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Madison v. ADT, 21-90028 (2021)

Court: Court of Appeals for the Fifth Circuit Number: 21-90028 Visitors: 11
Filed: Aug. 24, 2021
Latest Update: Aug. 25, 2021
Case: 21-90028    Document: 00515993370      Page: 1     Date Filed: 08/24/2021

          United States Court of Appeals
               for the Fifth Circuit                                United States Court of Appeals
                                                                             Fifth Circuit

                                                                     August 24, 2021
                              No. 21-90028
                                                                      Lyle W. Cayce

   Taylor Madison; Angie Dickson,



   ADT, L.L.C.,


                       Motion for Leave to Appeal
                       Pursuant to 28 U.S.C. § 1453

                        Consolidated With

                              No. 21-10837
Case: 21-90028     Document: 00515993370           Page: 2     Date Filed: 08/24/2021

                                      No. 21-90028
                                    c/w No. 21-10837

   Taylor Madison; Angie Dickson,



   ADT, L.L.C.,


                  Appeal from the United States District Court
                      for the Northern District of Texas
                           USDC No. 3:20-CV-2516

   Before Jones, Duncan, and Engelhardt, Circuit Judges.
   Edith H. Jones, Circuit Judge:
         Telesforo Aviles was an ADT LLC (“ADT”) employee who installed
   ADT’s home-security surveillance systems and used his access privileges to
   spy on customers in their homes. Taylor Madison and Angie Dickson, now
   also representing a class of plaintiffs, sued Aviles in state court seeking
   millions in damages.
         ADT, which is being sued directly by other plaintiffs in both Texas
   and Florida for the breach of privacy, intervened in this suit and removed to
   the Northern District of Texas pursuant to the Class Action Fairness Act
   (“CAFA”). The plaintiffs moved to remand the suit to state court, and the
   district court granted the motion, citing the “home state” exception to
   CAFA. ADT sought this appeal pursuant to 28 U.S.C. § 1453(c), and
   plaintiffs oppose. We GRANT permission to appeal and REVERSE the
   district court’s remand order.

Case: 21-90028      Document: 00515993370          Page: 3     Date Filed: 08/24/2021

                                      No. 21-90028
                                    c/w No. 21-10837

          This court reviews de novo the district court’s order to remand to
   state court a suit removed pursuant to CAFA. Robertson v. Exxon Mobil Corp.,
814 F.3d 236
, 239 (5th Cir. 2015). The party objecting to CAFA jurisdiction
   must prove that a CAFA exception divests the federal court of the ability to
   retain a class action. Hollinger v. Home State Mut. Ins. Co., 
654 F.3d 564
, 571
   (5th Cir. 2011)(citing cases).
          “CAFA provides district courts with jurisdiction over ‘class
   action[s]’ in which the matter in controversy exceeds $5,000,000 and at least
   one class member is a citizen of a State different from the defendant.
   § 1332(d)(2)(A).” Home Depot U.S.A., Inc. v. Jackson, 
139 S. Ct. 1743
, 1746
   (2019) reh'g denied, 
140 S. Ct. 17
 (2019). However, CAFA seeks to “draw a
   delicate balance between making a federal forum available to genuinely
   national litigation and allowing the state courts to retain cases when the
   controversy is strongly linked to that state.” Hollinger, 
654 F.3d at 570
   Hart v. FedEx Ground Package Sys. Inc., 
457 F.3d 675
, 682 (7th Cir. 2006)).
   Therefore, the act provides a number of scenarios in which federal courts
   must abstain from exercising jurisdiction. 
 The “home state” exception
   affords one such scenario, whereby the court must abstain if “two-thirds or
   more of the members of all proposed plaintiff classes in the aggregate, and
   the primary defendants, are citizens of the State in which the action was
   originally filed.” 
Id. at 570
; 28 U.S.C. § 1332(d)(4)(B).
          Aviles, who was sued by the plaintiffs, is a “primary defendant,” of
   course. The issue here is whether ADT, a non-citizen of Texas, is also a
   “primary defendant” under CAFA. If ADT is not a primary defendant, the
   district court was right to remand to the state court, but if ADT is a primary
   defendant, the district court was required to retain jurisdiction.
          This court has only addressed this question with minimal reasoning,
   and there is scant discussion across our sister circuits. The leading case that

Case: 21-90028        Document: 00515993370         Page: 4     Date Filed: 08/24/2021

                                     No. 21-90028
                                   c/w No. 21-10837

   examines the meaning of primary defendant is Vodenichar v. Halcón Energy
   Props, Inc., 
733 F.3d 497
 (3rd Cir. 2013). In that case, the Third Circuit
   described two chief approaches district courts have used to define primary
   defendant. The first attempts to “capture those defendants who are directly
   liable to the proposed class, as opposed to being vicariously or secondarily
   liable based upon theories of contribution or indemnification.” 
Id. 504
. This
   approach focuses “on the defendants who plaintiffs alleged are the real
   wrongdoers as opposed to those defendants who may have to pay because of
   the actions of others.” 
Id. at 505
. The second looks “to identify the
   defendants expected to sustain the greatest loss if liability were found . . . and
   whether such defendants have substantial exposure to significant portions of
   the proposed class.” 
 (internal citations omitted).
          The Vodenichar panel adopted a blend of these two approaches,
   holding that courts “should assume liability will be found and determine
   whether the defendant is the ‘real target’ of the plaintiffs’ accusations.” 
Id. at 505
. This includes “determin[ing] if the plaintiffs seek to hold the
   defendant responsible for its own actions, as opposed to seeking to have it
   pay for the actions of others,” and also requires the court to consider
   whether, “given the claims asserted against the defendant, it has potential
   exposure to a significant portion of the class and would sustain a substantial
   loss as compared to other defendants if found liable.” 
Id. at 505
–06. In that
   case, the circuit court held that three defendants were primary defendants:
   two had been non-diverse leasing agents of the plaintiff class, while the third
   was an oil and gas company, a diverse defendant, that allegedly reneged on
   lease agreements. Accordingly, the court rejected remand based on the home
   state exception.
          This court’s sparse analysis is similar to that in Vodenichar. In
   Hollinger, the panel merely stated in passing (the issue of primary defendant
   was not in dispute) that a class of insurance companies were primary

Case: 21-90028        Document: 00515993370              Page: 5       Date Filed: 08/24/2021

                                         No. 21-90028
                                       c/w No. 21-10837

   defendants because “all putative class members . . . have claims against the
   [non-diverse] County Mutuals, and as the entities that issued the insurance
   policies, the County Mutuals have a primary role in the alleged
654 F.3d at 572
. Several years later, in Watson v. City of
   Allen, Tx., another panel of this court considered whether three private
   companies of diverse citizenship, with whom Texas municipalities
   contracted to operate challenged red light cameras, were primary defendants.
821 F.3d 634
 (5th Cir. 2016). The panel began its analysis by observing that
   the “suit’s primary thrust [wa]s an attempt to declare unconstitutional the
   Texas red light camera legislative scheme.” 
Id. at 641
. Although the panel
   noted that the claims against the private companies were “expressly
   contingent on a threshold finding that the challenged legislative scheme [wa]s
 its quest was to identify the “suit’s primary thrust”
   and thereby to determine the suit’s “primary defendant.”                      The court
   concluded that because the companies were not primary parties to the suit,
   as opposed to the state and the municipalities, the CAFA home state
   exception applied.
           None of these cases is factually apposite to the present litigation, but
   there is much to commend the Vodenichar emphasis on the “real target” of
   the litigation and Watson’s description of the controversy’s “primary
   thrust.” Whether ADT is vicariously or secondarily liable is a relevant
   factor, 1 certainly, but it does not necessarily control a court’s determination,
   or the analysis would often be at odds with the Supreme Court’s admonition
   “against adopting rules in the CAFA context that would ‘exalt form over

             Plaintiffs make much of the fact that ADT became a defendant by voluntary
   intervention, and they have not—yet—sued ADT. To accept their demurrer, however,
   would be naïve, because the statute of limitations will not run on ADT’s potential liability
   for some months, and the parties are currently embroiled in litigation over a substantial
   discovery request and a motion to compel arbitration.

Case: 21-90028      Document: 00515993370         Page: 6     Date Filed: 08/24/2021

                                     No. 21-90028
                                   c/w No. 21-10837

   substance.’” Kitchin v. Bridgeton Landfill, LLC, 3 F.4th 1089, 1096 (8th Cir.
   2021) (citing Standard Fire Ins. v. Knowles, 
568 U.S. 588
, 595, 
133 S. Ct. 1345
   1350 (2013)). Madison and Dickson claim to represent a class of plaintiffs
   seeking millions in recovery for the invasion of their privacy, although, as of
   yet, they have asserted claims against only the offending employee (who is
   imprisoned). But the thrust of this suit is to gain access to ADT’s deep
   pockets, and ADT, having properly intervened, must be considered a
   primary defendant under CAFA.
          We GRANT permission to appeal. Further, because the district court
   erred in remanding, its order is REVERSED.

Source:  CourtListener

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