You may recall my blog post from last November about the Eighth Circuit’s opinion in Thatcher v. Hanover Ins. Group, Inc., 659 F.3d 1212 (8th Cir. 2011).  In that opinion, the Eighth Circuit reversed an Arkansas federal district court decision allowing a plaintiff to voluntarily dismiss a putative class action without prejudice in order to re-file the case in state court with several causes of action omitted.  The plaintiff sought to eliminate those causes of action in order to ensure that the amount in controversy would be below the $5 million threshold for federal jurisdiction under the Class Action Fairness Act (CAFA), and thereby keep the case in state court.  The Eighth Circuit explained that “we have repeatedly stated that it is inappropriate for a plaintiff to use voluntary dismissal as an avenue for seeking a more favorable forum,” and instructed the district court to first determine whether federal jurisdiction existed, and then, if it found jurisdiction, to reconsider whether the motion for voluntary dismissal was an improper “forum-shopping measure.” 

The Arkansas federal district court has now ruled in Thatcher that it has jurisdiction under CAFA, and that the motion to dismiss was an improper forum shopping device.  In Thatcher v. Hanover Ins. Group, Inc., Civil No. 10-4172, 2012 U.S. Dist. LEXIS 73961 (W.D. Ark. May 29, 2012), the court held that each of the causes of action in the complaint (unjust enrichment, fraud/constructive fraud, and breach of contract) potentially could result in a separate damages award, which, together with statutory penalties and attorneys’ fees, would substantially exceed the $5 million threshold for CAFA jurisdiction.  The court rejected the plaintiff’s argument that by alleging that he was not seeking a “double recovery,” he was seeking only breach of contract damages.  The court also found that punitive damages were potentially available on the fraud and constructive fraud claims because such damages potentially can be awarded even where not expressly requested in the complaint.  (For more on this point, see my blog post about the Seventh Circuit’s Back Doctors opinion.)  The court rejected the plaintiff’s argument that an allegation that the aggregate amount in controversy was less than $5 million could establish to a legal certainty that the actual amount in controversy was below $5 million.

After finding jurisdiction, the court then reconsidered its decision to grant the motion for voluntary dismissal without prejudice.  It held that to allow the plaintiff to voluntarily dismiss the case for the purpose of re-filing in state court “clearly amounts to improper forum shopping . . . .”  The court further explained that:

While this plaintiff and his attorneys had the right to draw his complaint as he saw fit (as the master of the complaint), he and they are obliged to live with it as drawn and to pursue it – if they can – in a court having proper jurisdiction over it as drawn.  They are not to be permitted to shop for a new and hopefully more favorable forum if it turns out that their complaint – as drawn – places them in a court not of their liking.

The amount in controversy is often the focus of disputes over whether CAFA jurisdiction exists in insurance class actions.  This is because the “local controversy” and “home state” exceptions to CAFA are inapplicable if none of the defendants are citizens of the state where suit is brought.  (And bringing one class action against multiple insurers is typically not proper.)  The only way plaintiffs’ lawyers can try to keep these cases in state court is by keeping the amount in controversy under $5 million.  As I mentioned in my prior post, filing an answer at the same time you remove a case to federal court is a helpful strategy to try to prevent plaintiffs from filing a notice of voluntary dismissal without prejudice so that they can re-file a case in state court with revised allegations designed to keep the amount in controversy below $5 million.  It’s also important, in preparing a notice of removal, to consider every potential category of damages that might be awarded on each cause of action that is pled.  It’s somewhat counterintuitive for a defendant to be trying to increase the calculation of potential damages and for the plaintiff to be fighting against that, but that is what determining the amount in controversy under CAFA is all about.

SPECIAL DISCLAIMER:  While I intend this blog to serve as an informational resource on insurance class actions and not advertising for my services as a lawyer, because I’m writing here about one of my own cases someone might think it is advertising.  Please understand that every case is different and the result achieved in the case described above may differ from the result in some other case, which may involve different facts, different applicable law or a different jurisdiction.  Past results do not guarantee future results, and you should always consult your own lawyer about your own case.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

Read more about Wystan Ackerman
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