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concluding removal would be proper under diversity jurisdiction, but finding amount in controversy not met
Summary of this case from Klein v. Vision Lab Telecommunications, Inc.Opinion
1:03-cv-00367-LJM-WTL.
June 10, 2003.
ORDER ON PLAINTIFFS' MOTION TO REMAND DEFENDANT'S MOTION TO DENY CERTIFY
This cause is now before the Court on the plaintiffs', Gold Seal Termite Pest Control Company, on behalf of itself and all others similarly situated ("Gold Seal"), motion to remand this suit to the Marion County Superior Court. Defendant, DirecTV, Inc. ("DirecTV"), moved for a denial of Gold Seal's motion and also moved to have the Court certify the question of jurisdiction to the Seventh Circuit for interlocutory determination.
Both parties' motions have been fully briefed and the Court has been duly advised. For the reasons discussed herein, Gold Seal's motion to remand is GRANTED. Correspondingly, DirecTV's motion to deny the plaintiffs' motion to remand and to certify is DENIED.
I. BACKGROUND
In this action, Gold Seal seeks to hold DirecTV liable for alleged unsolicited facsimile transmissions that occurred on March 8, 2001, pursuant to the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227(b)(1)(C). Section 227(b)(3) provides a private right of action under the TCPA. It states:
A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State —
(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
Gold Seal asserts that remand is appropriate in this case because § 227(b)(3) gives exclusive jurisdiction to State courts for private suits under the TCPA. Gold Seal supports this assertion with six Courts of Appeals holdings. See Murphey v. Lanier, 204 F.3d 911, 915 (9th Cir. 2000); ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d 513, 520 (3rd Cir. 1998); Foxhall Realty Law Offices, Inc. v. Telecom. Premium Servs., Ltd., 156 F.3d 432, 438 (2d cir. 1998); Nicholson v. Hooters of Augusta, inc., 136 F.3d 1287, 1289, modified, 140 F.3d 989 (11th Cir. 1998); Chair King, Inc. v. Houston Cellular Corp., 131 F.3d 507, 514 (5th Cir. 1997); Int'l Sci. Tech. Inst., Inc. v. Inacom Comm., Inc., 106 F.3d 1146 (4th Cir. 1997). In addition, Gold Seal points to an unpublished decision by this Court that concludes that the Court must "acknowledge the surging tide and the near-deafening roar of these appellate decisions on this issue and yield to their shared wisdom and distilled judgment." Cohen Malad, P.C. v. USMoney Source, Inc., No. IP00-1547-C-B/S, Order Granting Pl.'s Mot. to Remand. The U.S. District Court for the Southern District of Indiana opinion in Cohen Malad came after a more thorough decision that found in favor of jurisdiction even in light of the Fourth Circuit's decision in International Science Technology Institute, Inc. v. Inacom Communications, Inc., Kenro, Inc. v. Fax Daily, Inc., 904 Supp. 912 (S.D. Ind. 1995).
In the alternative, Gold Seal asserts that diversity jurisdiction in this case is inappropriate because the amount in controversy does not exceed the $75,000.00 jurisdictional minimum. Specifically, Gold Seal argues that class notification costs cannot be included in a judgment in this case because the TCPA does not authorize the award of fees. Id. Moreover, Gold Seal argues that costs of notification, like attorneys fees, are yet-to-be incurred expenses that are not "in controversy" at the time of removal. Id. at 13 (citing Hart v. Schering-Plough Corp., 253 F.3d 272, 274 (7th Cir. 2001)). Finally, Gold Seal argues that an award of notification costs, like an award of attorneys' fees, in this case would be subject to the "common fund" doctrine and borne by the class plaintiffs on a pro rata basis. Id. at 15 (citing Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)).
DirecTV asserts that jurisdiction in this Court is appropriate for two independent reasons. First, pursuant to 28 U.S.C. § 1331, this Court has jurisdiction over claims arising under federal law or involving the interpretation of federal law. DirecTV argues that Gold Seal's claims arise under federal law because the TCPA is a federal statute and the language of § 227(b)(3) is permissive rather than exclusive. Def.'s Br. in Opp'n, at 2 (citing Am. Well Works Co. v. Layne Bowler Co., 241 U.S. 257, 260 (1916)). See also Breuer v. Jim's Concrete of Brevard, Inc., 123 S.Ct. 1882, 1884-85 (2003). Therefore, this Court has federal subject matter jurisdiction over the suit because there is no express prohibition for such jurisdiction in the statute.
Second, DirecTV argues that this Court has diversity jurisdiction over the suit because the parties are citizens of different states, and Gold Seal seeks class action certification of this suit and seeks to hold DirecTV responsible for the cost of class notification, the cost of which would exceed the $75,000.00 jurisdictional minimum. Def.'s Br. in Opp'n, at 3. DirecTV asserts that the cost of class notice in a class action is an item that should be attributed to the named plaintiff alone, not allocated pro rata among the class as a whole. Id.; id. at 28 (citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 356 (1978); Eisen v. Carlisle Jacquelin, 417 U.S. 156,179 (1974)). Gold Seal has asserted that there are potentially 8.5 million class members, mail notification of which would exceed $3 million. Id. at 25-26. Therefore, the amount in controversy well exceeds the $75,000.00 threshold.
II. STANDARD
A federal court may remove to its jurisdiction a civil suit filed in state court so long as the district court has original jurisdiction. See Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993) (citing 28 U.S.C. § 1441). Courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum. Id. (citing Illinois v. Kerr-McGee Chem. Corp., 677 F.2d 571, 576 (7th Cir.), cert. denied, 459 U.S. 1049 (1982)). Any doubt regarding jurisdiction should be resolved in favor of the states. Id. (citing Jones v. Gen. Tire Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976). The party seeking removal bears the burden of establishing federal jurisdiction. Id. (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92 (1921)). With respect to the amount in controversy requirement for diversity jurisdiction, it is not enough to point to a possibility that a plaintiff's claim could reach $75,000. In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599, 607 (7th Cir. 1997). Rather, the evidence must establish at least a "reasonable probability" that the amount in controversy requirement is satisfied. NLFC v. Devcom Mid-Am., Inc., 45 F.3d 231, 237 (7th Cir. 1995); King v. Wal-Mart Stores, Inc., 940 F. Supp. 213, 216 (S.D.Ind. 1996); Reason v. Gen'l Motors Corp., 896 F. Supp. 829, 834 (S.D.Ind. 1995).
III. DISCUSSION A. FEDERAL JURISDICTION
The Court finds that DirecTV's attempt to create a jurisdictional split among the Circuit Courts of Appeal by obtaining a ruling from this Court that finds federal jurisdiction over private rights of action brought under the TCPA fails. DirecTV's primary argument is that because a federal statute creates the cause of action, the Court must presume that it has jurisdiction. But, as so clearly pointed out by the Fourth Circuit, such a presumption is ill-founded. See Int'l Sci. Tech. Inst., 106 F.3d at 1151. Federal courts have limited jurisdiction. See id. Therefore, unless jurisdiction is found through a statute, this Court may not exercise jurisdiction over the matter. It is true that 28 U.S.C. § 1331 grants federal courts jurisdiction over claims "arising under the Constitution, laws or treaties of the United States." However, the grant of jurisdiction described by § 1331 is narrower than that of the similarly worded grant of power by the Constitution. See Verlinden B. V. v. Cent. Bank of Nigeria, 461 U.S. 480,495 (1983). Federal-question jurisdiction necessarily depends upon an act of Congress and the corresponding intent of Congress for jurisdiction expressed by statute. See Int'l Sci. Tech. Inst., 106 F.3d at 1153-54.
In the case of the TCPA, Congress did express its intent to create jurisdiction for private rights of action — in State courts. It is clear from a comparison of 47 U.S.C. § 227(b)(3) to another section of the TCPA that Congress did not mean to imply jurisdiction in federal courts under § 227(b)(3). Compare 47 U.S.C. § 227(b)(3) with 47 U.S.C. § 227(f)(2) ("the district courts of the United States . . . shall have exclusive jurisdiction over all civil actions brought under this subsection"). Where Congress meant to grant jurisdiction in federal courts under the TCPA it did so explicitly. See 47 U.S.C. § 227(f)(2). Moreover, as pointed out by the Fourth Circuit in International Science Technology Institute, in the rest of the Communications Act (which the TCPA amended), Congress explicitly provided for concurrent jurisdiction when it so intended. 106 F.3d at 1152 (citing 47 U.S.C. § 214(c), 407, 415(f), 553(c)(1), 555(a), 605(e)(3)(A)). See also Foxhall Realty Law Offices, 156 F.3d at 436 (agreeing with the Fourth Circuit that Congress' explicit grant of concurrent jurisdiction in other parts of the Communications Act evidences Congress' intent to limit jurisdiction to State courts pursuant to 47 U.S.C. § 227(b)(3)). Therefore, reading the entire Communications Act as a whole, the absence of an explicit grant of concurrent jurisdiction in 47 U.S.C. § 227(b)(3) implies that Congress did not intend for federal courts to hear private rights of action under the TCPA.
The Supreme Court's recent holding in Breuer v. Jim's Concrete of Brevard, Inc., 123 S.Ct. 1882 (2003), does not change this analysis. In Breuer, a former employee sued his former employer in a Florida state court for alleged violation of the Fair Labor Standards Act of 1938 ("FLSA"). The employer removed the suit to federal court pursuant to 28 U.S.C. § 1441(a). Id. at 1883. The employee moved to remand the case to Florida State court arguing that the FLSA's provision that an action "may be maintained" in state court was an express exception to the general authorization of removal under 28 U.S.C. § 1441(a). The district court denied the employee's motion and the Eleventh Circuit affirmed.
The Supreme Court held that removal was proper. The Court reasoned that the FLSA provided that an action "may be maintained . . . in any Federal or State court of competent jurisdiction." 29 U.S.C. § 216(c). Therefore, pursuant to 28 U.S.C. § 1331, district courts would have original jurisdiction over FLSA claims because they arise under the laws of the United States. Removal would be improper only if Congress expressly prohibited such removal. Breuer, 123 S.Ct. at 1884. Finding no such prohibition in the FLSA or other statute referencing the FLSA, the Supreme Court concluded that removal was proper. Id. at 1886-87.
DirecTV's reliance upon Breuer is misplaced because unlike in that case where the FLSA's jurisdictional provision expressly provided that federal courts may hear such actions, the similar provision of the TCPA has no similar express grant of federal jurisdiction. Therefore, the analysis in this case would not follow that of Breuer unless first there was a finding of implied federal court jurisdiction. As discussed above, there is no reason to find such implied jurisdiction.
For these reasons, the Court finds that it lacks federal subject matter jurisdiction over Gold Seal's claim under the TCPA. However, DirecTV's removal of the case may still have been proper if diversity jurisdiction lies.
B. DIVERSITY JURISDICTION
Diversity jurisdiction exists if the parties are residents of different states and the amount in controversy exceeds $75,000.00. 28 U.S.C. § 1332. In a class action suit, at least one plaintiff must meet the jurisdictional amount in controversy requirement. See In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997), reh'g denied. If so, the Court has supplemental jurisdiction over the claims of the other putative class members pursuant to 28 U.S.C. § 1367. See id.
In this case, the TCPA provides that private citizens may bring an action either to enjoin violation of the Act or to recover damages in an amount up to $1,500.00. 47 U.S.C. § 227(b)(3). There is no provision that provides for shifting of attorneys' fees or costs. But, DirecTV argues that because in its settlement demand Gold Seal requested that DirecTV pay for notice to putative class members, the Court should attribute the approximate cost of such notice to the named plaintiff for purposes of determining diversity jurisdiction. Def.'s Br. in Opp'n, at 28 (citing Eisen, 417 U.S. at 179; Oppenheimer Fund, 437 U.S. at 356; accord In re Mexico Money Transfer Litig., 267 F.3d 743, 746 (7th Cir. 2001)).
The Court is not convinced that this approach is proper. It is true that the Supreme Court in Eisen espoused the "usual rule . . . that a plaintiff must initially bear the cost of notice to the class." 417 U.S. at 178. In fact, because the plaintiff in Eisen was unwilling to bear the cost of notice to the class as defined in his original complaint, the Supreme Court "remand[ed] the cause with instructions to dismiss the class action as so defined." Id. at 179. However, Eisen speaks to who bears the cost up front; it does not speak to the issue of whether the cost of notice is eventually apportioned among the members of the class. Moreover, Eisen does not sanction the assignment of the cost of notice as a liability of the defendant.
Even if the Court were to consider the cost of notice a liability of the defendant, DirecTV's argument fails. In cases that look at the potential liability of the defendant to determine the amount in controversy, usually in the context of injunctive relief, the courts first determine whether the relief sought by the plaintiff "would require some alteration in the defendant's method of doing business that would cost the defendant at least the statutory minimum," or whether the relief sought "would force the defendant to forgo a benefit to him that is worth more than the threshold amount. . . ." Brand Name Prescription Drugs Antitrust Lit., 123 F.3d at 609, 610, reh'g denied (citing McCarty v. Amoco Pipeline Co., 595 F.2d 389 (7th Cir. 1979)). But, the defendant may not aggregate class members' separate claims for purposes of the jurisdictional amount. Id. at 609. Therefore, whether the cost of notice in this case should be considered an expense attributable only to the named plaintiff seems to turn on whether the class plaintiffs are "asserting an individual right or, rather, a right to an undivided interest in something." Id. at 610. Here, each plaintiff would be asserting an individual right, not an undivided interest in something. Likewise, class notice, even if it is an administrative cost to be borne by DirecTV, would be apportioned to the number of plaintiffs. In other words, the cost to DirecTV increases with the addition of another potential class member, not because of a change in a right that the class has as a whole.
Moreover, the Court agrees with Gold Seal that the "common fund" doctrine would apply to any costs that Gold Seal would incur on behalf of the class. See Boeing Co. v. Van Gemert, 444 U.S. 472 (1980). Under that doctrine, attorneys fees and other costs born by the named plaintiff are shared pro rata among the class members. Here, those costs would include the cost of class notice.
Finally, a holding that allowed defendants to use the cost of notice as a method for creating diversity jurisdiction would directly conflict with the purpose of a class action. Class actions were designed to give plaintiffs with small claims the ability to aggregate resources to enforce those claims. Allowing a defendant to use the aggregated cost of class notice to support diversity jurisdiction would make superfluous the doctrine that the plaintiff may choose his forum. Moreover, such a holding would ensure that every class action filed would automatically meet the amount in controversy requirement, which is inapposite to long-established rules regarding the determination of the amount in controversy for removed class actions. Accord In re Bridgestone/Firestone, Inc., Tires Prod. Liability Lit., IP00-9373-C-B/S, 2003 WL 1873751, *7 n. 17 (S.D. Ind. Apr. 11, 2003) (discussing Brand Name Prescription Drugs, 123 F.3d at 608).
For the foregoing reasons, the Court finds that DirecTV has not evidenced that the amount in controversy exceeds the statutory minimum of $75,000.00. Therefore, this Court does not have diversity jurisdiction over this cause.
IV. CONCLUSION
The Court has found that it lacks federal subject matter jurisdiction and diversity jurisdiction over this matter. Therefore, the cause was improperly removed to this Court and the plaintiffs' motion to remand is GRANTED. Correspondingly, the defendant's motion to deny the plaintiffs' motion to remand and to certify is DENIED. The cause is REMANDED to the Marion County, Indiana, Superior Court. The plaintiffs are awarded their fees and costs incurred as a result of removal, pursuant to 28 U.S.C. § 1447(c). The plaintiffs shall file their petition for fees and costs within fifteen days of the date of this Order; defendants shall have fifteen days to file any response.
IT IS SO ORDERED this 10th day of June, 2003.