Eugene Fridman et al v. Bally Total Fitness Holding Corporation et al

Filing 38

ORDER DISMISSING CASE: Upon sua sponte review of Plaintiffs Complaint, the Court finds that it lacks subject-matter jurisdiction and must dismiss the case without prejudice. The Clerk of Court shall close this case by Judge Otis D Wright, II. (Made JS-6. Case Terminated.) (lc). Modified on 9/25/2012 (lc).

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JS-6

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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EUGENE FRIDMAN, EDWARD
RAECEK, BRIAN M. DROMGOOLE,
RONNIE KEHATI, and JOSEPH V.
ESPOSITO, on behalf of themselves and
others similarly situated,

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ORDER DISMISSING CASE

Plaintiffs,

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Case No. 2:12-cv-707-ODW(MRWx)

v.
BALLY TOTAL FITNESS HOLDING
CORP. and L.A. FITNESS
INTERNATIONAL, LLC,
Defendants.

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Upon sua sponte review of Plaintiffs’ Complaint, the Court finds that it lacks
subject-matter jurisdiction and must dismiss the case. Fed. R. Civ. P. 12(h)(3).

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Federal courts are courts of limited jurisdiction, having subject-matter

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jurisdiction only over matters authorized by the Constitution and Congress. See, e.g.,

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Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Subject-matter

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jurisdiction exists in civil cases involving a federal question or diversity of citizenship.

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28 U.S.C. §§ 1331, 1332. In this case, Plaintiffs solely allege diversity jurisdiction

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and brings no federal causes of action.

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Diversity jurisdiction exists for all suits, including class-action suits, where “the

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matter in controversy exceeds the sum or value of $75,000, exclusive of interest and

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costs,” and is between parties with diverse citizenship. 28 U.S.C. § 1332(a). But

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multiple plaintiffs may not aggregate their claims against defendants—to reach the

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$75,000 threshold—unless they have a single title or right in a common and undivided

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interest. Gibson v. Chrysler Corp., 261 F.3d 927, 943–44 (9th Cir. 2001).

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Alternatively, plaintiffs may establish diversity jurisdiction under the Class

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Action Fairness Act (“CAFA”). Under CAFA, diversity jurisdiction exists in “mass

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action” suits so long as the following requirements are met: (1) 100 or more plaintiffs;

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(2) common questions of law or fact between plaintiffs’ claims; (3) minimal diversity,

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where at least one plaintiff is diverse from one defendant; (4) aggregated claims in

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excess of $5 million; and (5) at least one plaintiff’s claim exceeding $75,000. 28

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U.S.C. § 1332(d); Abrego v. Dow Chem. Co., 443 F.3d 676, 689 (9th Cir. 2006).

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In this class action, Plaintiffs properly allege complete diversity under

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§ 1332(a), but fail to allege that the amount in controversy (per Plaintiff) exceeds

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$75,000.1

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million.” (Compl. ¶ 1.) But this does not suffice—individual Plaintiffs still must

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show that their claims exceed $75,000. Gibson, 261 F.3d at 943–44. In situations like

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this where plaintiffs do not state specific, individual amounts in damages, the Court

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determines under the preponderance-of-evidence standard whether the jurisdictional

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amount is satisfied. Lowdermilk v. U.S. Bank Nat’l Assoc., 479 F.3d 994, 998 (9th

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Cir. 2007).

Plaintiffs state that the aggregate amount in controversy “exceeds $5

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Examining the Complaint, the Court finds no evidence suggesting that any class

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member would be entitled to more than $75,000 in damages. Plaintiffs bring this

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class-action suit for breach of contract and consumer fraud because Defendants no

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longer honor their “lifetime” and long-term gym memberships. (Compl. ¶¶ 97, 109.)

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Plaintiffs mention the costs they paid to acquire these memberships.2 But none of

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Plaintiffs are citizens of Arizona, Florida, New Jersey, New York, and Pennsylvania. Defendants
are citizens of California and Illinois. (Compl. ¶¶ 10–16.)
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Fridman acquired his lifetime membership as a gift, and is required to pay a $17.32 monthly
maintenance fee for the membership; Raecek’s lifetime membership cost “approximately $1,000,”

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these costs come close to $75,000. Further, the Complaint fails to state—and rightly

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so—that Plaintiffs have individually suffered damages in excess of $75,000; the Court

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sees no reason how they could. Based on Plaintiffs’ allegations, the Court finds that

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no class member’s claim—not just under a preponderance, but with legal certainty—

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could possibly exceed $75,000. Accordingly, as a regular class-action suit, there is no

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diversity jurisdiction here under § 1332(a).

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But Plaintiffs also allege that this is a CAFA mass action under § 1332(d),

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because it involves more than 100 plaintiffs and over $5 million in aggregated

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damages. (Compl. ¶ 1.) Plaintiffs also satisfy the minimal-diversity requirement.

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(Compl. ¶¶ 10–16.)

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Yet, under Ninth Circuit law, individual plaintiffs must still meet the $75,000

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amount-in-controversy requirement in a CAFA mass action: “‘jurisdiction shall exist

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only over those plaintiffs whose claims in a mass action satisfy the [in excess of

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$75,000] jurisdictional amount.’” Abrego, 443 F.3d at 687 (alteration in original)

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(citing 28 U.S.C. § 1332(d)(11)(B)(i)). While it is unclear whether each individual

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plaintiff in a mass action has to meet the $75,000 amount-in-controversy requirement,

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it is clear that at least one plaintiff must meet that requirement. Id. at 689 (“We do

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conclude . . . that the case cannot go forward unless there is at least one plaintiff

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whose claims can remain in federal court.”).

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To be clear, the Court is unaware of any binding authority that applies the

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$75,000 amount-in-controversy requirement to plaintiffs in a mass action originating

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in federal court, as opposed to on removal. Abrego and its progeny deal only with

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cases removed from state court—it may be argued that the curious CAFA statute

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should be construed to mean that the $75,000 amount-in-controversy requirement

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and he must pay an annual maintenance fee of $25.51; Dromgoole paid “approximately $1,300” for
his lifetime membership, and paid a $100 fee to transfer his “home club”; Kehati’s lifetime
membership cost “approximately $2,500,” and he must pay $30 per year in maintenance fees;
Esposito paid “approximately $559” for his lifetime membership, and must pay a $60 annual
maintenance fee. (Compl. ¶¶ 42–43, 52–53, 59–62, 68–69, 76–77.)

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applies only to cases removed from state court, and not to cases originally filed in

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federal court. 28 U.S.C. § 1332(d)(11)(A) (“For purposes of this subsection . . . a

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mass action shall be deemed to be a class action removable under paragraphs (2)

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through (10) if it otherwise meets the provisions of those paragraphs.”).

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But this Court finds it illogical that the amount-in-controversy requirement for

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removal would be different (and more strict) than for a case originating in federal

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court.

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conclusion, holding that the $75,000 amount-in-controversy requirement equally

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applies to actions removed from state court and actions originally filed in federal

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court. Cappuccitti v. DirecTV, Inc., 611 F.3d 1252, 1256–57 (11th Cir. 2010.) But

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the Eleventh Circuit later vacated this opinion and held that there is no $75,000

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requirement for CAFA diversity jurisdiction—for cases removed from state court and

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cases originating in federal court. Cappuccitti v. DirecTV, Inc., 623 F.3d 1118, 1122

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(11th Cir. 2010).

The Court is aware of one Court of Appeals case that makes the same

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The Ninth Circuit, however, has maintained its $75,000 amount-in-controversy

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requirement in Abrego, but has not explicitly held that this requirement also applies to

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actions originating in federal court. Nevertheless, it is this Court’s position that so

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long as the Ninth Circuit’s Abrego opinion stands, it is bound to follow the $75,000

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amount-in-controversy requirement, both for cases removed from state court and cases

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originating in federal court.

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Therefore, this case is hereby DISMISSED WITHOUT PREJUDICE for lack
of subject-matter jurisdiction. The Clerk of Court shall close this case.
IT IS SO ORDERED.

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September 25, 2012
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OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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