Baker v. Auto Stop, Inc.

Filing 15

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs motion to remand [Doc. #11] is denied. IT IS FURTHER ORDERED that plaintiffs request for attorneys fees and costs is denied. Signed by District Judge Carol E. Jackson on 8/29/2012. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
BRIAN BAKER,
Plaintiffs,
vs.
AUTO STOP, INC.,
Defendant.

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Case No. 4:12-CV-00244

MEMORANDUM AND ORDER
This matter is before the Court on plaintiffs’ motion to remand this action to the
Twenty-First Judicial Circuit Court of Missouri (St. Louis County), from which it was
removed. Defendant opposes the motion.
Plaintiff Brian Baker initiated this action in a Missouri state court, claiming
violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.020 et seq.
(Count I), fraudulent and negligent misrepresentation (Counts II, III, and IV), and
breach of implied warranty based on the Magnuson-Moss Warranty Act, 15 U.S.C. §
2301 et seq. (Count V). The claims stem from the plaintiff’s purchase of a used truck
from the defendant. Plaintiff alleges that the defendant misrepresented the vehicle’s
damage history. The case was removed to this Court, based on the assertion of
federal question jurisdiction under 28 U.S.C. § 1331. Plaintiffs now seek remand,
arguing that the Court lacks jurisdiction because the amount in controversy

requirement of the Magnuson-Moss Warranty Act is not present.
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The Magnuson-Moss Warranty Act provides that “a consumer who is damaged
by the failure of a supplier, warrantor, or service contractor to comply with any

obligation under this chapter, or under a written warranty, implied warranty, or service
contract, may bring suit for damages and other legal and equitable relief.” 15. U.S.C.
§ 2310(d)(1). The Warranty Act provides for federal jurisdiction of certain claims. See
15. U.S.C. § 2310(d)(1)(B). However, federal jurisdiction of a claim brought under the
Warranty Act is subject to an amount in controversy requirement. Thus, 15. U.S.C.
§ 2310(d)(3)(B) provides that, “no claim shall be cognizable in a suit brought under
paragraph (1)(B) of this subsection . . . if the amount in controversy is less than the
sum or value of $50,000 (exclusive of interests and costs) computed on the basis of
all claims to be determined in this suit.” The party invoking federal jurisdiction has the
burden to prove the requisite amount exists by a preponderance of the evidence.
Rasmussen v. State Farm Mut. Auto. Ins. Co., 410 F.3d 1029, 1031 (8th Cir. 2005);
Mountaire Feeds, Inc. v. Argro Impex, S.A., 677 F.2d 651, 653 n.3 (8th Cir. 1982);
Piper v. Kassel, 817 F.Supp. 802 (E.D. Mo. 1993).
In the context of a motor vehicle warranty, the formula for calculating damages
under the Warranty Act is the price of a replacement vehicle, minus both the present
value of the allegedly defective vehicle and the value that the plaintiff received from
the use of the allegedly defective vehicle. Stephens v. Arctic Cat Inc., 4:09-CV-2131
AGF, 2011 WL 890686, *6 (E.D. Mo. Mar. 14, 2011); Dembski v. American Honda
Motor Co., Inc., 06-6060-CVSJREL, 2006 WL 2331178, *2 (W.D. Mo. Aug. 10, 2006);
see also Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 406 (7th Cir.2004);
Gardynski–Leschuck v. Ford Motor Company, 142 F.3d 955, 957 (7th Cir.1998);
Millicevic v. Mercedes–Benz USA, LLC, 256 F.Supp.2d 1168, 1179–80 (D.Nev.2003).
In the instant case, the purchase price of the vehicle in question was $30,995.
If this factor were the only consideration in the amount-in-controversy determination,
then clearly the $50,000 threshold under the Warranty Act could not be met.

However, plaintiff alleges in the complaint that the defendant acted “maliciously and
in willful, wanton, and reckless disregard for the rights of the Plaintiff, thereby
warranting substantial punitive damages.” [Doc. # 1-1, p. 21, ¶ 18] Plaintiff
incorporates this allegation into each count of the complaint. Punitive damages for
breach of warranty are recoverable under the Warranty Act if they are recoverable for
breach of warranty under the applicable state law. Hughes v. Segal Enterprises, Inc.,
627 F.Supp. 1231, 1238 (W.D.Ark.1986); Chariton Vet Supply, Inc. v. Moberly Motor
Co., 2:08CV47MLM, 2009 WL 1011500 (E.D. Mo. Apr. 15, 2009). Under Missouri law,
a plaintiff may recover punitive damages for breach of a warranty contract if the
defendant’s conduct “amounts to an independent, willful tort and there are proper
allegations of malice, wantonness, or oppression . . .” Peterson v. Continental Boiler
Works, Inc., 783 S.W.2d 896, 903 (Mo. 1990).
Here, the complaint contains specific allegations of willful, wanton and malicious
conduct by the defendant. Although plaintiff states in his motion for remand that
“punitive damages are not part of Plaintiff’s claim for breach of implied warranty,”
plaintiff has not sought to amend the complaint by deleting the allegations that support
his claim for punitive damages.

[Doc. # 11, p. 11].

Therefore, the Court will

consider punitive damages in determining whether the $50,000 threshold has been
met for the Warranty Act claim.
The Supreme Court has not established a concrete constitutional limit on the
ratio between harm, alleged harm, or potential harm, to a plaintiff and a reward of
punitive damages. The Court has, however, commented that “few awards exceeding
a single-digit ratio between punitive and compensatory damages, to a significant
degree, will satisfy due process.” State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S.
408, 425 (2003). Thus, when determining the amount in controversy, courts have

looked to the ratio of punitive damages to compensatory damages being sought in the
case. See Thomas v. National Legal Professional Associates, 594 F.Supp.2d 31, 32-33
(D.D.C. 2009) (ratio of claimed punitive to compensatory of 6.5:1 satisfied due
process); McQueen v. Woodstream Corp., 672 F.Supp.2d 84, 91-92 (D.D.C. 2009)
(ratio of claimed punitive to compensatory of 5000:1 violated due process); Hunter v.
District of Columbia, 384 F.Supp.2d 257, 261 (D.D.C. 2005) (ratio of claimed punitive
to compensatory of 13:1 violated due process). Plaintiff does not allege a specific
amount of punitive damages. However, it is reasonable to assume a ratio of roughly
3:2 (or even 4:1) of punitive to compensatory damages would satisfy due process.
In conclusion, the Court finds that defendant has sufficiently shown by a
preponderance that the amount in controversy under the Warranty Act is met and that
federal jurisdiction is proper. Plaintiff has asked for punitive damages that are available
under applicable state law that may be reasonably assumed in an amount that, when
considered with actual damages, would satisfy the requisite amount in controversy.
Accordingly,
IT IS HEREBY ORDERED that plaintiff’s motion to remand [Doc. #11] is
denied.
IT IS FURTHER ORDERED that plaintiff’s request for attorneys’ fees and costs
is denied.

__________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 29th day of August, 2012.