 F.3d 857, 861 (8th Cir. 2002). If “at any time
before final judgment it appears that the district court lacks subject matter jurisdiction,” the case
must be remanded to the state court from which it was removed. 28 U.S.C. § 1447(c).
III.

PROCEDURAL REQUIREMENTS FOR REMOVAL
While 28 U.S.C. § 1441(a) establishes that a defendant has a right to remove “any civil

action brought in a State court of which the district courts of the United States have original
jurisdiction,” the party seeking removal must comply with certain procedural requirements. If
the case stated by the initial pleading is not removable, a defendant must file a notice of removal
in the district court within thirty days of receiving the documents from which it may be
ascertained that the case is one that is or has become removable. 28 U.S.C. § 1446(b)(3).
Generally, “a case may not be removed under subsection (b)(3) on the basis of jurisdiction
conferred by section 1332 more than 1 year after the commencement of the action[.]” 28 U.S.C.
§ 1446(c).
The time limits of removal statutes are mandatory and must be strictly construed in favor
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of state court jurisdiction. See McHugh v. Physicians Health Plan of Greater St. Louis, Inc., 953
F. Supp. 296, 299 (E.D. Mo. Feb. 6, 1997). If a defendant fails to timely file a notice of removal,
the defendant’s right to remove is foreclosed. Id. Strictly construing the removal rules
“promote[s] expedited identification of the proper tribunal.” Id.
IV.

DISCUSSION
This action was commenced by Plaintiff on March 8, 2012. Subsequently, Barnes-Jewish

Hospital removed the case to this Court on the basis of diversity jurisdiction on April 23, 2012,
less than thirty days after the March filing date in the case. Plaintiff’s pending Motion for
Remand, filed on July 17, 2012, asserts that the Court lacked jurisdiction because removal was
prohibited under the “Home State Exception” of 28 U.S.C. § 1332(d)(4)(B). Defendants oppose
Plaintiff’s Motion, advancing arguments that the proposed class of plaintiffs in this case consist
of less than two-thirds of Missouri residents, and that the discretionary exception should not
apply [ECF No. 46].
Defendants contend that Plaintiff’s Motion should be denied because “Home State
Exception”, which requires the court to decline to exercise jurisdiction if more than two-thirds of
the petitioners are from the state where the original action was filed, does not apply here.
Defendants claim the percentage of petitioners that are residents of Missouri is only 66.14%.
Defendants also assert that this Court should not decline to exercise its jurisdiction under
the CAFA discretionary exception. When considering the application of the discretionary
exception, six factors are examined: whether 1) the claims involve a matter of interstate or
national interest; 2) the law where the action was originally filed will govern; 3) the complaint
was pleaded in a way to avoid federal jurisdiction; 4) there is a distinct nexus between the forum
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chosen and the petitioners, the harm, or the defendants; 5) in the aggregate, the proposed class
consists of substantially more citizens of the state where the action was filed than any other state,
and the citizenship of the other members is dispersed among a substantial number of states; and
6) a similar claim has been filed within the last three (3) years. 28 U.S.C. § 1332(d)(3).
Defendants argue that this case does involve a matter of national or interstate interest,
because Barnes-Jewish Hospital receives pathology specimens from all over the country, and
more than one-third of the petitioners are from states other than Missouri. Defendants also assert
that Missouri law would not apply, because some of the petitioners were treated in facilities
located outside of Missouri and the complaint alleged violations of the MMPA. Defendants also
argue that Plaintiffs were seeking to avoid federal jurisdiction, asserting that the complaint was
too vague with regards to the definition of the class. As well, the Defendants claim that there is
no distinct nexus to Plaintiff’s chosen forum, because the proposed class members do not all
reside in St. Louis City, and because Barnes-Jewish Hospital received specimens from facilities
outside of St. Louis City.
Defendants further argue that Plaintiff’s request for additional jurisdictional discovery
should be denied, stating that Barnes-Jewish Hospital has already supplied all of the appropriate
discovery responses to Plaintiff’s requests.
Here, the percentage of proposed class who are Missouri citizens is 66.14, and is
therefore barely less than two-thirds for purposes of falling within the “Home State Exception.”
Where an action has more than two-thirds of the proposed class residing in the state that the
action was filed, then a district court must not exercise jurisdiction over the case. 28 U.S.C. §
1332(d)(4)(B). The statute requires more than two-thirds; therefore, the “Home State Exception”
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does not apply to the proposed class as identified.
District courts in the Eastern District of Missouri have not addressed the “more than twothirds” requirement and the percentage or rounding associated with the “Home State
Exception’s” requirements. See Tonnies v. Southerland Imports, Inc., No. 4:09CV414 SNL,
2009 WL 3172565 at *3 n.2 (E.D. Mo. Sept. 29, 2009). Under the plain meaning of two-thirds,
the proposed class consists of 66.14 percent Missouri citizens. Since the class is less than twothirds, the Court should exercise jurisdiction over this case and not remand to the lower courts
based only on the two-thirds rule; however, further analysis is required.
Here, Defendants also assert that the discretionary exception should not apply because the
case involves a national or interstate interest, the law of Missouri will not govern all of the
petitioners, Plaintiff was seeking to avoid federal jurisdiction when pleading the complaint, and
several of the petitioners do not have a distinct nexus with St. Louis City.
Plaintiff’s claim does not involve a national or interstate interest solely because the
specimens came from states other than Missouri. Here, as did the defendants in Redd v. Suntrup
Hyundai, Inc., No. 09-411 MLM, 2009 WL 2568054 (E.D. Mo. Aug. 18, 2009), Defendants
argue that remand is not appropriate because this action involves a national or interstate interest.
In Redd, the defendant was a car dealer who charged processing fees for paperwork that had legal
significance, and the plaintiff brought suit alleging the unauthorized practice of law by the
defendant. Id. at *1. Although the defendant sold or leased cars to individuals from states other
than Missouri, the Court held, among other things, that there was not a national or interstate
interest involved, because the claims pertained to a matter of state concern; the regulation and
definition of the practice of law. Id. at *4. Similarly, Defendants here received specimens from
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several other states besides Missouri. However, like the situation found in Redd, solely having
services or products in other states does not necessarily create a national or interstate interest. Id.
Plaintiff’s claims are governed by Missouri law, because the complaint alleges violations
of a specific Missouri statute, the MMPA. See Tonnies, 2009 WL 3172565 at *4 (holding that
Missouri law governed because complaint alleged violations of specific Missouri statute).
Defendants argue that Plaintiff pleaded his complaint to avoid federal jurisdiction. See
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294, 58 S.Ct. 586, 82 L. Ed. 845
(1938). In St. Paul Mercury Indem. Co., the Court noted that if a plaintiff was seeking to avoid
federal jurisdiction, the plaintiff could simply have sued for less than the jurisdictional amount,
thus precluding the defendant’s ability to remove. Id. Here, Plaintiff could have sued for less
than $5,000,000, the jurisdictional amount, and kept Defendants from being able to remove the
action to federal court. Id. The absence of such leads the Court to hold that Plaintiff was not
trying to avoid federal jurisdiction.
Selection of the correct forum requires a distinct nexus with either the class members, the
alleged harm, or the defendants. 28 U.S.C. § 1332(d)(3). Plaintiff’s claims originally were
brought in the correct forum, because there is a distinct nexus with the City of St. Louis. Here,
the wrongful acts occurred in St. Louis, and Defendants conduct their business at locations in St.
Louis. Because there is a distinct nexus with the alleged harm and the defendants, this action
originally was brought in the correct forum.
Plaintiff’s claim proposes a class consisting of a substantially large amount of Missouri
residents; the remaining proposed class is from a substantial number of states other than
Missouri. Plaintiff’s action proposes a class that consists of twenty-two thousand and twenty8

eight (22,028) members. Fourteen thousand-five hundred and seventy (14,570) of those
proposed members reside in Missouri. The proposed class consists of citizens from forty-eight
(48) different states. Consequently, the number of citizens from the State in which this action
was originally filed, in the aggregate, is substantially larger than the number of citizens from
other states and the remaining members of the proposed class is dispersed among a substantial
number of states. Finally, there are no other class actions that are the same or similar that have
arose within the last three (3) years on behalf of the same or other persons [ECF No. 39].
Accordingly, even assuming that less than two-thirds (2/3), but more than one-third (1/3), of the
potential class members were members of Missouri at the time of filing, pursuant to the
permissive considerations of 28 U.S.C. § 1332(d)(3) (A)-(E), the Court finds that this matter
should be remanded to the State court.
Based on the above reasons, the motion to remand will be granted. Therefore, the
motion to engage in further jurisdictional discovery is moot.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion to Remand [ECF No. 38] is
GRANTED. This action is remanded to the Circuit Court of the City of St. Louis, Missouri,
pursuant to 28 U.S.C. § 1447(d).
Dated this

10th

day of October, 2012.

E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE

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