Faltermeier v. FCA US LLC
Filing
87
ORDER CLARIFYING DENIAL OF REMAND. Plaintiff's Motion for Relief from Stay to File Motion for Reconsideration and for Leave to File Sur-Reply (Doc. 84 ) is denied. The stay imposed is lifted, and the May 10, 2016, discovery teleconference is rescheduled for June 1, 2016, at 10:00 a.m. No additional briefing for the discovery teleconference is required. Signed on 5/26/16 by Chief District Judge Greg Kays. (Francis, Alexandra)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
DAVID FALTERMEIER, on behalf of
himself and all others similarly situated,
Plaintiff,
vs.
FCA US LLC,
Defendant.
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Case No. 4:15-cv-00491-DGK
ORDER CLARIFYING DENIAL OF REMAND
This is a putative class action arising from alleged violations of the Missouri
Merchandising Practices Act (“MMPA”). On June 2, 2015, Plaintiff David Faltermeier initiated
this action in the Circuit Court of Jackson County, Missouri, against Defendant FCA US LLC
(“FCA”). Plaintiff alleges that FCA’s misrepresentations during a vehicle safety recall have
caused Plaintiff and all other consumers who have purchased those vehicles in Missouri since
June 4, 2013, an ascertainable financial loss.
On June 29, 2015, FCA removed the case to this Court, alleging jurisdiction based on the
Class Action Fairness Act (“CAFA”) and bankruptcy-related jurisdiction. The Court denied
Plaintiff’s motion to remand, finding that it had CAFA jurisdiction. In its analysis, however, the
Court did not address Plaintiff’s argument concerning the availability of alternative damages
under the MMPA. The Court now clarifies its earlier order and confirms that it has subject
matter jurisdiction.
Factual Background
Plaintiff maintains FCA has consistently and affirmatively misrepresented the design,
safety, and performance of Model Year 2002-2007 Jeep Liberty and Model Year 1993-1998 Jeep
1
Grand Cherokee vehicles (collectively, “Jeep Vehicles”) from June 4, 2013, to the present. Pet. ¶
29. Plaintiff contends misrepresentations made during a safety recall have caused Plaintiff and
all other consumers who have purchased Jeep Vehicles since June 4, 2013, an ascertainable
financial loss. Id. ¶¶ 32-33. Specifically, Plaintiff contends he and other putative class members
were deprived of the benefit of the bargain when they purchased Jeep Vehicles that were
represented as safe and non-defective, but were actually worth less than represented due to a
defective, rear-mounted fuel tank design. Id. ¶ 32.
Plaintiff filed this case in the Circuit Court of Jackson County, Missouri. The Petition
sought compensatory damages for a violation of the MMPA, but did not request punitive
damages. Id. at 15. The Petition also included two stipulations: (1) that Plaintiff would not
request or accept an award of attorney’s fees that would cause the amount in controversy to
exceed $5 million; and (2) that Plaintiff’s counsel would not request or accept an award of
attorney’s fees that would cause the aggregate award on the class claims to exceed $5 million.
Id.
FCA timely removed to this Court, asserting (1) CAFA jurisdiction, 28 U.S.C. § 1332(d),
and (2) federal bankruptcy-related jurisdiction, 28 U.S.C. § 1334(b).
The Court denied
Plaintiff’s motion to remand, finding it had jurisdiction under CAFA.
Standard
Federal courts are courts of limited jurisdiction and possess only the power authorized by
the Constitution and statute. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994). A state court action may be removed by the defendant to federal court if the case falls
within the original jurisdiction of the district courts. 28 U.S.C. § 1441(a). The party seeking
removal bears the burden of establishing federal subject matter jurisdiction. Kokkonen, 511 U.S.
2
at 377; Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009). If federal subject matter
jurisdiction is lacking, the district court must remand the case to state court. 28 U.S.C. §
1447(c).
Where removal is based on CAFA jurisdiction, the notice of removal must contain a
statement alleging minimal diversity, that the proposed class contains at least 100 members, and
that the amount in controversy exceeds $5 million, exclusive of interest and costs. See id. §
1332(d). While there is normally a presumption against federal court jurisdiction, Kokkonen,
511 U.S. at 377, the Supreme Court has recently observed that “no antiremoval presumption
attends cases invoking CAFA.” Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547,
554 (2014).
Where the jurisdictional amount is in dispute, both sides submit proof and the Court
decides, by a preponderance of the evidence, whether the amount in controversy requirement has
been satisfied. Id. “Under the preponderance standard, the jurisdictional fact is not whether
damages are greater than the requisite amount, but whether a fact finder might legally conclude
that they are.” Bell, 557 F.3d at 959 (internal quotation omitted). If “the removing party has
established by a preponderance of the evidence that the jurisdictional minimum is satisfied,
remand is only appropriate if the plaintiff can establish to a legal certainty that the claim is for
less than the requisite amount.” Id. at 956.
This inquiry is fact intensive.
Id. at 959.
Defendants may introduce affidavits,
declarations, or other documentation to satisfy the preponderance of the evidence standard.
Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 755 (11th Cir. 2010) (cited with approval in
Raskas v. Johnson & Johnson, 719 F.3d 884, 888 (8th Cir. 2013)).
3
Discussion
The only element of CAFA jurisdiction Plaintiff contests is whether the $5 million
amount in controversy is met. The amount in controversy here is determined by three factors:
(1) the number of putative class members; (2) the amount of compensatory damages available for
each vehicle; and (3) attorneys’ fees.1
With respect to the number of putative class members, in its previous order the Court
found that a fact finder might conclude that over 9,000 people bought at least 8,000 different
vehicles in the state of Missouri within the class period. To clarify, the Court finds that the
preponderance of the evidence establishes that the number of putative class members is equal to
the number of Jeep Vehicles sold in Missouri: 8,127.2
The Court now turns to the question of the amount of the class members’ damages. FCA
asserts Plaintiff may seek “benefit of the bargain” damages that would amount to at least $5
million in the aggregate. Plaintiff contends this estimate is speculative and inflated.3
In deciding whether the amounts alleged satisfy the amount in controversy, “the court
looks to state law to determine the nature and extent of the right to be enforced as well as the
state measure of damages and the availability of special and punitive damages.” McGuire v.
State Farm Fire & Cas. Co., 108 F. Supp. 3d 680, 684 (D. Minn. 2015). An amount is “not ‘in
controversy’ if no fact finder could legally award it.” Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir.
2002).
1
Although the MMPA provides for an award of punitive damages, Mo. Rev. Stat. § 407.025.1, Plaintiff did not seek
them in his Petition. Therefore, the Court will not include them in calculating the amount in controversy. See Hurst
v. Nissan N. Am., Inc., 511 Fed. App’x 584, 586 (8th Cir. 2013) (noting that if punitive damages are not sought in
the state court petition, such damages are legally unrecoverable under Missouri law).
2
This is the number identified by Lawrence Brookes, Head of Product Analysis and Regulatory Processes for FCA,
which the Court finds is the most credible evidence on the record.
3
Plaintiff does not offer an alternate estimate of damages, but he is not required to offer an estimate because FCA
bears the burden of establishing that the amount in controversy is more than $5 million.
4
The Court notes that compensatory damages on an MMPA claim can be measured by the
benefit of the bargain rule, “which compares the actual value of the item to the value of the item
if it had been as represented at the time of the transaction.” Plubell v. Merck & Co., Inc., 289
S.W.3d 707, 715 (Mo. Ct. App. 2009); see also Torp v. Gen. Motors Acceptance Corp., No. 051042-CV-W-HFS, 2007 WL 2811437, at *6 n.9 (W.D. Mo. Sept. 24, 2007) (“Applied to a
transaction involving the sale of an automobile, [the benefit of the bargain rule] allows the
defrauded party to be awarded the difference between the actual value of the property and what
its value would have been if it had been as represented.”). Here, FCA has established that Jeep
Vehicles sold for between $2,900 and $12,986 4 and that the average sale price was
approximately $6,638. Since the Petition alleges the Jeep Vehicles contain a “lethal” defect
posing a “substantial risk of harm” to their occupants,5 a jury could find the actual value of each
Jeep Vehicles to be almost nothing.
This means a jury could find each class members’
compensatory damages to be $6,638, making the class members’ aggregate damages almost $54
million,6 more than ten times the jurisdictional threshold. Thus, FCA has carried its burden of
establishing the jurisdictional amount.
Plaintiff argues the Court should use the cost of repair as the measure of compensatory
damages. But even using this alternate measure of compensatory damages, the jurisdictional
threshold would still be exceeded once attorneys’ fees are included.
4
See Def.’s Exhibits B-L (Docs. 16-2 to 16-12).
5
See Pet. ¶¶ 2, 4 (describing the defect as one that “may result in fire and create a lethal hazard for vehicle
occupants” and poses “a substantial risk of harm in ordinary operation”).
6
This calculation is the number of class members, 8,127, multiplied by the average damages $6,638, which is the
difference between the average sales price ($6,638) and the actual value ($0). 8,127 multiplied by $6,638 equals
$53,947,026.
5
Cost of repair damages are a valid alternative to diminution in value damages under the
MMPA. See Brown v. Bennett, 136 S.W.3d 552, 557 (Mo. Ct. App. 2004) (awarding cost of
repair damages to give the plaintiff the benefit of her bargain); Morehouse v. Behlmann PontiacGMC Truck Serv., Inc., 31 S.W.3d 55, 61-62 (Mo. Ct. App. 2000) (finding evidence of repair
costs sufficient to support an actual damages award under the MMPA). Plaintiff argues the cost
of alternative repairs could be as little as $320 per vehicle.7 Given the number of vehicles sold,
8,127, the total cost of these repairs would be $2,600,640.
As FCA points out, however, this amount does not account for costs associated with parts
needed for installation and actual installation costs. The “skid plate” parts and labor required for
installation would total $455 for the Jeep Liberty models and $430 for the subject Jeep Grand
Cherokee models, bringing the costs of repair up to $3,605,010.8 Since it is more likely than not
that a jury would include the price of additional parts and labor needed for installation in
determining cost of repair damages, the Court finds, by a preponderance of the evidence, that
cost of repair damages awarded may total $3,605,010.
While this amount does not exceed the jurisdictional threshold, this is not the end of the
analysis. The Court must also consider attorneys’ fees. The MMPA states that a court may, in
its discretion, “award to the prevailing party attorney’s fees, based on the amount of time
reasonably expended.” Mo. Rev. Stat. § 407.025.1. Although Plaintiff and Plaintiff’s counsel
have both stipulated that they will not request or accept an award of attorney’s fees that would
cause the amount in controversy to exceed $5 million, this precertification stipulation cannot be
used to defeat CAFA jurisdiction. In Rolwing v. Nestle Holdings, Inc., the Eighth Circuit held
7
Pl.’s Reply at 5 (Doc. 18).
8
Brookes’ Supp. Aff. ¶ 4. 4,416 Liberty vehicles x $455 = $2,009,280; 3,711 Grand Cherokee vehicles x $430 =
$1,595,730; totaling $3,605,010.
6
that a plaintiff’s stipulation not to accept an award of attorneys’ fees that would exceed
$4,999,999 precludes removal under CAFA’s $5 million jurisdictional threshold. 666 F.3d 1069,
1072-73 (8th Cir. 2012). The Supreme Court subsequently held in Standard Fire Insurance
Company v. Knowles that a plaintiff could not bind absent class members with a damages
stipulation.
133 S.Ct. 1345, 1350 (2013).
Although Knowles did not consider whether a
stipulation limiting the amount of attorneys’ fees could preclude removal under CAFA, in the
wake of Knowles the Eighth Circuit held that “Rolwing was wrong,” and remanded a case for
calculation of the amount in controversy without regard to the damages and attorney’s fee
stipulations. CMH Homes, Inc. v. Goodner, 729 F.3d 832, 838-39 (8th Cir. 2013); see also
Goodner v. Clayton Homes, Inc., No. 4:12-CV-4001, 2014 WL 4722748, at *5 (W.D. Ark. Sept.
23, 2014) (finding that “statutory attorney fees are a benefit belonging to the putative class” and
“a representative plaintiff’s attorney would also be prohibited from limiting the recovery
available to a class prior to class certification”). Consistent with these cases, the Court holds
Plaintiff cannot use a stipulation limiting the amount of attorneys’ fees to preclude CAFA
jurisdiction. Thus, the Court must include in the jurisdictional amount the attorneys’ fees that
may be awarded.
In determining an amount of attorneys’ fees that may be awarded, the court may consider
attorneys’ fees awarded in similar cases. See Harris v. TransAmerica Life Ins. Co., No. 4:14CV-186 CEJ, 2014 WL 1316245, at *1 (E.D. Mo. Apr. 2, 2014). FCA cites Berry v. Volkswagen
Group of America, Inc., in support. 397 S.W.3d 425 (Mo. 2013). In Berry, the plaintiff sued
Volkswagen under the MMPA alleging that a class of cars contained window defects. Id. After
five years of hard-fought litigation, the case settled with a total payout to class members of
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$125,261. Id. After a three-day hearing on attorney’s fees, the trial court awarded $6,174,640 in
attorneys’ fees. Id. at 428-29. The Supreme Court of Missouri upheld this award. Id. at 433.
The present case could generate a similar fee award. Given that the risk and complexity
of prosecuting class actions such as this one justify higher fee awards; the quality of Plaintiff’s
counsel in this case and the commensurate higher hourly rates charged; and the expected length
of the litigation (two years of discovery and motion work followed by a two-week trial); the
Court finds it is more likely than not that the attorneys’ fees awarded to Plaintiff in this case
could be at least $1.4 million. 9
Adding this amount to a compensatory damages award of $3,605,010, the Court finds
that FCA has shown, by a preponderance of the evidence, that the total amount awarded may be
more than $5 million. Consequently, the Court possesses CAFA jurisdiction to hear this case.
Conclusion
The Court holds it possesses subject matter jurisdiction over this case. Plaintiff’s Motion
for Relief from Stay to File Motion for Reconsideration and for Leave to File Sur-Reply (Doc.
84) is DENIED. The stay imposed is lifted, and the May 10, 2016, discovery teleconference is
rescheduled for June 1, 2016, at 10:00 a.m.
No additional briefing for the discovery
teleconference is required.
IT IS SO ORDERED.
Dated: May 26, 2016
/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT
9
The Court reiterates that, under the preponderance standard, the question is not whether an award of attorneys’ fees
will be greater than the requisite amount, but whether a court might legally conclude that they are. The Court’s
finding that such an amount is possible here does not signify that an attorneys’ fees award in this amount is an
acceptable, fair, or even likely amount.
8
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