Thompson v. Apple, Inc., No. 3:11-CV-03009-PKH, 2011 WL 2671312 (W.D. Ark. July 8, 2011).
A District Court in Arkansas held that a plaintiff is judicially estopped from attempting to recover more than the amount contemplated in the stipulations made while seeking remand.
The plaintiffs commenced this class action lawsuit in the county court of Arkansas alleging that the defendant, Apple, Inc., wrongfully accessed and altered the plaintiffs’ iPhones.
Apple removed the case to federal district court asserting jurisdiction under CAFA. The plaintiffs moved to remand the action to state court, which the District Court granted.
The plaintiffs’ complaint does not allege how the plaintiffs’ damages would be calculated on their claim of wrongful access and alteration of the iPhones. The plaintiffs did, however, attach to their complaint signed affidavits stating that their damages would not exceed the jurisdictional amount under CAFA.
Apple challenged the affidavits by filing a Declaration stating that there were over 250,000 iPhones registered in Arkansas, and with a retail cost per phone from $99 to more than $599, the total retail cost exceeded $5 million. The defendant suggested that the alleged alteration could have made the iPhones “worthless,” thereby the damages could exceed $5 million.
The plaintiffs challenged Apple’s evidence, arguing that there was no correlation between the relief sought in the complaint and the total retail cost of the iPhones. The plaintiffs argued that their claims were based on Apple’s wrongful access and alteration of the plaintiffs’ iPhones, which had little to do with the retail cost of the iPhones.
The Court observed that neither party had provided the Court with a reliable method to determine, or even “guestimate” the proper amount of damages. The Court saw little correlation between the plaintiffs’ claims and Apple’s argument that the iPhones may be rendered “worthless” if the plaintiffs were to prevail. Thus, the Court concluded that Apple failed to show by a preponderance of the evidence that the amount in controversy exceeded the jurisdictional amount under CAFA.
The Court remarked that even if Apple had met its burden of proof as to the amount in controversy, it would still not prevail based on the binding affidavits submitted with the plaintiffs’ complaint. The Court noted that the plaintiffs followed the Bell roadmap by attaching signed affidavits from both the plaintiffs and their lawyers stating that damages would not exceed $5 million, inclusive of costs and attorneys’ fees.
In Bell v. Hershey Co., 557 F.3d, 953, 958 (8th Cir. 2009), the Eighth Circuit stated that to make the removal unsuccessful, a party may file a stipulation stating that he would not seek damages greater than the jurisdictional minimum upon remand. (Editors’ Note: See the CAFA Law Blog analysis of Bell posted on July 28, 2009).
While Apple challenged the language regarding stipulations in Bell as nothing more than dicta, the Court observed that numerous district courts in Arkansas have set forth compelling reasoning in ruling that stipulations following the procedure outlined in Bell are sufficient to defeat diversity jurisdiction under CAFA.
Next, Apple argued that the plaintiffs had not adequately disclaimed punitive damages, and as such, there was the possibility that damages could exceed the jurisdictional amount under CAFA. The Court stated that although punitive damages are to be considered by the court in determining the amount in controversy, the plaintiffs complaint did not allege a claim for punitive damages, and the attached affidavits stated that “damages” would not exceed the jurisdictional amount under CAFA.
Apple, however, argued that the plaintiffs’ claim for “all other relief” did not adequately disclaim a claim for punitive damages, and that the Court could not rely on the plaintiffs’ argument in its brief that they would not seek punitive damages if the case was remanded to state court. The Court observed that the term “damages” is inclusive of all recoverable damages including punitive damages. While the Court believed that this stipulation alone was sufficient to limit damages, the plaintiffs would also be judicially estopped from asserting a claim in state court for punitive damages or in any other way attempting to recover more than the amount contemplated in the stipulations.
The Court noted that the Arkansas courts will not permit the plaintiff to recover damages for the class as a whole in excess of the damages plead in the complaint. Furthermore, if the aggregate claims of the class exceed the amount pled, the Arkansas courts will be able to prorate the recoverable damages among the members of the class.
Similarly, the Court found that in the present case, any attempt by the plaintiffs to change their position in state court would be precluded because any request for damages in excess of $5 million would be clearly inconsistent with the position taken before the Court; it would suggest an attempt to manipulate the judicial process to gain an unfair advantage; the plaintiffs would have successfully maintained their position such that the Court relied on their stipulations and pleadings; and the integrity of the judicial process would be impaired by any subsequent inconsistent position. Because the case met all elements of judicial estoppel recognized under Arkansas law, the Court was satisfied that the plaintiffs would be estopped from seeking punitive or otherwise increased damages in state court upon remand.
Accordingly, the Court concluded that the plaintiffs had shown to a legal certainty that damages would not exceed the jurisdictional amount under CAFA.