IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
______________________
No. 99-40430
______________________
H & D TIRE AND AUTOMOTIVE-
HARDWARE, INC., ET AL., Plaintiffs,
H & D TIRE AND AUTOMOTIVE-
HARDWARE, INC.; BEARD PLUMBING
CO.; JONES & JONES, INC., Plaintiffs - Appellants
versus
PITNEY BOWES INC., ET AL., Defendants,
PITNEY BOWES INC.; PITNEY
BOWES CREDIT CORP., Defendants - Appellees.
___________________________________________________________________
Appeal from the United States District Court for the
Eastern District of Texas
___________________________________________________________________
September 27, 2000
Before POLITZ, GIBSON,* and HIGGINBOTHAM, Circuit Judges.
JOHN R. GIBSON, Circuit Judge.
H & D Tire and Automotive-Hardware, Inc., Beard Plumbing Co.,
and Jones & Jones, Inc. appeal the district court's grant of
summary judgment to Pitney Bowes Inc. and Pitney Bowes Credit Corp.
(collectively, Pitney Bowes). We conclude that the court did not
have jurisdiction over this case because the amount in controversy
requirement was not satisfied. We therefore vacate the district
*
Circuit Judge of the Eighth Circuit, sitting by designation.
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court's judgment and instruct it to remand this case to the state
court in which it was initially filed.
Pitney Bowes Inc. markets a variety of mailing equipment and
other office equipment and sells it to Pitney Bowes Credit Corp.,
which then leases the equipment to customers. The plaintiffs
entered into leases with Pitney Bowes. Representatives of Pitney
Bowes contacted the plaintiffs before their original leases expired
and offered them the opportunity to upgrade their mailing
equipment. The plaintiffs then entered into the replacement leases
that are the subject of this suit.
H & D Tire and Beard Plumbing brought an action in Texas state
court, seeking to represent a class of Pitney Bowes customers.1
They alleged that Pitney Bowes overcharged customers who entered
into replacement leases by impermissibly including a trade-up
component in the calculation of lease payments. They claimed that
individual actual damages would not exceed $30,000 and sought an
unspecified amount of punitive damages and attorneys' fees.
Pitney Bowes invoked federal diversity jurisdiction and
removed the case to the Eastern District of Texas. It argued that
the jurisdictional amount was satisfied in any of three ways: (1)
by adding each plaintiff's requested actual damages to its punitive
damages; (2) by aggregating the punitive damages claims of the
1
After the case was removed to federal court, H & D Tire and
Beard Plumbing's First Amended Complaint added Jones & Jones as a
plaintiff.
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class and attributing the amount to each plaintiff; or (3) by
adding the claim for attorneys' fees to the named plaintiffs'
claims.
H & D Tire and Beard Plumbing moved to remand the case to
state court, arguing that Pitney Bowes had not established the
required amount in controversy.2 The district court referred the
motion to a magistrate judge, who found that punitive damages could
be aggregated and recommended denial of the motion. The court
followed the recommendation and denied the motion to remand. The
district court later denied class certification and granted Pitney
Bowes's motion for summary judgment. On appeal, the plaintiffs
challenge only the grant of summary judgment. They do not appeal
the denial of class certification or the denial of their motion to
remand to state court.
We have a duty to raise the issue of subject matter
jurisdiction sua sponte. See Christoff v. Bergeron Indus., Inc.,
748 F.2d 297, 298 (5th Cir. 1984). We must determine whether the
district court would have had original jurisdiction had the case
been filed there. See 28 U.S.C. § 1441(a) (1994).
Even if a court lacks jurisdiction at the time of removal and
regardless of whether there was an objection to the removal, the
2
When a case is removed and the complaint does not allege a
specific amount of damages, the defendant must prove by a
preponderance of the evidence that the amount in controversy
requirement is met. See De Aguilar v. Boeing Co., 11 F.3d 55, 58
(5th Cir. 1993).
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judgment will stand if the court had jurisdiction at the time it
entered judgment. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 64,
73 (1996); Grubbs v. General Elec. Credit Corp., 405 U.S. 699, 700
(1972). If, however, the court lacked jurisdiction both at the
time of removal and judgment, the judgment cannot stand. "Despite
a federal trial court's threshold denial of a motion to remand, if,
at the end of the day and case, a jurisdictional defect remains
uncured, the judgment must be vacated." Caterpillar, 519 U.S. at
76-77 (emphasis in original).
Diversity jurisdiction exists if the amount in controversy
requirement is satisfied and there is diversity of citizenship
between the plaintiffs and defendants. See 28 U.S.C. § 1332(a)
(1994). Diversity of citizenship is not at issue here; our only
concern is whether the amount in controversy is sufficient.3 At
the relevant time, the amount in controversy had to exceed $50,000.
See id.
I.
We first consider whether the plaintiffs' individual actual
damages plus individual punitive damages exceed $50,000. In their
state court petition, H & D Tire and Beard Plumbing alleged that
their individual claims for actual damages would not exceed
3
The district court's denial of class certification is not
relevant to our analysis. See St. Paul Mercury Indem. Co. v. Red
Cab Co., 303 U.S. 283, 292-93 (1938) (if district court had
jurisdiction at time of removal, subsequent event that decreases
amount in controversy does not defeat jurisdiction).
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$30,000. They also sought an unspecified amount of punitive
damages. Because it is not facially apparent from the complaint
that the jurisdictional amount is satisfied, we will look elsewhere
in the record to determine the amount in controversy. Cf. St. Paul
Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998);
Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).
According to documents filed with the plaintiffs' response to
Pitney Bowes's motion for summary judgment,4 H & D Tire, Beard
Plumbing, and Jones & Jones have actual damages claims of no more
than $72, $254, and $990, respectively. These amounts are
substantially less than the ceiling of $30,000 set forth in the
state court petition. There is no evidence that any member of the
putative class would have had a claim for significantly greater
actual damages. In fact, the plaintiffs' reply to Pitney Bowes's
brief opposing class certification indicates that a typical class
member's claim would be less than $200. There is no evidence of
conduct by Pitney Bowes that would support punitive damages awards
equal to roughly 50 to 690 times actual damages, the amount
necessary to bring the total damages above the statutory minimum.
Accordingly, the amount in controversy requirement is not satisfied
by the damages of any individual plaintiff.
4
These documents, which are appended to an affidavit from an
attorney for the plaintiffs, include copies of the replacement
leases executed by H & D Tire and Jones & Jones and a copy of a
Pitney Bowes internal worksheet for Beard Plumbing's lease.
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II.
We next consider whether the punitive damages of the class can
be aggregated and attributed to each plaintiff to meet the amount
in controversy requirement.5 Our earlier decisions seem to
conflict on this issue.
In Lindsey v. Alabama Telephone Co., 576 F.2d 593 (5th Cir.
1978), we held that the district court did not have subject matter
jurisdiction over a removed class action where the plaintiff
requested $2000 in compensatory damages and $1 million in exemplary
damages on behalf of the class. The complaint did not allege the
number of class members, and thus we could not mathematically
ascertain the amount in controversy for each member. See id. at
595. Implicit in this reasoning is that a claim for punitive
damages must be allocated pro rata among class members to determine
whether the jurisdictional requirement is met. Otherwise, the
number of members would have been irrelevant, the district court
would have had jurisdiction, and removal would have been
appropriate.
We later addressed a nearly identical issue in a case brought
jointly by 512 plaintiffs for damages related to an explosion. See
Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1329 (5th Cir. 1995).
5
Although the plaintiffs did not request a specific amount of
punitive damages in their state court petition, they did allege
that the class contained "thousands of persons and entities." For
purposes of our analysis, we assume that if punitive damages were
awarded to a class this size, they would exceed $50,000.
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We held that the full amount of alleged punitive damages must be
counted against each plaintiff to determine the amount in
controversy because punitive damages, under Mississippi law, are
fundamentally collective. See id. at 1333. Lindsey's reasoning
did not rely on a characterization of punitive damages under
Alabama law, but was instead based on the principle that "the
claims of several plaintiffs, suing as members of a class, cannot
be aggregated for the purpose of satisfying th[e] jurisdictional
predicate." Lindsey, 576 F.2d at 594 (citing Snyder v. Harris, 394
U.S. 332 (1969)).
After Allen was decided, we followed Lindsey and held that
punitive damages should not be aggregated and attributed to each
plaintiff for purposes of determining the amount in controversy.
See Ard v. Transcontinental Gas Pipe Line Corp., 138 F.3d 596, 602
(5th Cir. 1998).6 See also Cohen v. Office Depot, Inc., 204 F.3d
1069, 1073-77 (11th Cir. 2000) (holding that Tapscott v. MS Dealer
Service Corp., 77 F.3d 1353 (11th Cir. 1996), which considered a
class claim for punitive damages in the aggregate, was inconsistent
with Lindsey; because the court was bound by Lindsey, it divided a
$10 million claim for punitive damages among 39,000 class members
and held that the amount in controversy requirement was not met),
petition for cert. filed, No. 00-246 (U.S. Aug. 14, 2000).
6
When the magistrate judge concluded that punitive damages
could be aggregated and recommended denial of the plaintiffs'
motion to remand, Ard had not yet been decided.
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When panel opinions appear to conflict, we are bound to follow
the earlier opinion. See Harvey v. Blake, 913 F.2d 226, 228 n.2
(5th Cir. 1990). Because Lindsey is the earliest, and thus
controlling, decision in this circuit, the punitive damages claims
of the putative class cannot be aggregated and attributed to each
plaintiff to meet the jurisdictional requirement.
III.
We turn now to whether the plaintiffs' claim for attorneys'
fees fulfills the amount in controversy requirement. When a
statutory cause of action entitles a party to receive attorneys'
fees, the amount in controversy includes those fees. See Graham v.
Henegar, 640 F.2d 732, 736 (5th Cir. Unit A Mar. 1981). If the
statute awards attorneys' fees to the named plaintiffs in a class
action, the fees are attributed solely to the class
representatives. See Free v. Abbott Lab. (In re Abbott Lab.), 51
F.3d 524, 526-27 (5th Cir. 1995), aff'd by an equally divided
Court, 120 S. Ct. 1578 (2000). The plaintiffs in Abbott
Laboratories brought an antitrust class action under Louisiana law
and alleged $20,000 in actual damages. Because a state statute
provided that attorneys' fees would be awarded to the
"representative parties" in a class action, the attorneys' fees
increased the amount in controversy so that the claims of the named
plaintiffs satisfied the jurisdictional amount. See id.
Here, the plaintiffs sought attorneys' fees under the
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Connecticut Unfair Trade Practices Act, which provides:
In any action brought by a person under this section, the
court may award, to the plaintiff, in addition to the
relief provided in this section, costs and reasonable
attorneys' fees based on the work reasonably performed by
an attorney and not on the amount of recovery. In a
class action in which there is no monetary recovery, but
other relief is granted on behalf of a class, the court
may award, to the plaintiff, in addition to other relief
provided in this section, costs and reasonable attorneys'
fees.
Conn. Gen. Stat. Ann. § 42-110g(d) (West 1992). The use of the
word "plaintiff" in this statute does not dictate that any fee
award must be attributed solely to the representative party in a
class action.7 The fee award could also be attributed to the
plaintiff class as a whole and therefore allocated pro rata among
its members for purposes of determining the amount in controversy.
Cf. Goldberg v. CPC Int'l, Inc., 678 F.2d 1365, 1367 (9th Cir.
1982) (attorneys' fees cannot be aggregated to reach jurisdictional
amount).
Because the Connecticut statute does not specifically provide
that attorneys' fees are awarded to the class representatives, we
decline to attribute the attorneys' fees solely to the named
7
Until 1976, a court could award attorneys' fees to either the
plaintiff or the defendant under this statute; an amendment
substituted the words "the plaintiff" for "either party" that year.
See Conn. Gen. Stat. Ann. § 42-110g (West 1992) (historical and
statutory notes); Staehle v. Michael's Garage, Inc., 646 A.2d 888,
890-91 n.8 (Conn. App. Ct. 1994). Presumably, the Connecticut
legislature wanted to limit awards of attorneys' fees to the side
bringing the action, but that does not indicate that the change was
intended to limit the award of attorneys' fees to the named
representatives in a class action.
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plaintiffs to determine whether the amount in controversy is
sufficient. Compare Abbott Lab., 51 F.3d at 526-27, with Cohen v.
Office Depot, Inc., 204 F.3d 1069, 1080 & n.11 (11th Cir. 2000)
(finding no basis for attributing award of attorneys' fees to class
representative where statutes award fees to "prevailing party" or
"[a]ny person prevailing"), petition for cert. filed, No. 00-246
(U.S. Aug. 14, 2000), and Darden v. Ford Consumer Fin. Co., 200
F.3d 753, 758 & n.4 (11th Cir. 2000) (declining to aggregate
attorneys' fees for jurisdictional purposes where statute entitled
"any person who is injured" to attorneys' fees).
* * *
Because the amount in controversy requirement was not
fulfilled when Pitney Bowes removed this case or at the time of
judgment, the district court did not have jurisdiction. We vacate
its judgment and instruct it to remand this case to the state court
in which it was initially filed.
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