Opinion
CASE NO. 4:03-cv-0018-DFH
May 30, 2003
Daniel A. Edelman, Cathleen M. Combs and James O. Latturner, Tara L. Goodman, EDELMAN, COMBS LATTURNER, LLC, Chicago, Illinois.
Vernon W. Blair and Ellen G. Friedman, Louisville, Kentucky.
Randall R. Riggs and Kevin C. Schiferl, LOCKE REYNOLDS LLP, Indianapolis, Indiana.
ENTRY ON PLAINTIFFS' MOTION FOR REMAND
Named plaintiffs Charles and Ruby Barnes brought suit against defendant Ford Motor Company in the Orange Circuit Court in Orange County, Indiana on behalf of themselves and as class representatives. Plaintiffs allege that defendant Ford Motor Company committed fraud under the laws of Kentucky and other states when it failed to disclose to its customers that the torsion bars on the Ford F-150 truck model were defective. Plaintiffs seek compensatory and punitive damages but have not specified an amount in their complaint.
Pursuant to 28 U.S.C. § 1441, Ford removed this action from the state court, invoking both diversity jurisdiction under 28 U.S.C. § 1332 and federal question jurisdiction under 28 U.S.C. § 1331. Plaintiffs have moved to remand this action to the state court on the grounds that the amount in controversy does not meet the required statutory amount for diversity jurisdiction and that their claims arise only under state law, not federal law. For the reasons explained below, the motion to remand is granted, and the court will award plaintiffs their reasonable attorney fees and costs resulting from the removal.
Discussion
In 1998, plaintiffs purchased a Ford F-150 truck from a Ford dealer in Kentucky. Cplt. ¶ 4. Plaintiffs also obtained a written warranty directly from Ford when they purchased the truck. Id., ¶ 5. In April 2002, shortly after the warranty expired, the truck's torsion bar collapsed while the truck was parked in plaintiffs' driveway and carrying a load well within the stated capacity of the vehicle. Id., ¶¶ 6-7. Plaintiffs allege that this collapse was the result of defective design and/or manufacture. Plaintiffs also allege that Ford was aware of this defect and that Ford committed fraud by willfully failing to notify plaintiffs of the need to replace the torsion bar before their warranty expired. Id., ¶¶ 8, 25, 29.
Defendant Ford removed the case to federal court arguing that diversity jurisdiction exists because the parties have diverse citizenship and the amount in controversy exceeds $75,000. Ford also argues that the court has federal question jurisdiction on the theory that the case necessarily arises under the federal Motor Vehicle Safety Act, 49 U.S.C. § 30101 et seq.
I. Diversity Jurisdiction
"Jurisdiction exists in a removal action if the case might have been brought in federal court to begin with." Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993). A district court may exercise diversity jurisdiction only when the parties have different citizenship and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). The amount in controversy is disputed here; diversity of citizenship is not. "The amount in controversy is whatever is required to satisfy the plaintiff's demand, in full, on the date suit begins." Hart v. Schering-Plough Corp., 253 F.3d 272, 273 (7th Cir. 2001) (emphasis in original).
When an issue is raised about the amount in controversy, the party invoking federal jurisdiction has the burden of establishing that jurisdiction exists. See Shaw, 994 F.2d at 366, n. 2 ("Defendants seeking removal may meet that burden by a preponderance of the evidence, which we take to mean proof to a reasonable probability that jurisdiction exists."), citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936).
In this putative class action, the claims of different plaintiffs cannot be aggregated to meet the jurisdictional requirement. Snyder v. Harris, 394 U.S. 332, 335-36 (1969); Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977 (7th Cir. 2000). Ford argues that the Barnes' claims satisfy the amount in controversy requirement in two ways: (a) the combination of compensatory and punitive damages and attorney fees, and; (b) the costs that would be imposed on Ford by what Ford views as the Barnes' request for injunctive relief.
Despite the rule against aggregating separate claims of separate plaintiffs, for purposes of this analysis, the court combines the claims of Mr. and Mrs. Barnes because they have a common and undivided interest in the claims they assert based on their joint ownership of the truck in question. See Snyder v. Harris, 394 U.S. 332, 335 (1969).
A. Compensatory and Punitive Damages and Attorney Fees
Defendant Ford argues that plaintiffs' "allegations set the predicate for a claim of refund of all or part of the purchase price" as compensatory damages and that Ford F-150 trucks can cost as much as $30,000. Def. Resp. Br. at 4. Adding punitive damages on top of that figure, Ford argues, would place the amount in controversy on the Barnes' claims well over the $75,000 threshold.
The complaint describes a defect in the plaintiffs' truck that they repaired for about $300. The complaint does not seek the full purchase price of the truck, nor is there any reasonable possibility that the purchase price would be a suitable measure of damages. See Johnson v. Naugle, 557 N.E.2d 1339, 1343 (Ind.App. 1990) (in similar case involving alleged fraud in sale of real estate, measure of damages would be cost of repair).
Ford cites Werwinski v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002), for the proposition that plaintiffs' carefully drafted complaint might have "left the door open" for later demanding the full purchase price of the vehicle in compensatory damages. Werwinski was a similar case alleging consumer fraud through failure to disclose a defect in a model of vehicles, and the Third Circuit affirmed the district court's denial of a motion to remand. However, in the Werwinski complaint, the plaintiffs had requested relief in the form of "all or part of the sums [plaintiffs] paid to purchase or lease [their] automobiles," and disgorgement of defendant's "ill-gotten profits received from the sale or lease of the subject vehicles and/or . . . full restitution to the Named Plaintiffs and the other members of the Class." 286 F.3d at 666-67. The Third Circuit relied on these allegations to find that the plaintiffs had not limited their claim for compensatory damages to the costs of repair. Id. at 667 (noting that plaintiffs' arguments for remand might have had merit if prayer for relief had not included these requests).
By contrast, plaintiffs' allegations in this case would support compensatory damages consisting only of the costs of repair. Plaintiffs allege that the torsion bar on their truck broke while it was parked in their driveway. Cplt. ¶ 6. In Count I, plaintiffs allege that Ford violated the Kentucky Consumer Protection Act "by failing to notify plaintiffs and the class members, prior to expiration of their warranties, to have the torsion bars replaced. Plaintiffs were damaged as a result. Had plaintiffs been advised of the defect, they would have replaced their torsion bars while the vehicle was under warranty." Id., ¶¶ 25-26. These allegations do not suggest that plaintiffs seek the full purchase price of the vehicle as damages for the alleged wrong. Plaintiffs also have not requested that defendant be required to disgorge any ill-gotten gains. Accordingly, the Third Circuit's decision in Werwinski would not support remand in this case.
Ford also relies on the complaint's allegations that the alleged defect is a safety problem that can cause a truck to spin out of control while being driven and that this "safety problem" has caused personal injury and death in other cases. The allegation does not support any inference that the named plaintiffs seek damages for such an injury. The torsion bar on plaintiffs' truck collapsed while the truck was parked in their driveway. Cplt. ¶ 6. Plaintiffs do state in the section labeled "Facts" that the "failure of a torsion bar while the vehicle is being operated can cause the vehicle to become uncontrollable or spin." Id., ¶ 15. Such an allegation is obviously relevant to whether the alleged defect is in fact a defect. However, the plaintiffs themselves do not allege that they suffered any such personal injury, let alone death. Also, their proposed class specifically excludes "(1) persons that suffered injury to the person or death and their representatives, (2) persons claiming injury to property other than the Ford F-150 trucks, and (3) defendant and its officers." Id., ¶ 18. Based on the complaint in this case, plaintiffs have not asked for payment of compensatory damages of any more than the reasonable cost of repair.
Punitive damages for the named plaintiffs also could not reach the jurisdictional threshold. Punitive damages of more than $74,000 would be required, or nearly 250 times the claimed actual damages. Cf. State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S.Ct. 1513, 1524 (2003) (declining to adopt "a bright-line ratio which a punitive damages award cannot exceed," but stating that "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process"); BMW of North America, Inc. v. Gore, 517 U.S. 559, 562, 574-75 (1996) (500 to 1 ratio between award and actual harm was grossly excessive); Anthony v. Security Pacific Financial Services, Inc., 75 F.3d 311, 317-18 (7th Cir. 1996) ("punitive damage recovery in such a large multiple of a compensatory recovery as 17.35 times stretches the normal ratio, and would face certain remittitur").
Plaintiffs suggest that the Indiana statute on punitive damages would impose a limit of $50,000 here. See Ind. Code § 34-51-3-4 (limiting punitive damages to greater of three times actual damages or $50,000). For purposes of argument, the court assumes that the Indiana statute would apply to this case, and assumes that in cases with very modest actual damages, the $50,000 limit survives the Supreme Court's recent decision in State Farm. See 123 S.Ct. at 1524 ("in cases with modest actual damages, ratios greater than those we have previously upheld may comport with due process where `a particularly egregious act has resulted in only a small amount of economic damages'"), quoting Gore, 517 U.S. at 582. Even with these assumptions, the $50,000 maximum would not meet the jurisdictional threshold here. See also Del Vecchio v. Conseco, Inc., 230 F.3d at 978-79 (vacating judgment on merits after finding that punitive damages claim did not satisfy jurisdictional amount).
Ford also seeks to include attorney fees in the amount in controversy, but for those fees to push the Barnes' total demand beyond $75,000, attorney fees incurred after the complaint was filed would need to be included. Ford's theory is contrary to the clear law of this circuit: the relevant amount of any legal fees that might be counted toward the jurisdictional amount is limited to fees incurred at the time the complaint is filed. Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 959 (7th Cir. 1998) ("legal expenses that lie in the future and can be avoided by the defendant's prompt satisfaction of the plaintiff's demand are not an amount `in controversy' when the suit is filed"). This holding is consistent with the more general principle that "jurisdiction depends on the state of affairs when the case begins; what happens later is irrelevant." Id. at 958, citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289-90 (1938).
Defendant Ford has not shown a reasonable probability that the amount in controversy, even by combining compensatory and punitive damages and pre-complaint attorney fees, on the named plaintiffs' claims exceeds $75,000, so diversity jurisdiction is not available on that basis.
B. Injunctive Relief
Ford next argues that plaintiffs' "request for injunctive relief itself places over $75,000 in controversy." Def. Br. at 6. Ford bases this argument on the assertion that since plaintiffs have not mentioned the specific phrase "monetary damages," and because plaintiffs assert in their brief that Ford did not inform them of the torsion bar defect, plaintiffs are actually asking for nothing short of "a court-ordered recall of F-150 torsion bars." Def. Resp. Br. at 6. The simple response to this argument is that plaintiffs have not stated a claim for injunctive relief. Ford's arguments to the contrary are not persuasive. There is no implied request for injunctive relief in the complaint. Accord, In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, ___ F. Supp.2d ___, ___, 2003 WL 1873751, *5 (S.D.Ind. 2003) (ordering remand where complaints did not meet amount in controversy requirement and did not request injunctive relief). Because the case does not satisfy the amount in controversy requirement, removal cannot be supported as an exercise of diversity jurisdiction.
II. Federal Question Jurisdiction
Ford also argues that the court has federal question jurisdiction based on the federal Motor Vehicle Safety Act, 49 U.S.C. § 30101 et seq. ("MVSA"). Under the MVSA, the National Highway Traffic Safety Administration is vested with comprehensive jurisdiction over nation-wide vehicle recalls. Ford argues, based on the assumption that plaintiffs are asking for injunctive relief in the form of a nation-wide recall of all torsion bars on all Ford F-150 trucks, that plaintiffs' claims are preempted by the MVSA.
As discussed above, plaintiffs have not requested a recall of any torsion bars or F-150 trucks. Rather, they seek only to recover compensatory damages based on their expenses incurred in replacing or repairing the torsion bar themselves, plus punitive damages and attorney fees.
Even if federal preemption were a defense on the merits in this case, that defense would not support removal and federal question jurisdiction. Under the long-followed "well-pleaded complaint" rule, even when a federal preemption defense is available on the merits, that defense does not transform the case into one that arises under federal law within the meaning of 28 U.S.C. § 1331. See, e.g., Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). The Supreme Court has recognized an exception to this rule, usually called "field preemption," that allows removal when Congress so completely preempts a particular field of law "that any civil complaint raising this select group of claims is necessarily federal in character." Id. at 63-64.
The Supreme Court has recognized such field preemption only in suits under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 ("LMRA"), and in most types of suits for benefits governed by the Employee Retirement Income Security Act. Id. at 64-65 (recognizing field preemption under ERISA), citing Avco Corp. v. Aero Lodge No. 735, Intern. Ass'n of Machinists and Aerospace Workers, 390 U.S. 557 (1968) (field preemption under LMRA); see also Caterpillar Inc. v. Williams, 482 U.S. 386, 393-94 (1987) (claims for breach of individual employment contracts did not arise under federal law so as to support removal, though federal labor law might provide preemption defense on the merits); Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 24-26 (1983) (state law action to levy tax liability against trustees of employee benefit plan did not arise under federal law and was not removable, though federal law might provide preemption defense on the merits).
There are two central inquiries in determining whether a field of law has been so thoroughly occupied by federal law as to support field preemption: "first, whether Congress in enacting the federal statutory scheme clearly manifested an intent to completely preempt the claim so as to make it removable to federal court, and second, whether the federal statutory scheme provides for some cause of action granting `jurisdiction over the parties and the subject matter.'" In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, ___ F. Supp.2d ___, ___, 2003 WL 1873751, *11 (S.D.Ind. 2003) (citing Metropolitan Life and Caterpillar).
The MVSA does not meet the criteria for field preemption. "Nothing in the [MVSA] demonstrates a Congressional intent to completely preempt all claims relating to motor vehicle safety." Id. Rather, the MVSA expressly provides for the opposite: "Compliance with a motor vehicle safety standard prescribed under this chapter does not exempt a person from liability at common law." 49 U.S.C. § 30103(e). The prohibition of fraud is a matter traditionally regulated by the states. Statutory fraud and common law fraud are not directed at regulating motor vehicle safety specifically, something left to the purview of the MVSA. There also is no indication that Congress intended to preempt state tort claims. See 112 Cong. Rec. 19,663 (1966) ("[W]e have preserved every single common law remedy that exists against a manufacturer for the benefit of a motor vehicle purchaser."). As Judge Barker explained in Bridgestone/Firestone, the overwhelming weight of case law holds that a preemption defense under the MVSA does not support removal on a field preemption theory. ___ F. Supp.2d at ___, 2003 WL 1873751, *11 (collecting cases). Thus, there is no basis for federal jurisdiction over plaintiffs' claims. Remand is required.
III. Costs and Attorney Fees
In connection with a remand such as this, the court can order the removing party to pay the plaintiffs' reasonable attorney fees and costs incurred as a result of the removal. 28 U.S.C. § 1447(c). Such an award does not require a finding of bad faith, and plaintiffs are presumptively entitled to such an award. Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 411 (7th Cir. 2000). When the stated grounds for removal are either contrary to the overwhelming authority or without any reasonable basis, an award is entirely appropriate. See id. at 410 (affirming district court's award of fees when removal "was unjustified under settled law," and noting that district court would have abused its discretion by denying fees in light of pattern of unjustified removals). The defendant's removal of this case was contrary to settled law and warrants an award to the plaintiffs of the fees and costs they incurred as a result of removal. See id. at 411.
Conclusion
This action is hereby remanded to Orange Circuit Court with costs awarded to plaintiffs. The plaintiffs may file a petition for reasonable attorney fees and costs resulting from the removal no later than June 16, 2003; defendant shall file any response no later than July 1, 2003. The court will readily extend those deadlines to allow the parties to explore the possibility of an agreement as to the reasonable amount of such costs and attorney fees.
So ordered.