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McCracken v. Verisma Systems, Inc.

United States District Court, W.D. New York

May 15, 2017

ANN McCRACKEN, JOAN FARRELL, SARAH STILSON, KEVIN McCLOSKEY, CHRISTOPHER TRAPATSOS, and KIMBERLY BAILEY, as individuals and as representatives of the classes, Plaintiffs,


          HON. MICHAEL A. TELESCA United States District Judge.


         This is a putative class action by Ann McCracken, Joan Farrell, Sara Stilson, Kevin McCloskey, Christopher Trapatsos, and Kimberly Bailey (collectively, “Plaintiffs”) against Verisma Systems, Inc. (“Verisma”), Highland Hospital (“HH”), Strong Memorial Hospital (“SMH”), and the University of Rochester (“UR”)[1]based on these entities' systematic overcharging of patients who requested copies of their medical records, in violation of New York Public Health Law (“NYPHL”) § 18.[2] Plaintiffs allege that Verisma and the Rochester Healthcare Defendants ignored the restriction in the statute that limits the amount that may be charged to “a reasonable charge . . . not exceeding the costs incurred, ” and not to exceed $0.75 per page, to produce the records. Instead, Plaintiffs allege, Verisma and the Rochester Healthcare Defendants imposed an across-the-board, uniform charge of $0.75 per page for all copies of medical records, even those produced electronically, in excess of their actual costs and in violation of NYPHL § 18. Additional facts will be set forth infra as necessary to the Court's resolution of Verisma's summary judgment motion.


         Before the Court are various motions. Plaintiffs have filed a Motion to Seal Documents (Dkt #70-1 through 70-14), and a Motion to Certify Class (Dkt #71), along with a supporting Memorandum of Law (Dkt #72) and supporting Declarations (Dkt #73 through #82). In response, Verisma filed a combined Motion for Partial Summary Judgment and Response in Opposition to the Motion to Certify Class (Dkt #84-1 through #84-15). The “Rochester Healthcare Defendants”) filed a Response in Opposition to the Motion to Certify Class (Dkt #85-1 through #85-3). Plaintiffs filed a Reply (Dkt #88) in further support of their Motion to Certify Class. Plaintiffs also filed a Statement of Facts in Opposition to Verisma's Motion for Summary Judgment (Dkt #90, replaced by Dkt #94), a Memorandum of Law in Opposition (Dkt #91, replaced by Dkt #95), and a supporting Declaration (Dkt #92). The Rochester Healthcare Defendants filed a Response in Opposition. Verisma filed a Reply (Dkt #97) in further support of its Motion for Summary Judgment.

         For the reasons discussed below, Verisma's Motion for Summary Judgment is denied. The Court will rule on Plaintiffs' Motion for Class Certification and Motion to Seal Documents in separate Decisions and Orders.


         I. This Court is Not Required to Decline Jurisdiction

         In 2005, Congress passed the Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4 (“CAFA”). Verisma seeks summary judgment on the basis that CAFA mandates that this Court decline to exercise subject matter jurisdiction over this lawsuit.

         A. CAFA

         CAFA gives federal courts subject matter jurisdiction over “class actions” if the suit meets certain requirements, namely, that the “‘matter in controversy exceeds the sum or value of $5, 000, 000, ' the aggregate number of proposed class members is 100 or more, and any class member is a citizen of a state different from any defendant.” Vodenichar v. Halcon Energy Properties, Inc., 733 F.3d 497, 503 (3d Cir. 2013) (citing 28 U.S.C. § 1332(d)(2), (d)(2)(A), (d)(5)(B)). Thus, CAFA affords federal courts jurisdiction over class actions “even in the absence of complete diversity between the parties, except where the ‘controversy is uniquely' connected to the state in which the action was originally filed.” Id. (citation omitted). To further the goal of excluding cases with a “unique[ ]” connection to the forum state, CAFA contains two “mandatory exceptions[, ]” id., to the exercise of federal subject matter jurisdiction over class actions-the “local controversy” exception, see 28 U.S.C. § 1332(d)(4)(A), and “home state” exception, see id. § 1332(d)(4)(B). “These exceptions are designed 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.” Hart v. FedEx Ground Package System Inc., 457 F.3d 675, 681-82 (7th Cir. 2006) (citing Pub.L. 109-2, § 2, Feb. 18, 2005, 119 Stat. 4). The party seeking to invoke one of these exceptions “bears the burden of proving by a preponderance of the evidence that the exception applies.” Vodenichar, 733 F.3d at 503 (citing Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 153-54 (3d Cir. 2009) (collecting circuit authority)).

         B. The Court Need Not Address the Timeliness of Verisma's Motion

         CAFA “imposes no time limit” on a motion under Section 1332(d). Hart, 457 F.3d at 682. Nevertheless, Plaintiffs argue that Verisma has waived its right to assert entitlement to an exception under CAFA because its motion was not filed within a “reasonable time.” Gold v. New York Life Ins. Co., 730 F.3d 137, 141 (2d Cir. 2013). In Gold, the Second Circuit agreed with the district court, as well as the Seventh and Eighth Circuits, that the “home state exception was not jurisdictional because the ‘“decline to exercise”' language ‘“inherently recognizes [that] the district court has subject matter jurisdiction”' but must actively decline to exercise it if the exception's requirements are met.”'” Id. (quoting Gold v. New York Life Ins. Co., No. 09 Civ. 3210(WHP), 2012 WL 1674300, at *2 (S.D.N.Y. May 14, 2012) (quoting Graphic Communications v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir. 2011); citing Morrison v. YTB Int'l, Inc., 649 F.3d 533, 536 (7th Cir. 2011)). The Second Circuit further agreed with the plaintiffs “that if the exception is not jurisdictional, it must be raised within a reasonable time, ” id., and if the defendant fails to do so, it “thereby waive[s] the exception.” Gold, 730 F.3d at 141. The Second Circuit reviews a district court's determination as to whether a CAFA motion was brought within a reasonable time for abuse of discretion. Id. at 142 (citation omitted).

         Both Plaintiffs and Verisma urge that Gold supports their respective positions. The Court has assumed arguendo that Verisma's motion asserting a CAFA defense was made within a reasonable time. As discussed further below, the Court finds that Verisma has not shouldered its burden of proving by a preponderance of the evidence that any of the mandatory CAFA exceptions apply.

         C. The “Home State” Exception Does Not Apply

         The home state exception provides that “[a] district court shall decline to exercise jurisdiction . . . over a class action in which . . . [1] two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the [2] primary defendants, are citizens of the State in which the action was originally filed.” 28 U.S.C. § 1332(d)(4)(B). Plaintiff does not dispute that the first element of the home state exception is met, but argues that Verisma, which is a non-domiciliary of New York, is the “primary defendant.” Therefore, the question for the Court to resolve is whether the “primary defendants” in this case are all New York citizens.

         “Despite burgeoning CAFA jurisprudence, few courts have opined on the home-state controversy requirement with respect to the definition of ‘primary defendants'.” Anthony v. Small Tube Mfg. Corp., 535 F.Supp.2d 506, 515 (E.D. Pa. 2007) (quoting 28 U.S.C. § 1332(d)(4)(B)). The Second Circuit has not weighed in on this discussion. “However, as ‘evident from the statute's use of the phrase “the primary defendants” rather than “a primary defendant”, “the plain language of the statute requires remand only when all of the primary defendants are residents of the same state in which the action was ...

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