In Lemy v. Direct General Finance Co., 2014 WL 903371 (11th Cir. March 10, 2014) (Lemy v. Direct General Finance Co), the plaintiff filed a class action complaint in Florida state court alleging that the insurance company defendants acted in concert to sell a worthless insurance product to a class of plaintiffs in violation of the Florida Insurance Code.  The defendants included a Florida corporation and two out-of-state companies.  The out-of-state defendants removed the case to the United States District Court for the Southern District of Florida pursuant to the Class Action Fairness Act (“CAFA”).   The plaintiff moved to remand the action back to state court, citing CAFA’s local controversy exception.  The district court denied the motion to remand and the Eleventh Circuit affirmed.

Although CAFA greatly expands federal jurisdiction over many types of class actions, it advises that federal district courts should decline to exercise personal jurisdiction of purely local controversies.  “A local controversy is one in which at least one local defendant is significant.  A local defendant is significant when [] the plaintiffs are seeking significant relief from him.”  Id. at * 1.  In order to determine whether the local defendant was significant in this case, the Court compared the relief sought against the local defendant to the relief sought against the out-of-state defendants.  The district court concluded, and the Eleventh Circuit agreed, that “4.5 percent of the relief sought against one of the local defendants was not significant as compared to the 80 percent sought against one of the foreign defendants.”  Id. at *2.  This was not, therefore, a local controversy.

Although the relief sought against the in-state defendant could have been worth millions of dollars, the fact that it was not a significant portion of the total relief sought against the defendants as a whole prevented this case from being considered a “local controversy” under CAFA.

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