Shelby v. Oak River Insurance Company
ORDER denying 7 motion to remand. Signed on December 5, 2017, by Chief District Judge Greg Kays. (Law clerk)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
QUENTON SHELBY, Individually
and on Behalf of Others Similarly Situated,
OAK RIVER INSURANCE COMPANY,
ORDER DENYING MOTION FOR REMAND
This putative class-action lawsuit arises from an attempt to recover on a judgment entered
in a separate class-action lawsuit. This lawsuit was filed in the Circuit Court of Jackson County,
Missouri. Defendant Oak River Insurance Company (“Oak River”) removed it to federal court
by invoking the Court’s jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C.
§§ 1332, 1441, and 1446.
Now before the Court is Plaintiff’s Motion to Remand (Doc. 7). Finding that Oak River
timely filed its notice of removal, and that the Court should not exercise its discretion to remand
under CAFA’s “interests of justice” exception, the motion is DENIED.
This dispute stems from a separate lawsuit (“the underlying litigation”) brought by a used
car dealer, Miller Investment Group (“MIG”), seeking to recover against Plaintiff Quenton
Shelby for a deficiency on his secured car loan. In response, Plaintiff filed a class-action
counter-claim alleging MIG violated the UCC and engaged in a deceptive pattern in repossessing
cars. MIG subsequently entered into a class-wide settlement with Plaintiff in which MIG
assigned any claims it had against its insurers to Plaintiff and the other class members.
Oak River is an insurance company that issued garage liability insurance policies to MIG.
It is a citizen of Nebraska, with its principal place of business in Omaha, Nebraska. Oak River
denied coverage in the underlying litigation, purportedly because the underlying litigation
concerned statutory penalties arising out of financing activities and not any activity associated
with MIG’s operation of a garage.
On July 22, 2016, Plaintiff filed suit against Oak River in the Circuit Court of Jackson
County, Missouri, seeking to recover under Oak River’s policies. Oak River contends it was
initially unclear whether the case was a class-action lawsuit. It notes, for example, the Petition
did not indicate that Plaintiff was bringing the case on behalf of others, and that the caption
denoted Mr. Shelby as the only Plaintiff. Pet. (Doc. 10-2). Oak River responded by asserting an
affirmative defense that the Petition failed as a matter of law because it failed to join proper
parties—that is, the class members in the underlying litigation—to the action.
Oak River subsequently engaged in discovery to confirm that the case was not a class
action. On February 8, 2017, Plaintiff stated in a sworn interrogatory response that, “This is not
a class action.” Am. Answers and Objs. to Def.’s First Interrogs. to Pl. at 3 (Doc. 10-4).
Less than thirty days later, on March 8, 2017, Plaintiff sought leave to file an amended
petition asserting that the case was, in fact, a class action lawsuit. Among other things, the
proposed First Amended Petition stated, “Shelby is asserting MIG’s and the Class’s claims . . .”
First Am. Pet. at ¶ 2 (Doc. 10-7) (emphasis added). It also revised the prayer for relief clause in
Count II to state it was seeking damages for “Shelby and the Class.” Id. at 7, ¶ B (emphasis
On March 28, 2017, Oak River removed the case to federal court by asserting CAFA
jurisdiction, arguing the motion to amend and proposed First Amended Petition were the first
sufficiently detailed and unequivocal statements from which it could unambiguously ascertain
that this was a class action.
Plaintiff now moves for remand, arguing Oak River’s removal was untimely, and even if
it was timely, the Court should decline to hear the dispute under CAFA’s “interests of justice”
The statute governing removal provides in relevant part that “[a]ny civil action brought in
a State court . . . may be removed by the defendant or the defendants” if the federal court has
original jurisdiction over it. 28 U.S.C. § 1441(a). The removing party bears the burden of
establishing federal jurisdiction. Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009). All
doubts about removal are resolved in favor of remand. Cent. Iowa Power Co-op. v. Midwest
Indep. Transmission Sys. Operator, Inc., 561 F.3d 904, 912 (8th Cir. 2009).
To establish CAFA jurisdiction, the removing party must show that the aggregate amount
in controversy in the class action exceeds $5,000,000 and “there is minimal (as opposed to
complete) diversity among the parties, i.e., any class member and any defendant are citizens of
different states; and there are at least 100 members in the class.” Westerfeld v. Indep. Processing
LLC, 621 F.3d 819, 822 (8th Cir. 2010) (citing 28 U.S.C. § 1332(d)). Generally speaking, a
defendant has thirty days to invoke CAFA jurisdiction from the time the complaint is filed or the
defendant receives “an amended pleading, motion, order, or other paper” from which it may first
be ascertained that the case has become removable. 28 U.S.C. § 1446(b).
Once the removing party establishes CAFA jurisdiction, the burden shifts to the party
seeking remand to establish that one of CAFA’s three jurisdictional exceptions applies.
Westerfeld, 621 F.3d at 822. Under the “interests of justice” exception:
A district court may, in the interests of justice and looking at the
totality of the circumstances, decline to exercise jurisdiction under
paragraph (2) over a class action in which greater than one-third
but less than two-thirds of the members of all proposed plaintiff
classes in the aggregate and the primary defendants are citizens of
the State in which the action was originally filed based on
(A) whether the claims asserted involve matters of national or
(B) whether the claims asserted will be governed by laws of the
State in which the action was originally filed or by the laws of
(C) whether the class action has been pleaded in a manner that
seeks to avoid Federal jurisdiction;
(D) whether the action was brought in a forum with a distinct
nexus with the class members, the alleged harm, or the
(E) whether the number of citizens of the State in which the action
was originally filed in all proposed Plaintiff classes is
substantially larger than the number of citizens from any other
State, and the citizenship of the other members of the
proposed class is dispersed among a substantial number of
(F) whether, during the 3-year period preceding the filing of that
class action, 1 or more other class actions asserting the same
or similar claims on behalf of the same or other persons have
28 U.S.C. § 1332(d)(3) (emphasis added).
Oak River’s removal was timely filed.
Plaintiff’s first argument—that Oak River’s removal was untimely—is unavailing. The
law here is clear:
If the case as pled in the initial complaint satisfies CAFA’s
jurisdictional requirements, 28 U.S.C. § 1446(b)(1) requires that
the defendant remove the case within thirty days after receiving a
copy of the complaint. If, on the other hand, the case as pled in the
initial complaint does not satisfy CAFA’s jurisdictional
requirements, 28 U.S.C. § 1446(b)(3) requires that the defendant
remove the case within thirty days after receiving ‘an amended
pleading, motion, order or other paper from which it may first be
ascertained that the case is one which is or has become removable.’
Gibson v. Clean Harbors Envtl. Servs., Inc., 840 F.3d 515, 518 (8th Cir. 2016). The thirty-day
removal period does not begin to run until the defendant receives an amended pleading, motion,
order, or “other paper” from which it can “unambiguously” ascertain that the CAFA
jurisdictional requirements have been satisfied. Id. at 519 (emphasis added). “Although a
defendant has a duty to ‘apply a reasonable amount of intelligence to its reading’ of any such
document received from the plaintiff, a defendant is not required to ‘perform an independent
investigation into a plaintiff’s indeterminate allegations to determine removability.’”
(quoting Cutrone v. Mortg. Elec. Registration Sys., Inc., 749 F.3d 137, 145 (2d Cir. 2014)).
Notwithstanding his interrogatory answer in February of 2017 that “[t]his is not a class
action,” Plaintiff contends that it was apparent from the initial petition that this case was, in fact,
a class action, so the thirty day removal period expired in August of 2016. This argument is
arguably frivolous. Plaintiff is claiming that despite the Petition’s not indicating it was a class
action—which was subsequently confirmed by Plaintiff’s sworn statement that it was not a class
action—Oak River should have known that this was a class action all along. At best, this
indicates Plaintiff is attempting to use questionable tactics to forum shop; at worst, it suggests
Plaintiff lied in his interrogatory answers. None of these choices reflect well on Plaintiff’s
In any event, the Court holds Oak River’s removal was timely filed. After carefully
reading the initial petition, the Court finds it is unclear whether Plaintiff was attempting to plead
a class action or not. The Court holds that it was only after Oak River received Plaintiff’s
motion for leave to amend on March 8, 2017, that it was unambiguous that Plaintiff was
asserting a class action. Since Oak River filed its notice of removal twenty days later, it was
Plaintiff has not established that the interest of justice exception applies or, even if it
did apply, that the Court should exercise its discretion to decline jurisdiction.
Arguing in the alternative, Plaintiff contends that the Court should decline to exercise
CAFA jurisdiction in the interests of justice. Assuming for the sake of argument that Oak River
is deemed a citizen of Missouri for purposes of this analysis 1 and that approximately 60% of
class members are Missouri citizens 2 (and so the one-third requirement is satisfied), the Court
must weigh the six statutory factors. The Court rules as follows.
Plaintiff did not argue that Oak River should be considered a Missouri citizen until it filed its reply brief. Since the
defendant’s citizenship is a prerequisite to the Court’s finding the interest of justice exception applies, this is
something the Court expected Plaintiff would have discussed in its initial brief. And ordinarily the Court will not
consider an argument made for the first time in a reply brief because it discourages “sandbagging,” that is, the
practice of waiting for the reply brief to argue an issue for the first time so the non-moving party cannot respond,
which is unfair. See Autotech Techs. Ltd. P’ship v. Automationdirect.com, Inc., 235 F.R.D. 435, 437 (N.D. Ill. 2006)
(observing that “[l]oading-up on a reply brief effectively results in a one-sided presentation, which is hopelessly
inconsistent with the very premise on which the adversary system is based,” is “unfair to one's opponent,” and
“adversely affects the accuracy of the judicial process, which depends on comprehensive presentations by both
sides”). However, since Oak River thoroughly argued this point in its brief, there is no harm here.
Oak River contends this figure is unverified and unreliable.
National or Interstate Interest
The Court finds there is a some interstate interest in this litigation. The parties agree that
the class claimants are from approximately twenty-one different states, that Oak River is a
Nebraska company headquartered in Omaha, and that the relevant decisions here were all made
in Nebraska. If 60% of class members are Missouri citizens, then the harms allegedly caused by
Oak River’s decision making are mostly felt in Missouri, but other states still have some interest
in this litigation. Hence, there is some interstate interest in the case, which weighs slightly in
favor of federal jurisdiction.
The parties agree that Missouri law will likely govern most claims, and that it is unclear
whether other states laws will govern the remaining claims. This factor weighs slightly in favor
Pleading to Avoid Federal Jurisdiction
The original petition was pled in such a way as to attempt to avoid federal jurisdiction.
Indeed, Plaintiff used impermissible tactics to do so. This factor weighs heavily in favor of
Forum’s Nexus to Class Members, Alleged Harm, and Defendant
The forum where the suit was brought has a nexus to most of the class members and the
alleged harm, but no nexus to Oak River. This factor weighs slightly in favor of remand.
Whether the Number of Class Members in the Forum is Substantially Larger Than
the Number from Any Other State, and Dispersal of Class Members
Assuming 60% of the class members are Missouri citizens, the number of Missouri class
members is larger than the number of citizens from other states. The remaining 40% are
dispersed throughout twenty-one other states, mostly in Kansas. This factor weighs slightly in
favor of remand.
Previous Lawsuits Asserting the Same or Similar Claim
The parties agree that another class action asserting the same or similar claim has not
been filed in the previous three years. This factor favors remand.
On the whole, these factors fairly balance each other out. That said, the Court declines to
exercise its discretion to remand this case back to state court for two independent reasons. First,
Plaintiff bears the burden of establishing that the Court should exercise its discretion to remand,
and he has not met that burden. Second, 28 U.S.C. § 1332(d)(3) requires the Court to consider
“the totality of the circumstances” in deciding whether it should exercise discretion to remand.
Here, Plaintiff attempted to deprive Oak River of its statutory right to removal by being less than
candid it as to whether the case was a class action. This is impermissible, and the Court will not
reward the use of such tactics by granting the relief sought.
For the reasons discussed above, Plaintiffs’ motion to remand (Doc. 7) is DENIED.
IT IS SO ORDERED.
December 5, 2017
/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT
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