McPeters v. LexisNexis, 4:11-cv-02056, 2011 WL 2434088 (S.D. Tex. June 10, 2011).
A District Court in Texas held that statute of limitations defense, even if apparent upon the face of the complaint, does not operate to deprive the federal court of jurisdiction based on amount in controversy because when determining the amount in controversy for jurisdictional purposes, courts cannot look past the complaint to the merits of a defense that has not yet been established. (Editors’ Note: Sorry, we do not have a LexisNexis cite for the opinion, only a Westlaw cite. Although we are sure that since LexisNexis won, LexisNexis will allow you to download the opinion for free…not).
The plaintiff, Karen McPeters, challenged the electronic filing charges imposed by the defendant, LexisNexis, on litigants in Texas state courts in Montgomery and Jefferson Counties. McPeters alleged that LexisNexis violated several provisions of the Texas Constitution, the Texas Deceptive Trade Practices – Consumer Protection Act (“DTPA”), the Texas Theft Liability Act (“TTLA”), the Texas Business and Commerce Codes, and that LexisNexis committed common-law fraud.
LexisNexis removed this stale law action to federal court pursuant to CAFA.
McPeters moved to remand the action to state court, which the District Court denied.
The Court noted that because McPeters had not specified the amount of damages sought by the class, LexisNexis had the burden of proving by a preponderance of the evidence that the amount in controversy was at least $5 million.
In support of its claim that the amount in controversy requirement had been met, LexisNexis provided an affidavit from Richard Steiner, a Business Solutions Consultant at LexisNexis. In that affidavit, Steiner stated that, based on LexisNexis’s e-filing data, he calculated that the total amount of fees paid by litigants using the File and Serve system for filings in Montgomery County, Texas and Jefferson County, Texas since 2002 likely exceeded $7 million. McPeters did not dispute the total fee amount that LexisNexis had collected from e-filing, but instead argued that the total fee amount was an improper measure of damages.
McPeters alleged in the complaint that all of the fees charged by LexisNexis in the two counties were higher than permissible fees and charges set forth in the Texas Government Code and in the Local Government Code. McPeters thus maintained that the fee LexisNexis charged was unlawful because it was higher than the fee as set by the Texas laws. Accordingly, the Court found from the face of the complaint that McPeters’ alleged damages of the entirety of fees charged by LexisNexis to the plaintiff class. The Steiner Affidavit indicated that that sum was likely over $7 million — well over the jurisdictional minimum. While holding so, the Court maintained that there is no blanket rule that total revenues should not be considered while determining the amount in controversy.
In addition, the Court observed that McPeters specifically sought three times the amount of her economic damages, as provided for by the DTPA. She also sought exemplary damages, injunctive relief, and attorney’s fees. Thus, the Court pointed out that even if not all of LexisNexis’s charges could be considered in the amount in controversy, the claimed damages would still exceed $5 million when the treble damages, exemplary damages, and attorney’s fees were considered.
Finally, McPeters argued that, for purposes of this motion, only damages from 2008 to 2011 should be counted, because LexisNexis could later claim that damages were limited under the statute of limitations under the DTPA. The Court, however, observed that it may not consider defenses such as statutes of limitations in determining the amount in controversy. The Court maintained that statute of limitations defense, even if apparent upon the face of the complaint, does not operate to deprive the federal court of jurisdiction based on amount in controversy because when determining the amount in controversy for jurisdictional purposes, courts cannot look past the complaint to the merits of a defense that has not yet been established. The Court remarked that LexisNexis might assert for jurisdictional purposes that the amount in controversy was one amount, and then argue later in the case that little or no damages were available based on various defenses. The Court, however, found that given the governing legal standards, that possibility did not justify remand. (Editors’ Note: We expect to see LexisNexis file a motion to dismiss on the basis of statute of limitations very shortly (which we assume will be published on LexisNexis)).
The Court thus concluded that LexisNexis had proven by a preponderance of the evidence that the amount in controversy exceeded $5 million. Accordingly, the Court declined to remand the action to state court.