Thatcher v. Hanover Insurance Group, Inc., The et al
Filing
39
ORDER denying 21 Motion to Remand; reconsidering and denying 10 Motion to Voluntarily Dismiss; denying as moot 27 Motion for Protective Order. Signed by Honorable Jimm Larry Hendren on May 29, 2012. (cap) Modified on 5/30/2012 to add text (cap).
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION
ALLEN THATCHER, Individually and as
Class Representative on Behalf of all Similarly
Situated Persons
v.
PLAINTIFF
Civil No. 10-4172
THE HANOVER INSURANCE GROUP, INC.
and THE MASSACHUSETTS BAY
INSURANCE COMPANY
DEFENDANTS
O R D E R
NOW on this 29th day of May, 2012, the above referenced matter
comes on for consideration.
Pursuant to both the Opinion and
Judgment of the Eighth Circuit Court of Appeals, dated November 4,
2011, and Plaintiff’s Motion to Remand (Doc. 21) and the responses,
replies and other briefing associated therewith, the issue of
whether this Court has subject matter jurisdiction over the instant
case
is
ripe
for
consideration.
The
Court,
being
well
and
sufficiently advised, finds and orders as follows:
1.
of
The plaintiff initiated this action in the Circuit Court
Miller
County,
Arkansas
and,
by
his
First
Amended
Class
Complaint filed therein on October 28, 2010, asserts the following
claims:
*
unjust enrichment;
*
fraud;
*
constructive fraud; and
*
breach of contract.
The claims are said to arise from plaintiff’s allegation that
defendants failed to properly pay insureds for general contractor’s
overhead and profit under the terms of their insurance policies.
Specifically, plaintiff claims
(a)
that defendants improperly failed to include in their
payments to the insureds fees for general contractors' services
[characterized as general contractor overhead and profit (GCOP)
herein] -- the breach of contract claim;
(b)
that defendants engaged in a fraudulent scheme to conceal
the availability of the GCOP and entitlement to payment for GCOP
from their insureds -- the fraud and constructive fraud claims; and
(c)
that defendants have realized extensive profits and ill-
gotten gains by reason of their failure to so properly compensate
the insureds.
2.
On November 30, 2010, defendants filed their Notice of
Removal in this Court in which they asserted, inter alia, that this
matter meets the requirements for federal jurisdiction under the
Class Action Fairness Act of 2005 (hereinafter “CAFA”), 28 U.S.C.
§ 1332(d).
3.
On December 7, 2010 at 11:02 A.M., defendants filed their
answer to the plaintiff’s complaint.
4.
Plaintiff did not then challenge defendants' removal nor
the jurisdiction of this Court but, rather, on that same date of
December 7, 2010 at 11:11 A.M. [some nine (9) minutes after
2
defendants had filed their answer], he filed a Notice of Voluntary
Dismissal Without Prejudice.
5.
On February 16, 2011, this Court found that plaintiff’s
motion to dismiss should be granted under Rule 41(a)(2) of the
Federal Rule of Civil Procedure.
6.
Defendants appealed this Court’s dismissal ruling --
contending that, before granting the motion to voluntarily dismiss,
this Court should have considered whether the motion to dismiss was
an improper forum-shopping measure. The Eighth Circuit agreed with
defendants' contention and stated that "determining whether the
district court had subject matter jurisdiction was at the crux of
the issue of whether the motion to dismiss was being used for the
improper purpose of seeking a more favorable forum."
Thatcher v.
Hanover Ins. Group, Inc., 659 F.3d 1212, 1215 (8th Cir. 2011). The
appellate court remanded the case with the following directions to
this Court:
After the trial court determines whether it has subject matter
jurisdiction, it can consider whether dismissal without
prejudice is appropriate, taking into consideration whether
the motion to dismiss is a forum-shopping measure.
Alternatively, if the court finds that it does not have
subject matter jurisdiction, it should remand to the state
court.
On November 25, 2011, a Mandate of the Eighth Circuit Court of
Appeals was entered herein.
7.
On December 12, 2011 -- the final date set by this Court
for the parties to file simultaneous briefs on the issues to be
3
addressed on remand -- plaintiff filed Plaintiff's Motion To Remand
(Doc. 21), asserting that this Court has no jurisdiction over this
case under a CAFA "because the amount in controversy does not
exceed $5 million."
8.
Under CAFA, this Court has jurisdiction of any class
action “in which the matter in controversy exceeds the sum or value
of $5,000,000, exclusive of interest and costs,” and is a class
action in which “any member of a class of plaintiffs is a citizen
of a State different from any defendant.”
28 U.S.C. § 1332(d)(2).
Class members’ claims “shall be aggregated to determine whether the
matter in controversy exceeds the sum or value of $5,000,000,
exclusive of interest and costs.”
9.
the
only
28 U.S.C. § 1336(d)(6).
The parties seem to agree -- as does the Court -- that
jurisdictional
issue
in
dispute
is
the
amount
in
controversy.
10.
The Court notes both parties herein rely heavily on Bell
v. Hershey Co., 557 F.3d 953 (8th Cir. 2009) as supporting their
respective contentions concerning jurisdiction in this case.
They
seem to agree that Bell holds that a party seeking to remove under
CAFA “must establish the amount in controversy by a preponderance
of the evidence regardless of whether the complaint alleges an
amount below the jurisdictional minimum.”
Bell, 557 F.3d at 958.
The Bell further court held that “[t]he jurisdictional fact .
. . is not whether the damages are greater than the requisite
4
amount, but whether a fact finder might legally conclude that they
are. . . .”
Bell, 557 F.3d at 959 (quoting Kopp v. Kopp, 280 F.3d
883, 885 (8th Cir. 2005) (emphasis supplied by Bell).
Once the removing party has met its burden, “remand is only
appropriate if the plaintiff can establish to a legal certainty
that the claim is for less than the requisite amount.”
Bell, 557
F.3d at 958 (internal citation omitted).
Accordingly, under Bell, this Court must initially determine
whether defendants have established, by a preponderance of the
evidence, that the amount in controversy has been satisfied.
11.
Plaintiff, as master of his complaint, asserted four
causes of action and did not characterize them as being alternative
to each other.
The Court will address the complaint in the order
it was drafted by plaintiff.
(a) Count One (Unjust Enrichment) -- In this count, plaintiff
alleges that defendants improperly failed to disclose information
and concealed information relating to the potential availability of
payments for GCOP; that this conduct is unfair, unjust, deceitful,
wrongful,
misleading
and/or
fraudulent;
that
defendants
have
generated extensive profits and ill-gotten gains by reason of this
alleged
conduct;
and
that
defendants
fully
appreciated
the
enrichment and benefit accorded to them by retaining monies that
should have been paid to plaintiff and the class members.
5
A fair reading of the allegations in Count One indicates to
the Court that plaintiff, on behalf of himself and the putative
class, is asserting that defendants have been unjustly enriched by
retaining for their use and benefit monies which should have been
paid over to them and that defendants were -- and continue to be -enjoying the benefit of those improperly retained funds.
While
denying
the
allegation,
defendants
have
provided
evidence in the form of affidavits which indicate that the alleged
benefit accruing to them could have taken the form of the earning
power of monies allegedly improperly withheld by them during
pertinent periods -- and that such "benefits" could amount to some
$793,677.
Plaintiff assails defendants' submissions on this claim saying
that they are not "evidence"; that defendants' calculations rest on
speculation; and that their computations are faulty.
plaintiff
offers
no
counter
affidavits
or
other
However,
persuasive
submissions which would suggest that he could make no recovery at
all on this claim if it were to be pressed -- relying instead on
his disclaimers included in his complaint and his contentions that
he would not be seeking a "double recovery."
The Court believes that defendants' submissions are "evidence"
within the context of its removal effort and that they preponderate
in favor of the notion that plaintiff could persuade a fact finder
to award damages to him and the class members on the unjust
6
enrichment claim as indicated by data presented by defendants.
Accordingly, the Court concludes that the possible value of these
damages
($793,677)
should
be
included
in
the
calculations
concerning the amount in controversy threshold for CAFA purposes.
(b) Counts Two and Three (Fraud and Constructive Fraud) -- In
these counts -- after reasserting the allegations discussed above
with respect to Count One (see paragraphs 71 and 74 of the amended
complaint [Doc. 3]) -- plaintiff further alleges that defendants
made false representations and gave false assurances regarding the
amounts owed and available under the insurance policies in question
and that they fraudulently concealed information regarding the
GCOP.
He further alleges that, by reason of these actions on the
part of defendants, plaintiff and the Class Members "have been
harmed and Defendants were able to retain monies that should have
been paid to plaintiff as GCOP" (Id. at para. 69) and that such
actions
"injured
Plaintiff
and
Class
Members
in
the
manner
described herein." (Id. at para. 73).
While plaintiff does not, within either Count Two or Count
Three, specify a precise amount of damages being sought with
respect to each, he states in his Prayer For Relief that "Through
whatever form of relief may be available, Plaintiff seeks recovery
of less than $75,000 for himself and each Class Member . . ."
(emphasis added).
Additionally, plaintiff thrice repeats that
"Plaintiff does not seek double recovery by setting forth multiple
7
theories of recovery or multiple remedies."
(emphasis added)(See
paragraphs B, C, and D of Prayer For Relief [Doc. 3]).
Thus, the
Court believes it clear that plaintiff is seeking damages of up to
$75,000 for himself and each of the Class Members on both these
Claims.
Again, while denying the merits of either Count Two or Count
Three, defendants nonetheless submit evidence in affidavit form
tending to show that, under the "benefit of the bargain" measure of
damages under Arkansas law, there could well be a basis on which a
finder of fact might conclude that damages of as much as $1,231,469
were recoverable by plaintiff and the Class Members on either or
both of these claims.
As he did with respect to Count One, plaintiff challenges
defendants' submissions on these claims saying that they are not
"evidence"; that defendants' calculations rest on speculation; and
that their computations are faulty.
However, again plaintiff
offers no counter affidavits or other persuasive submissions which
would suggest that he could make no recovery at all on these claims
if they were to be pressed -- relying instead on his disclaimers
included in his complaint and his contentions that he would not be
seeking a "double recovery."
The Court believes that defendants' submissions are "evidence"
within the context of its removal effort and that they preponderate
in favor of the notion that plaintiff could persuade a fact finder
8
to award damages to him and the class members on either or both the
fraud or constructive fraud counts as indicated by data presented
by defendants.
Accordingly, the Court concludes that the possible
value of these damages ($1,231,469) should be included in the
calculations concerning the amount in controversy threshold for
CAFA purposes based on plaintiff's complaint as drawn.
(c)
Breach of Contract (Count Four) -- In this Count Four
--
after reasserting the allegations discussed above with respect to
Counts One, Two and Three (paragraph 74 of the amended complaint
[Doc. 3]) --
plaintiff's complaint indicates that he is seeking
for himself and the putative class damages for breach of contract
which, as characterized by him in his brief (in agreement with
defendants' calculations), would amount to about $2,411,077 -being 20% of GCOP for all the class members. [See plaintiff's brief
(Doc. 22) at page 2].
There seems to be no dispute that there is evidence from which
a finder of fact could conclude that plaintiff and the Class
Members were entitled to recover damages from defendants in the
amount of $2,411,077.
possible
value
of
Accordingly, the Court concludes that the
these
damages
should
be
included
in
the
calculations concerning the amount in controversy threshold for
CAFA purposes based on plaintiff's complaint as drawn.
(d)
Statutory Penalties -- Defendants argue that -- as a
matter of law per Ark. Code Ann. §23-79-208(a)(1) -- if plaintiff
9
and the class members should be successful on Count Four alleging
breach of contract, he and they could be entitled to 12% penalties
amounting to some $289,329 for a recovery of $2,411,077.
The
Court
perceives
no
opposition
argument
by
plaintiff
concerning that notion. Accordingly, if that could occur, then the
Court believes the potential amount of $288,329 should be included
in the calculations concerning the amount in controversy threshold
for CAFA purposes based on plaintiff's complaint as drawn.
(e)
Statutory
Attorneys'
Fees
re
Breach of
Contract
–
Defendants further argue in reliance on Ark. Code Ann. §23-79208(a)(1) that, if plaintiff and the class members should be
successful on Count Four alleging breach of contract, he and they
could be entitled to attorneys' fees which could
as 40% of the amount recovery.
amount to as much
[See defendants' brief (Doc. 23) at
page 14, citing as an example, Capital Life & Accident Ins. Co. v.
Phelps, 66 S.W.3d 678, 682 (Ark. Ct. App. 2002)].
Based upon that
potential, say defendants, plaintiff and the class members could be
awarded attorneys' fees of as much as $1,890,221 on a total
recovery of $2,411,077 on their breach of contract claim.
Plaintiff dismisses defendants' contentions that plaintiff and
the class members could be awarded a 40% fee by saying that the
Phelps case "is hardly evidence that Plaintiff would be entitled to
the same 40% attorney's fee in a multi-million dollar case."
[plaintiff's brief (Doc. 22) at page 19].
10
He goes on to correctly
opine that the determination of an attorney's fee is discretionary
with the trial court who is obliged to take into consideration
several
factors
to
inform
its
exercise
of
that
discretion.
Plaintiff does not, however, argue that a 40% attorney's fee could
not be sought in this case or that it would be unreasonable if
awarded.
Instead, he argues that defendants have
made "no effort
to provide evidence of a reasonable fee under these factors."
[plaintiff's brief (Doc. 22) at page 20].
Plaintiff's arguments on this issue seem to beg the question
presented:
"Could (not would) a 40% attorneys' fee be awarded?"
They are not accompanied by any evidence indicating that such fees
could not be awarded -- they are simply naked arguments that
defendants have not produced evidence to show that such fees would
be
awarded.
The
Court
strongly doubts
that
any
plaintiff's
attorney would argue that attorneys' fees permissible under an
applicable
statute
could
not
jurisdiction over the matter.
be
awarded
by
a
court
with
Thus, while the Court expresses no
opinion on whether such fees would be awarded in this case, it is
satisfied by a preponderance of the evidence presented on the issue
that
such
fees
circumstances.
could
be
so
awarded
under
certain
possible
Accordingly, if that could occur, then the Court
believes the potential amount of $1,890,221 in attorneys' fees
should be included in the calculations concerning the amount in
11
controversy
threshold
for
CAFA
purposes
based
on
plaintiff's
complaint as drawn.
The sum of the calculations based upon defendants' submissions
as to what damages could be awarded under plaintiff's complaint -as thus far discussed -- would total $6,614,773, computed as
follows:
Unjust Enrichment
$ 793,677 [Para 11(a), supra]
Fraud and Constructive Fraud 1,231,469 [Para 11(b), supra]
Breach of Contract
2,411,077 [Para 11(c), supra]
Statutory Penalties
288,329 [Para 11(d), supra]
Statutory Attorneys' fees
1,890,221 [Para 11(e), supra]
Total
$6,614,773
This total sum exceeds the $5 Million "amount in controversy"
threshold by over $1.5 Million.
The Court notes that if, instead
of a 40% attorneys' fee ($1,890,221) were awarded, a court awarded
only a 20% attorneys' fee ($472,555), the "amount in controversy"
would be $5,197,107 -- which is still clearly above the said
threshold. The Court has no doubt that the attorneys here involved
would be able to convince a court that, under applicable criteria,
their services in a case recovering more than $2 Million would be
worth at least 20% of the amount recovered.
(f)
Punitive Damages -- Defendants point out that where an
award of punitive damages is potentially available on the claims
alleged, such damages must be considered in determining the amount
in
controversy.
They
also
note
that
punitive
damages
are
potentially available under Arkansas law on plaintiff's claims for
12
fraud and constructive fraud.
Defendants point to averments in
plaintiff's complaint -- most of which have already been mentioned,
supra -- which, in the Court's judgment, clearly implicate the
potential for punitive damages in this case.
Finally, defendants
suggest that punitive damages calculated at the rate of $5,000 for
each
class
member
($11
Million,
plus)
could
potentially
be
available in this case and they point to other CAFA cases wherein
courts have concluded that punitive damages assessed utilizing
multipliers of four to six times the total amount of compensatory
damages would not be "legally impossible."
Plaintiff dismisses defendants' contentions that plaintiff and
the Class Members could be awarded punitive damages saying they are
not
properly
considerable
"because
Plaintiff
has
expressly
disclaimed punitive damages in his complaint. (Doc. No. 3, ¶ 12 and
Prayer for Relief, p. 21)."
While apparently acknowledging that
the complaint's fraud allegations could form the basis for punitive
damages claims,
Plaintiff
is
he
insists
seeking
that
punitive
"[n]one
damages,
of
this
proves
particularly
when
complaint includes an express disclaimer of such damages."
that
the
To the
contrary, there have been cases in which punitive damages have been
properly awarded when merited even in the absence of their being
sought after or prayed for by a party.
See, e.g., Bowles v. Osmose
Util. Servs., 443 F.3d 671, 675 (8th Cir. 2006) (affirming this
court in allowing a party to recover punitive damages even if they
13
have not specifically requested punitive damages in the complaint
as along as the defendant had adequate notice of the plaintiff’s
intention to seek punitive damages.)
Plaintiff
also
argues
that,
even
if
he
sought
punitive
damages, defendants' estimates as to their potential or possible
magnitude amount to shear speculation.
The Court does not agree.
Thus, it cannot be said that the complaint -- as drawn -- could not
justify an award of punitive damages if the allegations of fraud
are properly supported and proven.
In light of the Court's foregoing conclusions, it is apparent
that punitive damages calculated at the rate of $5,000 per class
member or at multiplier rates would further justify the conclusion
that the $5 Million "amount in controversy" threshold is crossed by
the complaint as drawn.
The Court will discuss, infra, the effect
of plaintiff's disclaimers on the issue presented.
12.
The Court concludes that defendants have shown, by a
preponderance of the evidence, that the total amount in controversy
raised by plaintiff's Amended Complaint could exceed the $5 Million
threshold required for federal jurisdiction over this matter.
13.
The Court now turns to a discussion of whether plaintiff
has shown to a legal certainty that, in fact, the case cannot
involve or exceed that amount.
See Bell 557 F.3d at 958 (citing
Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir.
2006)).
14
Plaintiff argues that he can show, to a legal certainty, that
the amount in controversy does not and could not exceed $5 Million
because -- following Bell -- he has disclaimed any intention to
seek damages in excess of that figure.
To back up this argument,
plaintiff points to the following assertions contained in his
amended complaint:
(a)
In paragraph 11, of the amended complaint, he states:
The amount in controversy for Plaintiff and each
Class member is less than $75,000 for purposes of
federal
jurisdiction.
Plaintiff
expressly
stipulates to seek less than $75,000 total
recovery, including costs and expenses, court
costs, pre and post-judgment interests, and
attorneys’ fees, for each Plaintiff or Class
Member. (Emphasis added)
(Doc. 3, page 4 of Amended Complaint).
(b)
In paragraph 12 of the amended complaint, he states:
The total amount in controversy is less than
$5,000,000, exclusive of interest and costs, for
purposes of federal jurisdiction.
Specifically,
the claims of Plaintiff and all Class Member are
less than $5,000,000 when aggregated, exclusive of
interests and costs. Plaintiff makes no claim for
declaratory or injunctive relief.
Plaintiff
specifically disclaims any actual or potential
entitlement to punitive damages. (Emphasis added)
(Doc. 3, page 4 of Amended Complaint).
(c)
Finally, the Prayer for Relief states that plaintiff,
individually and as class representative on behalf of all similarly
situated persons, prays for relief and judgment against defendants,
jointly and severally, as follows:
15
(1) Awarding money damages to Plaintiff and Class
Members from the Defendants in an amount equal to the
amount that should have been paid to Class Members for
GCOP, provided that Plaintiff seeks less than $75,000
total recovery for himself and each Class Member and
further provided that Plaintiff does not seek double
recovery by setting forth multiple theories of recovery
or multiple remedies; (Emphasis added)
(Doc. 3, Paragraph B, page 20 of Amended Complaint)
(2) Awarding pre-judgment interest; provided that
Plaintiff seeks less than $75,000 total recovery for
himself and each Class Member and further provided that
Plaintiff does not seek double recovery by setting forth
multiple theories of recovery or multiple remedies;
(Emphasis added)
(Doc. 3, Paragraph C, page 20 of Amended Complaint)
(3) Awarding attorneys' fees and costs; provided
that Plaintiff seeks less than $75,000 total recovery for
himself and each Class Member and further provided that
Plaintiff does not seek double recovery by setting forth
multiple theories of recovery or multiple remedies;
(Emphasis added)
(Doc. 3, Paragraph D, page 20 of Amended Complaint)
(4)
[t]hrough whatever form of relief may be
available, Plaintiff seeks recovery of less than $75,000
for himself and each Class Member from all Defendants,
jointly and severally, including all interest and costs,
prejudgment interest, post-judgment interest, court
costs, and attorneys fees. Therefore, although Plaintiff
contends that Defendants are jointly and severally liable
for all damages and relief owed to Plaintiff and each
Class Member, Plaintiff expressly seeks less than $75,000
total – from whatever source – on behalf of himself and
each Class Member and so stipulates for all purposes.
Pursuant to Arkansas Rule of Civil Procedure 8(a),
Plaintiff and each Class Member is limited to less than
$75,000 total recovery. Further, as set forth in this
Complaint, the total amount in controversy is less than
$5,000,000, exclusive of interest and costs, for purposes
of federal jurisdiction.
Specifically, the claims of
Plaintiff and all Class Members are less than $5,000,000
when aggregated, exclusive of interest and costs.
16
Plaintiff makes no claim for declaratory or injunctive
relief. Plaintiff specifically disclaims any actual or
potential entitlement to punitive damages.
(Final Paragraph, pages 20 and 21 of Amended Complaint)
14.
Plaintiff
argues that
the
“stipulations
and
express
disclaimers” in his amended complaint regarding the amount in
controversy demonstrate the absence of federal jurisdiction under
the CAFA.
In support of his contention, plaintiff relies on Bell.
It is nowhere suggested in the Bell case, however, that the
mere pleading of an amount less than the jurisdictional threshold
for federal jurisdiction establishes to a legal certainty that
amounts in excess of that threshold could not be awarded under the
pleading.
Rather, the Court specifically stated:
In order to ensure that any attempt to remove would have been
unsuccessful, Bell could have included a binding stipulation
with his petition stating that he would not seek damages
greater than the jurisdictional minimum upon remand; it is too
late to do so now. De Aquilar, 47 F.3d at 1412. ("[l]itigants
who want to prevent removal must file a binding stipulation or
affidavit with their complaints; once a defendant has removed
the case, St. Paul makes later filings irrelevant.") [quoting
In Re Shell Oil Co., 970 F.2d 355, 356 (7th Cir. 1992)(per
curiam)].
Bell, 557 F.3d at 958.1
1
This Court, in applying Bell, has held that a “Sworn
and Binding Stipulation” filed by a plaintiff and attached to the
complaint is effective to evade federal jurisdiction under CAFA.
See Tomlinson v. Reebok International Ltd., Civil Action No. 115036; Tomlinson v. Sketchers USA, Inc., Civil Action No. 11-5042;
Stagg v. New Balance Athletic Shoes, Inc., Civil Action No. 115043; Overby v. L.A. Gear, Inc., Civil Action No. 11-5046; and
Brady v. Collective Brands, Inc., Civil Action No. 11-5053.
17
In
this
case,
plaintiff
stipulation with his complaint.
could
have
included
a
binding
He chose not to.
Plaintiff nonetheless continues to argue that “the express and
intentional language set forth in his Complaint is sufficient to
show that the amount in controversy is less than the jurisdictional
minimum"
(Doc. 26 at pages 5, 6).
However, the Eighth Circuit’s
holding in Bell says otherwise and plaintiff cites no controlling
authority which supercedes that holding.
While the panel in Bell could have said that -- in addition to
including a binding stipulation with the complaint to disclaim
damages above
a
certain
threshold
in
order
to
avoid federal
jurisdiction -- a plaintiff could achieve that same purpose by
including language in his complaint disclaiming damages above the
jurisdictional threshold, it did not do so.
Instead, it rejected
Bell's suggestion, at argument, that the ad damnum clause contained
within his petition (in violation of Iowa law) was equivalent to a
binding stipulation. See Bell at 557 F.3d at 958.
The Bell panel
also rejected Bell's contention that the doctrine of judicial
estoppel (based upon the disclaimers in the petition) would serve
to
make
the
petition-disclaimers
equivalent
to
a
binding
stipulation saying:
The doctrine of judicial estoppel is similarly unavailing
since we find no evidence that upon remand an Iowa court would
prohibit recovery in excess of the amount alleged as a matter
of law. Cf. Winnebago Indus., Inc. v. Haverly, 727 N.W.2d
567, 574-75 (Iowa 2006)(doctrine of judicial estoppel in Iowa
"prevents a party who has successfully taken a position in one
18
litigation from taking the opposite position in a subsequent
litigation . . .") (emphasis supplied).
Bell at 557 F.3d 959
It is clear to this Court that Bell holds that a binding
stipulation submitted with a complaint can be sufficient to avoid
federal jurisdiction in a CAFA case such as this.
While it does
not categorically hold that disclaimers within a complaint could
never be sufficient for that purpose, neither does it clearly hold
that they could be -- or that they are "just as good" as a binding
stipulation.
All
courts
addressing
the
issue
seem
to
agree
that the
analysis as to what is or is not being claimed in a lawsuit centers
on what is contained in the complaint or petition initiating it.
Thus, the Court sees no reason why Bell and the other courts
addressing
this
issue
(limitation
of
damages
claims
for
jurisdictional purposes) would not have just simply said that
disclaimers, stipulations and the like designed to limit damage
claims below a certain threshold should or could be included within
the complaint (or petition) itself -- rather than in an affidavit
or stipulation to be filed with the complaint --
if, in fact, they
held the view that the two methods were the same or sufficiently
equivalent.
This Court does not believe the two methods are the same or
sufficiently equivalent.
Complaints and petitions are drawn and
signed by attorneys who are trained in the law.
19
They necessarily
include many things necessary to properly initiate a lawsuit -many of which would be of no interest to a client and would most
likely not be understood by him.
If the disclaimers and/or
stipulations are interspersed in the legal jargon of a lengthy
complaint, it is difficult, if not impossible, to regard them as
the clear expression of the client's intentions sufficient to
establish, to a "legal certainty", what their effect would be on a
jurisdictional issue.
stipulation
filed
On the other hand, a separate affidavit or
with
the
complaint
(as
counseled
by
Bell)
provides a short, focused and clear statement of the party's
intentions on the matters crucial to the jurisdictional issue -uncluttered
by
extraneous
matters.
Moreover,
affidavits
and
stipulations are signed by the parties -- the former under oath -and not by their attorneys.
Finally, while procedural rules are
rather clear about how and when pleadings may be amended, the Court
is unaware of any such rules which would permit the amendment of
affidavits and/or stipulations.
In
light of these and other
reservations about the contention, the Court sees no reason to
discuss it further since it feels bound by Bell.
15. Plaintiff also argues that, even if the disclaimers, etc.
in his complaint are not sufficient under Bell to preclude federal
jurisdiction, they are sufficient to accomplish that result because
of the enactment of Ark. Code Ann. § 16-63-221 (providing that a
plaintiff is bound by a declaration with respect to the amount in
20
controversy unless the plaintiff subsequently amends the complaint
to pray for damages in an amount that exceeds the jurisdictional
limits of the court).
Although plaintiff acknowledges that Ark.
Code Ann. § 16-63-221 did not become law until after this case was
filed, he argues that it will be applied retroactively under
Arkansas law.
However, the cases cited to support that conclusive
statement at best state only that such retroactive application
"may" apply and that such legislation is "often given retroactive
application."
Steward v. Statler, 371 Ark. 351, 354 (2007); Bean
v. Office of Child Support Enforcement, 340 Ark. 286, 297 (2000).
The Court is not convinced -- certainly not to a legal certainty -that the cited statute would be given retroactive application in
this case. Moreover, even if it were, such application would be of
little import because of the obvious fact that -- notwithstanding
any such declaration -- the complaint could be later amended.
Plaintiff further argues that, in light of the disclaimers,
etc. in his complaint, the doctrine of judicial estoppel would
prevent him from seeking or obtaining damages inconsistent with
them.
As previously noted, the Bell court rejected the judicial
estoppel argument as it related to Iowa law saying that "we find no
evidence that upon remand an Iowa court would prohibit recovery in
excess of the amount alleged as a matter of law."
557 F.3d at 959).
estoppel
under
(citing Bell,
While, admittedly, the concepts of judicial
Arkansas
law
and
21
under
Iowa
law
may
not
be
identical, it may be properly concluded that they both feature
reasoned approaches to be utilized in given cases to reach a
determination as to whether the doctrine should be applied.
Thus,
any opinion by this Court that judicial estoppel would be applied
in this case by an Arkansas court would be, at best, dicta, and
clearly speculative.
Accordingly, the Court sees no proper basis
to conclude, to a legal certainty, that an Arkansas court would
apply the doctrine of judicial estoppel to prevent plaintiff from
seeking or recovering damages inconsistent with the disclaimers,
etc. contained in his complaint.
16.
Having
decided
that
it
has
proper
subject
matter
jurisdiction, the Court will now turn to a reconsideration of
plaintiff's motion to dismiss.
The Court begins with the premise
stated by the Eighth Circuit in this case that “a party is not
permitted to dismiss merely to escape an adverse decision nor to
seek a more favorable forum.”
Thatcher, 659 F.3d at 1214 (citing
Hamm v. Rhone-Poulenc Rorer Pharm., Inc., 187 F.3d 941, 950 (8th
Cir. 1999) (internal citations omitted)).
As mentioned by the Eighth Circuit panel, plaintiff has not
provided to the Court any good reason why it wants to voluntarily
dismiss its case, re-file in state court and eliminate the first
three counts stated in his amended complaint (unjust enrichment,
fraud and constructive fraud).
The obvious reason -- as admitted
by plaintiff in his presentations -- is to avoid removal of the
22
class action to federal court upon it being re-filed as a breach of
contract action only.
That clearly amounts to improper forum
shopping and the analysis need proceed no further.
As
has
jurisdiction
been
has
previously
yet
noted,
recognized
or
no
court
certified
of
competent
plaintiff
as
a
legitimate class representative; or the putative class; or the
attorneys representing this plaintiff as proper attorneys for a
proper representative and the proper class members.
While this
plaintiff and his attorneys had the right to draw his complaint as
he saw fit (as the master of his complaint), he and they are
obliged to live with it as drawn and to pursue it -- if they can -in a court having proper jurisdiction over it as drawn.
They are
not to be permitted to shop for a new and hopefully more favorable
forum if it turns out that their complaint -- as drawn -- places
them in a court not of their liking.
Accordingly, plaintiff's motion to dismiss without prejudice
will be denied.
Also pending before the Court is plaintiff’s Motion for
17.
Protective Order (Doc. 27) and defendants’ brief in opposition
thereto (doc. 28). Plaintiff’s motion relates to a subpoena issued
by defendants to a third-party, which acted as the class action
administrator in another class action involving issues similar to
this case.
23
Plaintiff objects to the subpoena on the grounds that a party
may not seek discovery prior to the Rule 26(f) conference, which
has not yet occurred in this case.
See Fed. R. Civ. P. 26(d)(1).
Defendants assert that the information they seek pursuant to
the subpoena is relevant to show that the amount in controversy has
been met in this case.
Given this Court’s ruling supra, the Court
finds that the motion is moot and it will be denied as such.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand
(Doc. 21) and Plaintiff's Motion To Voluntarily Dismiss (Doc. 10)
are both hereby DENIED.
IT IS FURTHER ORDERED that plaintiff’s Motion for Protective
Order (Doc. 27) is DENIED AS MOOT.
IT IS SO ORDERED.
/s/ Jimm Larry Hendren
JIMM LARRY HENDREN
UNITED STATES DISTRICT JUDGE
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