Truglio v. Planet Fitness, Inc., No. 15-CV-7959-FLW-LHG, 2017 WL 3595475 (D.N.J. Aug. 21, 2017).
In Truglio v. Planet Fitness, Inc., a federal district court in New Jersey determined that the defendants had carried their burden of proving the jurisdictional amount in controversy under the Class Action Fairness Act (“CAFA”) by a preponderance of the evidence.
The plaintiff, a member of a gym operated by the two defendants, brought a putative class action in New Jersey state court, alleging that the defendants’ gym-membership agreements violated various New Jersey statutes. The plaintiff identified as a putative class member every individual who enrolled as a member in one of the defendants’ New Jersey gyms between September 28, 2009, and September 28, 2015; her complaint sought $600 in statutory damages per plaintiff.
The defendants removed the case, asserting that the parties met CAFA’s minimal diversity requirement because the plaintiff was a citizen of New Jersey while one of the defendant gyms was incorporated in Delaware and had its principal place of business in New Hampshire. As for the amount in controversy, the defendants reasoned that 8,334 class members claiming $600 in damages would clear the $5,000,000 jurisdictional amount, and alleged that the putative class far exceeded the 8,334-member threshold. The defendants then filed a motion to dismiss, which the district court granted in large part, leaving just one claim under a statute that provided for only $100 in damages. The court then ordered, sua sponte, that the defendants show cause why the dismissal did not destroy subject-matter jurisdiction under CAFA.
The defendants came up short in their first attempt to prove jurisdiction. One defendant gym submitted an unsworn certification, in which the other defendant gym joined, claiming that the amount in controversy was met because its total membership exceeded 50,000 individuals, each of whom could be a class member with a claim for $100. But the court rejected the sufficiency of this certification under Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 554 (2014), finding that the defendants failed to prove jurisdiction by a preponderance of the evidence. (Editor’s Note: see the CAFA Law Blog analysis of the Dart Cherokee decision posted on April 9, 2015.) Specifically, the court pointed out that the certification failed to refer to the challenged provisions of the membership agreement, made no reference to the six-year putative class period, and was prepared by defense counsel on the basis of hearsay evidence rather than by someone with firsthand knowledge of the facts. It reasoned that, until the sua sponte inquiry into jurisdiction, the defendants’ “plausible allegation[s]” established the amount in controversy. But because those allegations had been called into question, Dart Cherokee required proof of jurisdiction by a preponderance of the evidence. The court then ordered the defendants to submit sufficient proof within seven days.
This time, the defendants produced two declarations, each from a managing executive at their respective organization, and each based on that executive’s review of their organization’s business records. The first declaration asserted that one gym had 71,569 former or current members who enrolled in the putative class period and whose membership agreements mirrored the named plaintiff’s; the second declaration counted 61,749 qualifying members at the other gym. The court found that these declarations established by a preponderance of the evidence that the defendants’ combined membership totaled 133,318. Accordingly, based on a $100 claim by each member, the court found that the defendants had proven the amount in controversy.
Truglio teaches that, when facing remand on an amount-in-controversy basis, a putative class defendant must build its proof of jurisdiction on solid evidentiary ground. An unsworn certification, offered by a declarant without personal knowledge and based on hearsay evidence, will not pass muster. Instead, a defendant should offer admissible evidence, competent witnesses, and sworn declarations or affidavits. Taking these small steps can be the difference between proceeding in federal court and getting sent back to state court.
Posted by Ben Richardson.