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

Removing Party Need Not Confess Liability To Show That The Controversy Exceeds CAFA’s Thresholds

Posted in Case Summaries

Reno Cova v. Charter Communications, 2016 WL 4368100 (E.D. Mo. Aug. 16, 2016)

The District Court denied plaintiffs’ motion to remand, finding that a defendant is not required to admit the allegations in plaintiffs’ complaint, and thus deprive itself of potential defenses, to avail itself of a federal forum under CAFA.

The plaintiffs, subscribers of defendant’s services, brought a putative class action in the Circuit Court of St. Louis, Missouri, alleging that the defendant’s advertisements and agreements with its subscribers of its internet, television and phone services were deceptive, fraudulent, misleading; violated their rights to privacy and of publicity; and constituted fraud or negligent inducement to purchase its products and services in violation of the Missouri Merchandising Practices Act (“MMPA”).

The defendant advertised that it was “selling or providing” goods and services to each subscriber at “monthly itemized rates,” however, it allegedly “knew” that its “products and services were not being offered for or provided at the total dollar rates marketed, advertised and intended.” The complaint also alleged that the defendant “would be selling or providing for other valuable consideration” the subscribers’ “personally identifiable information” to third parties “unknown to the subscribers,” and without their “knowledge or adequate opportunity to consent.”

The defendant timely removed the action invoking diversity jurisdiction pursuant to CAFA. The plaintiffs moved to remand and their motion was ultimately denied by the District Court.

The plaintiffs argued that defendant had not established that the proposed class was comprised of at least 100 people, nor that the amount in controversy exceeded $5,000,000. The defendant submitted an affidavit that it had approximately 530,402 subscribers in Missouri, all of whom were potential members of the proposed class.  The plaintiffs did not challenge the defendant’s assertion with respect to the number of its subscribers, rather they contended that in order to remove, the defendant must admit it sold 100 or more subscribers’ information without their consent.

The District Court noted that subject matter jurisdiction exists if the defendant evidences that it is more likely than not that 100 or more people meet the proposed class definition pled in the complaint, assuming the allegations as framed by the complaint are true. The District Court further noted that the removing party need not confess liability in order to show that the controversy exceeds CAFA’s thresholds.

In the instant case, it was undisputed that defendant had at least 530,402 subscribers in Missouri during the relevant period. The District Court noted that the defendant need not concede it ever sold any of its subscribers’ information to prove that it was more likely than not that the proposed class would comprise 100 or more subscribers.  The District Court opined that it is sufficient that, if the allegations in the complaint are true and the class is as proposed, the defendant purportedly sold all subscribers’ personally identifiable information to third parties, for value, and without the subscribers’ consent, in violation of the MMPA.  Because over half a million subscribers exist, the District Court found that the defendant met its burden to show that it is more likely than not that the proposed class numbers 100 or more.

Next, to determine whether the amount in controversy requirement is satisfied, the District Court noted that under the preponderance standard, ‘the jurisdictional fact…is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are….’ The District Court found that in the instant case, the proposed class potentially encompasses at least 530,402 of defendant’s subscribers, and that if each such subscriber was subjected to the conduct alleged in the complaint, if that conduct violated the MMPA, and if each subscriber recovered just her or his actual damages, as a matter of common sense the recovery could be in excess of $5,000,000.  The District Court opined that to exceed the $5,000,000 threshold, a fact finder would only have to be legally permitted to conclude that each subscriber was entitled to $9.43 in actual damages.  The District Court also noted that even if the proposed class included just 10% of those subscribers, 5,304 people, the jurisdictional threshold would be satisfied if a fact finder could legally conclude that each subscriber was entitled to $942.69 in actual damages.  In determining that a finder of fact might legally reach the above amount in controversy conclusions, the District Court also noted that the finding is buttressed by the plaintiffs’ demand for attorney’s fees and punitive damages, both of which serve to magnify the amount in controversy.  The District Court therefore found that the defendant had proven by a preponderance of the evidence that the aggregate amount in controversy exceeded $5,000,000.

The District Court thus concluded that the defendant had established by preponderance of the evidence all of the elements of subject matter jurisdiction under CAFA. Accordingly, the District Court denied the plaintiffs’ motion to remand.

Posted by Kerry Cummings