Williams v. HOMELAND INS. CO. OF NY
657 F.3d 287
5th Cir.2011Background
- Williams brought a state-court class action in Louisiana against Med-Comp, RMS, and SIF for alleged PPO notice violations under Louisiana law.
- Over a year later, Williams added Corvel and Homeland/Executive Risk as non-Louisiana defendants; Corvel provided claims administration with Med-Comp discounts and its own PPO rates.
- Executive Risk removed the case to federal court under CAFA; Williams and Corvel moved for remand, arguing CAFA local controversy exception applied.
- The district court held that the local controversy exception applied, finding two-thirds of the class Louisiana citizens, a Louisiana-defendant with significant relief, and principal injuries in Louisiana, with no similar class action in three years.
- On remand, the state court preliminarily approved Corvel’s settlement; Homeland sought appellate review of remand on appeal.
- The Fifth Circuit reviews the remand de novo and holds that the local controversy exception applies, affirming remand to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Two-thirds of class are Louisiana citizens? | Williams: 76% Louisiana citizens. | Homeland: lower percentage after excluding inactive/nonexistent entities. | Two-thirds Louisiana citizens satisfied. |
| Existence of local defendant from whom significant relief is sought and who forms a significant basis for the claims? | Med-Comp satisfies as common denominator for all defendants. | Med-Comp not sole basis; issue disputed. | Med-Comp constitutes a significant local defendant satisfying the element. |
| Principal injuries occurred in the state of filing? | Injuries tied to Louisiana PPO Act violations and local performance. | Out-of-state insurer aspects challenge injuries location. | Principal injuries occurred in Louisiana, satisfying the element. |
| No other class action filed within 3 years? | Prior class actions irrelevant or not sufficiently similar. | Class arbitration may count against no-other-class-action requirement. | No other qualifying class action within 3 years; CAFA exception satisfied. |
| Is a class arbitration a class action for CAFA purposes? | Courts should count arbitrations as class actions under CAFA. | Arbitrations are not civil actions filed in court; not class actions. | Class arbitration is not a class action; prior arbitration does not defeat the CAFA exception. |
Key Cases Cited
- Preston I, 485 F.3d 793 (5th Cir. 2007) (local controversy analysis and burden on movants)
- Preston II, 485 F.3d 804 (5th Cir. 2007) (reasonable assumption of CAFA citizenship from class evidence)
- Frazier v. Pioneer Americas, LLC, 455 F.3d 542 (5th Cir. 2006) (CAFA local controversy elements and burden)
- Harris v. Black Clawson Co., 961 F.2d 547 (5th Cir. 1992) (inactive corporations remain citizens of their state)