Belin v. Int’l Paper Co., No. 11-0215, 2011 WL 2559810 (W.D. La. June 28, 2011) and related case, Ackers v. Int’l Paper Co., 2011 WL 2559844 (W.D. La. June 28, 2011).

In this case, a District Court in Louisiana turned a deaf ear to the plaintiffs and held that the class representatives do not have authority to waive damages on behalf of other unnamed class members.

In December 2010, thirty seven named plaintiffs, led by Marvin Evans, filed a class action complaint in state court against the defendants, International Paper Company (“IP”) and/or Papco, Inc., for recovery of occupational hearing loss damages that the class of former employees sustained while employed with the defendants. 

The defendants removed this action (Evans I) to the federal court under CAFA, which the Evans I plaintiffs did not contest.

Instead, in January 2011, the same plaintiffs commenced new actions against IP in state court, dividing their original cause of action into three separate class actions, Evans v. International Paper Co., (“Evans II”), Belin v. International Paper Co., and Ackers v. International Paper Co., and expressly limited their individual and total damages in hopes of avoiding the amount in controversy threshold that would trigger removal. 

The plaintiffs’ efforts proved ineffective, however, because IP again removed the cases to federal court on the bases of both traditional diversity jurisdiction under 28 U.S.C. § 1332(a), and as expanded by CAFA, 28 U.S.C. § 1332(d). 

Reacting to the notice of removal, the plaintiffs in Evans II, Belin, and Ackersfiled motions to remand the actions to state court for lack of subject matter jurisdiction. 

The District Court denied the motions.

 First, the Court found that traditional diversity jurisdiction under § 1332(a) requires complete diversity of citizenship and an amount in controversy exceeding $75,000.  There was no dispute about the diversity of citizenship. The plaintiffs, however, limited their damages beneath the jurisdictional threshold by alleging that “the amount of damages sustained by each member of the Class herein do not exceed the sum of $45,000.00, exclusive of interest and costs and each member of the Class hereby waives, forgoes and relinquishes any and all damages in excess of $45,000.00, exclusive of interest and costs.” The plaintiffs further alleged that the total amount in controversy was less than $5 million, exclusive of interests and costs.

The Court noted that the plaintiffs’ allegations remain presumptively correct until the removing defendant can show by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional minimum.

The Court observed that although the class representatives were willing to waive their own claims for damages in excess of the jurisdictional threshold, they do not have authority to waive damages on behalf of other unnamed class members.  Further, in the absence of a binding stipulation by the unnamed class members, it was facially apparent that the amount in controversy for each unnamed member’s claim for damages exceeded $75,000.  Specifically, the Court relied on Alford v. International Minerals & Chemical Corp., No. 05-1108 (M.D. La. March 27, 2006), which aggregated hearing loss cases that awarded between $90,000 to $150,000, for purposes of determining that individual damages claims for exposure to occupational noise exceeded $75,000.

Further, the plaintiffs sought attorneys’ fees apart from their self-imposed, individual damages cap. The Court stated that the attorney’s fee award for the entire class action need only exceed $30,000 to breach the $75,000 jurisdictional threshold — when it was combined with each class representative’s self-imposed damages cap of $45,000. In any event, the same result was obtained, even if the potential attorneys’ fees for the class were divided pro rata amongst the named plaintiffs.

The Court observed that while the plaintiffs purport to limit the prospective class to less than 100 members, and otherwise did not specify the number of class members, they alleged that the number of prospective class members was so large that joinder would prove impracticable. 

Moreover, the plaintiffs sought to certify a class on behalf of employees who worked at specified IP facilities for six or more months prior to December 31, 1979. Also, the exposure period for the class representatives lasted as long as 40 years, which suggested the likelihood of a large number of potentially afflicted employees.  Accordingly, the Court stated that it was facially apparent that the putative class, more likely than not, equaled at least 60 members. 

Of the 60 members, the potential damages for 48 unnamed class members would be $80,000 each, totaling to $3,840,000. Adding to this award the $540,000 self-capped damages of the named representatives (12 plaintiffs x $45,000), produced a potential damages award of $4,380,000 for the at least 60 named and unnamed class members.

In absence of the actual number of hours the class counsel would reasonably expend in this litigation, the Court stated that at the motion to remand stage, it could only derive a potential attorneys’ fee as a percentage of the class members’ damages.  A typical class action benchmark fee award equal to twenty-five percent of the common fund, produces class attorney’s fees of $1,095,000 — well in excess of the $30,000.01 in fees necessary to establish the amount in controversy for each named plaintiff over $75,000.

Next, regarding the jurisdiction under CAFA, the Court found that the plaintiffs were diverse from the defendant and the aggregate amount in controversy exceeded $5 million ($4,380,000 damages plus $1,095,000 attorneys’ fees).

The plaintiffs argued, however, that CAFA jurisdiction did not extend to this case because the putative class action did not exceed 100 members.  Although the plaintiffs alleged in their petition that the membership of the proposed class was less than 100, they had the burden of supporting this allegation with adequate proof, when, as here, the issue was contested by the defendant.  Because the plaintiffs had not made the requisite showing here, the Court denied the plaintiffs’ motion to remand.

We will be on the look out to see if the plaintiffs receive a hearing (get it?) from the U.S. Fifth Circuit.