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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Plaintiff as “Master of the Claim” May Base his Claims on Only State Law to Avoid Federal Jurisdiction under CAFA

Posted in Case Summaries

Steven Archavage v Professional Account Services, 2017 WL 1162911 (M.D. Penn. March 29, 2017).

In this action, while remanding the case to the state court, the United States District Court, Middle District of Pennsylvania (the “District Court”), found that where the plaintiff expressly limited his claim below the Class Action Fairness Act’s (“CAFA”) $5,000,000.00 amount in controversy requirement in the complaint, and applying the maxim that the plaintiff is the master of his own complaint, the proponent of jurisdiction (i.e., the defendant in this case) must show, to a legal certainty, that the amount in controversy exceeded the statutory threshold.

The plaintiff brought a putative class action in the Court of Common Pleas of Luzerne County, Pennsylvania alleging defendant Professional Account Services, Inc. (“Professional Account Services”), a debt collector, conducted its collection activities under the guise of being the original creditor, wrongfully cloaking itself with the identity of the creditor, and referring to itself as the original creditor.

The plaintiff alleged that on various occasions, he received medical treatment at the Wilkes-Barre General Hospital (the “Hospital”). Most of the medical bills were processed and paid by insurance, and the Hospital sent the unpaid bills to Professional Account Services for collection.  When Professional Account Services learned the plaintiff’s unpaid medical bills of the Hospital should have been paid by his workers compensation insurance carrier, a representative of Professional Account Services made a telephone call to the workers

compensation carrier’s third party administrator, and she unlawfully recorded the telephone call, failed to identify herself as a debt collector, falsely claimed she was calling from the hospital, requested and received the name and contact information of the workers compensation claims adjuster, and failed to secure the appropriate consent from the plaintiff.

The plaintiff had previously filed a different lawsuit against Professional Account Services in the Court of Common Pleas of Luzerne County, Pennsylvania (“Archavage I”) alleging his claims were based on Professional Account Services’ collection activities relative to his unpaid medical bills. The plaintiff also filed a separate prior class action complaint in the Court of Common Pleas of Luzerne County, Pennsylvania (“Archavage II”) alleging the same violations of state and federal law as in Archavage I.  After Professional Account Services removed Archavage II to the District Court, the plaintiff filed a notice of voluntary dismissal of that action, without prejudice.  Subsequently, the plaintiff filed the instant action (“Archavage III”) and the complaint contained the same factual basis as those previously filed; however, the plaintiff removed all explicit claims based on federal statutes.

Professional Account Services removed the action to the District Court under CAFA. The plaintiff moved to remand, which the District Court granted.  Professional Account Services contended the plaintiff had strategically fashioned the pleadings to avoid Federal jurisdiction.  The plaintiff argued Professional Account Services had failed to meet its burden of proving that the amount in controversy exceeded $5,000,000.00, and that as the master of the complaint, he could choose to seek state law remedies only and not invoke federal question jurisdiction.

At the outset, the District Court, pursuant to Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006) noted that under CAFA, the party seeking to remove the case to Federal Court bears the burden to establish that the amount in controversy is satisfied.  (Editors’ Note: See the CAFA Law Blog analysis of Morgan posted on January 19, 2007). Like the plaintiff in Morgan, here the plaintiff expressly limited the amount in controversy to an amount lower than the jurisdictional requirement.  The District Court noted that Morgan held where the plaintiff expressly limited his claim below the jurisdictional amount as a precise statement in the complaint, applying the maxim that the plaintiff is the master of his own complaint, the proponent of jurisdiction must show, to a legal certainty, that the amount in controversy exceeded the statutory threshold.

Professional Account Services argued the plaintiff’s settlement demand of $45,000 represented the value of his claim. The District Court, however, found Professional Account Services ignored the values it placed on the case when it offered the plaintiff $8,000 on one occasion and $11,000 on another occasion to settle the case.  The District Court also found Professional Account Services’ brief was silent on any increase of settlement beyond $11,000.  Because it was Professional Account Services’ burden to prove the amount in controversy exceeded $5,000,000.00, the District Court opined the offers of settlement multiplied by 100 potential class members fell short of the threshold to invoke Federal jurisdiction even if attorney’s fees and punitive damages were added in.  The District Court thus concluded Professional Account Services was asserting the instant action was not a class action and therefore had no basis to invoke CAFA.

Accordingly, the District Court granted the plaintiff’s motion to remand.

Yaron Shaham