Andrews et al v. Medical Excess, LLC
MEMORANDUM OPINION AND ORDER GRANTING 5 MOTION to Remand ; REMANDING this case to the Circuit Court of Barbour County, Alabama; directing the Clerk to take appropriate steps to effect the remand. Signed by Honorable Judge Mark E. Fuller on 5/31/12. Certified copy of order mailed to Clerk Barbour County, AL.(djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
BILLY JOE ANDREWS, WALTER
STENSLAND, JOHN SCOTT, MARY
SCOTT, MARK MILLER, JAMES C.
STENSLAND, ALFRED MARSHALL,
HOWARD MILLER, and JOHN DAVIS,
MEDICAL EXCESS, LLC,
Case No. 2:11-cv-1074-MEF
MEMORANDUM OPINION AND ORDER
The defendant, Medical Excess, LLC, removed this case to federal court from the
Circuit Court of Barbour County, Alabama. (See Doc. # 1.) In response, the plaintiffs
filed the Motion to Remand (Doc. # 5) now before the Court. For the reasons discussed
below, the plaintiffs’ Motion to Remand is due to be GRANTED.
Medical Excess, LLC, markets and sells excess health insurance coverage. (Doc. #
1-1 at ¶ 22.) In October of 2003, Medical Excess solicited business from Magnatrax, a
company located in Barbour County, Alabama, that employed the plaintiffs at the time.
The Court has taken the facts from the complaint and accepts them as true for present purposes.
(Id. at ¶ 24.) At Medical Excess’ request, Magnatrax required the plaintiffs, along with
its other employees, to provide to Medical Excess a bevy of personal and confidential
information so the employees could receive health insurance. (Id. at ¶ 25–26.) The
information Medical Excess gathered included the plaintiffs’ names, social security
numbers, and dates of birth. (Id. at ¶ 25.)
In June of 2006, Medical Excess notified the plaintiffs and other Magnatrax
employees that someone had stolen the data collected in connection with their health
insurance applications. (Id. at ¶ 27.) Along with the notification, Medical Excess offered
some bare-bones advice about what the plaintiffs could do to protect themselves from
identity theft. (Id. at ¶ 29.) Medical Excess also alluded to some services that it would
provide to the plaintiffs if they noticed unusual activity on their financial statements and
suspected identity theft. (Id. at ¶ 30.) Medical Excess offered these services for only a
year. (Id.) The plaintiffs had no further correspondence with Medical Excess after this
point. (Id. at ¶ 31.)
In February of 2010, each plaintiff found out that someone had stolen his or her
identity from Medical Excess. (Id. at ¶ 32.) The thief had used the information to open
unapproved bank accounts, file falsified tax returns, receive unauthorized tax refunds, or
some combination of all three. (Id.) Medical Excess was then told about these events but
did nothing to offset the plaintiffs’ losses. (Id. at ¶ 33.)
As a result, the plaintiffs filed a complaint in the Circuit Court of Barbour County,
Alabama, on November 11, 2011. In their complaint, they alleged various state law
claims arising out of the alleged theft of confidential personal information. In Count One,
each plaintiff claimed an alleged breach of fiduciary duty, asking for up to $74,999 in
compensatory and punitive damages on that count. In Count Two, each plaintiff alleged
negligence and wantonness, asking for up to $74,999 in compensatory damages. In
Count Three, each plaintiff alleged negligent training, monitoring, and supervision on the
part of Medical Excess, and, as with the other counts, sought damages of up to $74,999
Medical Excess removed the action to federal court, filing removal papers on
December 16, 2011. (Doc. # 1.) The plaintiffs filed their remand motion less than a
month later, submitting it on January 13, 2012. (Doc. # 5.) To decide the remand
question, the Court is faced with a single issue: should the Court aggregate the $74,999
demands in each of the three counts in determining the amount in controversy?
A. The remand standard
Federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian
Life Ins. Co. Of Am., 511 U.S. 375, 377 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092,
1095 (11th Cir. 1994); Wymbs v. Republican State Executive Comm., 719 F.2d 1072,
1076 (11th Cir. 1983). As a result, they only have the power to hear cases over which the
Constitution or Congress has given them authority. See Kokkonen, 511 U.S. at 377.
Congress has empowered the federal courts to hear a case removed by a defendant from
state to federal court if the plaintiff could have brought the claims in federal court
originally. See 28 U.S.C. § 1441(a); Caterpillar, Inc. v. Williams, 482 U.S. 386, 392
(1987). To accomplish a successful removal, the removing defendant bears the burden of
showing that a district court has subject matter jurisdiction over the action. See Diaz v.
Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996) (putting the burden of establishing federal
jurisdiction on the defendant seeking removal to federal court). And although the
Eleventh Circuit favors remand where federal jurisdiction is not absolutely clear, see
Burns, 31 F.3d at 1095, “federal courts have a strict duty to exercise the jurisdiction that
is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706,
B. The removal statutes
The removal statute, 28 U.S.C. § 1441(a), allows a defendant to remove an action
from state to federal court if the plaintiff could have originally brought his claim in
federal court. Removing an action implicates federalism and comity concerns, however,
because it requires a federal court to snatch the case out of state court. See Univ. of S.
Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999). To ameliorate these
concerns, federal courts construe the removal statutes narrowly, with all doubts resolved
in favor of remand to state court. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th
With this in mind, for this Court to exercise removal jurisdiction based on
diversity, there must exist “complete diversity” between adverse parties—no plaintiff may
share state citizenship with any of the defendants. See Riley v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 292 F.3d 1334, 1337 (11th Cir. 2002). In addition, the amount in
controversy must exceed $75,000, exclusive of interests and costs. 28 U.S.C. § 1332(a);
Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). When a
plaintiff asks for a specific sum in the complaint, and that sum falls below $75,000, the
defendant must prove to a legal certainty that the amount in controversy exceeds
$75,000. Burns, 31 F.3d at 1095. And although multiple claims by one plaintiff can be
aggregated in determining the amount in controversy, federal courts “do not aggregate
the value of multiple plaintiffs’ claims to satisfy the amount in controversy requirement.”
Leonard v. Enterprise Rent-a-Car, 279 F.3d 967, 974 (11th Cir. 2002) (citing Zahn v.
Int’l Paper Co., 414 U.S. 291, 295 (1973)).
Should the plaintiffs’ three counts be considered separate bases for liability? Or
does each count merely represent a different theory for which the plaintiffs can recover
on a single claim? In the eyes of Medical Excess, the plaintiffs have made three distinct
claims for $74,999, which, when added together to get $224,997, easily satisfy the
jurisdictional threshold. The plaintiffs view things differently, however, seeing the three
counts as three different ways in which to recover the $74,999 in damages they allegedly
suffered as a result of Medical Excess mishandling their personal information.
In Daniel v. Nationpoint, No. 2:07-cv-640, 2007 WL 4533121 (M.D. Ala. Dec.
19, 2007), Judge Watkins faced a similar issue. There, the plaintiffs filed a complaint
requesting compensatory and punitive damages not to exceed $74,999, asserting claims
for fraudulent suppression, breach of contract, fraud, and negligence. When the
defendant contested the plaintiffs’ remand motion by claiming the various claims should
be aggregated, Judge Watkins disagreed, holding that the defendants “failed to show that
aggregation is proper.” 2007 WL 4533121 at *2. He reasoned that, “[w]hile a plaintiff
can sue for both a breach of contract and a tort arising out of a single transaction, the
claims are not aggregated because the plaintiff can recover for either but not for both.”
Id. (citing Combined Servs., Inc. v. Lynn Elecs. Corp., 888 F.2d 106, 107 n.4 (11th Cir.
1989)). He also relied on Alabama law, noting how “a plaintiff cannot receive a ‘double
recovery’ for what is essentially one viable cause of action.” Id. (quoting Deupree v.
Butner, 522 So. 2d 242, 244–45 (Ala. 1988)). Significantly, however, the complaint in
Daniel dealt with a complaint requesting only $50,000 in damages. Here, the plaintiffs
have mentioned $74,999 in each count. This difference makes the case for aggregation
relatively weaker here than in Daniel.
Yet in Holmes v. Boehringer Ingelheim Pharmaceuticals, Inc., 158 F. Supp. 2d
866 (N.D. Ill. 2001), a district court decided a case more analogous to the one at bar, and
did so consistent with Judge Watkins’s Daniel decision. The plaintiff’s complaint in
Holmes sought damages for personal injury and contained two counts—one for
negligence, the other for strict liability. Each made reference to $50,000 in damages, just
like how in this case each of the plaintiffs’ counts asks for $74,999. The Holmes
defendants argued that the plaintiffs asserted two distinct claims for $50,000, which,
when aggregated, exceeded the jurisdictional threshold. The district court disagreed,
holding that “Counts I and II of the plaintiff’s complaint . . . state different legal theories
of recovery for the same injury, not separate claims for relief,” meaning they could not
“be aggregated to meet the jurisdictional amount of § 1332(a).” 158 F. Supp. 2d at 868.
In reaching this result, the Holmes court explained the difference between a standalone
claim and a theory of recovery:
Both claims rely on the same facts and allege a failure to
warn; all that differs between the two claims are the
allegations of the nature of the defendants’ duties. A right of
recovery is distinct from a theory of liability; a plaintiff may
have only one right of recovery though she ‘advances a
variety of legal theories to support that recover.’
Id. (emphasis added) (quoting Institutto Nacional De Comercializacion Agricola v.
Continental Ill. Nat’l Bank & Trust Co. of Chi., 576 F. Supp. 991, 1004 (N.D. Ill. 1983)).
Applying this reasoning, the Holmes court noted how “[t]he theories of negligence and
strict liability are ‘merely different bases for a single recovery.’” Id. (quoting Ind. Harbor
Belt R.R. Co. v. Am. Cyanamid Co., 860 F.2d 1441, 1445 (7th Cir. 1988)); see also
Palmermo v. Fid. & Guar. Ins. Co., No. 1:08-cv-218, 2009 WL 88340, at *2 (D. Vt.
January 12, 2009) (“claims seeking the same damages under different theories may not
be aggregated.”) Thus, the district court found aggregation inappropriate and held that
the amount in controversy did not exceed the jurisdictional minimum.
In the case at hand, it is unclear whether the plaintiffs have asserted three different
theories of recovery or three standalone claims. Neither party has cited Alabama case law
allowing for or barring recovery for breach of a fiduciary duty, negligence, and negligent
training when all three allegations arise out of the same underlying conduct. Medical
Excess argues that, because the plaintiffs could receive different types of damages under
each theory,2 each count amounts to a separate claim for $74,999. The insurer also notes
that the three theories allege three breaches at three different points in time,3 which
would arguably take this case outside the ambit of Holmes.
The Court finds Medical Excess’s arguments unpersuasive. It is true enough that
the plaintiffs allege they suffered damages as a result of separate acts or omissions by
Medical Excess. But at the end of the day, the plaintiffs, like the plaintiffs in Daniel and
Holmes, assert a claim for a single injury: they want compensation for the harms
stemming from Medical Excess’s failure to safeguard their private information. Medical
Excess admits as much when it repeatedly refers to the “three theories” deployed by the
For example, the plaintiffs can recover punitive damages under the breach of fiduciary theory
but not under the negligence theory.
Medical Excess states that the plaintiffs seek damages for three separate breaches that took
place in three different points in time. The first deals with Medical Excess’s breach from the date it
collected the date until the theft in 2006. The second involves Medical Excess’s response and offer of
advice and protection services. And the third seeks damages for the unapproved bank accounts opened,
and false tax returns filed, by the thief.
plaintiffs but fails to show that they amount to distinct claims under Alabama law. Cf.
Daniel, 2007 WL 4533121 at *2 (“While a plaintiff can sue for both a breach of contract
and a tort arising out of a single transaction, the claims are not aggregated because the
plaintiff can recover for either but not for both.”); Holmes, 158 F. Supp. 2d at 868 (“A
right of recovery is distinct from a theory of liability”). In other words, from where
Medical Excess’s duty to protect the plaintiffs’ data springs and when the insurer
breached this duty is much less important—at least when it comes to determining the
amount in controversy—than the harm suffered by the plaintiffs. Therefore, the Court
will look at the value of the alleged harm in determining the amount in controversy. This
makes more sense than woodenly adding the numbers recited in each count of the
plaintiffs’ complaint, as Medical Excess wants the Court to do, because it would lead to
double counting if Alabama law does not allow a separate recovery under each theory.
Viewed in this light, it is not at all clear—let alone certain—that the value of the
plaintiffs’ claims exceed $75,000. Indeed, the harm at issue is the monetary damages
suffered by the plaintiffs as a result of the data theft, combined with any attendant mental
anguish, emotional distress, and punitive damages a jury may award. Given that none of
the plaintiffs allege the specific amount of monetary damages (namely those stemming
from the unauthorized bank accounts and false tax returns), and due to the inherently
difficult-to-value nature of subjective and punitive damages, there is no reason to doubt
the $74,999 figure claimed by each plaintiff. Accordingly, the Court finds that Medical
Excess cannot prove to a legal certainty that the claim asserted by the plaintiffs exceeds
$75,000, exclusive of interest and costs. The case is due to be remanded back to state
The stipulations filed by the plaintiffs further buttress this conclusion. While wellestablished law holds that federal courts look at the amount in controversy at the time of
removal, Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 752 (11th Cir. 2010), and that
a plaintiff cannot deprive a court of subject-matter jurisdiction with a post-removal
stipulation, St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938), courts
can still look at post-removal evidence to establish the facts at the time of removal,
Sierminski v. Transouth Fin. Corp., 216 F.3d 945, 949 (11th Cir. 2000). Here, the
plaintiffs’ stipulations show that the plaintiffs seek $74,999 for a single harm, not
$74,999 for each of three separate harms. In fact, each plaintiff specifically says so: “I am
not seeking more than $74,999 in total damages for all counts and causes of action
combined in the complaint. I do not currently seek nor will I accept more than $74,999 in
damages in this case for all claims, even if a jury verdict exceeds that amount.” (Doc. #
6-1.)4 This supports the Court’s conclusion that the plaintiffs assert one claim for
$74,999 under three different theories, not three separate claims for $74,999 apiece. The
plaintiffs should note that these stipulations preclude them from seeking or accepting any
This document contains the affidavits of Billy Andrews (Doc. # 6-1 at 1); Walter Stensland (id.
at 2); Alfred Marshall (id. at 3); John Davis (id. at 4); Howard Miller (id. at 5); Mary Scott (id. at 6);
John Scott (id. at 7); Mark Miller (id. at 8); and James Stensland (id. at 9).
more than $74,999 once they return to state court. And if plaintiffs’ counsel acts in a
manner inconsistent with the affidavits they have submitted, adverse consequences can
ensue. See Burns, 31 F.3d at 1095 (stating representation about damages submitted by
lawyer has “important legal consequences” and thus “raise[s] significant ethical
implications for a court officer”); Federated Mut. Ins. Co. v. McKinnon Motors, LLC,
329 F.3d 805, 808 n.6 (11th Cir. 2003) (allowing Rule 11 proceedings for improper
representations to the court even after case no longer pending).5
For the reasons discussed above, the plaintiffs’ Motion to Remand (Doc. # 5) is
GRANTED. The case is hereby REMANDED to the Circuit Court of Barbour County,
Alabama, and the Clerk is DIRECTED to take appropriate steps to effect the remand.
Done this the 31st day of May, 2012.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE
The state bar would presumably have an interest as well in hearing about improper
representations used to evade a federal court’s subject-matter jurisdiction.
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