PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 15-2080

_____________

AUTO-OWNERS INSURANCE COMPANY

v.

STEVENS & RICCI INC.; 

HYMED GROUP CORPORATION

HYMED GROUP CORPORATION,

 Appellant

_______________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. No. 5-12-cv-07228)

Magistrate Judge: Hon. Henry S. Perkin

_______________

Argued

January 20, 2016

Before: JORDAN, HARDIMAN, and GREENAWAY, JR.,

Circuit Judges.
2

(Opinion Filed: September 1, 2016)

_______________

Jeffrey A. Berman

David M. Oppenheim [ARGUED]

Anderson & Wanca

3701 Algonquin Road, Suite 500

Rolling Meadows, IL 60008

Phillip A. Bock

Bock & Hatch, LLC

134 N. LaSalle Street, Suite 1000

Chicago, IL 60602

Ann M. Caldwell

Caldwell Law Office, LLC

108 W. Willow Grove Avenue, Suite 300

Philadelphia, PA 19118

 Counsel for Appellant

Robert S. Stickley

Langsam Stevens Silver & Hollaender, LLP

1818 Market Street, Suite 3400

Philadelphia, PA 19103

Timothy P. Tobin [ARGUED]

Gislason & Hunter LLP

701 Xenia Ave. South

Suite 500

Minneapolis, MN 55416

 Counsel for Appellee

_______________
3

OPINION OF THE COURT

_______________

JORDAN, Circuit Judge.

In this insurance coverage dispute, Auto-Owners 

Insurance Company (“Auto-Owners”) seeks a declaration that 

it has no obligation to defend or indemnify its insured,

Stevens & Ricci, Inc. (“Stevens & Ricci”), in connection with 

a $2,000,000 judgment entered against Stevens & Ricci as 

part of the settlement of a class action lawsuit. In that class 

action, the Hymed Group Corporation (“Hymed”) alleged, as 

representative of the class, that Stevens & Ricci had violated 

the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. 

§ 227, by sending unsolicited fax advertisements. While that 

class action was pending, Auto-Owners filed this declaratory 

judgment action in the United States District Court for the 

Eastern District of Pennsylvania against both Stevens & Ricci 

and Hymed.

1

 Auto-Owners and Hymed filed cross-motions 

for summary judgment. In its motion, Auto-Owners argued

that the terms of the insurance policy did not obligate it to 

indemnify or defend Stevens & Ricci in the class action; 

Hymed argued, to the contrary, that the policy required AutoOwners to pay the judgment on behalf of its insured.

2

 The 

 

1 By agreement of the parties, the declaratory judgment 

action was heard before a magistrate judge, who was thus 

empowered to enter final judgment. 28 U.S.C. § 636(c). 

2 As more fully explained herein, Hymed, rather than 

Stevens & Ricci, ended up making these coverage arguments 

because Stevens & Ricci settled its stake in the coverage 

dispute in a manner that effectively made Hymed the party 
4

District Court concluded that the sending of unsolicited fax 

advertisements in violation of the TCPA did not fall within 

the terms of the insurance policy, and thus granted AutoOwners’s motion for summary judgment and denied Hymed’s 

cross-motion. Because we agree that the insurance policy 

does not cover the judgment in the underlying class action, 

we will affirm.

I. BACKGROUND

This case began with the improper use of what now 

seems an old-fashioned method of communication: fax 

machines. Stevens & Ricci was solicited by an advertiser 

claiming to have a fax advertising program that complied 

with the TCPA. Relying on that representation, Stevens & 

Ricci allowed the advertiser to fax thousands of 

advertisements to potential customers on its behalf. The 

advertiser sent 18,879 unsolicited advertisements by fax in 

February 2006. 

Much later, on June 1, 2012, Hymed filed a class 

action lawsuit in the United States District Court for the 

Eastern District of Pennsylvania against Stevens & Ricci,

claiming that the advertisements actually did violate the 

TCPA, see Hymed Grp. Corp. v. Stevens & Ricci, Inc., Civil 

Action No. 12-CV-3093 (the “Underlying Action”), which 

prohibits the “use [of] any telephone facsimile machine, 

computer, or other device to send, to a telephone facsimile 

machine, an unsolicited advertisement ... .” 47 U.S.C. 

§ 227(b)(1)(C). Hymed asserted that it and other class 

 

most interested in securing coverage. See infra at pp. 6-7, 9 

n.7.
5

members – numbering, per the complaint, “more than 39 

other recipients” (J.A. at 545) – had not invited or given 

permission to Stevens & Ricci to send the faxes. Hymed’s 

complaint further charged that the unsolicited faxes had 

damaged the recipients by causing them to waste paper and 

toner consumed in the printing process and to lose the use of 

their fax machines when the advertisements were being 

received. In Hymed’s words, the “junk faxes” had also 

interrupted the class members’ “privacy interest in being left 

alone.” (J.A. at 549-50.) For relief, Hymed sought actual or 

statutory damages, whichever was greater, and an injunction 

against future violations. Given the volume of faxes sent, a 

finding of liability to the class under the TCPA, with statutory 

damages of $500 per fax, 47 U.S.C. § 227(b)(3)(B), could 

have resulted in a damage award in the Underlying Action of 

$9,439,500, before trebling.

3

 Such a judgment could have 

bankrupted Stevens & Ricci and caused the dissolution of its 

business. 

During the time that Stevens & Ricci had the

unsolicited faxes sent to Hymed and other class members, it 

was covered by a “Businessowners Insurance Policy” (the 

“Policy”) issued by Auto-Owners. (J.A. at 555.) The Policy 

obligates Auto-Owners to “pay those sums that the insured 

becomes legally obligated to pay as damages because of 

‘bodily injury’, ‘property damage’, ‘personal injury’ or 

‘advertising injury’ to which this insurance applies.” (J.A. at 

563.) The present dispute centers on whether the sending of 

unsolicited faxes inflicted two of those four types of injury on 

 

3 The TCPA permits trebling of statutory damages if 

the defendant acted “willfully or knowingly” in violating the 

statute. 47 U.S.C. § 227(b)(3).
6

the members of the class: property damage and advertising 

injury.

The term “property damage” is defined in the Policy as 

“[p]hysical injury to tangible property, including all resulting 

loss of use of that property.” (J.A. at 576.) For “property 

damage” to be covered under the Policy, it must be caused by 

an “occurrence” (J.A. at 563), which the Policy defines as an 

“accident, including continuous or repeated exposure to 

substantially the same general harmful conditions” (J.A. at 

575). Despite its use of the term, the Policy does not 

separately define an “accident,” though it does exclude from 

coverage any property damage “expected or intended from 

the standpoint of the insured.” (J.A. at 564-65.)

The Policy defines “advertising injury” as injury 

arising out of one or more of the following events:

a. Oral or written publication of material that 

slanders or libels a person or organization or 

disparages a person’s or organization’s goods, 

products or services;

b. Oral or written publication of material that 

violates a person’s right of privacy;

c. Misappropriation of advertising ideas or style 

of doing business; or

d. Infringement of copyright, title or slogan.
7

(J.A. at 573.) To be covered, an “advertising injury” must 

also be inflicted “in the course of advertising [the insured’s] 

goods, products or services.” (J.A. at 563.)

Auto-Owners agreed to defend Stevens & Ricci in the 

Underlying Action, but reserved its right to later challenge 

whether the alleged misconduct (i.e., the sending of 

unsolicited faxes) fell within the terms of the insurance 

policy’s coverage. In November 2013, Hymed, Stevens & 

Ricci, and Auto-Owners reached an agreement to 

compromise and settle the Underlying Action. Among other 

things, the parties agreed to entry of judgment in favor of the 

class, and against Stevens & Ricci, in the amount of 

$2,000,000. Hymed and the class also agreed to seek 

recovery to satisfy the judgment only from Auto-Owners

under the Policy. On December 4, 2014, the District Court in 

the Underlying Action entered an order and final judgment 

approving the settlement and entering the judgment against 

Stevens & Ricci. In its order, the Court specifically found 

that Stevens & Ricci “did not willfully or knowingly violate 

the TCPA.” (J.A. at 24.)

By that time, Auto-Owners had already filed this case 

to clarify its obligations under the Policy. In particular, on 

December 28, 2012, Auto-Owners filed the present

declaratory judgment action, pursuant to 28 U.S.C. § 2201,

against Stevens & Ricci and Hymed, seeking a declaration 

that the Policy did not provide coverage for Hymed’s claims 

in the Underlying Action and that Auto-Owners thus did not 

owe Stevens & Ricci any duty to defend or indemnify.4 It 

 

4 Hymed had previously filed a declaratory judgment 

action on the coverage question in the United States District 
8

filed an amended complaint on January 3, 2013. Stevens &

Ricci never entered an appearance or filed a response.

5

 AutoOwners and Hymed each moved for summary judgment, and

the District Court concluded that the sending of unsolicited 

faxes to Hymed and other class members did not cause the 

sort of injury that falls within the Policy’s definition of either 

“property damage” or “advertising injury.” Accordingly, the 

Court granted Auto-Owners’s motion for summary judgment 

 

Court for the Eastern District of Michigan. That case was 

dismissed for improper venue, because venue was proper in 

the United States District Court for the Eastern District of 

Pennsylvania, where the Underlying Action was then 

pending. See Hymed Grp. Corp. v. Auto Owners Ins. Co., No. 

12-12519, 2012 WL 6642645 (E.D. Mich. Dec. 20, 2012). 

On the day that case was dismissed, Hymed filed another 

declaratory judgment action, this time in the Western District 

of Michigan. That case was then transferred to the Eastern 

District of Pennsylvania and consolidated with the instant 

case in April 2014 by agreement of the parties. The parties 

stipulated that Hymed’s declaratory judgment complaint 

would be treated as a counterclaim in the case filed by AutoOwners. 

5

It appears that, despite having been served, Stevens 

& Ricci never filed an answer to Auto-Owners’s amended

complaint seeking a declaratory judgment. The District Court 

did not issue a default judgment against it, however, opting 

instead to dismiss Auto-Owners’s motion for a default 

judgment without prejudice to Auto-Owners’s opportunity to 

argue later, in its motion for summary judgment, that 

declaratory relief should be granted against all defendants, 

including the absent Stevens & Ricci.
9

and denied Hymed’s cross-motion. Hymed promptly 

appealed. 

II. DISCUSSION

A. Jurisdiction

This is an action under the Declaratory Judgment Act, 

28 U.S.C. § 2201. That Act does not itself create an 

independent basis for federal jurisdiction but instead provides 

a remedy for controversies otherwise properly within the 

court’s subject matter jurisdiction. Skelly Oil Co. v. Phillips 

Petroleum Co., 339 U.S. 667, 671-72 (1950). In bringing its 

action, Auto-Owners invoked the District Court’s diversity 

jurisdiction under 28 U.S.C. § 1332, which has two 

requirements for the establishment of jurisdiction. First, the 

parties must be completely diverse, meaning that “no plaintiff 

can be a citizen of the same state as any of the defendants.” 

Grand Union Supermarkets of the V.I., Inc. v. H.E. Lockhart 

Mgmt., Inc., 316 F.3d 408, 410 (3d Cir. 2003). For

jurisdictional purposes, “a corporation is a citizen of both its 

state of incorporation and the state ‘where it has its principal 

place of business.’” Johnson v. SmithKline Beecham Corp., 

724 F.3d 337, 347 (3d Cir. 2013) (quoting 28 U.S.C. 

§ 1332(c)(1)). Here, there is no dispute that the parties are 

completely diverse: Auto-Owners is based and incorporated 

in Michigan, while Stevens & Ricci is based and incorporated

in Arizona, and Hymed is based and incorporated in 

Pennsylvania.6

 

6 We need not address the citizenship of the various 

unnamed members of the class. For one, those unnamed 

individuals are not parties to this declaratory judgment action. 
10

The second requirement for federal jurisdiction under 

the diversity statute is that the “matter in controversy exceeds 

the sum or value of $75,000 ... .” 28 U.S.C. § 1332(a). 

Meeting that requirement here is not as straightforward as it 

may first appear. Although Auto-Owners and Hymed are 

ultimately fighting over the insurer’s need to pay a 

$2,000,000 judgment against its insured, that judgment is 

based on the settlement of an underlying class action lawsuit 

in which the individual claims of each class member fell well 

below the $75,000 amount-in-controversy threshold. In 

general, the distinct claims of separate plaintiffs cannot be 

aggregated when determining the amount in controversy. 

Werwinski v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 

2002). Given that anti-aggregation rule, we solicited 

supplemental briefing from the parties to address “whether 

and how the amount-in-controversy requirement for federal 

diversity jurisdiction is met in this case.”

7 Hymed now 

 

Even if this were the Underlying Action, “in a federal class 

action only the citizenship of the named class representatives 

must be diverse from that of the defendants.” In re Sch. 

Asbestos Litig., 921 F.2d 1310, 1317 (3d Cir. 1990).

7 We also solicited supplemental briefing on the 

question of whether Hymed has proper Article III standing, as 

required for jurisdiction, “to participate in an action seeking a 

declaration of rights under an insurance contract to which it is 

not a party.” On that issue, the parties agree – correctly – that 

Hymed does have standing. That standing is rooted in our 

previous recognition that, in a declaratory judgment action 

concerning the scope of an insurance policy, “the injured 

party has an independent right to present its case upon the 

ultimate issues, apart from that of the insured, because ‘in 
11

argues that the District Court’s exercise of diversity 

jurisdiction ran afoul of the anti-aggregation rule, and the 

Court thus acted without jurisdiction in granting AutoOwners’s motion for summary judgment.

8

As the party invoking diversity jurisdiction, AutoOwners bears the burden to prove, by a preponderance of the 

evidence, that the amount in controversy exceeds $75,000. 

Judon v. Travelers Prop. Cas. Co. of Am., 773 F.3d 495, 506-

07 (3d Cir. 2014). But that burden is not especially onerous. 

In reviewing the complaint, “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.” St. Paul 

 

many of the liability insurance cases, the most real dispute is 

between the injured third party and the insurance company, 

not between the injured and oftentimes impecunious 

insured.’” Am. Auto. Ins. Co. v. Murray, 658 F.3d 311, 319 

(3d Cir. 2011) (quoting Fed. Kemper Ins. Co. v. Rauscher, 

807 F.2d 345, 354 (3d Cir. 1986)).

8

It is perhaps not a coincidence that Hymed only 

discovered its concern about the District Court’s jurisdiction 

after losing in that Court. But, because the amount-incontroversy issue goes to jurisdiction, it is immaterial that it

only arose on appeal. As we have previously held, “if it 

develops that the requisite amount in controversy was never 

present, even if that fact is not established until the case is on 

appeal, the judgment of the District Court cannot stand.” 

Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 

218 (3d Cir. 1999), abrogated on other grounds by Exxon 

Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005).
12

Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 

(1938). “Accordingly, the question whether a plaintiff’s 

claims pass the ‘legal certainty’ standard is a threshold matter 

that should involve the court in only minimal scrutiny of the 

plaintiff’s claims.” Suber v. Chrysler Corp., 104 F.3d 578, 

583 (3d Cir. 1997).

In making that assessment, “[t]he temporal focus of the 

court’s evaluation ... is on the time that the complaint was 

filed.” Id.; see also Kaufman v. Allstate N.J. Ins. Co., 561 

F.3d 144, 152 (3d Cir. 2009) (“[U]nder a long-standing rule, 

federal diversity jurisdiction is generally determined based on 

the circumstances prevailing at the time the suit was filed.”). 

Subsequent events cannot reduce the amount in controversy 

so as to deprive the district court of jurisdiction, St. Paul 

Mercury Indem., 303 U.S. at 293, nor can later events

increase the amount in controversy and give rise to 

jurisdiction that did not properly exist at the time of the 

complaint’s filing. For our purposes, that means we assess 

whether Auto-Owners met the amount-in-controversy 

threshold by considering only the circumstances that existed 

in January 2013, when Auto-Owners filed its amended 

complaint in this case. Because that was long before the 

parties reached their $2,000,000 settlement of the Underlying 

Action, we must determine whether the amount in 

controversy exceeded $75,000 before the settlement made 

clear the value of Hymed’s underlying claims.

In its amended complaint, Auto-Owners alleged that 

the amount in controversy exceeded $75,000. Typically, 

“[s]uch a general allegation when not traversed is sufficient, 

unless it is qualified by others which so detract from it that 

the court must dismiss sua sponte or on defendants’ motion.” 
13

Gibbs v. Buck, 307 U.S. 66, 72 (1939). Auto-Owners based 

its allegation on averments in the then-pending Underlying 

Action,9 which claimed that Stevens & Ricci had violated the

TCPA, that statutory damages were $500 per violation, and

that “more than 39 other recipients” had received the faxes 

without their permission. (J.A. at 545.) Thus, at a minimum, 

Auto-Owners’s potential financial exposure when it filed its 

amended complaint was $20,000, i.e., $500 statutory damages 

for each of 40 fax recipients. But the complaint in the 

Underlying Action also noted that damages could be trebled, 

further increasing that minimum to $60,000. Again, that sum

represents the minimum exposure, given trebling, and the 

complaint in the Underlying Action specifically noted that 

“more than 39” other individuals received the disputed faxes, 

with no limitation. (J.A. at 545 (emphasis added).) Using the 

statutory measure of damages and considering the potential 

for trebling, only eleven additional faxes would be necessary 

for damages to exceed $75,000.

10

 Importantly, the $60,000 

 

9

In assessing whether the amended complaint 

sufficiently alleged jurisdiction, we may also consider 

“documents referenced therein and attached thereto.” Gould 

Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). 

Here, that includes Hymed’s complaint in the Underlying 

Action, as the amended complaint in the instant case 

repeatedly relies upon Hymed’s own allegations.

10 As it turned out, thousands of unsolicited faxes had 

been sent to a like number of recipients, so that the actual 

amount of the purported damages at the time the complaint 

was filed was plainly adequate, even if not known at the time. 

See State Farm Mut. Auto. Ins. Co. v. Powell, 87 F.3d 93, 97 

(3d Cir. 1996) (distinguishing between subsequent events that 
14

minimum does not include the expense Auto-Owners would

certainly incur in providing a legal defense against Hymed’s 

class action, as the Policy imposes on Auto-Owners a “duty to 

defend” its insured. (J.A. at 563.) That cost of defense in the 

Underlying Action, which can fairly be assumed to be well in 

excess of the $15,000 difference between $60,000 and the 

$75,000 jurisdictional threshold, is properly included in 

determining the amount in controversy here. See State Farm 

Mut. Auto. Ins. Co. v. Powell, 87 F.3d 93, 98 (3d Cir. 1996) 

(“[W]here the underlying instrument or contract itself 

provides for their payment, costs and attorneys’ fees must be 

considered in determining the jurisdictional amount” (internal 

quotation marks omitted).).11

 

change the amount in controversy and subsequent revelations

that clarify whether the amount in controversy was in fact met 

at the time the action was filed, and permitting the latter to be 

considered for assessing the “factual reality” underlying 

jurisdiction).

11 Attorney’s fees do not generally constitute part of 

the amount in controversy because the successful party 

typically does not collect its attorney’s fees. As an exception 

to that rule, however, courts include attorney’s fees in the 

amount-in-controversy calculation when, as in this case, their 

payment is provided for by the terms of an underlying 

contract. See 14AA Charles Alan Wright et al., Federal 

Practice & Procedure § 3712 (4th ed. 2016) (“[T]he amount 

expended for attorney’s fees are a part of the matter in 

controversy for subject matter jurisdiction purposes when 

they are provided for by contract ... , since these are part of 

the liability being enforced. ... The same is true when the 

action is for indemnification for a prior judgment plus the 
15

We have previously recognized 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.” Angus v. Shiley Inc., 989 F.2d 142, 

146 (3d Cir. 1993). Here, in light of the costs that AutoOwners would incur if required to defend the Underlying 

Action and the plausibility of there being a few additional fax 

recipients, we cannot say to a legal certainty that Auto-

 

attorney’s fees incurred in defending the earlier action.”); 

Springstead v. Crawfordsville State Bank, 231 U.S. 541, 541-

42 (1913) (“Could such an attorney’s fee be considered in 

determining whether the jurisdictional amount was involved? 

We think so. ... [T]he moment suit was brought the liability 

to pay the fee became a ‘matter in controversy,’ and as such 

to be computed in making up the required jurisdictional 

amount ... .”); see also Farmers Ins. Co. v. McClain, 603 

F.2d 821, 823 (10th Cir. 1979) (holding that an insurer’s 

potential losses for amount-in-controversy purposes can 

include the cost of its defense of its insured in an underlying 

suit); Stonewall Ins. Co. v. Lopez, 544 F.2d 198, 199 (5th Cir. 

1976) (per curiam) (“The pecuniary value of the obligation to 

defend the separate lawsuit is properly considered in 

determining the existence of the jurisdictional amount ... .”). 

Here, Auto-Owners seeks a declaration of its rights under an 

insurance policy that provides for both indemnification and

defense. Thus, at the time Auto-Owners filed this declaratory 

judgment case, its possible losses were not limited only to the 

value of any potential judgment that might have arisen out of 

the Underlying Action. Those losses also included the costs it 

would incur if required to represent Stevens & Ricci in that 

case.
16

Owners’s declaratory judgment action was valued at or below 

$75,000 when it was filed. We likewise cannot conclude that 

the complaint’s allegation that the amount in controversy 

exceeded $75,000 was made in bad faith.

Consistent with that conclusion, Hymed does not argue

that Auto-Owners claimed more than $75,000 in bad faith.12 

Instead, it contends that, by adding up the potential damages

owed to each of the various class members, Auto-Owners is 

improperly aggregating those claims to cross the 

jurisdictional threshold. Again, the “claims of several 

plaintiffs, if they are separate and distinct, cannot be 

aggregated for purposes of determining the amount in 

controversy.” Werwinski, 286 F.3d at 666 (internal quotation 

marks omitted).

13

 Although declaratory judgment actions do 

not directly involve the award of monetary damages, “it is 

well established that the amount in controversy [in such

 

12 It would be awkward for Hymed to even imply there 

was less than good faith, given that, in both of the declaratory 

judgment actions it filed in Michigan federal courts, see supra 

note 4, it had itself invoked federal diversity jurisdiction and 

alleged that the amount in controversy exceeded $75,000.

13 The Supreme Court has recognized one limitation on 

the anti-aggregation rule, which is inapplicable here. See 

Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 

(2005) (holding that the supplemental jurisdiction statute 

permits the exercise of diversity jurisdiction over additional 

plaintiffs who fail to satisfy the minimum amount-incontroversy requirement, as long as the other elements of 

diversity jurisdiction are present and at least one named 

plaintiff does satisfy the amount-in-controversy requirement).
17

actions] is measured by the value of the object of the 

litigation.” Hunt v. Wash. State Apple Advert. Comm’n, 432 

U.S. 333, 347 (1977); see also 14AA Charles Alan Wright et 

al., Federal Practice & Procedure § 3708 (4th ed. 2016)

(“With regard to actions seeking declaratory relief, the 

amount in controversy is the value of the right or the viability 

of the legal claim to be declared, such as a right to 

indemnification or a duty to defend.”).

Hymed argues that the “object of the litigation” here is 

resolution of a dispute between the many members of the 

class and the insurer, and that Auto-Owners can thus only 

satisfy the amount-in-controversy requirement by improperly

aggregating those various claims. To Hymed, “this action 

always has been a multi-party dispute between Auto-Owners 

and the multiplicity of class claimants.” (Hymed Jan. 8, 2016 

Letter Br. at 9.) Unsurprisingly, Auto-Owners disagrees, 

viewing the case as a unitary controversy between it and its 

insured. Taking that perspective, Auto-Owners argues that,

“in coverage litigation commenced by an insurer, the focus is 

on the amount the insurer will owe to its insured or the value 

of its coverage obligation.” (Auto-Owners Jan. 4, 2016 Letter 

Br. at 1.) Given those two competing positions, we must 

decide whether this case is properly viewed as a dispute 

between Auto-Owners and the many class members – which 

would give rise to aggregation problems – or as a dispute 

between Auto-Owners and its insured concerning its overall 

obligation to defend and indemnify under the Policy.
18

Although we have never before spoken precedentially 

on this question,14 we find persuasive the opinion of the 

United States Court of Appeals for the Seventh Circuit in 

Meridian Security Insurance Company v. Sadowski, 441 F.3d 

536 (7th Cir. 2006) (Easterbrook, J.). There, much like here, 

an insurer sought a declaratory judgment against its insured to 

avoid any obligation to defend a class action alleging that the 

insured had sent unsolicited fax advertisements in violation of 

the TCPA. Id. at 537. Also as here, the underlying class 

action was still pending at the time the declaratory judgment 

action was filed. Id. at 538. In concluding that the district 

court indeed had diversity jurisdiction, the Seventh Circuit 

rejected the very argument that Hymed now advances. 

According to that court, “[the insurer] has not aggregated 

multiple parties’ claims. From its perspective there is only 

one claim – by its insured, for the sum of defense and 

indemnity costs.” Id. at 539. The Seventh Circuit thus held 

that “the anti-aggregation rule does not apply ... just because 

the unitary controversy between these parties reflects the sum 

of many smaller controversies. No more need be said on this 

subject.” Id.

15

 

14 We have previously concluded, in a pair of nonprecedential opinions, that the district court does have 

jurisdiction under such circumstances, though we did not 

address the amount-in-controversy requirement in any detail. 

Nationwide Mut. Ins. Co. v. David Randall Assocs., Inc., 551 

F. App’x 638, 639 n.1 (3d Cir. 2014); St. Paul Fire & Marine 

Ins. Co. v. Brother Int’l Corp., 319 F. App’x 121, 124 (3d 

Cir. 2009).

15 Each case that Hymed cites to the contrary is readily 

distinguishable. It primarily relies on two cases – Siding & 
19

 

Insulation Co. v. Acuity Mut. Ins. Co., 754 F.3d 367 (6th Cir. 

2014), and Travelers Prop. Cas. v. Good, 689 F.3d 714 (7th 

Cir. 2012). Although Siding also involved class claims 

against an insured based on the TCPA, the declaratory 

judgment action in that case was commenced by a class 

representative, not the insurer, and that action did not include 

the insured. 754 F.3d at 368. The Sixth Circuit, looking at 

the case from the perspective of the plaintiff class 

representative, dismissed the case for lack of jurisdiction, 

holding that the only way the class members could meet their 

amount-in-controversy burden was by aggregating their 

claims. Id. at 371-72. Here, Auto-Owners commenced the 

declaratory judgment action. Following the logic of Siding

and taking the case from the perspective of the plaintiff –

here, the insurer rather than the class – the amount in 

controversy is properly regarded as the entire sum AutoOwners could owe under the Policy.

At first glance, Good more closely resembles the 

present suit. The insurer in that case filed the declaratory 

judgment action against its insured, but did so only after the 

settlement of the underlying class action for $16 million. 

Good, 689 F.3d at 716-17. That settlement agreement 

assigned to the class members all of the insured’s claims 

against and rights to payment from the insurer. Id. at 716. As 

a result, the indemnity rights that the insurer was litigating 

had been functionally parceled by the terms of the settlement, 

thus requiring the court to aggregate the insurer’s obligation 

to each member of the class to reach the jurisdictional 

minimum. The Seventh Circuit declined to do so. And 

because it had previously issued Sadowski, the court 

distinguished that prior case on the very grounds we also now 

rely upon:
20

 

The decisive difference between this case and 

[Sadowski] is that at the time the insurer filed 

the declaratory judgment action in that case, the 

insured’s arguable right to recover under its 

policy was still completely its own. No 

assignment had been made. By the time [the 

insurer] filed this action, however, [the insured]

had already assigned its claims to the members 

of the Good class, and no individual class 

member had a claim for more than $75,000. ... 

Once [the insured] made the assignment of 

rights, this was no longer a “unitary 

controversy” between the insurer and its 

insured. It had become a multi-party dispute 

between [the insurer] and thousands of class 

claimants. [Sadowski] is inapposite.

Id. at 718. Here, as in Sadowski, Stevens & Ricci’s right to 

recovery had not been divided among the class members at 

the time the declaratory judgment complaint was filed. The 

subsequent settlement in the Underlying Action did not 

revoke the jurisdiction that had been established.

We recognize that this results in a situation in which 

an insurer can invoke federal jurisdiction in a declaratory 

judgment action while class members cannot. Echoing that 

notion, the Dissent says we are taking an “insurance-company 

viewpoint approach” to the amount-in-controversy question. 

(Dissent Op. at 10.) But our decision reflects no partiality. 

The fact that Auto-Owners can invoke federal jurisdiction 

simply follows from application of the amount-in-controversy 

requirement and its accompanying anti-aggregation rule. To 

Auto-Owners, the amount in controversy exceeds $75,000; 

we need not aggregate claims to cross that threshold. To each 
21

We agree and now adopt Sadowski’s reasoning as our 

own. Viewing this case from the perspective of the insurer at 

the time of filing of the declaratory judgment complaint, 

Auto-Owners’s quarrel was with Stevens & Ricci regarding 

its indemnity obligation under the Policy. The only “amount 

in controversy” that the insurer was then concerned with was 

its total indemnity and defense obligation; it presumably had 

no interest in the way the indemnity sum might later be 

divided among the various class members. Its dispute was 

thus with its insured, not the class. And its overall liability 

(as established above) was not legally certain to fall below the 

jurisdictional minimum.

 

member of the class, the amount in controversy falls short. 

Only one party may invoke our diversity jurisdiction because 

only that party has the requisite amount at stake. We note, 

however, that any concern about one-sidedness should be 

mitigated by the Class Action Fairness Act (“CAFA”), 28 

U.S.C. § 1332(d), which vests district courts with jurisdiction 

over class actions where the aggregate amount in controversy 

exceeds $5,000,000 and the parties are minimally diverse. As 

a consequence, class action plaintiffs may satisfy the amountin-controversy requirement necessary for federal jurisdiction 

if their individual claims exceed $75,000 or if the total 

aggregate claims of the class exceed $5,000,000. Here, the 

aggregate statutory damages of the class, as subsequent 

revelations have made clear, see supra note 10, perhaps 

exceeded the CAFA threshold. In future cases, if class 

members cannot satisfy either amount, they are not then 

entirely without any opportunity for declaratory relief; they 

just need to proceed in state court.
22

Our dissenting colleague disagrees, and would dismiss 

this case for lack of subject-matter jurisdiction. He first 

points out that “Hymed, not Stevens & Ricci, Inc., has been 

defending the suit from the beginning,” and “Stevens & Ricci 

has not so much as entered an appearance in the matter.” 

(Dissent Op. at 1-2.) But that is not something we may 

consider, because – as already noted – “federal diversity 

jurisdiction is generally determined based on the 

circumstances prevailing at the time the suit was filed.” 

Kaufman, 561 F.3d at 152. Auto-Owners filed this 

declaratory judgment action against both Stevens & Ricci and 

Hymed at a time when the Underlying Action was still 

pending. The fact that only Hymed is now defending this 

case does not alter the circumstances that existed at the time it 

was filed.

Next, the Dissent says there is tension between our 

standing jurisprudence, “in which we have stressed that

parties like Hymed have a significant stake” in insurance 

coverage actions, and our amount-in-controversy conclusion 

that “parties like Hymed cannot assert federal jurisdiction in 

declaratory actions seeking similar relief.” (Dissent Op. at 2.) 

There is no such tension. Standing and amount-incontroversy are two distinct inquiries. Hymed certainly had 

standing to participate in this insurance coverage action, see 

supra note 7, but that does not alter the $75,000 amount-incontroversy threshold that it must meet in order for the 

dispute to fall within our jurisdiction.

The Dissent then cites In re Ford Motor Co./Citibank 

(South Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001) for 

the proposition that we should look directly “to Hymed’s 

underlying suit to determine the amount in controversy.” 
23

(Dissent Op. at 6.) But Ford involved multiple plaintiffs who 

each sought injunctive relief. 264 F.3d at 955-56. In 

dismissing that case, the United States Court of Appeals for 

the Ninth Circuit took the same plaintiff-focused approach 

that we now take and held that the amount at stake “depend[s] 

upon the nature and value of the right asserted” by each 

plaintiff. Id. at 959. Our approach here is thus entirely 

consistent with Ford.

16

 The Dissent nonetheless labors to 

create an aggregation problem. Indeed, its approach to 

determining the amount in controversy in declaratory 

judgment cases – to effectively ignore the declaratory 

judgment action altogether and look only at the Underlying 

Action – is unprecedented.17 We must look to the Underlying 

 

16 Despite the Dissent’s charge to the contrary, our 

approach is also consistent with our opinion in Packard v. 

Provident National Bank, 994 F.2d 1039 (3d Cir. 1993). 

Packard involved a claim by various class members against a 

bank, and the parties sought to avoid aggregation problems by 

arguing that the jurisdictional amount should be measured by 

the costs to the bank rather than the damages of each plaintiff. 

994 F.2d at 1050. We held that permitting that method of 

measurement would create aggregation problems. Id. But 

that is not what happened here. In this case, Auto-Owners 

filed suit against its one insured and Hymed. Were the case 

reversed, Packard might prove relevant. As it stands, the 

plaintiff in the declaratory judgment action (Auto-Owners) is 

not aggregating claims to meet the amount-in-controversy 

requirement.

17 Our dissenting colleague takes issue with this 

characterization but cites no cases that have ever taken his 

view.
24

Action to discern the value of the right being litigated here, 

but we cannot, and do not, ignore party status when 

determining whether the plaintiff in the case before us is 

improperly aggregating claims to reach the jurisdictional 

threshold. From Auto-Owners’s perspective, the basic 

dispute is one between it and its insured over the scope of 

overall insurance coverage. Principles of anti-aggregation 

thus remain intact.

The Dissent goes on to change tack, arguing that “the 

total amount potentially owed by Auto-Owners [in the 

Underlying Action] also falls short of the $75,000 threshold.” 

(Dissent Op. at 6.) On that score, we simply disagree. It is 

difficult for us to say to a legal certainty that less than 

$75,000 is at stake in this case, where damages from the faxes 

alone were known to be at least $60,000, the complaint 

specifically said that more individuals received the faxes in 

question, and only eleven additional faxes would be necessary 

to cross the jurisdictional threshold. In apparent recognition 

of those facts, neither party has even raised this argument. 

And, of course, subsequent revelations show that, at the time 

of the complaint, over 18,000 faxes had actually been sent, 

placing a great deal more than $75,000 at issue. See Powell, 

87 F.3d at 97; supra note 10. In any event, we are attuned to 

the admonition 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.” Angus v. Shiley Inc., 989 F.2d 142, 146 (3d Cir. 

1993). The Supreme Court has likewise instructed that we 

may only dismiss if it appears “to a legal certainty that the 

claim is really for less than the jurisdictional amount.” St. 

Paul Mercury Indem. Co., 303 U.S. at 288-89. We do not 

share our dissenting colleague’s certainty.
25

Finally, the Dissent would not take into account 

potential attorney’s fees when determining the amount in 

controversy here, and faults us for an “unnecessary expansion 

of our jurisprudence” on the subject. (Dissent Op. at 8-9.) 

Even if we were to set attorney’s fees aside entirely, that 

would not change our conclusion that the amount in 

controversy exceeds $75,000, for the reasons just set forth. 

But we ought not discount those costs. As we have 

endeavored to explain, supra note 11, Auto-Owners is 

seeking a declaration of its rights and responsibilities with 

respect to a contract that requires it to pay its insured’s 

defense costs. Our precedent on the subject is 

straightforward: “costs and attorneys’ fees should be 

considered part of the amount in controversy for jurisdictional 

purposes when they are mandated by underlying instruments 

or contracts.” Powell, 87 F.3d at 98.18 Here, the underlying 

 

18 Our dissenting colleague says we are “tak[ing] 

Powell out of context,” and uses a block quotation from that 

case to shed light on its reasoning. (Dissent Op. at 7.) One 

could read that block quote, as the Dissent does, as expressing 

some doubt about the rule of law discussed in the case. But 

that is not so. Powell recognized the common-sense notion 

that if the payment of attorney’s fees is provided for by an 

underlying contract, then those fees should be considered for 

amount-in-controversy purposes. 87 F.3d at 98. The 

prevailing party will be awarded those fees, so they are quite 

clearly “in controversy.” In support of that proposition, the 

Powell Court cited the same two cases, Springstead and 

McClain, which we have also cited. See Powell, 87 F.3d at 

98; supra note 11. Until today, there was no debate about 

that rule. Indeed, after collecting some thirty cases to that 

effect, a leading treatise describes the law on this question as 
26

insurance contract mandates that Auto-Owners pay its 

insured’s defense costs, including fees. As the Dissent points 

out, Auto-Owners’s duty to defend Steven & Ricci “only 

applies to suits that fall within coverage.” (Dissent Op. at 7.) 

That is exactly right, which means that the obligation to pay 

attorney’s fees rises and falls with the outcome of this 

coverage dispute. That obligation is thus an inseparable part 

of the “amount in controversy” between Auto-Owners and 

Stevens & Ricci. To ignore those costs is to ignore the reality 

of what is at stake in this litigation.

 

“now quite settled.” 14AA Charles Alan Wright et al., 

Federal Practice & Procedure § 3712 (4th ed. 2016).

The problem we identified in Powell was that a 

previous district court opinion on which a party to the case 

had relied – Nationwide Mut. Ins. Co. v. Rowles, 818 F. Supp. 

852 (E.D. Pa. 1993) – had used that correct rule of law and 

applied it in an improper context. In Rowles, the arbitration 

provision in the underlying contract provided that the costs of 

arbitration would be shared evenly by the parties. Powell, 87 

F.3d at 98. Thus, the amount was not “in controversy” at all; 

it would be borne equally regardless of the outcome of the 

arbitration or litigation. So, when Powell “question[ed] the 

reasoning of the district court’s decision in Rowles,” 87 F.3d 

at 98, it did not call into doubt a settled rule of law. Instead, 

the Powell Court took issue with whether Rowles had 

correctly applied that rule of law to the case at hand – a case 

in which the underlying contract did not make the payment of 

fees depend upon the outcome of the litigation. Here, by 

contrast, the insurance coverage dispute also resolves the fee 

payment dispute; if the claim is covered, then Auto-Owners 

will pay the fees, and vice-versa. The present case thus fits 

easily into the settled rule the Powell Court discussed.
27

Accordingly, satisfaction of the amount-in-controversy 

requirement in this case does not violate the anti-aggregation 

rule, and the District Court had diversity jurisdiction under 28 

U.S.C. § 1332.

B. Standard of Review

Both parties moved for summary judgment under Rule 

56 of the Federal Rules of Civil Procedure. Summary 

judgment is proper when, viewing the evidence in the light 

most favorable to the nonmoving party and drawing all 

inferences in favor of that party, there is no genuine issue of 

material fact and the moving party is entitled to judgment as a 

matter of law. Fed. R. Civ. P. 56(a); Appelmans v. City of

Phila., 826 F.2d 214, 216 (3d Cir. 1987). “This standard does 

not change when the issue is presented in the context of crossmotions for summary judgment.” Appelmans, 826 F.2d at

216. When both parties move for summary judgment, “[t]he 

court must rule on each party’s motion on an individual and 

separate basis, determining, for each side, whether a judgment 

may be entered in accordance with the Rule 56 standard.” 

10A Charles Alan Wright et al., Federal Practice &

Procedure § 2720 (3d ed. 2016). On appeal, “[w]e exercise 

plenary review over an order resolving cross-motions for 

summary judgment,” Tristani ex rel. Karnes v. Richman, 652 

F.3d 360, 366 (3d Cir. 2011), applying the same standard that 

the lower court was obligated to apply under Rule 56,

Smathers v. Multi-Tool, Inc., 298 F.3d 191, 194 (3d Cir.

2002).
28

C. Analysis

A federal court sitting in diversity must apply state 

substantive law. Chamberlain v. Giampapa, 210 F.3d 154, 

158 (3d Cir. 2000). Here, the ultimate merits question is 

whether the sending of faxes in the described circumstances

fell under the Policy’s definition of either “property damage” 

or “advertising injury,” as a matter of state law.19 But before 

reaching that question, we must determine which state’s law 

to apply. The parties disagree on that point. Auto-Owners 

urges Pennsylvania law, given Pennsylvania’s role as the 

forum state for both this declaratory judgment case and the 

Underlying Action. Hymed, on the other hand, says that 

Arizona law should apply. It emphasizes the many 

connections between the Policy and that state: Stevens & 

Ricci is based and incorporated there; the underwriting file on 

 

19 Hymed makes no argument concerning the scope of 

Auto-Owners’s duty to defend Stevens & Ricci, as distinct 

from its duty to indemnify. Hymed argues only that AutoOwners must indemnify its insured per the Policy, and thus 

pay the $2,000,000 settlement. Subject to the terms of the 

insurance policy, an insurer’s duty to defend may be broader 

than its duty to indemnify. Kvaerner Metals Div. of Kvaerner 

U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 896 

n.7 (Pa. 2006). But we need not consider the extent of AutoOwners’s duty to defend its insured given the absence of any 

argument on this issue. Albrecht v. Horn, 485 F.3d 103, 113 

n.3 (3d Cir. 2007) (“An issue that is not discussed in the 

briefs is waived.”). We thus address only the scope of AutoOwners’s duty to indemnify under the Policy – that is, its 

obligation to pay the $2,000,000 judgment.
29

the Policy indicates that the insurance quote was by an

agency based in Tucson; the application for insurance was 

submitted to the Auto-Owners branch in Mesa and reviewed 

by an underwriter there; and the decision to insure Stevens & 

Ricci was made entirely within the Mesa branch. Essentially, 

Hymed argues that Arizona law should apply because that is 

where the insurance contract was formed.20

Because the Policy itself did not contain a choice-oflaw provision, to determine which state’s substantive law 

applies we “must apply the choice of law rules of the forum 

state.” Kruzits v. Okuma Mach. Tool, Inc., 40 F.3d 52, 55 (3d 

Cir. 1994) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 

U.S. 487, 497 (1941)). As in all applications of state law, our 

task “is to predict how the [state] Supreme Court would rule 

if it were deciding this case.” Norfolk S. Ry. Co. v. Basell 

USA Inc., 512 F.3d 86, 91-92 (3d Cir. 2008). This action was 

filed in the Eastern District of Pennsylvania, so we apply 

Pennsylvania choice-of-law rules. In contract cases, those 

rules are not entirely settled. Before 1964, Pennsylvania 

courts applied the law of the place where the contract was 

formed (“lex loci contractus”). That stood in contrast to the 

rule in tort cases, which required application of the law of the 

place where the injury occurred (“lex loci delicti”). In 

Griffith v. United Air Lines, Inc., the Pennsylvania Supreme 

Court abandoned the “lex loci delicti” rule for torts “in favor 

of a more flexible rule which permits analysis of the policies 

 

20 Neither party has argued in favor of applying the law 

of Michigan, the state where Auto-Owners is based and 

where Hymed previously filed two declaratory judgment 

actions of its own, see supra note 4. We therefore do not 

consider Michigan in our choice-of-law analysis.
30

and interests underlying the particular issue before the court.” 

203 A.2d 796, 805 (Pa. 1964). The Griffith court did not 

address whether its new flexible approach to choice-of-law 

questions would also apply to contract claims, thus also 

displacing the “lex loci contractus” rule. Nor, in the years 

since, has the Supreme Court of Pennsylvania had occasion to 

answer that question.

But we have, twice. Almost 40 years ago, we 

“predict[ed] that Pennsylvania w[ould] extend its Griffith

methodology to contract actions.” Melville v. Am. Home 

Assurance Co., 584 F.2d 1306, 1312 (3d Cir. 1978). More

recently, in Hammersmith v. TIG Insurance Co., we 

thoroughly analyzed subsequent precedent and again 

concluded that Pennsylvania would apply Griffith’s flexible 

approach to choice-of-law questions in contract cases. 480 

F.3d 220, 226-29 (3d Cir. 2007). In particular, we 

emphasized that, in Budtel Associates, LP v. Continental 

Casualty Company, the Pennsylvania Superior Court had 

concluded “[a]fter careful reflection” that the “spirit and 

weight of th[e] Commonwealth’s precedents mandate we 

follow the Griffith rule in the contract law context.” Id. at 

228 (quoting Budtel Assocs., LP v. Cont’l Cas. Co., 915 A.2d 

640, 644 (Pa. Super. Ct. 2006)). Although Hymed argues that 

the previous “lex loci contractus” rule should control – and 

thus we should apply Arizona law – it cites no intervening 

Pennsylvania authority that calls our prediction in 

Hammersmith into question. Accordingly, we will continue 

to follow our previous prediction and apply Griffith’s flexible 

choice-of-law analysis.

Under the Griffith approach, “the first step in a choice 

of law analysis under Pennsylvania law is to determine 
31

whether a conflict exists between the laws of the competing 

states.” Budtel Assocs., 915 A.2d at 643. If there are no 

relevant differences between the laws of the two states, the

court need not engage in further choice-of-law analysis, and 

may instead refer to the states’ laws interchangeably. 

Hammersmith, 480 F.3d at 229-30. To determine whether a 

conflict exists, we must decide whether Arizona and 

Pennsylvania law disagree on the proper scope of the

coverage applicable here.

Hymed cites “two significant conflicts” between 

Arizona and Pennsylvania substantive law. (Opening Br. at 

17.) First, it contends that a basic Pennsylvania principle of 

contract interpretation – that courts enforce unambiguous 

policy language – does not apply to the interpretation of 

insurance contracts under Arizona law. Instead, as Hymed’s 

argument goes, Arizona courts interpret insurance contracts 

by looking to the “reasonable expectations of the insured.” 

(Id. at 18 (internal quotation marks omitted).) According to 

Hymed, “in Arizona, even clear and unambiguous boilerplate 

language is ineffective if it contravenes the insured’s 

reasonable expectations.” (Id.)

We reject that argument. To begin with, we do not 

agree that there is a conflict; both states, with limited 

exceptions not applicable here, give dispositive weight to

clear and unambiguous insurance contract language.

21

 But, 

 

21 Pennsylvania and Arizona generally apply clear and 

unambiguous language in an insurance contract. See Erie Ins. 

Exch. v. Conley, 29 A.3d 389, 392 (Pa. Super. Ct. 2011); 

D.M.A.F.B. Fed. Credit Union v. Emp’rs Mut. Liab. Ins. Co. 

of Wis., 396 P.2d 20, 23 (Ariz. 1964). Indeed, both states 
32

 

recognize that the written policy itself manifests the intention 

of the parties. See Madison Constr. Co. v. Harleysville Mut. 

Ins. Co., 735 A.2d 100, 106 (Pa. 1999); Fireman’s Fund Ins. 

Co. v. New Zealand Ins. Co., 439 P.2d 1020, 1021 (Ariz. 

1968). As a narrow exception, Arizona does rely on the 

reasonable expectations of the parties to refuse enforcement 

of “even unambiguous boilerplate terms in standardized 

insurance contracts,” but only in a “limited variety of 

situations.” Gordinier v. Aetna Cas. & Sur. Co., 742 P.2d 

277, 283 (Ariz. 1987) (emphasis in original). Those limited 

situations involve either unambiguous language that is not 

sufficiently understandable to a reasonably-intelligent 

consumer, unusual terms that emasculate apparent coverage, 

or situations where the insurer’s previous conduct created a 

mistaken impression of coverage despite clear language to the 

contrary. Id. at 283-84. That exception, contrary to Hymed’s 

argument, is in line with Pennsylvania law, which also 

recognizes and protects the reasonable expectations of the 

insured “regardless of the ambiguity, or lack thereof, inherent 

in a given set of insurance documents” where policy terms 

may not be readily understandable, Collister v. Nationwide 

Life Ins. Co., 388 A.2d 1346, 1353 (Pa. 1978), or to protect 

the insured from deception or unilateral changes to policy 

terms by the insurer, Tonkovic v. State Farm Mut. Auto. Ins. 

Co., 521 A.2d 920, 925-26 (Pa. 1987).

That narrow exception is irrelevant here, however, as 

Hymed makes no argument that this case falls into any of 

those categories. Instead, Hymed seems to suggest that 

Arizona’s law concerning insurance contract interpretation 

simply traces the expectations of the insured, and Arizona 

courts conclude that an insured has coverage if it reasonably 

thinks it has coverage. (See Reply Br. at 11 n.2 (arguing that, 
33

even if a conflict existed on that broad interpretive principle, 

Hymed makes no effort to detail how or why the use of the 

“reasonable expectation” test would give rise to a relevant

conflict in the substantive law applicable here. As best we 

can tell, Hymed is using the “reasonable expectation” test to 

empower it to conduct a fifty-state legal survey and to 

advocate that Arizona’s law must be whatever the prevailing 

legal theory is across the country since that prevailing law is –

given its popularity – inherently “reasonable.” In Hymed’s 

words, “to suggest that its proffered policy interpretation is 

consistent with a reasonable insured’s expectations, AutoOwners must demonstrate that the interpretation adopted 

explicitly or implicitly by courts nationwide is unreasonable.” 

(Opening Br. at 18.) That argument misperceives the nature 

of our inquiry. When sitting in diversity and conducting a 

choice-of-law analysis pursuant to Pennsylvania conflict 

principles, our job is only to evaluate any conflict between the 

laws of Arizona and Pennsylvania. In its first purported

“conflict,” Hymed makes no argument that those two states’ 

laws are different in any way that actually changes the 

meaning of either of the relevant terms of the Policy:

“property damage” or “advertising injury.” Its argument is 

thus not only wrong on the law – the states’ laws do not 

conflict in how they interpret insurance contracts – but is also 

irrelevant because Hymed fails to connect the purported 

conflict to the law we must apply in this case.

 

under Arizona law, “the reasonable expectation of the insured 

is controlling” (original emphasis)).) That would allow the 

exception to swallow the rule, would be oddly one-sided, and 

is not the law of Arizona.
34

Hymed’s second alleged conflict is more tenable and

relates to differing interpretations of Arizona and 

Pennsylvania courts as to the meaning of “property damage.” 

The Policy requires that any covered “property damage” be 

caused by an “occurrence” (J.A. at 563), which is defined as 

an “accident” (J.A. at 575). The Policy does not define the 

term “accident,” though it does separately exclude from 

coverage any property damage “expected or intended from 

the standpoint of the insured.” (J.A. at 565.) Hymed 

contends that the two states define an “accident” differently. 

Specifically, it says that the two states’ laws are in conflict 

over whether an insurance policy that covers “accidents” 

would extend to the “unintended consequences of intentional 

acts,” in this instance, damage to a fax recipient from an 

intentionally-sent fax. (Opening Br. at 19.)

Hymed argues that “a construction of Pennsylvania 

law” results in such damages being excluded from coverage. 

(Opening Br. at 19.) We agree. In Donegal Mutual 

Insurance Co. v. Baumhammers, the Supreme Court of 

Pennsylvania said that, when “accident” is undefined in an 

insurance policy, Pennsylvania courts should treat the term as 

“refer[ing] to an unexpected and undesirable event occurring 

unintentionally ....” 938 A.2d 286, 292 (Pa. 2007).

[T]he key term in the definition of the 

“accident” is “unexpected” which implies a 

degree of fortuity. An injury therefore is not 

“accidental” if the injury was the natural and

expected result of the insured’s actions. ... See 

also Minnesota Fire and Cas. Co. v. Greenfield, 

855 A.2d 854, 870 (Pa. 2004) (“‘Accident’ has 

been defined in the context of insurance 
35

contracts as an event or happening without 

human agency or, if happening through such 

agency, an event which, under circumstances, is 

unusual and not expected by the person to 

whom it happens.”)

Id. (internal citations omitted). That definition comports with 

the basic purpose of insurance: “to cover only fortuitous 

losses.” United Servs. Auto. Ass’n v. Elitzky, 517 A.2d 982, 

986 (Pa. Super. Ct. 1986).

The intentional conduct of third parties may still be a 

covered “accident” under that definition. By way of example, 

Baumhammers involved a killing spree perpetrated by the son 

of the insured. 938 A.2d at 288. The estates of several of the 

victims sued both the son and his parents, alleging, among 

other claims, negligence on the part of the parents “in failing 

to take possession of [his] gun and/or alert law enforcement 

authorities or mental health care providers about [their son’s]

dangerous propensities.” Id. at 291. The parents sought 

coverage under their insurance, which covered claims for 

bodily injury caused by an “accident.” Id. at 288. The 

Supreme Court of Pennsylvania held that, with respect to the 

insured parents, the shootings qualified as an “accident” 

under the policy. Id. at 293. “The extraordinary shooting 

spree embarked upon by [the son] resulting in injuries to [the 

victims] cannot be said to be the natural and expected result 

of [his parent’s] alleged acts of negligence.” Id. The 

“injuries were caused by an event so unexpected, undesigned 

and fortuitous as to qualify as accidental within the terms of 

the policy.” Id.
36

Here, in contrast, Hymed’s claimed injury is the use of 

ink, toner, and time that was caused by the receipt of junk 

faxes. Those injuries are the natural and expected result of 

the intentional sending of faxes, a far cry from Pennsylvania’s 

definition of an “accident.” Though it did not intend injury, 

Stevens & Ricci clearly intended for the third-party advertiser 

to send the fax advertisements to the members of the class. 

Barring a problem with the communication devices, the 

sending of faxes necessarily results in the receipt of faxes, 

and any sender of a fax knows that its recipient will need to

consume paper and toner and will temporarily lose the use of 

its fax line. That does not happen by accident. While the 

Supreme Court of Pennsylvania has not addressed whether 

unintended damages from faxes sent in violation of the TCPA 

constitute an “accident,” we predict that the court would 

reject coverage under the “property damage” provision of the 

Policy.22

In its effort to manufacture a conflict, Hymed next 

claims that Arizona law would cover its claim as an 

“accident.” Unfortunately for Hymed, Arizona law defines 

an “accident” much the same way as does Pennsylvania law:

 

22 In reaching that conclusion, we are guided and 

persuaded by the extensive analysis of the United States 

District Court for the Eastern District of Pennsylvania, which 

applied Pennsylvania law in the closely analogous case of 

Melrose Hotel Co. v. St. Paul Fire & Marine Insurance Co., 

432 F. Supp. 2d 488 (E.D. Pa. 2006) (rejecting coverage 

under “accident” provision of insurance policy when a thirdparty vendor sent unsolicited fax advertisements in violation 

of the TCPA), aff’d, 503 F.3d 339 (3d Cir. 2007) (judgment 

order).
37

[A]n effect which was or should have been 

reasonably anticipated by an insured person to 

be the natural or probable result of his own 

voluntary acts is not accidental. Or to put it in 

the affirmative form, if the result is one which 

in the ordinary course of affairs would not be 

anticipated by a reasonable person to flow from 

his own acts, it is accidental. The test is, what 

effect should the insured, as a reasonable man, 

expect from his own actions under the 

circumstances.

Cal. State Life Ins. Co. v. Fuqua, 10 P.2d 958, 960 (Ariz. 

1932); see Lennar Corp. v. Auto-Owners Ins. Co., 151 P.3d 

538, 547 (Ariz. Ct. App. 2007) (“Whether an event is 

accidental is evaluated from the perspective of the insured. ... 

[A]n accident is anything that happens or is the result of that 

which is unanticipated and takes place without the insured’s 

foresight or expectation or intention.” (citations and internal 

quotation marks omitted)). Following that definition, as a 

matter of Arizona law just as under Pennsylvania law, the use 

of ink, toner, and time can be regarded as the natural result of 

the intentional sending of faxes.23

 

23 Hymed primarily relies on two cases in its effort to 

demonstrate that the unintentional damage from the sending 

of the faxes is covered by the Policy as interpreted under 

Arizona law – Transamerica Insurance Group v. Meere, 694 

P.2d 181 (Ariz. 1984), and Phoenix Control Systems, Inc. v. 

Insurance Co. of North America, 796 P.2d 463 (Ariz. 1990). 

The question in Transamerica was whether an insurance 

contract that excluded intentional injury would cover 

damages inflicted by an insured acting in self-defense. The 
38

 

Supreme Court of Arizona held that, when an insured acts 

properly in self-defense, resulting injury will be covered 

because, although “[t]he law presumes he intended the result 

which was the natural consequence of his intentional act,” 

one acting in self-defense is “confronted with a risk over 

which he ha[s] little control.” 694 P.2d at 188-89. The court 

thus relied partly on the underlying purpose of insurance: 

protecting “against risks that are outside [the insured’s]

control.” Id. at 185. It would be inconsistent with that 

purpose to exclude coverage for an insured who is simply 

“attempting to avoid a ‘calamity’ which has befallen him.” 

Id. at 186. But insurance is not meant to allow an insured to 

act wrongfully “with the security of knowing that his 

insurance company will ‘pay the piper’ for the damages.” Id.

Similarly, Phoenix Control involved a situation in 

which the insured acted under a claim of right or justification. 

There, the insured intended to use copyrighted material, but 

did so under a belief “that he had the ‘legal right’ to use the 

information because it was in the public domain.” 796 P.2d 

at 468-69. That belief “was based on advice of counsel.” Id. 

at 469. Following Transamerica, the Supreme Court of 

Arizona held that summary judgment in favor of the insurer 

was improper because the insured’s subjective intent in using 

the materials was a disputed fact. Id. at 469-70. In reaching 

that holding, the court noted that, “[b]efore a court may 

inquire into the insured’s subjective intent, the facts must 

indicate that the insured was provoked, privileged, or justified 

in acting.” Id. at 468. Contrary to Hymed’s argument, 

Transamerica and Phoenix Control do not require coverage 

for all insureds who merely assert that they did not intend the 

injury caused. Where no “affirmative claim of [a] privilege” 

exists, Transamerica, 694 P.2d at 183, Arizona law demands 
39

We conclude that there is no conflict between 

Pennsylvania and Arizona law on the question of whether the 

damage to the class members is covered under the Policy’s 

definition of “property damage.” Under either states’ law, 

there is no coverage because the alleged injury was not the 

result of an “accident.” It was, instead, the foreseeable result 

of the intentional sending of faxes to the class recipients.

Finally, Hymed argues that coverage is available

because the damage to class members from receipt of the junk 

faxes qualifies as “advertising injury” under the Policy. 

Because Hymed does not contend that the Arizona definition 

of “advertising injury” differs from that of Pennsylvania, we 

look to Pennsylvania law to answer that question.24 We again 

 

that an insured be held responsible for the foreseeable results 

of his or her actions. Insurance coverage does not insulate an 

insured who “claim[s] that he did not intend the precise injury 

– in character or magnitude – that in fact occurred.” Id. at 

189.

24 As previously discussed, Hymed relies on its 

misapprehension of Arizona law regarding the “reasonable 

expectations of the insured” exception as a way to survey the 

nationwide legal landscape and to argue that Arizona law has 

incorporated Hymed’s preferred definition of “advertising 

injury.” Although Hymed cites law from a number of 

jurisdictions to support its argument that “advertising injury” 

coverage exists here, it omits any citations from one notable 

jurisdiction: Arizona. Given the absence of any proper 

argument or even citation to Arizona law, we apply the law of 

Pennsylvania.
40

conclude, as did the District Court, that the claimed injury 

falls outside of the scope of the Policy’s coverage.

The Policy defines “advertising injury” as, among 

other things: “Oral or written publication of material that 

violates a person’s right of privacy.” (J.A. at 573.)25 

Although the Policy does not define the term “privacy,”

numerous state and federal courts have considered whether 

violations of the TCPA are covered by insurance policies that 

include similar or identical language to that at issue here. Of 

particular note is the decision of the Pennsylvania Superior 

Court in Telecommunications Network Design v. Brethren 

Mutual Insurance Co. (“Brethren”), which collects cases that 

organize the covered “right of privacy” into two broad 

categories: the privacy interest in secrecy and the privacy 

interest in seclusion. 5 A.3d 331, 335-36 (Pa. Super. Ct. 

2010). Secrecy- based privacy rights protect private

information, while seclusion-based privacy rights protect the 

right to be left alone. The TCPA protects only the latter

category of privacy interest, by shielding people from 

unsolicited messages. The content of the messages (i.e., 

whether they include private information) is immaterial under 

the TCPA. “Congress took aim at unsolicited advertisements, 

 

25 The Policy also defines “advertising injury” as: 

“Oral or written publication of material that slanders or libels 

a person or organization or disparages a person’s or 

organization’s goods, products or services”; 

“Misappropriation of advertising ideas or style of doing 

business”; and “Infringement of copyright, title or slogan.” 

(J.A. at 573.) Hymed does not argue that its damages fall 

under any of those three definitions, so we do not address 

them, except in the comparative way noted hereafter.
41

not the content of those advertisements.” Melrose Hotel Co. 

v. St. Paul Fire & Marine Ins. Co., 432 F. Supp. 2d 488, 502 

(E.D. Pa. 2006), aff’d, 503 F.3d 339 (3d Cir. 2007) (judgment 

order). The sending of unsolicited faxes does not necessarily

result in the dissemination of confidential information. 

Rather, “an unsolicited fax intrudes upon the right to be free 

from nuisance.” Id. at 501. “Accordingly, the TCPA seeks to 

protect privacy interests in seclusion, not secrecy.” Id. That

purpose is consistent with the type of injury that Hymed 

alleged in its complaint, saying, “[t]he [Stevens & Ricci] 

faxes unlawfully interrupted the ... class members’ privacy 

interests in being left alone.” (J.A. at 550.)

The Policy does not cover that injury. Read in context, 

the Policy provides coverage only for violations of the

privacy interest in secrecy, and thus does not cover violations 

of a right to seclusion. This is amply demonstrated by the 

other three offenses that the Policy includes within the 

definition of “advertising injury”: “Oral or written publication 

of material that slanders or libels a person or organization or 

disparages a person’s or organization’s goods, products or 

services”; “Misappropriation of advertising ideas or style of 

doing business”; and “Infringement of copyright, title or 

slogan.” (J.A. at 573.) All three of those offenses – slander, 

misappropriation, and infringement – “focus on harm arising 

from the content of an advertisement rather than harm arising 

from mere receipt of an advertisement.” Auto-Owners Ins. 

Co. v. Websolv Computing, Inc., 580 F.3d 543, 551 (7th Cir. 

2009) (interpreting an identical “advertising injury” provision 

to exclude coverage for the sending of unsolicited faxes). 

That content-dependent coverage clarifies the scope of the 

Policy’s “advertising injury” provision: it protects against 

injuries caused by the improper content of a published
42

advertisement.26 The Policy’s protection of the “right of 

privacy” is thus logically limited to a privacy interest the 

infringement of which depends upon the content of the 

advertisements: in other words, the privacy right to secrecy.

None of the allegations in the Underlying Action relate 

in any way to the content of the faxed advertisements. The 

faxes caused the alleged damage because they were received

without permission, not because of their content. At no point 

did Hymed allege that those unsolicited faxes included 

confidential or otherwise secret information about any of the 

class members. Because the Policy’s “advertising injury” 

deals only with the publication of private information, it 

strongly suggests that the injury alleged in the Underlying 

Action falls outside of the scope of that protection.

And what the provision’s context suggests its plain 

text confirms. Again, as relevant here, the Policy defines 

“advertising injury” to include “[o]ral or written publication 

of material that violates a person’s right of privacy.” (J.A. at 

573 (emphasis added).) In that definition, the phrase “that 

violates a person’s right of privacy” modifies the term 

“material.” See Pa. Dep’t of Banking v. NCAS of Del., LLC, 

 

26 See Riccio v. Am. Republic Ins. Co., 705 A.2d 422, 

426 (Pa. 1997) (“[A]n insurance policy, like every other 

written contract, must be read in its entirety and the intent of 

the policy is gathered from consideration of the entire 

instrument.”); Northway Vill. No. 3, Inc. v. Northway Props., 

Inc., 244 A.2d 47, 50 (Pa. 1968) (“[T]he meaning of words 

may be indicated or controlled by those words with which 

they are associated. Words are known by the company they 

keep.”).
43

948 A.2d 752, 760 (Pa. 2008) (“[T]he last antecedent rule ... 

advises that a proviso usually is construed to apply only to the 

provision or clause immediately preceding it.”); Buntz v. Gen. 

Am. Life Ins. Co., 7 A.2d 93, 95 (Pa. Super. Ct. 1939) 

(applying rule of the last antecedent to the interpretation of an

insurance contract).

27

 Thus, it must be the “material” itself, 

rather than its “publication,” that violates a person’s right of 

privacy. See ACS Sys., Inc. v. St. Paul Fire & Marine Ins. 

Co., 53 Cal. Rptr. 3d 786, 796 (Cal. Ct. App. 2007) 

(construing analogous provision and concluding “that 

‘material’ is not only the last antecedent of ‘that’ but is also 

its only antecedent”). That “would be the case only if the 

material contained confidential information and violated the 

victim’s right to secrecy.” State Farm Gen. Ins. Co. v. JT’s 

Frames, Inc., 104 Cal. Rptr. 3d 573, 586 (Cal. Ct. App. 2010)

(using the rule of the last antecedent to construe identicallyworded provision). The text of the relevant provision of the 

Policy, as well as its broader context, thus compels a contentdependent view of the privacy interest meant to be protected.

Of course, our ultimate endeavor is to apply 

Pennsylvania law to determine the scope of the Policy’s 

“advertising injury” provision. Although the Supreme Court 

of Pennsylvania has not addressed that question, the Superior 

Court in Brethren interpreted verbatim contract language and 

reached the same conclusion as we do here, for largely the 

 

27 We recognize that the rule of the last antecedent is 

“not an absolute and can assuredly be overcome by other 

indicia of meaning ... .” Barnhart v. Thomas, 540 U.S. 20, 26 

(2003). But here, those other indicia of meaning – the 

surrounding language already described – confirm the rule’s 

applicability rather than undermine it.
44

reasons we have addressed. Brethren, 5 A.3d at 337. We 

regard decisions of an intermediate appellate court as 

“indic[ative] of how the state’s highest court might decide the 

issue.” McGowan v. Univ. of Scranton, 759 F.2d 287, 291 

(3d Cir. 1985) (internal quotation marks omitted). Such 

decisions can even constitute “presumptive evidence” of state 

law. Nat’l Sur. Corp. v. Midland Bank, 551 F.2d 21, 30 (3d 

Cir. 1977). We emphasize that this case raises the exact same 

question as did Brethren – the policy language is identical, 

the underlying TCPA violation is identical, and the claimed 

damages for that violation are identical.

28

 We thus defer to 

the intermediate appellate court’s decision as a well-reasoned 

interpretation of Pennsylvania state law.29

 

28 Brethren also represents a validation of the earlier 

prediction of state law made by the Eastern District of 

Pennsylvania in Melrose Hotel, “which applied Pennsylvania 

policy interpretation rules to an insurance policy containing a 

nearly identical clause to that in the instant matter and 

concluded that there was no duty to defend.” Brethren, 5 

A.3d at 336 (citing Melrose Hotel, 432 F. Supp. 2d 488).

29 Hymed argues that the Policy’s “advertising injury” 

definition “provides coverage for violations of all rights of 

privacy.” (Opening Br. at 26.) It does so by contrasting the 

Policy’s coverage for “publication of material that violates a 

person’s right of privacy” (J.A. at 573 (emphasis added)), 

with the “advertising injury” language in Melrose Hotel, 

which extended coverage to the act of “[m]aking known to 

any person or organization covered material that violates a 

person’s right to privacy,” 432 F. Supp. 2d at 491 (emphasis 

added). According to Hymed, the “making known to” 

formulation makes abundantly clear the content-dependent 
45

III. CONCLUSION

For the foregoing reasons, we will affirm the judgment 

of the District Court.

 

nature of the insurance coverage, whereas the “publishing” 

language of the Policy here requires coverage by virtue of the 

mere act of sending a fax, regardless of its content. Hymed 

finds support for this distinction primarily in a First Circuit 

decision applying Massachusetts law. See Cynosure, Inc. v. 

St. Paul Fire & Marine Ins. Co., 645 F.3d 1, 3-4 (1st Cir. 

2011) (Souter, J., retired). That distinction is unpersuasive as 

a matter of Pennsylvania law, however, in light of the 

Commonwealth’s definition of “publication” with respect to 

claims of invasion of privacy, which requires dissemination to 

the public at large. OneBeacon Am. Ins. Co. v. Urban 

Outfitters, Inc., 21 F. Supp. 3d 426, 436-37 (E.D. Pa. 2014), 

aff’d, 625 F. App’x 177, 180 (3d Cir. 2015). And, given 

Brethren’s contrary conclusion interpreting Pennsylvania law, 

the First Circuit’s view of Massachusetts law provides scant 

support for Hymed’s argument. Were that not enough, we 

also note that the Seventh Circuit has twice concluded that the 

same “publication” language covers only invasions of the 

privacy interest in secrecy. Auto-Owners Ins. Co. v. Websolv 

Computing, Inc., 580 F.3d 543, 551 (7th Cir. 2009); Am. 

States Ins. Co. v. Capital Assocs. of Jackson Cty., Inc., 392 

F.3d 939, 942-43 (7th Cir. 2004), declined to follow by Valley 

Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 323 

(Ill. 2006).
GREENAWAY, JR., Circuit Judge, dissenting,

I would dismiss for lack of subject matter jurisdiction. 

In deciding that the amount-in-controversy threshold is 

satisfied, the majority adopts the reasoning in Meridian 

Security Insurance Company v. Sadowski, 441 F.3d 536, 539 

(7th Cir. 2006), to conclude that the rule against aggregation

does not apply to this declaratory judgment action because “at 

the time of filing of the declaratory judgment complaint, 

Auto-Owners’s quarrel was with Stevens & Ricci regarding 

its indemnity obligation under the Policy . . . [and] [i]ts 

dispute was thus with its insured, not the class.” Majority Op. 

at 21. I write separately because I am unconvinced that this 

approach is permissible in light of the anti-aggregation rule, 

and believe that, in reaching its conclusion, the majority 

obfuscates our jurisprudence in two important areas. 

First, the majority’s view that the instant controversy is

“unitary” is questionable as a practical matter and creates 

tension with our previous decisions. Plaintiff-Appellee AutoOwners Insurance Company named Appellant Hymed Group 

Corporation as a defendant in its declaratory action “in the 

hope of attaining a binding judgment against both the insured 

and the injured party,” American Automobile Insurance 

Company v. Murray, 658 F.3d 311, 319 (3d Cir. 2011); 

moreover, Hymed, not Stevens & Ricci, Inc., has been 

defending the suit from the beginning. In other words, we

are not presented with a unitary controversy between AutoOwners and Stevens & Ricci because, in reality, the presence 

of Hymed reflects the fact that a “controversy exist[s] 

between the insurance company and the injured [parties].” Id. 

at 319. 
2

It is hard to conceive of what controversy actually 

exists between Auto-Owners and Stevens & Ricci given the 

fact that Stevens & Ricci has not so much as entered an 

appearance in the matter. As Auto-Owners itself states in its 

Brief: “Hymed and Auto-Owners are the parties currently 

engaged in the ‘real dispute’ that has reached this Court on 

appeal . . . and Hymed (and the class members) are the only 

ones that have a financial interest in the coverage issue . . . .” 

Appellee’s Supp. Br. at 12. 

The notion that insurance coverage disputes occur only 

between the insurance company and its insured fits uneasily

with our Article III standing decisions in which we have 

stressed that parties like Hymed have a significant stake. See

Murray, 658 F.3d at 319 (explaining that an injured party has 

a “particularized interest” in an insurance coverage suit 

“because a determination of . . . coverage would dictate its 

ability to receive the full benefit of the . . . lawsuit”); see also

Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 354 (3d 

Cir. 1986) (“Concluding that the injured party has an 

independent, and not a derivative right, to be heard, is not 

only jurisprudentially sound, but is also realistic[.]”). 

As the majority notes, the import of its decision is that 

parties like Hymed cannot assert federal jurisdiction in 

declaratory actions seeking similar relief. In my view, this 

retreats from our previous decisions emphasizing the

particularized interest of the injured party. The majority 

observes that “[s]tanding and amount-in-controversy are two 

distinct inquiries.” Majority Op. at 22. It misses the point.

My uneasiness with the majority’s characterization of 

coverage disputes arises from the practical anomaly of the 

real party in interest losing part of its stake in the suit. 
3

Further, I believe that the majority’s approach is 

essentially a run around the anti-aggregation rule. We have

prohibited measuring the amount-in-controversy by the

defendant’s total cost on the basis that it violates antiaggregation principles. In Packard v. Provident National 

Bank, 994 F.2d 1039, 1050 (3d Cir. 1993) we stressed that 

“allowing the amount in controversy to be measured by the 

defendant’s cost would eviscerate Snyder [v. Harris, 394 U.S. 

332 (1969)]’s holding that the claims of class members may 

not be aggregated in order to meet the jurisdictional 

threshold,” and thus declined to do so. 

The majority’s response to this reasoning is that it is 

not aggregating but rather assessing the amount-incontroversy as the total “value of the right being litigated”

from the perspective of Auto-Owners. Majority Op. at 24. 

On this point, the majority invokes the plaintiff’s viewpoint

rule, under which the test for determining the amount-incontroversy relies solely on the value of the benefit to the 

plaintiff. In other words, the majority believes that because 

the defendant in the underlying action is now the plaintiff, the 

reasoning in Packard does not apply. 

But the majority’s approach does not actually elude the 

aggregation of class members’ claims. This becomes clear if 

we consider courts’ treatment of the “either viewpoint” 

approach, under which the amount-in-controversy is based on 

the pecuniary result to either party that would be produced by 

the judgment. See 14AA Charles A. Wright et al., Federal 

Practice and Procedure § 3702.5 (4th ed. 2016). 

Courts addressing the either-viewpoint approach have 

declined to adopt the rule in suits involving class actions, for

the simple fact that total cost is the same as aggregation. See
4

In re Ford Motor Co./Citibank (South Dakota), N.A., 264 

F.3d 952, 958 (9th Cir. 2001). This is exactly what we 

explained in Packard: aggregation is not avoided by shifting

perspective or semantics—whether one calls it “total cost” or 

“total detriment,” or “value of the right being litigated,” if one 

arrives at that total through aggregation of individual claims,

it violates Snyder. Concluding otherwise, we explained, 

disturbs long-standing anti-aggregation principles. 

The Ninth Circuit Court of Appeals has made the same 

point. In Ford Motor Co., 264 F.3d at 958, class-action 

plaintiffs seeking injunctive relief invoked the “either 

viewpoint” rule and argued that the amount-in-controversy

should be viewed as the total detriment to the defendant. The 

court rejected this approach, because of the “inherent 

conflict” between the application of the approach and the 

anti-aggregation rule, explaining that “‘total detriment’ is 

basically the same thing as aggregation, and . . . where the 

equitable relief sought is but a means through which the 

individual claims may be satisfied, the ban on aggregation 

applies with equal force to the equitable as well as the 

monetary relief.” Id. at 959.

Here, the relief requested is different but the 

implications are the same. Auto-Owners asks us to view the 

amount-in-controversy as its total detriment on the 

presumption that this eludes application of the antiaggregation rule. But the “inherent conflict” noted in Ford

does not really disappear simply by assessing the amount-incontroversy from the plaintiff-insurance company’s 

viewpoint. This is because in a declaratory action, the court 

looks to the underlying suit to determine the amount in 

controversy. See e.g., Jumara v. State Farm Ins. Co., 55 F.3d 

873, 877 (3d Cir. 1995) (“[T]he amount in controversy in a 
5

petition to compel arbitration or appoint an arbitrator is 

determined by the underlying cause of action that would be 

arbitrated.”).

1

 That means, regardless of party status in the 

declaratory action, the plaintiff’s claim in the underlying suit 

still provides the basis from which we calculate the amount in 

controversy. Put differently: merely labeling the amount as 

the “total amount the insurance company will owe” does not 

sidestep the fact that, practically speaking, we are deriving 

that amount by aggregating the individual claims of the class 

members in the underlying suit.2

The majority believes that its approach is “consistent” 

with Ford. Majority Op. at 23. I disagree. Ford

straightforwardly explained that it would not consider the

total detriment of the defendant in reaching the amount in 

controversy because “total detriment” and “aggregation” are

one and the same. Here, the majority concludes that total 

detriment and aggregation are not the same simply because 

 

1 The majority calls this approach unprecedented. But 

we have clearly suggested as much in Jumara. Further, the 

proposition that we look to the underlying suit to determine 

the amount in controversy is apparent as a matter of common 

sense. 

2 This is so even if we adopt the fiction that because 

declaratory relief is sought, the controversy becomes unitary, 

only involving the insurer and its insured. Even viewing this 

suit in this way, we do not derive the amount of controversy 

out of thin air—rather, we must look to the value of damages

sought in the underlying suit. 
6

the insurance company is the plaintiff in the declaratory 

action. Rather than being consistent with Ford, the majority

skirts the relevant point of Ford through a narrow focus on 

party status. 

Thus to calculate the amount-in-controversy, I would 

do what our precedents suggest: look to Hymed’s underlying 

suit to determine the amount in controversy. In doing so, it is 

clear to a legal certainty that the amount-in-controversy is not

met. No single class member’s claim would exceed, or even 

come close to, the $75,000 threshold. 

To be sure, the total amount potentially owed by AutoOwners also falls short of the $75,000 threshold. The 

majority attempts to overcome this problem by tacking onto 

the amount the cost of hypothetical attorneys’ fees. I also 

depart from this approach. Generally, attorneys’ fees are not

considered a part of the amount-in-controversy. 28 U.S.C. § 

1332(a); see also 14AA Charles A. Wright et al., Federal 

Practice and Procedure § 3712 (4th ed. 2016). We have 

referenced a narrow exception to this rule when “the contracts 

at issue called for the payment of attorneys’ fees and costs by 

the party breaching the contract.” State Farm Mut. Auto Ins. 

Co. v. Powell, 87 F.3d 93, 98 (3d Cir. 1996). The policy 

between Auto-Owners and Stevens & Ricci (the “Policy”) is 

not an instrument of this sort. 

The majority relies on Powell in concluding that 

attorneys’ fees are duly included here, but that case provides 

only apparent support. In Powell, we declined to include 

arbitration costs in the amount-in-controversy because the 

policy at issue did “not specifically impose a duty to pay on 

the part of the [insurance company].” Id. Similarly, the 

Policy contains no provision specifically imposing on Auto-
7

Owners a duty to pay attorneys’ fees and costs. While the 

majority points out that the Policy imposes on Auto-Owners a 

general “duty to defend,” this duty only applies to suits that 

fall within coverage. Thus, it is not an unconditional 

requirement from which we could comfortably speculate as to 

costs that may be incurred. 

The way the majority presents it, it might appear that 

Powell straightforwardly adopts the position it embraces. Not 

so. The full text of the language cited by the majority is as 

follows: 

As an initial matter, we question the reasoning 

of the district court’s decision in [Nationwide 

Mutual Insurance Company v. Rowles by 

Rowles, 818 F. Supp. 852 (1993)]. In arriving 

at its conclusion, the Rowles court relied upon 

two cases, [Springstead v. Crawfordsville State 

Bank, 231 U.S. 541 (1913)] and [Farmers 

Insurance Company v. McClain, 603 F.3d 821 

(10th Cir. 1979)] which held that costs and 

attorneys’ fees should be considered part of the 

amount in controversy for jurisdictional 

purposes when they are mandated by underlying 

instruments or contracts. In those two cases, 

however, the contracts at issue called for the 

payment of attorneys’ fees and costs by the 

party breaching the contract. 

Id. at 98. What should be readily apparent is that the majority 

takes Powell out of context. There, we did not hold that 

“costs and attorneys’ fees should be considered part of the 

amount in controversy for jurisdiction purposes when they are 

mandated by underlying instruments or contracts;” we merely 
8

cited a district court case that made a conclusion to that 

effect. The upshot of Powell’s holding is more limited—it is, 

where an underlying instrument does not “specifically impose

a duty to pay” fees and costs, such costs are not duly included

in the amount in controversy. Id.

To be clear, I would agree that where a contract 

requires a breaching party to pay attorneys’ fees, those may 

be considered part of the amount in controversy—after all, in 

those contexts, “the costs [are] essentially additional damages 

to be assessed against the party found to have breached the 

instrument.” Id. This narrow exception to the general 

prohibition does not apply here. Whatever fees and costs 

flowed from Auto-Owners’s duty to defend in its subsequent 

defense of Stevens & Ricci are entirely forward-looking—and 

as the majority opines, “federal diversity jurisdiction is 

generally determined based on the circumstances prevailing at 

the time the suit was filed.” Majority Op. at 22 (citing 

Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 152 (3d Cir. 

2009). And these costs are not “essentially additional 

damages” Auto-Owners owes to Stevens & Ricci or vice 

versa, especially not as it relates to the declaratory judgment 

action. It would be a different scenario if Stevens & Ricci 

sued Auto-Owners for breach of the Policy’s duty to defend. 

But that is not the situation we are presented with here. 

In sum, the inclusion of attorneys’ fees here is an 

unnecessary expansion of our jurisprudence for which the 

majority articulates no basis.3 The majority believes that 

 

3 The majority cites an influential treatise for the 

proposition that the law in this area is “quite settled.” 

Majority Op. at 25–26 n.18. However, one treatise does not 

law make. And, a closer look at the cases collected in that 
9

those fees are an “inseparable” part of the controversy and to 

ignore them is to “ignore the reality of what is at stake in this 

litigation.” Majority Op. at 26. But in my view, by including 

these fees, the majority ignores the express language of 28 

U.S.C. § 1332(a) in the absence of any support from our 

Court. 

“It is axiomatic that federal courts are courts of limited 

jurisdiction, and as such are under a continuing duty to satisfy 

themselves of their jurisdiction before proceeding to the 

merits of any case.” Packard, 994 F.2d at 1049 (citations 

omitted). Here, I am afraid the majority has “ben[t] over 

 

treatise demonstrates that what is “quite settled” is that where 

an underlying contract contains a fee-shifting provision, 

attorneys’ fees may be included in the amount-in-controversy, 

a point I do not dispute. See 14AA Charles Alan Wright et 

al., Federal Practice & Procedure § 3712 (4th ed. 2016). 

What is less settled, and has received less circuit attention, is 

the context we are presented with here—with only one circuit

sharing the majority’s view and other circuits employing a

similar approach only where the relevant defense or 

indemnification occurs before the declaratory suit is brought.

See Stonewall Ins. Co. v. Lopez, 544 F.2d 198, 199 (5th Cir. 

1976) (per curiam) (cost of insurer’s prospective defense of 

insured provides basis for including attorneys’ fees); S. Ariz.

York Refrigeration Co. v. Bush Mfg. Co., 331 F.2d 1, 18 (9th 

Cir. 1964) (attorneys’ fees included when defense has already 

occurred and indemnitor refused to defend); Farmers Ins. Co. 

v. McClain, 603 F.2d 821, 823 & 823 n.3 (10th Cir. 1979)

(attorneys’ fees included when defense has already occurred). 

Far from settled then, the circuit law addressing this particular 

question is limited and inconclusive. 
10

backwards . . . to persuade itself that subject matter 

jurisdiction exists.” Travelers Prop. Cas. v. Good, 689 F.3d 

714, 718 (7th Cir. 2012). 

Thus, because of the difficult fit between the 

majority’s reasoning and our Article III standing 

jurisprudence in similar contexts, the tension between the

insurance-company viewpoint approach and the antiaggregation rule, and my reservations regarding the inclusion 

of the attorneys’ fees to reach the amount-in-controversy, I 

am not satisfied of our jurisdiction over this dispute. I would 

dismiss the appeal on that ground and therefore respectfully 

dissent.