Toller v. Sagamore Ins. Co., 2008 WL 927703 (E.D. Arkansas April 4, 2008).

Just the other week, in a galaxy far, far way (a/k/a/ Arkansas)

Insurance Wars: Episode II The Decider Strikes Back

In Episode I (which if you are a Star Wars fan is really Episode IV), the plaintiff Gwendolyn Toller (think, Princess Lea in the bikini with Jaba the Hut) filed suit against Sagamore Insurance Company (think, the Evil Empire) following an automobile accident that caused damages, including medical expenses, in excess of Ms. Toller’s liability coverage. Ms. Toller alleged that at the time she applied for insurance she was not made aware of the availability of no-fault coverages, such as uninsured motorist coverage, underinsured motorist coverage, medical benefits and income benefits, in violation of Arkansas law. Look, it is dangerous being a Jedi Knight on the Arkansas highways.

Ms. Toller brought suit on behalf of all persons similarly situated seeking to force Sagamore to provide no-fault insurance coverage to all of these persons (the Rebel Alliance). Ms. Toller did not seek a specified amount of damages, but apparently wanting to avoid removal to federal court (think Death Star), she stated the sum will not exceed the sum or value of $4,999,999.

Sagamore removed the case to federal court asserting jurisdiction on two grounds: 1) diversity and damages in excess of $75,000; and 2) under CAFA. Toller moved to remand. You will recall, in a prior CAFA post in which the Judge (Darth Vader in this increasingly lame Star Wars parody) was referred to as “the Decider” for his lack of decision, you were informed that court decided not to decide (which is, after all, still a decision) allowing the parties to provide “summary judgment type evidence” of the amount in controversy. (Editors’ Note: See the CAFA Law Blog analysis of Toller (Episode I/IV) posted on February 11, 2008).

Well, Darth Vader does not like to be called into question for his lack of decisiveness (Not that I am saying that anyone here at CAFA has the ability to put the Jedi mind meld on Federal Judges). After hearing evidence submitted by both parties regarding the amount in controversy, the motion to remand was denied.

The court looked at the amount in controversy of Toller’s individual claim and of the class. The court found the amount in controversy of the individual claims to be less than $75,000, the main issue being the amount of attorney’s fees. The court found Toller’s maximum damages to be no more than $41,000. Toller urged applying attorney’s fees of 1/3 of that amount, or $13,904. The Evil Empire tried to apply a lodestar method resulting in attorney’s fees of $33,000. The judge looked askance at the possibility of fees of $33,000 being generated on a $41,000 claim. 

But, the Empire was not lost. The court found the amount in controversy of the class claims exceeded the jurisdictional minimum. The plaintiffs tried some convoluted method of calculating the possible payout of claims. Consistent with his rejection of the convoluted lode star method put forth by the Empire to calculate attorney’s fees, Judge Vader rejected a convoluted method to calculate the class claims. The court accepted the Empire’s calculation of class damages based on the face value of the insurance coverage Toller claimed the Empire failed to provide to the class or the premiums the class would have to pay to get that coverage. The court noted that the Eighth Circuit typically relies on the plaintiff’s viewpoint in determining the amount in controversy. But, in the case of CAFA, Congress made it clear that aggregating to determine amount in controversy is appropriate. The court stated:

“Since CAFA expressly contemplates aggregation, and CAFA’s evident purpose is to expand federal jurisdiction, the proper approach to valuing claims for injunctive relief under CAFA seems to be to use the total benefit to the plaintiff class or the aggregate cost to the defendant.”

Post script: Bloodied by its epic battle with the Evil Empire, the Rebel Alliance withdraws three days after Darth Vader issues his opinion forcing the plaintiff to litigate on the Death Star (a/k/a Federal Court). The Rebel Alliance dismissed its case with prejudice.

Coming soon to a Blog near you. Insurance Wars Part III: The Rebel Alliance Strikes Back in State Court.

All right, I know this is lame. And all you Stars Wars Aficionados out there are outraged. What can I say?. 

(S. Tolson)