2007 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-9-2007

Frederico v. Home Depot

Precedential or Non-Precedential: Precedential

Docket No. 06-2266

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"Frederico v. Home Depot" (2007). 2007 Decisions. Paper 160.

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 06-2266 

 

JANELLE FREDERICO, individually and on behalf

of a class of similarly situated persons,

 Appellant

v.

HOME DEPOT

 

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No.05-cv-05579)

District Judge: Hon. Joel A. Pisano

 

Argued July 12, 2007

Before: SLOVITER, ALDISERT and ROTH, Circuit Judges.

(Filed: November 9, 2007)
2

Khalid A. Elhassan (Argued)

EICHEN LEVINSON & CRUTCHLOW, LLP

40 Ethel Road

Edison, NJ 08817

Attorney for Appellant

Dwight D. Davis (Argued)

S. Stewart Haskins

Tracy Klinger

KING & SPALDING, LLP

1180 Peachtree Street

Atlanta, GA 30309

Nicholas Stevens

STARR, GREN, DAVISON & RUBIN

103 Eisenhower Parkway

Roseland, NJ 07068

Attorneys for Appellee

 

OPINION OF THE COURT

 

ALDISERT, Circuit Judge.

Plaintiff Janelle Frederico, for herself and on behalf of

a class of similarly situated persons, appeals a judgment of the
3

United States District Court for the District of New Jersey that

dismissed her complaint against The Home Depot, Inc.

Alleging fraud and breach of contract, the complaint was

dismissed without prejudice pursuant to Rules 9(b) and

12(b)(6), Federal Rules of Civil Procedure. 

Her action was originally filed in the Superior Court of

New Jersey, Law Division, Middlesex County. Home Depot

then removed the case to the District Court for the District of

New Jersey. Frederico made no motion to remand to state

court. The District Court decided that jurisdiction was proper

under 28 U.S.C. § 1332(d), pursuant to the Class Action

Fairness Act of 2005 (“CAFA”). After the matter reached us,

we raised the issue of jurisdiction sua sponte and offered the

parties an opportunity to respond by letter to our concerns.

A threshold matter requires our attention: we must first

decide whether the District Court’s dismissal without

prejudice meets the finality requirement of 28 U.S.C. § 1291

to vest this Court with jurisdiction. We will decide that matter

in the affirmative and proceed to consider: (1) which party has

the burden of establishing federal jurisdiction in the removal

process; (2) the extent of that party’s burden of proof; and (3)

whether diversity jurisdiction is established by the record

before us. After finding federal jurisdiction, we will address

the merits of the case. For the reasons that follow we will

affirm the judgment of the District Court.

I.
4

On Saturday, August 6, 2005, Frederico rented a

flatbed truck from a Home Depot store located in South

Plainfield, New Jersey, owned and operated by Defendant.

Home Depot regularly provides short-term leases of trucks to

customers to assist customers with the transportation of large

purchases. During the transaction, Frederico signed a Vehicle

Delivery Agreement (“Agreement”) that provided “Date and

Time Out: 08/06/2005 6:23 pm” and “Date and Time Due In:

08/06/2005 7:38 pm.” App. at 80. According to the

Agreement, Frederico was to rent the truck for a total of 75

minutes. The District Court summarized other relevant terms

of the Agreement:

1. Plaintiff’s truck was due back to the store

at 7:38 pm on August 6, 2005.

2. The rental rate for the truck was $19.00

for the first seventy-five minutes and

$5.00 for each additional fifteen minutes.

3. The vehicle must be returned “to the

Home Depot location where rented, on

the date and at the time specified . . . IF

NOT, A CLEANING CHARGE, DROP

CHARGE, AND/OR RATE CHANGE

MAY APPLY.”

4. The vehicle “MUST BE RETURNED

TO THE STORE BEFORE CLOSING

ON THE DAY OF RENTAL.”

5. The store hours listed were 6:00 - 10:00

on Saturdays.
1The Vehicle Delivery Invoice shows “Date and Time In:

08/07/2005 8:07 am.” App. at 80.

5

6. “THE AGREEMENT DOES NOT

PERMIT RENTAL OF THE VEHICLE

FOR MORE THAN ONE DAY OR

PAST THE TIME AT WHICH THE

HOME DEPOT DEMANDS RETURN

OF THE VEHICLE.”

Id. at 121. 

Frederico alleges that she “returned the truck to Home

Depot on August 6, 2005, but was informed by Defendant that

the rental department was closed, that Home Depot had no

after-hours rental facilities or procedures, and to re-return the

truck the following morning.” Compl. ¶ 8. She returned the

next morning1

 and paid $287.14, of which $269.00

represented the thirteen hours and forty-four minutes that she

possessed the vehicle. 

Frederico subsequently filed a class action complaint

in state court, alleging that Home Depot breached its contract,

violated the New Jersey Consumer Fraud Act, N.J.S.A. §

56:8-1 et seq. (2005) (“NJCFA”), and committed common

law fraud. Her complaint states: 

The proposed class consists of (i) all New

Jersey individual consumers (ii) who rented a

vehicle from a Home Depot store with no after-
2

 The parties addressed this issue in subsequent letter

briefs to assist us in our determination. 

6

hours rental return facilities or procedures, (iii)

who were unable to return the vehicle to Home

Depot after-hours, and (iv) who were charged

‘late’ rental return fees for the after-hours

period during which no vehicles could have

been returned.

Id. ¶ 18. 

II.

Sua sponte, we raised the question of whether this

court has jurisdiction over the District Court’s judgment here

entered “without prejudice.”2

 Frederico invoked the

jurisdiction of this Court pursuant to 28 U.S.C. § 1291, which

grants this Court jurisdiction over appeals from final decisions

of district courts. Appellant’s Br. at 1. 

We conclude that the District Court’s March 9, 2006

Order granting Home Depot’s motion to dismiss, from which

Frederico appeals, is a final order, notwithstanding its

“without prejudice” modifier. “Guided by the Supreme

Court’s directive that we employ a ‘practical rather than a

technical construction’ of § 1291’s finality requirement,” we

have held that a dismissal with leave to amend will be treated

as a final order if the plaintiff has elected to “stand upon the

original complaint.” Shapiro v. UJB Financial Corp., 964 F.2d
7

272, 278 (3d Cir. 1992) (quoting Cohen v. Beneficial Indus.

Loan Corp., 337 U.S. 541, 546 (1949)); see also Berke v.

Bloch, 242 F.3d 131, 135 (3d Cir. 2001) (concluding that it is

“well-settled” in the Court of Appeals for the Third Circuit

that an order dismissing a complaint without prejudice is final

if the plaintiff has elected to stand on his complaint).

Proceeding with appellate review here is consistent with the

goal of the final judgment rule – to prevent piecemeal

litigation – because, “if plaintiff cannot or will not bring a

second action, there is no risk of multiple litigation.” TrevinoBarton v. Pittsburgh Nat’l Bank, 919 F.2d 874, 878 (3d Cir.

1990).

Under this standard, the dismissal of the complaint is

final and appealable because Frederico clearly indicated an

intent to stand on the original complaint. At no time during

the District Court’s consideration of Home Depot’s motion to

dismiss, which included initial and supplemental briefing as

well as oral argument, did Frederico offer or seek to amend

the complaint to address the pleading deficiencies noted by

Home Depot. Instead, she repeatedly asserted that the

allegations contained in the complaint were legally sufficient.

See, e.g., Plaintiff’s Memorandum in Law in Opposition to

the Defendant’s Motion to Dismiss, Frederico v. Home

Depot, 2:05-cv-00579JAP, at 2 (January 3, 2006) (“The

claims contained in Plaintiff’s Complaint are sufficient as a

matter of law, and should not be dismissed.”). 

After the District Court dismissed the complaint and

the clerk’s office officially terminated the action, Frederico
8

did not seek to amend the complaint. Her only response was

to file a notice of appeal. On appeal, she continues to argue

that the factual allegations contained in her complaint are

sufficient. See, e.g., Appellant’s Br. at 9 (“The lower court’s

opinion is premised on the mistaken assumption that the

Appellant/Plaintiff should have pled the evidence and facts

underlying her Complaint.”). Because Frederico has elected to

stand on her original complaint rather than amend or refile it,

the order dismissing the complaint without prejudice is final.

See, e.g., Lucas v. Township of Bethel, 319 F.3d 595, 600 (3d

Cir. 2003) (dismissal without prejudice was final and

appealable because plaintiff chose to stand on the complaint);

Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 n.5 (3d Cir.

1992) (holding that plaintiff elected to stand on complaint by

failing to amend within specified time period); Tiernan v.

Devoe, 923 F.2d 1024, 1031 (3d Cir. 1991) (finding appellate

jurisdiction over dismissal without prejudice based on

statements made in letter brief filed after appeal was

initiated); Letter from William O. Crutchlow, Counsel for

Appellant Janelle Frederico, to the Office of the Clerk, United

States Court of Appeals for the Third Circuit (July 3, 2007)

(“In the instant matter, Appellant/Plaintiff stands by her

complaint.”).

III.

We now must decide whether this class action case

removed to a federal court as a diversity matter properly

meets the requisite amount in controversy set by CAFA. It is

now settled in this Court that the party asserting federal
3

 For a summary of such district court cases, see SamuelBassett, 357 F.3d at 396-397.

9

jurisdiction in a removal case bears the burden of showing, at

all stages of the litigation, that the case is properly before the

federal court. Samuel-Bassett v. Kia Motors America, Inc.,

357 F.3d 392, 396 (3d Cir. 2004); see also Morgan v. Gay,

471 F.3d 469, 473 (3d Cir. 2006) (“Under CAFA, the party

seeking to remove the case to federal court bears the burden

to establish that the amount in controversy is satisfied.”). Our

standard of review for issues of subject matter jurisdiction,

including cases arising under CAFA, is plenary. Morgan, 471

F.3d at 472. 

A.

We are aware that the quantum of proof to be used in

ascertaining the requisite amount in removal cases sounding

in diversity has caused some disagreement among the district

courts of this circuit.3

 We also note the concern that “‘[c]ourts

in the Third Circuit [have been] unencumbered by consistency

in their characterization of a defendant’s burden of proving

the amount in controversy on a motion to remand.’” SamuelBassett, 357 F.3d at 396 (quoting Irving v. Allstate Indemnity

Co., 97 F. Supp. 2d 653, 654 (E.D. Pa. 2000)). Since that

concern was first voiced, two cases decided by this Court

sought to bring clarity and consistency to the jurisprudence in

our circuit: Samuel-Bassett, 357 F.3d at 392 (class action

removal case arising prior to the enactment of CAFA), and
10

Morgan, 471 F.3d at 469 (class action removal case arising

under CAFA). It is to these cases we now turn. 

1. 

Samuel-Bassett, decided prior to the enactment of

CAFA, articulated a template for addressing subject matter

jurisdiction challenges by examining two Supreme Court

cases: St. Paul Mercury Indemnity Co. v. Red Cab Co., 303

U.S. 283 (1938), and McNutt v. General Motors Acceptance

Corp. of Indiana, 298 U.S. 178 (1936). 

In Red Cab, the plaintiff filed suit in state court and, in

response to defendant’s removal of the case, subsequently

reduced its claim below the requisite amount. 303 U.S. at 285

(holding that “events occurring subsequent to removal which

reduce the amount recoverable, whether beyond the plaintiff’s

control or the result of his volition, do not oust the district

court’s jurisdiction once it has attached”). The Supreme Court

articulated what has become known as the “legal certainty

test,” observing that when a case is brought in federal court,

“the sum claimed by the plaintiff controls if the claim is

apparently made in good faith.” Id. at 288. The case will be

dismissed only if, “from the face of the pleadings, it is

apparent, to a legal certainty, that the plaintiff cannot recover

the amount claimed, or if, from the proofs, the court is

satisfied to a like certainty that the plaintiff never was entitled

to recover that amount.” Id. at 289. 
11

In McNutt, the plaintiff brought suit in federal court

and defendant contested the assertion in the complaint that the

requisite matter in controversy was involved. McNutt, 298

U.S. at 179-180. The Supreme Court held: “[T]he court may .

. . insist that the jurisdictional facts be established or the case

be dismissed, and for that purpose the court may demand that

the party alleging jurisdiction justify his allegations by a

preponderance of evidence.” Id. at 189.

This Court, in Samuel-Bassett, disentangled the “legal

certainty” and “preponderance of the evidence” approaches of

McNutt and Red Cab by distinguishing them on the grounds

of whether the jurisdictional dispute surrounded factual

matters: “In [McNutt], although a challenge to the amount in

controversy had been raised in the pleadings, no evidence or

findings in the trial court addressed the issue. In that respect

Red Cab differs because these factual findings had been

made.” Samuel-Bassett, 357 F.3d at 397. As a result, in the

many cases where disputes over factual matters are involved,

the McNutt preponderance of the evidence standard is

appropriate for resolving the dispute. By contrast, in those

cases “when relevant facts are not in dispute or findings have

been made,” the district court should adhere to the “legal

certainty test cited in such cases as Meritcare[ Inc. v. St. Paul

Mercury Insurance Co.], 166 F.3d 214[ (3d Cir. 1993)];

Packard[ v. Provident Nat’l Bank], 994 F.2d 1039[ (3d Cir.

1993)]; Bloom v. Barry, 755 F.2d 356 (3d Cir. 1985); and

Nelson v. Keefer, 451 F.2d 289 (3d Cir. 1971).” SamuelBassett, 357 F.3d at 398. Under the legal certainty test, as it

appears in those cases, “[w]hen it appears to a legal certainty
12

that the plaintiff was never entitled to recover the

jurisdictional amount, the case must be dismissed.” Packard,

994 F.2d at 1046; see also Meritcare, 166 F.3d at 217 (“When

it appears to a legal certainty that the plaintiff was never

entitled to recover the minimum amount set by Section 1332,

the removed case must be remanded . . . .”); Bloom, 755 F.2d

at 358 (“[T]he court properly applied the ‘legal certainty’ test

with respect to the jurisdictional amount announced in [Red

Cab].”); Nelson, 451 F.2d at 293 (citing Red Cab for the

proposition that to determine “good faith,” “[i]t must appear

to a legal certainty that the claim is really for less than the

jurisdictional amount to justify dismissal”) (citing Jaconski v.

Avisun Corp., 359 F.2d 931, 934 (3d Cir. 1966)). 

As Judge Norma L. Shapiro observed in Valley v.

State Farm Fire and Cas. Co.:

All these cases [cited by Samuel-Bassett] cite to

and rely upon the Red Cab legal certainty

standard . . . . The legal certainty standard

established by the Court of Appeals in SamuelBassett is the same standard established by the

Supreme Court in Red Cab.

Under Red Cab, a case must be

dismissed or remanded if it appears to a legal

certainty that the plaintiff cannot recover more

than the jurisdictional amount of $75,000. The

rule does not require the removing defendant to

prove to a legal certainty the plaintiff can
4 CAFA also requires a minimum of 100 persons for a

diversity class action. 28 U.S.C. § 1332(d)(5)(B).

13

recover $75,000 – a substantially different

standard. This reading of the legal certainty test

is supported by Meritcare, Bloom, Packard, and

Nelson. None of these cases require the

defendant to prove the jurisdictional amount to

a legal certainty in order to remain in federal

court. 

504 F. Supp. 2d 1, 3-4 (E.D. Pa. 2006) (internal citations

omitted).

2.

Two years after Samuel-Bassett, this Court was

presented with our first class action diversity removal case

brought under CAFA, Morgan v. Gay, 471 F.3d at 469.

Morgan came to our Court on an appeal from a district court

order granting plaintiff’s motion to remand to state court, on

the grounds that the amount in controversy required to

support a diversity action under 28 U.S.C. § 1332(d)(2), an

amount in excess of $5 million, had not been demonstrated.4

Id. at 471. In Morgan, the plaintiff expressly limited the

amount in controversy to an amount lower than the

jurisdictional requirement, stating in the complaint that “the

total amount of such monetary relief for the class as a whole

shall not exceed $5 million in sum or value.” Id.
5

 “CAFA does not change the proposition that the

plaintiff is the master of her own claim.” Morgan, 471 F.3d at

474.

6 The panel noted as an aside in Samuel-Bassett that: 

We recognize that requiring a defendant to show

to a legal certainty that the amount in controversy

exceeds the statutory minimum may lead to some

bizarre situations. As the Court observed in Shaw

v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir.

1993), oral argument presented a “comic scene:

plaintiff’s personal injury lawyer protests up and

down that his client’s injuries are as minor and

14

The claims in Samuel-Bassett, Red Cab and McNutt

did not involve such a limitation. The different circumstances

in Morgan called for a different approach to determine

whether there was federal jurisdiction. Against the wellestablished backdrop that the plaintiff is the master of her own

claim and thus “may limit [her] claims to avoid federal

subject matter jurisdiction,”5

 the panel concluded that where

the plaintiff so limits her claim, “[t]he party wishing to

establish subject matter jurisdiction has the burden to prove to

a legal certainty that the amount in controversy exceeds the

statutory threshold.” Id. at 474. This “legal certainty” standard

differs from that of the cases cited by Samuel-Bassett. In

those cases, the challenger to subject matter jurisdiction had

to prove, to a legal certainty, that the amount in controversy

could not exceed the statutory threshold.6

 See Packard, 994
insignificant as can be, while attorneys for the

manufacturer paint a sob story about how the

plaintiff’s life has been wrecked.” It would not be

a surprise that when the time came for assessment

of damages the parties would once again switch

their views by some 180 degrees. 

357 F.3d at 398. We do not read the introductory sentence of the

above paragraph as the holding of Samuel-Bassett. Indeed, it

argues against placing such a burden on a defendant. Moreover,

Shaw did not advocate such a burden on the defendant. To the

contrary, it observed: “Defendants seeking removal may meet

that burden by a preponderance of evidence . . . which we take

to mean proof to a reasonable probability that jurisdiction

exists.” 994 F.2d at 366 (internal citation omitted).

15

F.2d at 1046; Meritcare, 166 F.3d at 217; Bloom, 755 F.2d at

358; Nelson, 451 F.2d at 293.

 In Morgan, by contrast, we held that where the

plaintiff expressly limits her claim below the jurisdictional

amount as a precise statement in the complaint, applying the

maxim that the plaintiff is the master of her own complaint,

the proponent of the federal subject matter jurisdiction is held

to a higher burden; that is, the proponent of jurisdiction must

show, to a legal certainty, that the amount in controversy

exceeds the statutory threshold. 

B.
7 In evaluating the precedential reach of Morgan, we look

at the “detailed set of facts” that undergird the rule of law

emerging therefrom. Here we start with a definition of

16

Thus, Morgan does not conflict with the reasoning and

holding of Samuel-Bassett. The Samuel-Bassett dichotomy

still paves the basic procedural avenue: “In many cases . . .

disputes over factual matters may be involved. In resolving

those issues, the McNutt preponderance of the evidence

standard would be appropriate. Once the findings of fact have

been made, the court may determine whether Red Cab’s ‘legal

certainty’ test for jurisdiction has been met.” 357 F.3d at 398.

Morgan provided a more complete roadmap. First, it

added a precept that may be applied to all diversity class

actions that have been removed: “Because ‘the complaint may

be silent or ambiguous on one or more of the ingredients

needed to calculate the amount in controversy,’ ‘[a]

defendant’s notice of removal serves the same functions as

the complaint would in a suit filed in federal court.’” Morgan,

471 F.3d at 474 (quoting Brill v. Countrywide Home Loans,

Inc., 427 F.3d 446, 449 (7th Cir. 2005)). Second, Morgan

erected guideposts in those cases where the plaintiff’s

complaint specifically (and not impliedly) and precisely (and

not inferentially) states that the amount sought in a class

action diversity complaint “for the class as a whole shall not

exceed $5 million in sum or value.” Id. at 471. In such cases

“[t]he party wishing to establish subject matter jurisdiction

has the burden to prove by a legal certainty that the amount in

controversy exceeds the statutory threshold.” Id.7
precedent:

A judicial precedent attaches a specific legal

consequence to a detailed set of facts in an

adjudged case or judicial decision, which is then

considered as furnishing the rule for the

determination of a subsequent case involving

identical or similar facts and arising on the same

court or a lower court in the judicial hierarchy.

Allegheny County Gen. Hosp. v. NLRB, 608 F.2d 965, 969-970

(3d Cir. 1979) (footnote omitted); see also Roscoe Pound,

Hierarchy of Sources and Forms in Different Systems of Law,

7 TUL. L. REV. 475, 482 (1933). 

In Morgan, the adjudicative facts were that the plaintiff’s

complaint deliberately limited recovery for class action damages

to not exceed $5 million. Thus, the holding of Morgan that

“[t]he party wishing to establish subject matter jurisdiction has

the burden to prove by a legal certainty that the amount in

controversy exceeds the statutory threshold,” 471 F.3d at 471,

is a viable precedent to only those diversity class action removal

cases where the original complaint contains such a limitation. 

17

The distinction between a case governed by Morgan

and a case governed by Red Cab and Samuel-Bassett is

crystal clear. Morgan applies where the complaint specifically

avers that the amount sought is less than the jurisdictional

minimum. There, a defendant seeking removal must prove to

a legal certainty that plaintiff can recover the jurisdictional
18

amount. By contrast, Samuel-Bassett applies where the

plaintiff has not specifically averred in the complaint that the

amount in controversy is less than the jurisdictional minimum.

There, the case must be remanded if it appears to a legal

certainty that the plaintiff cannot recover the jurisdictional

amount. 

Against this framework, we turn to the case before us.

IV.

“In removal cases, determining the amount in

controversy begins with a reading of the complaint filed in the

state court.” Samuel-Bassett, 357 F.3d at 398. Here, Frederico

does not state an exact sum sought in her complaint. Instead,

her complaint “seeks, inter alia, damages and compensation to

all class members from the Defendant, interest, punitive

damages, costs of suit, treble damages and attorneys’ fees as

permitted under the Consumer Fraud Act, and any other

damages deemed just and proper by the Court.” Compl. ¶ 1.

The class size alleged is “thousands, if not . . . tens of

hundreds of thousands, of individuals.” Id. ¶ 19. Frederico

herself paid $287.14 for her use of the rental vehicle. Id.

Exhibit B. 

In addition, to determine whether the minimum

jurisdictional amount has been met in a diversity case

removed to a district court, a defendant’s notice of removal

serves the same function as the complaint would if filed in the
19

district court. Morgan, 471 F.3d at 474. Thus, we examine

Home Depot’s contentions set forth therein:

Assuming that Plaintiff’s payment of $287.14

represents the average actual damages of each

member of the putative class and the maximum

punitive damages allowable under New Jersey

law were awarded (see N.J. Stat. § 2:A:15-

5.14(b)), Plaintiff need only prevail on behalf of

2,903 class members for the class recovery to

exceed $5,000,000. Given that Plaintiff has

alleged a putative class consisting of

“thousands” if not “tens of hundreds of

thousands” of members, it is more likely than

not that $5,000,000 or more is in controversy in

this case. See Compl., ¶¶ 17, 19. See Penn v.

Wal-Mart Stores, Inc., 116 F. Supp. 2d 557, 562

(D.N.J. 2000) (“In the absence of Third Circuit

precedent on the issue of what the defendant

needs to show to satisfy the amount in

controversy requirement when the plaintiff

alleges unspecified damages, the Court will

adopt the preponderance of the evidence

standard.”).

Moreover, Plaintiff also seeks attorneys’ fees,

which can exceed six figures in a class action

and are properly aggregated and considered for

purposes of determining the amount in

controversy under CAFA. See 28 U.S.C. §
20

1332(d)(6) (“In any class action, the claims of

the individual class members shall be

aggregated to determine whether the matter in

controversy exceeds the sum or value of

$5,000,000, exclusive of interest and costs.”);

see also Suber v. Chrysler Corp., 104 F.3d 578,

585 (3d Cir. 1997) (“Moreover, in calculating

the amount in controversy, we must consider

potential attorneys’ fees.”). 

Home Depot, Notice of Removal ¶¶ 20, 21 (filed Nov. 28,

2005).

In response to this Court’s letter requesting that the

parties “address whether the allegations in the complaint and

notice of removal that ‘the matter in controversy exceeds the

sum or value of $5 million dollars, exclusive of interest and

costs,’” vested the District Court with jurisdiction, both

parties filed replies. Letter from Marcia M. Waldron, Clerk

for the United States Court of Appeals for the Third Circuit,

to Counsel for Janelle Frederico and Home Depot (June 26,

2007). 

In its reply, Home Depot essentially restates the

averments set forth in Paragraphs 20 and 21 of its Notice of

Removal. Frederico’s reply states, in relevant part:

Although [Home Depot’s] letter [to the Court in

response to the Court’s query as to jurisdiction]

quotes Appellant/Plaintiff’s complaint that “the
21

matter in controversy exceeds the sum or value

of $5 million dollars, exclusive of interests and

costs,” it should be noted that the complaint

does not contain such a quote, does not contain

any mention of the sum or value of the matter in

controversy, nor, for that matter, does

Appellant’s complaint assert federal jurisdiction

at all.

This suit was initially brought in state court –

specifically, New Jersey Superior Court,

Middlesex County. Thereafter, Respondent

asserted diversity and CAFA jurisdiction, and

removed the case from state court to federal

court. As such, Appellant leaves it to the

Respondent to explain Respondent’s basis for

asserting jurisdiction.

Letter from William O. Crutchlow, Counsel for Appellant

Janelle Frederico, to the Office of the Clerk, United States

Court of Appeals for the Third Circuit (July 3, 2007)

(emphasis in original). 

In Morgan, the plaintiff expressly limited, in her

complaint, the damages sought to less than the jurisdictional

threshold. 471 F.3d at 471. Here, by contrast, Frederico does

not explicitly limit the amount in controversy to $5 million or

less. Therefore, the case falls under the framework established

by Samuel-Bassett. 
22

Frederico’s response to the Court’s query regarding

jurisdiction supplies us with no useful information with which

to calculate the amount in controversy. She is playing her

cards close to the vest: Her answer neither agrees with the

facts alleged in the removal notice nor contests them.

Nonetheless, Home Depot’s argument for jurisdiction is based

on allegations made initially by Frederico herself.

Accordingly, the present posture of the case is one where the

relevant facts are not expressly in dispute between the parties.

Even where allegations are not challenged by the adversary,

“the court may still insist that the jurisdictional facts be

established or the case be dismissed, and for that purpose the

court may demand that the party alleging jurisdiction justify

his allegations by a preponderance of the evidence.” McNutt,

298 U.S. at 189.

We do not believe such an insistence is necessary in

this case. The District Court accepted and relied on the facts

alleged in Home Depot’s Notice of Removal when it

concluded that it had diversity jurisdiction. App. at 120 n.3.

Furthermore, neither party contests the underlying facts and

both instead rely upon them. Cf. McCann v. Newman

Irrevocable Trust, 458 F.3d 281, 290 (3d Cir. 2006) (“If a

defendant does not challenge the [jurisdictional] facts alleged

in the plaintiff’s pleadings, a court may rule on the [Rule

12(b)(1)] motion by accepting these allegations as true.”). We

will therefore apply Red Cab’s legal certainty test to the facts

alleged by Frederico in her complaint and incorporated by

Home Depot into its Notice of Removal. 
8

 Our calculations are based on compensatory damages of

$287.14. That amount represents the total paid by Frederico,

including the typical rental rate, late fees, 6% sales tax, and the

domestic security charge of $2.00. As we do not know when

Frederico first attempted to return the vehicle, we do not know

what amount of $287.14 represents the amount she objects to.

Assuming that she returned the vehicle at the closing time listed

on the Agreement (10 PM), her accepted costs would have been

$32.74 (including applicable sales tax and the domestic security

charge). As a result, she would seek compensatory damages of

$254.40, punitive damages of $1,272.00, and attorneys fees of

$457.92, bringing her total damages to $1,984.32. Even under

this damage calculation, the class size, in order to meet the

amount in controversy requirement, need only be 2,520

individuals, a number significantly within the “tens of hundreds

of thousands” alleged by Frederico and recounted by Home

Depot. 

23

Here Frederico is seeking $287.14 in compensatory

damages.8

 In addition, she is seeking punitive damages, which

we must consider when calculating the amount in

controversy. Golden v. Golden, 382 F.3d 348, 356 (3d Cir.

2004). Under New Jersey law, Frederico can collect punitive

damages of up to five times the compensatory damages.

N.J.S.A. § 2A:15-5.14(b). Thus, she can collect $1,435.70 in

punitive damages. Combined with compensatory damages,

the punitive damages bring Frederico’s total damages to

$1,722.84.
24

We must also consider attorney’s fees. See Suber v.

Chrysler Corp., 104 F.3d 578, 585 (3d Cir. 1997). Fees could

be as much as thirty percent of the judgment. See In re Rite

Aid Corp. Securities Litigation, 396 F.3d 294, 303 (3d Cir.

2005) (noting study done by the Federal Judicial Center that

found a median percentage recovery range of 27-30% for all

class actions resolved or settled over a four-year period).

Thirty percent of a $1,722.84 judgment is $516.85, bringing

Frederico’s total damages to $2,239.69. 

Finally, $5 million, the jurisdictional threshold, divided

by the total amount of damages sought for Frederico herself,

$2,239.69, produces a requisite class size of 2,233

individuals. See 28 U.S.C. § 1332(d)(6) (“In any class action,

the claims of the individual class members shall be aggregated

to determine whether the matter in controversy exceeds . . .

$5,000,000 . . . .”). This class size necessary to meet the

requisite amount in controversy is well under the “tens of

hundreds of thousands” of class members that appears in both

Frederico’s complaint and Home Depot’s Notice of Removal. 

Thus, we are satisfied that the Red Cab legal certainty

test is met: as it does not appear to a legal certainty that

Frederico cannot recover the jurisdictional amount, the case

need not be remanded and we may proceed to the substantive

merits of this appeal.

V. 
25

 In her complaint, Frederico alleged that Home Depot

violated the NJCFA, committed common law fraud, and

breached its contract with her. She contends that the District

Court erred in granting Home Depot’s motion to dismiss

under Rules 12(b)(6) and 9(b), Fed. R. Civ. P. 

Our review of the District Court’s order is plenary.

Santiago v. GMAC Mortgage Group, Inc., 417 F.3d 384, 386

(3d Cir. 2005). Pursuant to Rule 12(b)(6), a court may dismiss

a complaint that fails “to state a claim upon which relief can

be granted.” We accept as true all well-pleaded factual

allegations and construe them in the light most favorable to

the plaintiff. Santiago, 417 F.3d at 386; Hayes v. Gross, 982

F.2d 104, 105-106 (3d Cir. 1992). 

We conclude that Frederico failed to state a claim upon

which relief may be granted.

A.

We turn first to Frederico’s contentions that Home

Depot committed common law fraud and violated the NJCFA

by materially misrepresenting or omitting in the Agreement

(1) the “terms, conditions, and ‘late’ fees associated with the

return of rental vehicles,” (2) “that the ‘late’ fees were not

grossly excessive,” and (3) “that its vehicle rental return

procedures were intended to enable Home Depot to illegally

profit” by causing delay in the return of rental vehicles.

Compl. ¶¶ 37, 42, 40. 
26

1. 

To state a claim for fraud under New Jersey law, a

plaintiff must allege (1) a material misrepresentation of fact;

(2) knowledge or belief by the defendant of its falsity; (3)

intention that the other person rely on it; (4) reasonable

reliance thereon by the other person; and (5) resulting

damage. Gennari v. Weichert Co. Realtors, 691 A.2d 350,

367-368 (N.J. 1997). 

The stringent pleading restrictions of Rule 9(b), Fed.

R. Civ. P., apply to such a claim: “In all averments of fraud or

mistake, the circumstances constituting fraud or mistake shall

be stated with particularity. Malice, intent, knowledge and

other conditions of mind of a person may be averred

generally.” Pursuant to Rule 9(b), a plaintiff alleging fraud

must state the circumstances of the alleged fraud with

sufficient particularity to place the defendant on notice of the

“precise misconduct with which [it is] charged.” Lum v. Bank

of America, 361 F.3d 217, 223-224 (3d Cir. 2004). To satisfy

this standard, the plaintiff must plead or allege the date, time

and place of the alleged fraud or otherwise inject precision or

some measure of substantiation into a fraud allegation. See id.

at 224.

We agree with the District Court that Frederico’s fraud

claim does not meet the stringent pleading requirements of

Rule 9(b). Frederico does not state with particularity the

circumstances of the alleged fraud or otherwise inject the

requisite precision into her allegations. In her complaint, she
9

 A plain reading of this allegation would suggest that the

rates themselves, as charged and found in the Agreement, were

excessive. See App. at 126 (“With respect to the fees charged,

Defendant clearly represented in the Agreement that the rental

rate for the truck was $19.00 for the first seventy-five minutes

and $5.00 for each additional fifteen minutes that Plaintiff

retained possession of the truck. The receipt for the truck rental

that Plaintiff attached to her complaint shows that this is exactly

the rate that Plaintiff was charged for the thirteen hours and

forty-four minutes that she retained possession of the truck.

Thus, Plaintiff’s protestations that such fees were ‘excessive’ are

baseless.”) (opinion of the District Court). Frederico, however,

does not appear to be making this argument. Frederico’s brief on

appeal reveals her argument to be that such fees were excessive

because of the undisclosed gap between the time the rental

department closes (a time not disclosed in the Agreement) and

the time the store closes (a time disclosed in the Agreement).

Without such detail appearing in the complaint, however, Home

Depot was not placed “on notice of the precise misconduct with

which [it is] charged.” Lum, 361 F.3d at 223-224.

27

only makes generic references to Home Depot’s “excessive

‘late’ rental fees,”9

 Compl. ¶ 37, failure to disclose lack of

after-hours rental return facilities or procedures, id. ¶ 39, and

false representation that “vehicle rentals and late fees

associated therewith would not accumulate beyond the time at

which Plaintiff and class members returned or attempted to

return rented vehicles to Home Depot,” id. ¶ 41. None of

these broad statements disclose the particular argument made

on appeal as to the substance of the misrepresentation,
10 That is, Frederico is arguing that the Agreement stated

closing was at 10 PM, see App. at 78 (“VEHICLE MUST BE

RETURNED TO THE STORE BEFORE CLOSING ON THE

DAY OF RENTAL.”), and seemed to therefore suggest vehicles

could be returned up until then. However, the rental department

in fact closed earlier (not disclosed in the Agreement) and thus

any attempt to return the vehicle before closing but after the

rental department closed resulted in the unexpected overnight

accumulation of late fees. 

28

namely, that Home Depot misrepresented “the actual hours

during which vehicles could be returned so as to avoid or halt

the accumulation of late fees.”10 Appellant’s Br. at 21-22.

Frederico did not provide such information in her

complaint and thus did not meet her obligation to put Home

Depot “on notice of the precise misconduct with which [it is]

charged.” Lum, 361 F.3d at 223-224. As the District Court

observed, Frederico “fail[ed] to allege that any particular

statement made by Defendant in the Agreement was in fact

false,” app. at 126, and: 

fail[ed] to allege when she attempted to return

the truck to Home Depot and whether this

attempted return was prior to the time it was due

at 7:38 pm or even before the store closed at

10:00 pm. Further, Plaintiff does not allege who

at Home Depot informed her that she could not

return the vehicle at that unspecified time and

that she should return the following morning.
11 The District Court noted that information as to the

identity of the person who told Frederico to return the truck the

next day “does not appear to be in the exclusive control of the

Defendant, and Plaintiff does not make such an allegation. See

29

See e.g., Klein v. General Nutrition Co., Inc.,

186 F.3d 338, 345 (3d Cir. 1999) (“The

complainant fails to attribute the statement to

any specific member of GNC management. Fed.

R. Civ. P. 9(b) requires, at a minimum, that the

plaintiff identify the speaker of allegedly

fraudulent statements.”); Granite State Ins. Co.

v. UJEX, Inc., Civ. No. 03-1220, 2005 WL

1618792, at *8 (D.N.J. July 11, 2005)

(dismissing fraud claim under Rule 9(b) where

complaint was utterly devoid of the averments

required by Rule 9(b), including the identity of

the alleged speaker). 

Id. at 128.

We are mindful of Frederico’s observation that without

the benefit of discovery she could not learn the name of the

employee with whom she interacted when attempting to

return the truck. Appellant’s Br. at 33 n.2. Nevertheless, her

complaint only refers generally to being “informed by

Defendant,” Compl. ¶ 8, and does not disclose the

circumstances surrounding her discussion with, or any

information about, the particular individual who informed her

that the rental department was closed.11 Furthermore, although
F.D.I.C. v. Bathgate, 27 F.3d 850, 876 (3d Cir. 1994) (stating

that where a plaintiff cannot be expected to have personal

knowledge of certain details of the alleged fraud, to satisfy Rule

9(b), the plaintiff must allege that the necessary information lies

within defendant’s exclusive control and provide facts to

illustrate that plaintiff’s claims are not baseless).” App. at 10

n.5. 

30

Frederico has subsequently stated in her briefs that her initial

attempt to return the truck occurred prior to 10:00 PM, see,

e.g., Appellant’s br. at 15 (“[A]lthough the Appellant returned

the vehicle to the store before 10 PM, Home Depot refused to

accept the return.”); Plaintiff’s Memorandum in Law in

Opposition to the Defendant’s Motion to Dismiss, Frederico

v. Home Depot, 2:05-cv-00579JAP, at 2 (January 3, 2006)

(same), we do not consider after-the-fact allegations in

determining the sufficiency of her complaint under Rules 9(b)

and 12(b)(6). See Commw. of Pa. ex. rel Zimmerman v.

PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) (“‘It is

axiomatic that the complaint may not be amended by the

briefs in opposition to a motion to dismiss.’”) (quoting Car

Carriers, Inc. v. Ford Motor Corp., 745 F.2d 1101, 1107 (7th

Cir. 1984)); Unger v. National Residents Matching Program,

928 F.2d 1392, 1400 (3d Cir. 1991). 

For the foregoing reasons, Frederico’s common law

fraud claim was properly dismissed. 

2.
31

To state a claim under the NJCFA, a plaintiff must

allege that the defendant engaged in an unlawful practice that

caused an ascertainable loss to the plaintiff. Cox v. Sears

Roebuck & Co., 647 A.2d 454, 462-465 (N.J. 1994). The

District Court found that Frederico failed to state such a

claim. We agree. 

a.

Frederico fails to allege Home Depot engaged in an

unlawful practice. The NJCFA defines “unlawful practice” as:

The act, use or employment by any person of

any unconscionable commercial practice,

deception, fraud, false pretense, false promise,

misrepresentation, or the knowing concealment,

suppression, or omission of any material fact

with intent that others rely upon such

concealment, suppression, or omission, in

connection with the sale or advertisement of any

merchandise . . . .

N.J.S.A. § 56:8-2. “Unlawful practices fall into three general

categories: affirmative acts, knowing omissions, and

regulation violations.” Cox, 647 A.2d at 462.

The “unlawful practice” engaged in by Home Depot,

alleged by Frederico, is the “instituti[on] and implement[ation

of] business processes intended to delay the return of rental

vehicles so as to enable Home Depot to profit from charging
32

Plaintiff and similarly situated consumers excessive ‘late’

rental return fees.” Compl. ¶ 28. 

Frederico does not contend that Home Depot charged

her late fees at a rate higher than that agreed upon and

disclosed in the Agreement. Instead, as discussed above, her

argument on appeal is that, “[u]nder the express terms of the

Rental Agreement, the Appellant was required to return the

vehicle to the Home Depot store before that store closed,” the

store hours were listed, showing that the store was open until

10 PM, and although she attempted to return the vehicle

before 10 PM, she learned that the “rental department closes

hours before the time listed on [the] Agreement.” Appellant’s

Br. at 14, 15. From this sequence of events, Frederico argues

that by refusing to accept the vehicle before the closing time

listed on the Agreement, and instead instituting an

“undisclosed condition” that vehicles must be returned before

the rental department closes, “Home Depot deliberately made

it impossible for consumers such as Ms. Frederico to return

the rental vehicles pursuant to the terms of the Rental

Agreement,” resulting in unexpected late fees, and that such a

practice “clearly falls within the deceptive, fraudulent, and

unconscionable commercial practices prohibited by the

[NJ]CFA.” Id. at 15, 16. 

Frederico’s complaint, however, does not provide such

detail. As the District Court observed:

[In her complaint, ]Plaintiff does not state when

she attempted to return the truck to Home Depot
33

and who told her that she could not return the

vehicle at that time. See, e. g., F.D.I.C. v.

Bathgate, 27 F.3d 850, 876 (3d Cir. 1994)

(dismissing plaintiff’s NJCFA and common law

fraud claims under Rule 9(b) where plaintiff

failed to identify the speaker of the allegedly

misleading statements and otherwise allege

facts to support plaintiff’s charges). Based on

plaintiff’s [sic] bare allegations, the Court

cannot conclude that Defendant engaged in any

unlawful practice.

App. at 130 (emphasis in original); see also Klein, 186 F.3d at

345 (“The complaint fails to attribute the statement to any

specific member of . . . management. Fed. R. Civ. P. 9(b)

requires, at a minimum, that the plaintiff identify the speaker

of allegedly fraudulent statements.”). 

Frederico merely asserts in her complaint that Home

Depot “violated the [NJ]CFA by its use of false and

misleading representations in connection with the terms,

conditions, and ‘late’ fees associated with the return of rental

vehicles.” Compl. ¶ 33. Without information as to when

Frederico attempted to return the vehicle, whether before the

closing listed on the Agreement (10 PM) or after, the grounds

for and contours of the alleged unlawful practice are unclear.

As with the common law fraud claim discussed above, Home

Depot is not placed on notice that the particular practice

complained of is nondisclosure of the fact that there is a gap

between the closing time of the store (as listed in the
34

Agreement) and the closing time of the rental department, and

that late fees accrue if a customer attempts to return the

vehicle between those two times. 

Frederico therefore failed to sufficiently allege an

unlawful practice with requisite specificity.

b.

In addition, Frederico failed to show that Home

Depot’s alleged unlawful practice caused her loss. We agree

with the District Court that: 

Without knowing when Plaintiff attempted to

return the truck to Home Depot, it is impossible

to determine whether it was Home Depot’s

conduct, or Plaintiff’s own conduct in not

returning the truck on time, that caused her to

retain the truck overnight and incur rental

charge[s] for the night of August 6, 2005. . . .

See Cannon v. Cherry Hill Toyota, Inc., 161 F.

Supp. 2d 362, 374-75 (D.N.J. 2001) (“New

Jersey courts have interpreted the NJCFA as

requiring a causal link between the practice and

the harm.”); New Jersey Citizen Action v.

Schering-Plough Corp., 842 A.2d 174, 178 (N.J.

Super. Ct. App. Div. 2003) (dismissing NJCFA

claim for failure to state a claim where plaintiffs

failed to demonstrate that any losses they may

have suffered were caused by defendants). 
35

App. at 130. That is, had she attempted to return the vehicle

after the store’s listed closing (10 PM), Home Depot’s

“unlawful conduct” of not disclosing that the rental

department closed earlier would not have caused her to incur

the late fees. 

The District Court’s dismissal of Frederico’s NJCFA

claim, therefore, was proper. 

B.

Finally, we turn to Frederico’s breach of contract

claim. To state a claim for breach of contract, she must allege

(1) a contract between the parties; (2) a breach of that

contract; (3) damages flowing therefrom; and (4) that the

party stating the claim performed its own contractual

obligations. See Video Pipeline, Inc. v. Buena Vista Home

Entertainment, Inc., 210 F. Supp. 2d 552, 561 (D.N.J. 2002).

In her complaint, Frederico claims that Home Depot

“breached its standard Vehicle Delivery Agreement with

Plaintiff and members of the class. Plaintiff and members of

the class suffered an ascertainable loss as a result of

Defendant’s breach of contract.” Compl. ¶ 46. Frederico

alleges that the Home Depot breached the Agreement for the

truck rental by refusing to allow her to return the truck on

August 6, 2005. She claims that an unspecified person at the

Home Depot store informed her that the rental department

was closed and that the store had no after-hours facilities, and
36

that accordingly she has to wait until the next morning and

pay $287.14 instead of $19.00. 

We are satisfied with the District Court’s dismissal of

Frederico’s contract claim. Both parties agree that the first

element, the existence of a contract, is met by the Agreement.

As the District Court found, however, Frederico failed to

“provide allegations to support the second, third, and fourth

elements of the breach of contract claim”:

Plaintiff failed to allege the time on August 6,

2005 that she attempted to return the truck. This

deficiency makes it impossible to determine

whether the defendant breached any promises

made in the Agreement or whether plaintiff

breached her own contractual obligation to

return the vehicle by 7:38 p.m. and in any event,

before the store closed at 10:00 p.m. 

App. at 125. 

With respect to the second and third elements, then,

Frederico’s complaint does not disclose how Home Depot

breached the Agreement: she was charged the agreed upon

amount for the time the vehicle was in her possession.

Without knowing when Frederico first attempted to return the

vehicle, it is unclear whether Defendant’s refusal to accept the

first return was in breach of the Agreement. Because it cannot

be determined that Home Depot breached the agreement, it
37

cannot be inferred that Frederico’s damages “flowed” from

the breach. 

With respect to the fourth element, that the party

alleging the breach performed its contract obligations,

Frederico argues on appeal:

[A]ll that the Rental Agreement required of

consume[r]s such as Ms. Frederico in order to

avoid or halt the accumulation of late fees was

to satisfy the following conditions: (1) return

the vehicle (2) to the store (3) before the store’s

closing. Appellant satisfied all those conditions

– she returned the vehicle, to the store from

which she had rented that vehicle, and did so

before that store had closed. As such, the

Appellant fulfilled the express terms of the

Rental Agreement.

Appellant’s Br. at 5-6. 

Frederico, however, did not plead in her complaint that

she returned the vehicle at the time specified in the

Agreement (7:38 PM) or even before the store’s closing (10

PM). Her complaint only states “Plaintiff returned the truck to

Home Depot on August 6, 2005, but was informed by

Defendant that the rental department was closed.” Compl. ¶ 8.

Contrary to Frederico’s brief, the District Court was not

requiring her to specify “the exact hour at which [she]

attempted the rental return.” Appellant’s Br. at 33. Instead,
38

she must simply plead that the time of the attempted return

was made in accordance with the Agreement, and thus that

she satisfied her own contractual obligations. This she did not

do, and therefore the District Court’s dismissal of Frederico’s

contract claim was proper. 

* * * * *

For the foregoing reasons, the judgment of the District

Court will be affirmed.