UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

________________ _________________BRIAN LAX; TRACY BURONHAHNLEIN; WERN ER HAHNLEIN; JEREMY HADER, Plaintiffs - Appellees,

v. APP OF NEW MEXICO ED, PLLC, f/k/a AlignMD of New Mexico, PLLC, Defendant - Appellant, and
LOVELACE HEALTH SYSTEM, LLC, Defendant.

––––––––––––––––––– ––––––––––––––––BRIAN LAX; TRACY BURONHAHNLEIN; WERN ER HAHNLEIN; JEREMY HADER, on their own behalf and on behalf of others similarly situated, Plaintiffs - Appellees,

v. LOVELACE HEALTH SYSTEM, LLC, Defendant - Appellant, and APP OF NEW MEXICO ED, PLLC, f/k/a AlignMD of New Mexico, PLLC, No. 22-2057 (D.C. No. 1:20-CV -00264-SCY-JFR) (D. N.M.)

No. 22-2058 (D.C. No. 1:20-CV -00264-SCY-JFR) (D. N.M.) FILED United States Court of Appeals Tenth Circuit 

### July 13, 2022 Christopher M. Wolpert Clerk of Court Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 12 Defendant.

________________ _________________ ORDER AND JUDGMENT *

________________ _________________ Before MATHESON , BACHARACH , and MORITZ , Circuit Judges.

________________ _________________ In these consolidated appeals, APP of New Mexico ED, PLLC (APP) and Lovelace Health System, LLC (Lovelace), a ppeal from the district court’s order remanding this putative class-action suit to New Mexico state court. Exercising jurisdiction under 28 U.S.C. § 1453(c)(1), we affirm.
I. Plaintiffs in this suit are former patients who so ught treatment at Lovelace facilities located in th e state of New Mexico. They a llege that APP, a company that provides emergency room physician and nur se practitioner staffing for Lovelace facilities, overbilled them at out-of-netwo rk rates even though plaintiffs were in-network with Lovelace. Plaintiffs file d this class action against APP and Lovelace in New Mexico state court in February 2 020. Their complaint included claims for violations of the New Mexico Unfair Practices Act, conve rsion, willful breach of

* After examining the briefs and appella te record, this pa nel has determined unanimously that oral argument would not ma terially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 23 contract, unjust enrichment, and civil conspiracy. They sought certification of a proposed class including “all New Mexico re sidents who, beginning four years prior to the filing date of this lawsuit, were billed by APP for amounts greater than the in-network amount permitted by their insu rance provider for medical services provided at Lovelace facilitie s.” J.A., Vol. I at 40. APP, which is a limited liability compa ny with its principal place of business in Tennessee, removed the action to federa l court based on the Class Action Fairness Act (CAFA). CAFA grants district courts jurisdiction over class actions involving at least 100 proposed class members, more th an $5,000,000 in controversy, and the presence of a plaintiff class member who is a citizen of a state different from any defendant. See 28 U.S.C. § 1332(d)(2)(A), (d)(5)(B ). Lovelace consented to the removal. Plaintiffs later filed a mo tion to remand the case to stat e court. They asserted the case should be remanded because defendants had failed to establish that more than $5,000,000 was in controversy. Th ey further argued that even assuming the amount-in-controversy requi rements were met, CAFA ’s “local controversy exception” mandated that the action remain in state court. The local controversy exception requires a district court to declin e jurisdiction if (1) “greater than twothirds of the members of all proposed plaint iff classes in the aggr egate are citizens of the State in which the action was originally filed”; (2) the action seeks “significant relief” from at least one de fendant “whose alleged conduc t forms a significant basis for the claims asserted by the proposed plai ntiff class,” and “who is a citizen of the Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 34 State in which the action was originally file d”; (3) the plaintiffs’ principal injuries “were incurred in the State in which the action was originally filed”; and (4) “during the 3-year period preceding the filing of th at class action, no other class action has been filed asserting the sa me or similar factual alle gations against any of the defendants on behalf of the same or other persons.” Id. § 1332(d)(4)(A). The district court found that the $5,000,000 jurisdictio nal threshold was met. That determination is not challenged in this appeal. It also initially found that the plaintiffs had failed to show that the lo cal controversy exception applied because they failed to establish that mo re than two-thirds of the proposed class members, whom the complaint defined as New Mexico resident s, were also New Me xico citizens. The district court then took plaintiffs’ moti on to remand under advi sement and provided them with the opportunity to conduct limited discovery on the question of class citizenship. Plaintiffs filed an amende d motion to remand. In connection with the amended motion, they produced an expert repor t from Professor James H. Degnan, an Associate Professor in the Depa rtment of Mathematics and St atistics at the University of New Mexico. Based on a statistical sa mpling Dr. Degnan con ducted, plaintiffs argued they had proved that more than two- thirds of the class members were citizens of New Mexico. In his expert report, Dr. Degnan explai ned that APP had provided plaintiffs with information concerning all people wh o received services from APP during the four-year period covered by the lawsuit w ho were in-network with Lovelace and Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 45 out-of-network with APP. From that list, plaintiffs’ couns el removed transactions in which a customer did not have a New Mexi co address, was not billed by APP, or received the first b ill from APP after APP had already received payment. They also removed duplicate entries. This left 29,35 1 class member records. Professor Degnan then created a random sample of 100 cl ass members from th e revised list and provided the sample to plaintiffs’ counsel. Law firm employees contacted the cl ass members on the list by telephone and surveyed them using a scri pt format agreed upon by th e parties. The telephone survey showed that, of the 100 sample class members, 52 affirmed their New Mexico citizenship, one stated he was not a citizen , and 47 either would not respond or could not be reached. Plaintiffs then retained a service that perform ed a “skip trace” to determine if additional information could be obtained about the 47 non-respondents. This skip tracing uncovered information concerning 83 of the 100 class members: 1
their current residential addr ess, property ownership on Fe bruary 11, 2020 (the date the complaint was filed), and vehicl e registration on Fe bruary 11, 2020. 2

1 It is unclear what proportion of thes e 83 class members were respondents vs. non-respondents to the telephon e survey. The Director of Operations at the skip tracing company filed a declaration stati ng that 20 of the non-respondents yielded New Mexico “data in 0 or 1 of the 3 categories.” See J.A., Vol. I at 231. Id. Data in “zero” categories appears to mean no data was found for a partic ular non-respondent, either in New Mexico or elsewhere. Th is would indicate that a particular nonrespondent was one of the 17 out of 100 class members for whom skip tracing yielded no data.

2 Plaintiffs initially sought vehicle registration and driv er’s license information from the New Mexico Taxation and Reve nue Department (NMTRD), but the response they received from NMTRD was re dacted, making it impossible to match Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 56 The skip tracing confirmed the data from th e survey respondents. None of the class members who had affirmed their New Mexico citizenship were shown to be identified with non-New Mexico data in any of the three categories. The skip tracing also yielded data c oncerning the 47 non-respondents. Of those non-respondents, 27 were identified with New Mexico data in at least two of the three categories and had no non-New Mexico data in any category. The other 20 non-respondents either were identified with New Mexico data in only zero or one of the three categories or were identified with non-New Mexico data in one or more of the categories. Dr. Degnan then added th e 52 class members who had affirmed their New Mexico citizenship to the 27 non-respo ndents who met at least two of the three categories to conclude that “79 of the 100 class members in the random sample were identified as citizens of New Mexico as of the date of filing the complaint.” J.A., Vol. I at 210. 3 He concluded with “[a] 95% confiden ce interval for this data . . . that the true proportion of New Mexico citizen s from the population of 29,351 individuals sampled is larger than 2/3.” Id. In other words, the survey results combin ed with the

the documents to th e class members. See J.A., Vol. II at 436. Plaintiffs also sought voter registration information from the Ne w Mexico Secretary of State but received no response. See id.

3 Although Dr. Degnan’s report merely states that the sk ip trace revealed data in two of the three categories—wh ich could be understood to mean any two of plaintiffs’ three criteria—th e parties later clarified th at “the 2 of 3 test [for citizenship] meant a finding of continuous residence plus at least one of the two other categories (vehicle registrati on or property ownership).” J.A., Vol. II at 450 n.6 (internal quotation marks omitted). Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 67 skip-tracing results showed th at the class met the two-thir ds requirement for the local controversy exception. 4 Defendants produced their own expert re port that criticized the scientific reliability of Dr. Degnan’s report. They again opposed plaintiffs’ motion to remand, arguing plaintiffs had failed to meet the local controversy requi rement because they had failed to show that (1) two-thirds of the proposed class were citizens of New Mexico, and (2) the New Mexico defendant named in the complaint, Lovelace, was a “significant defendant” whose conduct form ed a significant basis for plaintiffs’ claims and from whom plaintiffs sought significant relief. The district court determined that plaintiffs met their bur den to show that the local controversy requirements were met. It therefor e granted their motion to remand. APP and Lovelace filed petitions for permission to appeal, see 28 U.S.C. § 1453(c)(1), which we granted.
II.
A. “CAFA was enacted to respond to per ceived abusive practices by plaintiffs and their attorneys in litigati ng major class actions with in terstate features in state
courts.” Woods v. Standard Ins. Co. , 771 F.3d 1257, 1262 (10t h Cir. 2014) (internal quotation marks omitted). CAFA permits a federal court to assume original

4 Dr. Degnan also produced a supplemental report, see J.A., Vol. I at 232-34, but the district court struck it and did not consider it in connection with its decision, see id. , Vol. II at 443 n.3. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 78 jurisdiction if certain requirements are met. See id. Congress included several exceptions to CAFA’s removal procedure. The party seeking a remand to the state court under one of these exceptions bears the burden of showing by a preponderance of the evidence that the ex ercise of federal court ju risdiction is improper. See id. ; Mondragon v. Cap. One Auto Fin. , 736 F.3d 880, 884 (9th Cir. 2013) (stating preponderance standard). The local controversy exception “is inte nded to respond to concerns that class actions with a truly local fo cus should not be moved to federal court under this legislation because state courts have a strong interest in ad judicating such disputes.” Woods , 771 F.3d at 1262 (interna l quotation marks omitted). “Rather than divesting a court of jurisdiction, the local contr oversy exception operate s as an abstention doctrine” under which the federal court abstains from hearing the case in favor of the state’s demonstrated inte rest in the dispute. Dutcher v. Matheson , 840 F.3d 1183, 1190 (10th Cir. 2016) (interna l quotation marks omitted). It “is a narrow exception that was carefully drafted to ensure that it does not become a jurisdictional loophole and all doubts are resolved in favor of exercising jurisdiction over the case.” Id. (brackets and internal quotation marks omit ted). “[R]emand is mandatory if the plaintiffs can show that they meet th e requirements of th e local controversy exception.” Id.
B. We review de novo the district court’s interpretation of CAFA. See Woods , 771 F.3d at 1262. We review the district court’s factual findings for clear error. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 89 Mondragon , 736 F.3d at 886. “Under that sta ndard, we may reverse only if the district court’s finding lacks fa ctual support in the record or if, after reviewing all the evidence, we have a definite and firm c onviction that the district court erred.” Middleton v. Stephenson , 749 F.3d 1197, 1201 (10th Cir. 2014). The district court’s findings concerning citizenship are factual findings subject to ou r clearly erroneous review. See id. (diversity jurisdicti on case).
III. Defendants challenge the district court’ s finding that plaintiffs showed more than two-thirds of class memb ers are New Mexico citizens. See 28 U.S.C. § 1332(d)(4)(A)(i)(I). “[A] person is a citizen of a state if the person is domiciled in that state.” Middleton , 749 F.3d at 1200. “[A] pers on acquires domicile in a state when the person resides there a nd intends to remain there i ndefinitely,” a status that courts typically discern from the “t otality of the circumstances.” Id. at 1200-01. We have described the citizenship i nquiry as “an all-things-considered approach” in which “any number of factor s might shed light on the subject in any given case.” Id. at 1201. Relevant factors include the party’s current residence; voter registration and voting practices; situs of personal and real property; loca tion of brokerage and bank accounts; membership in unions, fraternal orga nizations, churches, clubs, and other associations; place of employment or business; driver’s license and automobile registration; payment of ta xes; as well as several other aspects of human life and activity. Id. (internal quotation marks omitted). Alth ough a person’s “place of residence is prima facie the domicile,” State Farm Mut. Auto. Ins. Co. v. Dyer , 19 F.3d 514, 520 Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 910 (10th Cir. 1994), something more than reside nce in a state is re quired to show the intent to remain in the state, see Whitelock v. Leatherman , 460 F.2d 507, 514 (10th Cir. 1972) (“[A]llega tions of mere ‘residence’ may not be equated with ‘citizenship.’”). Defendants contend the di strict court’s citizensh ip finding was clearly erroneous because plaintiffs’ method of proof, which the di strict court accepted, was unreliable or inadequate. Because it is impracticable to obtain information concerning citizenship of all the members of a large class, af fidavits or survey responses targeting a representa tive sample of class member s is a legitimate means of satisfying a plaintiff’s burde n under a CAFA exception. See, e.g. , In re Sprint Nextel Corp. , 593 F.3d 669, 675-76 (7th Cir. 2010) (stating that “affidavits or survey responses in which putative cl ass members reveal whether they intend to remain in Kansas indefinitely” might be sufficient to establish citizenship of those survey respondents under CAFA’s home-state excep tion). Defendants argue, however, that plaintiffs’ approach in this case, which involved a survey to which nearly half those surveyed failed to respond, coupled with skip tracing th at obtained information on only a few citizenship-related factors c oncerning the non-res pondents, did not produce reliable indicia of ci tizenship. They claim plai ntiffs’ method was flawed because it allowed them to count a si gnificant number of non-responding class members—for whom there was only skip-t race evidence of cu rrent New Mexico residency plus either evidence of New Mexico property ownership or vehicle registration—as New Mexico citizens. They argue that the dist rict court’s reliance Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1011 on only these few factors rather than the totality of potentially relevant considerations, as discussed in Middleton , was erroneous. 5
Middleton was a non-class-action case where we were concerned with the citizenship of a single defenda nt who had raised counterclai ms and third-party claims in reliance on diversity jurisd iction. 749 F.3d at 1198-120 0. The determination of domicile used in non-class-action cases ri sks becoming unnecessarily arduous when transported to the context of CAFA exceptions. See Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc. , 485 F.3d 804, 816 (5th Cir. 2007). A better approach when determining CAFA exceptions is to use an evidentiary standard “based on practicality and reasonableness.” Id. Under this approach, defend ants fail to show that the plaintiffs’ method was unreasonable.

5 Defendants suggest that pl aintiffs cherry-picked th e available data. They complain, for example, that plaintiffs gathered employment data but chose not to use it in the citizenship inquiry. But the district court expl ained the plaintiffs’ reasons for not relying on the employment data: Plaintiffs chose not to use this data because they could not draw inferences from it, one way or another, due to various problems such as old information and that some data lacked corresponding addresses or provided an address of a corporate office instead of a local office. In other words, the data could not be used to re liably determine whether a person was employed in New Mexico. J.A., Vol. II at 460. We discern no error in this determination. Also, as we have noted, see supra n.2, plaintiffs sought data for the sample on vehicle registration and driver’s licenses but were unable to obt ain usable information concerning these factors. These facts do not suggest that plaintiffs relie d on only the available data that favored their position. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1112 Defendants contend that re sidency plus property owne rship in a state does not necessarily equal citizen ship. They cite the examples of military members, students, or green card holders, who may reside in New Mexico and own property there without being New Mexico citizens. It is true that residency in a state does not equate to citizenship, see Whitelock , 460 F.2d at 514, and that property ownership in a state, without more, does not esta blish citizenship in that state, see, e.g. , Evans v. Walter Indus., Inc. , 449 F.3d 1159, 1165-66 (11th Cir. 2006). Here, however, two additional factors enhanced the reliability of the finding that those non-respondents were in fact New Mexico citizens. First, the skip-tracing uncovered no data that they resided, owned property, or ha d registered vehicles in any other state. Second, they were residents of New Mexico both when they r eceived the medical service and years later, when the skip tracing was performed. Both these factors support the district court’s conclusion that these class member s were not only reside nts of New Mexico but also were citizens who intended to remain within that state. These additional facts also rebut two other arguments the defendants make, that (1) even if plaintiffs established Ne w Mexico citizenship by a preponderance of the evidence for each of the 27 non-responding cla ss members who met the “residency plus one” test, a nd assuming that each of th ese class members therefore has “a 51% likelihood of citizensh ip, then it is highly unlikely that every single one of these 27 class members would be a citi zen”; and that (2) random sampling of a class should only be used to determine citizenship when “the surveyed members of the sample confirm their citizenship.” Ap lt. Opening Br. at 38 (emphasis omitted). Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1213 First, we see no reason to conclude that the “residen cy plus one” method, when combined with other reasona ble inferences to be drawn from the skip-tracing data, yielded only a 51 percent likelihood that each non-responding class member was a citizen. Second, skip traci ng, when properly conducted, is a legitimate means of determining citizenship, partic ularly when a telephone surv ey yields too few results to provide an adequate analysis of the pr oposed class. “What is in another man’s mind must be determined by what he doe s as well as by what he says.” Smith v. Marcus & Millichap, Inc. , 991 F.3d 1145, 1157 (11th Ci r. 2021) (internal quotation marks omitted). Skip tracing provides obj ective evidence of a pa rty’s intent to be domiciled in a particular state, and in the citizenship context . See Preston , 485 F.3d at 817 (stating the district court has broad discretion to determin e what evidence to use in making a jurisdictional de termination). It is true that in determining citizen ship, a court may not rely on guesswork, even “[s]ensible guesswork.” Sprint Nextel , 593 F.3d at 674 (stating that although the court was “inclined to think that at leas t two-thirds of those who have Kansas cell phone numbers and use Kansas mailing a ddresses for their ce ll phone bills are probably Kansas citizens,” such a common-sense conclusion based on “[s]ensible guesswork” was insufficient to determine ci tizenship because “a court may not draw conclusions about the citizenship of clas s members based on things like their phone numbers and mailing addresses” ). But the district cour t’s determination here was based on reasonable inferences drawn from th e available data and did not represent Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1314 mere guesswork. We cannot conclude that its citizenship determination was clearly

erroneous. 6 Finally, we note that defendants cite tw o unpublished cases fro m this court that discuss citizenship in the CAFA context. Each is dis tinguished on its facts and is not inconsistent with our result.
In Nichols v. Chesapeake Operating, LLC , 718 F. App’x 736 (10th Cir. 2018), the district court denied the plaintiff’ s motion to remand his putative class-action case to state court under the “home state” ex ception, which requires that two-thirds or more of the class members mu st be citizens of the state where the action was filed. See id. at 738. His complaint described a class of “Oklahoma Residents” who had received royalty checks from the defendant. Id. (internal quotation marks omitted). To establish citizenship of class members for CAFA exception purposes, the plaintiff used a statistician, who (as in this case) randomly selected 100 royalty owners out of the thousands of poten tial class members. See id. After successfully surveying 54 of those 100 sample members, by asking them “w hether they consider ed themselves to be Oklahoma citizens and whether they pla nned to move from Oklahoma in the near future,” and, in the case of businesse s, “whether they were organized or

6 Defendants suggest that pl aintiffs were required not only to prove that twothirds of the members of the representativ e sample were New Me xico citizens, but also to provide prove that they were United States citizens. See Aplt. Opening Br. at 33 n.5. Defendants fail to show they made this ar gument in district court; we therefore decline to consider it. See Richison v. Ernest Grp., Inc. , 634 F.3d 1123, 1127-28 (10th Cir. 2011). Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1415 headquartered in Oklahoma,” plaintiff’s counsel “determined that 95% of the sample’s royalty owners were Oklahoma c itizens because the data shows indicia of Oklahoma citizenship with no conflicti ng data of citizensh ip elsewhere.” Id. at 739 (internal quotation marks omitted). 7 The district court rejected counsel’s approach, finding significant flaws in the evidence and concluding, among other things, that “counsel had an insufficient basis for determining that some members of the random sample were Oklahoma citizens.” Id. (internal quotation marks omitted). “For instance, the skip-tra ce reports indicated that only 35 of the sample’s class member s had Oklahoma driver’s licenses and that 37 members had non-Oklahoma addresses.” Id. n.2. In upholding the district court’s result, we emphasized the “flawed” nature of the sample and counsel’s failure to “dispute these problems or otherwise explain how [the expert’s] evidentiary extrapolation remains statistically viable.” Id. at 742. The result in Nichols is consistent with this case, gi ven that the survey/skip-trace in Nichols was significantly less reliable than those here.
In Reece v. AES Corp. , 638 F. App’x 755 (10th Ci r. 2016), the district court denied the plaintiffs’ motions to remand thei r putative class action to state court under CAFA’s “local controversy,” “home state,” and “interests of justice” exceptions, and ultimately dismissed their complaint. See id. at 756, 759. The class was defined as “all

7 Although Nichols mentions a “skip-tr ace investigation,” see 718 F. App’x at 739, it is unclear from the decision to what extent the survey results were supplemented by skip tracing, or for how many of the 46 unsu ccessfully surveyed sample class members skip trace data was obtained. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1516 citizens and/or residents and/ or property owners of the St ate of Oklahoma” who were in defined proximity to certain pollution-creating operations maintained by the defendants. Id. at 759. In their renewed motion for remand, pl aintiffs relied solely on the “local controversy” exception. See id. at 760 & n.8. They provide d an affidavit from an expert who had analyzed property reco rds within the class area and had concluded that at least two-thirds of the proposed class members were Oklahoma residents

. See id. at 760-61. Plaintiffs did not include the records that underlay the expert’s analysis. See id. at 761. The district court denied the renewed motion. On appeal, the Reece court addressed the legal difference between residence and citizenship. See id. at 769. It concluded that wher e a class is defined as “residents” rather than “citizens” (as in our case), the plaintiffs seeki ng remand must “marshal and present some persuasive substantive eviden ce (extrinsic to the amended petition) to establish the [state] citizensh ip of the class members.” Id. The Reece plaintiffs had failed to meet this standard because they had failed to “va lidate the conclusions contained in the summary exhibits by, for example, pr esenting to the court the records upon which the exhibits were ostensibly based or offe ring sworn testimony regarding the analysis underlying the conclusions.” Id. at 770. Given that the complaint included plaintiffs from a twenty-year period that might not have currently been residents or citizens of Oklahoma, and that the plainti ffs’ evidence dealt w ith residence rather than citizenship, the materials submitted with the first mo tion for remand were insufficient. Id. at 771. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1617 The expert’s affidavit submitted with the renewed motion failed to cure the fundamental defects of the fi rst motion, because it was “fra med in terms of residency, not citizenship.” Id. at 774. In this case, by cont rast, the extrinsic proof offered by the plaintiffs is framed in terms of citizenship, not me re residency. There is sufficient additional evidence on which the district court could rely in determining citizenship.
IV. Defendants also challenge the district court’s determination that Lovelace is a “significant” local defendant—that is , one “whose alleged conduct forms a significant basis for the clai ms asserted by the proposed plaintiff class” and from whom plaintiffs seek “si gnificant relief.” 28 U.S. C. § 1332(d)(4)(A)(i)(II). 8 “CAFA itself does not describe the type or ch aracter of conduct that would form a ‘significant basis’ of plain tiffs’ claims or define the term ‘significant relief.’” Woods , 771 F.3d at 1265. But to further CA FA’s statutory purposes, “we interpret the significant local defendant requirement strictly so that plaintiffs and their attorneys may not defeat CA FA jurisdiction by routinely naming at least one state citizen as a defendant, irrespective of whet her that defendant is actually a primary focus of the litigation.” Id.

8 Defendants do not challenge Lovelace’s New Mexico citizenship, so no issue concerning that fact or is before us. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1718 In Woods , we distilled the following guid elines from CAFA’s legislative history for determining whether a defenda nt named in the co mplaint meets the statute’s significant-local-d efendant requirements: [F]or the local controversy exception to a pply there must be at least one real defendant . . . whose alleged conduct is central to the class’s claims and from whom the class seeks significant re lief. . . . [T]he local defendant must be a primary focus of the plaintiffs’ claims—not just a peripheral defendant. The defendant must be a target from whom significant relief is sought by the class (as opposed to just a subset of the class membership), as well as being a defendant whose allege d conduct forms a significant basis for the claims asserted by the class. Id. at 1266 (citation and intern al quotation marks omitted). The district court determined that plai ntiffs’ complaint adequately alleged that Lovelace’s conduct formed a significant basis for the claims the cl ass asserted. In addition to reviewing the complaint, it accepted extrinsi c evidence from the defendants but found this evidence unconvi ncing. The district court noted: [A]lthough Plaintiffs allege that A PP was the party responsible for the actual overbilling, they also allege Love lace was a significant player in an alleged overbilling scheme. They allege that Lovelace interacted with all of the proposed class members by advertis ing itself as in-network, failing to disclose its relationship with APP a nd APP’s billing practices, treating the Plaintiffs, and then benefitting from APP’ s overbilling. Indeed, they allege that both Lovelace and APP are agents for the other and ratified each other’s misconduct. J.A., Vol. II at 464. The district court further determined th at plaintiffs sought significant relief from Lovelace. It found that “Plaintiffs’ complaint makes clear that Lovelace is a primary target of litigation and a defendant from whom the entire class of plaintiffs seeks relief”; that the plaintiffs alleged that defendants were “jointly and severally Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1819 liable for all damages and that each are direc tly liable; are liable for aiding, abetting, participating in, and ratifying the other pa rties’ conduct; are vi cariously liable for each other’s misconduct; and ar e liable as members of a jo int enterprise”; and that plaintiffs’ five claims for relief were each as serted against both Lovelace and APP for their joint overbilling scheme. Id. at 467-68 (internal quot ation marks omitted).
A. To determine whether the “significant basis” element is met, we examine whether the local defendant’s conduct “f orms a significant ba sis for the claims asserted by the class.” Woods , 771 F.3d at 1266. Defe ndants argue that “[o]nly APP’s alleged conduct,” not Lovelace’s, “f orms a significant basis of Plaintiffs’ claims.” Aplt. Opening Br. at 17. But we agree with the district court’s conclusion that “Lovelace is a real target of the litigation,” based on Lovelace’s conduct identified in the complaint. J.A., Vol. II at 465. A lthough APP allegedly committed the overbilling, APP could not have done so “h ad Lovelace not advertised itself as innetwork, treated the patients, contracted with APP, and fail ed to disclose to patients its relationship with APP.” Id. at 466. The complaint thoroughly describes Love lace’s role in the alleged scheme, which includes alleged misrepre sentations and material om issions made by Lovelace. It alleges that “Lovelace holds out to the public that it is an in-n etwork provider for numerous insurance plans” but that Lovel ace does not disclose numerous features of its relationship with APP to patients, incl uding the fact that “they may end up paying more than the in-netwo rk rate for services provided by APP employees.” J.A., Vol. I Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 1920 at 33-34. The complaint further alleges th at although “ostensibly, Lovelace takes the position that such overbilling should not be taking place,” in reality, “Lovelace benefits from APP’s overbilling” and “L ovelace and APP are part of a joint enterprise” and “acted as one another’s agents in the conduct described.” Id. at 34. In addition, each of the cl aims for relief asserts that the potential plaintiffs are entitled to recover from Lovelace, and that the defendants are lia ble for each other’s alleged misconduct, and the pr ayer for relief asks that defendants be found jointly and severally liable for all damages. We agree with the dist rict court that the language in the complaint satisfies the significant basis element. Defendants cite extrinsic evidence that they claim contradicts the complaint and undermines plaintiffs’ claims. Assu ming this evidence may be considered in determining whether Lovelace is a significa nt local defendant, th e extrinsic evidence fails to defeat plai ntiffs’ showing concerning that element. First, defendants point to the “Cons ent to Treatment” fo rms that Lovelace provides to patients. See Aplt. Opening Br. at 25-26. Th ese forms require patients to acknowledge (1) that Lovelace has not repr esented or taken actions to induce the patient to believe that th e physicians, residents, me dical students, and nurses providing treatment are Lovelace employees, and (2) that the pati ent will receive a separate bill from the provider. But this language does not notify patients of an important fact that forms th e gist of plaintiffs’ claims : that patients may end up paying more than the in-network rate for services provided by APP employees. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2021 Second, defendants cite testimony from APP’s Rule 30(b)(6) representative which indicates that Lovelace did not participate in APP’s billing procedures. But the mere fact that APP sent the bills does not show that Lovelace’s conduct, including alleged omissions and misrepresentations, fails to form a significant basis for plaintiffs’ claims. We th erefore conclude that neither item of extrinsic evidence undermines the district c ourt’s conclusion that Lovel ace is a significant local defendant.
B. Defendants argued in district court that plaintiffs did not seek significant relief from Lovelace because their complaint did not plausibly state a claim for relief against Lovelace. In evaluating this asser tion, the district c ourt stated it was not considering the merits of th e claims, only whether they s ought significant relief. The district court then rejected defendants’ argum ent in part because th e claims “d[id] not appear frivolous on their face.” J.A., Vol. II at 468. Defendants argue the district court should have analyzed the claims unde r the plausibility standard described in Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly , 550 U.S. 554, 555 (2007), not a frivolousness standard. Defendants then supply an analysis of each of plaintiffs’ claims, asser ting that each fails to state a claim against Lovelace under the Iqbal/Twombly analysis. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2122 Assuming the Iqbal/Twombly standard plays a role in assessing whether plaintiffs’ claims seek signi ficant relief from Lovelace, 9 we discern no reversible error here. Under that standard, plaintiffs’ allegations need only be sufficient to raise their “right to relief above the sp eculative level.” Twombly , 550 U.S. at 555. “A claim has facial plausibility when the plain tiff pleads factual cont ent that allows the court to draw the reasonable inference that the defendant is lia ble for the misconduct alleged.” Iqbal , 556 U.S. at 678. Defendants ha ve not shown that plaintiffs’ complaint fails the pl ausibility standard for purposes of our threshold jurisdictional analysis. Defendants assert that pl aintiffs’ first claim, unde r the New Mexico Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 to 26, fails because it “does not allege that Lovelace was aware of APP’s alleged misc onduct, and therefore could not have intentionally misled patients” ; because it does not allege that Lovelace made some other representation that w ould become misleading in th e absence of a disclosure;

9 Whether and how the standard applies to this inquiry seems less than clear. See Allen v. Boeing Co. , 821 F.3d 1111, 1119 n.8 (9th Cir. 2016) (stating that “for purposes of assessing the app licability of [CAFA’s] local controversy exception, we can ignore a claim against [the local defendant] only if that claim is immaterial, insubstantial, or frivolous on its face,” but alte rnatively applying the Iqbal/Twombly standard to the relevant claim (internal quot ation marks omitted)). It has also been suggested that rather than applying the federally based Iqbal/Twombly standard to such inquiries, a federal court should view the pleadings as a state court (in this case, New Mexico) would view them. See Arbuckle Mtn. Ranc h of Tex., Inc. v. Chesapeake Energy Corp. , 810 F.3d 335, 343-44 (5th Cir. 2016) (Elrod, J., dissenting). We need not definitively resolve this issue, however, because New Mexico’s “notice pleading” rules appear to be at least as liber al to a plaintiff’s pleadings as the Iqbal/Twombly standard. See Madrid v. Vill. of Chama , 283 P.3d 871, 875-76 (N.M. Ct. App. 2012). Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2223 and because it fails to show that any alleged omission wa s material. Aplt. Opening Br. at 19-20. But the complain t alleges that Lovelace “holds out to the public that it is an in-network pr ovider for numerous insurance plan s” but “does not state to its patients that they may end up paying more than the in-network rate for services provided by APP employees.” J.A., Vol. I at 33-34. The comp laint states that “Lovelace takes the position that such overbilling should not be taking place,” id. at 34, which could lead a court to reasonably infer that L ovelace is aware that “such overbilling” is taking place. The complaint also alleges sufficient facts to show materiality, given that plain tiffs chose to obtain care at Lovelace facilities because they were informed that Lovelace was an in-network provider under their insurance coverage, and their damages flowed from overbilling that exceede d the in-network rate. These factual allegations are sufficient to show that plaintiffs’ Unfair Practices Act claim seeks significan t relief from Lovelace. Defendants assert that plaintiffs’ conversion clai m fails against Lovelace because any alleged overpayments were made to APP, not Lovelace. The complaint alleges, however, that Lovel ace and APP operated as a “joi nt enterprise,” “agreed to share their money, property, employees, and time in pursuit of th eir emergency room business,” and “share the prof its and losses of the busine ss and they are subject to mutual control over the business.” Id. Although a threadbare assertion of “joint and several liability” cannot make an otherwis e insignificant defendant significant, see Woods , 771 F.3d at 1269, where the plaintiffs’ damage claim rests on a claim of joint and several liability implica ting the local defendant’s ow n conduct, the significant Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2324 relief requirement may be satisfied, see Coffey v. Freeport McMoran Copper & Gold , 581 F.3d 1240, 1244 (10th Cir. 2009). That sta ndard is met here. Defendants assert that pl aintiffs’ claim for breach of contract fails against Lovelace because their complaint fails to id entify the terms of the contract with Lovelace that were breached or how Love lace breached them. Although the facts underlying the contractual cl aim are not particularly well articulated, we cannot say that it fails the jurisdictional analysis . A court could reasonably infer from the complaint that the “contract ” referred to involves the patient’s agreement that Lovelace will provide medical services at its facilities, including providing medical personnel to perform those services, in consid eration of payment by the patient or his or her insurance company. As part of this contractual unders tanding with patients, Lovelace represented that it was an in-n etwork provider, but it breached the “covenant of good faith and fair dealing,” see J.A., Vol. I at 43, by using medical personnel that it knew would overbill pa tients beyond in-network rates. Defendants assert that plaintiffs’ unjust enrichme nt claim fails against Lovelace because the co mplaint provides no factual basi s to conclude that Lovelace retained any benefit from APP’s overbilling. For the reasons discussed concerning the conversion claim, supra , the allegations that Lovelace benefitted are sufficient, if only barely so. Finally, defendants assert that plaintiffs’ civil cons piracy claim fails against Lovelace because (1) th e complaint alleges that Love lace did not believe APP should be overbilling patients because such overb illing was barred by Lovelace’s contract Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2425 with APP, and (2) the comp laint fails to stat e any specific acts Lovelace took in furtherance of the alleged cons piracy. Taken in context, the cited allegations assert that Lovelace does not disclose to patients th at they may end up pa ying more than innetwork rates for APP’s employees’ services , because “ostensibly, Lovelace takes the position that such overbilling should not be taking place,” but that Lovelace nevertheless “benefits fro m APP’s overbilling.” Id. at 34. A reasonable inference from these provisions, taken as a whole, is that Lovelace has tacitly agreed to continue to represent itself as an in-network provider and to pursue its profitable arrangement with APP while turning a b lind eye to APP’s overbilling practices, which are facilitated by Lovelace’s repr esentations and cont ractual arrangements with patients and insuran ce companies. This cond uct by Lovelace, including allegedly misleading omissions made to the public and to patients, facilitates the alleged conspiracy. In sum, to the extent a merits-based inquiry is a ppropriate when deciding the remand issue, we cannot say at this stage that plaintiffs’ comp laint fails to seek significant relief from Lovel ace. Finally, in considering Lovelace’s significance as a defendant, we must compare its conduct w ith that of the other defendant, APP. See Woods , 771 F.3d at 1266. For the reasons we have identified, Lovelace qualifies as a significant local defendant un der this comparative analysis . Contrary to defendant’s contention, it does not appear that plaint iffs named Lovelace to defeat CAFA jurisdiction, or that Lovelace is not “actua lly a primary focus of the litigation.” Id. at 1265. Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 2526 V. We affirm the district court’s order of remand.

Entered for the Court
Nancy L. Moritz Circuit Judge Appellate Case: 22-2057 Document: 010110710056 Date Filed: 07/13/2022 Page: 26