Opinion
No. 04 Civ. 2411 (HB).
August 23, 2004
OPINION ORDER
Defendant Domino's Pizza LLC ("Domino's") moves pursuant to Federal Rule of Civil Procedure ("Fed.R.Civ.P.") 12(b)(1) and 12(b)(6) to dismiss plaintiff Mark Leyse's ("Leyse") class-action complaint on the basis that (1) the Court lacks subject matter jurisdiction because plaintiffs have not met the amount in controversy requirement, (2) in order to establish a trespass on land, a plaintiff must first provide notice or a warning that advertisements are not welcome; and (3) Domino's is not the proper party as it does not own or operate any of the Domino's franchises in New York. On the basis that this Court lacks subject matter jurisdiction to hear this matter, defendant's motion is granted.
I. BACKGROUND
A. Factual Background
Plaintiff, on behalf of a similarly situated class of individuals, asserts that he and others were aggrieved by Domino's practice of depositing advertisements on their personal property without prior authorization. Specifically, plaintiffs allege that on or about March 6, 2004, "Domino's deposited onto Leyse's property a written advertisement for its good[s] and services" without "Leyse's permission to do so." Complaint ("Compl.") ¶¶ 9, 11. Plaintiffs also assert that Domino's also deposited advertisements onto the property of "thousands of individuals and entities without having obtained permission to do so, and continues to engage in such conduct." Id. ¶ 12. Plaintiffs argue that Domino's conduct constitutes a trespass to land
B. Procedural History
Plaintiffs filed their complaint in this action on March 26, 2004. Defendant's motion to dismiss was fully-briefed on July 16, 2004, and oral argument was heard on August 18, 2004.
II. DISCUSSION
A. Standard of Review
When considering a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court is required to accept as true all of the facts alleged in the complaint and draw all reasonable inferences in the plaintiffs' favor. See Krimstock v. Kelly, 306 F.3d 40, 47-48 (2d Cir. 2002), cert. den'd, 539 U.S. 969 (2003). A motion to dismiss should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 63 (2d. Cir. 1997) (citations and internal quotations omitted). A motion to dismiss under Rule 12(b)(1) challenges a court's statutory or constitutional power to adjudicate a case and "typically . . . alleges that the federal court lacks either federal question or diversity jurisdiction over the action." 2A James W. Moore et al., Moore's Federal Practice, P 12.07, at 12-49 (2d ed. 1994). In a motion to dismiss for lack of subject matter jurisdiction, the court must construe the complaint broadly and liberally in conformity with the principle set out in Rule 8(f) of the Fed.R.Civ.P., "but argumentative inferences favorable to the pleader will not be drawn." 5A Charles A. Wright et al., Federal Practice and Procedure § 1350, at 218-19 (1990 Supp. 1991). Once challenged, the burden of establishing a federal court's subject matter jurisdiction rests on the party asserting jurisdiction. See Thomson v. Gaskill, 315 U.S. 442, 446 (1942).
B. Amount In Controversy
Plaintiffs assert that this Court has jurisdiction over their suit on the basis of diversity jurisdiction, and therefore must establish both that there is complete diversity between the parties and that "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332(a) (2004). "It is well settled 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.'" Chase Manhattan Bank, N.A. v. American Nat'l Bank and Trust Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir. 1996) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, (1938)). It is undisputed that there is complete diversity of citizenship among the parties here since the named plaintiff is a New York resident and the defendant is a Michigan corporation, with its principal place of business in Michigan. Compl. ¶¶ 6-8. However, the parties dispute whether plaintiffs have met the required jurisdictional amount.
Defendant argues that plaintiffs fail to prove that their claim is in excess of the statutory jurisdictional amount of $75,000. "In determining whether subject matter jurisdiction exists, the court may refer to evidence outside the pleadings and the party asserting jurisdiction bears the burden of proof by a preponderance of the evidence. FSP, Inc. v. Societe Generale, 02 Civ. 4786, 2003 U.S. Dist. LEXIS 493, at *11 (S.D.N.Y.), aff'd, 350 F.3d 27 (2d Cir. 2003) (citing Moser v. Pollin, 294 F.3d 335, 339 (2d Cir. 2002); Luckett v. Bure, 290 F.3d 493, 496-97 (2d Cir. 2002)). Plaintiffs assert that their claim for trespass meets the statutory jurisdictional amount because, even though they claim no actual physical harm to their person or property, the value of the injunctive relief sought to the proposed class of the "thousands of individuals and entities" on whose property Domino's deposited advertisements without prior authorization, exceeds $75,000. Compl. ¶¶ 15, 24. In their complaint, plaintiffs concede that "the damages suffered by most of the individual members of the Class are too small to render prosecution of the claims asserted herein economically feasible on an individual basis . . ." Id. ¶ 17.
The Supreme Court has established that, in the context of a class-action, "each of several plaintiffs asserting separate and distinct claims must satisfy the jurisdictional-amount requirement if his claim is to survive a motion to dismiss." Gilman v. BHC Sec., 104 F.3d 1418, 1422 (2d Cir. 1997) (citing Zahn v. Int'l Paper Co., 414 U.S. 291, 300 (1973)). "This rule against aggregating separate and distinct claims 'plainly mandates . . . that the entire case must be dismissed where none of the plaintiffs claims more than [the jurisdictional minimum.]'" Id. Courts allow aggregation of claims to satisfy the jurisdictional amount "only when several parties have a common, undivided interest and a single title or right is involved." Gilman, 104 F.3d at 1423 (citing 14A Charles A. Wright et al., Federal Practice and Procedure § 3704, at 83 (2d ed. 1985). However, parties only have a common, undivided interest when the "matters cannot be adjudicated without implicating the rights of everyone involved . . ." Gilman, 104 F.3d at 1423 (citing Bishop v. General Motors Corp., 925 F. Supp. 294, 298 (D.N.J. 1996)). In this case, it is clear that since each of the proposed class plaintiffs has separate and distinct claims, stemming from Domino's depositing of advertisements on each proposed class member's property, the claims may not be aggregated to reach the $75,000 jurisdictional requirement.
Although plaintiff, on behalf of a proposed class, does not assert any claims for actual damages, he argues that the value of the injunctive relief requested, namely an order prohibiting Domino's from depositing advertisements without prior authorization, when viewed from Domino's perspective, as the cost to Domino's of ceasing such advertising, exceeds $75,000. While it is undisputed that when injunctive relief is sought, "the amount in controversy is measured by 'the value of the object of the litigation" ( Kings Choice Neckwear, Inc., et al. v. DHL Airways, Inc., et al., 02 Civ. 9580, 2003 U.S. Dist. LEXIS 17507, at *13 (S.D.N.Y. Oct. 1, 2003) (citing Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977)), the parties disagree over from whose perspective the value is determined. In this Circuit, the amount in controversy is measured from the plaintiff's viewpoint. See Kings Choice Neckwear, Inc., et al., 2003 U.S. Dist. LEXIS 17507, at *14-15 (citing Kheel v. Port of N.Y. Auth., 457 F.2d 46, 49 (2d Cir. 1972)). "The Second Circuit has held that the amount in controversy for jurisdictional purposes should be measured strictly from the plaintiff's perspective, without regard to the amount at stake for any other party." 15 Moore's Federal Practice — Civil § 102.109[3] (citing, inter alia, Kheel, 457 F.2d at 48-49). As I explained in Bernard v. Gerber Food Products Co., 938 F. Supp. 218, 222 (S.D.N.Y. 1996), "[t]o evaluate the jurisdictional amount from the defendant's viewpoint would eviscerate . . . [the idea that] the claims of class members may not be aggregated in order to meet the jurisdictional threshold." (internal quotations and citation omitted) (alteration in original).
In arguing that this Court should value the benefit to plaintiffs of the equitable relief sought in terms of the cost to defendant of implementing such relief, the plaintiffs largely rely on the same cases and the same theory as relied upon, unsuccessfully, by the plaintiffs in Doe, et al. v. CBS Broadcasting, Inc., et al., 04 Civ. 312, 2004 U.S. Dist. LEXIS 13220, at *8 (S.D.N.Y. July 13, 2004), a very recent case from this District, which addresses the valuation of damages when only equitable relief is sought. In Doe, et al., the Court rightly determined that the plaintiffs' reliance on Mortgageit Inc. v. Wallberg, 02 Civ. 5911, 2002 U.S. Dist. LEXIS 19681 (S.D.N.Y. Oct. 16, 2002), In re Rezulin Prods. Liab. Litig., 168 F. Supp.2d 136 (S.D.N.Y. 2001), Steinberg v. Nationwide Mut. Ins. Co., 91 F. Supp.2d 540 (E.D.N.Y. 2000) and Katz v. Warner-Lambert Co., 9 F. Supp.2d 363 (S.D.N.Y. 1998) was unfounded as all of these cases are distinguishable. See Doe, et al., 2004 U.S. Dist. LEXIS 13220, at *8. Mortgageit, In re Rezulin Products Liability Litigation, and Katz, the case upon which they both rely, all involve claims of injury stemming from the use of particular drugs, and all demand injunctive relief such as warnings, regular monitoring, and research funds, to decrease the chance of future injuries. In these cases, the courts measure the value of the injunctive relief to the plaintiffs in terms of the cost to the defendants, but stress that "[t]his method does not shift the viewpoint from which value is determined . . ." In re Rezulin Prods. Liab. Litig., 168 F. Supp.2d at 152. Instead, while still valuing the relief from the plaintiffs' perspective, the courts rely upon the cost to the defendants as the best measure of the relief's value to the plaintiffs. For example, "a medical monitoring fund must be funded fully for each individual plaintiff to receive whatever benefits might result." Id. And, "in order to receive the putative benefits of the contemplated medical research, a plaintiff would have either to fund such research herself or prevail in [the] lawsuit." Katz, 9 F. Supp.2d at 365.
In addition, plaintiffs rely on Steinberg v. Nationwide Mutual Ins. Co., et al., 91 F. Supp.2d 540 (E.D.N.Y. 2000), a case seeking both damages and equitable relief. However, Steinberg is not only from a sister district, but it also cites, yet declines to follow established Second Circuit precedent holding that the value of injunctive relief is to be measured from the plaintiff's perspective. Therefore, this Court has no reason to follow Steinberg in contravention of clear Second Circuit precedent.
Plaintiffs assert that since they are not required to notify Domino's that they do not wish to receive advertisements, in order to comply with injunctive relief, Domino's would have to cease completely from depositing advertisements. Therefore, Domino's' cost of compliance with regard to one plaintiff would be the same as its cost of compliance for all plaintiffs — the loss in revenue from the cessation of paper advertisements of the sort targeted herein — an amount in excess of $75,000. In this regard, plaintiffs argue that their case is akin to Mortgageit Inc., In re Rezulin Prods. Liab. Litig., and Katz. I disagree. In this case, unlike in the drug injury cases, the value of the injunctive relief to each individual plaintiff, which amounts to the solace achieved through having no more Domino's advertisements deposited on his or her property, is negligible even if the cost to Domino's of complying with the injunction would be significant. To the contrary, in the drug injury cases, because the plaintiffs "sought to compel the defendants to conduct research, the benefit they were seeking was the value of that research. Therefore, the benefit to plaintiffs was equal to the cost defendants would incur to conduct the research, and defendants' costs were the appropriate measure of the amount in controversy." Doe, et al., 2004 U.S. Dist. LEXIS 13220, at *9. (discussing Katz, 9 F. Supp.2d at 364). Here, each plaintiff is only seeking the benefit of the value to him or herself of the cessation of paper advertising by Domino's. Any method that took into account Domino's costs of complying with the requested injunction would be a back-door form of aggregation. Therefore, plaintiffs have failed to advance a theory that could support the jurisdictional amount required for diversity jurisdiction.
Defendant also argues that the amount in controversy may not be established from the fact that plaintiffs seek attorneys' fees, which could exceed $75,000, and which could be awarded to the class representative pursuant to N.Y.C.P.L.R. 909, with the Court then exercising supplemental jurisdiction over the remainder of the class members' claims. Notably, plaintiffs do not even offer this argument. Nonetheless, this Court finds, as I found in Bernard, that it is premature to consider a potential attorneys' fees award for purposes of the jurisdictional requirement, since, at this stage, the class has yet to be certified, and the amount of attorneys' fees is speculative. Bernard, 938 F. Supp. 218, 223-24.
III. CONCLUSION
For the foregoing reasons, defendant's motion is granted. The clerk is instructed to close this motion and remove this case from my docket.IT IS SO ORDERED.