Opinion
CIVIL 3:23-CV-02104
06-17-2024
SUZETTE GRAY, Plaintiff v. V-TECH, Defendant
MUNLEY, D.J.
REPORT AND RECOMMENDATION
William I. Arbuckle, U.S. Magistrate Judge
I. INTRODUCTION
Plaintiff Suzette Gray, a resident of Queens County, New York, brings this pro se action (purportedly) under the Court's diversity of citizenship jurisdiction. (Doc. 1). Plaintiff alleges that Defendant V-Tech defrauded her. Id. This case was originally filed in the Southern District of New York, and was transferred (Doc. 4) to this Court on December 19, 2023, along with a pending Motion to Proceed in forma pauperis.
Gray v. V-Tech., No.1:23-CV-10504-LTS (S.D.N.Y Nov. 29, 2023).
II. BACKGROUND AND PROCEDURAL HISTORY
Plaintiff alleges that Defendant “promised [her] millions of dollars if [she] became a member and pa[id] the fee of $138.00.” (Doc. 1, p. 5). The V-Tech advertisement that Plaintiff responded to reads:
WHAT WILL “V-TECH PROVIDE EXACTLY?
The primary key to your success on YouTube is utilizing PROVEN, cash generating videos, FULLY copyright-free, with preexisting &
MASSIVE viewership. Through our proprietary “V-TECH” video packaging techniques, these videos will become YOURS. That's right, a popular video with millions, or even BILLIONS of views, as many do have, will legitimately become YOUR copyrighted property through the application of our techniques.
YouTube accounts, such as the one we will create and manage for you, earn money from “pre-roll” advertisements. These are automatically generated by YouTube according to popularity, and are the “commercials” that appear before a video plays. Every single time a video is played, the account holder receives a fee for the commercial. The more popular the video, the more commercials are viewed. Hence, more income for the account holder. It's an unparalleled “auto pilot” type system.(Doc. 1, p. 12) (emphasis in original). Essentially, V-Tech advertised that a “member” would “do absolutely nothing” and make “massive sums of money.” (Doc. 1, p. 11). Plaintiff “sent in [her] application and the fee, but V-Tech never pa[id] [her] any money.” (Doc. 1, p. 5).
Plaintiff initially lodged her Complaint in the Southern District of New York. However, Plaintiff provides a physical address for V-Tech in East Stroudsburg, Pennsylvania. Based on these allegations the Court in New York determined the Middle District of Pennsylvania was the proper venue and transferred the case here. (Doc. 3).
Plaintiff's Motion to Proceed in forma pauperis, (Doc. 5), was granted (Doc. 6). On December 21, 2023, the Court reviewed Plaintiff's Complaint and found that it appeared the Court did not have subject matter jurisdiction to hear this case. (Doc. 7). The Court issued an Order giving Plaintiff leave to amend to properly invoke the Court's subject matter jurisdiction, warning her that failure to file an amended complaint would result in a recommendation that this case be dismissed. Id. Plaintiff did not file an amended complaint. On February 12, 2024, the Court issued an Order extending the time for Plaintiff to file an amended complaint. (Doc. 8).
On March 6, 2024, the Court received a letter from Plaintiff that said she responded to the Court's December 21, 2023 Order on January 15, 2024, informing the Court she did not want to make any changes to her lawsuit and to proceed with her case. (Doc. 9, p. 1). This letter also requested that Plaintiff be sent “the forms that I need to file the amended complaint against V-Tech.” Id. at p. 2 (emphasis in original). Given that this letter seemed to suggest Plaintiff may have wanted to amend her complaint against V-Tech, on April 19, 2024, the Court issued an Order instructing the Clerk of Court to send Plaintiff a copy of the blank civil complaint form and, out of an abundance of caution, extended Plaintiff's time to file an amended complaint. (Doc. 10).
On May 13, 2024, the Court received a letter from Plaintiff stating that she “will not file an amended complaint, so please go forward with [her] original complaint against V-Tech.” (Doc. 11, p. 1).
Plaintiff appears to bring a state common law claim for fraud, and requests ten million dollars because V-Tech promised her millions of dollars. (Doc. 1, pp. 56).
III. DISCUSSION
The Court has the duty to ensure it has subject matter jurisdiction over a case. Pursuant to Federal Rule of Civil Procedure 12(b)(1), a federal court can dismiss an action for lack of jurisdiction sua sponte.
Stephanatos v. Cohen, No. 6-1310(JAP), 2006 WL 2872519, at *1 n.3 (D.N.J Aug. 7, 2006).
[A]s the Third Circuit has held, “[f]ederal courts are courts of limited jurisdiction, and when there is a question as to our authority to hear a dispute, ‘it is incumbent upon the courts to resolve such doubts, one way or the other, before proceeding to a disposition on the merits.' ” Accordingly, federal courts have an independent obligation to address issues of subject matter jurisdiction sua sponte and may do so at any stage of the litigation.
Phillip v. Atl. City Med. Ctr., 861 F.Supp.2d 459, 466 (D.N.J. 2012) (internal citations omitted for clarity).
“Subject-matter jurisdiction defines the court's authority to hear a given type of case ” Unless Congress has authorized this Court to hear the type of case Plaintiff brings, the case cannot proceed in this Court. “[S]ubject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.”
U.S. v. Morton, 467 U.S. 822, 828 (1984).
U.S. v. Cotton, 535 U.S. 625, 630 (2002).
In this case, Plaintiff seeks to invoke the Court's diversity jurisdiction. A plaintiff “invokes § 1332 jurisdiction when [they] present[] a claim between parties of diverse citizenship that exceeds the required jurisdictional amount, currently $75,000.” To determine whether the amount-in-controversy is met, “[t]he rule . . . is that . . . the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” The court looks at the circumstances “at the time the complaint is filed.”
Arbaugh v. Y&H Corp., 546 U.S. 500, 513 (2006) (footnote omitted) (citing 28 U.S.C. § 1332(a)).
St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938) (footnotes omitted).
Stewart v. Tupperware Corp., 356 F.3d 335, 338 (1st Cir. 2004).
Plaintiff asserts a state common law fraud claim. Thus, Plaintiff seeks to invoke the Court's diversity jurisdiction. This means the amount-in-controversy must exceed $75,000. Plaintiff attempts to meet the amount-in-controversy requirement by seeking ten million dollars. (Doc. 1, p. 6).
“Due to V-Tech fraud and scam I suffered emotional pain.” (Doc. 1, p. 5).
“Under Pennsylvania law, in an action based on fraud, the measure of damages is ‘actual loss,' and not the benefit, or value, of that bargain.” Similarly, under New York law, a plaintiff may not make a “claim [for[] actual damages for the loss of speculative, expected proceeds. Rather, [they] may claim actual damages only for [their] “out-of-pocket” expenses.” Here, Plaintiff asks for ten million dollars because “V-Tech promised [her] millions of dollars ....” (Doc. 1, p. 6). Plaintiff cannot recover for “expected proceeds” or the “benefit, or value” she expected to receive in exchange for paying V-Tech $138. Plaintiff may only recover her actual loss, that is the $138 she paid V-Tech. This is the only out-of-pocket expense Plaintiff alleges, and it clearly does not approach the $75,000 amount-in-controversy threshold requirement. The Court finds that in this case, it appears to be a legal certainty that Plaintiff cannot recover the $10,000,000 she requests, or $75,000 as is required to invoke this Court's diversity jurisdiction. This Court therefore lacks subject matter jurisdiction to hear this case and it should be dismissed.
Delahanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243, 1257 (Pa. Super. Ct. 1983) (internal citations omitted).
Nwanza v. Time, Inc., 125 Fed.Appx. 346, 348 (2d Cir. 2005). See Kaddo v. King Serv., Inc., 250 A.D.2d 948, 949 (N.Y.App.Div. 1998) (“[T]he proper measure of damages is plaintiff's actual pecuniary loss as a result of the fraud, or what is known as the out-of-pocket rule. Damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained.”) (internal citations and quotation marks omitted).
With the limited information available to it, the Court will not decide whether Pennsylvania or New York law is applicable in this case.
Nwanza, 125 Fed.Appx. at 348.
Delahanty, 464 A.2d at 1257.
[The next page contains the Recommendation]
IV. RECOMMENDATION
For the reasons explained above, IT IS RECOMMENDED that:
(1) This case be DISMISSED without prejudice pursuant to Federal Rule of Civil Procedure 12(b)(1).
(2) The Clerk of Court be directed to mark this case CLOSED.
Dated: June 17, 2024 BY THE COURT
s/William I. Arbuckle
William I. Arbuckle
U.S. Magistrate Judge
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
SUZETTE GRAY, Plaintiff v.
V-TECH, Defendant
CIVIL NO. 3:23-CV-02104
ORDER
(MUNLEY, D.J.)
(ARBUCKLE, M.J.)
NOTICE OF LOCAL RULE 72.3
NOTICE IS HEREBY GIVEN that any party may obtain a review of the
Report and Recommendation pursuant to Local Rule 72.3, which provides:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses, or recommit the matter to the magistrate judge with instructions.