Valdez v. Metropolitan Property & Casualty Insurance (867 F. Supp. 2d 1143, 2012)

MEMORANDUM OPINION AND ORDER

JAMES 0. BROWNING, District Judge.

THIS MATTER comes before the Court on the Plaintiffs’ Memorandum Motion to Remand to State Court for Lack of Federal Jurisdiction, filed June 24, 2011 (Doc. 55)(“Motion”). The Court held a hearing on March 7, 2012. The primary issues are: (i) whether the Court has subject-matter jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(4)(A) (“CAFA”) or the traditional diversity-jurisdiction analysis, under 28 U.S.C. § 1332; and (ii) if the Court has jurisdiction, whether the Court should decline to exercise that jurisdiction. The Court will deny the Motion. The Court has jurisdiction under CAFA, and no CAFA exception applies. Additionally, the Court concludes that there is no reason to decline to exercise that jurisdiction, because no party challenges a final state court judgment, there is no pending state proceeding, and federal review of this matter will not interfere with New Mexico’s ability to oversee its laws regulating insurance.

FACTUAL BACKGROUND

All of the Plaintiffs are New Mexico residents. See Petition for Declaratory Judgment and Injunctive Relief ¶¶ 1-6, at 1-2 (dated April 15, 2011), filed June 10, 2011 (Doc. 4)(“Complaint”). Defendants Metropolitan Property & Casualty Insurance Company (“Metropolitan Casualty”), Colorado Casualty Insurance Company (“Colorado Casualty”), Pacific Indemnity Insurance Company (“Pacific Indemnity”), The Travelers Insurance Company d/b/a The Travelers Home & Marine Insurance Company (“Travelers Insurance”), 21st Century Insurance Company (“21st Century Insurance”), and Arnica Mutual Insurance Company (“Arnica Insurance”) are foreign insurance companies authorized to issue automobile liability insurance policies within the State of New Mexico in compliance with all the rules and regulations promulgated by the Superintendent of Insurance as well as the applicable New Mexico statutes and case law. See Complaint ¶¶ 10-16, at 3-4. Defendant Desert Mountain Agency (“Desert Mountain”) is a New Mexico corporation authorized to sell automobile insurance policies in New Mexico. See Complaint ¶¶ 17-18, at 4-5.

Plaintiff Michael Valdez is a named insured in an insurance policy with Metropolitan Casualty, policy number 045192877-3, whose policy provides uninsured motorist coverage with limits that are less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 29, at 7. Plaintiff Kim Dressel is a named insured in an insurance policy with Pacific Indemnity, policy number 12714973-03, whose policy provides uninsured motorist coverage with limits that are less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 31, at 7. Plaintiff Dress Construction, Inc. is a named insured in an insurance policy with Colorado Casualty, policy number CBP08431076, whose policy provides uninsured motorist coverage with limits that are less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 33, at 8. Plaintiff Freddie Sue Gatewood is a named insured in an insurance policy with Travelers Insurance, policy number 979038Q62-1011, whose policy provides uninsured motorist coverage with limits that are less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 35, at 8. Plaintiff Mary Jo Vaughn is a named insured in an insurance policy with 21st Century Insurance, policy number 979038Q62-1011, whose policy provided uninsured motorist coverage with limits that were less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 38, at 9. Plaintiff Marcus Perkins is a named insured in an insurance policy with Arnica Insurance, policy number 910730-20FF, whose policy provides uninsured motorist coverage with limits that are less than the relevant liability limits in the same policy without a valid written rejection of equal uninsured motorist coverage. See Complaint ¶ 39, at 9.

PROCEDURAL BACKGROUND

The Plaintiffs initiated this action by filing the Complaint against six insurance companies and one New Mexico Insurance Agency in the First Judicial District Court, Santa Fe County, State of New Mexico. The Plaintiffs allege that the Defendants have failed to comply with the Supreme Court of New Mexico’s decisions in Progressive Northwestern Insurance Co. v. Weed Warrior Services, 149 N.M. 157, 245 P.3d 1209 (2010), and in Jordan v. Allstate Insurance Co., 149 N.M. 162, 245 P.3d 1214 (2010), because they failed to provide the Plaintiffs with full and adequate information about their legal options, at the point of sale, when buying uninsured motorist coverage. See Complaint ¶¶ 7, 46, at 2, 10. The Plaintiffs allege:

In Jordan and Weed Warrior, the Supreme Court [of New Mexico] established, as a matter of New Mexico public policy, the following retroactive rules regulating all MFRAf] policies and [uninsured or underinsured motorist] coverages issued in New Mexico since May 20, 2004: a) the purchase of less than equal limits [uninsured or underinsured motorist] coverage constitutes a “rejection” by the insured of the available equal limited [uninsured or underinsured motorist] coverage; b) an insured’s rejection of [uninsured or underinsured motorist] coverage or equal limits [uninsured or underinsured motorist] coverage under a New Mexico MFRA policy must be in writing and must be attached to, endorsed upon, or otherwise made a part of the MFRA/[uninsured or underinsured motorist] policy; c) every written rejection of [uninsured or underinsured motorist] coverage in New Mexico must include a “menu” showing each vehicle insured, each limit of [uninsured or underinsured motorist] coverage available for purchase for that vehicle (up to the policy’s limits for that type of coverage whether [uninsured or underinsured motorist] or [property damage]), and the premium prices for each available limit of [uninsured or underinsured motorist] coverage for each vehicle (hereinafter “the Jordan menu”); d) if an insurer does not, or did not after May 20, 2004, comply with these requirements for a written rejection, then any [uninsured or underinsured motorist] policy issued in New Mexico that provides, or provided, less than equal limits [uninsured or underinsured motorist] coverage must be retroactively reformed as a matter of law to provide equal limits [uninsured or under-insured motorist] coverage regardless of the payment of any premium or the intent of the parties so that all similarly situated insureds will be treated equally.

Complaint ¶ 27, at 6-7. The Plaintiffs assert that the Defendants are violating a retroactive duty to provide them with “full and complete information about all [uninsured or underinsured motorist] coverage available to them.” Complaint ¶ 42, at 9-10. The Plaintiffs assert that the Defendants engaged in “unconscionable trade practices” under the New Mexico Unfair Trade Practices Act, N.M.S.A.1978, § 57-12-2 to 58-12-10 (“UTPA”). Complaint ¶ 48, at 11. They allege that the Defendants have issued and renewed thousands of policies which did not comply with Jordan v. Allstate Insurance Co. and that none of the Defendants will comply with the Supreme Court of New Mexico’s mandate unless ordered to do so. See Complaint ¶¶ 50, 52, at 11. With respect to the class allegations, the Plaintiffs assert that each of the Defendants has faded: (i) “to affirmatively offer their insured equal limits [uninsured or underinsured motorist] coveragef — together with a Jordan menu[ — ]at the time of the sale of the policy”; (ii) “to obtain written rejections of all [uninsured or underinsured motorist] coverage or of equal limits [uninsured or underinsured motorist] coverage as retroactively mandated by Jordan”; (iii) “to unilaterally and retroactively reform every ... policy issued, or renewed, with less than equal limits [uninsured or underinsured motorist] coverage as retroactively mandated by Jordan ”; and (iv) “to unilaterally notify each insured to whom [a] ... policy was issued providing no [uninsured or underinsured motorist] coverage or less than equal limits [uninsured or underinsured motorist] coverage of their entitlement to have such policies reformed.” Complaint ¶ 68, at 15-16.

The Plaintiffs request the following relief against the insurer Defendants:

a) a Declaratory Judgment retroactively reforming all the [uninsured or underinsured motorist] policies issued in New Mexico to Plaintiffs and the class members since May 20, 2004, so as to provide equal limits [uninsured or underinsured motorist] coverage, where the policy did not already do so, without the payment of any premiums by the class members and regardless of the intent of the parties; b) injunctive relief ordering each Defendant to immediately notify all its insureds who were issued less than equal limits [uninsured or underinsured motorist] policies since May 20, 2004, that their policies have been retroactively reformed to provide equal limits [uninsured or underinsured motorist] coverage together with an explanation of the effect of this retroactive reformation that can be easily understood by the hypothetical average insured — including notice to seek independent legal advice or contract the Defendant if they have any questions about the legal impact of this retroactive reformation of their MFRA/[uninsured or underinsured motorist] policies, and especially if any insureds have been involved in an auto accident since May 20, 2004; and c) injunctive relief ordering each Defendant to adopt and immediately implement a [uninsured or underinsured motorist] selection form for use in New Mexico that fully and substantially complies with the retroactive requirements of Jordan.

Complaint ¶ 1, at 18. The Plaintiffs also separately ask for the following relief against Desert Mountain:

For the Court’s Order granting injunctive relief pursuant to the UTPA and/or [New Mexico Unfair Claims Practices Act, N.M.S.A.1978, § 59A-16-20] and/or the common law in equity ordering Defendant Agent in the future to affirmatively provide all applicants for a New Mexico MFRA policy with a written Jordan menu at the time the original policy is sold and again whenever one of Agent’s insureds requests a change in his or her MFRA policy including, but not limited to, a change in liability or [uninsured or underinsured motorist] limits or the addition of a vehicle.

Complaint ¶ 2, at 19.

1. Notice of Removal.

On June 10, 2011, the Defendants filed their Notice of Removal. See Doc. 1. They assert that removal is based upon CAFA and, alternatively, the diversity of citizenship of the parties pursuant to 28 U.S.C. § 1332(a). See Notice of Removal ¶ 3, at 3. The Defendants assert that the Court has jurisdiction pursuant to CAFA, because the proposed class: (i) has at least 100 putative class members; (ii) the class asserts an aggregate amount in controversy of $5,000,000.00 or more; (iii) minimal diversity exists, because any one of the Plaintiffs is a citizen of a State different from any Defendant; and (iv) no CAFA exceptions apply. See Notice of Removal ¶ 4, at 3 (citing 28 U.S.C. § 1332(d)). They assert that the Court likewise has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), because, among the Defendants, six are foreign insurance carriers writing automobile policies in New Mexico and the seventh — Desert Mountain — does not defeat diversity, despite being an in-state Defendant, because the Plaintiffs have failed to assert a valid cause of action against Desert Mountain. See Complaint ¶ 5, at 3.

The Defendants argue that CAFA was intended to “expand significantly the jurisdiction of the federal courts over class action lawsuits as well as to limit what were seen as typical abuses of the class action system at the state level.” Notice of Removal ¶ 14, at 5 (citing Kearns v. Ford Motor Co., No. 05-5644, 2005 WL 3967998, at *14 (C.D.Cal. Nov. 21, 2005)). The Defendants contend that there is minimal diversity, because the Plaintiffs are citizens of New Mexico which are completely diverse from six of the seven Defendants: (i) Metropolitan Casualty is incorporated under the laws of and has its principal place of business in Rhode Island; (ii) Colorado Casualty is incorporated under the laws of New Hampshire and maintains its principal place of business in Massachusetts; (iii) Travelers Insurance is incorporated under the law of and maintains its principal place of business in Connecticut; (iv) 21st Century Insurance is incorporated under the laws of New York and maintains its principal place of business in Delaware; (v) Arnica Insurance is incorporated under the laws of and maintains its principal place of business in Rhode Island; and (vi) Pacific Indemnity is incorporated under the law of Wisconsin and maintains its principal place of business in New Jersey. See Notice of Removal ¶¶ 15-16, at 6. They assert that the proposed class has at least 100 members, because the putative class for Colorado Casualty alone is approximately 4,799 policyholders — individuals whose policies were issued on or after May 20, 2004 where uninsured motorist coverage was less than the policy limits or rejected in its entirety. See Notice of Removal ¶ 20, at 7 (citing Affidavit of Brigitte Coulson ¶¶ 9-10, at 2 (executed June 9, 2011), filed June 10, 2011 (Doc. 21)(“Coulson Aff.”)). They contend that the putative class for 21st Century Insurance is 4,882 policyholders. See Notice of Removal ¶ 20, at 7 (citing Declaration of Jessica Schmidt ¶ 10, at 2-3 (executed June 10, 2011), filed June 10, 2011 (Doc. 14)(“Schmidt Decl.”)). The Defendants also note that the Complaint alleges that the members of the putative class are “so numerous that joinder of all class member policyholders is impracticable.” Notice of Removal ¶ 19, at 7 (citing Complaint ¶ 70, at 16).

The Defendants assert that they need only “make it possible ” that the threshold is satisfied and that the United States Court of Appeals for the Tenth Circuit considers the higher of the “value to the plaintiff or the cost to the defendant” when determining the amount in controversy. Notice of Removal ¶¶ 23-24, at 8-9 (emphasis original) (citing Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977); McPhail v. Deere & Co., 529 F.3d 947, 955 (10th Cir.2008)). They further assert that the amount in controversy under CAFA is determined by aggregating the claims of putative class members. See Notice of Removal ¶ 27, at 10 (citing 28 U.S.C. § 1332). The Defendants argue that the aggregate increase in insurance coverage which the putative class seeks exceeds $1.5 billion. See Notice of Removal ¶¶ 31-33, at 13-14 (citing Coulson Aff. ¶ 11, at 2-3; Schmidt Decl. ¶ 11, at 3). The Defendants also contend that they can aggregate lost insurance premiums to meet the amount in controversy requirement, see Notice of Removal ¶ 36, at 14 (citing Toller v. Sagamore Ins. Co., 558 F.Supp.2d 924 (E.D.Ark.2008), and that applying the lost premium method the amount in controversy is at least $6.94 million, see Notice of Removal ¶ 39-40, at 16 (citing Coulson Aff. ¶ 12, at 3); Schmidt Decl. ¶ 16, at 5; Affidavit of Jodi Ebersole in Support of Removal ¶ 7, at 3 (executed June 10, 2011), filed June 10, 2011 (Doc. 17)(“Ebersole Aff.”); Affidavit of Benjamin J. Mellino in Support of Notice of Removal ¶ 8, at 3 (executed June 10, 2011), filed June 10, 2011 (Doc. 16)(“Mellino Aff.”)). They argue that aggregate claims for class members seeking additional uninsured motorist payments could cost approximately $1.38 million. See Notice of Removal ¶ 44, at 18 (citing Declaration of Angelo Palazzolo ¶ 7, at 3 (executed June 10, 2011), filed June 10, 2011 (Doc. 19)(“Palazzolo Decl.”); Schmidt Decl. ¶ 17, at 5). They also assert that the administrative costs related to implementing the injunctive relief requested would be more than $493,358.00. See Notice of Removal ¶ 46, at 18 (citing Coulson Aff. ¶ 13, at 3; Schmidt Decl. ¶ 19, at 6; Mellino Aff. ¶ 10, at 3; Palazzolo Decl. ¶ 14, at 5).

The Defendants argue that no CAFA exceptions apply and that the Plaintiffs bear the burden of establishing that a statutory exception applies. See Notice of Removal ¶ 48, at 19 (citing Coffey v. Freeport-McMoran Copper & Gold, Inc., 623 F.Supp.2d 1257, 1263 (W.D.Okla.) aff'd, 581 F.3d 1240 (10th Cir.2009)). The Defendants assert that they, out of an abundance of caution, will address the “local controversy exception,” which applies only if at least one local defendant — citizen of the forum state — is a defendant: (i) “from whom significant relief is sought by members of the plaintiff class”; and (ii) “whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class.” Notice of Removal ¶ 49, at 19-20 (emphasis original) (citing 28 U.S.C. § 1332(d)(4)(A)). The Defendants argue that only four of the eighty-two paragraphs in the Complaint are directed towards Desert Mountain, that the relief sought against it is not significant, and that its conduct does not form a significant basis of the claims asserted. See Notice of Removal ¶¶ 50-54, at 21-22. They similarly assert that the “home state exception” does not apply, because “the primary defendants” are not New Mexico citizens. Notice of Removal ¶ 55, at 22-23 (citing 28 U.S.C. § 1332(d)(4)(B); Anthony v. Small Tube Mfg. Corp., 535 F.Supp.2d 506, 515 (E.D.Pa.2007)).

Finally, the Defendants assert that, under a traditional diversity jurisdiction analysis, the Court also has subject-matter jurisdiction, because the Court can sever Desert Mountain from the case. The Defendants argue that the Tenth Circuit has recognized that courts “frequently employ Rule 21 to preserve diversity jurisdiction over a ease by dropping a non-diverse party if his presence is not required under Rule 19.” Notice of Removal ¶ 62, at 25 (quoting Miller v. Leavenworth-Jefferson Elec. Coop., Inc., 653 F.2d 1378, 1382 (10th Cir.1981)). They contend that Desert Mountain is not a necessary party, because: (i) it is the only agency named; (ii) it only has a relationship with one insurer — Travelers Insurance; and (iii) severing Desert Mountain would not prevent the Plaintiffs from obtaining the requested declaratory relief. See Notice of Removal ¶¶ 64-65, at 25-26. The Defendants assert that severing Desert Mountain will not prejudice the Defendants or the Plaintiffs. See Notice of Removal ¶ 69, at 27. In the alternative, the Defendants argue that the Court could sever or dismiss Desert Mountain on the basis of fraudulent joinder, because the Plaintiffs failed to state a claim against Desert Mountain. See Notice of Removal ¶ 77, at 30. They further assert that the Court could sever or dismiss Desert Mountain on the basis of fraudulent misjoinder, under rule 20, because the claims against Desert Mount have no relation to the other claims. See Notice of Removal ¶¶ 78-84, at 31-32.

2. Answers to the Complaint.

After removing the case to federal court, three of the insurer Defendants filed answers to the Complaint. 21st Century Insurance lists several affirmative defenses, including that: (i) the Plaintiffs fail to state a claim upon which relief can be granted; (ii) the Plaintiffs lack standing to pursue, for themselves or on behalf of the putative class, the relief sought; (iii) the Plaintiffs lack privity of contract with the purported entity “21st Century Insurance Company,” which does not exist; and (iv) the Plaintiffs’ claims, to the extent they ever existed, are moot. Answer of Defendant 21st Century North America Insurance Company ¶ 85, at 13, filed June 16, 2011 (Doc. 35)(“21st Century Answer”). Metropolitan Casualty also asserts several affirmative defenses, including that: (i) the Complaint fails to state a claim upon which relief may be granted; (ii) the Plaintiffs lack standing to pursue, for themselves or on behalf of the putative class, the relief sought; (iii) the Plaintiffs’ claims, to the extent any claims ever existed, are moot; (iv) the applicable statute of limitations may bar the Plaintiffs’s claims, in whole or in part; and (v) the doctrine of laches may bar the Plaintiffs’ claims, in whole or in part. See Answer of Defendant Metropolitan Property and Casualty Insurance Company at 12-13, filed June 17, 2011 (Doc. 43)(“Metropolitan Casualty Answer”). Pacific Indemnity raises the following affirmative defenses: (i) that Dressel’s insurance policy with Pacific Indemnity, at all relevant times, provided equal limits uninsured motorist coverage; (ii) that the Complaint fails to state a cause of action, because Dressel has not been in an automobile accident with an uninsured motorist in which he sought and was denied equal limits uninsured motorist coverage; (iii) that the class alleged fails to satisfy the numerosity requirement; (iv) that the applicable statute of limitations bar the Plaintiffs’s claims; (v) that Pacific Indemnity breached no duty to Dressel; (vi) that the doctrine of unjust enrichment bars any damages the Plaintiffs seek; (vi) that Dressel’s claims, to the extent that they ever existed, are moot; (vii) the doctrine of laches bars Dressel’s claims; and (viii) that the Plaintiffs have not met the requirements of rule 23 of the Federal Rules of Civil Procedure. See Defendant Pacific Indemnity Insurance Company’s Answer to Plaintiffs’ Petition for Declaratory Judgment and Injunctive Relief at 16-17, filed July 14, 2011 (Doc. 68)(“Pacific Indemnity Answer”). These Defendants have not raised any constitutional challenges to the Supreme Court of New Mexico’s decision in Jordan v. Allstate Ins. Co. or questioned that it is governing law in New Mexico.

3. Motion to Remand.

The Plaintiffs move the Court to remand this case to state court for lack of federal jurisdiction. See Motion at 1. The Plaintiffs contend that the Notice of Removal fails to confer jurisdiction upon the Court, because there is a lack of complete diversity of citizenship as 28 U.S.C. § 1332 requires, or fraudulent joinder. See Motion at 1. In support of this argument, the Plaintiffs argue that: (i) the Notice of Removal fails to show that the CAFA applies; (ii) the Plaintiffs seek equitable relief only — and no monetary relief — to complete and enforce the Supreme Court of New Mexico’s retroactive mandate in Jordan v. Allstate Ins. Co.; and (iii) jurisdiction would violate the well-established rule in Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995), which establishes that the Court should not exercise jurisdiction where such exercise would amount to unnecessary interference with the orderly and comprehensive disposition of state court litigation. See Motion at 1.

The Plaintiffs note that a removing party carries a “heavy burden of persuasion” to show that a non-diverse party was fraudulently joined. Motion at 3 (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981)). They assert that “CAFA did not change, lessen or shift the burden of proving fraudulent joinder,” and that the Defendants’ failure to meet their heavy burden to demonstrate that Desert Mountain was fraudulently joined is “fatal to Defendants’ Notice of Removal.” Motion at 4. The Plaintiffs argue that, “where there is any ambiguity about the State law or disputed questions of fact, the resolution of whether the [Complaint] states possibly viable claims against non-diverse defendants ‘should be left to the state court where the action was commenced.’ ” Motion at 5 (emphasis original) (quoting Montano v. Allstate Indemnity, 211 F.3d 1278, 2000 WL 525592, at *1 (10th Cir.2000)(unpublished table decision)). The Plaintiffs contend that the Complaint alleges that Desert Mountain participated in actions which could constitute a violation of the UTPA and that the “Defendants’ denials or assertions that there are no viable claims that can be asserted against [Desert Mountain] must be resolved by the state court first.” Motion at 5. They assert that the Court lacks “federal diversity jurisdiction mandating remand to the State court for further determination of the availability of claims against the non-diverse Defendant joined in this case.” Motion at 6. The Plaintiffs further assert that remand is required if there is a reasonable basis for the district court to predict that the plaintiff might be able to recover against an instate defendant or that any one of the claims against Desert Mountain is possibly viable. See Motion at 7 (citing Zufelt v. Isuzu Motors Am., LCC, 727 F.Supp.2d 1117, 1124 (D.N.M.2009)(Browning, J.)). They argue that the claims against Desert Mountain are not wholly frivolous or insubstantial, and that, because there is a colorable claim under state law against Desert Mountain, the Court should remand. See Motion at 7 (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir.1992)). The Plaintiffs contend that they have asked for injunctive relief against Desert Mountain under the UTPA, and that the Plaintiffs are “ ‘persons’ likely to be damaged by [Desert Mountain’s] alleged unfair, deceptive, or unconscionable trade practices and thus have standing to assert their equitable UTPA claims against [Desert Mountain.]” Motion at 8.

The Plaintiffs also argue that CAFA’s local-controversy exception requires that the Court remand the case to state court. They assert that the Court “shall decline to exercise jurisdiction” where: (i) greater than two-thirds of the proposed class members are citizens of the State in which the action was filed; (ii) significant relief is sought against at least one non-diverse defendant whose alleged conduct forms a significant basis for the claims asserted; (iii) the principal conduct of all defendants occurred in the State in which the action was filed; and (iv) no other class action has been filed asserting the same or similar factual allegations against the same defendants within the past three years. Motion at 8. The Plaintiffs represent that the local-controversy exception applies to a “truly local controversy [which is] a controversy that uniquely affects a particular locality to the exclusion of all others.” Motion at 9 (quoting Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir.2006)). They argue that this case presents a local controversy within the exception, because the

granting of declaratory and injunctive relief to ensure that these named Defendants adhere in New Mexico to the unique holding of the New Mexico Supreme Court in Jordan, — which by definition will only apply to New Mexico [uninsured or underinsured motorist] policies and New Mexico policyholders— is a matter that uniquely affects the locality of New Mexico to the exclusion of all others.

Motion at 9 (emphasis original). The Plaintiffs assert that they meet each of the local-controversy exception requirements. The Plaintiffs contend that: (i) all class members are New Mexico residents; (ii) Desert Mountain is a New Mexico Corporation; (iii) the conduct involves uninsured motorist coverage in New Mexico; and (iv) they are aware of no similar actions being filed against the Defendants within the last three years. See Motion at 9.

The Plaintiffs assert that, because this case seeks only equitable relief, the Court should decline to accept jurisdiction. See Motion at 10. The Plaintiffs argue that the Supreme Court of the United States has repeatedly characterized the Declaratory Judgment Act, 28 U.S.C. § 2201, as “an enabling Act which confers a discretion on the courts rather than an absolute right upon the litigant.” Motion at 11 (quoting Pub. Serv. Comm’n v. Wycoff Co., Inc., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952)). They contend that it would be “uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues,” and that “[gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.” Motion at 11 (quoting Brillhart v. Excess Ins., Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942)). The Plaintiffs assert that it is well settled that the existence of an independent basis for federal jurisdiction does not deprive the Court of its right and duty to exercise its independent discretion to decline jurisdiction in a case involving the “enforcement of a state court’s declaratory judgment.” Motion at 12. They argue that, when parallel proceedings are pending in state court, a federal court must determine whether to abstain from exercising jurisdiction using a variety of factors. See Motion at 13. The Plaintiffs state that there is no need for the Court to expend its resources on a matter which is “nothing more than a ministerial exercise in enforcement of a fully litigated state court action.” Motion at 15.

On July 25, 2011, the Defendants filed the Insurer Defendants’ Joint Opposition to Motion to Remand. See Doc. 70 (“Response”). The Defendants assert that the Plaintiffs conceded in the Motion that CAFA’s requirements are met. See Response at 1. The Defendants emphasize that, under CAFA, the requirement is minimal diversity and not complete diversity. See Response at 2. They argue that the Plaintiffs are trying to “circumvent CAFA jurisdiction by asking this Court to make an exception that is not based in fact or law.” Response at 2. The Defendants assert that the local-controversy exception does not apply when “the allegations against the in-state defendant pale in scope and number to those against the out-of-state defendants.” Response at 2. They further assert that, because the Plaintiffs seek the same relief against Travelers Insurance and Travelers Insurance is the proper party to comply with Jordan v. Allstate Insurance Co., the allegations against Desert Mountain do not meet the local-controversy requirements. See Response at 2. The Defendants argue that there is no basis to abstain absent a parallel state proceeding and that, because the Plaintiffs seek more than only declaratory relief, Wilton v. Seven Falls Co., does not apply. See Response at 2. The Defendants also make arguments, similar to those in the Notice of Removal, that the Court has jurisdiction under the traditional diversity analysis, because the Court should sever or dismiss Desert Mountain from the case. See Response at 2-3.

The Defendants assert that fraudulent joinder is irrelevant under CAFA. They argue that CAFA jurisdiction exists when the proposed class contains at least one-hundred persons, the amount in controversy exceeds $5,000,000.00 and there is minimal diversity. See Response at 5. They contend that the presence of a non-diverse defendant does not defeat jurisdiction under CAFA. See Response at 6. The Defendants further assert that CAFA’s local-controversy exception does not apply, because Desert Mountain is not a party from whom significant relief is sought and whose alleged conduct forms a significant basis for the claims alleged. See Response at 6. The Defendants argue that the Plaintiffs bear the burden of establishing that an exception to CAFA jurisdiction applies and that the local-controversy exception is narrow, with all doubts resolved in favor of jurisdiction. See Response at 7 (citing Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 153-54 (3d Cir.2009); Evans v. Walter Indus., 449 F.3d at 1164-65). They contend that the Plaintiffs do not seek “significant relief’ from Desert Mountain and that its alleged conduct does not form a “significant basis” of the claims asserted, because only four paragraphs, out of the eighty-two in the Complaint, are directed at Desert Mountain. Response at 7. They assert that the requested relief against Desert Mountain, provision of a menu under Jordan v. Allstate Ins. Co., would not originate with Desert Mountain, but that Travelers Insurance would prepare and disseminate such a menu, and that the Plaintiffs seek the same relief from Travelers Insurance. Response at 7. The Defendants assert that, in contrast, the Plaintiffs seek a variety of significant relief from the out-of-state insurer Defendants, including: (i) a declaration ordering them to reform automobile insurance policies retroactively; (ii) an injunction requiring notices to insureds about that reformation and the attendant consequences; and (iii) an injunction ordering the insurers to develop and implement new uninsured motorist selection/rejection forms which local agents will use. See Response at 7-8 (citing Complaint ¶¶ 65-66, at 14-15, 18-19). They contend that relief is significant only if it is a significant portion of the entire relief sought “by the class,” and assert that the Plaintiffs have not identified anyone, other than Gatewood, who may have a relationship with Desert Mountain. Response at 8 (quoting Evans v. Walter Indus., 449 F.3d at 1167). The Defendants argue that the cases they cite in the Notice of Removal reject the tactic of naming a local insurance agent to invoke the local-controversy exception and that the Plaintiffs’ Motion did not discuss or distinguish those cases. See Response at 9. The Defendants point to the Senate Committee Report on CAFA, which states: “[I]n a consumer fraud case alleging that an insurance company incorporated and based in another state misrepresented its policies, a local agent of the company named as a defendant presumably would not fit [the ‘significant defendant’] criteria.” Response at 9 (citing Senate Report on CAFA, S.Rep. No. 109-14 at 40, 2005 U.S.C.C.A.N. 3, 38, 2005 WL 627977, at *34 (Feb. 28, 2005)). They assert that CAFA is not limited to multi-state class actions and that allowing the Plaintiffs to avoid federal jurisdiction, because the Plaintiffs named Desert Mountain, would undermine CAFA’s purpose. See Response at 10.

The Defendants also argue that the Plaintiffs’ reliance on the Court’s discretion under the Declaratory Judgment Act is misplaced. They assert that this situation is not one where abstention is appropriate, because there is not a parallel state proceeding and because the Plaintiffs are seeking more than declaratory relief. See Response at 11. The Defendants contend that abstention arises more appropriately when a plaintiff sues a defendant in state court, and when the defendant subsequently sues the plaintiff in federal court in a competing and parallel action seeking declaratory relief on the same core issues. See Response at 11 (citing Brillhart v. Excess Ins. Co., 316 U.S. at 494-95, 62 S.Ct. 1173; Wilton v. Seven Falls Co., 515 U.S. at 282, 115 S.Ct. 2137; Amanatullah v. Colo. Bd. of Med. Exam’rs, 187 F.3d 1160, 1163 (10th Cir.1999)). They assert that, when there is no pending state proceeding, abstention is not warranted. See Response at 12 (citing United States v. City of Las Cruces, 289 F.3d 1170, 1183 (10th Cir.2002); Hartford Ins. Co. of the Midwest v. Estate of Tollardo, Nos. 04-0997, 04-1120, 2005 WL 3662914, at *2 (D.N.M. Nov. 20, 2005)(Browning, J.)). They argue that the rule permitting abstention from a declaratory judgment action does not apply where the defendant removed the action from state court instead of filing a declaratory relief action in federal court during the pendency of the state court action. See Response at 12. The Defendants further assert that the Court lacks discretion to decline jurisdiction, because the Plaintiffs seek injunctive and monetary relief, and because abstention under the Declaratory Judgment Act is not permitted when coercive claims are present. See Response at 13. They contend that it is well-settled that, where a complaint seeks injunctive as well as declaratory relief, abstention under Brillhart v. Excess Ins. Co. is not appropriate. See Response at 13. The Defendants also argue that a claim for reformation of insurance policies is more like a request for class-wide monetary relief than a declaratory action. See Response at 14 (citing Fincher v. Prudential Prop. & Cas. Ins. Co., No. 00-2098, 2007 WL 891371 (D.Colo. Mar. 22, 2007)(Blackburn, J.), aff'd 374 Fed.Appx. 833 (10th Cir.2010)(unpublished)). The Defendants point to the Motion and to the Plaintiffs’ comment that class members “may be entitled to new or additional [uninsured or underinsured motorist] benefits” as an admission that the requested relief is more akin to monetary relief. Response at 14 (citing Motion at 15). With respect to their traditional diversity jurisdiction analysis, the Defendants made substantially the same arguments in their Response as they did in the Notice of Removal. See Response at 15-17.

On August 8, 2011, the Plaintiffs filed their Reply on Motion to Remand to State Court for Lack of Federal Jurisdiction. See Doc. 75 (“Reply”). The Plaintiffs assert that the Defendants “treat this case as if it were an ordinary insurance action brought to enforce some unresolved rule of law concerning [uninsured or underinsured motorist] insurance coverage.” Reply at 1 (emphasis original). The Plaintiffs argue that this case is unique, because it is “an equitable action for declaratory-relief brought to ensure enforcement of an affirmative mandate of the New Mexico Supreme Court.” Reply at 1 (emphasis original). They emphasize that Jordan v. Allstate Ins. Co. is more than a judicial holding — it is a “judicial act of insurance regulation.” Reply at 2 (emphasis original). They assert that, in Jordan v. Allstate Ins. Co., the Supreme Court of New Mexico ordered every insurer in New Mexico to retroactively reform its nonconforming uninsured motorist policies and that such a broad sweeping reform distinguishes this case from the cases which the Defendants cite. See Reply at 2. The Plaintiffs argue that the “Defendants’ unified opposition to this action more than amply demonstrates their united refusal to fully comply with the Supreme Court’s regulatory mandate,” and that this opposition “is directly relevant to whether the Supreme Court’s regulatory Order should be enforced in the New Mexico State courts or in the federal courts.” Reply at 3. They contend that the Defendants are attempting to “try to reform Plaintiffs’ pleadings to suit their arguments” and that the Defendants’ presumption that the “Plaintiffs’ ‘ultimate’ objective in this ease is the payment of money is simply false.” Reply at 4. The Plaintiffs assert that they seek no monetary damages and that what “happens after Plaintiffs achieve the equitable relief sought in this case will be left for other cases.” Reply at 4.

With respect to the local-controversy exception to CAFA, the Plaintiffs argue that: (i) the premium disclosure requirements of Jordan v. Allstate Ins. Co. is the most “substantial” element of that decision; and (ii) their request to enforce compliance with the premium disclosure ruling is the most “significant” relief sought against every Defendant. Reply at 5. The Plaintiffs assert that these facts establish that they seek significant relief from Desert Mountain. See Reply at 6. They contend that there is no statutory definition of “significant relief,” and that whether significant relief is sought is determined through a comparison of relief sought between all Defendants. Reply at 5-6. They argue that, because the same relief is sought against each Defendant, they have sought significant relief against Desert Mountain. Reply at 6. The Plaintiffs further assert that there is not support in the record for the Defendants’ allegation that Travelers Insurance is responsible for promulgating the uninsured motorist selection/rejection forms. See Reply at 7. They state that they specifically allege that Gatewood “seeks injunctive relief ... to affirmatively provide all applicants for a New Mexico MFRA policy with a written Jordan menu” and that the Defendants’ argument that “Gatewood seeks relief only against Travelers” is incorrect, because their allegations refer to every Desert Mountain customer. Reply at 9.

On March 7, 2012, the Court held a hearing. The Plaintiffs argued that the state courts have exclusive jurisdiction to enforce the state insurance regulations that were mandated in Montano v. Allstate Indem. Co., 135 N.M. 681, 92 P.3d 1255 (2004) and Jordan v. Allstate Ins. Co. See Transcript of Hearing at 8:22-9:2 (March 7, 2012)(Berardinelli)(“Tr.”). They also asserted that the Court should consider the McCarran-Ferguson Act, 15 U.S.C. § 1012, abstention under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943) or Brillhart v. Excess Ins. Co., and the Rooker-Feldman doctrine. See Tr. at 9:3-8 (Berardinelli). The Plaintiffs stated that this is a rare case and argued that the Court should remand to the state court, because the Plaintiffs are attempting to enforce the Supreme Court of New Mexico’s universal mandate regulating automobile insurance. See Tr. at 9:9-16 (Berardinelli). They pointed to Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996), where the Supreme Court held that abstention under Burford v. Sun Oil Co. allows a federal court to abstain if it presents difficult questions of state law bearing on policy problems of substantial public import. See Tr. at 10:6-17 (Berardinelli). The Plaintiffs argued that the policies announced in Jordan v. Allstate Ins. Co. represent regulations of substantial public concern and that enforcement should take place in state court, because the Supreme Court of New Mexico prescribed certain procedures in the manner of a regulation. See Tr. at 10:17-11:6 (Berardinelli). They emphasized that abstention under Burford v. Sun Oil Co. stems from the discretion courts of equity traditionally enjoy, and from principles of federalism and comity, which are equally important in this case. See Tr. at 11:7-19 (Berardinelli). The Plaintiffs asserted that the state’s interests in this case are paramount and that the dispute would best be adjudicated in a state forum. See Tr. at 11:20-12:6 (Berardinelli). They also contended that the MeCarran-Ferguson Act preserves the state’s right to regulate the business of insurance, and the relationships between an insurer and the insured. See Tr. at 12:22-13:13 (Berardinelli). The Plaintiffs asserted that the Supreme Court of New Mexico addressed that relationship in Jordan v. Allstate Ins. Co. See Tr. at 14:10-15 (Berardinelli). The Plaintiffs cited Safety National Casualty Corporation v. Certain Underwriters at Lloyd’s London, 587 F.3d 714 (5th Cir.2009), for the proposition that the MeCarran-Ferguson Act allows state law to reverse preempt an otherwise applicable federal statute. See Tr. at 17:12-25 (Berardinelli). Extending this principle, the Plaintiffs argued that CAFA cannot invalidate, impair, or supersede the Supreme Court of New Mexico’s regulatory, retroactive ruling in Jordan v. Allstate Ins. Co. See Tr. at 18:4-14 (Berardinelli). They contended that the Defendants have the burden of proving that the MeCarranFerguson Act does not reverse preempt CAFA. See Tr. at 18:15-20 (Berardinelli).

With respect to the Rooker-Feldman doctrine, the Plaintiffs argued that there can be no re-litigation of issues that are inextricably intertwined with Jordan v. Allstate Ins. Co. and cited DePasquale v. Allstate Ins. Co., 179 F.Supp.2d 51 (E.D.N.Y.2002), for the proposition that the Rooker-Feldman bars federal courts from exercising jurisdiction over cases that seek review of “inextricably intertwined” state-court judgments. Tr. at 20:2-22 (Berardinelli). They asserted that for this Court to do anything other than enforce the mandate in Jordan v. Allstate Ins. Co. would mean that the Court was determining that the Supreme Court of New Mexico was wrong. See Tr. at 20:23-21:5 (Berardinelli).

The Plaintiffs then discussed several New Mexico cases related to automobile insurance policies. See Tr. at 21:17-30:11 (Berardinelli). They argued that the Supreme Court of New Mexico’s objective in Jordan v. Allstate Ins. Co. is that all insurance companies operating in New Mexico offer the menu that Jordan v. Allstate Ins. Co. mandated, which the Plaintiffs asserted has been universally ignored. See Tr. at 30:12-31:7 (Berardinelli). The Plaintiffs contended that the Superintendent of Insurance has not issued a regulation with respect to the Jordan v. Allstate Ins. Co. menu and stated that the only viable vehicle to enforce the Supreme Court of New Mexico’s mandate is through the state judicial courts. See Tr. at 35:19-37:7 (Berardinelli). They asserted that no insurance company has complied with Jordan v. Allstate Ins. Co. See Tr. at 39:8-40:1 (Berardinelli). The Plaintiffs stated that they seek equitable relief only: (i) a declaratory judgment stating that all insurance policies are retroactively reformed to provide equal-limits coverage; (ii) notice to the insureds of the policy changes; and (iii) a court order that the insurers must provide the menu that Jordan v. Allstate Ins. Co. requires. See Tr. at 40:2-14 (Berardinelli). The Plaintiffs argued that the only viable remedy is in state court and, under principles of comity and in deference to the regulatory system, the Court should find that it does not have jurisdiction. See Tr. at 41:23-42:7 (Berardinelli). They asserted that the Court must determine whether there is reverse preemption and noted that all of their claims apply equally to all of the Defendants, including Desert Mountain. See Tr. at 43:4-10 (Berardinelli).

The Court asked whether the purpose of the McCarran-Ferguson Act was to determine what law applies and whether it would deprive the Court of jurisdiction. See Tr. at 43:11-18 (Court). The Plaintiffs responded that the McCarran-Ferguson Act is jurisdictional and intended to bar the federal courts from exercising jurisdiction when a case involves state regulation of insurance. See Tr. at 43:19-25 (Berardinelli). They argued that this issue is one of extreme public interest which goes to the very essence of the Court’s jurisdiction and that Congress intended to withdraw federal jurisdiction from matters related to the regulation of insurance. See Tr. at 44:12-24 (Berardinelli). They further asserted that the Supreme Court of New Mexico has already determined that all insurers must provide this menu and coverage, and that the case before the Court is an attempt to enforce the Jordan v. Allstate Ins. Co. mandate. See Tr. at 44:24-45:22 (Berardinelli). The Plaintiffs explained that their argument is that, because CAFA is a federal statute, the Court cannot assume jurisdiction under CAFA in an insurance case if that exercise of jurisdiction would interfere with the State’s right to regulate insurance. See Tr. at 46:4-14 (Berardinelli). They clarified that there is not an insurance exception to CAFA and conceded that a case involving insurance would not divest the Court of CAFA jurisdiction. See Tr. at 46:24-47:16 (Berardinelli). The Court then asked about the Plaintiffs’ references to Rooker-Feldman and whether it would apply, because the Court is not being asked to determine the correctness of a state court judgment. See Tr. at 47:17-23 (Court). The Plaintiffs responded that they brought Rooker-Feldman up because the Defendants are arguing that they do not have to obey the Jordan v. Allstate Ins. Co. mandate and, if the Court agreed, the Court would be overruling the Supreme Court of New Mexico on an issue of New Mexico law. See Tr. at 47:24-18:10 (Berardinelli). They argued that, when the Supreme Court of New Mexico remands a case ordering insurance companies to comply with a decision, the federal courts do not get to take jurisdiction of that case. See Tr. at 48:16^49:8 (Berardinelli). The Court agreed that assessment would be true if the Defendants were trying to remove Jordan v. Allstate Ins. Co., but asked whether that assessment hold true where there is a different case and involved different parties. See Tr. at 49:9-12 (Court). The Plaintiffs responded that the Court’s point was a distinction without a difference, because the Supreme Court of New Mexico chose to make a universal holding in Jordan v. Allstate Ins. Co. See Tr. at 49:13-50:2 (Berardinelli). The Court then asked, with respect to abstention, for what action it would be abstaining. See Tr. at 50:3-6 (Court). The Plaintiffs asserted that the Court would be abstaining to allow the state court to address these issues, but conceded that there is not a separate state court action. See Tr. at 50:7-10 (Berardinelli). They reiterated that the only way to have a uniform insurance policy is to have the state court deal with these cases. See Tr. at 51:11-52:13 (Berardinelli). They further asserted that the case before the Court is a continuation of Jordan v. Allstate Ins. Co. and that the Court should send it back to the state courts for enforcement. See Tr. at 53:3-10 (Berardinelli).

The Defendants then argued in opposition. The Defendants argued that the intent of Congress in adopting CAFA was to expand federal jurisdiction and that all doubts in interpreting the statute were to be resolved in favor of jurisdiction, with the exceptions construed narrowly. See Tr. at 55:6-10 (Strong). They argued that the Tenth Circuit has held that the Court has an unflagging obligation to exercise jurisdiction where it has it. See Tr. at 55:10-15 (Strong). The Defendants asserted that none of the Plaintiffs’ arguments regarding abstention under Burford v. Sun Oil Co., McCarran-Ferguson Act preemption, or Rooker-Feldman abstention were properly briefed. See Tr. at 55:16-56:6 (Strong). The Defendants then argued that this is not the type of complicated case that calls for abstention under Burford v. Sun Oil Co., because this case is an enforcement action and the Plaintiffs are taking the position that it is not a difficult question of state law. See Tr. at 56:7-24 (Strong). They contended that the case law is clear that the value of declaratory or injunctive relief include all benefits that logically flow from that relief. See Tr. at 56:25-57:7 (Strong). They asserted that the Senate Committee Report on CAFA commented that the value of the matter in litigation can be determined from the viewpoint of the plaintiff or defendant. See Tr. at 57:7-13 (Strong). They represented that the Senate Committee also stated that, in assessing declaratory relief, a court should include in its assessment the value of all relief and all benefits that would logically flow from the granting of the relief. See Tr. at 57:19-58:12 (Strong). The Defendants contended that the Plaintiffs have not disputed that billions of dollars could be at issue. See Tr. at 58:11-15 (Strong). They argued that the relief that the Plaintiffs seek has a monetary value, and that there will be lost premiums and administrative costs. See Tr. at 59:19-60:13 (Strong). The Defendants stated that they do not contest that Jordan v. Allstate Ins. Co. applies or its constitutionality. See Tr. at 60:18-61:11 (Strong).

With respect to the local-controversy exception to CAFA, the Defendants argued that an attorney’s affidavit and allegations do not establish that significant relief was sought against a non-diverse defendant. See Tr. at 61:11-25 (Strong). The Defendants asserted that the Plaintiffs bear the burden of establishing that a CAFA exception applies and that the Plaintiffs have not met that burden. See Tr. at 62:4-12 (Strong). They explained that the local-controversy exception envisions a scenario where the local defendant is the primary focus of the plaintiffs claims. See Tr. at 62:11-15 (Strong). They argued that, under the statute’s language, the Court must determine whether significant relief is sought against a non-diverse defendant whose conduct forms a significant basis for the claims asserted and contended that Desert Mountain was not the Complaint’s focus. See Tr. at 62:16-63:4 (Strong). They represented that, in Evans v. Walter Indus., Inc., the United States Court of Appeals for the Eleventh Circuit held that the significant-relief prong is not established where only one of eighteen defendants was local and was alleged to have contributed to contamination. See Tr. at 63:5-11 (Strong). The Defendants noted that Desert Mountain was the only insurer agent who had been sued and that the Plaintiffs seek only one form of relief against it. See Tr. at 63:12-23 (Strong). The Defendants also noted that the Complaint mentions only one Plaintiff to whom Desert Mountain issued a policy. See Tr. at 64:7-17 (Strong). The Defendants asserted that abstention under Brillhart v. Excess Ins. Co. also does not apply, because the Plaintiffs are not seeking pure declaratory relief and there is no pending state ease. See Tr. at 65:7-66:2 (Strong). With respect to the traditional diversity jurisdiction analysis, the Defendants argued that the Court should sever or dismiss Desert Mountain from this case, because it is an anomalous Defendant and does not fit easily into the case. See Tr. at 67:16-68:8 (Rohback). The Defendants emphasized that the Court has discretion to sever a party to preserve diversity jurisdiction and the Court could remand the case against Desert Mountain to state court. See Tr. at 68:25-69:14 (Rohback). They reiterated that none of the paragraphs that refer to Desert Mountain state a cause of action and that the Plaintiffs had admitted that the Superintendent of Insurance approved the forms used, establishing the applicability of an exception from the UTPA. See Tr. at 69:15-71:8 (Rohback).

Regarding CAFA’s specific requirements, the Defendants asserted that: (i) there are at least one-hundred putative class members; (ii) that the aggregated amount in controversy is in excess of $5,000,000.00; and (iii) no exceptions apply. See Tr. at 73:10-21 (Spano). Focusing on the amount in controversy, the Defendants argued that the relief sought would be costly, because the Plaintiffs seek to reform all policies issued after May 2004, to have the Defendants notify all insureds of this change, and to have the insurers develop and implement a new uninsured motorist coverage selection form. See Tr. at 74:8-14 (Spano). The Defendants contended that they need show only that it is possible that the cost of relief would satisfy the amount in controversy standard, and that the Court should look at the benefits or costs of the relief sought. See Tr. at 74:15-75:21 (Spano). The Defendants then discussed the costs that they calculated in their Response and argued that they have met the amount-in-controversy requirement. See Tr. at 75:22-78:11 (Spano). The Defendants asserted that reverse preemption under the McCarran-Ferguson Act is not a jurisdictional issue, and that a federal court retains jurisdiction to adjudicate the rights of policyholders and insureds. See Tr. at 78:12-79:11 (Spano). The Court asked whether the Defendants had a response to the Plaintiffs’ argument that the McCarran-Ferguson Act affects congressional statutes and that CAFA is a congressional statute. See Tr. at 79:12-19 (Court). The Defendants responded that, for the McCarran-Ferguson Act to apply, CAFA would have to conflict with a state law that is designed to regulate insurance and argued that CAFA does not conflict with state law. See Tr. at 79:20-81:2 (Spano). The Defendants also contended that the McCarran-Ferguson Act cannot preempt CAFA, because the McCarran-Ferguson Act applies only to state-enacted laws regulating insurance, and this case deals with a judicial decision. See Tr. at 82:4-21 (Kohls).

The Court then asked the Plaintiffs whether they conceded the amount in controversy requirement under CAFA is met. See Tr. at 83:24-84:9 (Court). The Plaintiffs asserted that they did not concede the amount in controversy issue and argued that, beyond the estimated $500,000.00 in administrative costs, the amount in controversy calculations are entirely speculative. See Tr. at 84:15-85:2 (Berardinelli). The Plaintiffs stated that they are not asking for payment of premiums. See Tr. at 85:3-4 (Berardinelli). The Court asked whether the Plaintiffs would agree that the relief they seek will, as a practical matter, have a financial impact and that the Court can look at the impact of these changes. See Tr. at 85:12-20 (Court). The Plaintiffs responded that whether policyholders can collect under the policies is not the Plaintiffs’ objective and argued that all the relief they seek is compliance with Jordan v. Allstate Ins. Co., See Tr. at 85:20-86:7 (Court, Berardinelli). They argued this case involves a regulatory action and the question is whether the federal court should be involved in telling insurance companies what is appropriate under the Supreme Court of New Mexico’s case law. See Tr. at 86:8-17 (Berardinelli). The Plaintiffs asserted that Desert Mountain is wrong when it argues that the Plaintiffs do not seek significant relief against it, because the Plaintiffs want insurance agents to have to comply with the law as well. See Tr. at 86:17-19 (Berardinelli). They also contended that there is no evidence to support the assertion that Desert Mountain cannot promulgate a form. See Tr. at 86:20-25 (Berardinelli). The Plaintiffs argued that comity, in its purest form, is at stake in this action and that, if the Court decides the case, then purpose of the McCarran-Ferguson Act will be defeated. See Tr. at 87:5-10 (Berardinelli). The Plaintiffs conceded that the only aspects of CAFA that they are challenging is the amount in controversy requirement and application of the local-controversy exception. See Tr. at 89:6-22 (Court, Berardinelli). The Plaintiffs asserted that they have satisfied the local-controversy exception, because the most significant relief is to obtain compliance and this case is dealing with significant public policy interests. See Tr. at 89:23-90:12 (Berardinelli). They also argued that, if the Court finds jurisdiction under CAFA, it will be in direct conflict with the McCarran-Ferguson Act. See Tr. at 90:13-22 (Berardinelli).

On March 14, 2012, Metropolitan Casualty and Travelers Insurance filed the Supplemental Memorandum of Defendants Metropolitan Property and Casualty Insurance Company and Travelers Home and Marin Insurance Company in Support of Their Joint Opposition to Motion to Remand. See Doc. 111 (“Sur-Reply”). Metropolitan Casualty and Travelers Insurance note that the Plaintiffs “never mentioned the McCarran-Ferguson Act, ‘reverse-preemption’ or the Burford Doctrine” in the Motion. Sur-Reply at 1. They argue that the McCarran-Ferguson Act does not divest federal courts of jurisdiction over cases involving the insurance industry. See Sur-Reply at 2 (citing Grimes v. Crown Life Ins., 857 F.2d 699 (10th Cir.1988); Atl. & Pac. Ins. Co. v. Combined Ins. Co. of Am., 312 F.2d 513, 515 (10th Cir.1962)). They assert that, although Grimes v. Crown Life Ins. was remanded under the Burford v. Sun Oil Co. abstention doctrine, Grimes v. Crown Life Ins. is distinguishable from the one before the Court, because, there, the plaintiff was the Oklahoma Insurance Commissioner, the subject of the litigation related to state court insolvency proceedings, and the Oklahoma statute provided for exclusive jurisdiction in the state district court. See Sur-Reply at 2-3 (citing Grimes v. Crown Life Ins., 857 F.2d at 705). Metropolitan Casualty and Travelers Insurance also refer the Court to the numerous cases that they cite in the Notice of Removal to refute the argument that there is an insurance exception to CAFA. See Sur-Reply at 3-4 (citing Notice of Removal ¶¶ 51-52, at 20-21). They note that the Plaintiffs are not claiming that the Insurance Division of the New Mexico Public Regulation Commission has exclusive jurisdicti