Hargett v. Revclaims, LLC
854 F.3d 962
8th Cir.2017Background
- Plaintiff Tammy Hargett, an Arkansas Medicaid beneficiary, sued Arkansas hospitals and RevClaims in state court on behalf of a class of Arkansas Medicaid-eligible beneficiaries alleging improper assignment/collection practices.
- Defendants removed under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), invoking federal jurisdiction.
- Hargett moved to remand and argued the CAFA local-controversy exception applied because the class was primarily local. The district court found the class satisfied the exception because it was defined by Arkansas residency, ordered Hargett to amend to say "Arkansas citizens," and remanded.
- Defendants appealed under 28 U.S.C. § 1453(c)(1). The Eighth Circuit accepted the appeal to address whether CAFA’s local-controversy exception requires citizenship (not mere residency).
- The Eighth Circuit held that the term "citizen" in § 1332(d)(4) carries the same historical meaning used elsewhere in § 1332 (requiring state citizenship, not mere residency), reversed the remand, and returned the case for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CAFA local-controversy exception’s requirement that more than two-thirds of the class be “citizens of the State in which the action was originally filed” can be satisfied by alleging class members are residents of that state | Hargett argued the class definition as Arkansas residents showed the class was predominantly local and triggered the local-controversy exception | Defendants argued "citizen" in § 1332(d)(4) means state citizenship (not mere residency), so residency allegations do not satisfy the two-thirds local-citizenship requirement | The court held "citizen" in § 1332(d)(4) means citizenship (not mere residency); plaintiffs must show citizenship by evidence or define the class as state citizens; remand based on residency was erroneous |
Key Cases Cited
- Reece v. Bank of N.Y. Mellon, 760 F.3d 771 (8th Cir.) (distinguishing citizenship from residency for § 1332(a))
- Pattiz v. Schwartz, 386 F.2d 300 (8th Cir. 1968) (complaints alleging residence do not satisfy diversity citizenship requirements)
- N.L.R.B. v. Amax Coal Co., 453 U.S. 322 (1981) (statutory terms with settled meaning incorporate that meaning absent contrary indication)
- In re Sprint Nextel Corp., 593 F.3d 669 (7th Cir. 2010) (refused to equate a class of "residents" with citizenship for § 1332(d)(4); explained two ways to establish local citizenship)
- Hood v. Gilster-Mary Lee Corp., 785 F.3d 263 (8th Cir. 2015) (discussed methods to establish class citizenship under CAFA and treated Sprint as persuasive)
- Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383 (6th Cir. 2016) (discussion regarding presumptions converting residency allegations into citizenship)