ESTHER SALAS, District Judge.
Pending before the Court is Plaintiff's motion to remand this action to the Superior Court of New Jersey. (D.E. No. 7). This Court referred Plaintiff's motion to the Honorable Steven C. Mannion, United States Magistrate Judge, pursuant to 28 U.S.C. § 636(b)(1)(B). On July 15, 2016, Magistrate Judge Mannion issued a Report and Recommendation (the "R & R") that the undersigned deny Plaintiff's motion. (D.E. No. 27). The parties had fourteen days to file and serve any objections to the R & R pursuant to Local Civil Rule 72.1(c)(2). On July 29, 2016, Plaintiff filed an objection to the R & R. (D.E. No. 28 ("Plaintiff's Objection")).
The Court provides the background of this action in summary fashion because Magistrate Judge Mannion provided the relevant factual and procedural background in the R & R. (See D.E. No. 27 at 2-5).
On December 23, 2015, Plaintiff filed an initial complaint in state court. (D.E. No. 1-1, Ex. A). On February 4, 2016, Plaintiff filed an amended complaint. (D.E. No. 6-4, Ex. D). The crux of Plaintiff's allegation is that Defendants "buried" unlawful provisions in its consumer contracts in violation of numerous New Jersey laws. (Id. ¶ 1). Defendant Defenders, Inc. ("Defenders"), an Indiana corporation with its principal place of business in Indianapolis, Indiana, removed Plaintiff's action to this Court on February 11, 2016, asserting federal diversity jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2) ("CAFA"). (D.E. No. 1 at 1). Plaintiff, however, moved to remand, arguing that remand is mandated under CAFA's "local controversy" exception and proper because Defenders failed to plausibly allege CAFA's $5,000,000 amount in controversy threshold. (D.E. No. 7-1 at 1). In the R & R, Magistrate Judge Mannion disagreed with Plaintiff, finding (among other things) that "CAFA's local controversy exception does not apply" and "Defenders has met [its] initial burden in demonstrating the amount in controversy plausibly exceeds $5,000,000." (D.E. No. 27 at 8, 14).
"When a litigant files an objection to a Report and Recommendation, the district court must make a de novo determination of those portions to which the litigant objects." Leonard Parness Trucking Corp. v. Omnipoint Commc'ns, Inc., No. 13-4148, 2013 WL 6002900, at *2 (D.N.J. Nov. 12, 2013) (citing 28 U.S.C. § 636(b)(1)(A), Fed. R. Civ. P. 72(b), and L. Civ. R. 72.1(c)(2)).
Plaintiff's sole objection to the R & R concerns the local controversy exception to diversity jurisdiction under CAFA. (D.E. No. 28 at 2). Specifically, Plaintiff argues that Magistrate Judge Mannion's R & R was "based on the incorrect conclusion that there is no `local defendant' (a defendant who is a New Jersey citizen) in this action as required by the local controversy exception, 28 U.S.C. § 1332(d)(4)(A)." (Id.).
CAFA provides federal courts with jurisdiction over civil class actions if (i) the "matter in controversy exceeds the sum or value of $5,000,000," (ii) the aggregate number of proposed class members is 100 or more, and (iii) any class member is a citizen of a state different from any defendant. Vodenichar v. Halcon Energy Props., Inc., 733 F.3d 497, 503 (3d Cir. 2013) (citing 28 U.S.C. § 1332(d)(2), (d)(2)(A), (d)(5)(B)). Thus, the statute makes it easier for state court litigants to file or otherwise remove class actions to federal court by authorizing federal jurisdiction over class actions even in the absence of complete diversity between the parties. Id. Even when a litigant meets these requirements, however, federal jurisdiction is barred where the "controversy is uniquely" connected to the state in which the action was originally filed. Id. To that end, 28 U.S.C. § 1332(d)(4)(A), commonly known as the "local controversy exception," precludes federal jurisdiction where the following six factors are met:
Id. at 506. Here, the parties agree that there is no dispute that elements one, five, and six are satisfied. (D.E. No. 28-1 at 6-7). Defendants contest elements two, three, and four. (See D.E. No. 30 at 3-8).
Plaintiff first argues that the "R&R's conclusion that ADTSSI-Tyco's
Plaintiff's successor-liability argument, however, is not inconsistent with Magistrate Judge Mannion's R & R. The Court agrees with (and the R & R does not contradict) Plaintiff's argument that an assignment does not let an assignor off the hook. And the Court agrees with (and the R & R does not contradict) Plaintiff's argument that an injured party can elect to proceed against the defunct corporation, the successor corporation, or both. But Plaintiff's argument misses the mark—the R & R does not recommend that this Court dismiss assignor ADTSSI-Tyco or otherwise limit Plaintiff's claims against it in any way. As Defendant ADTSSI-Tyco remains a defendant in this case, Plaintiff's first argument fails.
Because the R &R concluded that "[ADTSSI-Tyco] is a New Jersey citizen" (D.E. No. 27 at 13-14), the Court will address the next contested element of the local controversy exception— whether ADTSSI-Tyco's conduct forms a significant basis for the claims asserted. Plaintiff argues that "ADTSSI-Tyco's alleged conduct forms a significant basis for the class members' claims." (D.E. No. 28 at 7-9). "In relating the local defendant's alleged conduct to all the claims asserted in the action, the significant basis provision effectively calls for comparing the local defendant's alleged conduct to the alleged conduct of all the [d]efendants." Kaufman v. Allstate New Jersey Ins. Co., 561 F.3d 144, 156 (3d Cir. 2009). If the local defendant's alleged conduct is a significant part of the alleged conduct of all the defendants, then the significant basis provision is satisfied. Id. Whether this condition is met requires a substantive analysis comparing the local defendant's alleged conduct to the alleged conduct of all the defendants. Id.
The Third Circuit suggests nine non-exclusive areas of inquiry for determining whether the local defendant's alleged conduct provided a significant basis for the asserted claims:
Id. at 158 n.13.
Plaintiff argues that "[c]omparing [D]efendants' alleged conduct as required by Kaufman, it is indisputable that ADTSSI-Tyco's conduct is at least as, if not more, significant, important, and noteworthy to the claims of the class members as ADT LLC's and Defenders, Inc.'s conduct."
Defendant responds that ADTSSI-Tyco "did not even operate for a majority of the putative class period." (D.E. No. 30 at 7). Although not specifically calculated by the parties, the Court notes that the putative class period spans over six years—from December 23, 2009, to at least the filing of the Amended Complaint, February 16, 2016. (D.E. No. 6-4, Ex. D ¶ 34, D.E. No. 6 at 1). And during the six-year putative class period, ADTSSI-Tyco operated for only approximately two and one-half years, from December 23, 2009, to June 30, 2012 (when it "distributed all residential/small business assets and liabilities, including the contracts of the putative class at issue in this lawsuit[,] to ADT LLC"). (D.E. No. 19 ¶¶ 6-7, 16; D.E. No. 30 at 4). So, for three years and seven months (from July 1, 2012 to February 16, 2016)—the majority of the putative class period—it was Defendant ADT LLC's conduct that formed the basis for the claims asserted.
The Court finds that Plaintiff failed to demonstrate that ADTSSI-Tyco's conduct formed a significant basis for the asserted claims. Plaintiff failed to address the nine non-exclusive areas of inquiry for determining if the alleged conduct of a local defendant provided a significant basis for the claims asserted. See Kaufman, 561 F.3d at 158 n.13; see also Mazzucco v. Kraft Foods Glob., Inc., No. 11-2430, 2011 WL 6936353, at *3 (D.N.J. Dec. 30, 2011) (denying plaintiff's motion to remand because plaintiff failed to address the relevant "areas of inquiry for determining whether the alleged conduct of a local defendant provided a significant basis for the claims asserted"). Specifically, Plaintiff failed to address (among other things): (1) the nature of the claims and issues raised against ADTSSI-Tyco (the alleged local Defendant) and the two non-local Defendants; (2) the number of claims asserted; and (3) the number of claims that rely on ADTSSI-Tyco's alleged conduct.
Because Plaintiff failed to demonstrate that ADTSSI-Tyco's conduct formed a significant basis for the asserted claims, the Court need not address the final contested element of the local controversy exception—whether the class members seek significant relief from ADTSSI-Tyco.
For the foregoing reasons, Plaintiff's motion to remand this case to the Superior Court of New Jersey is denied. An appropriate Order accompanies this Opinion.
(D.E. No. 7-1 at 8).