IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF FLORIDA

GAINESVILLE DIVISION

BEVERLY E. KRUEGER,

Plaintiff,

vs.

CASE NO.: 1:10-CV-00128-SPM

NORTHWESTERN MUTUAL

LIFE INSURANCE COMPANY,

Defendant.

__________________________/

ORDER DENYING MOTION TO REMAND

THIS CAUSE comes before the Court upon Plaintiff’s “Motion to Remand” (doc. 6 ) filed

July 28, 2010, and memorandum in support thereof (doc. 7). The Court has also considered the

arguments raised in Defendant’s Memorandum in Opposition to Motion to Remand (doc. 8) and

all attachments and exhibits in support thereof. For the following reasons, the Court finds the

motion to remand must be denied.

BACKGROUND

This case is an action involving annuity policies issued by Defendant prior to 1985 that

were sold through Defendant’s independent contractor agents in all fifty states. The annuity

contracts provided policyholders with a share of Defendant’s divisible surplus, called “dividend.”

Plaintiff brought this action on behalf of purchasers of annuity policies and alleges that

Defendant breached the annuity contracts and breached the fiduciary duties to the policyholders

when Defendant changed the methodology for allocating dividends beginning in 1985. The

Parties indicated that a certified class of Wisconsin residents pursues a parallel lawsuit, initiated
by a Wisconsin annuitant, against Defendant. Although this case was originally filed in Florida

circuit court, Defendant removed the case to federal court, claiming that this action has met

requirements for removal to federal court under the Class Action Fairness Act [hereinafter

CAFA], 28 U.S.C. § 1332(d)(2). Plaintiff now seeks to remand the case.

ANALYSIS

CAFA broadens the federal diversity jurisdiction statute, 28 U.S.C. § 1332, by

establishing lower threshold requirements for jurisdiction and abrogating long-established

precedent. See Lowery v. Alabama Power Co., 483 F.3d 1184, 1193 (11th Cir. 2007). Subject to

certain exceptions, § 1332(d)(3) to (5), CAFA provides federal courts with jurisdiction over class

actions provided that: (1) any member of the plaintiff class is diverse from any defendant, §

1332(d)(2); (2) the aggregate of the claims of individual class members exceeds $5 million

exclusive of interests and costs, § 1332(d)(2), (6); and (3) the number of plaintiffs in all

proposed plaintiff classes exceeds one hundred, § 1332(d)(5)(b); Lowery, 483 F.3d at 1193-94;

see also Miedema v. Maytag Corp., 450 F.3d 1322, 1327 (11th Cir. 2006); Evans v. Walter

Indus., Inc., 449 F.3d 1159, 1163 (11th Cir.2006). CAFA does not change the traditional rule

that the party seeking to remove the case to federal court bears the burden of establishing

federal jurisdiction. Evans, 449 F.3d at 1164 (quoting Brill v. Countrywide Home Loans, Inc.,

427 F.3d 446 (7the Cir. 2005)); see also Miedema, 450 F.3d at 1328.

Plaintiff is a resident and citizen of the State of Florida; Northwestern is a Wisconsin

mutual insurance corporation with its principal place of business in Wisconsin. The Complaint

does not seek a specific amount of damages. Defendant’s Affidavit (exhibit 4) attached to

Defendant’s Notice of Removal (doc. 1) states that damages claimed in the Complaint would be

more than $ 5 million. Plaintiff alleges two putative classes: a Florida-resident ”State Class” and

2
a “National Class” of Northwestern annuity policyholders, and that “the members of each of the

Classes number in excess of one thousand.” As the minimum diversity of citizenship exists

between the parties, the amount in controversy exceeds $ 5 million, and the number of class

members exceeds one hundred, the requirements of 28 U.S.C § 1332(d) are satisfied.

Plaintiff argues, relying on 28 U.S.C. § 1332(d)(9)(B) that this action should be

remanded to the state court because the “internal affairs” exception to CAFA specifically

excludes federal jurisdiction over this action (doc. 6). Following removal of a case to federal

court, plaintiff can seek remand of an action back to state court. See 28 U.S.C. 1447(c). The

Eleventh Circuit Court of Appeals has specifically decided that when a party seeks to avail itself

of an express statutory exception to federal jurisdiction granted under CAFA, the party seeking

remand bears the burden of proof with regard to that exception. See Evans, 449 F.3d at 1164;

see also PHLD P’ship v. Arch Specialty Ins. Co., 565 F. Supp. 2d 1342, 1343 (S.D. Fla. 2008).

Neither the Supreme Court of the United States nor the Eleventh Circuit Court of Appeals has

specifically decided whether the “internal affairs” exception to CAFA should be narrowly

construed. However, the Eleventh Circuit Court of Appeals has states that CAFA's language

favors federal jurisdiction over class actions. Evans, 449 F.3d at 1163 (quoting S.Rep. No. 109-

14 at 42, U.S.Code Cong. & Admin. News 3, 40)(“The language and structure of CAFA itself

indicates that Congress contemplated broad federal court jurisdiction . . . with only narrow

exceptions.”).

The internal affairs exception is found at 28 U.S.C. § 1332(D)(9)(b) and provides:

Paragraph (2) shall not apply to any class action that solely involves a

claim-

. . .

(B) that relates to the internal affairs or governance of a corporation or

other form of business enterprise and that arises under or by virtue of

3
the laws of the State in which such corporation or business enterprise is

incorporated or organized[.]

Thus, the internal affairs exception precludes federal jurisdiction over class action only if

two conditions are met::the class action solely involves a claim (1) that relates to corporate

internal affairs; and (2) that arises under the laws of the state where the company is

incorporated. 28 U.S.C. § 1332(D)(9)(b). “The internal affairs doctrine is a conflict of laws

principle, which recognizes that only one State should have the authority to regulate a

corporation's internal affairs-matters peculiar to the relationships . . . -because otherwise a

corporation could be faced with conflicting demands.” Edgar v. MITE Corp., 457 U.S. 624, 645

(1982).

Plaintiff argues that this action solely involves a claim that arises under the laws of

Wisconsin, because Defendant as a Wisconsin mutual company must comply with Wisconsin

statutes, because provisions of Wisconsin statutes are the basis for receiving a share of

Defendant’s divisible surplus, and because Defendant’s obligations under annuity contracts also

arise under Wisconsin insurance laws; therefore, it would be irrational to suggest any other law

other than Wisconsin’s would apply.

However, under identical circumstances, the courts in Wisconsin, the state with the

interest in Defendant’s internal affairs, have already determined that state laws other than

Wisconsin apply to this dispute. See Noonan v. Northwestern Mut. Life Ins. Co., Appeal No.

2005AP1653 ¶ 18-19 (Wis. App. 2005). In the parallel lawsuit, the Wisconsin trial court denied

motion for nationwide class certification, which was affirmed by the Wisconsin Court of Appeals.

Id. ¶ 18-19. The Court of Appeals upheld the lower court’s decision, based in part on the lower

court’s recognition that the laws of many states could govern the claims, thus rendering the

action unmanageable. See id. ¶ 7. More precisely, the Court of Appeals held that the breach of

4
fiduciary duty laws of Wisconsin do not clearly apply to all national class members’ claims. Id. ¶

18. The Court of Appeals likewise found that multiple states laws may apply to the same breach

of contract claims Plaintiff has asserted on behalf of the national class. Id. ¶ 19.

At this time it is not clear that solely Wisconsin law would apply to the claims asserted by

Plaintiff on behalf of putative class members. Thus, this Court adopts the Wisconsin courts

determination that laws other than Wisconsin may apply to claims asserted by Plaintiff on behalf

of a national class .Based on this finding, the Court need not reach the arguments presented as

to whether claims relate to corporate internal affairs. Since multiple state laws may apply to the

same claims asserted by the Plaintiff on behalf of the class, the “internal affairs” exception does

not preclude federal jurisdiction over this action.

CONCLUSION

After careful consideration, the Court concludes that Defendant’s removal of the case

was not precluded by 28 U.S.C. § 1332(D)(9)(b). Consequently, because the requirements of 28

U.S.C. § 1332(d) are satisfied, Plaintiff’s motion to remand is DENIED.

SO ORDERED this ninth day of November, 2010.

s/ Stephan P. Mickle

Stephan P. Mickle

Chief United States District Judge

5