Pauley v. Hertz Global Holdings, Inc. et al
Filing
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MEMORANDUM OPINION AND ORDER granting Plaintiff's 17 MOTION to Remand to Circuit Court of Wayne County. Signed by Judge Robert C. Chambers on 5/19/2014. (cc: attys; any unrepresented parties) (skm)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
JAMES F. PAULEY, on behalf of himself,
and all others similarly situated,
Plaintiff,
v.
CIVIL ACTION NO. 3:13-31273
HERTZ GLOBAL HOLDINGS,
INC., a Delaware corporation, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff’s motion to remand (ECF No. 17). For the reasons
explained below, this motion is GRANTED. This case is hereby REMANDED to the Circuit
Court of Wayne County, West Virginia.
I.
Background
On November 4, 2013, Plaintiff James F. Pauley filed the instant Complaint in the Circuit
Court of Wayne County, West Virginia, on behalf of himself and others similarly situated,
against Defendants The Hertz Corporation, doing business as Hertz Rent-A-Car (“Hertz”); Hertz
Global Holdings, Inc.; Hertz Investors, Inc.; and Dollar Thrifty Automotive Group, Inc., doing
business as Thrifty Car Rental and Dollar Rent A Car. Compl., ECF No. 3-1 at 3-14. The
Complaint stems from Defendants’ business practices regarding parking citations.
On August 15, 2013, Plaintiff received a parking citation in Atlanta, Georgia, for a
parking meter violation while using a car rented from Hertz. Id. ¶¶ 3-5. Plaintiff timely paid
online the $35.00 fine for this violation, along with a $2.95 online processing fee for his payment
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by credit card, on August 23, 2013. Id. ¶¶ 9-10. At some point after that payment was made,
Plaintiff received a letter from Hertz Processing Services instructing him to pay the fine—which
he had already done—and also informing him of a $30.00 “handling fee.” Id. ¶¶ 12-13. This
“handling fee” was to cover administrative tasks undertaken by Hertz to transfer liability for the
parking citation from Hertz to Plaintiff, such as sending transfer of liability documents to the
municipality that issued the citation. See id. ¶¶ 13-15. According to Plaintiff, “it was unclear . . .
whether the handing fee would be applicable if the notice of parking violation had already been
paid by the time the letter was sent.” Id. ¶ 13. Because he “[b]eliev[ed] he had fulfilled his legal
obligations . . . , Plaintiff simply filed away the letter.” Id. Plaintiff alleges that the City of
Atlanta does not utilize a transfer of liability process, that Hertz did not properly incur any cost
for transferring liability for Plaintiff’s parking violation, and that Plaintiff’s rental agreement
with Hertz does not mention handling costs. Id. ¶¶ 14-16. Plaintiff brings claims for breach of
contract, unjust enrichment, and conversion. Also, Plaintiff defines the putative class as “rental
customers throughout the United States who rented vehicles from Defendant Hertz and
Defendant [Dollar Thrifty Automotive Group] and after receiving and paying parking citations
issued during the rental period were nevertheless charged a handling cost by Defendant Hertz
and Defendant [Dollar Thrifty Automotive Group].” Id. ¶ 24.
On December 5, 2013, Defendants filed a Notice of Removal, stating that this case
should be removed to federal court because the Complaint satisfies the requirements of the Class
Action Fairness Act (“CAFA”), and therefore, this Court has original jurisdiction over the
Complaint. Under CAFA, a district court has original jurisdiction over a class action if “any
member of a class of plaintiffs is a citizen of a State different from any defendant,” if the
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putative class consists of 100 or more members, and if “the matter in controversy exceeds the
sum or value of $5,000,000, exclusive of interest and costs.” 28 U.S.C. § 1332(d).
Plaintiff subsequently filed the instant Motion to Remand, arguing that the requirements
for CAFA jurisdiction are not satisfied and that, therefore, this Court does not have jurisdiction
over the case. Mot. Remand; Mem. Support Mot. Remand, ECF No. 18. Defendants filed a
Response, ECF No. 23, and Plaintiff filed a Reply, ECF No. 25. The Motion to Remand is now
ripe for resolution.1
II.
Legal Standard
In the course of resolving a motion to remand, a court must strictly construe removal
statutes in favor of state court jurisdiction. Palisades Collections LLC v. Shorts, 552 F.3d 327,
333-34 (4th Cir. 2008). Accordingly, “if federal jurisdiction is doubtful, a remand to state court
is necessary.” Id. at 334 (internal quotation marks omitted). It is well-established that the burden
of demonstrating federal jurisdiction falls on the party seeking removal. Strawn v. AT&T
Mobility LLC, 530 F.3d 293, 296-98 (4th Cir. 2008). The enactment of CAFA has not changed
this traditional rule. Id. at 297-98. When jurisdiction is challenged, the removing party must
prove jurisdiction by a preponderance of the evidence. See Sayre v. Potts, 32 F. Supp. 2d 881,
885 (S.D. W. Va. 1999); see also Caufield v. EMC Mortgage Corp., 803 F. Supp. 2d 519, 528
(S.D. W. Va. 2011) (using the preponderance of the evidence standard and finding that “[t]he
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Defendants have filed a Motion to Dismiss, ECF No. 13, which is also ripe for resolution.
However, it is necessary to resolve the Motion to Remand before turning to the Motion to
Dismiss. McCoy v. Norfolk S. Ry. Co., 858 F. Supp. 2d 639, 642 (S.D. W. Va. 2012) (“[I]t is
ordinarily improper to resolve the motions to dismiss before deciding the motion to remand.”);
see also Bilmar Ltd. P’ship v. Prima Mktg., LLC, No. 2:13-cv-14391, 2013 WL 6195722, at *1
(S.D. W. Va. Nov. 27, 2013) (citing McCoy in noting that, “[b]efore the court may consider the
merits of the motions to dismiss, it must first resolve the jurisdictional question posed by the
motion to remand”).
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mere possibility that the plaintiff and proposed class could meet [the amount in controversy
requirement] is not enough to give this court jurisdiction”).
III.
Discussion
Plaintiff argues that this case must be remanded because Defendants have not proven by a
preponderance of the evidence that the amount in controversy exceeds $5,000,000.2 Defendant
argues that the amount in controversy in this case does exceed $5,000,000, pointing to a
declaration from Richard P. McEvily, Senior Vice President and Deputy General Counsel of
Hertz, which states, “I am informed by [American Traffic Solutions (“ATS”)] that ATS business
records show that between January 2010 and November 2013, the dollar amount of transfer of
liability-related administrative fees collected from Hertz customers in the United States was at
least $5.6 million.” Supp. Decl. Richard P. McEvily ¶ 5, May 2, 2014, ECF No. 23-1.3
Defendants also include a declaration from Nikki Woodward, Senior Vice President of Fleet
Services for ATS, which states,
I personally have reviewed ATS’s business records reflecting its transfer of
liability-related administrative fee charges . . . . ATS business records show that,
between January 2010 and November 2013, the dollar amount of transfer of
liability-related administrative fees collected from Hertz customers in the United
States was at least $5.6 million.
Decl. Nikki Woodward ¶ 4, May 2, 2014, ECF No. 23-2.4
2
Plaintiff also makes the cursory assertion that Defendants have not sufficiently established the
size of the putative class. See Mem. Supp. Mot. Remand 1. Because Plaintiff presents no
argument on this point, the Court will not address it.
3
As explained in Mr. McEvily’s declaration, ATS is a company contracted by Hertz to handle
administrative tasks related to transfer of liability. Supp. Decl. Richard P. McEvily ¶ 4, May 2,
2014, ECF No. 23-1.
4
To the extent that Plaintiff suggests that declarations submitted by Defendants cannot be
considered because of lack of personal knowledge, the Court rejects such an argument. Kemper
v. Quicken Loans, Inc., No. 5:13-CV-91, 2013 WL 5504152, at *4 (N.D. W. Va. Oct. 2, 2013)
(affidavits submitted to resolve a removal dispute need not be based upon personal knowledge).
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Plaintiff argues that these declarations cannot establish the amount in controversy
because the $5.6 million amount included in the declarations is over-inclusive. Specifically,
while Plaintiff limited the putative class to “rental customers . . . who . . . after receiving and
paying parking citations issued during the rental period were nevertheless charged a handling
cost,” Compl. ¶ 24, the $5.6 million figure represents the total amount of liability-related
administrative fees collected from all Hertz customers charged a handling fee—not just those
who paid their parking citations before being charged. Defendant counters that the $5.6 million
figure is not over-inclusive because, based on the Complaint as a whole, Plaintiff is attacking
transfer-of-liability fees at large and not merely the imposition of those fees on individuals who
had already paid their parking citations.
In Krivonyak v. Fifth Third Bank, the plaintiffs brought a class action lawsuit in
connection with the alleged mishandling of home loans, defining the putative class as “[a]ll
consumer borrowers in West Virginia whose loans were serviced by Fifth Third anytime after
May 4, 1997.” No. 2:09-cv-00549, 2009 WL 2392092, at * 1-2, *5 (S.D. W. Va. Aug. 4, 2009)
(citing to the complaint) (internal quotation marks omitted). The plaintiffs alleged that the
defendants charged multiple late fees for a single late payment, did not credit payments, and
improperly returned payment. Id. at *5. The defendants removed the case under CAFA, and the
plaintiffs subsequently moved to remand. In considering the motion to remand, the court noted
that the putative class was defined broadly, but that the complaint “must be read as a whole.” Id.
The result was that “the class only include[d] those borrowers who were charged multiple late
fees, were not credited payments, or were returned an alleged partial payment. Any borrower
who was not charged any of the challenged fees simply could not be a member of the putative
class.” Id. Because the defendants only provided evidence of the total amount of first mortgages
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originated within the operative time frame, the court was not able to determine the class size. Id.
at *5 n.1. The court decided that, even assuming the class exceeded 100 members, the defendants
nonetheless failed to establish that the amount in controversy exceeded $5,000,000, and the case
was accordingly remanded. Id. at *5 n.1, *7.
Krivonyak was cited in Caufield v. EMC Mortgage Corp. for its discussion of reading the
complaint as a whole when determining whether CAFA jurisdiction has been established. 803 F.
Supp. 2d at 525-26. Similar to Krivonyak, the class in Caufield was broadly defined as all West
Virginians who had a loan serviced by the defendant, and the complaint alleged the illegal
assessment of multiple late fees, the illegal assessment of attorney’s fees and default charges, and
false representation, all in violation of the West Virginia Consumer Credit Protection Act
(“WVCCPA”). Id. at 526. The court found that, “[r]eading the complaint as a whole, the
proposed class can only consist of persons in West Virginia whose loans were serviced by EMC
in violation of these WVCCPA provisions.” Id. Therefore, “EMC’s assertion that each and every
West Virginia citizen whose loan was serviced by EMC is a member of the proposed class is
unfounded.” Id. Because there was no evidence in the record regarding the size of the class,
CAFA’s class size requirement was not established. Id.; see also Pirillo v. PNC Mortgage Corp.,
No. 1:12CV7, 2012 WL 761607 (N.D. W. Va. Mar. 7, 2012) (in considering removal under
CAFA, finding that, although the class was defined broadly, the causes of action alleged in the
complaint further limited that class and remanding for lack of evidence that the size of the
proposed class was at least 100 members).
Similarly, in Hedrick v. CitiMortgage, Inc., the plaintiff brought a class action lawsuit,
arguing that the defendant loan servicer imposed foreclosure-related fees upon her and others
although their homes were not foreclosed upon. No. 2:12-cv-00537, 2012 WL 1458086, at *1
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(S.D. W. Va. Apr. 26, 2012). In support of jurisdiction pursuant to CAFA, the defendant
calculated the number of first mortgage loans serviced in West Virginia for the specified time
period for which delinquency or default-related charges were incurred. Id. at *2. The court found
that the defendant’s calculation of the class size was over-inclusive because “[t]here is no
evidence in the record to determine which mortgages incurred default-related charges versus
delinquent charges, which are not challenged by [the plaintiff’s] complaint.” Id. Also, the court
noted that “[t]here is . . . no evidence in the record to determine which defaultrelated [sic]
charges were incurred after a foreclosure.” Id. The court accordingly granted the plaintiff’s
motion to remand.
Applying the reasoning of these cases to the instant case, the Court believes that the class
in this case is limited to “rental customers throughout the United States who rented vehicles from
Defendant Hertz and Defendant [Dollar Thrifty Automotive Group] and after receiving and
paying parking citations issued during the rental period were nevertheless charged a handling
cost by Defendant Hertz and Defendant [Dollar Thrifty Automotive Group].” Compl. ¶ 24.
Though portions of the Complaint could fairly be viewed as a general attack on Defendants’
practices regarding transfer-of-liability fees, when reading the Complaint as a whole, the Court
believes that the Complaint should not be interpreted such that those more general allegations
widen the otherwise narrowly-defined class. Rather, the authority cited supports the opposite
approach—namely, any “generalized” claims regarding handling costs are narrowed by the
limited class defined in the Complaint. In other words, the class of individuals who may recover
based on Plaintiff’s allegations is explicitly limited to those individuals who incurred handling
fees after paying their parking citations.
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Defendants point to several cases to support their argument that the amount in
controversy is sufficiently established as exceeding $5,000,000. However, those cases are
distinguishable from the instant situation. For example, in Kemper v. Quicken Loans, Inc., the
court denied the plaintiff’s motion to remand where the plaintiff disputed the defendants’
calculation of the amount in controversy; in that case, however, the defendants’ calculation was
not clearly over-inclusive and plaintiff offered no evidence that the calculation was incorrect.
No. 5:13-CV-91, 2013 WL 5504152, at *1-5 (N.D. W. Va. Oct. 2, 2013). In contrast, Plaintiff
here has pointed to a specific, clear defect in Defendants’ declarations. Other cases cited by
Defendants are distinguishable as well. See Strawn, 530 F.3d at 294, 298 (where “[t]he complaint
defined the class as all consumers in West Virginia who purchased cellular telephone service
from AT & T and were charged a $2.99 monthly fee for Roadside Assistance service without
ever having requested the service or having affirmatively enrolled in the program,” rejecting the
plaintiffs’ argument “in their papers that the proposed class includes only ‘unwilling’ customers
and excludes customers who, even though automatically enrolled in the program, chose to retain
the service after being charged the $2.99 fee” because that argument “amounts to a post hoc
characterization of the pattern and practice that they are challenging in the complaint as illegal,
as their characterization is inconsistent with the descriptions they give in the complaint of the
pattern and practice and of the class of persons described as victims” (emphasis added)); Martin
v. State Farm Mut. Auto. Ins. Co., No. 3:10-cv-0144, 2010 WL 3259418, at *5 (S.D. W. Va.
Aug. 18, 2010) (where it was undisputed that the class size exceeded 100, defendant properly
multiplied the amount of damages each plaintiff sought by 100 to determine the low-end of the
amount in controversy); Laws v. Priority Tr. Servs. of N.C., L.L.C., No. 3:08-CV-103, 2008 WL
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3539512 (W.D.N.C. Aug. 11, 2008) (approving of the defendants’ use of sampling to determine
the class size and amount in controversy).
Defendants’ declarations state that the amount of liability fees collected by Hertz is at
least $5.6 million. However, Defendants do not specify the amount of fees collected from
customers who were charged those fees after paying the underlying parking citations, and neither
do they specify any fees collected by Dollar Thrifty Automotive Group. Because Defendants
have not shown by a preponderance of the evidence that the amount in controversy exceeds
$5,000,000, the jurisdictional requirements of CAFA are not met. This case is accordingly
remanded to the Circuit Court of Wayne County, West Virginia.
IV.
Conclusion
For the reasons explained above, Plaintiff’s Motion to Remand is GRANTED. This case
is hereby REMANDED to the Circuit Court of Wayne County, West Virginia.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.
ENTER:
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May 19, 2014
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