Schiff v. Liberty Mutual Fire Insurance Co.
2:17-cv-00914
W.D. Wash.Oct 26, 2017Background
- Plaintiff Dr. Stan Schiff filed a state-court class action alleging Liberty Mutual reduced PIP medical bills to the 80th percentile, violating Washington law requiring coverage for “all reasonable medical expenses” and the Washington CPA.
- The action was removed to federal court by Liberty Mutual; Plaintiff moved to remand to King County Superior Court and for attorney fees and costs.
- Liberty Mutual asserted federal-question and diversity jurisdiction in its removal, relying in part on an anticipated affirmative defense based on an Illinois class-action settlement (the “Lebanon settlement defense”).
- Plaintiff’s individual claimed underpayment was $103.25 and alleged fees as of removal were approximately $1,500; Plaintiff did not claim damages over $75,000.
- The Court considered CAFA principles, Grable federal-question analysis, amount-in-controversy rules for diversity, and Younger abstention regarding parallel state proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of federal-question jurisdiction | Complaint raises only state-law claims; no federal question exists at removal | Federal question exists because a federal due-process issue will arise from Lebanon settlement defense | No federal-question jurisdiction; federal jurisdiction determined at removal and no federal claim pleaded |
| Grable substantial federal issue (due process) | No necessarily-raised federal issue; state-law theories available | Due-process challenge to binding of class by other settlement raises substantial federal question | Grable factors not met (not necessarily raised, not actually in dispute, not substantial); Grable fails |
| Diversity / amount in controversy | Plaintiff’s individual claim and fees are under $75,000; removal not under CAFA so plaintiff’s pleading controls | Amount in controversy exceeds $75,000 (speculation about potential fees/claims) | Defendant failed to prove to a legal certainty that amount exceeds $75,000; diversity fails |
| Younger abstention and supplemental jurisdiction | State proceedings implicate important state interests and provide adequate forum; abstention appropriate | Removal creates federal jurisdiction so case should remain | Younger applies; no independent federal jurisdiction exists; remand granted |
Key Cases Cited
- Duncan v. Stuetzle, 76 F.3d 1480 (9th Cir. 1996) (burden on removing party when CAFA does not apply)
- Grable & Sons Metal Prods., Inc. v. Darue Eng. & Mfg., 545 U.S. 308 (2005) (test for federal-question jurisdiction over state-law claims involving substantial federal issues)
- Williams v. Costco Wholesale Corp., 471 F.3d 975 (9th Cir. 2006) (federal jurisdiction assessed at time of removal)
- Rains v. Criterion Sys., Inc., 80 F.3d 339 (9th Cir. 1996) (alternative independent theories defeat federal-question jurisdiction)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (plaintiff’s good-faith allegation controls amount in controversy)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (removing party must prove amount in controversy to a legal certainty)
- Norwood v. Dickey, 409 F.3d 901 (9th Cir. 2005) (Young er abstention doctrine requirements)
- Evergreen Sch. Dist. v. N.F., 393 F. Supp. 2d 1070 (W.D. Wash. 2005) (absence of federal claim defeats federal-question jurisdiction)