Jeffry Vodenichar v. Halcon Energy Properties Inc
2013 U.S. App. LEXIS 17027
| 3rd Cir. | 2013Background
- Mercer County, PA landowners (putative class) alleged Halcón, M&P, and CX-Energy induced leases via Landowner MarketPlace Agreements, then refused leases in breach; plaintiffs sought class relief for >1,300 landowners.
- Plaintiffs first filed a diversity class action in federal court against Halcón alone; Halcón anticipated joining M&P and CX-Energy as necessary parties.
- Plaintiffs voluntarily dismissed the federal suit (without prejudice) and immediately filed an essentially identical class suit in Pennsylvania state court adding M&P and CX-Energy.
- Halcón removed the second-filed state action to federal court under CAFA; plaintiffs moved to remand invoking CAFA’s home-state exception and/or local-controversy exception.
- The district court remanded based on the home-state exception; the Third Circuit affirmed remand but on the separate ground that the local-controversy exception applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA’s home-state exception bars jurisdiction | Two-thirds of class and the primary defendants (M&P, CX-Energy) are PA citizens so home-state exception applies | Halcón is not a PA citizen and is not a "primary defendant" because it denied liability | Court held Halcón is a primary defendant; home-state exception does not apply because not all primary defendants are PA citizens |
| How to identify “primary defendants” under CAFA | Primary defendants are those directly targeted and expected to bear most liability | Defendants urged looking to pleading denials and relative number of claims against each defendant | Court adopted a functional test: assume liability and identify defendants with direct exposure to significant portions of class; focus on who would sustain greatest loss — Halcón qualifies |
| Whether the earlier federal filing counts as “another class action” under CAFA’s local-controversy exception | The earlier federal complaint is the same underlying case (not a separate class action) because plaintiffs dismissed to add defendants; thus no other class action was filed | Halcón argued the first-filed federal complaint was an ‘‘other class action’’ within CAFA’s three-year bar | Court held the first suit was the same case (a continuation/enlargement) not an ‘‘other class action,’’ so the “no other class action” prong is satisfied |
| Whether local-controversy exception requirements are met | Plaintiffs: >2/3 of class are PA citizens; local defendants are PA citizens; local defendants’ conduct forms a significant basis; significant relief sought from them; principal injuries occurred in PA; no other class action exists | Halcón disputed the “no other class action” element and the identity of primary defendants | Court held all local-controversy elements satisfied and remand under that exception is appropriate |
Key Cases Cited
- Kaufman v. Allstate New Jersey Insurance Co., 561 F.3d 144 (3d Cir. 2009) (standard for proving CAFA exceptions and jurisdictional inquiry)
- Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (U.S. 2013) (home-state exception and limits on precertification stipulations)
- Wisconsin Department of Corrections v. Schacht, 524 U.S. 381 (U.S. 1998) (interpretation of CAFA statutory language regarding citizenship)
- Coleman v. Estes Express Lines, Inc., 631 F.3d 1010 (9th Cir. 2011) (permissibility of considering pleadings and extrinsic evidence when assessing CAFA exceptions)
- Coffey v. Freeport-McMoRan Copper & Gold Inc., 581 F.3d 1240 (10th Cir. 2009) (considering company activity to determine citizenship and related jurisdictional questions)