Woods v. Standard Insurance Co.
2014 U.S. App. LEXIS 21383
| 10th Cir. | 2014Background
- New Mexico state employees sued Standard Insurance Company (Oregon), the New Mexico Risk Management Division (state agency), and Standard employee Martha Quintana, alleging premiums were deducted/retained without providing coverage; claims included breach of contract, unjust enrichment, fiduciary and statutory claims, and state consumer fraud.
- Plaintiffs sought class-wide damages, declaratory relief, and injunctions directing refund/coverage; Quintana was named in one paragraph alleging she failed to require evidence of insurability and “knew or should have known” premiums were retained without coverage.
- Defendants removed to federal court under the Class Action Fairness Act (CAFA), asserting minimal diversity and that amount in controversy exceeded $5 million; plaintiffs moved to remand invoking CAFA’s state-action and local-controversy exclusions and disputing the amount-in-controversy showing.
- A magistrate judge remanded under CAFA’s local-controversy exception, finding Quintana a significant local defendant; did not resolve the amount-in-controversy issue.
- On appeal, the Tenth Circuit (McHugh) reviewed de novo, held the state-action exception inapplicable because not all primary defendants are state entities, and concluded Quintana is not a significant local defendant; remanded to district court to resolve factual disputes about the $5 million amount-in-controversy threshold.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA’s state-action provision bars federal jurisdiction | State-action applies if any primary defendant is a state entity; Division’s presence should preclude removal | State-action requires that all primary defendants be states/state entities; here Standard is a non-state primary defendant | State-action exception inapplicable — statute requires all primary defendants be state entities, and Standard is not a state entity |
| Whether CAFA’s local-controversy exception applies (is Quintana a "significant local defendant") | Quintana, as Standard’s sole local account manager, is central to the scheme and thus a significant local defendant | Quintana is a peripheral/local agent; primary conduct and relief targets are Standard and the Division | Local-controversy exception inapplicable — Quintana’s alleged conduct is peripheral and plaintiffs do not seek significant relief from her |
| Whether court may consider extrinsic evidence in assessing local-defendant prongs | Plaintiffs urge focus on complaint allegations only | Defendants rely on broader context/extrinsic facts | Court limited analysis to complaint allegations (and found those insufficient), without resolving whether extrinsic evidence may be considered generally |
| Whether amount-in-controversy exceeds $5 million for CAFA jurisdiction | Plaintiffs dispute class size, premium amounts, and evidence admissibility; argue defendants failed to prove $5M threshold | Defendants point to affidavit/extrinsic evidence attached to notice of removal asserting >$5M | Court could not resolve on appeal due to factual disputes; remanded to district court to determine amount-in-controversy |
Key Cases Cited
- Coffey v. Freeport-McMoRan Copper & Gold, 581 F.3d 1240 (10th Cir. 2009) (discusses CAFA local-controversy exception and significant-local-defendant analysis)
- Parson v. Johnson & Johnson, 749 F.3d 879 (10th Cir. 2014) (standard of review for CAFA removal issues)
- Frazier v. Pioneer Americas LLC, 455 F.3d 542 (5th Cir. 2006) (interprets CAFA state-action provision to require all primary defendants be states)
- Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144 (3d Cir. 2009) (analysis of significant-local-defendant requirement)
- Vodenichar v. Halon Energy Props., Inc., 733 F.3d 497 (3d Cir. 2013) (consideration of agent conduct in local-defendant inquiry)
- Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242 (10th Cir. 2012) (burden to prove amount-in-controversy by preponderance)
- Dutcher v. Matheson, 733 F.3d 980 (10th Cir. 2013) (remanding factual determinations on CAFA thresholds to district court)