Hawk Valley, Inc. v. Taylor, No. 10-cv-804, 2011 WL 710466 (E.D. Pa. Feb. 28, 2011).
A District Court in Pennsylvania, while examining sua sponte whether it has subject-matter jurisdiction, held that the courts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it.
The plaintiff filed a class action complaint in the District Court alleging that on or about June 17, 2006, the defendants sent a one-page unsolicited advertisement to the plaintiff’s facsimile machine, and that “on information and belief, the defendants have sent similar unsolicited facsimile advertisements to at least 39 other recipients,” in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. The plaintiffs were concerned that the world may come to an end (before 2012) as a result of the numerous unsolicited faxes allegedly sent by the plaintiffs. In order to save humanity, they filed this class action.
The defendants, Elaine G. Taylor and Environmental Process Systems, Inc. filed a motion to dismiss the plaintiff’s complaint.
Although the defendants did not raise lack of subject matter jurisdiction as a basis for dismissal, it appeared to the Court that the plaintiff’s class action complaint failed to establish that the Court had jurisdiction over the subject matter of this case. Accordingly, the Court, sua sponte, examined the issue relating to its subject-matter jurisdiction.
The Court noted that in the Civil Cover Sheet submitted with the complaint, the plaintiff marked the checkbox indicating that the basis of the Court’s jurisdiction was “Federal Question.” The complaint, however, averred that jurisdiction existed under CAFA.
The Court observed that private actions under the TCPA may not be brought in federal court on the basis of federal question jurisdiction pursuant to 28 U.S.C. § 1331. However, this does not preclude a federal court from hearing TCPA cases brought on the basis of diversity jurisdiction under CAFA, 28 U.S.C. § 1332(d). But the Court found that the plaintiff’s complaint did not sufficiently establish any of the three requirements (numerosity, diversity of citizenship, and required amount in controversy) for diversity jurisdiction under CAFA.
First, the Court found that the complaint did not specifically allege that the amount in controversy exceeded $5 million in the aggregate. Instead, the complaint alleged generally that there was more than $5 million in controversy, and that the plaintiff purported to bring this class action on behalf of all holders of telephone numbers who had received facsimile transmission advertising or promoting the goods or services of the defendants during the last four years. Further, the complaint alleged that in addition to the unsolicited facsimile advertisement sent to plaintiff, the defendants had sent similar unsolicited facsimile advertisements to at least 39 other recipients. The complaint sought an award of ‘actual monetary loss’ or ‘$500.00 in damages for each violation [as provided for in the TCPA, 47 U.S.C. § 227(b)(3)(B)] whichever was greater.’
Based on the above allegations, the Court found that the complaint gave no estimate of what dollar amount of actual monetary loss the plaintiff and other class members might have suffered from receipt of the defendant’s faxes. The complaint stated that the plaintiff received one such fax on June 17, 2006, but did not allege whether the other 39 recipients also received just one fax or multiple faxes (which would constitute multiple violations of the TCPA). If the plaintiff and each of the other 39 recipients received one fax, this would be 40 violations which would, in the aggregate, be only $20,000.00 in damages; and $60,000.00 if the Court was to award treble damages.
Next, although the complaint alleged that “at least” 39 other recipients, indicating a possibility that the plaintiff could show enough potential violations of the TCPA to reach the jurisdictional threshold of more than $5 million, the allegations as stated in the complaint fell far short of showing that the amount in controversy exceeded $5 million. Using the measure of $500.00 per violation, the plaintiff would need to allege at least 10,001 violations of the TCPA in order to exceed $5 million in damages. Even using the treble damages measure of $1,500.00 per violation, the plaintiff would need to allege at least 3,334 violations.
Because the complaint provided no other numerical estimate or other allegation from which the Court may infer that the amount in controversy was met, the Court was unable to conclude that the amount in controversy exceeded $5 million.
Second, because the complaint alleged that the plaintiff and ‘at least 39 other recipients’ received the unsolicited faxes, but provided no other numerical estimate relating to number of class members, the Court concluded that the plaintiff had not established that there were at least 100 members in the putative class.
Finally, the Court found that the plaintiff had not established that any class member and any defendant were citizens of different states. Specifically, the plaintiff Hawk Valley and the defendant Environmental Process Systems are both corporations, and the defendant, Elaine G. Taylor is an individual.
The Court noted that for purposes of pleading diversity jurisdiction, a plaintiff must allege a corporation’s state of incorporation and principal place of business because a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.
Although the complaint pled that Environmental Process Systems is incorporated in and has principal place of business in North Carolina, the complaint averred only that the plaintiff, Hawk Valley, is a Pennsylvania corporation. The complaint failed to allege in which state Hawk Valley maintains its principal place of business, leaving open the possibility that the plaintiff has its principal place of business in a non-diverse state.
Further, the complaint averred that individual defendant, Taylor, is a shareholder, officer, and director of Environmental Process Systems. The complaint, however, did not allege Taylor’s state of citizenship; leaving open the possibility that Taylor may be a citizen of a non-diverse state.
Accordingly, the Court concluded that the plaintiff’s complaint failed to establish that this action met the requirements of CAFA. Because the Court was compelled to address the question of jurisdiction even in the absence of objection, the Court provided the plaintiff with an opportunity to re-plead the grounds for the Courts jurisdiction, and dismissed the complaint, as well as the defendants’ motion to dismiss without prejudice.