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Fluke v. Cashcall

March 10, 2009

KEVIN FLUKE
v.
CASHCALL, INC.



The opinion of the court was delivered by: Bartle, C.J.

MEMORANDUM

Now pending before the court is the motion of plaintiff, Kevin Fluke, to remand this action for lack of subject matter jurisdiction to the Court of Common Pleas of Philadelphia County under 28 U.S.C. § 1447(c). Plaintiff asserts that the jurisdictional threshold for damages has not been met under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d)(2).

On November 21, 2008, Kevin Fluke, a citizen of Pennsylvania, filed this putative class action lawsuit in state court against CashCall, Inc. ("CashCall"), a California corporation with its principal place of business there. Fluke seeks declaratory and injunctive relief compelling arbitration on a class basis and monetary relief for alleged violations of the Loan Interest and Protection Law, 41 Pa. Stat. Ann. § 201, and the Consumer Discount Company Act, 7 Pa. Stat. Ann. § 6203. He claims that CashCall preys on low income, low credit score borrowers by making loans with usurious interest rates and fees. The class of borrowers he seeks to represent are "citizens" of Pennsylvania who have been or are currently being subjected to unlawful interest rates and fees.

On December 12, 2008, CashCall removed the action to this court on the ground that the requirements of minimal diversity of citizenship and of the amount in controversy have been satisfied pursuant to CAFA, 28 U.S.C. § 1332(d)(2) and 28 U.S.C. §§ 1441, 1446, and 1453. The CAFA vests original jurisdiction over class actions in the district courts where the amount in controversy exceeds $5 million exclusive of interest and costs, and where any member of the class of plaintiffs is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2)(A). As noted above, plaintiff disputes that the damage threshold has been met. The complaint states in Paragraph 24: "Although the claims are numerous, the total aggregate dollar amount of the claims, with interest and attorneys' fees, is less than $5 million."

I.

Plaintiff seeks to represent a class of Pennsylvania citizens who obtained a loan from CashCall for less than $25,000 where the stated interest rate was greater than 6% and interest payments were made to CashCall within the last four years. The complaint alleges CashCall charged and collected interest at the rate of 99% per annum on its loans totaling $25,000 or less. According to Fluke, CashCall is able to collect these usurious rates of interest because it targets unsophisticated low income and low credit score borrowers. In addition to the alleged unlawful interest rates, Fluke complains about the $75 "loan origination fee" charged by CashCall on all loans it originates. Fluke's $2,600 loan from CashCall, which he obtained online, was subject to the $75 loan origination fee and a 99.16% APR. He has paid $2,842.88 to CashCall in repayment but has since stopped doing so. His claim, he maintains, is typical of the claims of the class.

In a February 19, 2009 letter to counsel for CashCall and this court, Fluke's counsel reiterated what is said in the complaint. This letter stated that "under no circumstances will plaintiff, individually or as a class representative, claim or seek to recover more than $5 million in this action, exclusive of interest and costs." Fluke has subsequently reaffirmed this position.*fn1

II.

Under 28 U.S.C. § 1441(a), a defendant may remove, except as otherwise provided by law, any civil action brought in a State court where the district courts have original jurisdiction. However, when jurisdiction is founded on diversity of citizenship as here, this statute "is to be strictly construed against removal." Samuel-Bassett v. Kia Motors Am., 357 F.3d 392, 396 (3d Cir. 2004). Congress has vested original jurisdiction in the district courts under CAFA "of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which ... any member of a class of plaintiffs is a citizen of a State different from any defendant[.]" 28 U.S.C. §1332(a)(2). Pursuant to § 1447(c), a case may be remanded at any time before final judgment if it appears that the district court lacks subject matter jurisdiction.

In Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006), our Court of Appeals outlined a roadmap for deciding amount in controversy challenges in CAFA cases after removal where the complaint expressly limits the requested relief to an amount below the jurisdictional threshold. It explained that:

1) The party wishing to establish subject matter jurisdiction has the burden to prove to a legal certainty that the amount in controversy exceeds the statutory minimum; 2) A plaintiff, if permitted by state laws, may limit her monetary claims to avoid the amount in controversy threshold; and 3) Even if a plaintiff states that her claims fall below the threshold, this Court must look to see if the plaintiff's actual monetary demands in the aggregate exceed the threshold, irrespective of whether the plaintiff states that the demands do not. Key to the present matter is that the plaintiff's pleadings are not dispositive under the legal certainty test. This Court's task is to examine not just the dollar figure offered by the plaintiff but also her actual legal claims.

Id. at 475.*fn2

The class action claims in Morgan asserted violations of the New Jersey Consumer Fraud Act and common law causes of action for fraud, unjust enrichment, and breach of warranties in connection with the alleged false advertising of a skin cream. Id. at 471. The complaint sought trebled compensatory damages, punitive damages, an injunction, interest, court costs and attorneys' fees. As here, plaintiff pleaded that the "total amount ...


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