“No Bugs, No Hassles” for Class Action Against Terminix When Illinois Federal Court Denies Remand

Gerstenecker v. Terminix International Inc. and Servicemaster Company, No. 07-CV-0164-MJR, 2007 WL 2746847 (S.D. Ill. Sep 19, 2007).

A Formosan termite ate out the wooden foundation of the plaintiff’s motion to remand this CAFA case. For all our “local controversy exception” afficionados out there, here is a case for you. Milton Gerstenecker, showing clear dissatisfaction with his termite contract, filed a class action lawsuit in Madison County Illinois against Terminix and Servicemaster. The defendants removed the case, alleging jurisdiction under CAFA. Gerstenecker moved for remand on the basis of the local controversy exception.

The court held it was Gerstenecker’s burden to establish applicablity of the local controversy exception. The element at issue was 28 U.S.C. § 1332(d)(4)(A)(i)(I): whether more than 2/3 of the proposed class is composed of citizens of the state in which the case was originally filed. Gerstenecker attempted to meet this burden by pointing to the definition of the proposed class in the lawsuit:

all individuals, proprietorships, partnerships, corporations, and other entities (hereinafter “persons and entities”) that own any home, condominium, apartment complex, commercial building, or other structure, and/or improvements to real property (hereinafter referred to as “structure”) located in the State of Illinois which have purchased contracts and/or warranties from Defendants for termite control service or whose contracts with other providers have been purchased or assumed by Defendants. . .

The court held that this definition did not pertain solely to Illinois citizens, but could be read to include also those who owned property in Illinois but were not themselves citizens. The court stated CAFA specifically requires proof of citizenship as opposed to residency for the local controversy exception. Gerstenecker’s next attempt was to argue that the state’s licensing law prohibited defendants from applying pesticides to properties outside the state lines. The court rejected this argument easily, since the Illinois licensing statute did not have anything to do with the citizenship of the proposed class members.

The court mentioned that Gerstenecker presented no evidence of the citizenship of the proposed class members. This absence of evidence, coupled with a class definition that was equivocal regarding the citizenship of the members, led the court to conclude the record was insufficient to establish the local controversy exception.

Lesson to the readers: for a “No Hassles” experience when seeking to establish applicability of CAFA’s local controversy exception, try the novel approach of using evidence.