Growitch v. Charter Communications, Inc., 2014 WL 1718737 (8th Cir. May 2, 2014).
The Eighth Circuit held that a federal jurisdiction under CAFA is measured at the time of removal–the court does not lose its jurisdiction over the action merely because the district court found that complaint failed to state a sufficient claim for damages and dismissed the claim.
The plaintiffs in this action were customers of the defendant Charter Communications (“Charter”), broadband communications company that provides cable, Internet, and telephone services. The plaintiffs subscribed to Charter’s “Plus” Internet service under Charter’s Internet Residential Customer Agreement (the “Agreement”) in 2011. Charter provided the plaintiffs with DOCSIS 2.0 modems at the time their Internet services were installed.
The plaintiffs were promised increased download speeds of up to 30 Mbps; however, they never achieved those speeds because they did not have the DOCSIS 2.0 modems. Accordingly, the plaintiffs brought putative class action in Missouri state court, claiming that Charter violated the Missouri Merchandising Practices Act (“MMPA”) and breached its contract with the class members. Charter removed the action under CAFA, and then filed a motion to dismiss.
The district court dismissed the complaint with prejudice on three independent grounds, concluding (1) that the plaintiffs had not pleaded facts sufficient to demonstrate pecuniary loss, (2) that the plaintiffs’ January 2012 bills gave them notice that their modems needed to be upgraded to obtain the increased download speed, and (3) that the plaintiffs’ claims were foreclosed by a speed disclaimer in the Agreement. On appeal, the plaintiffs challenge each of the grounds the district court relied on in granting Charter’s motion to dismiss and, in the alternative, argue that the district court did not have jurisdiction.
The plaintiffs argue that removal under CAFA was improper because Charter failed to prove by a preponderance of the evidence that the amount-in-controversy exceeded $5 million. The plaintiffs contended that the district court should have remanded the case to state court because it did not have subject matter jurisdiction.
Contrary to their argument, the Eighth Circuit noted that the plaintiffs alleged a nationwide class consisting of at least 50,000 members, who overpaid for Internet services each month from September 14, 2007, to the date of final judgment. The plaintiffs sought to recover up to $50,000 in damages per class member. Based on these allegations, a jury might conclude that the class suffered damages of more than $5 million dollars, even if the individual class members’ monthly overpayment was minimal. Accordingly, the Eighth Circuit concluded that Charter met its burden of showing that the amount-in-controversy exceeded CAFA’s $5 million jurisdictional threshold.
Challenging the grant of motion to dismiss, the plaintiffs argued that even if the district court had jurisdiction, it erred in dismissing their complaint for failure to plead facts sufficient to demonstrate pecuniary loss. Missouri law requires the plaintiffs to prove that they suffered pecuniary loss in order to prevail on their MMPA claim, and breach of contract claim. The plaintiffs contended that they adequately pleaded damages by alleging that they suffered a monetary loss of the difference in the cost and value of the services they paid for and the useable service they received.
The Eighth Circuit, however, noted that the complaint did not allege facts to support the plaintiffs’ allegation of damages because it did not allege that the plaintiffs paid extra for the 30 Mbps download speed.
The plaintiffs then contended that if based on the pleading, there were no damages, then there cannot be an amount-in-controversy of more than $5 million. The plaintiffs, thus, maintained their claim that removal under CAFA was improper. The Eighth Circuit ruled that the district court’s jurisdiction is measured at the time of removal. At that time, the Eighth Circuit remarked, the district court could fairly assume that the plaintiffs had stated a claim and that a fact finder might legally conclude that the class damages were greater than $5 million. The Eighth Circuit remarked that the plaintiffs themselves did not challenge removal until after their claims were dismissed.
Accordingly, the Eighth Circuit found no error in the district court’s holding and affirmed the dismissal of the action.