Madison v. ADT

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
FILED
August 24, 2021
No. 21-90028
Lyle W. Cayce
Clerk
Taylor Madison; Angie Dickson,
Plaintiffs—Respondents,
versus
ADT, L.L.C.,
Defendant—Petitioner.
Motion for Leave to Appeal
Pursuant to 28 U.S.C. § 1453Consolidated 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,
Plaintiffs—Appellees,
versus
ADT, L.L.C.,
Defendant—Appellant.
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.
2
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 (citing
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. Id. 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
3
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.” Id. (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
4
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
discrimination.” 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
unconstitutional,” id., 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
1
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.
5
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.
6