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

Plaintiff’s Facially Deficient Claims Cannot Be Considered for Purposes of the CAFA Amount in Controversy Determination

Posted in Case Summaries, Uncategorized

McDaniel v. Fifth Third Bank, 2014 WL 805508 (M.D. Fla. Feb. 28, 2014).

In an action arising out of fraud and misrepresentation, the district court refused to retain subject matter jurisdiction under CAFA finding that it could not consider a facially deficient claim for the purpose of ascertaining the amount-in-controversy.

The plaintiff filed an action in the state court asserting nine counts arising out of the defendant’s practice of charging non-account holders, who wished to cash checks at the defendant’s branch offices, a $4.00 check cashing fee.  After charging the fee, the defendant gave the non-account holder cash in the amount of the check, minus the fee.  The plaintiff asserted a violation of the Florida’s Consumer Collection Protection Act (“FCCPA”).  Based on the claims asserted by the plaintiff, the defendant removed the action to the District Court.  The plaintiff moved to remand the case.

At the very outset, the District Court noted that the amount-in-controversy is determined by an estimate of the damages, both compensatory and punitive, that will be at issue during litigation.  If a plaintiff’s claim supporting an award of damages is deficient on its face, those damages cannot be considered at issue.  This necessarily includes a claim supporting an award of punitive damages.  Therefore, a removing defendant cannot establish that the amount-in-controversy exceeds the jurisdictional threshold if it must rely on a facially deficient claim.

The District Court noted that the plaintiff’s fraud claims were facially deficient.  In counts Four and Five, the plaintiff alleged fraud and fraud in the inducement.  The plaintiff alleged that the defendant made a misrepresentation when it told the plaintiff and other non-account holders that it was legally entitled to charge $4.00 fee.  The District Court noted that the alleged misrepresentation is one of law and not fact; therefore, the plaintiff’s fraud claims were deficient on their face.  Accordingly, the District Court concluded that the defendant could not establish that punitive damages were at issue because an award of punitive damages relied on the plaintiff’s facially deficient fraud claims.

The District Court noted that the only other basis the plaintiff asserted to recover punitive damages was under the Florida Consumer Collection Practices Act.  However, as the defendant noted in the Notice of Removal, the statutory limit on punitive damages for a violation of the FCCPA was $1.5 million.

Accordingly, the District Court concluded that the defendant could not show that the punitive damages in controversy exceeded $5 million, and remanded the action to the state court.