Abdale et al v. North Shore-Long Island Jewish Health System, Inc. et al

Filing 21

MEMORANDUM & ORDER terminating 9 Motion to Dismiss for Failure to State a Claim; denying 11 Motion to Remand to State Court; For the foregoing reasons, Plaintiffs' motion to remand is DENIED with leave to renew thirty (30) days after the conclusion of expedited discovery regarding the CAFA exceptions. The Court RESERVES JUDGMENT on Defendants' motion to dismiss. The Clerk of the Court is directed to TERMINATE this motion and Defendants may refile the motion within thirty (30) days after the conclusion of expedited discovery. So Ordered by Judge Joanna Seybert on 6/30/2014. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------X
DENISE R. ABDALE; HELEN BUTLER; PAULETTE
SCHRAMM; CHARLEEN SOLOMON; LENA VETERE;
CHARLES BILLUPS; DIANE PETERMAN, M.D.;
KATHERINE CROSS; LINDA KIEHL; ELIZABETH
CAPORASO; RICHARD ERTL; and JARRETT
AKINS, on behalf of themselves and all
others similarly situated,
Plaintiffs,
MEMORANDUM & ORDER
13-CV-1238(JS)(WDW)

-againstNORTH SHORE-LONG ISLAND JEWISH HEALTH
SYSTEM, INC.; NORTH SHORE-LONG ISLAND
JEWISH MEDICAL CARE, PLLC; NORTH
SHORE-LIJ NETWORK, INC.; and NORTH
SHORE UNIVERSITY HOSPITAL,

Defendants.
----------------------------------------X
APPEARANCES
For Plaintiffs:
Bonita E. Zelman, Esq.
Law Offices of Bonita E. Zelman
2001 Marcus Avenue, Suite S150
Lake Success, NY 11042
For Defendants:

Jason Brown, Esq.
Joseph Gaughan Cleemann, Esq.
Ropes & Gray LLP
45 Rockefeller Plaza
New York, NY 10111-0087

SEYBERT, District Judge:
Plaintiffs--a group of patients who received medical
services at medical facilities owned by defendants--commenced this
putative class action by filing a Summons and Complaint in the
Supreme Court of the State of New York, Queens County.

The

Complaint seeks, inter alia, damages for defendants’ “failure to

adequately

protect

the

confidential

personal

and

medical

information of their current and former patients, conduct that
ultimately

resulted

in

identity

breaches.”

(Compl. ¶ 1.)

and

medical

identity

data

Defendants removed the action to this

Court pursuant to 28 U.S.C. § 1446, claiming: (1) that federal
question jurisdiction exists, and (2) that removal is appropriate
under the Class Action Fairness Act of 2005.

Presently before the

Court are (1) defendants’ motion to dismiss the Complaint for
failure

to

state

a

claim

pursuant

to

Federal

Rule

of

Civil

Procedure 12(b)(6), (Docket Entry 9); and (2) plaintiffs’ motion
to remand pursuant to 28 U.S.C. § 1447(c), (Docket Entry 11).

For

the following reasons, plaintiffs’ motion to remand is DENIED with
leave to renew and the Court RESERVES JUDGMENT on defendants’
motion to dismiss.
BACKGROUND
Plaintiffs are thirteen residents of the State of New
York (collectively, “Plaintiffs”).

(Compl. ¶¶ 12-23.)

Defendants

are New York, not-for-profit corporations that own and operate
North Shore University Hospital in Manhasset, New York and other
medical facilities in New York City and Long Island, New York
(collectively, “Defendants”).

(Compl. ¶¶ 24-33.)

Plaintiffs

bring this action on behalf of themselves, and a class of those
similarly

situated,

to

recover

damages

stemming

from

alleged

security breaches that exposed Plaintiffs’ confidential personal
2

and medical information to identify thieves. The Complaint asserts
eleven

causes

of

action

brought

under

New

York

state

law

for: (1) negligence per se based on violations of New York General
Business Law § 899-aa; (2) negligence per se based on violations
of New York Public Health Law § 18; (3) negligence per se based on
violations

of

New

York

General

Business

Law

§

399-dd(4);

(4) negligence per se based on violations of the Health Insurance
Portability and Accountability Act of 1996 (“HIPPA”), Pub. L. No.
104–191, 110 Stat. 1936 (1996); (5) negligence per se based on
violations of the Health Information Technology for Economic and
Clinical

Health

Act

(“HITECH”),

42

U.S.C.

§§

17921–53;

(6) violations of New York General Business Law § 349; (7) breach
of

contract;

(8)

breach

of

fiduciary

duty;

(9)

negligence;

(10) breach of the implied covenant of good faith and fair dealing;
and (11) misrepresentation.

(Compl. ¶¶ 161-238.)

Defendants moved to dismiss the Complaint for failure to
state

a

claim.

However,

since

the

filing

of

that

motion,

Plaintiffs moved to remand the action to state court for lack of
subject matter jurisdiction.

These motions are currently pending

before the Court.
DISCUSSION
Although Defendants’ motion to dismiss the Complaint was
filed before Plaintiffs’ motion for remand, the Court first must
decide the motion for remand since it raises questions of subject
3

matter jurisdiction.

Macro v. Independent Health Ass’n, Inc., 180

F. Supp. 2d 427, 431 (W.D.N.Y. 2001) (“[W]hen an action is removed
from state court, the district court first must determine whether
it

has

subject

matter

jurisdiction

over

the

claims

before

considering the merits of a motion to dismiss . . . .”).

“If

removal was inappropriate, the court must remand for lack of
subject matter jurisdiction, notwithstanding the pendency of the
other motions.”

Id.

As discussed below, the Court finds that subject matter
jurisdiction exists under the Class Action Fairness Act.

However,

the Court also finds that Plaintiffs have presented the Court with
evidence that warrants expedited discovery regarding whether an
enumerated

exception

to

jurisdiction

Fairness Act also applies here.

under

the

Class

Action

The Court will first discuss the

applicable legal standard for a motion to remand before turning to
Plaintiffs’ motion specifically.
I.

Legal Standard on a Motion to Remand
Under the federal removal statute, 28 U.S.C. § 1441,

“any civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may be
removed by the defendant or the defendants, to the district court
of the United States for the district and division embracing the
place where such action is pending.”

28 U.S.C. § 1441(a).

“On a

motion to remand, the party seeking removal bears the burden of
4

establishing
proper.”

to

a

‘reasonable

probability’

that

removal

is

Anwar v. Fairfield Greenwich Ltd., 676 F. Supp. 2d 285,

292 (S.D.N.Y. 2009) (citations omitted).

“If at any time before

final judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.”
§ 1447(c).

28 U.S.C.

Additionally, any doubts regarding the propriety of

removal are resolved in favor of remand, and “‘federal courts
construe the removal statute narrowly.’”

Lupo v. Human Affairs

Int’l, Inc., 28 F.3d 269, 274 (2d Cir. 1994) (quoting Somlyo v. J.
Lu–Rob Enters., Inc., 932 F.2d 1043, 1045–46 (2d Cir. 1991)).
II.

Federal Question
Defendants first argue that removal is proper because

the Complaint raises federal issues sufficient to trigger federal
question jurisdiction pursuant to 28 U.S.C. § 1331.
Br., Docket Entry 15, at 3-14.)

(Defs.’ Opp.

The Court disagrees.

Federal courts have federal question jurisdiction over
actions “arising under the Constitution, laws, or treaties of the
United States.”

28 U.S.C. § 1331.

An action arises under federal

law if “‘a well-pleaded complaint establishes either that federal
law creates the cause of action or that the plaintiff’s right to
relief necessarily depends on resolution of a substantial question
of federal law.’”

Empire Healthchoice Assurance, Inc. v. McVeigh,

547 U.S. 677, 690, 126 S. Ct. 2121, 165 L. Ed. 2d 131 (2006)
(quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation
5

Trust for S. Cal., 463 U.S. 1, 27–28, 103 S. Ct. 2841, 77 L. Ed.
2d 420 (1983)).
To determine whether a state law claim “necessarily
depends on resolution of a substantial question of federal law,”
id. at 689–90, a court must assess whether the state law claim
“necessarily raise[s] a stated federal issue, actually disputed
and substantial, which a federal forum may entertain without
disturbing any congressionally approved balance of federal and
state judicial responsibilities.”

Grable & Sons Metal Prods.,

Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314, 125 S. Ct. 2363
(2005).

Under Grable, only a “special[,] small . . . [and] slim

category” of cases may be removed to federal court.
U.S. at 699, 701.

Empire, 547

“Even if [the] state-law claims involve a

federal element, the mere presence of such an element does not
automatically create federal jurisdiction.”

Schultz v. Tribune

ND, Inc., 754 F. Supp. 2d 550, 556 (E.D.N.Y. 2010) (citing Empire,
547 U.S. at 701 (“[I]t takes more than a federal element to open
the arising under door.” (internal quotation marks and citation
omitted)); accord Ins. Corp. of N.Y. v. Monroe Bus Corp., 491 F.
Supp. 2d 430, 434 (S.D.N.Y. 2007) (citing Merrell Dow Pharms. Inc.
v. Thompson, 478 U.S. 804, 808, 813–14, 106 S. Ct. 3229, 92 L. Ed.
2d 650 (1986)).
As noted, Plaintiffs’ Complaint sets out eleven causes
of action, the first five of which are labeled “Negligence Per
6

Se.”

(Compl. ¶¶ 161-97.)

The first three causes of action allege

that Defendants’ conduct violated New York state laws and therefore
constituted negligence per se.

(Compl. ¶¶ 161-80.)

Defendants

argue that the fourth and fifth causes of action for negligence
per se arise under federal law because they are based on alleged
violations of federal statutes, i.e., HIPPA and HITECH.

(Defs.’

Opp. Br. at 4-9.)

However, district courts in this Circuit have

consistently

that

held

federal

question

jurisdiction

is

not

appropriate where “no cause of action . . . necessarily stands or
falls based on a particular interpretation or application of
federal law.”

In re The Reserve Fund Secs. & Derivative Litig.,

Nos. 09-CV-0782, 09-CV-3786, 2009 WL 3634085, at *4 (S.D.N.Y. Nov.
3, 2009) (quoting Sung v. Wasserstein, 415 F. Supp. 2d 393, 406
(S.D.N.Y. 2006)).

Thus, a complaint that alleges negligence per

se based on violations of state and federal law “does not create
a ‘necessary’ federal-law question” because the negligence per se
claim “relies on alternative grounds for finding the presumption
of negligence--i.e., violations of state or federal law.”

DeLuca

v. Tonawanda Coke Corp., No. 10-CV-859S, 2011 WL 3799985, at *5
(W.D.N.Y. Aug. 26, 2011).

A necessary federal question therefore

is not present because “a fact finder could find negligence per se
without determining whether Defendants violated federal law.”
(citations omitted).

7

Id.

Here, Plaintiffs allege that Defendants were negligent
per se with respect to the security of Plaintiffs’ confidential
information based on several alternative theories, only two of
which reference violations of federal law.

Thus, the Complaint’s

negligence per se claims do not present a necessary federal
question.

See Broder v. Cablevision Sys. Corp., 418 F.3d 187, 194

(2d Cir. 2005) (“Where a federal issue is present as only one of
multiple theories that could support a particular claim . . . this
is insufficient to create federal jurisdiction.”); Mulcahey v.
Columbia Organic Chem. Co., 29 F.3d 148, 154 (4th Cir. 1994)
(finding that federal question jurisdiction did not exist because
“negligence per se under the federal environmental statutes is
only

one

of

the

Plaintiffs’

numerous

theories

of

recovery . . . .”); Abbott v. Tonawanda Coke Corp., No. 11-CV0549, 2012 WL 42414, at *4 (W.D.N.Y. Jan. 9, 2012) (“Plaintiffs’
alternative theory of negligence per se [based on violations of
federal law] is not ‘essential’ to their negligence theory, [and
as such] no federal subject matter jurisdiction exists.” (internal
quotation

marks

and

citation

omitted)

(second

alteration

in

original)); see also In re Reserve Fund, 2009 WL 3634085, *4
(finding that federal question jurisdiction did not exist because
federal law violation was only one of several alternative theories
underlying breach of contract and fiduciary duties claims).

The

Court is not persuaded by Defendants’ argument that Plaintiffs’
8

fourth and fifth causes of action based on violations of federal
law are not alternative theories of negligence simply because
Plaintiffs broke them out and labeled them as separate causes of
action. This argument elevates form over substance. The Complaint
alleges that Defendants were negligent in the handling and security
of

Plaintiffs’

confidential

information.

The

violations

of

federal law are just one way Plaintiffs intend to establish their
state law claim that Defendants were negligent per se.
Defendants also argue that Plaintiffs’ sixth and seventh
causes of action serve as bases for removal on federal question
grounds.

(Defs.’ Opp Br. at 9-12.)

However, Defendants did not

assert these as grounds for removal in their notice of removal and
have therefore waived them.

See CBS Inc. v. Snyder, 762 F. Supp.

71, 73 (S.D.N.Y. 1991) (“A petition for removal may be amended
freely within the statutory 30–day period calculated from the date
of service of the initial state court pleading.

Thereafter it may

be amended to set forth more specifically grounds for removal which
were imperfectly stated in the original petition.
decisions

have

made

a

distinction

between

an

The prior

‘imperfect’

or

‘defective’ allegation and a wholly missing allegation, which
cannot be supplied by amendment after the 30–day period has run.”);
see also Wyant v. Nat’l R.R. Passenger Corp., 881 F. Supp. 919,
925 (S.D.N.Y. 1995) (denying motion to amend notice of removal to
add new basis for removal and remanding to state court.).
9

Having found no basis for federal question jurisdiction,
the Court will turn to Defendants’ next argument that removal is
appropriate pursuant to the Class Action Fairness Act.
III. Class Action Fairness Act
Enacted in 2005, the Class Action Fairness Act (“CAFA”),
Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of
28 U.S.C, including § 1332), “expanded the jurisdiction of the
federal courts to allow class actions originally filed in state
courts that conform to particular requirements to be removed to
federal district courts.”

Greenwich Fin. Servs. Distressed Mortg.

Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23, 26 (2d Cir.
2010); see also 28 U.S.C. § 1453 (“A class action may be removed
to a district court of the United States in accordance with section
1446 . . . .”). Specifically, CAFA “confer[s] federal jurisdiction
over class actions where: (1) the proposed class contains at least
100 members (the ‘numerosity’ requirement); (2) minimal diversity
exists between the parties, (i.e., where ‘any member of a class of
plaintiffs is a citizen of a State different from any defendant’);
and (3) the aggregate amount in controversy exceeds $5,000,000.”
Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 213 (2d Cir. 2013)
(quoting 28 U.S.C. § 1332(d)(2)-(6)).
Defendants, as the removing party, bear the burden of
establishing jurisdiction under CAFA.

See Sorrentino v. ASN

Roosevelt Ctr., LLC, 588 F. Supp. 2d 350, 353 (E.D.N.Y. 2008) (“The
10

Second Circuit has made clear that the party asserting federal
jurisdiction

under

CAFA

bears

the

burden

of

establishing

jurisdiction.” (citing Blockbuster, Inc. v. Galeno, 472 F.3d 53,
57-58 (2d Cir. 2006); DiTolla v. Doral Dental IPA of N.Y., LLC,
469

F.3d

271,

275

(2d

Cir.

2006);

Mattera

v.

Clear

Commc’ns, Inc., 239 F.R.D. 70, 78 (S.D.N.Y. 2006))).

Channel

However, the

jurisdiction granted to federal courts under CAFA is not unlimited,
as

CAFA

“[O]nce

enumerates
the

general

certain

exceptions

requirements

of

to
CAFA

CAFA

jurisdiction.

jurisdiction

are

established, plaintiffs have the burden of demonstrating that
remand

is

warranted

exceptions.”

on

Greenwich,

the
603

basis
F.3d

of
at

one
26

of

the

(citing

enumerated
Brook

v.

UnitedHealth Grp. Inc., No. 06-CV-12954, 2007 WL 2827808, at *3
(S.D.N.Y. Sept. 27, 2007)); see also Anwar, 676 F. Supp. 2d at 293
(“If a defendant has successfully met his burden of demonstrating
the propriety of removal, a plaintiff may still prevail on a motion
to remand upon a showing that one of CAFA’s enumerated exceptions
applies.” (internal citations omitted)).
Here, Plaintiffs argue that this action must be remanded
to state court because Defendants have failed to demonstrate that
the three prerequisites for CAFA jurisdiction are met.
Br., Docket Entry 12, at 2-13.)

(Pls.’

Additionally, even if Defendants

had met their burden of establishing jurisdiction under CAFA,
Plaintiffs contend, the Court still must remand this case pursuant
11

to CAFA’s “local controversy,” “home state,” and “interests of
justice” exceptions to CAFA jurisdiction.
As

discussed

demonstrated

below,
that

the

the

Court

CAFA

finds

(Pls.’ Br. at 13-20.)
that

prerequisites

are

Defendants
met.

have

However,

although Plaintiffs have not shown that one of CAFA’s enumerated
exceptions applies here, the Court finds that they have presented
enough

evidence

to

warrant

conducting

expedited

discovery

regarding whether this action falls within one of the exceptions.
A.

CAFA Prerequisites
1.

Jurisdictional Amount

To satisfy the jurisdictional amount requirement under
CAFA, the removing defendant “must show that it appears to a
‘reasonable

probability’

that

the

aggregate

plaintiff class are in excess of $5 million.”
F.3d at 58.

claims

of

the

Blockbuster, 472

“Facts relating to the jurisdictional amount can be

challenged by the plaintiff, thereby requiring the defendant to
support those facts with a ‘competent proof’ by a preponderance of
the evidence.”

Sorrentino, 588 F. Supp. 2d at 354 (quoting United

Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark
Props. Meriden Square, Inc., 30 F.3d 298, 301-02 (2d Cir. 1994)).
To determine the amount in controversy, courts first turn to the
allegations of the complaint.

Id. (citing DiTolla, 469 F.3d at

276; Kocienda v. U-Haul Int’l., Inc., No. 07-CV-0954, 2007 WL
2572269, at *1 (D. Conn. Sept. 4, 2007)).
12

“‘Where the pleadings

themselves

are

inconclusive

as

to

the

amount

in

controversy . . . courts may look outside those pleadings to other
evidence in the record.’” Smith v. Manhattan Club Timeshare Ass’n,
Inc., 944 F. Supp. 2d 244, 250 (S.D.N.Y. 2013) (ellipsis in
original) (quoting United Food, 30 F.3d at 305).
Here, the Complaint contains a claim for $50 million in
punitive damages but does not make any other specific damages
demand. Defendants argue that the punitive damages claim satisfies
the amount-in-controversy requirement in and of itself.
Opp. Br. at 16.)

(Defs.’

Plaintiffs counter, arguing that the amount-in-

controversy calculation should not include amounts for punitive
damages because punitive damages are precluded by Section 901(b)
of the New York Civil Practice Laws and Rules.
6.)

(Pls.’ Br. at 3-

Because the amount-in-controversy is determined at the time

of removal, which in turn depends on state law, Plaintiffs contend,
any

amounts

for

punitive

damages

cannot

be

included

in

the

calculation.
Plaintiffs are correct that the amount in controversy is
determined at the time of removal, which depends on state law.
See DiPonzio v. Bank of Am. Corp., No. 11-CV-6192, 2011 WL 2693912,
at *5 (W.D.N.Y. July 11, 2011).

However, Plaintiffs are incorrect

that Section 901(b) prohibits the recovery of punitive damages
here.

Section 901(b) prohibits the recovery of penal damages

imposed by statute in a class action unless a statute specifically
13

authorizes the recovery of such damages in a class action.

N.Y.

C.P.L.R. § 901(b) (“Unless a statute creating or imposing a
penalty, or a minimum measure of recovery specifically authorizes
the recovery thereof in a class action, an action to recover a
penalty, or minimum measure of recovery created or imposed by
statute may not be maintained as a class action.”)

Here, however,

Plaintiffs do not seek punitive damages pursuant to a statute.
Rather, they seek punitive damages because Defendants “actions and
omissions

rose

to

recklessness . . . .”

the

level

of

(Compl. at 47.)

gross

negligence

and

Section 901(b) therefore

has no application here and punitive damages may be considered in
the amount-in-controversy calculation.

See Zehnder v. Ginsburg &

Ginsburg Architects, 172 Misc. 2d 57, 61, 656 N.Y.S.2d 135, 138
(N.Y. Sup. Ct. Westchester Cnty. 1997) (“Punitive damages are penal
in nature but plaintiffs are not seeking such damages under a
statute that creates the penalty and, therefore, the request for
that relief does not bar class action certification.” (internal
citations omitted)); see also Felder v. Foster, 71 A.D.2d 71, 74,
421 N.Y.S.2d 469, 471 (4th Dept. 1979) (“[Section 901(b)] does not
preclude a class action where plaintiffs seek punitive damages
under section 1983 of title 42 of the United States Code, since
such damages are not a ‘penalty’ or ‘minimum measure of recovery
created or imposed by statute’ (internal citations omitted)).
Accordingly, the Court may consider the amount claimed for punitive
14

damages

in

determining

whether

CAFA’s

jurisdictional

amount

requirement is met.
The
million

parties

demand

do

represents

not

debate

an

amount

whether
that

Plaintiffs’
Plaintiffs

$50

could

legitimately recover in this action, and the Court therefore finds
that Plaintiffs’ punitive damages request satisfies the $5 million
amount requirement.

However, notwithstanding the punitive damages

claim, it seems clear to the Court that Plaintiffs’ additional
claims for actual damages and equitable relief far exceed $5
million.

Although they do not provide specific monetary demands,

Plaintiffs assert a claim for actual damages to cover losses, outof-pocket expenses, and “the burden and expense of comprehensive
credit monitoring for more than one year into the future” and also
seek equitable relief in the form of a fund to pay for credit
monitoring and “the appointment of an administrator and an advisory
panel of persons qualified and knowledgeable in the field of
identity theft detection, prevention and mediation to oversee the
fund so as to prevent any additional harm and remedy actual harm
that has or will occur.”

(Compl. ¶¶ 8, 155, 240, 241.)

Given the

size of the purported class (which is alleged to be in the
thousands)

and

the

expansive

nature

of

Plaintiffs’

claimed

damages, it hard to see how the amount-in-controversy does not
exceed $5 million in actual damages and equitable relief even
absent Plaintiffs’ request for $50 million in punitive damages.
15

Accordingly,

the

Court

finds

that

the

amount-in-controversy

requirement is met.
2.

Class Size

As noted, CAFA also requires that there be at least 100
members

in

the

§ 1332(d)(5)(B).
meet

their

proposed

class.

See

28

U.S.C.

Plaintiffs argue that Defendants have failed to

burden

of

showing

that

this

requirement

is

met.

However, the Complaint itself alleges that the proposed class
amounts to “thousands, if not more” and also specifically alleges
that one of the alleged security breaches underlying this action
involved 500 patients.

(Compl. ¶¶ 76, 155.)

Accordingly, the

Court finds that the class size requirement is met.
3.

Minimal Diversity

Finally, CAFA requires only minimal diversity of the
parties, i.e., where at least one plaintiff and one defendant are
citizens of different states.

28 U.S.C. § 1332(d)(2).

The

Complaint alleges, and the parties do not dispute, that Defendants
are

New

York,

not-for-profit

therefore citizens of New York.

corporations.

Defendants

are

See 28 U.S.C. § 1332(c)(1) (“[A]

corporation shall be deemed to be a citizen of every State and
foreign state by which it has been incorporated . . . .”).

With

respect to the named Plaintiffs, the Complaint only alleges that
they are residents of New York; it makes no allegation with respect
to their citizenship.

Additionally, the Complaint does not limit
16

the proposed class to New York citizens.

Nonetheless, Defendants

claim that minimal diversity is evident from the face of the
Complaint because of the sheer size of the proposed class.

Given

the size of the proposed class and the fact that it is not limited
to New York citizens, the Court finds that Defendants have met
their burden of showing that there is a reasonable probability
that at least one class member is not a citizen of New York and
thus is a “a citizen of a State different from . . . defendant.”
See

Blockbuster,

472

F.2d

at

59

(quoting

28

U.S.C.

§ 1332(d)(2)(A)).
Having found that the three CAFA prerequisites are met,
the Court will now determine whether Plaintiffs have demonstrated
that any of the CAFA exceptions apply.
B.

CAFA Exceptions
As noted, CAFA provides expanded, but not unlimited,

diversity jurisdiction.
jurisdiction.

There are enumerated exceptions to CAFA

In their motion to remand, Plaintiffs contend that

even if the CAFA prerequisites are satisfied, three CAFA exceptions
apply, which all depend in part on the citizenship of each member
of the putative class: (1) the “local controversy” exception;
(2) the “home state controversy” exception; and (3) the “interests
of

justice”

exception.

(Pls.’

Br.

at

13-20.)

The

local

controversy and home state controversy exceptions are mandatory;
if either applies, the Court must decline jurisdiction.
17

28 U.S.C.

§ 1332(d)(4) (stating that “[a] district court shall decline to
exercise jurisdiction” if the local controversy or home state
controversy exception apply (emphasis added)).

These exceptions

“are designed to draw a delicate balance between making a federal
forum available to genuinely national litigation and allowing the
state courts to retain cases when the controversy is strongly
linked to that state.”

Brook, 2007 WL 2827808, at *3 (quoting

Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 682 (7th
Cir. 2006)).

The interests of justice exception is discretionary

but it is also “designed to address similar concerns regarding
truly

‘local’

controversies

exception applies.”

in

cases

where

neither

mandatory

Sorrentino, 588 F. Supp. 2d at 355.

Defendants argue that Plaintiffs’ motion to remand based
on the CAFA exceptions should be denied because (1) it is untimely;
and (2) in any event, Plaintiffs have failed to establish that the
Court should decline CAFA jurisdiction under one of the exceptions.
(Defs.’ Opp. Br. at 19-22.)

As discussed below, the Court finds

that Plaintiffs’ motion to remand was timely and that expedited
discovery regarding the citizenship of the class members is needed
before the Court can decide whether any of the exceptions apply.
1.

Timeliness

Defendants argue that Plaintiffs’ attempt to invoke the
CAFA exceptions is untimely because Plaintiffs filed their motion
to remand more than thirty days after this action was removed to
18

this Court.

Under 28 U.S.C. § 1447(c), “[a] motion to remand the

case on the basis of any defect other than lack of subject matter
jurisdiction must be made within 30 days after the filing of the
notice of removal . . . .”

28 U.S.C. § 1447(c).

Because the CAFA

exceptions do not deprive the Court of subject matter jurisdiction,
Defendants contend, Plaintiffs’ motion to remand, which was filed
ninety-four days after Defendants’ notice of removal, is untimely.
The Court disagrees.
Defendants
jurisdiction

are

are

not

correct

that

the

jurisdictional.

As

exceptions
the

Second

to

CAFA

Circuit

recently explained in Gold v. New York Life Insurance Co., 730
F.3d 137 (2d Cir. 2013), because the home state controversy
exception

states

that

the

Court

“shall

decline

to

exercise

jurisdiction” under CAFA, the exception “inherently recognizes
[that] the district court has subject matter jurisdiction but must
actively decline to exercise it if the exception’s requirements
are met.”

730 F.3d at 141 (alteration in original) (internal

quotations marks and citation omitted).

However, in Gold, the

Second Circuit also endorsed the Eight Circuit’s holding in Graphic
Communications v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir.
2011) that remand motions based on CAFA need only be raised within
a “reasonable time,” not within the thirty-day deadline under 28
U.S.C. § 1447(c).

Gold, 730 F.3d at 142.

19

In Graphic Communications, the Eight Circuit found that
Section 1447(c)’s thirty-day deadline did not apply to remand
motions

under

CAFA

because

it

did

not

consider

the

local

controversy exception to be “any other defect other than subject
matter jurisdiction” under Section 1447(c).

636 F.3d at 975.

Instead, the Eight Circuit held that a motion to remand must be
filed within a “reasonable” time period after removal.

In Gold,

the Second Circuit considered the timeframe for filing a motion to
dismiss under CAFA’s home state exception.

In deciding this

question, the Second Circuit relied heavily on the Eight Circuit’s
holding regarding the timeliness of remand motions, finding the
Eight Circuit’s approach to be “sound” and “similarly hold[ing]
that motions to dismiss under CAFA’s home state exception must
also be made within a reasonable time.”

Gold, 730 F.3d at 142.

Thus, although the Second Circuit has not explicitly answered
whether a remand motion under CAFA must be made within the thirtyday period under Section 1447(c) or within a reasonable time, the
Second Circuit’s express endorsement of, and reliance on, the
Graphic Communications holding indicates that the law of this
Circuit requires remand motions based on CAFA exceptions to be
made within in a reasonable time.
Here, considering the facts of this case, Plaintiffs’
motion to remand was made with a reasonable time.

See Gold, 730

F.3d at 142 (“[W]hat is reasonable will vary according to the
20

relevant facts . . . .”).

Although Plaintiffs were aware that the

CAFA exceptions might provide a basis for remand at the time
Defendants
Plaintiffs’

removed

this

counsel’s

case,

the

representation

Court
that

is

satisfied

Plaintiffs

with

did

not

possess sufficient evidence to support such a motion at that time.
As discussed in more detail later, the local controversy, home
state controversy, and interest of justice exceptions all depend
on the citizenship of each putative class member.

For example,

the home state controversy exception provides that a court must
decline jurisdiction in cases where “two-thirds or more 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.” 28 U.S.C. § 1332(d)(4)(B). In light
of these requirements, Plaintiffs’ counsel engaged in interviews
with prospective victims of identity theft for three months prior
to filing the motion to remand and dedicated additional time to
investigate criminal reports and findings in an attempt to garner
enough evidence to support a motion to remand based on the CAFA
exceptions.

(Pls.’ Reply Br., Docket Entry 20, at 7-10.)

Given

that much of the information regarding the citizenship of the
purported class members rests exclusively with Defendants, the
Court concludes that Plaintiffs could not in good faith attempt to
make out a successful motion to remand based on the CAFA exceptions
at the time this case was removed.
21

Additionally, the Court finds that the motion to remand
was not made at an unreasonably late stage of this litigation.
The case is still in its preliminary stages, the Court has not
held an initial conference, and, with the exception of the pending
motion to remand, the Court has not expended significant resources
on this case.

For all of these reasons, the Court finds that

Plaintiffs motion to remand was timely.
2.

Expedited Discovery

Having found the motion to remand to be timely, the
Court will now explain why expedited discovery is required before
determining the applicability of the CAFA exceptions.

As noted

above, Plaintiffs move for remand under the local controversy,
home state controversy, and interests of justice exceptions. While
each exception consists of different elements, they all require
Plaintiffs to make a numerical showing regarding the citizenship
of the putative class.

The local controversy exception provides

that a court must decline to exercise jurisdiction in cases where
a plaintiff demonstrates, inter alia, that “greater than twothirds of the members of all proposed plaintiff classes in the
aggregate are citizens of the State in which the action was
originally filed . . . .”1

28 U.S.C. § 1332(d)(4)(A).

Similarly,

1

The full text of the exception provides that a district court
“shall decline to exercise” its jurisdiction:
(i) over a class action in which—
22

the home state controversy exception requires a court to decline
jurisdiction in cases where “two-thirds or more 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.”

28 U.S.C. § 1332(d)(4)(B).

The interests of

justice exception provides that a
district court may, in the interests of
justice and looking at the totality of the
circumstances,
decline
to
exercise
jurisdiction under [CAFA] over a class action

(I) greater than two-thirds of the members of all
proposed plaintiff classes in the aggregate are
citizens of the State in which the action was
originally filed;
(II) at least 1 defendant is a defendant—
(aa) from whom significant relief is sought
by members of the plaintiff class;
(bb) whose alleged conduct forms a
significant basis for the claims asserted by
the proposed plaintiff class; and
(cc) who is a citizen of the State in which
the action was originally filed; and
(III) principal injuries resulting from the alleged
conduct or any related conduct of each defendant were
incurred in the State in which the action was
originally filed; and
(ii) during the 3–year period preceding the filing of that
class action, no other class action has been filed
asserting the same or similar factual allegations against
any of the defendants on behalf of the same or other
persons[.]
28 U.S.C. § 1332(d)(4)(A).
23

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 consideration of [several factors] . . . .2
28 U.S.C. § 1332(d)(3).
The citizenship of Defendants is not in dispute here;
each of them is a citizen of New York.

However, the parties

2

The factors are:
(A) whether the claims asserted involve matters of national
or interstate interest;
(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 other States;
(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 defendants;
(E) whether the number of citizens of the State in which
the action was originally filed in all proposed plaintiff
classes in the aggregate 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 States; and
(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 been filed.

28 U.S.C. § 1332(d)(3). “The plaintiff need not satisfy all
factors, rather a balancing test should be applied taking into
consideration the ‘totality of the circumstances.’” Sorrentino,
588 F. Supp. 2d at 359 (citation omitted).
24

heavily contest whether Plaintiffs have met their burden of showing
that (1) two-thirds or more of the putative class members are
citizens of New York, which would invoke the home state controversy
exception

and

satisfy

one

element

of

the

local

controversy

exception; or (2) one-third or more of the putative class members
are citizens of New York, which would satisfy one element of the
interests of justice exception.
Plaintiffs argue that they have met their burden of
showing that more than two-thirds of the potential class members
are citizens of New York because (1) all of the named Plaintiffs
are citizens of New York; (2) thirty-four unnamed class members
identified

by

Plaintiffs’

counsel

are

New

York

citizens;

(3) Defendants operate sixteen hospitals and eighteen medical
centers exclusively in New York; and (4) a 2011 annual report
published by Defendants states that ninety-one percent of their
patients “originate” from within New York City and Long Island.
(Pls.’ Br. at 14-17.)

This argument is extremely compelling, but

based only on these New York connections, it does not necessarily
follow that two-thirds, or even one-third, of the putative class
is made up of New York citizens.

The sample of the twelve named

Plaintiffs and thirty-four unnamed plaintiffs is small and, even
assuming that ninety-one percent of Defendants’ patients originate
from within New York, such statistic says nothing about the
citizenship of those patients.

It is probable that a portion of
25

these patients consist of individuals who reside in New York, but
who are not domiciled in New York, and therefore are not New York
citizens (e.g., an out-of-state college student). In sum, although
compelling, Plaintiffs’ argument is somewhat speculative and the
Court concludes that it cannot remand this action based on the
evidence before it.

Plaintiffs’ motion to remand is therefore

DENIED, with leave to renew.
Recognizing the inadequacy of their evidence, Plaintiffs
previously requested limited jurisdictional discovery in a premotion conference letter,3 and Plaintiffs assert that discovery
will show that two-thirds of the class are New York citizens, thus
requiring remand under the home state exception.

The Court finds

that expedited discovery on the issue of class citizenship is
appropriate and required here.
putative

class

members

is

As noted, the citizenship of the

unclear,

but

given

the

New

York

connections in this action, it seems likely that two-thirds of the
putative class will consist of New York citizens.

The Court is

mindful that the Court has jurisdiction under CAFA, and thus,
court-ordered discovery would not be jurisdictional in nature.
However, CAFA does impose an obligation on this Court of mandatory
abstention.

Because Plaintiffs have made a substantial showing

3

(See Docket Entry 8.) The undersigned does not require premotion conference letters, with the exception of motions for
summary judgment. Plaintiffs’ request for a pre-motion
conference was therefore denied.
26

that more than two-thirds of the putative class are New York
citizens and much of the information regarding the putative class
is possessed by Defendants, the Court finds that the appropriate
way to proceed here is with limited, expedited discovery on the
issue of the CAFA exceptions. See Barricks v. Barnes-Jewish Hosp.,
No. 11-CV-1386, 2012 WL 1230750, at *2 (E.D. Mo. Apr. 12, 2012)
(ordering discovery before considering applicability of local
controversy exception); cf. Catron v. Colt Energy, Inc., No. 13CV-4073, 2013 WL 6016231, at *3 (D. Kan. Nov. 13, 2013) (declining
to order expedited discovery because, inter alia, “it . . . [did]
not appear that the information [was] . . . as readily available
as plaintiff assume[d]” and “plaintiff’s initial evidence of the
applicability of the local controversy exception . . . [was not]
as strong as plaintiff contend[ed]).
The parties are therefore ORDERED to confer and submit
a joint proposed discovery plan within thirty (30) days of this
Memorandum and Order.

The discovery plan shall not exceed ninety

(90) days and shall include the types of discovery to be conducted.
Because the parties will engage in expedited discovery that may
require the Court to abstain from jurisdiction over this case, the
Court RESERVES JUDGMENT on Defendants’ pending motion to dismiss.
CONCLUSION
For the foregoing reasons, Plaintiffs’ motion to remand
is DENIED with leave to renew thirty (30) days after the conclusion
27

of expedited discovery regarding the CAFA exceptions.
RESERVES JUDGMENT on Defendants’ motion to dismiss.

The Court

The Clerk of

the Court is directed to TERMINATE this motion and Defendants may
refile the motion within thirty (30) days after the conclusion of
expedited discovery.

SO ORDERED.

/s/ JOANNA SEYBERT
Joanna Seybert, U.S.D.J.

Dated:

June
30 , 2014
Central Islip, New York

28