Dammann v. Progressive Direct Insurance Company, 2015 WL 9694633 (D. Minn. Nov. 20, 2015).
A magistrate judge found that when a defendant meets its burden to plausibly show that the amount in controversy exceeds the $5 million jurisdictional threshold under CAFA, the plaintiff must then show to a legal certainty that if the plaintiff prevails in the action, it was impossible to recover $5 million. In this case, the magistrate judge recommended to deny the motion to remand because the plaintiff did not meet that burden here.
The plaintiffs were purchasers of automobile insurance policies from the defendant Progressive Direct Insurance Company. The plaintiffs were Minnesota residents, whereas the defendant was an Ohio corporation. The Minnesota No-Fault Act requires all Minnesota automobile drivers to obtain insurance plans that provide coverage for $20,000 medical expenses loss and $20,000 for economic loss. Under the provisions of certain insurance policies sold by the defendant, the defendant applied a $100 deductible to its insureds’ medical-expense coverage and a $200 deductible to its insureds’ economic-loss coverage, so that the insureds who had $20,000 in coverage and incur that amount or more in medical or economic-loss expenses received a benefit payment of only $19,900 or only $19,800, respectively. The plaintiffs in this case were those who incurred medical expenses of $20,000 or more, but received only $19,900 in benefit payments, which is $100 below the statutory minimum.
The plaintiffs initially filed this class action lawsuit in Minnesota state court, alleging that the defendant violated the Minnesota Consumer Fraud Act (“MCFA”), the Minnesota Deceptive Trade Practices Act (“MDTPA”), the Minnesota Declaratory Judgments Act (“MDJA”), and Minnesota state common law by selling insurance policies with benefits that fell below the statutory minimum. The plaintiffs specifically contended that each member of the putative class was entitled to reimbursement of $100 medical-expense shortages; revenue resulting from the under-payments; refund of premiums; injunctive, declaratory, and equitable relief as necessary; and attorney’s fees.
The defendant removed the action under CAFA. The plaintiffs moved to remand, primarily arguing that the defendant failed to establish that the amount in controversy exceeded the $5 million jurisdictional threshold of CAFA.
The defendant pointed to Raskas v. Johnson & Johnson, 719 F.3d 884 (8th Cir. 2013), in support of its amount in controversy argument. In Raskas, the plaintiff filed three separate class action suits in Missouri state court against three drug companies, alleging that the companies encouraged consumers to throw out medications after their expiration date despite the defendants’ knowledge that the medications were still effective. The defendants established the amount in controversy by using the total sales of their respective medications in Missouri during the five-year statute of limitations time period. The plaintiffs argued that those sales figures were insufficient to satisfy the requirement because they were only seeking to recover damages for medications. The court rejected the plaintiffs’ argument and held that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they were. (Editors’ Note: See the CAFA Law Blog analysis of Raskas posted on December 16, 2013).
As in Raskas, the defendant in this case attempted to show possible aggregated damages using all policies sold in Minnesota. The defendant argued that the plaintiffs’ allegations put at issue 637,258 personal automobile insurance policies sold during the six-year period, which elected a $100 deductible, as well as another 653,483 policies which elected a $200 deductible. The premiums for each of those policies over the relevant time period were $58,073,024.23, and $20,450,588.49, respectively. The defendant argued that that because the plaintiffs sought a declaration that the subject policies were illegal and requested disgorgement of premiums, they had put at least a possible $78 million in controversy.
The plaintiffs asserted that the amount in controversy was merely $60,000 plus attorney’s fees given that they only sought the $100 deduction related underpayment multiplied by the 600 individuals that would make up the class. The Magistrate Judge, however, noted that the complaint also sought declaratory judgment that defendant’s practices were illegal, putting the defendant’s sales practices at issue, and had broader implications than the recovery of $100 deductible.
The Magistrate Judge remarked that as the defendant had met its burden to plausibly show that nearly $78 million in insurance premiums may be at issue given the plaintiffs’ request for declaratory relief. The Magistrate Judge, therefore, opined that the plaintiffs now had the burden to show to a legal certainly that it was impossible for them to collect more than $5 million should they prevail in the action.
The plaintiffs failed to meet this burden, the Magistrate Judge therefore recommended to deny the plaintiffs’ motion to remand.