Brooks v. GAF Materials Corp., No. 8:07-3988, 2008 WL 250368 (D.S.C. Jan. 31, 2008).
We’re going to provide you a soundtrack for this one, because nothing says “rock n’ roll” like CAFA. Ok, got your speakers cranked up? Good, then let’s roll these Steel Wheels.
In this case, the plaintiffs filed their complaint in state court in South Carolina asserting claims of negligence, negligent representation, breach of warranty, breach of implied warranties, fraud, unfair trade practices and unjust enrichment. They alleged that they sustained property damage as a result of the defendant’s defective roofing materials. Since their roof evidently failed to provide them adequate shelter, they sought the protective cover of the judicial system. In their amended complaint, they asserted a putative class action, but stated that their individual recovery, as well as any putative class member’s individual recovery, was not to exceed $74,999.00.
The defendants nonetheless said, “Start Me Up” to a notice of removal. (The case had already been removed and remanded once prior to the filing of the amended complaint.) The district court initially remanded the action for lack of subject matter jurisdiction based on the one-year bar to removal, but reconsidered and determined that, because it was a putative class action, the one-year bar did not apply. It then ordered the parties to respond to the issue of whether the amount in controversy exceeded $5,000,000.00.
The district court first considered which party must be the “Beast of Burden [of Proof]” for establishing the amount in controversy is met. Citing Phillips v. Whirlpool Corp., 351 F.Supp.2d 458 (D.S.C. 2005), it noted that the Fourth Circuit has not determined the proper standard for evaluating amount in controversy and decided that it need not determine which party bore the burden of proving amount in controversy was satisfied because in this case, the plaintiffs had limited their damages in the complaint. The court reasoned that, under the South Carolina Rules of Civil Procedure, a party may plead the amount in controversy and limit the claim for any purpose, including doing so to avoid removal under CAFA. It accepted the plaintiffs’ representations that the amount in controversy for the class did not exceed $5,000,000.00 and that the individual recovery for the named plaintiffs and any putative class members would not exceed $74,999.00.
While agreeing with the defendant that South Carolina Rule 54(c) poses the possibility of amount in controversy manipulation (that rule provides that a final judgment “shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings”), the court nonetheless adopted the reasoning of Jones v. Allstate Ins. Co., 258 F.Supp.2d 424 (D.S.C. 2003), finding that such manipulation “would not be a good career move for plaintiffs’ attorneys” because it would tarnish their credibility with the court. The court also provided a bit of advice, again citing Jones, strongly suggesting that future plaintiffs who wished to limit their damages claims file affidavits sworn to by both the plaintiffs and their counsel disclaiming any recovery in excess of the federal jurisdictional threshold before removal.
So, try as it might, this defendant “Can’t Get No Satisfaction” in this federal district court. We’re imagining the plaintiffs doing a Mick Jagger strut back to state court.