Williams v Employers Mutual Casualty Company et al., 2017 WL 117148 (8th Cir. 2017).

In affirming the judgment of a District Court’s order denying plaintiff’s motion to remand, the Eighth Circuit found that an equitable garnishment action against insurers and land owners, although labeled otherwise, is a class action in “substance” for the purpose of CAFA because the garnishment action emerged from a class action filed in state court.

Plaintiff, on behalf of herself and the residents of Autumn Hills Mobile Home Park (“Autumn Hills”), brought a class action in state court against the owner of Autumn Hills, The Collier Organization, Inc. (“Collier”), alleging that Collier supplied the residents of Autumn Hills with contaminated drinking water (hereinafter referred to as the “Original Action”).  Collier sought indemnification from its corporate liability insurers (“Insurers”) but was denied coverage.  Subsequently, Plaintiff entered into an agreement with Collier, which provided that Collier would assign the rights to its insurance proceeds to Williams, as class representative. In exchange, Williams agreed that if the class obtained judgment against Collier, the class’ recovery would be limited to those insurance proceeds.

The state court eventually entered judgment in favor of the class, and awarded the plaintiffs $70,085,000 for medical monitoring, and $11,952,000 for the loss in value to their homes. Plaintiff then filed an equitable garnishment action in state court against the Insurers and Collier pursuant to Missouri Revised Statute § 379.200 (hereinafter referred to as the “Instant Action”).

The Insurers removed the action to the Eastern District of Missouri, asserting jurisdiction under CAFA. Plaintiff moved to remand, arguing that the equitable garnishment action was not a “class action” as defined by § 1332(d)(1)(B).  The District Court denied the motion to remand concluding that although the garnishment action was not brought under a statute specifically authorizing class action suits, it was a class action under CAFA because the plaintiff filed it on behalf of a class.  A renewed motion to remand before a different judge was also denied.  The District Court subsequently granted judgment on the pleadings in favor of the Insurers and entered a “Consent Judgment” in favor of Collier, which deemed Collier a nominal but necessary party against which no relief could be obtained under § 379.200. Plaintiff appealed the denials of the motions to remand. In her motions to remand, Plaintiff argued that the District Court did not have jurisdiction over the Instant Action because it was not a “class action” as defined by CAFA, as it was not “filed under” Rule 23 or a state-law analogue. The parties did not dispute that the complaint in the Original Action referred to Missouri Rule of Civil Procedure 52.08, or that Rule 52.08 was analogous to Rule 23. Plaintiff, however, argued that the complaint in the Instant Action did not refer to Rule 52.08; rather, it referred only to Missouri Revised Statute § 379.200, the equitable garnishment statute.  The District Court, relying on Addison Automatics, Inc. v. Hartford Casualty Insurance Co., 731 F.3d 740 (7th Cir. 2013) concluded that, although labeled otherwise, the Instant Action was a class action because it was a class action in substance.

Plaintiff argued that Addison and the District Court incorrectly interpreted CAFA when they concluded that it was appropriate to look to the substance of a lawsuit to determine whether it was a class action.  She argued that, under the plain language of CAFA, an action was “filed under” Rule 23 or a state-law analogue only where the complaint expressly invoked such a rule.  She further contended that the complaint in the instant action sought no relief under class rules, and required no resolution of class-related issues.  Plaintiff cited cases from other circuits that found no CAFA jurisdiction where a plaintiff brought a lawsuit in a representative capacity and cited a state statute or rule that was not analogous to Rule 23, arguing that, like the plaintiffs in those cases, she was entitled to bring suit under whatever law she chose and that she chose to bring suit pursuant to a state statute that was not analogous to Rule 23, Missouri’s equitable garnishment statute.

The Eighth Circuit, however, found that the circumstances of the Instant Action distinguished it from the line of cases that the plaintiff relied on. In each of those cases, the plaintiff cited some rule or statute that purportedly allowed the plaintiff to proceed as the representative of a group of people, but that otherwise was not sufficiently similar to Rule 23 for purposes of CAFA.  Here, the equitable garnishment statute included no provision authorizing a plaintiff to bring suit on behalf of others.  The Eighth Circuit rather found that it was clear from the pleadings that the plaintiff could bring the instant case only because of her status as the representative of the class certified under Rule 52.08, an undisputed analogue of Rule 23.

Plaintiff additionally argued that the Instant Action did not involve class-related questions, as the complaint did not seek class certification, and there were no “notice, opt-out, or court approval issues involved.” The Eighth Circuit, however, found that the Instant Action implicated other class-related issues; for example, if the plaintiff chose to dismiss or settle the case in state court, the court would have been obligated to direct her to give notice to the members of the class under Rule 52.08(e).  The Eighth Circuit opined that although the complaint omitted reference to Rule 52.08, it was clear from the face of the complaint that Rule 52.08 was the precise rule under which plaintiff proceeded in her effort to enforce the judgment obtained for the benefit of the class.  The Eighth Circuit therefore ruled that the Instant Action was “filed under” a state-law analogue to Rule 23, and was a class action for purposes of CAFA jurisdiction.  Additionally, the Eighth Circuit noted that its conclusion was in line with the legislative intent behind CAFA.  The Eighth Circuit thus concluded that the District Court had jurisdiction over the instant action, and affirmed the judgment of the District Court with respect to the motions for remand.