Sabatino v. HMO Missouri, Inc.
129 F. Supp. 3d 887
N.D. Cal.2015Background
- Plaintiffs Monica and Michael Sabatino, Missouri citizens and former/current Anthem members, filed a putative statewide class action in Missouri state court after the 2014–2015 Anthem data breach, asserting MMPA, breach of fiduciary duty, breach of contract, and negligence claims under Missouri law.
- The proposed class initially was pled as "residents" of Missouri; plaintiffs later amended the complaint (post-removal) to clarify the class and plaintiffs are "citizens" of Missouri.
- Defendants (Missouri companies, affiliates of Anthem) removed to federal court asserting CAFA (minimal diversity and > $5M amount in controversy) and federal-question jurisdiction based on HIPAA-related federal issues.
- Defendants submitted evidence that some plan members are out-of-state domiciliaries (“guest” members) to establish minimal diversity.
- The transferee court (N.D. Cal.) considered Ninth Circuit authority requiring it to apply its circuit law, and ordered supplemental briefing; plaintiffs sought remand.
- The court held CAFA minimal-diversity was not satisfied after considering plaintiffs’ clarifying post‑removal amendment and rejected federal-question jurisdiction under Grable because HIPAA does not create a private right of action and the state-law claims do not necessarily raise substantial federal issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA minimal diversity exists | Plaintiffs: both plaintiffs and class are Missouri citizens (amendment clarifies citizenship), so no minimal diversity | Defendants: some class members are domiciled outside Missouri ("guest" members), so minimal diversity exists | Held: No CAFA minimal diversity; court considered plaintiffs' clarifying amendment and found all parties are Missouri citizens |
| Whether post-removal amendment can be considered | Plaintiffs: amendment is a clarification for jurisdictional purposes and may be considered under Benko | Defendants: court should look only at pleadings at time of removal | Held: Court may consider the clarifying amendment (Benko exception); amendment was proper clarification, not manipulation |
| Whether a federal question exists under Grable due to HIPAA/regulatory standards | Plaintiffs: claims arise under Missouri law; HIPAA reference does not create a federal cause of action | Defendants: fiduciary-duty claim depends on federal HIPAA-based standards and cyber-attacks raise substantial federal interests | Held: No federal-question jurisdiction — HIPAA does not create a private right of action; Grable's substantiality and balance factors not met |
| Whether remand is required | Plaintiffs: remand to state court because neither CAFA nor federal-question jurisdiction applies | Defendants: federal jurisdiction exists under CAFA or HIPAA-based federal question | Held: Case remanded to Circuit Court of St. Louis City, Missouri (remand granted) |
Key Cases Cited
- Caterpillar Inc. v. Williams, 482 U.S. 386 (U.S. 1987) (removal proper only when federal court would have original subject-matter jurisdiction)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (U.S. 2005) (standard for federal-question jurisdiction over state-law claims)
- Benko v. Quality Loan Serv. Corp., 789 F.3d 1111 (9th Cir. 2015) (plaintiffs may amend to clarify CAFA jurisdictional facts; court may consider such clarifications)
- Doyle v. OneWest Bank, FSB, 764 F.3d 1097 (9th Cir. 2014) (determine class citizenship as of removal; distinguishes between narrowing and clarifying amendments)
- Webb v. Smart Document Solutions, LLC, 499 F.3d 1078 (9th Cir. 2007) (HIPAA does not create a private right of action)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (U.S. 1986) (absence of federal private right of action limits federal-question jurisdiction)
- Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) (citizenship for diversity determined by domicile, not mere residence)
- Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (U.S. 2014) (notice of removal need only plausibly allege amount-in-controversy under CAFA)