[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 98-4787 08/17/99
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 97-3611-Civ-JAL
CHERYL COHEN, on behalf of herself and
others similarly situated,
Plaintiff-Appellant,
versus
OFFICE DEPOT, INC., a Florida corporation,
Defendant-Appellee.
__________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(August 17, 1999)
Before BIRCH and CARNES, Circuit Judges, and MILLS*, Senior District Judge.
CARNES, Circuit Judge:
*
Honorable Richard Mills, Senior U.S. District Judge for the Central District of Illinois,
sitting by designation.
Cheryl Cohen appeals the district court’s dismissal of her Florida state law
deceptive advertising suit against Office Depot. The district court struck Cohen’s
prayer for punitive damages from her complaint for failure to comply with a
Florida statute requiring a plaintiff to obtain leave of court before requesting
punitive damages. Finding that the other relief Cohen requested did not satisfy the
amount-in-controversy requirement for diversity jurisdiction, the court dismissed
her suit on jurisdictional grounds. For the reasons set forth below, we reverse.
I. BACKGROUND
A. FACTS
Cohen’s complaint alleges that Office Depot made representations and
statements in its catalogues which led “customers to believe that Office Depot’s
prices for merchandise in its catalog will be as low, if not lower, than the prices of
identical merchandise purchased from any other office supply store, including
Office Depot’s own stores[,]” when “[i]n fact, . . . Office Depot’s catalog prices are
often significantly higher than the price of the same item in the Office Depot
stores.” The complaint also alleges that Cohen relied upon such advertisements in
the Fall 1997 catalogue when she purchased by phone a color cartridge for $26.99
and file folder labels for $1.99. When those items were subsequently delivered, the
accompanying invoice reflected no delivery charges in the price of the items. A
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few days later, Cohen went into an Office Depot store and saw the same cartridge
priced at $2.00 less, and the same labels priced at $0.30 less, than their prices in the
catalogue. An Office Depot spokesman allegedly admitted to a newspaper that the
claim of free delivery was false when the spokesman explained the difference
between the store and catalogue prices by saying, “It is certainly not uncommon
that catalog pricing would be a little higher because of providing free delivery.”
B. PROCEDURAL HISTORY
On November 12, 1997, Cohen filed a complaint in federal district court on
behalf of herself and a proposed nationwide class of approximately 39,000 Office
Depot customers, alleging that Office Depot had made deceptive statements
regarding the pricing of its merchandise in violation of the Florida laws governing
unfair and deceptive trade practices, fraud, and misleading and negligent
advertising. In addition to compensatory damages, the complaint sought
$10,000,000.00 in punitive damages, an injunction prohibiting deceptive
advertising in the future, attorney fees, and costs. Because no violation of federal
law was alleged, subject matter jurisdiction was founded solely upon diversity of
citizenship under 28 U.S.C. § 1332.
Office Depot moved to strike the punitive damages request from the
complaint and dismiss the lawsuit. The court granted the motion to strike the
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punitive damages request on the ground that Cohen had failed to comply with
Florida Statutes § 768.72, which requires a plaintiff to obtain leave from the court
before including a prayer for punitive damages in a pleading. The court then
determined that the other relief requested by Cohen failed to meet the $75,000
amount-in-controversy requirement for diversity jurisdiction. Accordingly, the
court granted Office Depot’s motion to dismiss Cohen’s suit for lack of subject
matter jurisdiction.1
II. DISCUSSION
The issue on appeal is whether the district court erred in concluding that
Cohen had not met the $75,000 amount-in-controversy requirement for diversity
jurisdiction. For diversity cases originally brought in federal court, the amount in
controversy is simply the sum claimed in the plaintiff’s complaint, “if the claim is
apparently made in good faith. It must appear to a legal certainty that the claim is
really for less than the jurisdictional amount to justify dismissal.” St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S. Ct. 586, 590
(1938).
Cohen argues that her requests for punitive damages, attorney fees, and
injunctive relief, taken individually or together, satisfy the amount-in-controversy
1
The court subsequently clarified that the dismissal was without prejudice.
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requirement and establish diversity jurisdiction. Because we conclude that her
request for punitive damages alone is sufficient for jurisdictional purposes, we
need not consider whether the other relief she requests would suffice.
The Supreme Court has held that “[w]here both actual and punitive damages
are recoverable under a complaint[,] each must be considered to the extent claimed
in determining jurisdictional amount.” Bell v. Preferred Life Assur. Soc. of
Montgomery, Alabama, 320 U.S. 238, 240, 64 S. Ct. 5, 6 (1943). Here, Cohen
requests $10,000,000 in punitive damages, which is obviously greater than the
amount-in-controversy threshold of $75,000. It is undisputed that under state law
Cohen would be entitled to an unspecified amount of punitive damages on two of
her claims if she is successful.
Under our holding in Tapscott v. MS Dealer Service Corporation, 77 F.3d
1353, 1358-59 (11th Cir. 1996), in a class action lawsuit punitive damages may be
aggregated to satisfy the amount-in-controversy requirement for each class
member. To be sure, Tapscott involved Alabama law, not Florida law, and it did
not establish a broad rule that all punitive damages claims may be aggregated for
purposes of determining the amount in controversy. Tapscott did hold, however,
that punitive damages may be aggregated where state law provides that an award of
punitive damages is for the “public benefit” or “collective good,” and the award
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would reflect “the wrongfulness of the defendant’s course of conduct as a whole.”
Tapscott, 77 F.3d at 1358.
Those conditions are met in this case. Because Florida law, like Alabama
law, provides that “punitive damages are warranted only where the egregious
wrongdoing of the defendant . . . constitutes a public wrong,” Chrysler Corp. v.
Wolmer, 499 So. 2d 823, 825 (Fla. 1986), awarding punitive damages is for the
public benefit or collective good. Likewise, as in Tapscott, 77 F.3d at 1358-59, the
award of punitive damages will reflect not the wrong done to any single individual
but the wrongfulness of the conduct as a whole.
Accordingly, under Tapscott, punitive damages in this Florida diversity case
may be aggregated to satisfy the amount-in-controversy requirement for each class
member. But that can occur only if Cohen is permitted to assert her request for
punitive damages. The district court struck Cohen’s prayer for punitive damages,
because she failed to comply with the conditions for seeking punitive damages set
forth in Florida Statutes § 768.72. Section 768.72 provides as follows:
In any civil action, no claim for punitive damages shall be permitted
unless there is a reasonable showing by evidence in the record or
proffered by the claimant which would provide a reasonable basis for
recovery of such damages. The claimant may move to amend her or
his complaint to assert a claim for punitive damages as allowed by the
rules of civil procedure. The rules of civil procedure shall be liberally
construed so as to allow the claimant discovery of evidence which
appears reasonably calculated to lead to admissible evidence on the
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issue of punitive damages. No discovery of financial worth shall
proceed until after the pleading concerning punitive damages is
permitted.
Cohen argues that she satisfied the requirements of § 768.72 because she
proffered evidence of malice and wanton and reckless conduct sufficient to
establish a reasonable basis for her punitive damages claim. However, the Florida
Supreme Court has interpreted § 768.72 as requiring the dismissal of any request
for punitive damages asserted without leave of the court. See Simeon, Inc. v. Cox,
671 So. 2d 158, 160 (Fla. 1996) (concluding “[i]t was inconsequential that the trial
court . . . held a hearing” to determine whether there was an evidentiary basis for a
punitive damages claim stated in the initial complaint, because under the statute
“any punitive damages claim alleged prior to a party asking for and receiving leave
of the court must be dismissed or stricken.”). See also WFTV, Inc. v. Hinn, 705 So.
2d 1010, 1011 (Fla. 5th Dist. Ct. App. 1998); Mayer v. Frank, 659 So. 2d 1254,
1255 (Fla. 4th Dist. Ct. App. 1995).
Thus, if § 768.72 applies in this case, the district court correctly struck the
request for punitive damages from Cohen’s complaint, which means that request
could not provide a basis for federal diversity jurisdiction. If, on the other hand, §
768.72 does not apply, then the request for punitive damages should not have been
struck, and would provide a sufficient basis to satisfy the amount-in-controversy
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requirement for diversity jurisdiction. Accordingly, we must determine whether
the pleading requirements of § 768.72 apply here, which entails resolving whether
they conflict with any Federal Rule of Civil Procedure.2
Federal courts sitting in diversity are required to apply state substantive law
and federal procedural law. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.
Ct. 817, 822 (1938); Lundgren v. McDaniel, 814 F.2d 600, 605 (11th Cir. 1987).
The distinction between substance and procedure is often elusive, however, and the
Supreme Court struggled for years to delineate it. In Guaranty Trust Co. of New
York v. York, 326 U.S. 99, 109, 65 S. Ct. 1464, 1470 (1945), the Court adopted an
“outcome-determinative” test, meaning that the question of whether to apply state
or federal law in diversity cases should be resolved so that “the outcome of the
litigation in federal court [would] be substantially the same . . . as it would be if
tried in a State court.” Realizing that even purely procedural laws could be
outcome-determinative, the Court retreated from the York test 13 years later in
Byrd v. Blue Ridge Rural Electric Coop., 356 U.S. 525, 78 S. Ct. 893 (1958). That
decision held that in order to decide which rule should apply, courts must balance
2
We recognize that § 768.72 contains a discovery component as well as a pleading
component, however, its discovery provision is not at issue in this case.
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the federal interest in uniform process against the state interest in uniformity of
results. See 356 U.S. at 536-40, 78 S. Ct. at 900-02.
Seven years later, in Hanna v. Plumer, 380 U.S. 460, 85 S. Ct. 1136 (1965),
the Court developed a two-part test for deciding when state law should apply in
federal diversity cases. Under the Hanna test, a court must determine whether the
state law in question directly conflicts with a Federal Rule of Civil Procedure. If it
does, “the court [is] instructed to apply the Federal rule, and can refuse to do so
only if the Advisory Committee, [the Supreme] Court, and Congress erred in their
prima facie judgment that the Rule in question transgresses neither the terms of the
[Rules] Enabling Act nor constitutional restrictions.” Hanna, 380 U.S. at 471, 85
S. Ct. at 1144.
In addressing the applicability of § 768.72, at least one district court asked if
it is substantive or procedural, and in answering that question looked to state law
decisions characterizing the provision as substantive for some other purpose (such
as the division of authority between the state legislature and judiciary). See Teel v.
United Techs. Pratt & Whitney, 953 F. Supp. 1534, 1540 (S.D. Fla. 1997). That
approach jumbles up the questions. Under Hanna, the proper question to ask is not
whether the state law provision is procedural or substantive; instead, the court must
ask whether the state law provision conflicts with a federal procedural rule. If it
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does, the federal procedural rule applies and the state provision does not. Stated
another way, if the state law conflicts with a federal procedural rule, then the state
law is procedural for Erie/Hanna purposes regardless of how it may be
characterized for other purposes.
The only exception is where the advisory committee, the Supreme Court,
and Congress have collectively erred and adopted a federal procedural rule that is
either unconstitutional or should not have been adopted under the Rules Enabling
Act process because it is a matter of substantive law. That exception will be
exceedingly rare, and it does not apply here because, as we shall see, § 768.72
conflicts with Federal Rule of Civil Procedure 8(a)(3), which is a procedural rule
and is not unconstitutional. To reiterate the important point that is sometimes
overlooked: where state law conflicts with a federal rule of procedure, the
substance versus procedure question is asked only about the federal rule, not
about the state law provision. That is the first prong of the Hanna test.
The second prong of the Hanna test comes into play only if the state law
does not conflict with a Federal Rule; if that is the case, then the court must
determine whether failure to apply the state law would lead to different outcomes
in state and federal court and result in inequitable administration of the laws or
forum shopping. See Hanna, 380 U.S. at 468, 85 S. Ct. at 1142. But those
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determinations are not reached where the first prong of Hanna applies, i.e., where
the state provision conflicts with a federal rule of procedure.
Applying the Hanna test, federal district courts in Florida have reached
different conclusions about whether § 768.72 applies in diversity cases. Most of
the courts to address the matter agree that § 768.72 implicates Federal Rules of
Civil Procedure 8(a) and 9(g), but they have split almost evenly on whether the
statute actually conflicts with either or both of those rules. See, e.g., Alexander v.
University/Gainesville Healthcare Ctr., Inc., 17 F. Supp.2d 1291, 1292 (N.D. Fla.
1998) (conflicts with Rule 8(a)); Tutor Time Child Care Sys., Inc. v. Franks Inv.
Group, Inc., 966 F. Supp. 1188, 1190 (S.D. Fla. 1997) (conflicts with both Rule
8(a) and Rule 9(g)); Teel, 953 F. Supp. at 1538-41 (no conflict); Sanders v.
Mayor’s Jewelers, Inc., 942 F. Supp. 571, 575 (S.D. Fla. 1996) (no conflict); Al-
Site Corp. v. VSI Int’l, Inc., 842 F. Supp. 507, 512 (S.D. Fla. 1993) (no conflict);
State of Wisconsin Inv. Bd. v. Plantation Square Assocs., Ltd., 761 F. Supp. 1569,
1573-80 (S.D. Fla. 1991) (conflicts with Rule 8(a)); Citron v. Armstrong World
Indus., Inc., 721 F. Supp. 1259, 1261-62 (S.D. Fla. 1989) (conflicts with Rule
9(g)).
Cohen argues that § 768.72 conflicts with Federal Rule of Civil Procedure
8(a)(2) and (a)(3). Rule 8(a) states, “A pleading which sets forth a claim for relief,
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whether an original claim, counterclaim, cross-claim, or third-party claim, shall
contain . . . (2) a short and plain statement of the claim showing that the pleader is
entitled to relief, and (3) a demand for judgment for the relief the pleader seeks.”
Rule 8(a)(2)’s “short and plain statement” rule abandons traditional pleading
formalities, requiring only that the pleading “give the defendant fair notice of what
the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson,
355 U.S. 41, 47, 78 S. Ct. 99, 103 (1957). Cohen argues that § 768.72 essentially
requires heightened pleading for punitive damages claims, contrary to the short and
plain statement rule of 8(a)(2). It is clear, however, that a request for punitive
damages is not a “claim” within the meaning of 8(a)(2); it is only part of the relief
prayed for in a claim. Thus, there is no conflict between § 768.72 and Rule 8(a)(2).
As one district court has pointed out, “the more relevant portion of Rule 8
appears to be subsection (a)(3).” Teel, 953 F. Supp. at 1538. We have explained
that under Rule 8(a)(3), any pleading that sets forth a claim must include a
“‘concise statement identifying the remedies and the parties against whom relief is
sought. . . .’” Goldsmith v. City of Atmore, 996 F.2d 1155, 1161 (11th Cir. 1993)
(quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1255, at 366 (2d ed. 1990)). Punitive damages are a remedy, so under the rule a
request for them should be included in the complaint. As we noted above,
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however, § 768.72 prohibits the inclusion of a request for punitive damages in any
pleading without leave of court. Thus, it appears that § 768.72 does conflict with
Rule 8(a)(3).
Office Depot contends that there is no real conflict between § 768.72 and
Rule 8(a)(3) because Federal Rule of Civil Procedure 54(c) essentially renders
Rule 8(a)(3) a nullity. It is true that Rule 54(c) tempers the effect of Rule 8(a)(3)
somewhat by stating that, except in the case of default judgments, “every final
judgment shall grant the relief to which the party in whose favor it is rendered is
entitled, even if the party has not demanded such relief in the party’s pleadings.”
But we do not view that language of Rule 54(c) as eviscerating Rule 8(a)(3)’s
express and unambiguous direction that the plaintiff include a demand for relief in
her pleadings. “The demand in fact may be helpful in indicating the relief to which
plaintiff is entitled. . . . In addition, relief that the parties do not desire should not
be forced on them.” 10 Wright, Miller, & Kane, Federal Practice & Procedure §
2662, at 158-60 (3d ed. 1998). Furthermore, the portion of Rule 54(c) relating to
default judgments provides that where the party against whom the claim is brought
fails to defend against the claim, the relief awarded in a default judgment “shall not
be different in kind from or exceed in amount that prayed for in the demand for
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judgment.” Thus, that part of Rule 54 actually reinforces Rule 8(a)(3)’s direction
that the relief sought be included in the complaint.
Even if Rule 8(a)(3) does not require a plaintiff to include in a complaint a
request for all the relief sought, there is still a conflict between § 768.72 and Rule
8(a)(3), because the rule clearly allows the plaintiff to include a request for
punitive damages in her initial complaint, whereas § 768.72 prevents her from
doing so. A state law may conflict with a Federal Rule even where it violates no
affirmative command or requirement of the rule, see Hanna, 380 U.S. at 470, 85 S.
Ct. at 1143, if the Federal Rule “occupies the statute’s field of operation.”
Burlington N. R.R. Co. v. Woods, 480 U.S. 1, 7, 107 S. Ct. 967, 970 (1987). See
also United States v. Lockheed Missiles & Space Co., 171 F.3d 1208, 1217 (9th
Cir. 1999); S.A. Healy Co. v. Milwaukee Metropolitan Sewerage Dist., 60 F.3d
305, 307 (7th Cir. 1995); Exxon Corp. v. Burglin, 42 F.3d 948, 950 n.3 (5th Cir.
1995); Neifeld v. Steinberg, 438 F.2d 423, 426 (3d Cir. 1971). Rule 8(a)(3)
“occupies [§ 768.72's] field of operation,” because Rule 8(a)(3) governs the ability
of plaintiffs to request any and all of the relief sought (including punitive damages)
in all pleadings that state a claim (including initial complaints). If applied in
federal court, § 768.72 would impair the operation and effect of Rule 8(a)(3).
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The nature of the conflict between § 768.72 and Rule 8(a)(3) is similar to the
conflict in Hanna itself. The issue in that case was whether a Massachusetts law or
Federal Rule of Civil Procedure 4(d)(1) should govern service of process. The
Massachusetts law provided that service could be effected only “by delivery in
hand upon [the] executor or administrator . . . .” Hanna, 380 U.S. at 462, 85 S. Ct.
at 1139 (quoting Mass. Gen. Laws ch. 197, § 9 (1958)). Rule 4(d)(1), on the other
hand, provided that “[s]ervice shall be made . . . [u]pon an individual . . . by
delivering a copy of the summons and of the complaint to him personally or by
leaving copies thereof at his dwelling house or usual place of abode with some
person of suitable age and discretion then residing therein . . . .” Id. at 461, 85 S.
Ct. at 1138-39 (quoting Fed. R. Civ. P. 4(d)(1)) (emphasis added).
Although the express language of Rule 4(d)(1) arguably could have been
viewed as not conflicting with the Massachusetts law, the Supreme Court
concluded that “the clash [was] unavoidable” because “Rule 4(d)(1) says –
implicitly, but with unmistakable clarity – that inhand service is not required in
federal courts.” Id. at 470, 85 S. Ct. at 1143. Likewise, in this case, because Rule
8(a)(3) allows a plaintiff to request in her initial complaint all the relief she seeks,
it says “implicitly, but with unmistakable clarity” that a plaintiff is not required to
wait until a later stage of the litigation to include a prayer for punitive damages,
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nor is she required to proffer evidence or obtain leave of court before doing so. In
short, Rule 8(a)(3) occupies the field in which the pleading portion of § 768.72
would otherwise operate, leaving no room for it. The two provisions do conflict.
Having concluded that Florida Statutes § 768.72 conflicts with Rule 8(a)(3),
we must apply Rule 8(a)(3) unless it transgresses the Rules Enabling Act or the
Constitution. See id. at 471, 85 S. Ct. at 1144. The Rules Enabling Act, 28 U.S.C.
§ 2072, provides, in pertinent part:
(a) The Supreme Court shall have the power to prescribe general rules
of practice and procedure and rules of evidence for cases in the United
States district courts (including proceedings before magistrates
thereof) and courts of appeals.
(b) Such rules shall not abridge, enlarge or modify any substantive
right . . . .
It is clear that a pleading rule such as 8(a)(3) relates to the “practice and
procedure” of the district courts. See, e.g., Follenfant v. Rogers, 359 F.2d 30, 31-
32 (5th Cir. 1966) (matters of pleading are governed by “rules of practice” and
therefore are controlled by the Federal Rules, not state law). Furthermore, in
Sibbach v. Wilson & Co., 312 U.S. 1, 14, 61 S. Ct. 422, 427 (1941), the Supreme
Court held that as long as a Federal Rule “really regulates procedure,” it will not be
held invalid on the ground that it affects substantive rights. As the Court later
explained:
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Undoubtedly most alterations of the rules of practice and procedure
may and often do affect the rights of litigants. Congress’ prohibition
of any alteration of substantive rights of litigants was obviously not
addressed to such incidental effects as necessarily attend the adoption
of the prescribed new rules of procedure upon the rights of litigants
who, agreeably to rules of practice and procedure, have been brought
before a court authorized to determine their rights.
Mississippi Pub. Corp. v. Murphree, 326 U.S. 438, 445, 66 S. Ct. 242, 246 (1946).
Finally, none of the parties in this case or any other cases have challenged
Rule 8(a)(3) as unconstitutional, and we see no basis for such a challenge.
III. CONCLUSION
Our application of Hanna leads us to conclude that the pleading component
of § 768.72 does not apply in this case due to its conflict with Rule 8(a)(3). For
that reason, we hold that the pleading requirements of Florida Statutes § 768.72 are
inapplicable in federal diversity cases. It follows that Cohen’s request for punitive
damages should not have been dismissed for failure to comply with those
requirements. Having determined that the district court erred in striking Cohen’s
request for punitive damages, and that those damages may satisfy the amount-in-
controversy requirement for diversity jurisdiction, we do not decide whether the
other relief requested, including attorney fees and injunctive relief, would be
sufficient to meet that requirement.
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Accordingly, we REVERSE the district court’s dismissal for lack of subject
matter jurisdiction and REMAND the case for further proceedings consistent with
this opinion.
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