Opinion
No. 04 Civ. 312 (SAS).
July 13, 2004
Todd C. Bank, Esq., Kew Gardens, New York. for Plaintiffs.
Ronald S. Rauchberg, Esq., Frank P. Scibilia, Esq., Proskauer Rose LLP, New York, New York, for Defendants.
OPINION AND ORDER
I. INTRODUCTION
John Doe and Jane Doe, on behalf of themselves and all others similarly situated (collectively, "plaintiffs"), filed this putative class action for trespass against CBS Broadcasting, Inc. ("CBS"), National Broadcasting Company, Inc. ("NBC"), American Broadcasting Companies, Inc. ("ABC"), Cable News Network LP, LLLP ("CNN"), Fox News Network, LLC ("Fox News"), and others similarly situated (collectively, "defendants"). Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332(a). Plaintiffs, who have — or have considered getting — unlisted or unpublished telephone numbers, seek to enjoin defendants from calling those numbers to conduct telephone opinion surveys. Defendants now move to dismiss for lack of subject matter jurisdiction, arguing that plaintiffs' claim does not meet section 1332(a)'s amount in controversy requirement. Defendants also move to dismiss Jane Doe's claim for lack of standing and to dismiss the entire action for failure to use the plaintiffs' actual names.
II. FACTS
Defendants, either directly or through hired research firms, conduct telephone opinion surveys, using computer-generated phone numbers from "processes called random digit dialing and sequential dialing." Plaintiffs allege that defendants "have never sought, nor been given, either the explicit or implicit consent of the members of the [p]laintiff [c]lasses to call them." John Doe has an unlisted, unpublished phone number, and claims that "each call by a member of the [d]efendant [c]lass to a member of the [p]laintiff [c]lass constitutes a trespass to chattels." Jane Doe "would obtain an unlisted telephone number, but has refrained from doing so solely because of the constant threat that the members of the [d]efendant [c]lass would call her."
See Defendants' Memorandum of Law in Support of the Motion to Dismiss ("Def. Mem.") at 3.
See Third Amended Complaint ("Complaint"), Ex. B to Plaintiffs' Notice of Cross-Motion, ¶ 14.
Id. ¶ 16.
Id. ¶¶ 19, 37.
Id. ¶ 20.
Plaintiffs allege that it would cost defendants "well over $100,000" to comply with the injunction sought by plaintiffs — namely to purchase phone lists that exclude unlisted and unpublished phone numbers. Defendants contend that if they obtained a list of plaintiffs' phone numbers, "it would cost pennies to make sure that their numbers are not called." Plaintiffs do not argue that the injury suffered by any individual plaintiff exceeds $75,000.00. Instead, plaintiffs argue that complying with the injunction would cost defendants more than $75,000.00, thereby satisfying section 1332(a)'s amount in controversy requirement.
See Plaintiff's Memorandum of Law in Opposition to Defendants' Motion to Dismiss and in Support of Plaintiffs' Cross-Motion for Leave to Amend the Second Amended Complaint ("Pl. Mem.") at 4 n. 1.
Defendants' Reply Memorandum of Law in Further Support of the Motion to Dismiss ("Reply Mem.") at 4.
See 3/11/04 Letter from Plaintiffs' Attorney Todd C. Bank to Defendants' Attorney Ronald S. Rauchberg ("Pl. Letter 3/11/04"), Ex. C to Defendants' Notice of Motion, at 2 ("[Y]our letter states that `we assume you would contend that the amount in controversy equals the damage to the chattel that has either been incurred or threatened.' In fact, I do not make such a contention.").
III. LEGAL STANDARD
In diversity actions, complete diversity among the parties must exist and the amount in controversy must exceed $75,000. "It is well settled that `the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.'" "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." In assessing jurisdiction, a court is not confined to the four corners of the complaint, however, and may consider evidence outside the pleadings such as affidavits and other documents.
See 28 U.S.C. § 1332(a).
Chase Manhattan Bank, N.A. v. American Nat'l Bank and Trust Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir. 1996) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)).
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).
See Kamen v. American Tel. Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986).
"It is well ingrained in the law that subject-matter jurisdiction can be called into question either by challenging the sufficiency of the allegation or by challenging the accuracy of the jurisdictional facts alleged." Where a defendant objects to a plaintiff's jurisdictional pleading, the standard of review is the same as the familiar Rule 12(b)(6) requirement: "the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff."
Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 68 (1987) (Scalia, J., concurring in part and concurring in the judgment) (citations omitted); see also Robinson v. Government of Malaysia, 269 F.3d 133, 140 (2d Cir. 2001) ("[T]he defendant may challenge either the legal or the factual sufficiency of the plaintiff's assertion of jurisdiction, or both.").
Sweet v. Sheahan, 235 F.3d 80, 83 (2d Cir. 2000).
In measuring the value of a claim for jurisdictional purposes, "the amount in controversy is calculated from the plaintiff's standpoint; the value of the suit's intended benefit or the value of the right being protected or the injury being averted constitutes the amount in controversy when damages are not requested." "When equitable relief is sought . . . the better reasoned approach is to measure the jurisdictional amount by reference to the property right which plaintiff seeks to protect by invocation of one of the equitable remedies." "The Second Circuit has held that the amount in controversy for jurisdictional purposes should be measured strictly from the plaintiff's perspective, without regard for the amount at stake for any other party. . . . [T]his viewpoint . . . applies both to declaratory and equitable relief actions." The burden of proof in establishing federal jurisdiction falls on the party seeking to invoke that jurisdiction.
Kheel v. Port of New York Auth., 457 F.2d 46, 49 (2d Cir. 1972) (quotation marks omitted); see also Maxons Restorations, Inc. v. Newman, 292 F. Supp.2d 477, 482-83 (S.D.N.Y. 2003) ("[W]here injunctive relief is sought in the Second Circuit it remains the general rule that the amount in controversy is measured from the plaintiff's viewpoint.") (quotation marks omitted).
Rockwell v. SCM Corp., 496 F. Supp. 1123, 1125 (S.D.N.Y. 1980) (citing Weeks v. American Dredging Co., 451 F. Supp. 464, 466 (E.D.Pa. 1978)).
15 Moore's Federal Practice § 102.109[3] (Daniel R. Coquillette et al. eds., 3d ed. 2004).
See Linardos v. Fortuna, 157 F.3d 945, 947 (2d Cir. 1998).
IV. DISCUSSION
Where a plaintiff seeks an injunction rather than damages, a court considering whether the jurisdictional amount is satisfied must ask whether the plaintiff hopes to receive a benefit in excess of $75,000.00. Plaintiffs concede that, under Second Circuit law, their damages must be calculated based on the value of the benefit they are seeking, but urge the court to consider the cost to defendants in valuing that benefit. In support of their argument, plaintiffs cite cases from the Southern and Eastern Districts of New York. However, each of these cases is distinguishable.
See Kheel, 457 F.2d at 49.
See Pl. Mem. at 3.
See Mortgageit Inc. v. Wallberg, No. 02 Civ. 5911, 2002 U.S. Dist. LEXIS 19681 (S.D.N.Y. Oct. 16, 2002); In re Rezulin Prods. Liab. Litig., 168 F. Supp.2d 136 (S.D.N.Y. 2001); Steinberg v. Nationwide Mut. Ins. Co., 91 F. Supp.2d 540 (E.D.N.Y. 2000); Katz v. Warner-Lambert Co., 9 F. Supp.2d 363 (S.D.N.Y. 1998).
Mortgageit v. Wallberg and In re Rezulin Products Liability Litigation both rely on Katz v. Warner-Lambert as their primary support for using defendants' costs to measure the amount in controversy. In Katz, plaintiffs sought an injunction requiring defendants to warn users about the potentially harmful effects of taking Rezulin, and fund research to develop cures for such harm. In calculating the amount in controversy, the court emphasized that the Second Circuit uses the "plaintiff's viewpoint" approach. Because plaintiffs in Katz sought to compel the defendants to conduct research, the benefit they were seeking was the value of that research. Therefore, the benefit to plaintiffs was equal to the cost defendants would incur to conduct the research, and defendants' costs were the appropriate measure of the amount in controversy. In the case now before me, however, the benefit to plaintiffs is not equal to the cost to defendants, and Katz, Mortgageit, and In re Rezulin are not instructive.
See Mortgageit, 2002 U.S. Dist. LEXIS 19681, at *1; In re Rezulin Prods. Liab. Litig., 168 F. Supp.2d at 152; Katz, 9 F. Supp.2d 363.
Katz, 9 F. Supp.2d at 364.
See id. at 364-65.
Plaintiffs' reliance on Steinberg is similarly misplaced. In Steinberg, the court noted that "the Second Circuit [has] stated that `where the plaintiff seeks injunctive relief, the value of his claim is generally assessed with reference to the right he seeks to protect and measured by the extent of the impairment to be prevented by the injunction.'" 91 F. Supp.2d at 544 (quoting A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82, 87-88 (2d Cir. 1991)). Yet, the court inexplicably went on to measure the amount in controversy by reference to the economic harm that defendants would suffer as a result of the injunction. Because Steinberg's invocation of the defendant's damages contravenes established Second Circuit law, it is not persuasive.
The "plaintiff's viewpoint" approach renders the amount of plaintiffs' claim insufficient to satisfy the jurisdictional amount required to exercise federal jurisdiction. Specifically, plaintiffs cannot allege that any individual plaintiff suffered more than $75,000.00 in damage. Plaintiffs have therefore failed to "allege a proper basis for jurisdictional in [their] pleadings" and have not "support[ed] those allegations with `competent proof'" in response to a jurisdictional challenge.
See supra note 8.
Linardos, 157 F.3d at 947 (quoting McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).
V. CONCLUSION
For the foregoing reasons, defendants' motion to dismiss for lack of subject matter jurisdiction is granted. The Clerk of the Court is directed to close this motion [docket # 11].
Because I have dismissed the case on jurisdictional grounds, I need not reach defendants' arguments concerning standing or use of pseudonyms.
SO ORDERED: