Hung v. American Traffic Solutions, Inc., 2014 WL 1689303 (E.D. Mo. April 29, 2014).

In an action brought on behalf of citizens of Missouri who had paid traffic violation fees, a district court in Missouri found that the allegations in the complaint were sufficient to satisfy the jurisdictional threshold considering that there were thousands of violations, and each violator paid a fine of $100.

The plaintiffs brought a putative class action in the Circuit Court for the City of St. Louis, Missouri.  The complaint stated that the defendant American Traffic Solutions, Inc. contracted with the City of St. Louis (the “City”) to aid enforcement of City Ordinance 66868 (“Ordinance”).  The Ordinance authorizes installation and use of traffic cameras to detect certain red light traffic violations.  The plaintiffs claimed that by contracting with the City to help enforce the Ordinance, the defendant violated Article I, Section 10 of the Missouri Constitution and the Missouri Merchandising Practices Act.  The plaintiffs alleged that the red light Ordinance impermissibly placed the burden on the accused to rebut a presumption of guilt, which is ultimately based on the registered owner of the vehicle, rather than the driver.  The defendant removed the action under CAFA, and the plaintiffs moved to remand.

The only dispute between the parties was whether the defendant satisfied CAFA’s amount-in-controversy requirement.  The defendant contended that the amount-in-controversy exceeded $5 million, based on the face of the petition and on the declaration of the defendant’s Senior Account Manager Damon Cross.  The defendant argued that in assessing the amount-in-controversy, the Court should consider the value of punitive damages, attorney fees, and injunctive relief sought by the plaintiffs.  The plaintiffs in turn claimed that the defendant merely speculated as to the amount-in-controversy, and had failed to offer any evidence of its suggestion that punitive damages and attorney fees would drive the amount-in-controversy over $5 million.

The District Court found that the defendant had demonstrated amount-in-controversy requirement by a preponderance of the evidence.  The District Court remarked that a plain reading of the petition alone showed that the amount-in-controversy exceeded $5 million.  Specifically, the District Court stated that the plaintiffs asserted that a $100 fine was typically assessed against those accused of red light violations.  The plaintiffs also asserted that the class and sub–class collectively contained thousands of members who paid fines for violating the Ordinance.  Further, the plaintiffs contended that the defendant issued several thousand red light camera violations per month.  The District Court remarked that assuming that the defendant issued 2,000 violations per month, and only half of those violations resulted in payment of the $100 fine, the amount-in-controversy would still be $6 million dollars for the most recent five years of the Ordinance’s enforcement.

The plaintiffs argued that the defendant’s hypothetical was speculative and insufficient to warrant jurisdiction.  The District Court disagreed.  Citing Hartis v. Chicago Title Insurance Company, 694 F.3d 935, 944–46 (8th Cir.2012), the Court explained that the Eighth Circuit had engaged in a similar analysis to conclude the removing party met CAFA’s amount-in-controversy requirement.  In Hartis, the plaintiff class of consumers sought to recover against the defendant title insurance company for allegedly overcharging for recording fees in many transactions.  In assessing the amount-in-controversy, the Eighth Circuit first noted the average amount allegedly overcharged was $12.  The plaintiff class alleged the defendant engaged in transactions in 17 states.  In fact, the plaintiffs had claimed that in Missouri alone, the defendant engaged in 71,000 transactions. Using the Missouri data, the Eighth Circuit estimated that the defendant engaged in a total of 1,207,000 relevant transactions.  Given the plaintiff class alleged “many” of the total transactions involved overcharged fees, the Eighth Circuit found that, even construing the term “many” as “one-half,” the amount-in-controversy would exceed $7.2 million.

In light of Hartis, the Hung Court concluded that the defendant’s hypothetical was compelling.  In addition, the Court noted that in his declaration, Cross stated, from January 1, 2009 through December 31, 2013, the City issued over 280,000 violation notices, which were paid in full or in part, based on automated traffic control systems.  The District Court remarked that given the standard fee of $100 per violation, the amount-in-controversy would be as much as $28 million, half of which would be $14 million.  Considering the five year period that the plaintiffs claimed, the amount-in-controversy would be as high as $35 million.

Finding that the defendants had adequately established the amount-in-controversy threshold under CAFA, the District Court denied the plaintiffs’ motion to remand.