Heejn Lim v. Helio, LLC, 2012 WL 359304 (C.D. Cal. Feb. 2, 2012).
In this action, a District Court in California held that under the “preponderance of evidence” standard, it cannot require a stronger showing which would require a defendant to concede liability.
The plaintiff, Heejin Lim, filed this action in state court against the defendants Helio, LLC, Virgin Mobile USA, L.P., Virgin Mobile USA, Inc., and Helio, Inc., asserting individual and class claims on behalf of all residents of the United States who paid refundable deposits to Helio/Virgin Mobile who did not receive a refund of those deposits. Although several thousand customers nationwide were alleged to comprise the class, an amount in controversy was not pleaded.
The defendants removed this action to federal court under CAFA, 28 U.S.C. § 1332(d).
In support of the Notice of Removal, the defendants attached the declaration of Stephen F. Bunker declaring that more than $5 million in deposits were collected in connection with the Helio prepaid wireless service during the class period.
The plaintiff challenged federal jurisdiction under CAFA, arguing that because the Complaint challenged only those “deposits that were wrongfully withheld and not the total amount that was collected when accounts were opened,” evidence that the defendants collected deposits in excess of $5 million alone was insufficient to satisfy the jurisdictional threshold.
The District Court denied the plaintiff’s motion to remand.
The Court, relying upon the ratio in Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 397 (9th Cir.2010), noted that where, as here, “the complaint does not contain any specific amount of damages sought, the party seeking removal under diversity bears the burden of showing, by a preponderance of the evidence, that the amount in controversy exceeds the statutory amount.” Under preponderance of the evidence standard, the ultimate inquiry is what amount is put ‘in controversy’ by the plaintiff’s complaint or other papers, not what the defendant will actually owe for the actual number of violations that occurred, if any. (Editors’ Note: see CAFA Law Blog analysis of Lewis posted on September 21, 2010.)
The Court found that the decision in Lewis was controlling in this case. In Lewis, the plaintiff sought recovery on behalf of defendant’s customers who had been billed for certain premium services they had not ordered. To support removal, the defendant submitted an affidavit that its total billings for the premium services exceeded $5 million. As here, the plaintiff moved to remand on the grounds that “because the complaint challenged only ‘unauthorized’ charges, there was a distinction between ‘unauthorized’ and ‘authorized’ charges for the purposes of determining the amount in controversy.”
The plaintiff argued that this rendered the defendant’s evidence regarding the total premium service charges insufficient to demonstrate the amount in controversy, since it described the sum of all premium services billed, not just the “unauthorized” ones challenged in the complaint. On appeal, the Ninth Circuit disagreed, noting that there was “no evidence to support the premise that some portion of the charges alleged in the complaint were authorized.” “Given the plaintiff’s refusal to limit the damages sought and the defendant’s showing that the total billings exceed $5 million, the total billings constituted the ‘amount in controversy,’” the Ninth Circuit concluded.
The Court observed that the plaintiff raised a nearly identical argument in this case-namely, that because this case was obviously about deposits that were wrongfully withheld after the closure of all of the cellular service accounts in question, not the total amount that was collected when those accounts were opened, the defendants’ showing that the deposits themselves exceed $5 million did not establish, by a preponderance of the evidence, that the jurisdictional threshold was met. The Court did, however, note one potential factual discrepancy. Here, the defendants were alleged to have applied a portion of the security deposit to a customer’s outstanding balance, meaning that, to the extent the plaintiff did not challenge the propriety of this unilateral application, only a portion of the total deposits were alleged to have been “wrongfully withheld.” Therefore, the Court concluded that unlike Lewis, this could be construed as “evidence to support the premise that some portion of the” at least $5 million was not at issue.
Nonetheless, the Court found that this alone did not defeat the defendants’ showing under Lewis. For one, the allegations in the complaint did not “obviously” show that this case was about only the wrongfully withheld deposits. While the plaintiff contended that the Complaint was clear that the plaintiff was not disputing the amount of her deposit that was applied to her final bill, the Complaint in fact alleged that the defendants’ forfeiture of the deposit and application thereof to any amount the customer may owe at the time of service termination was an unlawful, unfair and fraudulent business act within the meaning of California Business and Professions Code § 17200, and also sought damages in the full amount of the $250.00 deposit in connection with the plaintiff’s conversion claim, notwithstanding that $82.14 of her deposit was allegedly applied to her final bill.
Because the plaintiff was required to place a security deposit, and sought restitution of all advanced deposits paid by the plaintiff and the class because of the defendants’ unlawful, unfair, and/or fraudulent business practices, the Court could not agree with the plaintiff that the evidence submitted was meaningless for establishing the amount in controversy. The Court maintained that to establish the jurisdictional amount, the defendants need not concede liability for the entire amount, which was what the plaintiff was in essence demanding by effectively asking the defendants to admit that at least $5 million of the deposits were wrongfully withheld.
The Court concluded that the defendants had shown that the plaintiff was “seeking recovery from a pot that could exceed $5 million.” In addition to this, attorney’s fees at 25% of would add up to the amount in controversy. Because the defendants effectively would be required to concede liability were the Court to require a stronger showing, and the plaintiff had not stipulated that it sought to recover less than $5 million, the Court stated it was satisfied that it was more likely than not that the stakes exceed the jurisdictional threshold.
Accordingly, the Court denied the plaintiff’s motion to remand.