## Facts

- Patients and relatives brought a putative class action arising from deaths and injuries at Memorial Medical Center in New Orleans during Hurricane Katrina.
- Tenet Healthsystem Memorial Medical Center, Inc. owned and operated the hospital; LifeCare leased and operated an acute-care facility on the seventh floor.
- Plaintiffs alleged Memorial failed to design and maintain the premises to avoid loss of power and failed to develop and implement an evacuation plan; LifeCare was also alleged to have failed to plan and implement evacuation.
- The petition asserted state-law negligence and intentional misconduct and included federal statutory allegations (including EMTALA “reverse patient dumping”) and allegations characterized as “involuntary euthanization.”
- The asserted harms occurred at the single New Orleans hospital where the patients were located during the storm.

## Issues

1. Whether the class action, removed under the Class Action Fairness Act (CAFA), fell within CAFA’s mandatory “local controversy” exception, requiring the federal court to decline jurisdiction and remand.
2. Whether Memorial qualified as the in-state “significant defendant” under 28 U.S.C. § 1332(d)(4) because significant relief was sought from it and its alleged conduct formed a significant basis for the claims, and whether the remaining statutory elements (local injuries, class citizenship, and absence of similar recent class actions) were satisfied.

## Decision

- The Fifth Circuit affirmed the district court’s order remanding the action to Louisiana state court.
- The court held that CAFA’s local controversy exception applied because Memorial was a Louisiana citizen and a central defendant against whom substantial, case-defining allegations were directed.
- The court found the alleged injuries and conduct were geographically concentrated in Louisiana, arising from events at a single New Orleans hospital during Hurricane Katrina.
- The court agreed that the proposed class was sufficiently composed of Louisiana citizens to meet the exception’s citizenship requirement and that the remaining statutory conditions for mandatory abstention were met.

## Legal Principles

- Under CAFA, federal courts must decline jurisdiction and remand when the mandatory local controversy requirements of 28 U.S.C. § 1332(d)(4) are met, even if CAFA’s general jurisdictional thresholds are otherwise satisfied.
- A defendant qualifies as a “significant” in-state defendant when the complaint seeks significant relief from it and alleges conduct that forms a significant basis for the asserted claims, rather than treating it as peripheral.
- The local controversy analysis focuses on the locality of the alleged injuries and conduct, the citizenship composition of the proposed class, and whether similar class actions against the defendants were recently filed.
- CAFA’s expansion of federal jurisdiction is limited by statutory exceptions designed to keep genuinely local class actions in state court.

## Conclusion

The Fifth Circuit held that the Katrina-related class action was a local controversy under CAFA because a Louisiana hospital was a significant in-state defendant and the alleged injuries were confined to a single Louisiana facility, requiring remand to state court.


Preston v. Tenet Healthsystem Memorial Medical Ctr., Inc., 485 F.3d 804 (5th Cir. 2007)