Opinion ID: 6323814
Heading Depth: 2
Heading Rank: 1

Heading: “Similar Factual Allegations”

Text: First, we agree with the district court that this case and Deming involve “the same or similar factual allegations.” § 1332(d)(4)(A)(ii). Our court has yet to construe that statutory provision, but the Tenth Circuit addressed its scope in Dutcher v. Matheson, 840 F.3d 1183 (10th Cir. 2016). There, purchasers of Utah properties alleged that the defendants had conducted wrongful, non-judicial foreclosures unauthorized by Utah 6 In both the district court and on appeal, Ciox also cited other prior class actions to defeat the local controversy exception. Because Deming is sufficiently similar to Schutte’s case, we do not address whether any of those other class actions would also be sufficient to deny remand. 16 No. 22-1087 law. In a case ﬁled several months earlier, however, another group of plaintiﬀs also alleged that the defendants had carried out non-judicial foreclosures in Utah. The two complaints alleged, “in nearly identical language, the same acts of wrongdoing by the same defendant.” Id. at 1191. To avoid federal jurisdiction under CAFA, the plaintiﬀs relied on the fact that the two cases alleged violations of diﬀerent statutes. The Tenth Circuit rejected that theory, emphasizing that CAFA’s language requires “the same or similar factual allegations,” not the same legal theories or causes of action. See id. at 1191– 92. Because the two cases relied on essentially the same factual allegations, despite the diﬀerent legal theories, the local controversy exception did not apply. Dutcher is persuasive and helpful here. Schutte relies on the fact that the Deming complaint alleged violations of Montana law while her own complaint alleges violations of Wisconsin law. We agree with the Tenth Circuit, however, that diﬀerences in the legal theories asserted do not place two complaints with similar factual allegations outside the provision’s sweep. See Dutcher, 840 F.3d at 1191–92; see generally, e.g., R3 Composites Corp. v. G&S Sales Corp., 960 F.3d 935, 941 (7th Cir. 2020) (“Plaintiﬀs need only plead facts, not legal theories, in their complaints.” (citation omitted)). And here, the factual allegations are nearly identical. The Deming plaintiﬀs alleged that they had to pay per-page charges, electronic data archive fees, and other fees for electronic copies of medical records. Likewise, Schutte alleges that class members had to pay “paper copies” fees, electronic archive data fees, and other fees for electronic copies of medical records. That overlap easily falls within any reasonable deﬁnition of “similar factual allegations.” No. 22-1087 17 Schutte is correct that Dutcher diﬀers from this case in at least one respect. The allegations in both complaints involved unlawful foreclosures on Utah property and diﬀerent provisions of Utah law, see 840 F.3d at 1191, whereas here Ciox’s alleged misconduct occurred in two diﬀerent states. In Schutte’s view, “the fact that the actions concern unlawful charges in diﬀerent states is enough to diﬀerentiate the two.” That diﬀerence does not govern application of CAFA’s mandatory local controversy exception. Both the Deming and Schutte complaints assert “the same basis of wrongdoing,” Dutcher, 840 F.3d at 1191, by Ciox—namely, charging impermissible fees for electronic copies of medical records. If geographic diﬀerences could render two otherwise identical complaints dissimilar for CAFA’s purposes, then plaintiﬀs would be able to avoid federal jurisdiction by ﬁling individual actions based on the same kind of misconduct in all ﬁfty states. There is no basis in the statutory text for that proposed limit, and the text’s speciﬁc reference to “the same or similar factual allegations” weighs heavily against it. § 1332(d)(4)(A)(ii) (emphasis added). As the Senate committee’s post-passage report explained, one purpose of that criterion was “to ensure that overlapping or competing class actions or class actions making similar factual allegations against the same defendant that would beneﬁt from coordination are not excluded from federal court by the Local Controversy Exception and thus placed beyond the coordinating authority of the Judicial Panel on Multidistrict Litigation.” S. Rep. No. 109-14, at 41, as reprinted in 2005 U.S.C.C.A.N. at 39; see also, e.g., Davenport v. Lockwood, Andrews & Newnam, Inc., 854 F.3d 905, 910 (6th Cir. 2017) (citing the same Senate report 18 No. 22-1087 and noting that “Congress did intend to prevent copycat suits in multiple forums, enabling class actions to be consolidated to promote judicial eﬃciency.”); Carter v. CIOX Health, LLC, 260 F. Supp. 3d 277, 285 (W.D.N.Y. 2017) (similar). 7 Consistent with that reasoning, a number of district courts have rejected Schutte’s theory that actions arising in diﬀerent states cannot involve “similar factual allegations.” E.g., Brown v. Saint-Gobain Performance Plastics Corp., Nos. 16-cv-242 & 16cv-243, 2016 WL 6996136, at  (D.N.H. Nov. 30, 2016) (denying remand; factual allegations deemed similar where case involved harm to plaintiﬀs in New Hampshire, while prior class actions alleged that same pollutant harmed diﬀerent plaintiﬀs in New York and Vermont); Torres v. CleanNet, U.S.A., Inc., No. 14-2818, 2014 WL 5591037, at –10 (E.D. Pa. Nov. 4, 2014) (denying remand; factual allegations deemed similar where case involved Pennsylvania law and was limited to Pennsylvania plaintiﬀs, while prior action was brought under Illinois law); Brook v. UnitedHealth Group Inc., No. 06 CV 12954, 2007 WL 2827808, at  (S.D.N.Y. Sept. 27, 2007) (denying remand; 7 Unlike the suggestion discussed above in note 5 that all doubts should be resolved in favor of federal jurisdiction, the explanation of the reasons for the statute’s “factual allegations” phrasing to allow MDL coordination fits the statutory text and does not try to impose a new substantive rule. We do not mean to imply here that this and similar electronic record fee cases should in fact be consolidated through the MDL process. We do not know enough about those cases, the parties have not been heard on that significant procedural decision, and that would not be our decision in any event. Our broader point is only that Congress drafted the local controversy exception so as to enable the Judicial Panel on Multidistrict Litigation to consolidate similar class actions arising under state law in multiple states, using the Panel’s usual standards and judgments. The Senate report makes explicit that consequence of the statutory language. No. 22-1087 19 “Plaintiﬀs cannot simply evade federal jurisdiction by deﬁning the putative class on a state-by-state basis, and then proceed to ﬁle virtually identical class action complaints in various state courts.”). Schutte seeks support from two district court cases, but both are distinguishable. First, in Anderson v. Hackett, 646 F. Supp. 2d 1041 (S.D. Ill. 2009), the court granted remand under the local controversy exception where a prior class action in New York had alleged that Monsanto should not have produced and distributed certain products. Those allegations were not suﬃciently similar to the Anderson plaintiﬀs’ claims that Monsanto should have used greater care in producing and handling its products in Illinois: “Boiled down, the [prior] action says, ‘Don't produce;’ the instant action says, ‘Don’t spill.’” Id. at 1051. The Anderson court went on to say that even if the defendants had contaminated the environment in the same way in both cases, “the fact that the actions concern the contamination of diﬀerent environments is enough to diﬀerentiate the two.” 646 F. Supp. 2d at 1051. Schutte takes this dictum to mean that geography should always be a diﬀerentiating factor. We do not read it nearly so broadly. Applying the local controversy exception to cases alleging pollution of speciﬁc properties in diﬀerent states may pose signiﬁcant challenges. Compare, e.g., Anderson, with Brown, 2016 WL 6996136, at  (denying remand where plaintiﬀs in prior actions also alleged that defendant had released same pollutant in their own states). But those challenges are not present in a case like this one, where only the plaintiﬀs themselves—rather than any real property—are in diﬀerent states. 20 No. 22-1087 Second, Schutte relies on Rasberry v. Capitol County Mutual Fire Insurance Co., 609 F. Supp. 2d 594 (E.D. Tex. 2009). The proposed class there sought declaratory and injunctive relief against an insurer for its use of unlicensed adjusters to calculate insurance claims. By contrast, the plaintiﬀs in a prior class action had requested money damages based on the insurer’s refusal to include contractor overhead and proﬁt when calculating the value of their claims. Although both cases involved insurance claims after the same hurricane, the court concluded that the “essential contours” of the actions were “wholly dissimilar.” Id. at 605. One group of plaintiﬀs wanted only equitable relief because of who was calculating their claims. The other group wanted damages because their claims were being undervalued. No such diﬀerences are present in this case, where both Schutte and the Deming plaintiﬀs primarily seek money damages because Ciox charged them impermissible fees for electronic copies of medical records. While the similarities between Schutte’s allegations and those in Deming are quite clear, harder cases are sure to arise. For instance, Ciox acknowledged at oral argument that the inquiry would be more diﬃcult here if a prior class action had alleged that plaintiﬀs were charged for the wrong number of pages or that the records were sent to the wrong recipients. In other words, not every prior class action involving requests for medical records from Ciox would necessarily be similar to Schutte’s allegations. As the Rasberry court observed, the local controversy exception generally will not be defeated where the relevant actions are similar only in “incidental respects, such as arising out of the same event and including a common defendant.” 609 F. Supp. 2d at 605. Here, however, the nearly identical nature of the factual allegations makes clear that No. 22-1087 21 Schutte’s case and Deming are factually similar for CAFA’s purposes.