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Fochtman v. Caair, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

March 9, 2018

MARK FOCHTMAN, individually, and on behalf of all others similarly situated; and SHANE O'NEAL, individually, and on behalf of all others similarly situated PLAINTIFFS
v.
CAAIR, INC.; SIMMONS FOODS, INC.; DARP, INC.; HENDREN PLASTICS, INC.; and JOHN DOES 1-30 DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Now pending before the Court are the following Motions, supporting briefs, and responses:

• Motion to Sever and Remand (Doc. 20) and Brief in Support (Doc. 21), filed by Defendant Hendren Plastics, Inc. ("Hendren"); Response in Support (Doc. 38), filed by Defendant Simmons Foods, Inc. ("Simmons"); Plaintiffs' Response in Opposition (Doc. 35); Hendren's Reply (Doc. 39); and Plaintiffs' Sur-Reply (Doc. 46);
• Motion to Sever and Dismiss, or in the Alternative, to Sever and Remand (Doc. 40) and Brief in Support (Doc. 41), filed by Defendant DARP, Inc. ("DARP"); and Plaintiffs' Response in Opposition (Doc. 56);
• Motion to Dismiss or Transfer Venue (Doc. 52) and Brief in Support (Doc. 55), filed by Simmons; Joinder in Simmons' Motion (Doc. 62), filed by Defendant CAAIR, Inc. ("CAAIR"); Hendren's Response in Support (Doc. 64); Plaintiffs' Response in Opposition (Doc. 80); and Simmons' Reply (Doc. 93);
• Motion to Remand (Doc. 54) and Brief in Support (Doc. 55), filed by Plaintiffs; Hendren's Response in Support (Doc. 63); Simmons' Response in Opposition (Doc. 76); and CAAIR's Response in Opposition (Doc. 77);
• Motion to Sever Claims (Doc. 78) and Brief in Support (Doc. 79), filed by CAAIR.; and Plaintiffs' Response in Opposition (Doc. 81); and
• two Motions to Quash (Docs. 70, 72), filed by Non-Party Daugherty & Daugherty Investments, LLC; and Plaintiffs' combined Response in Opposition (Doc. 89).

         For the reasons explained in greater detail below, the Motion to Sever and Remand (Doc. 20) is GRANTED IN PART AND DENIED IN PART; the Motion to Sever and Dismiss, or in the Alternative, to Sever and Remand (Doc. 40), is GRANTED IN PART AND DENIED IN PART; the Motion to Dismiss or Transfer Venue (Doc. 52) is GRANTED; the Motion to Remand (Doc. 54) is MOOT; the Motion to Sever Claims (Doc. 78) is GRANTED; the Court will TRANSFER the Motion to Quash related to the CAAIR/Simmons claims (Doc. 70) to the Northern District of Oklahoma for resolution in that jurisdiction; and the Court will RESERVE RULING on the other Motion to Quash, involving the DARP/Hendren claims (Doc. 72), until after a separate hearing on the matter.

         I. BACKGROUND

         A. Jurisdictional Issues and Preliminary Rulings

         This case is a purported class action that was originally filed in the Circuit Court of Benton County, Arkansas, on October 23, 2017. See Doc. 8. Defendant Simmons removed the case to this Court on November 6, 2017 (Doc. 1), asserting federal jurisdiction under the Class Action Fairness Act ("CAFA"). In order for CAFA jurisdiction to apply: (1) the aggregate amount in controversy must exceed $5, 000, 000; (2) the putative class must contain more than 100 members; and (3) at least one plaintiff and one defendant must be citizens of different states. 28 U.S.C. § 1332(d)(2).

         Here, the two Plaintiffs, Mark Fochtman and Shane O'Neal, and Defendants Simmons and Hendren, are all Arkansas citizens. Defendants CAAIR and DARP are believed to be citizens of Oklahoma.[1] CAAIR[2] has entered into agreements with Arkansas and Oklahoma state courts to provide residential drug, alcohol, and counseling treatment to individuals on probation. Residents of CAAIR agree to work in exchange for room, board, and treatment. They work at Simmons' facilities in Arkansas, Oklahoma, and Missouri, pursuant to a contract between CAAIR and Simmons. Each day, CAAIR's residents are transported to work at Simmons and then returned to CAAIR when the work day ends. As for DARP, [3] it provides services very similar to CAAIR's, under agreements made with state courts in the region. Instead of contracting with Simmons for labor, DARP contracts with Hendren and transports DARP's residents to work at Hendren's processing facilities in Decatur, Arkansas.

         As for the Plaintiffs, Mr. Fochtman is a citizen of Arkansas who currently resides in Washington County. He agreed to enter CAAIR as a condition of probation and spent six months at CAAIR's facility near Jay, Oklahoma. When he first arrived at CAAIR, he was assigned to work at a Simmons poultry processing plant, and then later, he was assigned to work at a Simmons chicken farm. According to the Complaint, at some point in the course of the same state-court probation matter, Mr. Fochtman transferred from CAAIR to DARP. Because of the transfer, he stopped working at Simmons and began working at Hendren instead. As for Plaintiff O'Neal, he resided only at CAAIR and worked only for Simmons during his probationary term. Plaintiffs have brought individual and class-action claims against the Defendants. All of these causes of action arise out of Arkansas law, not federal law.

         As for the amount in controversy, Simmons has maintained since the time of removal that the damages in the case exceed $5, 000, 000. Plaintiffs have been skeptical of this figure, and their skepticism prompted them to file a Motion to Remand (Doc. 54) on December 6, 2017, in which they contested CAFA jurisdiction, but only with respect to the amount in controversy.

         On January 16, 2018, the Court held a hearing on all pending motions, including the Motion to Remand, and it was made clear to all in attendance that Plaintiffs had changed their minds about contesting the amount in controversy. In open Court, Plaintiffs' counsel conceded that the amount in controversy did, in fact, exceed $5, 000, 000, and that CAFA jurisdiction was therefore appropriate. All other parties were also in agreement that CAFA's jurisdictional requirements had been satisfied as of the time of removal. See Simmons' Response to Motion to Remand, Doc. 76 (establishing that the amount in controversy exceeds $5, 000, 000); CAAIR's Response to Motion to Remand (Doc. 77) (agreeing with Simmons); Hendren's Reply in Support of Motion to Sever (Doc. 39) (admitting that removal based on CAFA jurisdiction was proper, but arguing in favor of remanding certain claims based on defined exceptions to CAFA jurisdiction); DARP's Brief in Support of Motion to Sever and Dismiss (Doc. 41) (agreeing with Hendren). Accordingly, the Court finds that Plaintiffs' Motion to Remand (Doc. 54) is now MOOT, and Simmons' removal of the case to this Court, based on CAFA jurisdiction, was proper.

         The next Issue that was initially contested, but to which the parties now appear in agreement, is whether the claims should be severed into two separate cases. As previously mentioned, Mr. Fochtman has individual claims pending against all Defendants, while Mr. O'Neal has claims against only CAAIR and Simmons. Two distinct classes could easily be carved out: one involving individuals who resided at CAAIR and worked for Simmons, and the other involving individuals who resided at DARP and worked for Hendren. All parties are in agreement that individuals residing at CAAIR never worked for Hendren, and individuals residing at DARP never worked for Simmons. CAAIR contracted for labor only with Simmons, and DARP contracted for labor only with Hendren. Although certain putative class members, such as Mr. Fochtman, may be members of both classes, the parties agree that severance of the CAAIR/Simmons claims from the DARP/Hendren claims is appropriate pursuant to Rule 21, and also, that severance will be simpler and more cost-efficient from a judicial-management point of view. Accordingly, as no party objects to severance, the Court finds, in its discretion, that the case should be severed into two separate cases. Hendren's Motion to Sever and Remand (Doc. 20) is GRANTED IN PART, with respect to severance, and DENIED IN PART, with respect to remand-which will be explained in further detail below; DARP's Motion to Sever and Dismiss, or in the Alternative, to Sever and Remand (Doc. 40) is GRANTED IN PART, with respect to severance, and DENIED IN PART, with respect to remand-which will be explained below; and CAAIR's Motion to Sever Claims (Doc. 78) is GRANTED.

         Now that the matter of the Court's federal jurisdiction pursuant to CAFA has been resolved, and the claims involving CAAIR/Simmons and DARP/Hendren have been severed, the only issues remaining for the Court at this juncture are: (1) whether the claims involving CAAIR/Simmons should be transferred to another jurisdiction, where similar claims are now pending, and (2) whether the claims involving DARP/Hendren should be remanded to state court, pursuant to a discretionary finding by the Court that an express exception to CAFA jurisdiction exists. As the issues of transfer and remand remain unresolved in the pending Motions, the Court will confine its discussion to only those issues.[4] The Court's decisions will impact the following Motions: (1) Simmons' Motion to Dismiss or Transfer Venue (Doc. 52); (2) Hendren's Motion to Sever and Remand (Doc. 20); and (3) DARP's Motion to Sever and Dismiss, or in the Alternative, to Sever and Remand (Doc. 40). As will be explained, the Court will GRANT Simmons' request to transfer the CAAIR/Simmons ...


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