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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

Complaints Still Matter – Pleadings, Primary Defendants, and Local Controversies

Posted in Motions Practice

 Daniel Villalpando sued three companies–Exel Direct, Inc., Deutsche Post DHL, and DHL Express (USA), Inc.—in California state court for underpaying him and drivers like him by misclassifying them as independent contractors. The defendants removed the case to the Northern District of California under the auspices of the Class Action Fairness Act. Mr. Villalpando moved to remand the case, citing the home state exception (which keeps cases where two thirds of the class members and the primary defendants are from the same state in state court) and the local controversy exception (which allows remand where the nature of the controversy is confined to a single state). The defendants opposed, pointing out that Deutsche Post DHL was based in Germany, not California. Mr. Villalpando countered that Deutsche Post DHL was not a "primary defendant." Similarly, he argued that the local controversy applied because of California’s "unique set of laws" governing employment relationships.

In its opinion in Villalpando v. Exel Direct, Inc., 2012 U.S. Dist. LEXIS 160631 (N.D. Cal. Nov. 8, 2012), the court found in favor of the Defendants on both arguments. Mr. Villalpando had asserted the same claims against all three defendants, so if one of them was "primary," all of them were. And, since the defendants were vulnerable to the same kind of claims in other states, the controversy was not "truly local."

So what can defense lawyers learn from this, aside from the intricacies of the home state and local controversy exceptions? The complaint still matters. The defendants’ arguments, and the court’s analysis, were all based on what Mr. Villalpando had actually pled. He was the one who identified all three companies in each claim. And he was the one who invoked the specific, not-that-unique California laws. When the plaintiffs’ arguments diverge from their pleadings, it is still worthwhile to point out what they pled when they had the time and the inclination.