United States District Court, M.D. Pennsylvania
March 17, 2003
Richard CARRICK, Plaintiff,
SEARS, ROEBUCK AND CO., Defendant.
The opinion of the court was delivered by: A. RICHARD CAPUTO, District Judge.
Plaintiff Richard Carrick filed a complaint in the Court of Common
Pleas of Lackawanna County on November 21, 2002 against Defendant Sears,
Roebuck and Co. alleging various state law claims.*fn1 Defendant removed
the action to federal court. (Doc. 1.) Defendant filed a motion to
dismiss. (Doc. 2.) Plaintiff subsequently filed a motion for remand to
state court. (Doc. 8.) The Court heard oral arguments on February 24,
2003. This matter has been fully briefed and is ripe for disposition.
Because the Court finds that Defendant has not satisfied the
amount-in-controversy requirement, the Court will grant Plaintiff's
motion to remand. Defendant's motion to dismiss will be denied as moot.
This case concerns the rates that Sears charges customers for alignment
services. According to the complaint filed in state court, Plaintiff took
his Chevrolet S-10 Blazer to Sears for an alignment. Plaintiff's Blazer,
like many SUVs and pick-up trucks, is designed so that the rear wheels
cannot be adjusted. Aligning a Blazer involves adjusting only the front
wheels. Sears charged Plaintiff $49.99 for what the invoice referred to
as an "all wheel" alignment. This is the same price Sears
[252 F. Supp.2d 118]
charges customers whose vehicles require adjustment of all four wheels.
Plaintiff argues that Sears is essentially charging customers with
vehicles requiring adjustment of only the front two wheels for work that
is not done; viz., adjustment of the back wheels. Plaintiff states in his
state court complaint that he seeks to become representative of a class
all customers of Defendant's Auto Centers who, since
November 1996, received wheel alignments on vehicles
that were mechanically incapable of having their rear
wheel alignments adjusted and were nevertheless
charged by Defendant's Auto Centers for an "all
wheel" or four-wheel alignment.
(Pl.Compl., ¶ 31.) This case has not been certified. It remains a
"putative" class action.
Plaintiff brings action under the common law theories of breach of
contract, breach of the duty of good faith and fair dealing, and unjust
enrichment. Plaintiff also brings action under 73 Pa. Stat. Ann. §
201-9.2, which authorizes a private right of action under the
Pennsylvania Unfair Trade Practices and Consumer Protection Law. In
addition to seeking class certification, Plaintiff's complaint demands
declaratory and injunctive relief, statutory damages under §
201-9.2, monetary damages pursuant to the common law contract theories,
punitive damages, and attorneys' fees.*fn2
A. Jurisdictional Questions Addressed First
Plaintiff, in his motion to remand, calls into question the Court's
subject matter jurisdiction over this case. (Doc. 8.) A federal court
cannot address a case's merits without first determining that it has
subject matter jurisdiction. See Steel Co. v. Citizens for a Better
Environ., 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). See
also Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d 742, 750 (3d
Cir. 1995) (federal courts have an "everpresent obligation to satisfy
themselves of their subject matter jurisdiction"). Therefore, the Court
addresses the motion to remand first.
B. Requirements For Removal
Defendant removed on the basis of diversity jurisdiction. Removal on
this basis requires: (1) diversity of citizenship, and (2) an amount in
controversy exceeding $75,000. Neither party disputes the diversity of
citizenship. The sole jurisdictional question is whether the
amount-in-controversy requirement has been satisfied.
C. Standard For Determining if Removal Was Proper
When deciding whether removal of a case from state court is proper, it
is important to recognize the basic principle that federal courts are
courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Chase
Manhattan Bank (Nat'l Asso.) v. South Acres Dev. Co., 434 U.S. 236,
239-40, 98 S.Ct. 544, 54 L.Ed.2d 501 (1978). Courts must strictly
construe all removal statutes and resolve doubts about removal
jurisdiction in favor of remand.*fn3 The Court of
[252 F. Supp.2d 119]
Appeals for the Third Circuit recently cautioned against "relying
exclusively" on the "supposed `presumption' in favor of remand," calling
this presumption a "questionable doctrine whose `basis has never been
very clearly explained.'" Cook v. Wikler, 320 F.3d 431, 436 n. 6 (3d
Cir. 2003) (citing Thomas v. Shelton, 740 F.2d 478, 488 (7th Cir.
1984)). I interpret the appeals court's words to mean that, when
considering motions to remand, courts should not allow adherence to the
general presumption to justify the omission of a rigorous "analysis of
the text and context of the [removal] statute." Id. Cook does not purport
to abolish the long-standing presumption against federal jurisdiction,
nor does Cook assert that this presumption lacks any basis in law or
logic. Compare Brown v. Francis, 75 F.3d 860, 865 (3d Cir. 1996)
("[b]ecause lack of jurisdiction would make any decree in the case void
and the continuation of the litigation in federal court futile, the
removal statute should be strictly construed and all doubts resolved in
favor of remand").*fn4 The burden of establishing federal jurisdiction
rests upon the party asserting jurisdiction. McNutt v. General Motors
Acceptance Corp., 298 U.S. 178, 182-183, 56 S.Ct. 780, 80 L.Ed. 1135
(1936). See also Ariel Land Owners v. Dring, 245 F. Supp.2d 589 (M.D.Pa.
Moreover, a plaintiff is the master of his own claim. Wilbur v. H
& R Block, Inc., 170 F. Supp.2d 480, 481 (M.D.Pa. 2000) (citing
Caterpillar, Inc. v. Williams, 482 U.S. 386, 391 & n. 7, 107 S.Ct.
2425, 96 L.Ed.2d 318 (1987)). Although a defendant may remove a case to
federal court in certain situations, a defendant's right to remove is not
on equal footing with a plaintiff's right to choose his forum. Wilbur,
170 F. Supp.2d at 481. When a plaintiff chooses a state forum, and the
defendant seeks to negate that choice by removing to federal court, the
defendant bears the burden of establishing, by a preponderance of the
evidence, that the case satisfies all of the jurisdictional requirements
for removal. See Wilbur, 170 F. Supp.2d at 483; Werwinski v. Ford Motor
Co., 2000 WL 375260, 2000 U.S. Dist. LEXIS 4602 at *5 n. 1 (E.D.Pa. Apr.
11, 2000), aff'd, 286 F.3d 661 (3d Cir. 2002); McFadden v. State Farm
Ins. Co., 1999 WL 715162, 1999 U.S. Dist. LEXIS 13956 at *1 (E.D.Pa.
Sept. 13, 1999).*fn5 Therefore, in considering Plaintiff's motion to
remand, the Court must determine whether Defendant has established by a
preponderance of the evidence i.e. it is more
[252 F. Supp.2d 120]
likely than not that the amount in controversy exceeds $75,000.
D. Putative Class Actions Treated As Class Actions For Jurisdictional
Plaintiff states in his state court complaint that he seeks class
certification. (Pl.Compl., Doc. 1, ¶ 31.) However, no state or
federal court has ruled on whether Plaintiff's case should be certified
as a class action. Plaintiff's claim remains a "putative class
action."*fn6 For the purposes of determining subject matter jurisdiction,
federal courts analyze a putative class action as though it were, in
fact, already certified. Miller v. Bridgestone/Firestone Inc., 2000 WL
1570732, 2000 U.S. Dist. LEXIS 15292 at *5 n. 2 (E.D.Pa., Oct. 19,
2000); Garcia v. General Motors Corp., 910 F. Supp. 160, 163-64 (D.N.J.
1995); In re Abbott Labs., 51 F.3d 524, 525 n. 1 (5th Cir. 1995); Eagle
v. American Tel. & Tel. Co., 769 F.2d 541, 545 n. 1 (9th Cir.
1985).*fn7 When applying this rule, courts do not inquire into the
likelihood that a court will eventually grant class certification. See
Knauer v. Ohio State Life Ins. Co., 102 F. Supp.2d 443, 446 (N.D.Ohio
E. Separate and Distinct Claims Not Aggregated
It is settled that separate and distinct claims of members of a class
action cannot be aggregated to satisfy the jurisdictional
amount-in-controversy requirement. Snyder v. Harris, 394 U.S. 332, 338,
89 S.Ct. 1053, 22 L.Ed.2d 319 (1969); Meritcare, Inc. v. St. Paul Mercury
Ins. Co., 166 F.3d 214, 218-22 (3rd Cir. 1999); McIntyre v. Nationwide
Mut. Fire Ins. Co., 2001 WL 893697, 2001 U.S. Dist. LEXIS 11317
(E.D.Pa., August 6, 2001).*fn8 Each plaintiff in a class action must
independently meet the amount-in-controversy requirement for a federal
court to exercise diversity jurisdiction over his or her claim. See Zahn
v. International Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 38 L.Ed.2d
[252 F. Supp.2d 121]
F. Application of the Non-Aggregation Principle
The non-aggregation principle, established in Snyder and Zahn, compels
the conclusion that when a plaintiff brings a putative class action in
state court, and the defendant removes to federal court based on
diversity jurisdiction, the federal court, in determining its own subject
matter jurisdiction, must attribute unliquidated damages sought by the
plaintiff (viz. attorneys' fees, punitive damages) pro rata to each member
of the putative class. Dozens, if not hundreds, of decisions involving
facts virtually identical to those in the case at bar have applied this
principle. Courts have held, with a few isolated and readily
distinguishable exceptions, that the nonaggregation principle requires
pro rata attribution of unliquidated damages across the putative class.
See Medley v. Am. Int'l Ins. Co., 2001 WL 892793, 2001 U.S. Dist. LEXIS
11316 (E.D.Pa. Aug. 1, 2001); Dorian v. Bridgestone/Firestone Inc., 2000
WL 1570627, 2000 U.S. Dist. LEXIS 15407 (E.D.Pa. Oct. 19, 2000); Miller
v. Bridgestone/Firestone Inc., 2000 WL 1570732, 2000 U.S. Dist. LEXIS
15292 (E.D.Pa. Oct. 19, 2000); Beatty v. Bridgestone/Firestone Inc., 2000
WL 1570590, 2000 U.S. Dist. LEXIS 15406 (E.D.Pa. Oct. 19, 2000); Lennon
v. Bridgestone/Firestone Inc., 2000 WL 1570645, 2000 U.S. Dist. LEXIS
15405 (E.D.Pa. Oct. 19, 2000); Robinson v. Computer Learning Ctrs., 1999
WL 817745, 1999 U.S. Dist. LEXIS 15753 (E.D.Pa. Oct. 12, 1999); McNamara
v. Philip Morris Cos., 1999 WL 554592, 1999 U.S. Dist. LEXIS 10855
(E.D.Pa. July 9, 1999); Lauchheimer v. Gulf Oil, 6 F. Supp.2d 339
(D.N.J. 1998); Bishop v. GMC, 925 F. Supp. 294 (D.N.J. 1996);*fn10
Johnson v. Gerber Prods. Co., 949 F. Supp. 327 (E.D.Pa. 1996); Pierson
v. Source Perrier, S.A., 848 F. Supp. 1186 (E.D.Pa. 1994); Goldberg v.
CPC International, Inc., 678 F.2d 1365 (9th Cir. 1982); Gooding v.
Allstate Ins. Co., 2000 WL 626856, 2000 U.S. Dist. LEXIS 6607 (N.D.Tex.
May 12, 2000); Miattingly v. Hughes Elecs. Corp., 107 F. Supp.2d 694
(D.Md. 2000); Crosby v. America Online, 967 F. Supp. 257 (N.D.Ohio
1997); Gilman v. Wheat, First Sec., 896 F. Supp. 507 (D.Md. 1995);
Daniels v. Philip Morris Cos., 18 F. Supp.2d 1110 (S.D.Cal. 1998); Kasky
v. Perrier, 1991 WL 577038, 1991 U.S. Dist. LEXIS 21177 (S.D.Cal. Sept.
[252 F. Supp.2d 122]
Against this background of virtually unanimous authority, the Court has
carefully studied Defendant's briefs and appended cases, searching for
authority to the contrary. The Court has found none. Therefore, I
conclude that the non-aggregation principle, and the resulting pro rata
attribution requirement, is the proper framework for analyzing the
Court's jurisdiction over this putative class action.
G. Defendant's Position Contra to the Non-Aggregation Principle
Defendant seeks to avoid the non-aggregation principle by pointing out
that, at this stage in the litigation, Plaintiff "is the only party whose
claims are properly before the Court." (Doc. 16 at 10.) It follows, by
Defendant's reasoning, that "the amount in controversy must be determined
from the named plaintiff's claims alone." (Doc. 16 at 10.) That is,
Defendant argues that any discussion of attributing potential damages to
other members of the plaintiff class pro rata "misses the mark" because
that would mean "apportioning the named plaintiff's potential recovery to
a class that is not now and may never be certified,"
something Defendant argues is improper and unwarranted.
This argument is without merit because it ignores the rule established
in Miller, Garcia, Abbott Labs, Eagle, and the numerous other decisions
cited above which hold that putative class actions, for the purpose of
determining subject matter jurisdiction, are analyzed as though they were
actually certified.*fn12 Applying this rule, the Court finds that it is
completely appropriate to consider unnamed members of the putative class
for jurisdictional purposes. Moreover, Defendant's argument fails to
account for the voluminous body of precedent, only some of which is cited
above, in which courts have applied the non-aggregation principle to
cases that are virtually identical to the one currently before the
Defendant attempts to support its argument against the application of
the nonaggregation principle by citing Gibson v. Chrysler Corp.,
261 F.3d 927, 940-41 (9th Cir. 2001). However, reading the entire case,
it is clear that Gibson is not only unhelpful to Defendant, but it
actually supports Plaintiff's position.
Gibson is unhelpful because, while it states in dicta that courts
should "[e]xamin[e] . . . only the claims of named class plaintiffs for
purposes of the amount-incontroversy requirement in diversity class
actions," Gibson, 261 F.3d at 941, the context reveals that this
statement is irrelevant to the matter before the Court. In Gibson, the
Court of Appeals for the Ninth Circuit considered whether a federal court
has supplemental jurisdiction over class members whose claims fall short
of the jurisdictional amount, provided that at least one unnamed member
of the putative class satisfies the jurisdictional amount. The Gibson
court held that there was no jurisdiction. Rather, for a federal court to
have supplemental jurisdiction over class members whose claims were worth
less than the jurisdictional amount, Gibson held that at least one named
plaintiff's claim must satisfy the amount-in-controversy requirement.
[252 F. Supp.2d 123]
Gibson fails to support the proposition urged by Defendant, viz., that
in determining subject matter jurisdiction, a federal court must ignore
all unnamed members of a putative class, even if the named plaintiff
alleges the class's existence in his complaint and describes the class's
membership. This is simply not what Gibson holds. It should also be noted
that the Gibson rule on supplemental jurisdiction is inapposite in the
Third Circuit because it is predicated upon the Court of Appeals for the
Ninth Circuit's determination that, in passing 28 U.S.C. § 1367,
Congress overruled the Supreme Court's decision in Zahn that every member
of a class must independently satisfy the amount-in-controversy
requirement in order for a federal court to exercise diversity
jurisdiction. The Court of Appeals for the Third Circuit has taken the
opposite view, holding that Zahn's vitality is unaltered by § 1367.
Meritcare, Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 222 (3d Cir.
Gibson actually supports Plaintiff's position. Gibson came before the
Court of Appeals for the Ninth Circuit as an appeal from the district
court's decision to impose Rule 11 sanctions and assess attorneys' fees
against a defendant who removed a case to federal court for a second time
based on an argument virtually identical to the argument put forth by
Defendant in the case at bar. See Gibson v. Chrysler Corp., 1998 WL
646659, 1998 U.S. Dist. LEXIS 11343 (N.D.Cal. July 20, 1998) (remanding
the case to state court), aff'd by Gibson, 261 F.3d 927 (9th Cir. 2001);
see also Gibson, 1999 WL 1049572, 1999 U.S. Dist. LEXIS 22305 (N.D.Cal.
May 28, 1999) (imposing sanctions and assessing attorneys' fees), aff'd
in part, rev'd in part by Gibson, 261 F.3d 927, 948-50 (9th Cir. 2001).
Although the appeals court ultimately affirmed only the district court's
imposition of attorneys' fees, and not Rule 11 sanctions, the court also
confirmed that the district court was legally correct in applying the
non-aggregation principle to potential compensatory and punitive damages
and attributing these potential damages pro rata to all members of the
putative class. Id. at 943-48.
Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002), relied upon
heavily by Defendant at oral argument, is similarly unavailing. In
Werwinski, the Court of Appeals for the Third Circuit affirmed the
district court's decision to deny the plaintiff's motion to remand to
state court a putative class action arising under the Pennsylvania Unfair
Trade Practices and Consumer Protection Law. Although neither the
district court nor the appeals court explicitly attributed unliquidated
damages to the entire putative class pro rata, the Court has no doubt
that this is what actually occurred. The appeals court held that the
amount-in-controversy requirement was met in Werwinski because, first of
all, the actual damages were $15,000 (i.e. the full purchase price of the
vehicles at issue), which could be trebled pursuant to 73 Pa. Stat. Ann.
§ 201-9.2, putting the amount in controversy at $45,000. Id. at 664.
The Court then found that reasonable attorneys' fees might total $5,000
to $10,000, and that a reasonable jury could award punitive damages that
would push the total amount in controversy over the $75,000 threshold.
Although the appeals court never specifically mentioned that it was
attributing the recoverable attorneys' fees and punitive damages to the
entire class pro rata, common sense compels that conclusion. To conclude
otherwise would be to assume that the appeals court believed that the
recoverable attorneys' fees resulting from a successful, complex,
large-scale class action lawsuit would total for the entire
action no more than $10,000. That is simply not a reasonable
[252 F. Supp.2d 124]
is it reasonable to assume that the appeals court believed that potential
punitive damages against Ford Motor Co. was limited to a figure on the
order of $20,000. It is far more likely that the appeals court assumed a
pro rata attribution without specifically mentioning it, concluding quite
reasonably under the facts of the case that potential attorneys' fees
were $5,000 to $10,000 per member of the putative plaintiff class and
that punitive damages could reach or possibly exceed $20,000 per member
of the putative plaintiff class.*fn14 This interpretation of Werwinski
further supports the validity of the pro rata attribution rule.
In light of the overwhelming weight of authority in favor of
Plaintiff's position, and the corresponding dearth of contrary
authority, I hold that any punitive damages and attorneys' fees
potentially recoverable in Plaintiff's putative class action must be
attributed to each member of the putative class pro rata.
H. In Light of the Pro Rata Attribution Rule, Is the
Amount-In-Controversy Requirement Satisfied?
The decision that potential damages must be attributed to each member
of the putative class pro rata does not dispose of the question of
jurisdiction. The Court must take the next step and determine, in light
of the pro rata attribution rule, whether Defendant has carried its
burden of showing by a preponderance of the evidence that the
amount-in-controversy requirement is met. I conclude that Defendant has
not carried this burden.
Under his common law theories, Plaintiff's potential recovery could not
exceed $49.99, which is what Plaintiff paid for the alignment service.
Under the Pennsylvania Unfair Trade Practices and Consumer Protection
Law, Plaintiff would be entitled to either actual damages, statutory
damages of $100, or treble damages in the court's discretion. 73 Pa.
Stat. Ann. § 201-9.1. These common law and statutory theories of
recovery flow from the same alleged injury and therefore could not be
aggregated for jurisdictional purposes. See Suber v. Chrysler Corp.,
104 F.3d 578, 588 (3d Cir. 1997). Under the most optimistic scenario in
which Plaintiff's actual damages were deemed to be the full price of the
alignment, the most Plaintiff could hope to recover in statutory damages
amounts to less than $150 (viz., the maximum possible actual damages,
Plaintiff avers in his state court complaint that his putative class is
composed of "thousands" of individuals in the Commonwealth of
Pennsylvania. (Pl.Compl., ¶ 33.) Defendant does not dispute that the
putative plaintiff class could number in the thousands, and the Court has
no reason to doubt Plaintiff's good faith in making this allegation.
Therefore, the Court will assume conservatively that the putative
plaintiff class is composed of 1,000 individuals.
Looking only at compensatory damages recoverable under Pennsylvania
law, Plaintiff remains $74,850 short of the jurisdictional amount. To
make up this shortcoming, the Plaintiff's pro rata share of attorneys'
fees and punitive damages would have to exceed $74,850. Assuming a class
of 1,000 individuals, this means that
[252 F. Supp.2d 125]
the combined attorneys' fees and punitive damages assessed against
Defendant would have to exceed $74,850,000. Even assuming that the
attorneys' fees potentially recoverable at the end of this action could
be quite high, the punitive damage component of the award would still
have to be well over $70,000,000.
If Plaintiff is typical of the class he seeks to represent, the maximum
recoverable statutory damages for the class as a whole would total
$150,000. Even if some of the class members could recover more statutory
damages than $150 (i.e. some may have purchased alignment services from
Sears on numerous occasions), it is hard to imagine that the total
recoverable statutory damages for the class as a whole would exceed
$1,000,000. In order for the Court to find that the amount-in-controversy
requirement is satisfied in this case, the Court would have to conclude
that a reasonable jury could award punitive damages that were at least 70
times the amount of statutory damages (and on the order of 1,000 times
the plaintiff class's actual damages).*fn15 Assuming arguendo that
punitive damages would be recoverable at all in this case (beyond the
treble damages authorized by 73 Pa. Stat. Ann. § 201-9.1(a)), the
Court has no difficulty concluding on the facts alleged in Plaintiff's
complaint that a punitive damage award of 70 times the statutory
damages, or nearly 1,000 times the class's actual damages, would be
excessive and impermissible as a matter of law. To put this in
perspective, the court in McFadden, 1999 WL 715162, 1999 U.S. Dist. LEXIS
13956, refused to assume, for the purpose of assessing satisfaction of
the jurisdictional amount in a class action, that punitive damages in the
amount of four-and-one-half times the compensatory damages were possible
under Pennsylvania's bad faith insurance law. See id. at *14, 1999 WL
715162. See also Bell v. Preferred Life, 320 U.S. 238, 243, 64 S.Ct. 5,
88 L.Ed. 15 (1943).
It is very clear under existing case law that potential punitive
damages and attorneys' fees must be attributed to each member of a
putative class pro rata, and not aggregated and attributed entirely to the
named plaintiff, for the purposes of determining satisfaction of the
jurisdictional amount-in-controversy requirement. In light of this, the
Court cannot find that it has subject matter jurisdiction without also
finding that: (1) a reasonable jury could award punitive damages that are
on the order of 1,000 times the actual damages; and (2) that such an
award would be legally permissible. The Court finds neither, and
therefore concludes that the Defendant has failed to carry its burden of
establishing that the amount-in-controversy requirement for removal has
been satisfied. The Court lacks subject matter jurisdiction over this
case, and will accordingly
[252 F. Supp.2d 126]
remand this case to the Court of Common Pleas of Lackawanna County
pursuant to 28 U.S.C. § 1447(c).
Given that the Court lacks subject matter jurisdiction, Defendant's
pending motion to dismiss (Doc. 2) will be denied as moot.
An appropriate order follows.