Sudholt v. Country Mutual Ins. Co.

Dist. Ct. erred in denying plaintiffs-current and former policyholders’ motion for remand back to state court their four claims, alleging breach of contract, Illinois Consumer Fraud and Deceptive Practices Act, unjust enrichment and breach of fiduciary duty against defendants-mutual insurance company and its current and former Board members and officers, where defendants had removed said claims to federal court under Class Action Fairness Act (CAFA). Instant case qualified for internal affairs exception to removal under section 1332(d)(9)(B) of CAFA, where: (1) each claim essentially alleged that defendants accumulated and retained excess surplus from policy premiums  of $3.2 billion and in turn failed to provide plaintiffs with insurance policies at cost, and (2) allegations of complaint satisfied said exemption, where plaintiffs alleged that defendants exercised discretion to set capital levels and to distribute dividends in impermissible ways. Ct. further found that home-state exemption to removal under CAFA also applied, where record showed that: (1) two-thirds of proposed class members and 45 out of 46 defendants were citizens of Illinois; and (2) sole defendant, who was insurance company’s chief fiscal officer and citizen of Massachusetts, was not “primary defendant,” or “real target” of plaintiffs’ lawsuit.