Autoport LLC et al v. Volkswagen Group of America, Inc.
ORDER entered by Judge Nanette Laughrey. Plaintiffs' Motion to Remand [Doc. 3 ] is granted. (Rosenbaum, Daniel)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
AUTOPORT LLC and CHESTERFIELD
MOTOR SPORTS, LLC, individually and
on behalf of all others similarly situated,
VOLKSWAGEN GROUP OF AMERICA,
Case No. 2:15-cv-04260-NKL
Pending before the Court is Plaintiffs’ Motion to Remand [Doc. 3]. For the following
reasons, the motion is granted.
Plaintiffs, Autoport LLC and Chesterfield Motor Sports, LLC, operate used car
dealerships in St. Louis County, Missouri. In the course of their business, both Plaintiffs have
purchased at least one vehicle manufactured and marketed by Defendant Volkswagen Group of
America. Autoport currently owns a 2012 Volkswagen Jetta TDI that it purchased in July 2015.
Meanwhile, Chesterfield owns a 2010 Volkswagen Jetta TDI that it purchased in November
2014 and a 2012 Volkswagen Jetta TDI it purchased in June 2015.
On September 18, 2015, the United States Environmental Protection Agency announced
that Volkswagen will be required to alter its emissions software for the following Volkswagen
vehicles: the 2009 to 2015 Jetta TDI, 2009 to 2015 Jetta Sportswagen TDI, 2010 to 2015 Golf
TDI, 2010 to 2015 Audi A3 TDI, 2012 to 2015 Volkswagen Beetle TDI, 2012 to 2015
Volkswagen Beetle Convertible TDI, and the 2012 to 2015 Volkswagen Passat TDI.
According to the Plaintiffs’ Complaint, the EPA’s notice stemmed from Volkswagen’s
manipulation of its emissions software so as to deceive customers and regulators. When a
vehicle was undergoing testing the software would operate, thus bringing the level of emitting
pollutants within federal emissions standards. When a vehicle was being driven, however, the
software would deactivate, thus boosting fuel economy and engine power.
Volkswagen therefore marketed the above models—all of which share its TDI series of
small diesel engines—as adequately powerful designs that nevertheless would not sacrifice fuel
efficiency or environmental performance.
Relying on these representations, the Plaintiffs
purchased affected Volkswagen vehicles.
The Plaintiffs argue that these vehicles have
subsequently lost market value because, first, the alterations required by the EPA will reduce
engine power and fuel efficiency, and second, because the disclosure of Volkswagen’s actions
have impeded attempts to resell the vehicles on the market.
The Plaintiffs filed suit against Volkswagen in Missouri state court, alleging one count
each of fraudulent misrepresentation and fraud on the market on behalf of a putative class of
Missouri dealers. On November 12, 2015, Volkswagen filed a Notice of Removal under 28
U.S.C. § 1441(a) [Doc. 1], and the Plaintiffs filed this Motion to Remand the following day.
Thereafter, due to the hundreds of cases filed against Volkswagen stemming from the
EPA’s September 18th notice, the Judicial Panel on Multidistrict Litigation ordered similar cases
against Volkswagen transferred to Judge Charles Breyer in the Northern District of California for
pretrial proceedings. In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Products Liab.
Litig., 2015 WL 8543102, at *2 (U.S. Jud. Pan. Mult. Lit. Dec. 8, 2015). On December 10,
2015, Judge Breyer issued a conditional transfer order under 28 U.S.C. § 1407 for a list of tagalong cases, including this one.
The Plaintiffs then filed an objection to Judge Breyer’s
conditional transfer order. Consequently, the case has not transferred to the Northern District of
California, and the Court retains jurisdiction to decide the Motion to Remand. Illinois Mun.
Retirement Fund v. Citigroup, Inc., 391 F.3d 844, 852 (7th Cir. 2004) (a district court may
remand a case after a conditional transfer order is issued so long as the transfer has not become
The Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), grants subject
matter jurisdiction to federal district courts in class actions where (1) any plaintiff has diversity
of citizenship from any defendant, (2) the total amount in controversy exceeds $5 million, and
(3) the alleged plaintiff class contains at least 100 members. See 28 U.S.C. § 1332(d)(2).
When Volkswagen removed this case to federal court under 28 U.S.C. § 1441(a), it
argued that these three elements were satisfied. Specifically, on the amount-in-controversy
question, it pointed to the Plaintiffs’ allegation that there are approximately 6,325 motor vehicle
dealers registered in Missouri.
Even assuming moderate damages of $2,500 per vehicle,
Volkswagen argued, and even assuming “only one-third of those Missouri dealers ever owned a
class vehicle,” the amount in controversy exceeds the $5 million threshold. [Doc. 1, p. 3]. The
Plaintiffs now challenge this reasoning on their Motion to Remand. According to the Plaintiffs,
Volkswagen premised its assumptions on a misunderstanding of the putative class: the proposed
class, as stated in the Complaint, consists of all dealers that owned an affected vehicle “as of
September 18, 2015,” [Doc. 1-1, p. 5, ¶ 22], but Volkswagen’s calculation considered any class
member that “ever owned” an affected vehicle.
When removing a case under CAFA, a defendant must “establish the amount in
controversy by a preponderance of the evidence.” Hartis v. Chicago Title Ins. Co., 694 F.3d
935, 944-45 (8th Cir. 2012). See also 28 U.S.C. § 1446(c)(2) (“[R]emoval of the action is proper
on the basis of an amount in controversy . . . if the district court finds, by the preponderance of
the evidence, that the amount in controversy exceeds the amount specified”). Yet this burden is
merely “a pleading requirement, not a demand for proof.” Hartis, 694 F.3d at 945 (quoting
Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008)). When a defendant seeks to remove,
“the defendant’s amount-in-controversy allegation should be accepted when not contested by the
plaintiff or questioned by the court.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.
Ct. 547, 553 (2014).
In a case where the plaintiff challenges the defendant’s removal under CAFA, the district
court must still determine “by a preponderance of the evidence whether the amount-incontroversy requirement has been satisfied.” Id. at 554. In reaching this outcome, “both sides
submit proof” and “the district court must make findings of jurisdictional fact.” Id.
Dart Cherokee does not expressly state whether the plaintiff or defendant carries the
burden of proof in these situations where the removal is challenged. Several circuits have
considered the question since Dart Cherokee, and all have concluded that the defendant still
carries the burden of proof. See Statin v. Deutsche Bank Nat. Trust Co., 599 F. App'x 545, 547
(5th Cir. 2014) (“After it receives any relevant evidence from both sides, the district court can
assess whether the Defendants have met their burden of demonstrating by a preponderance of the
evidence that the amount in controversy was satisfied at the time of removal.”); Dudley v. Eli
Lilly & Co., 778 F.3d 909, 910-11 (11th Cir. 2014) (“We have repeatedly held that the removing
party bears the burden of proof to establish by a preponderance of the evidence that the amount
in controversy exceeds the jurisdictional minimum.”); Ibarra v. Manheim Investments, Inc., 775
F.3d 1193, 1197 (9th Cir. 2015) (“[Defendant], as the removing defendant, has the burden of
proof on this.”) 1
Consequently, the Fifth, Eleventh, and Ninth Circuits have declined after Dart Cherokee
to shift the burden of proof when a plaintiff challenges the amount in controversy.
approach is consonant with the language of 28 U.S.C. § 1446(c)(2)—upon which Dart
Cherokee’s holding is based—as well as with the traditional rule that the party seeking federal
jurisdiction carries the burden of establishing it. 2 See Bell v. Hershey Co., 557 F.3d 953, 956
(8th Cir. 2009) (“Nor did [CAFA] impact the traditional rule that the party attempting to remove
bears the burden of establishing subject matter jurisdiction.”).
See also Westerfeld v.
Independent Processing, LLC, 621 F.3d 819, 821 (8th Cir. 2010) (“Although CAFA expanded
federal jurisdiction over class actions, it did not alter the general rule that the party seeking to
remove a case to federal court bears the burden of establishing federal jurisdiction.”).
In line with this Eighth Circuit precedent and the decisions of other circuits, the Court
finds that Volkswagen bears the burden of proof on this Motion to Remand.
Outside of the CAFA context, the Tenth Circuit has also remarked that the defendant bears the
burden of proof when its asserted amount in controversy is challenged. See Duran v. Marathon Asset
Mgmt., LP, 2015 WL 6735628, at *1 (10th Cir. Nov. 4, 2015).
While Dart Cherokee also holds that “no antiremoval presumption attends cases invoking
CAFA,” Dart Cherokee, 135 S. Ct. at 554, this does not indicate that CAFA carries a pro-removal
presumption such that it modifies a defendant’s burden of proof. See id. (quoting S.Rep. No. 109–14, p.
43 (2005)) (“CAFA’s provisions should be read broadly, with a strong preference that interstate class
actions should be heard in a federal court if properly removed by any defendant.”) (emphasis added).
Therefore, the dispositive question before the Court is whether Volkswagen has carried
its burden by showing, by a preponderance of the evidence, that the $5 million amount in
controversy requirement is satisfied.
When answering this question, a district court should assess the evidence after “both
sides submit proof.” Dart Cherokee, 135 S. Ct. at 554. Yet the Dart Cherokee court does not
provide a procedure for carrying out this process. See Ibarra, 775 F.3d at 1199 (“The Supreme
Court did not decide the procedure for each side to submit proof on remand.”). Consequently,
circuit decisions after Dart Cherokee have taken several approaches: the Ninth Circuit, in one
case, proceeded by holding oral arguments, LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1202
(9th Cir. 2015), while the Eleventh Circuit has considered paper briefings and affidavits, Dudley,
778 F.3d at 912-13. But under any approach, a district court is not required to order evidentiary
submissions. See Sloan v. Soul Circus, Inc., 2015 WL 9272838, at *5 (D.D.C. Dec. 18, 2015)
(citing post-Dart Cherokee cases for the proposition that a district court need not request
additional briefing from the parties). Rather, the court must merely provide a “fair opportunity”
for both sides to submit proof. Ibarra, 775 F.3d at 1195. If the court provides that opportunity
and one party does not submit any evidence, the Fifth Circuit has found that the court may still
evaluate the amount in controversy when the “record is . . . sufficient” to do so. Statin v.
Deutsche Bank Nat. Trust Co., 598 F. App'x 322, 323 (5th Cir. 2015).
Volkswagen has had multiple such opportunities to provide evidence, first in its briefings
and, second, during a telephone conference held by the Court. During this conference, the Court
asked whether the parties wished to schedule an evidentiary hearing or submit additional
evidence, and Volkswagen declined to pursue either option. See [Doc. 17]. Volkswagen,
therefore, has not submitted any evidence to support its position. In arguing that the amount in
controversy exceeds $5 million, it has only offered generic assumptions to counter the Plaintiffs’
Motion to Remand.
Even taking Volkswagen’s assumptions as “submit[ted] proof” under Dart Cherokee,
Volkswagen still has not shown that the amount in controversy exceeds the statutory threshold.
As discussed above, Volkswagen asserts in its Notice of Removal that the amount in controversy
is met because, even if only one-third of the 6,325 motor vehicle dealers in Missouri “ever
owned” an affected vehicle, the Plaintiffs would only need to seek damages of $2,500 per
vehicle to surpass the $5 million threshold. [Doc. 1, p. 3]. Similarly, in its briefing on this
Motion to Remand, Volkswagen continues to estimate that one-third of the 6,325 Missouri
dealers would be part of the plaintiff class.
Yet as the Plaintiffs emphasize, their Complaint alleges a class of “[a]ll motor vehicle
dealers (excluding Volkswagen and Audi franchised dealers) located in Missouri that owned [an
affected vehicle] for sale as of September 18, 2015.” [Doc. 1-1, p. 5, ¶ 22] (emphasis added).
The Plaintiffs are masters of their claim, Bell, 557 F.3d at 956, and so, because they have limited
their proposed class to dealers who owned affected vehicles on the date of the EPA notice,
Volkswagen must operate within this limitation when arguing for federal diversity jurisdiction.
Volkswagen has not done so. In assuming that one-third of Missouri dealers would be part of the
class, Volkswagen has supported this figure only by terming it “a conservative estimate.” [Doc.
11, p. 9].
The Plaintiffs, on the other hand, have submitted exhibits indicating that the class size is
See [Docs. 12-1, 12-2, 12-3, 12-4].
These exhibits show that, on
November 12, 2015, there were 218 affected vehicles listed for sale within 250 miles of
Jefferson City, Missouri on one website, Cars.com. On another site, Autotrader.com, 814
affected vehicles were listed within a 300 mile radius on that same date. Volkswagen challenges
these exhibits as unreliable, given the disparities between the two websites, and inconsistent,
considering that the Plaintiffs conducted their search on November 12th instead of September
18th. Yet the Plaintiffs have still provided evidence tending to show that, on a given date, the
number of vehicles for sale within an over-inclusive geographic radius fell far short of
Volkswagen’s assumptions. Crucially, Volkswagen has not countered this argument with any
proof of its own.
Volkswagen has had multiple opportunities to demonstrate that the amount in
controversy exceeds the jurisdictional threshold. Given that Volkswagen continues to assert
damages based on a plainly overbroad reading of the Plaintiffs’ alleged class, the Court finds the
record sufficient to conclude that Volkswagen has not carried its burden of proof.
Nevertheless, because the Complaint alleges that class members are entitled to punitive
damages, Volkswagen argues that the amount in controversy “would clearly be met” if these
punitive damages are also considered. [Doc. 11, p. 12]. In this situation as well, Volkswagen
maintains that the Plaintiffs bear the burden of proof and that, so long as Volkswagen plausibly
alleges the amount in controversy, it does not need to present any evidence. Yet Volkswagen’s
position does not reflect Eighth Circuit precedent. While the Eighth Circuit has found that
punitive damages are included when determining the amount in controversy, Allison v. Security
Benefit Life Ins. Co., 980 F.2d 1213, 1215 (8th Cir. 1992), the party seeking federal jurisdiction
still carries the burden of proof and courts will “scrutinize a claim for punitive damages more
closely than a claim for actual damages.” State of Mo. ex rel. Pemiscot Cty., Mo. v. W. Sur. Co.,
51 F.3d 170, 173-74 (8th Cir. 1995).
Moreover, since Dart Cherokee, district courts have required evidence when an asserted
amount in controversy is challenged—even if the plaintiff claims punitive damages as well. See,
e.g., Byrd v. TVI, Inc., 2015 WL 5568454, at *4 (E.D. Mo. Sept. 21, 2015) (questioning the
amount in controversy because the defendant had merely pointed to clauses in the plaintiff’s
petition seeking lost wages, punitive damages, and attorneys’ fees; thus “defendant has come
forward with no evidence . . . to suggest that these damages might be awarded in this case or
that, even if so, they reasonably may exceed the jurisdictional amount.”).
Again, Volkswagen has failed to demonstrate, much less plausibly allege, that punitive
damages can push the amount in controversy past the statutory threshold when considering the
Plaintiffs’ proposed class. 3
For the foregoing reasons, the Plaintiffs’ Motion to Remand [Doc. 3] is granted.
Volkswagen cites to district court cases holding that punitive damage multipliers of 3.98, 6.7, and
8.4 are acceptable, and therefore that the CAFA amount in controversy may be satisfied even where the
alleged compensatory damages fall far short of $5 million. Yet these cases are distinguishable because
Volkswagen has not carried its burden of establishing any amount of compensatory damages. The Court
cannot apply a multiplier if Volkswagen has not provided a reasonable baseline number. See Johnson v.
Sun W. Mortgage Co., Inc., 2015 WL 6697261, at *3 (C.D. Cal. Nov. 3, 2015) (“Defendants also argue
that attorneys' fees and punitive damages provide further evidence that the $5 million amount in
controversy has been satisfied. However, because Defendants have failed to adequately support their
assumption that damages are either $4.5 or $5.4 million, they cannot base their attorneys' fees and
punitive damages calculations on those damage estimates.”).
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: January 11, 2016
Jefferson City, Missouri
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