Opinion ID: 161121
Heading Depth: 2
Heading Rank: 2

Heading: Determination of Amount in Controversy

Text: 22 We turn to a de novo review of the district court's conclusion that diversity jurisdiction is present here. 3 The complaint does not in any of its counts request a specific dollar amount. Nonetheless, the district court adopted defendants' construction of the Martins' pleading and concluded that the complaint itself established the requisite amount in controversy. 4 We have carefully reviewed the complaint and we agree with the Martins that it does not demonstrate by a preponderance of the evidence claims in excess of $50,000. For example, it appears defendants simply viewed every dollar amount mentioned in the complaint as an item of damages claimed by the Martins without regard to allegations making clear the Martins were not in fact seeking all those amounts. 5 In addition, while the Martins did seek treble damages under one state statute, defendants have failed to establish what specific damages were recoverable under that statute and instead merely assumed that all amounts mentioned in the complaint were subject to trebling. 23 Because we conclude that the amount-in-controversy requirement is not satisfied on the face of the complaint, we turn to the notice of removal. As mentioned above, defendants conceded in their removal notice that the amount in controversy could not be determined from the face of the complaint. Aplt. App., doc. 4 at 2. In contending that the requisite amount was nonetheless satisfied, defendants began by summarizing the allegations and the requested relief asserted by the Martins. This mere summary, of course, does not provide the requisite facts lacking in the complaint. Defendants also asserted that jurisdiction was satisfied because the attorneys fees and the punitive damages claimed by the entire class could be aggregated and attributed to the Martins in determining the amount in controversy, and that so long as the Martins as class representatives met the jurisdictional amount, the other class members fell within the court's supplemental jurisdiction regardless of the value of their claims. As we discuss below, none of these assertions supports the existence of diversity jurisdiction.
24 We turn first to defendants' contention, both in their removal notice and on appeal, that the punitive damage claims of the putative class members may be aggregated and attributed to the Martins and to each class member, and that these aggregated damages satisfy the jurisdictional amount with respect to each member of the putative class. In support of this argument, defendants rely on the cases of Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353 (11th Cir. 1996), and Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th Cir. 1995), both of which have been disapproved by the circuits that decided them. See Cohen v. Office Depot, Inc., 204 F.3d 1069, 1073-77 (11th Cir. 2000) (explaining Tapscott not valid precedent because it conflicts with earlier ruling on same issue); Ard v. Transcont'l Pipe Line Corp., 138 F.3d 596, 601-02 (5th Cir. 1998) (Allen decision due to peculiarity of Mississippi law and does not represent precedent for any other state). Indeed, all of the circuits considering the issue now hold that punitive damages cannot be aggregated and attributed in total to each member of a putative class for purposes of satisfying the amount-in-controversy requirement of diversity jurisdiction. See, e.g., Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1264-65 (11th Cir. 2000); Ard, 138 F.3d at 600-02; Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1430-31 (2d Cir. 1997); see also Anthony v. Security Pac. Fin. Servs., Inc., 75 F.3d 311, 315 (7th Cir. 1996) (implicitly rejecting aggregation of punitive damages by concluding that [t]he plaintiffs in this case would have to recover on average at least $47,118.36 in punitive damages to satisfy 28 U.S.C. § 1332). 25 Although this court has not ruled directly on the matter, we have pointed out that the Supreme Court has historically interpreted section 1332 to require plaintiffs who have separate and distinct claims, but unite together in a single suit, to each meet the jurisdictional amount in controversy. Leonhardt v. Western Sugar Co., 160 F.3d 631, 637(10th Cir. 1998). We observed that the Court has therefore only permitted aggregation when a single plaintiff seeks to aggregate . . . his own claims, or when two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest. Id. As we discuss below, we now hold, in light of the language in Leonhardt and the analysis of our sister circuits, that punitive damages may not ordinarily be aggregated and attributed in total to each member of a putative class for purposes of satisfying diversity jurisdiction. 26 The court in Gilman explained the reasoning supporting this conclusion. 27 As one court expressed the principle, the paradigm cases allowing aggregation of claims are those which involve a single indivisible res, such as an estate, a piece of property (the classic example), or an insurance policy. These are matters that cannot be adjudicated without implicating the rights of everyone involved with the res. 28 Gilman, 104 F.3d at 1423 (quoting Bishop v. General Motors Corp., 925 F. Supp. 294, 298 (D. N.J. 1996)). The court pointed out that even though a class claim for punitive damages may create a single pool of recovery, a common interest in a pool of funds is not the type of interest that permits aggregation of claims under the `common fund' doctrine. Id. at 1430. Each class member could sue separately for punitive damages and have his right to recovery determined without implicating the rights of every other person claiming such damages. Id. Because a class member's right to punitive damages is separate, distinct, and independent from those of other class members, the class claim for such damages does not seek to enforce a single right in which the class has a common and undivided interest. Punitive damages therefore may not be aggregated in a class action and attributed in total to each member of the class. We agree with Gilman and the other courts, and we reject defendants' argument that the jurisdictional amount with respect to the Martins is satisfied on the basis of the aggregated claims of the class members to punitive damages.
29 In their removal notice, defendants also assert that [t]he attorney fees of the entire class are attributable to the named plaintiffs for purposes of satisfying the jurisdictional amount. Aplt. App., doc 4 at 3. Although defendants do not present this argument directly on appeal, they contend that all of the fees requested by the Martins should be considered in determining whether their claims satisfy the amount in controversy, in effect attributing all the fees that will potentially be recovered in this putative class action to the class representatives. 30 Courts have generally held, under the same rationale applied to preclude the aggregation of puntive damages, that attorneys fees cannot be aggregated for purposes of diversity jurisdiction. See, e.g., Morrison, 228 F.3d at 1266-68 (when each class member could recover attorneys fees if he sued separately, right to recover fees was separate and distinct and could not be aggregated); see also Goldberg v. CPC Int'l, Inc., 678 F.2d 1365, 1367 (9th Cir. 1982) (aggregation of attorneys fees would conflict with Supreme Court authority requiring plaintiffs with separate and distinct claims to each meet jurisdictional amount). 6 We agree and conclude that potential attorneys fees requested on behalf of the class may not be aggregated and attributed entirely to the Martins in assessing whether they meet the amount in controversy. 7 31 In view of our conclusions that neither the face of the complaint nor the removal notice demonstrate that the Martins' claims will exceed $50,000, and that neither the punitive damages nor the attorneys fees sought by the class can be attributed entirely to the Martins as class representatives, we hold defendants have failed to show by a preponderance of the evidence that the Martins' claims meet the amount in controversy necessary to the exercise of diversity jurisdiction. 8 32 Because the Martins' claims do not meet the jurisdictional amount, the disposition of the class claims by the district court is irrelevant. Although we therefore need not address the remaining arguments with respect to the class, we make the following observations. This court has specifically rejected defendants' contention that so long as the class representatives meet the jurisdictional amount, all class members fall within the court's supplemental jurisdiction. See Leonhardt, 160 F.3d at 638-41 (rejecting argument that the enactment of 28 U.S.C. § 1367, concerning supplemental jurisdiction, altered the historical aggregation rules under § 1332 for class actions, and concluding enactment of § 1367 did not overrule pre-existing authority holding each plaintiff in a diversity-based class action must meet the jurisdictional amount in controversy under § 1332). 9 In any event, because the class representatives here do not meet the jurisdictional amount, supplemental jurisdiction over class members would not be available. 10 33 In sum, we hold that we have appellate jurisdiction over this final, appealable order. Defendants have failed to establish the requisite amount in controversy, and the district court therefore lacked subject matter jurisdiction. Accordingly, we REVERSE the judgment of the district court and REMAND with directions to remand this action to state court.