GOLDBERG et al v. HEALTHPORT TECHNOLOGIES, LLC et al

Filing 25

OPINION fld. Signed by Judge William H. Walls on 7/30/14. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

FISCHEL GOLDBERG AND JERRY
VELASQUEZ, individually and on behalf of
others similarly situated,

OPINION
No. 2:14-cv-2810 (WHW)(CLW)

Plaintiffs,
v.
HEALTHPORT TECHNOLOGIES, LLC,
KIMBALL MEDICAL CENTER, iNC.,
COMMUNITY MEDICAL CENTER, INC.,
BARNABAS HEALTH, INC., OCEAN
MEDICAL CENTER, JERSEY SHORE
UNIVERSITY MEDICAL CENTER, and
MERIDIAN HEALTH SYSTEM, INC.,
Defendants.
Walls, Senior District Jud2e
Plaintiffs move to remand following removal by Defendant Healthport Technologies. The
motion, decided without oral argument under Federal Rule of Civil Procedure 78(b), is granted.
FACTUAL AND PROCEDURAL HISTORY
On March 12, 2014, Plaintiffs filed an amended class action complaint in New Jersey
state court, Docket No. ESX-L-1421-14. Def.’s Notice of Removal, Ex. B (Am. Compi.) (ECF
No. 1-3). The amended complaint alleges violations of N.J.A.C.

§

8:43-G15.3(d) (2014), a state

regulation governing the charges that a hospital or third party may charge a patient for a copy of
his medical records. Id.

¶

I. The named Plaintiffs allege that the Defendants unlawfully charged

them and others similarly situated “unauthorized service fees” for “services other than the basic
retrieval, copying and shipping of medical records,” including a $5.00 “Certification Fee.” Id. at
4-5

¶J 5,

10, 13. They list four counts: violation of 8:43G-153(d), id. ¶j 37-43; violation of

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New Jersey’s consumer fraud act, N.J.S.A.
negligent misrepresentation, id.

§ 56:8-2 (2012), id. ¶J 44-5 1; fraudulent and

¶J 52-58; and unjust enrichment,

id.

¶J 59-63. They request,

among other things, injunctive relief, costs, attorneys’ fees, treble damages and punitive
damages. Id. at 18.
Defendant Healthport removed the action on May 1, 2014, citing 28 U.S.C.

§ 1332 and

1441, the Class Action Fairness Act (“CAFA”) and “all other applicable bases for removal.”
Notice of Removal at 2. It argues that removal is appropriate under CAFA because the parties
are minimally diverse, the proposed class contains at least 100 members, and the aggregate
amount in controversy exceeds $5,000,000. Id.

¶ 11. Plaintiffs now move to remand, arguing that

Defendant’s amount in controversy calculation is faulty and that removal is inappropriate under
the “local controversy” and “home state” exceptions to CAFA jurisdiction. Pl.’s Mot. to Remand
at 6 (ECF No. 10-1)) Healthport opposed, ECF No. 14, and the other Defendants joined
Healthport’s opposition, ECF Nos. 15, 16.2 Plaintiffs replied. ECF No. 22. Defendant sought
permission to file a sur-reply, which the Court denies. ECF No. 23.
STANDARD OF REVIEW

“By statute, a defendant has the right to remove a civil action from state court if the case
could have been brought originally in federal court.” In re Briscoe, 448 F.3d 201, 215 (3d Cir.
2006) (citing 28 U.S.C.

§

144 1(a) (2012)). But as a general rule, “removal statutes ‘are to be

strictly construed against removal, and all doubts resolved in favor of remand.” Bover v. Snap
Oii Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch &

Signal Div., Am. Standard, Inc., 809 F.2d 1006, 1010 (3d Cir. 1987) (further citation omitted)).

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The Court does not reach the “local controversy” and “home state” exception issues.

For simplicity, the Court will refer to the filings of a singular defendant.
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Under CAFA, federal district courts have original jurisdiction over class actions in which the
amount in controversy exceeds $5,000,000, at least one plaintiff and one defendant are citizens
of different states, and the class consists of 100 or more persons. 28 U.S.C.

§ 1332(d)(2),

1332(d)(5)(B); see Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013). A state
court class action meeting these requirements can be removed to federal court. 28 U.S.C.

§ 1441;

Knowles, 133 S. Ct. at 1348.

“[Tjhe party asserting federal jurisdiction in a removal case bears the burden of showing,
at all stages of the litigation, that the case is properly before the federal court.” Frederico v.
Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing Samuel-Bassett v. KIA Motors America,
Inc., 357 F.3d 392, 396 (3d Cir. 2004) and Morgan v. Gay, 471 F.3d 469, 473 (3d Cir. 2006)).
This is true for CAFA as well as other bases of federal jurisdiction, but the burden can change
depending on whether the parties dispute jurisdictional facts. Id. If they do, “the court may
demand that the party alleging jurisdiction justify his allegations by a preponderance of
evidence.” Id. at 194 (quoting McNutt v. General Motors Acceptance Corp. ofIndiana, 298 U.S.
178, 189 (1936)). In other words, the burden stays with the remover. But if the parties do not
dispute the jurisdictional facts and the amended complaint does not stipulate to an amount in
controversy below the threshold, then the burden shifts to the party resisting jurisdiction, who
must show to a legal certainty that the threshold cannot be reached. Frederico, 507 F.3d at 19697 (citing Samuel-Bassett, 357 F.3d at 397 (citing St. Paul Mercury indem. C’o. v. Red Cab Co.,
303 U.S. 283, 289 (1938))). ‘The concept of legal certainty is not well defined, but falls

somewhere below ‘absolute certainty’ and above ‘preponderance of the evidence.” Hoffman v.
DSEHealthcare Solutions, LLC, No. 13-cv-7582 (JLL), 2014 WL 1155472, at *2 (D.N.J. Mar.
21, 2014). See Nelson v. Keefer, 451 F.2d 289, 293 (3d Cir. 1971) (quoting a 7th Circuit decision

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finding that a party asserting jurisdiction need not demonstrate the jurisdictional amount “to an
absolute certainty” but only to a “legal certainty”) (quoting Jeffries v. Silvercup Bakers, Inc., 434
F.2d 310, 311-312(7th Cir. 1970)); see also Stephenson v. Consolidated Rail Corp., 2013 WL
1750005, at *2 (D.N.J. April 23, 2013) (“The ‘legal certainty’ standard is somewhat
amorphous..

.

DISCUSSION

The parties agree that the parties are diverse and that plaintiffs are sufficiently numerous,
but dispute whether the amount in controversy exceeds $5 million.
I.

Defendant Bears the Burden

Defendant argues that, because there is no genuine dispute about jurisdictional facts, the
burden has shifted to Plaintiffs to show to a legal certainty that the amount in controversy cannot
exceed $5 million. Not. of Removal
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¶ 20; Opp’n to Remand at 6.

It believes the burden. Id.

But there is a dispute. Defendant believes that the amended complaint “implicates
Healthport’s total revenue” from the named hospitals and put forth evidence of that revenue,
Def.’s Notice of Removal ¶ 23, but Plaintiff says that Defendant’s calculation “bears no relation
to the actual claims asserted by Plaintiffs,” Pl.’s Mot. to Remand at 9. Under the Third Circuit’s
guidance in Frederico, this is a dispute about jurisdictional facts which requires the removing
party to “justify [its] allegations by a preponderance of the evidence.” 507 F.3d at 194. In other
words, the burden is on the Defendant to “show.. that it is more likely than not that the
.

Though Defendant ostensibly asserts removal on “other applicable bases,” there is no plausible
argument that any plaintiff’s claim could exceed the $75,000 threshold required for ordinary
diversity jurisdiction. See, e.g., Shah v, Hyatt ‘orp., 425 Fed, App’x (21, 124 (3d Cir. 2011)
(considering both amount in controversy thresholds).
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aggregate of [Plaintiffs’] proposed claims will meet or exceed $5,000,000.” Heleine v. Saxon
Mortgage Svcs., Inc., No. 1 l-cv-5695 (FLW), 2013 WL 1352257, at *4 (D.N.J. Apr. 2, 2013).
IL

Calculating the Amount in Controversy

Defendant has failed to carry this burden.
The Court “discern[sj the amount in controversy by consulting the face of the amended
complaint and accepting the plaintiff’s good faith allegations.” Dolin v. Asian Am. Accessories,
Inc., 449 Fed. App’x 216, 218 (3d Cir. 201 1) (citing Horton v. Liberty Mut. Ins. Co., 367 U.S.
348, 353 (1961)); see also In re Briscoe, 448 F.3d at 217. The court may also consider the notice
of removal and pleadings, “as well as evidence that the parties submit.” Vodenichar v. Halcon
Energy Properties, Inc., 733 F.3d 497, 503 n.l (3d Cir. 2013) (citing Erie Ins. Exch. v. Erie
Indem. Co., 722 F.3d 154, 158 (3d Cir. 2013)).
The amount should be calculated “by a reasonable reading of the value of the rights being
litigated,” i.e., whether a reasonable jury could award damages in excess of the threshold .Angus
v. Shiley Inc., 989 F.2d 142, 146 (3d Cir. 1993). “The inquiry should be objective and not based

on fanciful, pie-in-the-sky, or simply wishful amounts, because otherwise the policy to limit
diversity jurisdiction will be frustrated.” Dolin, 449 F. App’x at 218 (quoting Samuel-Bassett,
357 F.3d at 403). The calculation should incorporate punitive damages and attorney’s fees.
Frederico, 507 F.3d at 199 (citation omitted).

Defendant argues that the $5 million threshold is reached because the amended complaint
“implicates Healthport’s total revenue” from the named hospitals. Def.’s Notice of Removal

J

23. It offers that, in the class period, it earned revenue of $1,440,000 from requests for medical
records received from patients’ attorneys and another $600,000 from patients directly. Id.
Defendant trebles the $1.44 million figure and adds 30% attorney fees to reach a figure of

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$5,616,000, not including punitive damages. Id. Plaintiffs respond that it is inappropriate to
consider Healthport’s “entire medical record reproduction revenues as a whole,” a figure which
“bears no relation to the actual claims asserted by Plaintiffs.” Pl.’s Mot. to Remand at 9.
Plaintiffs are correct. The Court begins with the complaint. The amended complaint,
despite Defendant’s claim, simply does not “implicate Healthport’s total revenue.” It seeks
redress for “unauthorized service fees,” Compi.

¶ 1, which it defines as “fees for services other

than the basic retrieval, copying and shipping of requested medical records,” id.

¶ 16. See also id.

¶23 (defining the class as any patient who requested a medical record from one of the
Defendants and “suffered economic damages as a result of the payment of service fees that were
imposed by Defendants in excess of those expressly authorized under N.J.A.C. 8:43G4
15.3(d).”).
The Court also considers the Notice of Removal and the attached affidavit declaration of
Janet McDavid, Defendant’s General Counsel. ECF Nos. 1, 1-5. But it is glaringly apparent that
the figures in the notice of removal, identified as “revenue from copying

services,” sweep in

revenue for “basic retrieval, copying and shipping”—the types of charges Plaintiffs specifically
exclude from their claims. Not. of Removal ¶ 23; McDavid Deci.

¶J 6-7. Defendant provides no

plausible explanation why these total revenue figures might be relevant and has not shown or
even

suggested what portion of the $2,040,000 it earned in the class period it could attribute to

charges other than copying, searching or shipping. In

response to

Plaintiffs’

argument

that they

New Jersey Administrative Code § 8:43G-15.3(d) provides that, when a patient requests his
medical record, a “copy of the record shall be furnished at a fee based on actual costs.”
Authorized charges include a “fee for copying records”—with limits of $1.00 per page for the
first 100 pages, $0.25 for all pages after that, and an absolute cap of $200— “[a] search fee,” and
“[a] postage charge of actual costs for mailing.” Id. § 8:43G-l5,3(d)(1), (2). However, “[nb
charges shall be assessed other than those” for copying, search, and shipping, Id. § 8:43GI 5.3(d)(2)(ii).
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do not seek refunds for every penny class members paid to Defendant, only for “unauthorized
service fees,” Defendant says that every type of fee it charges is a “service fee” and therefore the

amended complaint must have implicated its entire revenue stream. Def.’s Opp’n to Pl.’s Mot. to
Remand at 1 (“All of HealthPort’ s revenue is generated from the service fees it charges for the

medical record copying services it provides.”). The amended complaint does no such thing and
Defendant’s submissions do not demonstrate otherwise by a preponderance of the evidence.
Defendant’s attempt to recast this argument as a sur-reply is unavailing. It argues that this
additional submission is necessary because Plaintiffs made a new argument on reply: that they
are challenging only the fees under N.J.A.C. 8:43G-l 5.3(d)(2), and therefore the amended
complaint itself must have included the copying fees in subsection (d)(1). Def.’s Proposed Sur
reply (ECF No. 23-2). This is not a new argument in Plaintiff’s reply—the amended complaint
expressly excludes fees for copying. Am. Compi. ¶IJ 3, 16, 27(a), 38, 54, 57, 60. The sur-reply is
not necessary and the motion to file it is denied.
“[B]efore this Court can engage in the.. jurisdictional analysis, it must have all the
.

necessary facts to do so.” Resolution Mgmt. Consultants, Inc. v. Hickey, CIV.A. 10-6243 RMB,
2011 WL 2609854 (D.N.J. June 29, 2011). Defendant has not submitted facts sufficient for the
Court to analyze whether the jurisdictional threshold is reached and so has not met its burden.
See, e.g., Valerio v. Mustabasic, No. 07-cv-534 (JLL) (CCC), 2007 WL 2769636, at *4 (D.N.J.

Sept. 21, 2007) (‘When determining if the jurisdictional threshold has been met, if this Court has
to guess, defendant has not proved its point.”) (citation and quotation marks omitted); Martin
Wal-Mart Stores, Inc., 709 F. Supp. 2d 345, 350 (D.N.J. 2010) (“Defendant’s suspicion that

Plaintiff’s claims may be worth more than the jurisdictional amount falls far short of establishing

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by a preponderance the Court’s subject-matter jurisdiction.”). Plaintiffs motion to remand is
granted.
CONCLUSION

Defendant’s motion for permission to file a sur-reply is denied. Plaintiffs motion to
remand is granted—this action will be remanded to Superior Court of New Jersey, Essex County.
An appropriate order follows.

July 30, 2014

Judge

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