Opinion
No. 00-1360.
December 28, 2000.
REPORT AND RECOMMENDATION
This cause is before the Court on Plaintiffs' Motion for Remand.
I. ARGUMENTS
Plaintiffs ask the Court to remand this case to the state court from whence it was removed based upon a lack of diversity jurisdiction. Plaintiffs argue that, although the parties are citizens of different states, the amount in controversy involved does not exceed $75,000.00, and therefore, the Court lacks diversity jurisdiction over this case. Plaintiffs assert that the only compensatory dam age which they seek is the reduced value of their Ford Explorers due to the problems alleged in their Complaint. Because no Plaintiff paid more than $75,000.00 for his Explorer and because each Explorer has depreciated in value since its purchase (even without considering the problems alleged in the Complaint), Plaintiffs contend that the amount in controversy has not been satisfied, and thus, diversity jurisdiction is lacking.
In addition, Plaintiffs claim that a potential award of attorneys' fees and punitive damages is insufficient to bestow diversity jurisdiction upon the Court. Plaintiffs argue that given the limited nature of the compensatory damage award sought and available to each Plaintiff, any punitive damage award which would raise an individual Plaintiff's award in excess of $75,000.00 would violate due process and, thus, should not be considered by the Court in determining the amount in controversy for jurisdictional purposes. As for an award of attorneys' fees, Plaintiffs assert that the Court may only consider the actual outlay of fees at the time the lawsuit is filed which, to date, is insufficient to satisfy the amount in controversy requirement of 28 U.S.C. § 1332.
Furthermore, Plaintiffs contend that their requests for injunctive relief do not satisfy the amount in controversy requirement. Plaintiffs claim that Defendant has failed to establish its burden to sustain diversity jurisdiction by making only conclusory allegations regarding the costs of a prospective negative injunction. Because Defendant works and advertises in "model years," Plaintiffs argue that Defendant can decide whether to comply with the Illinois Consumer Fraud and Deceptive Practices Act when it organizes its advertisement campaigns for the next model year, and thus, complying with a prospective negative injunction would not impose costs on Defendant in an amount greater than $75,000.00. Accordingly, Plaintiffs contend that, because the removal statute must be interpreted narrowly and because all doubts concerning removal should be resolved in favor of a remand, the Court should remand this case to the state court.
Defendant argues that diversity jurisdiction is present in this case, and therefore, the Court should deny Plaintiffs' motion for a remand. First, Defendant asserts that, given the broad relief sought by Plaintiffs, it is clear that at least one of the named Plaintiffs has asserted a claim in excess of the $75,000.00 threshold and that the Court has supplemental jurisdiction over all other Plaintiffs' claims. Defendant contends that a federal district court possesses diversity jurisdiction unless it is clear beyond a legal certainty that the plaintiff would, under no circumstances, be entitled to recover the jurisdictional amount. Here, Defendant claims that Plaintiffs' Complaint makes clear that they are seeking a huge punitive damage award which is well in excess of the minimum jurisdictional requirement of $75,000.00.
Moreover, Defendant asserts that because Plaintiffs' Complaint asks for "[a]ll such other relief as the court may deem just and proper", the Complaint could be read as including a request for damages for mental pain and suffering stemming from a fear of serious injury and death proximately caused by the alleged defects of the Explorer. Defendant claims that damages for mental anguish could by themselves lead to a recovery in excess of $75,000.00, thereby conferring diversity jurisdiction upon the Court.
Second, Defendant argues that Plaintiffs' and the putative class members' common and undivided interest in the injunctive relief requested satisfies 28 U.S.C. § 1332's amount in controversy requirement. Defendant contends that the Court should consider Plaintiffs' claims for injunctive relief as a united request to enforce a single title or right in which they have a common and undivided interest in determining whether the jurisdictional amount has been satisfied. Defendant asserts that, when the Court does this, it is clear that the jurisdictional minimum has been met because the conduct complained of cannot be remedied by merely altering future conduct; rather, it will be forced to take corrective actions with past buyers of Explorers, including locating owners, sending notices to the owners, and performing a class-wide accounting with respect to the amount of actual damages allegedly owed to them. Because these measures will require Defendant to incur more than $75,000.00 in administering the injunctive relief sought by Plaintiffs, Defendant contends that the Court has diversity jurisdiction over this matter and asks the Court to deny Plaintiffs' motion for a remand.
II. LEGAL STANDARD
The standard governing motions to remand is well established. Federal district courts "have original jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between citizens of different States . . . ." 28 U.S.C. § 1332(a)(1). If these conditions have been met, a defendant may remove an action filed in state court to federal district court. 28 U.S.C. § 1441 (b). If the conditions have not been met, the plaintiff may file a motion to remand the case back to state court pursuant to 28 U.S.C. § 1447(c).
As the removing party, the defendant has the burden of establishing that the parties are diverse and that the required amount in controversy is at stake. Chase v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997). "A defendant meets this burden by supporting her allegations of jurisdiction with `competent proof,' McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936), which in our circuit requires the defendant to offer evidence which proves `to a reasonable probability that jurisdiction exists.' Gould v. Artisoft, Inc., 1 F.3d 544, 547 (7th Cir. 1993) (quoting Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993))." Id. In other words, "the test set forth in McNutt is satisfied if a defendant in a removal action can show to a reasonable probability that more than [$75,000.00] is in controversy." Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 n. 2 (7th Cir. 1993).
The starting point in making this determination is the face of the complaint because, generally, the plaintiff's evaluation of the amount at stake must be respected. Chase, 110 F.3d at 427; see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938) (holding that courts will accept the plaintiff's good faith allegation of the amount in controversy unless it "appear[s] to a legal certainty that the claim is really for less than the jurisdictional amount."). In fact, a plaintiff may avoid removal to a federal district court by seeking monetary damages less than $75,000.00. Barbers, Hairstyling For Men Women, Inc. v. Bishop, 132 F.3d 1203, 1205 (7th Cir. 1997).
However, when a plaintiff is "seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 437 (1977) (citations omitted). In determining the value of the object of the litigation, the United States Court of Appeals for the Seventh Circuit has adopted an "either view-point rule" under which the district court can measure the value of the declaratory or injunctive relief from the view-point of either party. In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 609 (7th Cir. 1997), citing McCarty v. Amoco Pipeline Co., 595 F.2d 389, 393-95 (7th Cir. 1979). Moreover, in making this determination, the district court may consider matters outside of the parties' pleadings, Jadair, Inc. v. Walt Keeler Co., Inc., 679 F.2d 131, 132-33 (7th Cir. 1982), but it may only consider the "pecuniary result to either party which the judgment would directly produce," not any indirect or speculative results. McCarty, 595 F.2d at 393. Finally, a district court must determine whether it has subject matter jurisdiction over a case removed from state court as of the time when the defendant filed the notice of removal. Tylka v. Gerber Prods. Co., 211 F.3d 445, 448 (7th Cir. 2000); In the Matter of Shell Oil Co., 970 F.2d 355, 356 (7th Cir. 1992) (per curium).
III. ANALYSIS
The Court believes that it possesses diversity jurisdiction in the above-captioned case because, based upon the allegations contained within Plaintiffs' Complaint, a reasonable probability exists that one Plaintiff's claim satisfies the minimum jurisdictional amount. Alternatively, the Court believes that it possesses diversity jurisdiction in this matter because Defendant's costs in administering the injunctive relief sought by Plaintiffs would exceed the minimum amount necessary to confer diversity jurisdiction upon the Court.
In order for this Court to have diversity jurisdiction in this case, at least one Plaintiff's claim must exceed the $75,000.00 minimum threshold. Snyder v. Harris, 394 U.S. 332, 337-38 (1969); Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977-78 (7th Cir. 2000). If one Plaintiff has made a claim for at least $75,000.00, then the Court may exercise supplemental jurisdiction over all other Plaintiffs' and putative class members' claims pursuant to 28 U.S.C. § 1367(c). See Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928, 930-37 (7th Cir. 1996) (interpreting § 1367); see also Del Vecchio, 230 F.3d at 977 (noting the circuit split on the question of whether Zahn's holding survives the enactment of § 1367 and noting the Seventh Circuit's position that it does not). In determining whether one Plaintiff's claim is worth $75,000.00, the Court may consider the alleged compensatory dam ages as well as that Plaintiff's pro rata share of attorney's fees and the potential claim for punitive damages. See Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1271-72 (11th Cir. 2000) (holding that "[i]f there is an individual class member whose claim for compensatory damages, combined with a pro rata share of attorney's fees and the potential claim for punitive damages, exceeds $75,000, then diversity jurisdiction exists over that individual's claim . . . ."); see also Ibrahim v. Old Kent Bank, 1999 WL 25994, * 2 (April 8, 1999) (noting that compensatory damages, a proportionate share of punitive damages, a proportionate share of attorney's fees, and the value of a proportionate share of injunctive relief may be aggregated in determining whether the amount in controversy requirement has been satisfied); see also Sarnoff v. American Home Prod. Corp., 798 F.2d 1075, 1078 (7th Cir. 1986), quoting Batts Restaurant, Inc. v. Commercial Ins. Co. of Newark, 406 F.2d 118, 120 (7th Cir. 1969) (holding that "where a litigant has a right, based on contract, statute, or other legal authority, to an award of attorney's fees if he prevails in the litigation, a reasonable estimate of those fees may be included in determining whether the jurisdictional minimum is satisfied."); see also Goldberg v. CPC Int'l, 678 F.2d 1365, 1367 (9th Cir. 1982) (holding that "attorney's fees can be taken into account in determining the amount in controversy if a statute authorizes fees to a successful litigant.").
The Seventh Circuit has explained that
[w]here punitive damages are required to satisfy the jurisdictional requirement in a diversity case, a two-part inquiry is necessary. The first question is whether punitive dam ages are recoverable as a matter of state law. If the answer is yes, the court has subject matter jurisdiction unless it is clear "beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount."
Anthony v. Security Pacific Fin. Serv., Inc., 75 F.3d 311, 315 (7th Cir. 1996), quoting Cadek v. Great Lakes Dragaway, Inc., 58 F.3d 1209, 1212 (7th Cir. 1995); Risse v. Woodard, 491 F.2d 1170, 1173 (7th Cir. 1974). Thus, the Court must first determine whether punitive damages and attorney's fees are recoverable for an alleged violation of the Illinois Consumer Fraud and Deceptive Practices Act. 815 ILCS 505/1 et seq.
The Illinois Consumer Fraud and Deceptive Practices Act provides that "[a]ny person who suffers actual dam age as a result of a violation of this Act committed by any other person may bring an action against such person. The court, in its discretion may award actual economic damages or any other relief which the court deems proper . . . ." 815 ILCS 505/10a(a). Illinois courts, including the Illinois Supreme Court, have determined that the phrase "any other relief which the court deems proper" includes an award of punitive damages. Martin v. Heinold Commodities, Inc., 163 Ill.2d 33, 643 N.E.2d 734, 756-57, 205 Ill. Dec. 443, 465-66 (Ill. 1994); Malooley v. Alice, 251 Ill. App.3d 51, 621 N.E.2d 265, 269, 190 Ill. Dec. 396, 400 (Ill.App.Ct. 1993); Black v. Iovino, 219 Ill. App.3d 378, 580 N.E.2d 139, 149-50, 162 Ill. Dec. 513, 523-24 (Ill.App.Ct. 1991).
Furthermore, the Act provides: "In any action brought by a person under this Section, the Court may award, in addition to the relief provided in this Section, reasonable attorneys' fees and costs to the prevailing party." 815 ILCS 505/10a(c); see Door Sys., Inc. v. Pro-Line Door Sys., Inc., 126 F.3d 1028, 1029 (7th Cir. 1997) (noting that a court may award attorney's fees to a prevailing party under the Illinois Consumer Fraud and Deceptive Practices Act). Thus, because punitive damages and attorney's fees are recoverable under Illinois law for an alleged violation of the Illinois Consumer Fraud and Deceptive Practices Act, the answer to part one of the Court's inquiry is answered in the affirmative.
As for the second part of the inquiry, the Court cannot say that it is clear beyond a legal certainty that a Plaintiff would, under no circumstances, be entitled to recover the minimal jurisdictional amount. Del Vecchio, 230 F.3d at 978. With allegations in the Complaint regarding Defendant's reprehensible conduct, allegations regarding Defendant's reported revenues, and the purpose of punitive damages being "to punish the defendant for reprehensible conduct and to deter him and others from engaging in similar conduct", Kemezy v. Peters, 79 F.3d 33, 34 (7th Cir. 1996), it appears clear to the Court that a Plaintiff may receive a punitive damage award well in excess of the minimum amount necessary to confer diversity jurisdiction on the Court.
Plaintiffs' case differs from Garbie v. Chrysler Corp., 8 F. Supp.2d 814 (N.D.Ill. 1998) and Hasek v. Chrysler Corp., 1996 WL 48602 (N.D.Ill. Feb. 5, 1996), in the degree of reprehensibility of the defendants' alleged conduct. In Garbie, the defendant allegedly sold vehicles which had defective paint. Garbie, 8 F. Supp.2d at 816-17. In Hasek, the defendant allegedly sold vehicles with inordinate engine idling noise. Hasek, 1996 WL 48602 at *4. On the other hand, Defendant, in the instant case, allegedly sold vehicles which were unsafe, dangerous, and hazardous to operate in ordinary, normal, and foreseeable driving and traffic conditions. As such, it appears clear to the Court that Defendant's alleged conduct would subject it to a greater award of punitive damages than that foreseeable and reasonable in either Garbie or Hasek.
In addition, as Defendant notes, Plaintiffs' Complaint contains a "catch-all" prayer for relief seeking any other relief available. This prayer for relief could be read to include a claim for damages for mental pain and suffering stemming from the threat and fear of serious injury and death stemming from Defendant's allegedly fraudulent representations. See Gilmer v. Walt Disney Co., 915 F. Supp. 1001, 1015 (W.D.Ark. 1996) (holding that the catch-all prayer for relief could constitute grounds for seeking damages for mental anguish despite the plaintiff's claims that her suit was limited to recovery of economic damages); see also Angus v. Shiley, 989 F.2d 142, 146 (3d Cir. 1993) (holding that "the amount in controversy is not measured by the low end of an open-ended claim, but rather by a reasonable reading of the value of the rights being litigated."). Such a recovery by one Plaintiff-when combined with a recovery for compensatory dam ages, a pro rata share of punitive dam ages, and a pro rata share of attorney's fees-would likely exceed the $75,000.00 jurisdictional minimum. Accordingly, the Court believes that diversity jurisdiction is present in this case and recommends that the district court deny Plaintiffs' motion for remand.
Alternatively, the Court believes that it has diversity jurisdiction over this matter because Defendant's costs in administering the injunctive relief sought by Plaintiffs would exceed $75,000.00. The Court believes that this is so because Plaintiffs' interests are "common and undivided" rather than "separate and distinct" as asserted by them.
In making this determination, the Court is persuaded by the reasoning of two recent cases from the United States District Court for the Northern District of Illinois. In Trujillo v. Bridgestone-Firestone, Inc., ___ F. Supp.2d___, 2000 WL 1690308 (N.D.Ill. Nov. 1, 2000), Judge Kocoras found that the jurisdictional minimum amount had been satisfied where the plaintiffs had asked for injunctive relief which would affect "the `general practices' currently employed by Ford and Firestone to respond to the alleged safety problems of the tires at issue." Id. at * 3. Likewise, in Jacobson v. Ford Motor Co., 1999 W L 966432 (N.D.Ill. Sept. 30, 1999), Judge Gottschall found that the amount in controversy exceeded $75,000.00 because "[t]he injunctive relief Jacobson seeks would, if granted, constitute a common and undivided interest of the class as a whole, for she apparently seeks to have a court declare that the general practice of providing customers with goodwill service on a case-by-case basis is illegal, not just that defendants illegally refused to provide free repaints (or other free service) to some purchasers of 1991 Mercury Sables (or other Ford vehicles)." Id. at * 3.
In the instant case, Plaintiffs seek broad relief affecting the class as an undivided whole. Whatever remedial requirements are included in the injunction, if granted, will affect the entire class-not merely the individual class members-because Plaintiffs seek an injunction which will impact and change the manner and way in which Defendant markets, advertises, and sells its Explorers. See Griffith v. Sealtite Corp., 903 F.2d 495, 498 (7th Cir. 1990) (holding that, in a class action, an interest is "common and undivided" where only the class as a whole is entitled to the relief requested). Because Plaintiffs are seeking broad reactive measures, Defendant cannot merely take corrective actions regarding an individual class member's rights without affecting the rights of another putative class member. Id. Because Plaintiffs' and the putative class members' interest must be treated as common and undivided, Defendant's costs in complying with such an injunction would well exceed $75,000.00, and therefore, this Court has diversity jurisdiction over this matter. In re Brand Name Prescription Drugs, 123 F.3d at 609-10; see Trujillo, 2000 WL 1690308 at * 3 (holding that "[a]lthough the parties have not provided any papers regarding projected costs, logic dictates that substantial costs would be involved in expediting the recall according to Plaintiffs' demands.").
Furthermore, although Plaintiffs' prayer for injunctive relief merely seeks "[a]n injunction permanently barring continuation of the conduct complained of herein", Plaintiffs' additional prayer for "all other relief as the court may deem just and proper" could encompass a request for injunctive relief which would require Defendant to take corrective measures such as re-issuing owners manuals and/or providing notice to Plaintiffs and putative class members that their Explorers are defective as alleged in the Complaint. Defendant's costs in complying with such an injunction would well exceed the minimum amount in controversy required to confer diversity jurisdiction upon the Court. See Jacobson, 1999 WL 966432 at * 3 (holding that "simply identifying owners of 1991 Mercury Sables and notifying them of any extension to their paint warranties would cost more than $75,000.").
In short, the Court believes that Plaintiffs' request for injunctive relief amounts to the "enforce[ment] of a single title or right in which Plaintiffs have a common and undivided interest." Snyder, 394 U.S. at 335. Moreover, the Court believes that diversity jurisdiction exists because the injunctive relief sought by Plaintiffs, if granted, would require some alteration in Defendant's business practices which would cost more than the statutory minimum amount of $75,000.00. In re Brand Name Prescription Drugs, 123 F.3d at 609-10; see Ibrahim, 1999 WL 259944, at * 4 (holding that "we cannot say beyond a legal certainty that punitive damages, should they be awarded, combined with Ibrahim's compensatory damages, attorney's fees and the value of injunctive relief, will not exceed the $75,000 threshold.").
Wherefore, the Court RECOMMENDS that Plaintiffs' Motion for Remand (d/e 9) be DENIED. The parties are advised that any objection to this Report and Recommendation must be filed in writing with the Clerk of the Court within ten working days after being served with a copy of this Report and Recommendation. See 28 U.S.C. § 636(b)(1). Failure to file a timely objection will constitute a waiver of objections on appeal. Video Views, Inc. v. Studio 21, Ltd., 797 F.2d 538, 539 (7th Cir. 1986). See also Local Rule 72.2.
The Court stays Plaintiffs' duty to respond to Defendant's pending Motion to Dismiss (d/e 6) pending Judge Mihm's ruling on this Report and Recommendation.