The “local controversy” exception provides that a federal district court “shall decline” jurisdiction over a putative class action if more than two-thirds of the proposed class are citizens of the state where suit was filed, at least one defendant is a citizen of that state and satisfies certain requirements, and no other class action “asserting the same or similar factual allegations” against any defendant has been filed during the prior three years. 28 U.S.C. § 1332(d)(4). The additional requirements to qualify as an in-state defendant are that the defendant is one “from whom significant relief is sought by members of the plaintiff class,” “whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class,” and “principal injuries arising from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed.” Id. (emphasis added). A lot of lawyers likely assumed that this exception would apply if more than two-thirds of the class are citizens of the forum state and their injuries (but not every single class member’s injury) were suffered in that state. Not so, according to a new Fifth Circuit decision.In Cheapside Minerals, Ltd. v. Devon Energy Production Co., L.P., Nos. 23-40591, 24-40026, – F.4th –, 2024 WL 886951 (5th Cir. Mar. 1, 2024), the plaintiffs sued for underpayment of oil-and-gas royalties on Texas properties. As you might expect, more than

Jurisdiction: United States District Court for the Southern District of New York; September 18, 2023Plaintiff Ann Greenberg’s asbestos-related lawsuit against defendants Johnson & Johnson and Kolmar Laboratories asserts that she contracted an asbestos-related disease from her use of Johnson’s Baby Powder, whichshe alleged contained asbestos-contaminated talc.Johnson & Johnson filed a motion to remove the action to federal court on August 27, 2021, invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Plaintiff opposed, and Johnson & Johnson filed a timely reply alleging the plaintiff fraudulently joined Kolmar to defeat federal jurisdiction.Pursuant to28 U.S.C. § 1441(a), a defendant may remove an action to the United States District Court in “any civil action brought in a State court of which the district courts of the United States have original jurisdiction.” The district courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States,”28 U.S.C. § 1331, as well as “all civil actions where the matter in controversy exceeds the sum of $75,000, exclusive of interests and costs, and is between . . . citizens of different States,”id.§ 1332(a).If Kolmar was not a fraudulently joined defendant, section 1441(b)(2) prohibited the removal of this action; if Kolmar was fraudulently jointed, removal was proper. “A plaintiff may not defeat federal court diversity jurisdiction by improperly joining as a defendant a non-diverse p

023 WL 2997420 (6th Cir. April 19, 2023), is not, strictly speaking, a drug or device case, but it is about constraining plaintiff lawyer attempts to aggregate litigation. That issue is near and dear to our flinty, defense-hack hearts. We never forego a chance to quote our old buddy Hegel, so here we go again: “Quantitative differences after a point become qualitative differences.” Mass litigations, whether in the form of class actions, multidistrict litigations, consolidations, or whatever, are designed to achieve economies of scale without altering substantive rights. Except that they almost always do alter substantive rights, and almost always to the detriment of defendants. Once litigations become massive enough, defendants face exposures massive enough to alter settlement calculations. Size overwhelms merit. Just like the complexity of the tax code is itself a tax on citizens, aggregating plaintiffs becomes a tax on defendants.Congress passed the Class Action Fairness Act (CAFA) (28 U.S.C. section 1332(d)(11)(B)(i)) to prevent plaintiff lawyers from cobbling together mass actions and running them through certain state courts that have earned a rather, er, inflammatory nickname. We usually refrain from using that nickname because we do not want to irritate the fine judges in such lovely places as Southern Illinois, or the City Hall that is only a stone’s throw from where we sit, or coal country.That last location is where the Adams case was filed. Initially, two complaints were filed in state court, with each listing over 100 coal miners, bringing product liability actions against respirator manufacturers, distributors, and retailers. The defendants removed the cases to federal court based on CAFA, which extends federal jurisdiction to certain “mass actions” involving “100 or more persons.” The district judge granted the plaintiffs’ motion to remand, the defendant obtained leave to file an interlocutory appeal, and the issue ended up in the hands of the Sixth Circuit. The Sixth Circuit is a good

l 28, 2023This asbestos-related action was brought by plaintiff Carolyn Keiser on behalf of herself and as the executor of her husband, decedent David Keiser’s estate. The decedent was diagnosed with mesothelioma, which the plaintiff alleges was caused by his occupational exposure to asbestos from defendants Donald McKay Smith, Inc. (“DMS”), Red Seal Electric Company and Vanderbilt Minerals LLC.Plaintiff originally brought this action in state court. Defendant Vanderbilt removed it to federal court, claiming diversity jurisdiction. As the only diverse defendant in the case, Vanderbilt argued that plaintiff fraudulently joined non-diverse defendants, DMS and Red Seal, to prevent removal. Plaintiff denied the claim and moved to remand the case back to the state court.A defendant may remove a civil case to federal court based on diversity jurisdiction. 28 U.S.C. § 1441(b)(2). Complete diversity exists when none of the defendants are citizens of the state where the plaintiff is a citizen. 28 U.S.C. § 1332. Even if the parties are not completely diverse, a diverse defendant may still remove a case to federal court if the plaintifffraudulently joined the non-diverse defendants. Walker v. Philip Morris USA, Inc., 443 F. App’x 946, 951 (6th Cir. 2011).Fraudulent joinder provides an exception to the complete diversity requirement.Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999)(quotingTriggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir.1998)).In order to defeat a motion to remand on the allegation of fraudulent joinder, the removing defendant must “present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law. … However, if there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, this Court must remand the action to state court.” Coyne, 183 F.3d at 493(citingAlexander v. Electronic Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994)). In evaluating wh

for The Washington Post. Although Heard never mentioned her ex-husband by name, Depp sued Heard for defamation. A jury agreed and awarded Depp $10 million in compensatory damages and $5 million in punitive damages.Heard’s insurer, which defended her under a comprehensive personal liability policy, now seeks to recover millions in legal defense costs from the defamation suit. Since Heard was found liable for an intentional act, Heard’s insurer argues she should pay for their legal defense. To avoid being sued in federal court by her insurer, Heard claimed that she was stateless. While still a U.S. citizen, Heard sold her house in California and moved to Spain, claiming she was no longer domiciled in any state and, therefore, stateless.Heard claims that she cannot be sued in federal court because the court lacks both personal and subject matter jurisdiction over her. In this case, the insurance company would need to show diversity jurisdiction to sue Heard in federal court. Pursuant to 28 U.S.C. § 1332(a), both the insurance company and Heard would need to be citizens of different states. Heard’s position is that she is not domiciled in any state, so for purposes of diversity jurisdiction, she cannot be held in federal court.While Heard’s stateless position has gotten attention, she is not the first to make this argument. In Freidrich v. Davis, a defendant successfully avoided being sued in federal court on the same theory. In that case, the plaintiff and defendant were both passengers on a plane flying from Pennsylvania to Germany when the defendant fell and broke the plaintiff’s arm. The plaintiff sued the defendant in federal court, alleging diversity jurisdiction in that she was a citizen of Ohio while the defendant a citizen of Pennsylvania. The defendant moved to dismiss, arguing that although he was still a citizen of the United States, he was no longer a citizen of Pennsylvania, as he was domiciled in Germany—hence, stateless. The district court ruled, and the Third Circuit aff

dismiss on the ground that it was immune from suit under the constitutions of both the United States and West Virginia. The district court rejected their immunity argument, but found on the merits that the fees were proper under the enabling statute for the Authority and granted the Authority’s motion to dismiss on this basis.On appeal, the Fourth Circuit did not reach the merits of the district court’s dismissal, but instead addressed the fundamental and unexamined question of whether the district court had diversity jurisdiction over the class-action lawsuit in the first place.Monaco alleged that there was diversity subject-matter jurisdiction under the Class Action Fairness Act, which expands the scope of diversity jurisdiction in certain interstate class actions. But, as the Fourth Circuit panel pointed out, the Act by its express terms does not apply when the “primary defendants” are “governmental entities against whom the district court may be foreclosed from ordering relief.” 28 U.S.C. §1332(d)(5)(A).Focusing on that statutory phrase, the Fourth Circuit easily concluded that Authority met the “primary defendants” requirement, as the Authority was the only defendant. Likewise, the panel assured itself that defendant Authority was a governmental entity by the express terms of West Virginia Code provisions creating it.Less simple was the task of construing the CAFA language excluding jurisdiction over lawsuits where “the district court may be foreclosed from ordering relief.” §1332(d)(5)(A) (emphasis added).The Fourth Circuit held that the “may be foreclosed” phrase does not require a definitive determination that the Authority has immunity. Something less will suffice. On the other hand, a “plainly implausible claim of immunity” would not establish that the “district court may be foreclosed from ordering relief.” Something more is required.Without determining the precise bounds of CAFA’s “may be foreclosed” language, the Fourth Circuit said that “[w]hether the precise line is drawn

as a laborer and laboratory technician at Alcoa Wenatchee Works, an aluminum smelting facility. The plaintiff was diagnosed with epithelioid mesothelioma in March 2022.In June 2022, he filed the instant lawsuit in King County Superior Court against seven defendants, including Howmet Aerospace, Alcoa’s corporate successor. The plaintiff did not initially name a Washington defendant but later added North Coast Electrical Company, a Washington corporation.However, he did so without first seeking leave of court to file an amended complaint. Therefore, Howmet removed the case to the Western District of Washington based on diversity jurisdiction.After voluntarily dismissing the action, the plaintiff filed a new lawsuit in state court, which included North Coast as a defendant.Howmet removed the case for a second time, alleging that North Coast was a “sham defendant.” The plaintiff filed a motion to remand. A case may be removed to federal court based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). “Although an action may be removed to federal court only where there is complete diversity of citizenship . . . one exception to the requirement for complete diversity is where a non-diverse defendant has been fraudulently joined.” Fraudulent joinder may be established either by “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” However, “if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to state court.” Under Washington law, a plaintiff must establish that “(1) he was exposed to asbestos from a particular defendant’s product; and (2) that such exposure was a substantial factor in the development of an asbestos-related injury.” As to the first prong, Howmet argued that the plaintiff did not identify Nor

tly addressed so-called “Snap Removals” in the case of In re Levy, 52 F.4th 244, 245 (5th Cir. 2022). In Levy, the plaintiff, Calvin Levy, petitioned the Fifth Circuit for a writ of mandamus directing the district court to remand the suit to state court for want of jurisdiction.The suit arose from a traffic collision. Levy is a citizen of Louisiana, as is the driver of the other vehicle, defendant Emile Dumesnil. At the time of removal by diverse defendant Zurich American Insurance Company, neither Dumesnil nor defendant Dynamic Energy Services International, LLC, had been served with process.Levy initiated the suit in Louisiana state court against the three defendants. Zurich—the only defendant that had received service of process—promptly removed to federal court, asserting that removal was proper under28 U.S.C. § 1441(b)(2), otherwise known as the “forum-defendant rule.” That statute provides that an “action otherwise removable solely on the basis of [diversity] jurisdiction under [28 U.S.C. § 1332(a)] “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” (Emphasis added.)According to Zurich, it could remove to federal court because Dumesnil—a citizen of the forum state—had not yet been served. The problem for defendants, however, was the passage insection 1441(b)(2) that limits it to “action[s] otherwise removable” on no basis other thansection 1332(a), the statute that confers diversity jurisdiction. By readingsections 1441(b)(2) and1332(a) together, removal undersection 1441(b)(2) is permissible only if complete diversity exists among allnamedparties: Each plaintiff must be diverse from each defendant,i.e., there must be what is known as “complete diversity.”The Fifth Circuit ordered the district court to remand the suit to state court, holding:The defendants mainly rely onTexas Brine Co., LLC v. American Arbitration Association, Inc., 955 F.3d 482 (5th Cir. 2020), where we autho

Jurisdiction always matters. Of course, litigants and the courts tend to focus on the merits. After all, the merits, not rote jurisdictional analyses, are what a lawsuit is all about. But parties cannot ignore basic jurisdictional principles in the hope that courts will. As recent decisions make clear, they won’t. Thus, like wide receivers, attorneys and their clients must see the jurisdictional ball into their hands before turning downfield to score on the merits.This advice is especially important for limited liability companies (“LLCs”) filing in or removing suits to federal court. According to the Internal Revenue Service, LLCs have been the fastest growing and most prolific form of business entity in the United States for nearly two decades. And when it comes to federal court, their jurisdictional hook of choice is 28 U.S.C. § 1332. That provision allows for “original jurisdiction” in the district courts “of all civil actions where the matter in controversy exceeds the sum or value of $75,000” and the parties’ citizenship is diverse. Though the first element is easily satisfied, LLCs have often found themselves in trouble when setting out their citizenship to establish diversity.As the Sixth Circuit recently observed, there are three lessons that all LLCs and counsel representing them should keep in mind when litigating in federal court. We address each in turn.Lesson 1“LLCs are not corporations.” “[A]lleging that an LLC is organized under the laws of a certain state does nothing to establish its citizenship.” Nor does asserting an LLC’s headquarters or principal place of business. And though the Supreme Court has not weighed in on this issue, the Circuit Courts of Appeals are unanimous in holding that, LLCs “have the citizenship of their members and sub-members,” through all of their corporate layers.That said,

Diversity jurisdiction of the federal courts requires complete diversity of citizenship. 28 U.S.C. § 1332. If a party is a corporation, then it becomes necessary to determine the location of the corporation's citizenship. In a recent decision, Magistrate Judge Donna M. Ryu summarized three different approaches adopted by the federal courts:Some courts look to both to the state of incorporation and to the state of the corporation's last business activity. * * * Some courts hold an inactive corporation has no "place of business" and therefore is a citizen only of its state of incorporation. * * * Other courts adopt a case-by-case approach: i e, if the corporation has been inactive for a substantial period of time (e g, 5 years), it is a citizen only of the state where it is incorporated.