Margulis v. Resort Renal, LLC, 2008 WL 2775495, Case No. 08-1719-WJM (D.N J. July 14, 2008).

This is a putative class action for alleged violations of the Telephone Consumer Protection Act (“TCPA”) and common law invasion of privacy. The plaintiff argued that the defendant, a resort rental company, sent promotional pre-recorded messages through residential telephone lines to recipients without their permission and with whom the defendant had no prior business relationship.

With certain exclusions, the plaintiff’s complaint defined the class as “[a]ll persons in the United States who (1) were the subscribers of a residential telephone line, and (2) were called on that residential telephone line on or after February 8, 2004 by or on behalf of Defendant using a pre-recorded voice to deliver a message promoting Defendant’s vacation services, (3) did not provide Defendant with prior express consent to place the call, and (4) did not have an established business relationship.”  

In an attempt to avoid removal under diversity jurisdiction, the complaint specifically limited damages to an amount “not more than $74,999.99” per individual class member. The plaintiff must have been drinking too many Mai-Tai’s because he forgot that damages could be aggregated to meet the $5,000,000 statutory threshold for CAFA removal.

While listening to Bob Marley’s “No Woman No Cry” on the famous white sand beaches of Negril, Jamaica, the defendant decided to remove the case to the United States District Court for the District of New Jersey under CAFA. In the Notice of Removal, the defendant asserted that it placed more than 50,000 phone calls using pre-recorded voice. 

The plaintiff moved to remand on the ground that the $5,000,000 aggregate amount in controversy had not been established because the number of calls alleged by the defendant does nothing to show whether those calls were made to potential class members in this case.

Relying on Frederico v. Home Depot, 507 F.3d 188 (3d Cir.2007), the District Court held that when a complaint does not specifically aver that the amount in controversy is less than the jurisdictional amount, the court first must determine whether there are disputes over factual matters related to jurisdiction. If so, the party asserting jurisdiction must prove those facts by a preponderance of the evidence. Assuming the defendant does so, or if the relevant facts are not disputed, jurisdiction is proper unless “the challenger to subject matter jurisdiction” can prove to a “legal certainty” that the amount in controversy “could not exceed the statutory threshold.” Frederico, 507 F.3d at 195 (emphasis added).  

A different standard applies when a complaint avers that the amount sought is less than the statutory threshold. Under CAFA, a plaintiff must “specifically (and not impliedly) and precisely (and not inferentially) state[] that the amount sought in a class action diversity complaint ‘for the class as a whole shall not exceed $5 million in sum or value.’” Id. at 196 (quoting Morgan v. Gay, 471 F.3d 469, 471 (3d Cir.2006)). If the complaint contains such an express stipulation, a defendant may still attempt to remove under CAFA by proving “to a legal certainty that plaintiff can recover the jurisdictional amount.” Frederico, 597 F.3d at 197 (emphasis added).  (Editors’ Note:  See the CAFA Law Blog analysis of this appellate decision in Morgan posted on January 19, 2007.)  Since the plaintiff in this case did not specifically aver that the amount sought was less than the CAFA threshold, the Court analyzed removal under the first standard.

The plaintiff argued that there was a factual dispute as to the amount of calls placed to potential class members in this case. Specifically, the plaintiff argued that the defendant should be required to identify the number of times it used a pre-recorded message when the subscriber of the residential telephone line (1) did not provide the defendant with prior express consent, and (2) did not have an established business relationship with the defendant. The court held that it would be improper to require the defendant to establish those facts at this stage because doing so would essentially concede liability under the TCPA.

Having determined that the defendant met its burden, the burden shifted to the plaintiff to prove to a legal certainty that the amount in controversy could not exceed the statutory threshold. Since the plaintiff could not do so, the Court found that removal under CAFA was proper. The lawyers then enjoyed a well-deserved trip to an all inclusive resort in the Dominican Republic.

By:  Rose Marie L. Fiore