Sidman v. Young Brothers, Limited et al

Filing 40

ORDER GRANTING DEFENDANTS AON RISK SERVICES, INC. OF HAWAIIS AND AON RISK SERVICES NORTHEAST, INC.'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT [DKT. NO. 10 ]; DENYING AS MOOT PLAINTIFFS SECOND APPLICATION TO PROCEED WITHOUT PREPAYING FEES OR COSTS [DKT. NO. 14 ]; AND DENYING AS MOOT DEFENDANT YOUNG BROTHERS, LTD.'S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 21 23 . Signed by JUDGE DERRICK K. WATSON on 6/29/2015. ~ Sidman is granted to leave to file an amended complaint no later than July 20, 2015. The Court cautions Sidman that failure to file an amended complaint, along with the required filing fee or a fully executed application to proceed without prepayment of fees by July 20, 2015, w ill result in the dismissal of this action (ecs, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry Text added on 6/29/2015 (ecs, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I

CIVIL NO. 15-00049 DKW-BMK

DANIEL SIDMAN,

Plaintiff,
vs.

YOUNG BROTHERS, LIMITED, a
domestic profit corporation; AON RISK
SOLUTIONS, a.k.a. AON RISK
SERVICES NORTHEAST, INC. a
foreign profit corporation, a.k.a. AON
RISK SERVICES, INC., a domestic
profit corporation,
Defendants.

ORDER GRANTING DEFENDANTS
AON RISK SERVICES, INC. OF
HAWAII’S AND AON RISK
SERVICES NORTHEAST, INC.’S
MOTION TO DISMISS
PLAINTIFF’S COMPLAINT [DKT.
NO. 10]; DENYING AS MOOT
PLAINTIFF’S SECOND
APPLICATION TO PROCEED
WITHOUT PREPAYING FEES OR
COSTS [DKT. NO. 14]; AND
DENYING AS MOOT DEFENDANT
YOUNG BROTHERS, LTD.’S
MOTION FOR SUMMARY
JUDGMENT [DKT. NO. 21]

INTRODUCTION
Plaintiff Daniel Sidman, a licensed attorney proceeding pro se, seeks damages
from Defendants Aon Risk Services, Inc. of Hawaii, Aon Risk Services Northeast,
Inc., and Young Brothers, Limited for a scratch on his vehicle’s windshield that
allegedly occurred during transport, and the denial of his subsequent insurance
claim. Because the Court lacks subject matter jurisdiction over his claims,
Sidman’s complaint is DISMISSED with leave to amend.

BACKGROUND
Sidman filed his complaint against Aon and Young Brothers on February 23,
2015. He alleges that Young Brothers damaged the windshield of his vehicle
during shipment in 2012, and that Aon improperly denied his claim for damages in
2013. The complaint seeks redress for the following:
1.

A light scuff/scratch mark on the windshield of Plaintiff’s
vehicle, near the bottom on the driver’s side, which
Plaintiff alleges occurred during shipment of the car from
Maui to Kauai, subject to the transaction on [Young
Brothers’] “bill of lading” number 15146023.

2.

Defendant [Young Brothers’] intentional deception of
Plaintiff (by and through its cargo warehouse attendant on
October 2, 2012) that resulted in his execution of a
liability waiver. Signature of the waiver led AON to
deny Plaintiff’s insurance claim.

3.

Defendant Aon’s intentional deception of Plaintiff by,
among other things, misleading him regarding a
subsequent review of his claims.

4.

Conspiratorial conduct among Defendants designed to
avoid paying for cargo shipping damage and related
insurance claims.

See Complaint at 4-6.
Sidman alleges that this Court has jurisdiction pursuant to 28 U.S.C.
§ 1332. His prayer for relief requests (1) attorney’s fees and/or expert fees;
(2) “the amount of the repair estimate provided by ACE Auto Glass on
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October 11, 2012, in the amount of $451.86,” and (c) $100,000 in punitive
damages from each defendant. Complaint at 18-20.
Before the Court are: (1) Aon’s Motion to Dismiss Plaintiff’s Complaint
(dkt. no. 10); (2) Young Brothers, Ltd.’s Joinder in Aon’s Motion to Dismiss (dkt.
no. 23); (3) Young Brothers, Ltd.’s Motion for Summary Judgment (dkt. no. 21);
and (4) Sidman’s objections to the Findings and Recommendation to Deny
Plaintiff’s Second Application To Proceed Without Prepaying Fees or Costs (dkt.
nos. 17 & 24).
STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 12(b)(1), a court may dismiss
claims over which it lacks subject matter jurisdiction. The plaintiff bears the initial
burden of proving that subject matter jurisdiction exists. Robinson v. United States,
586 F.3d 683, 685 (9th Cir. 2009). “In considering the jurisdiction questions, it
should be remembered that ‘it is a fundamental principle that federal courts are
courts of limited jurisdiction.’” Stock West, Inc. v. Confederated Tribes of the
Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989) (quoting Owen Equip. &
Erection Co. v. Kroger, 437 U.S. 365, 374 (1978)). Upon a motion to dismiss, a
party may make a jurisdictional attack that is either facial or factual. Safe Air for
Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A facial attack occurs
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when the movant “asserts that the allegations contained in a complaint are
insufficient on their face to invoke federal jurisdiction.” Id. By contrast, a factual
attack occurs when the movant “disputes the truth of the allegations, that by
themselves, would otherwise invoke federal jurisdiction.” Id.; see also Long v. JP
Morgan Chase Bank, Nat’l Ass’n, 848 F. Supp. 2d 1166, 1171 (D. Haw. 2012).
The district court resolves a facial attack as it would a motion to dismiss under
Rule 12(b)(6): Accepting the plaintiff’s allegations as true and drawing all
reasonable inferences in the plaintiff’s favor, the court determines whether the
allegations are sufficient to invoke the court’s jurisdiction. Pride v. Correa, 719
F.3d 1130, 1133 (9th Cir. 2013). Because Aon makes a facial attack on Sidman’s
complaint, the Court need not consider evidence beyond the complaint. See
Bartholomew v. Burger King Corp., 21 F. Supp. 3d 1089, 1094 (D. Haw. 2014).
The Court also recognizes that “[u]nless it is absolutely clear that no
amendment can cure the defect . . . a pro se litigant is entitled to notice of the
complaint’s deficiencies and an opportunity to amend prior to dismissal of the
action.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995).

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DISCUSSION
I.

The Court Lacks Subject Matter Jurisdiction
Aon seeks to dismiss this action based on Sidman’s failure to (1) satisfy the

amount in controversy required for diversity jurisdiction; (2) allege any federal
claims; and (3) pay the statutory filing fee. Because the Court finds that it lacks
subject matter jurisdiction, the motion is GRANTED.1
At the pleading stage, a plaintiff must allege sufficient facts to show a proper
basis for the Court to assert subject matter jurisdiction over the action. McNutt v.
Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Johnson v. Columbia
Props. Anchorage, L.P., 437 F.3d 894, 899 (9th Cir. 2006); Fed. R. Civ. P. 8(a)(1).
Sidman alleges that –
This Court has jurisdiction over this claim on the basis of a
diversity of citizenship and the “matter in controversy”
exceeding $75,000 (28 U.S.C. § 1332). In this case the “matter
in controversy” comes in the form primarily of punitive
damages, as determined appropriate by this Court, to encourage
Defendants [Young Brothers] and AON to reform their business
practices.

1

In opposition, Sidman makes no claim of federal question subject matter jurisdiction pursuant to
28 U.S.C. § 1331. Although his complaint seeks attorney’s fees pursuant to 42 U.S.C. §§ 1983
and 1988(b), these statutes are clearly inapplicable to these defendants based on the allegations in
the complaint, and Sidman does not contend that this Court has subject matter jurisdiction pursuant
thereto. Accordingly, the Court addresses only Sidman’s assertion of diversity jurisdiction.

5

Both Defendants are resident in Hawaii, and all the relevant
events took place in this District. Plaintiff is a resident in the
State of Vermont.
Complaint at 6.
The Court has diversity jurisdiction in cases involving claims greater than
$75,000 and that are either between citizens of different states or citizens of a state
and citizens or subjects of a foreign state pursuant to 28 U.S.C. § 1332(a)(1)-(2).
Generally, the amount in controversy is determined from the face of the pleadings,
and the sum claimed by the plaintiff controls so long as the claim is made in good
faith. Crum v. Circus Circus Enters., 231 F.3d 1129, 1131 (9th Cir. 2000) (citation
omitted).
“To justify dismissal, ‘it must appear to a legal certainty that the claim is
really for less than the jurisdictional amount.’” Id. (quoting Budget Rent–A–Car,
Inc. v. Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997)). The Ninth Circuit
stated that such “legal certainty” exists “when a rule of law or limitation of damages
would make it virtually impossible for a plaintiff to meet the amount-in-controversy
requirement.” Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 364
(9th Cir. 1986). “Only three situations clearly meet the legal certainty standard: (1)
when the terms of a contract limit the plaintiff’s possible recovery; (2) when a
specific rule of law or measure of damages limits the amount of damages

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recoverable; and (3) when independent facts show that the amount of damages was
claimed merely to obtain federal court jurisdiction.” Id. at 363.
Aon contends that, in order to reach the $75,000 threshold, Sidman would
need a colorable punitive damages claim of $74,548.14, based on his $451.86
compensatory damages claim. See, e.g., Scher v. Premier Holdings, Inc., 2010 WL
1064678, at *5 (D. Haw. Mar. 24, 2010) (“In determining the jurisdictional amount
in controversy, both compensatory and punitive damages must be considered “to the
extent they are recoverable and to the extent claimed.’”) (quoting Russell v. Access
Securepak, Inc., 2007 WL 4170756, at *1 (E.D. Cal. Nov. 20, 2007)). Aon argues
that this punitive-to-compensatory damages ratio of 165-to-1 violates due process.
The Ninth Circuit recently reviewed the development of the punitive damages
due process analysis, explaining as follows –
In [BMW of North America, Inc. v. Gore], the Supreme Court
altered the legal punitive damages landscape, applying the Due
Process Clause of the Fourteenth Amendment to a state court’s
$2 million punitive damages award (accompanying a $4000
compensatory damages award) arising from state common law
claims, and concluding that the punitive damages amount was
“grossly excessive” and therefore unconstitutional. 517 U.S. at
565-67, 574-75, 116 S.Ct. 1589. To assess the constitutionality
of a state common law punitive damages award, the Court in
Gore employed three guideposts, which it later summarized in
State Farm Mutual Automobile Insurance Co. v. Campbell, 538
U.S. 408, 418, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), as
follows: “(1) the degree of reprehensibility of the defendant’s
misconduct; (2) the disparity between the actual or potential
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harm suffered by the plaintiff and the punitive damages award;
and (3) the difference between the punitive damages awarded by
the jury and the civil penalties authorized or imposed in
comparable cases.” Id. (citing Gore, 517 U.S. at 575, 116 S.Ct.
1589).
Under Gore and State Farm, the most important guidepost is
reprehensibility. State Farm articulated several factors courts
could consider in assessing the egregiousness of a defendant’s
conduct:
the harm caused was physical as opposed to economic; the
tortious conduct evinced an indifference to or a reckless
disregard of the health or safety of others; the target of the
conduct had financial vulnerability; the conduct involved
repeated actions or was an isolated incident; and the harm
was the result of intentional malice, trickery, or deceit, or
mere accident.
Id. at 419, 123 S.Ct. 1513.
As for the second factor—the disparity between the harm
suffered by the plaintiff and the punitive damages award—the
Court has repeatedly eschewed the adoption of a “bright-line
ratio which a punitive damages award cannot exceed.” Id. at
425, 123 S.Ct. 1513. Nevertheless, the Court has noted that, “in
practice, few awards exceeding a single-digit ratio between
punitive and compensatory damages, to a significant degree, will
satisfy due process.” Id. The Court also cautioned, however,
that a higher ratio may be appropriate where the conduct is
especially egregious, but results in minimal economic damages.
Id. (citing Gore, 517 U.S. at 582, 116 S.Ct. 1589, for the
proposition that economic awards may be small because the
injury is hard to quantify or detect).

8

Arizona v. ASARCO LLC, 773 F.3d 1050, 1054-55 (9th Cir. 2014); but see Exxon
Shipping Co. v. Baker, 554 U.S. 471 (2008) (adopting, in the area of federal
maritime law, a 1-to-1 ratio between compensatory and punitive damages).2
In the present case, Sidman alleges that –
“punitive damages” represents what Plaintiff really stands to
potentially gain from this action, yet in this capacity, plaintiff is
merely a “just beneficiary” of this Court’s determination, and not
any sort of an active participant (except, in so far as to
demonstrate to this Court certain circumstances that exist outside
of the courtroom). In determining the amount of punitive
damages, assuming that all of Plaintiff’s allegations herein are
true, the court would need to estimate certain things, such as how
many vehicle windshields are damaged by [Young Brothers]
(and thus, how much Defendant [Young Brothers] and
Defendants AON “save” by not having to pay legitimate
insurance claims); how many of these customers (who have had
damage done to their windshields) filed claims against [Young
Brothers]; and, how many of those customers who file claims
have their claims unfairly denied, because of this scheme of
getting them to sign away their rights. Furthermore, there is a
“messaging aspect” inherent in punitive damages, to send a
“strong signal” to companies like [Young Brothers] and AON.
In this regard, the court acts on behalf of the public, and the
interest of the public, and again, without consideration for (this
individual) Plaintiff.
****

2

Hawaii state courts’ analysis of punitive damage awards under state law includes consideration of
federal due process standards. See Kekona v. Bornemann, 2015 WL 1880727, at *7 (Haw. Apr.
24, 2015) (“Two levels of review are applicable when a punitive damages award is challenged as
excessive. The first inquiry proceeds under state law, and the second, if raised, is governed by
federal due process standards.”).

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Again, the appropriate level of punitive damages is up to this
Court’s discretion. Plaintiff believes it is not unreasonable,
considering these circumstances to be quite serious (and perhaps
even criminal) in nature, to request of this Court $100,000 in
punitive damages from Defendant AON Risk Solutions and
$100,000 in punitive damages from Defendant Young Brothers,
Limited. But if this Court determines a higher amount
appropriate, then I defer to its better judgment.
Complaint at 19-20. In opposition to Aon’s motion, Sidman asserts that –
While there may be valid concerns, over certain defendants
being deprived of their due process rights, based on “arbitrary
deprivation of property,” there is little question that Plaintiff’s
claimed amount of punitive damages, in excess of the $75,000
jurisdictional minimum, is well within the boundaries prescribed
by the Supreme Court, in BMW v. Gore, Cooper Industries v.
Leatherman Tool, and in State Farm v. Campbell.
Mem. in Opp. at 20. The Court disagrees.
Even assuming the truth of the allegations in the complaint, Sidman’s request
for $100,000 in punitive damages against Aon and another $100,000 in punitive
damages against Young Brothers is grossly excessive under Supreme Court
precedent. The alleged harm here was a scratched windshield. There harm,
therefore, was economic, not physical, and did not target a particular financial
vulnerability. Nor is this a class case. Even an award of $74,548.14 in punitive
damages (assuming an award of $451.86 in compensatory damages), resulting in a
ratio of 165-to-1 is grossly excessive, under these circumstances. Such an award

10

would be vastly disproportionate to the award of compensatory damages and would
appear to be outside of the constitutional limits established by the Supreme Court.
Accordingly, based on the specific allegations in the complaint, the Court concludes
that Sidman cannot constitutionally recover $74,548.14 with actual damages of only
$451.86, and that he fails to satisfy the amount in controversy requirement for this
Court to assert diversity jurisdiction.
The Court’s ruling is consistent with another recent case in this district,
involving alleged damages stemming from an incident in which the plaintiff’s
vehicle was allegedly broken into while parked at Six Flags theme park in St. Louis,
Missouri. In Scher v. Premier Holdings, Inc., the district court concluded that it
lacked subject matter jurisdiction over plaintiff’s state law claims, where actual
damages amounted to $750 –
Because Plaintiff’s claim for punitive damages of $1,000,000
makes up “the bulk of the amount in controversy, and may even
have been colorably asserted solely to confer jurisdiction,” the
court must scrutinize this claim closely. Russell, 2007 WL
4170756, at *1. To meet the jurisdictional requirement,
Plaintiff would need to recover punitive damages in the amount
of $74,250—approximately 100 times the compensatory damage
amount. “Such an award would be grossly disproportionate to
the award of compensatory damages and would appear to be
excessive . . . and outside of the federal Constitutional limits
established by the Supreme Court.” Brown v. Robinson, 2009
WL 1313364, at *4 (S.D. Ohio May 8, 2009). “Single-digit
multipliers are more likely to comport with due process, while
still achieving the State’s goals of deterrence and retribution
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. . . .” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.
408, 425, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003); see also
Smith v. Am. Gen. Life & Acc. Ins., 337 F.3d 888, 893 (7th Cir.
2003). Plaintiff cannot recover $74,250 with actual damages of
only $750. Accordingly, the court finds that Plaintiff’s
potential state law claims do not meet the amount in controversy
necessary for diversity jurisdiction.
Scher v. Premier Holdings, Inc., 2010 WL 1064678, at *6 (D. Haw. Mar. 24, 2010).
Sidman, the party asserting diversity jurisdiction, bears the burden of proof
here. Because he fails to satisfy the amount in controversy, he does not meet that
burden. As a result, this Court is without the authority to adjudicate his claims.
When a court dismisses a claim for failure to properly allege diversity jurisdiction,
leave to amend should be granted unless doing so would be futile. See Fed.R.Civ.P.
15(a)(2); see also Jacobs v. Patent Enforcement Fund, Inc., 230 F.3d 565, 567-68
(9th Cir.2000). Accordingly, Sidman is granted leave to file an amended
complaint, in accord with the guidance set forth in this order.
II.

Young Brothers’ Motion for Summary Judgment Is Denied as Moot
Young Brothers moves for summary judgment, and asks the Court to dismiss

all claims with prejudice because Sidman did not file this action within one year of
the delivery of his cargo as required by the Bill of Lading, and as stated on the face
of the “YB Cargo Insurance” sheet attached to Sidman’s complaint. See Ex. C
attached to complaint (“Suit for loss or damage must be brought within one (1) year

12

from the date of delivery of cargo or the date on which it would have been normally
delivered.”). Because the Court finds that it does not have subject jurisdiction over
this matter, Young Brothers’ motion for summary judgment is DENIED as moot.
III.

Sidman’s Second Application to Proceed In District
Court Without Prepaying Fees or Costs Is Denied as Moot
Finally, also as a result of the Court’s dismissal of the complaint for lack of

subject matter jurisdiction, Sidman’s Second Application to Proceed In District
Court Without Prepaying Fees or Costs is DENIED as moot.3 Sidman is
CAUTIONED that if he elects to file an amended complaint, he must pay the
statutory filing fee or submit a fully executed application to proceed without
prepayment of fees or costs.
CONCLUSION
For the foregoing reasons, Defendants’ Aon Risk Services, Inc. of Hawaii and
Aon Risk Services Northeast, Inc.’s Motion to Dismiss Plaintiff’s Complaint is
hereby GRANTED. Plaintiff’s Second Application to Proceed In District Court
Without Prepaying Fees or Cost is DENIED as moot, as is Defendant Young
Brothers’ Motion for Summary Judgment. Sidman is granted to leave to file an

3

Accordingly, the Court does not reach Sidman’s objections to the Findings and Recommendation
to Deny Plaintiff’s Second Application To Proceed Without Prepaying Fees or Costs. Dkt. No.
17.

13

amended complaint no later than July 20, 2015. The Court cautions Sidman that
failure to file an amended complaint, along with the required filing fee or a fully
executed application to proceed without prepayment of fees by July 20, 2015, will
result in the dismissal of this action.
IT IS SO ORDERED.
DATED: June 29, 2015 at Honolulu, Hawai‘i.

Daniel Sidman v. Young Brothers, Limited, et al.; Civil No. 15-00049 DKW-BMK;
ORDER GRANTING DEFENDANTS AON RISK SERVICES, INC. OF
HAWAII’S AND AON RISK SERVICES NORTHEAST, INC.’S MOTION
TO DISMISS PLAINTIFF’S COMPLAINT [DKT. NO. 10]; DENYING AS
MOOT PLAINTIFF’S SECOND APPLICATION TO PROCEED WITHOUT
PREPAYING FEES OR COSTS [DKT. NO. 14]; AND DENYING AS MOOT
DEFENDANT YOUNG BROTHERS, LTD.’S MOTION FOR SUMMARY
JUDGMENT [DKT. NO. 21]

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