Rader v. Teva Parental Medicines, Inc., No. 2:10-CV-818 JCM RJJ, Slip Copy, 2010 WL 3463652 (D. Nev. Aug 27, 2010).

In this case, a District Court in Nevada declined to remand the action to state court under CAFA’s local controversy and home state exceptions holding that ‘primary defendants’ are the targets of the lawsuit, not every defendant against whom a significant relief is not sought.

The plaintiff brought a class action in state court of the State of Nevada against the Products Defendants–Teva Parenteral Medicine, Inc., Sicor Pharmaceuticals, Inc., Sicor, Inc. Baxter Healthcare Corporation, and McKesson Medical-Surgical, Inc. The plaintiff also sued Quality Care Consultants, LLC (“QCC”), who is not a member of the Products Defendants group.

The plaintiff asserted claims for: 1) strict product liability; 2) breach of implied warranty of fitness for a particular purpose; 3) negligence; 4) violation of Nevada Deceptive Trade Practices Act; and 5) punitive damages against the Products Defendants.  The plaintiff’s claims against QCC were limited to: 1) negligence; 2) violation of Nevada Deceptive Trade Practices Act; and 3) punitive damages.

The Products Defendants removed the action to the federal court alleging that QCC was fraudulently joined, and claimed diversity of citizenship under 28 U.S.C. §1332(a) between the properly joined parties.  The Products Defendants also based their removal on CAFA, 28 U.S.C. §1332(d).

The plaintiff moved to remand arguing that QCC was not fraudulently joined, and that as a Nevada limited liability company, its citizenship destroyed complete diversity.  Although the plaintiff did not dispute that this action met the requirements of CAFA, he pointed out that CAFA’s local controversy and home state exceptions applied here.

The Court noted that §§1332(d)(4)(A) & (B) of CAFA require a district court to decline jurisdiction when the controversy is uniquely local and does not reach into multiple states. Subsection (A), the “local controversy” exception, may apply when at least one significant defendant and more than two-thirds of the members of the putative classes are local.  Subsection (B), the “home-state” exception, may apply when the primary defendants and at least two-thirds of the members of the putative classes are local.  Relying on Corsino v. Perkins, 2010 WL 317418 at 5 (C.D. Cal Jan. 19.2010), the Court observed that the term "primary" generally means all defendants, or those who are the target of the lawsuit.  Editors’ Note:  See the CAFA Law Blog analysis of Corsino posted on June 18, 2010).

The Court noted that there was no dispute that the two-thirds requirement was met for all the CAFA exceptions.  The plaintiff, however, failed to adequately show how defendant QCC was either a defendant from whom a ‘significant relief was sought,’ ‘a defendant whose conduct formed a significant basis for the claims asserted by the proposed plaintiff class,’ or how it was a ‘primary’ defendant.  As the primary defendants (the Product Defendants), the targets of the lawsuit, were all citizens of other states, the Court was not inclined to rule that one of the CAFA exceptions was applicable.