Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-07-02084/USCOURTS-ca4-07-02084-0/pdf.json

Parties Involved:
AT&T Mobility
Appellant
Cingular Wireless

James Staton
Appellee
James Strawn
Appellee

Document Text:

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JAMES STRAWN and JAMES STATON, 

individually, and on behalf of all

others similarly situated,

Plaintiffs-Appellees,

v.

AT&T MOBILITY LLC, f/k/a  No. 07-2084 Cingular Wireless LLC,

Defendant-Appellant,

and

CINGULAR WIRELESS, a foreign

corporation,

Defendant. 

Appeal from the United States District Court

for the Southern District of West Virginia, at Charleston.

John T. Copenhaver, Jr., District Judge.

(2:06-cv-00988)

Argued: May 14, 2008

Decided: June 30, 2008

Before WILLIAMS, Chief Judge, NIEMEYER, Circuit Judge, and

Alexander WILLIAMS, Jr., United States District Judge for the

District of Maryland, sitting by designation.

Reversed and remanded by published opinion. Judge Niemeyer wrote

the opinion, in which Chief Judge Williams and District Judge Williams joined. 

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COUNSEL

ARGUED: Jeffrey Michael Wakefield, FLAHERTY, SENSABAUGH & BONASSO, PLLC, Charleston, West Virginia, for Appellant. William L. Bands, BELL & BANDS, PLLC, Charleston, West

Virginia, for Appellees. ON BRIEF: Scott L. Winkelman, Jennifer N.

Waters, Lynn E. Parseghian, Katherine J. Nesbitt, CROWELL &

MORING, LLP, Washington, D.C., for Appellant. Harry F. Bell, Jr.,

Tim J. Yianne, BELL & BANDS, PLLC, Charleston, West Virginia,

for Appellees. 

OPINION

NIEMEYER, Circuit Judge: 

After AT&T Mobility LLC, formerly known as Cingular Wireless

LLC, removed a class action from a West Virginia state court to federal court under the Class Action Fairness Act of 2005, the district

court remanded the case, finding that AT&T failed to show that the

matter in controversy exceeded the sum or value of $5 million, exclusive of interest and costs, the jurisdictional threshold established by

the Class Action Fairness Act. 

The class action complaint challenges as unlawful under the West

Virginia Consumer Credit and Protection Act a practice of "bundling," by which AT&T automatically enrolled each new cellular telephone customer in a "Roadside Assistance" program, charging the

customer $2.99 per month if the customer did not opt out of the program. The complaint defined the class as all consumers in West Virginia who purchased cellular telephone service from AT&T and were

charged a $2.99 monthly fee for Roadside Assistance service without

ever having requested the service or having affirmatively enrolled in

the program. AT&T demonstrated that 58,800 of its customers fell

within this definition of the class. 

On the plaintiffs’ motion to remand, the district court read the complaint as defining a narrower class consisting of only those customers

who paid the fee "unwillingly." When AT&T could not provide an

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estimate of how many customers paid the fee but did so unwillingly,

the court held that AT&T had failed to carry its burden of demonstrating the basis for its allegation that the amount in controversy

exceeded $5 million and remanded this case to state court. 

We conclude that the district court either misread or construed too

broadly the issues raised by the complaint and the definition of the

putative class and therefore reverse its order remanding this case to

the state court. We thus remand this case to the district court for further proceedings. 

I

James Strawn and James Staton commenced this class action

against AT&T Mobility LLC in the Circuit Court of Kanawha

County, West Virginia, alleging violations of the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-1-101 et seq.

Strawn and Staton alleged that they were AT&T cellular telephone

subscribers and that in May 2006 they discovered that they were

being assessed a $2.99 monthly charge for the Roadside Assistance

service, which provides jump starts, flat tire assistance, and similar

benefits. They asserted that they "never requested or enrolled for the

service" and therefore were wrongfully charged for it. 

Their complaint challenges AT&T’s "pattern and practice" of automatically enrolling new cellular telephone customers in a free trial of

its optional Roadside Assistance service and, when the free trial ends,

charging them $2.99 per month if they do not opt out. It alleges:

Plaintiffs and Class members were not given an option.

Instead, the Roadside Assistance was part of a "bundled"

transaction, whereby the Plaintiff and Class members had to

catch the Roadside Assistance charge, and opt-out of it. Otherwise, if Plaintiff and Class members failed to catch the

charge, [AT&T] automatically enrolled them for the Roadside Assistance service and imposed a $2.99 monthly

charge.

Compl. ¶ 5. The complaint defines the purported class as: 

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[A]ll consumers who: (1) purchased [an AT&T Mobility

cellular] account in the state of West Virginia; and (2) were

charged a $2.99 monthly charge for the Roadside Assistance

service without ever requesting or enrolling for said service.

Compl. ¶ 20. The definition of the class excludes business customers

and persons affiliated with AT&T. To justify class certification, the

complaint alleges common questions of law and fact that include

"whether [AT&T] engaged in a pattern and practice of imposing a

charge for the Roadside Assistance service without consumers

requesting or enrolling for said service," and "whether [AT&T] violated the WVCCPA by imposing a charge for the Roadside Assistance

service without consumers requesting or enrolling for said service."

Compl. ¶ 23 (emphasis added). 

For relief, the complaint seeks a declaratory judgment that the pattern and practice was deceptive and unlawful under West Virginia law

— specifically, West Virginia Code §§ 46A-6-102(7)(L), 46A-6-

102(7)(M), and 46A-6-104, defining and prohibiting various types of

deception and fraud — and an injunction prohibiting AT&T from

continuing the pattern and practice. The complaint also seeks "damages of which the individual recoveries do not exceed $75,000 for

Plaintiffs or any member of the Class." 

Attached to the complaint are three stipulations, two signed by the

named plaintiffs Strawn and Staton and one signed by counsel for the

named plaintiffs and purported class members. Each of the named

plaintiffs stipulated that he is not seeking damages in excess of

$75,000, and counsel stipulated that their law firm does not seek damages, including attorneys fees and costs, exceeding $75,000 for each

class member and that the law firm "will not accept an aggregate

award for attorneys fees and costs exceeding $5 million inclusive of

any other damages awarded to each named Plaintiff and Class member." 

Relying on the Class Action Fairness Act of 2005 ("CAFA"), Pub.

L. No. 109-2, 119 Stat. 4, AT&T filed a notice of removal. See 28

U.S.C. § 1453. In the notice of removal, AT&T alleged minimal

diversity of citizenship, an aggregate amount in controversy exceeding $5 million, exclusive of interest and costs, and a class size greater

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than 100 persons. See id. § 1332(d). AT&T attached to its notice of

removal an affidavit stating that from the introduction of the Roadside

Assistance program in November 2004 through the filing of the complaint in September 2006, more than 58,800 AT&T customers,

excluding business customers and AT&T employees, remained

enrolled in the Roadside Assistance program beyond their initial free

trial period and thereby were automatically charged the $2.99

monthly fee. The affidavit asserted that based on the minimum statutory damages of $200 for each person, see W. Va. Code § 46A-6-

106(a), the amount in controversy was at least $11,760,000. 

In their response, the plaintiffs argued that the class definition

required AT&T to exclude from the number of class members those

customers who willingly remained enrolled in the Roadside Assistance program. They also maintained that based on the stipulations

attached to the complaint, they "effectively limited damages to $5

million or less," which is below the threshold amount for federal

jurisdiction. 

In light of the plaintiffs’ response, the district court ordered AT&T

to recalculate the estimated class size by narrowing it from 58,800,

which represented all customers automatically enrolled in the Roadside Assistance service program beyond the free trial period, to "the

more limited scope of the putative class" — the subset consisting of

just those customers who did not willingly remain enrolled. AT&T

responded that it was not possible to calculate this number, because

it did not, nor could it, "track a hypothetical subset of Roadside Assistance customers who [were] being charged for Roadside Assistance

but allegedly [did] not want it." 

Based on AT&T’s response, the district court entered a "Judgment

Order" dated September 26, 2007, in which it remanded the case to

the state court for lack of subject matter jurisdiction. In its supporting

"Memorandum Opinion," the court rejected as ineffective the plaintiffs’ effort to limit the amount in controversy through the stipulations

attached to the complaint. Strawn v. AT&T Mobility, Inc., 513 F.

Supp. 2d 599, 602 (S.D. W. Va. 2007). But the court also held that

AT&T bore the burden of establishing the predicates under CAFA for

federal jurisdiction, including the $5-million amount in controversy,

id. at 604, and that AT&T failed to carry this burden because it did

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not "explain how many of the 58,800 eligible consumers who paid the

[$2.99] fee did so unwillingly," id. at 606. The court reasoned, "the

class alleged in the complaint includes only those consumers who

were charged a fee without their authorization," and "[a] group that

includes all of the consumers charged the $2.99 fee extends beyond

the scope of the class sought in the complaint." Id. at 608. On that

basis it granted the plaintiffs’ motion to remand for lack of federal

jurisdiction. 

Under the authorization of 28 U.S.C. § 1453(c), AT&T filed this

appeal, raising the issues of (1) "[w]hether the district court erred by

imposing the burden of proof on [AT&T]" and (2) whether the district

court erred in "finding the amount in controversy requirement of

CAFA not satisfied." The plaintiffs did not cross-appeal to challenge

the district court’s ruling on the ineffectiveness of their effort to limit

by stipulation the amount in controversy. 

II

We begin with the undergirding principle that federal courts, unlike

most state courts, are courts of limited jurisdiction, created by Congress with specified jurisdictional requirements and limitations. See

generally 13 Charles Alan Wright, et al., Federal Practice & Procedure § 3522 (2d ed. 1984 & Supp. 2008). Accordingly, a party seeking to adjudicate a matter in federal court must allege and, when

challenged, must demonstrate the federal court’s jurisdiction over the

matter. Id. If a plaintiff files suit in state court and the defendant seeks

to adjudicate the matter in federal court through removal, it is the

defendant who carries the burden of alleging in his notice of removal

and, if challenged, demonstrating the court’s jurisdiction over the

matter. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192,

200 (4th Cir. 2008) ("[T]he party seeking removal bears the burden

of demonstrating that removal jurisdiction is proper") (quotation

marks omitted); In re Blackwater Security Consulting, LLC, 460 F.3d

576, 583 (4th Cir. 2006) (same); Lontz v. Tharp, 413 F.3d 435, 439

(4th Cir. 2005) (same); Mulcahey v. Columbia Organic Chems. Co.,

29 F.3d 148, 151 (4th Cir. 1994) (same). While a defendant filing a

notice of removal under 28 U.S.C. § 1446(a) need only allege federal

jurisdiction with a short plain statement — just as federal jurisdiction

is pleaded in a complaint — when removal is challenged, the remov6 STRAWN v. AT&T MOBILITY LLC

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ing party bears the burden of demonstrating that removal jurisdiction

is proper. Ellenburg, 519 F.3d at 200. 

AT&T argues that CAFA reversed this long-settled principle that

places the burden of proof on the removing party by "plac[ing] this

burden of proof on the party seeking to avoid federal court." While

acknowledging that CAFA contains no statutory text reversing this

near-canonical rule, AT&T contends that "Congress explained in the

legislative history [of CAFA] that any uncertainty with respect to

jurisdiction should be resolved in favor of finding federal jurisdiction." (Emphasis added). In making this argument, AT&T relies on

the statement made by the House Sponsor of CAFA that if a class

action is removed under CAFA, "the named plaintiff(s) should bear

the burden of demonstrating that the removal was improper," 151

Cong. Rec. H727 (daily ed. Feb. 17, 2005) (statement of Rep. Sensenbrenner), and statements to the same effect in the Senate Judiciary

Committee Report, S. Rep. No. 109-14, at 42-43 (2005), as reprinted

in 2005 U.S.C.C.A.N. 3, 40-41.

The difficulty with AT&T’s position is that it seeks, without textual support, to reverse the established rules for alleging and demonstrating jurisdiction on removal. The relevant portions of CAFA were

enacted to amend the requirements for diversity jurisdiction and to

amend the rules for removing cases to federal court, and while CAFA

expressly altered certain requirements for asserting diversity jurisdiction and removing class actions, it did not reverse the established

principles for alleging and demonstrating jurisdiction on removal. To

the contrary, the removal provision in CAFA specifically refers to and

comports with the general removal provision in § 1446, subject to a

few express exceptions, thus confirming that Congress considered

which rules of the existing removal procedures to keep and which to

reject. See 28 U.S.C. § 1453(b). In the absence of any statutory text

reversing the burden of proof, we presume that Congress legislated

consistently with existing law and "with the knowledge of the interpretation that courts have given to [the] existing statute." United

States v. Langley, 62 F.3d 602, 605 (4th Cir. 1995) (en banc); see also

DiTolla v. Doral Dental IPA of N.Y., LLC, 469 F.3d 271, 275 (2d Cir.

2006) ("We presume that Congress, when it enacted CAFA, knew

where the burden of proof had traditionally been placed. By its

silence, we conclude that Congress chose not to alter that rule"). 

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While AT&T is correct in noting that there are statements in the

legislative history indicating the desire of some members of Congress

to alter the traditional burden, those statements simply "do[ ] not concern any text in the bill that eventually became law." Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005). As the

court in Brill observed, "[W]hen the legislative history stands by

itself, as a naked expression of ‘intent’ unconnected to any enacted

text, it has no more force than an opinion poll of legislators." Id.; see

also Miedema v. Maytag Corp., 450 F.3d 1322, 1329 (11th Cir. 2006)

("Statements in CAFA’s legislative history, standing alone, are [an]

insufficient basis for departing from this well-established rule"). 

We thus conclude that in removing a class action based on diversity jurisdiction under 28 U.S.C. §§ 1453 and 1332(d), the party seeking to invoke federal jurisdiction must allege it in his notice of

removal and, when challenged, demonstrate the basis for federal jurisdiction. In so holding, we join the six other circuits that have considered this issue. See Smith v. Nationwide Prop. & Cas. Ins. Co., 505

F.3d 401, 404-05 (6th Cir. 2007); Morgan v. Gay, 471 F.3d 469, 473

(3d Cir. 2006); DiTolla, 469 F.3d at 275; Miedema, 450 F.3d at 1329-

30; Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 685-86 (9th Cir.

2006); Brill, 427 F.3d at 447-48. 

III

AT&T contends that even if it has the burden of demonstrating federal jurisdiction, it nonetheless properly alleged federal jurisdiction

and, when challenged on the jurisdictional amount, demonstrated the

amount specified in 28 U.S.C. § 1332(d). In its notice of removal,

AT&T alleged minimal diversity, the matter in controversy, and the

class size — all as specified by § 1332(d), which confers federal jurisdiction over specified class actions. The plaintiffs challenged only

AT&T’s allegation of the amount in controversy, arguing (1) that the

class should consist of only those persons who were unwillingly

charged the $2.99 for Roadside Assistance service; and (2) that in any

event, the stipulations they filed limiting their damages claims should

control the amount in controversy. Because the district court rejected

the plaintiffs’ second point and the plaintiffs did not appeal, we are

left with the question of whether AT&T demonstrated that the amount

in controversy should be based on the 58,800 customers who were

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automatically enrolled in the Roadside Assistance service and paid a

$2.99 fee for it. 

AT&T contends that the district court erred in reading the complaint to include only "customers who were ‘unwillingly’ enrolled in

[AT&T’s] Roadside Assistance program," rather than reading it to

include all of the 58,800 West Virginia customers who were automatically enrolled in the program and paid the $2.99 fee. It argues that

plaintiffs’ complaint, fairly read, defines the class as all of AT&T’s

West Virginia customers who were automatically enrolled in the

Roadside Assistance program, inasmuch as all those customers were

allegedly victims of AT&T’s "pattern and practice" of automatically

enrolling the customers in the program without their request. It

claims, therefore, to have demonstrated that the minimum amount of

class damages, if the plaintiffs were to succeed on the merits, would

be $11,760,000 (the minimum statutory damages of $200 per customer x 58,800 customers). 

Responding to this argument, the plaintiffs argue in their papers

that the proposed class includes only "unwilling" customers and

excludes customers who, even though automatically enrolled in the

program, chose to retain the service after being charged the $2.99 fee.

The plaintiffs’ argument, however, amounts to a post hoc characterization of the pattern and practice that they are challenging in the

complaint as illegal, as their characterization is inconsistent with the

descriptions they give in the complaint of the pattern and practice and

of the class of persons described as victims. 

The complaint makes clear that what the plaintiffs are challenging

as unlawful under West Virginia law is AT&T’s allegedly deceptive

practice of "bundling" the Roadside Assistance service with new cellular telephone service, such that all customers were automatically

enrolled in a free trial period and then charged $2.99 per month at the

end of that period if they did not opt out. The class is not defined as

those willing or unwilling to retain the program, but rather as those

who "were not given an option." As the complaint alleges:

Plaintiffs and Class members were not given an option.

Instead, the Roadside Assistance was part of a "bundled"

transaction, whereby the Plaintiff and Class members had to

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catch the Roadside Assistance charge, and opt-out of it. Otherwise, if Plaintiff and Class members failed to catch the

charge, [AT&T] automatically enrolled them for the Roadside Assistance service and imposed a $2.99 monthly

charge. 

Compl. ¶ 5 (emphasis added). Thus, the complaint challenges the initial transaction in which customers were automatically given both

telephone service and Roadside Assistance service, even if the customers opted out later after discovering the charge. That the

automatic-enrollment transaction is the essence of the alleged violation is also reflected by the definition of the class, which is alleged

to include:

all consumers who: (1) purchased [an AT&T cellular]

account in the state of West Virginia; and (2) were charged

a $2.99 monthly charge for the Roadside Assistance service

without ever requesting or enrolling for said service. 

Compl. ¶ 20 (emphasis added). This class definition includes any

AT&T customer who was charged $2.99 after being automatically

enrolled in Roadside Assistance, "without ever requesting or enrolling

for said service." The proposed class makes no distinction between

automatically-enrolled customers who, upon eventually discovering

the $2.99 charge, chose to ratify it and retain the service and those

who, upon discovering the charges, became "unwilling" customers.

Rather, the wrong from the allegedly deceptive practice is described

as having occurred at the time of the automatic enrollment, and the

wrong was not undone after the fact merely because the particular

customer decided, after discovering the charge, that he or she liked

the service and therefore "willingly" retained it. Such subjective

inquiries about a customer’s "willingness" or "unwillingness" in continuing to pay the charge might relate to a limitation of damages by

ratification, but it does not diminish the class defined in the complaint: those who were at the outset automatically enrolled in the program without their request — those who "were not given an option."

At that point, none of the customers were "willing" or "unwilling";

rather, all were unaware. 

AT&T submitted an affidavit stating that approximately 58,800

individual consumers "in West Virginia have remained enrolled in the

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Roadside Assistance program beyond the initial free trial period and

thus have paid [AT&T’s] $2.99 per month charge." And the plaintiffs

have offered nothing to suggest that the 58,800-customer figure is not

an accurate number. 

Therefore, taking (1) the challenged practice as alleged in the complaint, (2) the definition of the class consisting of persons who were

victims of the challenged practice, and (3) AT&T’s data about the

number of persons fitting that class, which were established by affidavit and remained unchallenged, AT&T demonstrated that the matter

in controversy exceeds the sum or value of $5 million, exclusive of

interest and costs, and therefore that the jurisdictional amount under

CAFA is satisfied. See 28 U.S.C. § 1332(d)(2). 

Accordingly, we reverse the district court’s order remanding this

case to state court and remand to the district court for further proceedings. 

REVERSED AND REMANDED

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