[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 04-11401 JUNE 6, 2005
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 02-81164-CV-DMM
SUSAN J. FRIEDMAN,
Plaintiff-Appellant,
versus
NEW YORK LIFE INS. CO.,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(June 6, 2005)
Before ANDERSON and WILSON, Circuit Judges, and OWENS*, District Judge,
ANDERSON, Circuit Judge:
________________________
*Honorable Wilbur D. Owens, District Judge for the Middle District of Georgia, sitting by
designation.
Plaintiff, Susan Friedman, appeals the district court's denial of her motion to
remand to state court for lack of jurisdiction. This appeal stems from Friedman’s
suit on behalf of herself and all those similarly situated against her insurer, New
York Life Insurance Co. Friedman claims that her premiums were raised in
violation of certain statutory provisions of Florida law that were, she asserts,
incorporated into her contract with New York Life.1 She seeks reimbursement of
the allegedly overpaid premiums, declaratory relief, and an injunction against
continuing violation of Florida law. The case was brought in state court and
1
Friedman asserts that New York Life has violated Fla.Code § 625.65625, which
provides in relevant part:
(1) . . . an insurer that offers a group health insurance policy may not establish rules for
eligibility, including continued eligibility, of an individual to enroll under the terms of the
policy based on any of the following health-status-related factors in relation to the
individual or a dependent of the individual:(a) Health status. (b) Medical condition,
including physical and mental illnesses. (c) Claims experience. (d) Receipt of health care.
(e) Medical history. (f) Genetic information.(g) Evidence of insurability, including
conditions arising out of acts of domestic violence. (h) Disability.
...
(4)(a) An insurer that offers health insurance coverage may not require any
individual, as a condition of enrollment or continued enrollment under the policy,
to pay a premium or contribution that is greater than such premium or
contribution for a similarly situated individual enrolled under the policy on the
basis of any health-status-related factor in relation to the individual or to an
individual enrolled under the policy as a dependent of the individual.
(b) This subsection does not:
1. Restrict the amount that an employer may be charged for coverage under a
group health insurance policy. . .
2
removed by New York Life on diversity grounds. 28 U.S.C. Sec. 1332. Because
we conclude that New York Life failed to satisfy the $75,000 amount in
controversy requirement, we conclude that the district court was without diversity
jurisdiction.2
I. FACTS AND PROCEDURAL HISTORY
Friedman is a member of the American Veterinary Medical Association
(AVMA), and her health plan is a group plan offered to AVMA members. At the
time of her enrollment, there were three premium rating classes used by the
AVMA: Standard, Standard Plus and Standard Plus 20. Due to her health history,
Friedman was placed in the Standard Plus 20 rating class at enrollment, and her
premium was 20% higher than the Standard premium rating class. At the time she
enrolled, Standard Plus rates were 10% higher than the Standard premium rating
class. Several years after she enrolled, New York Life raised the rates for the
Standard Plus group to 15% higher than Standard, and for Standard Plus 20 to
50% higher than Standard. Friedman’s proposed class is “all AVMA insureds in
Florida rated Standard Plus and/or Standard Plus 20."
2
After denial of Friedman’s motion to remand, the district court dismissed the
complaint pursuant to Fed. R. Civ. P. 12(b)(6). Friedman also appeals that ruling, but we do not
reach that issue because we vacate on the jurisdictional ground.
3
The suit was originally brought in the 15th Judicial Circuit Court in and for
Palm Beach County. New York Life removed on diversity grounds. Friedman
moved for remand to state court, claiming that the amount in controversy
requirement had not been met. The district court denied the motion, as well as a
motion for reconsideration.
The district court judge did not provide any reasoning for its denial of
Friedman’s motion for remand to state court or her motion for reconsideration. On
appeal, New York Life offers three possible bases for a finding that the amount in
controversy exceeds $75,000; 1) the aggregate total of the premium increases for
which class members seek reimbursement exceeds $75,000; 2) the amount in
controversy is equal to the face value of Friedman's policy, which exceeds
$75,000; and 3) the value of injunctive relief to the plaintiffs exceeds $75,000.
II. DISCUSSION
Diversity is the only potential basis for jurisdiction in the instant case. As
this Court explained in Morrison, v. Allstate Indem. Co., 228 F.3d 1255 (11th Cir.
2000): “lower federal courts are empowered to hear only cases for which there has
been a congressional grant of jurisdiction, and once a court determines that there
has been no grant that covers a particular case, the court's sole remaining act is to
4
dismiss the case for lack of jurisdiction.” Id. at 1261(citations omitted). As this
Court noted in Kirkland v. Midland Mortgage Co., 243 F.3d 1277(11th Cir. 2001),
“[i]n removal cases, the burden is on the party who sought removal to demonstrate
that federal jurisdiction exists. Where the plaintiff has not plead a specific amount
of damages . . . the defendant is required to show. . . by a preponderance of the
evidence that the amount in controversy” can be satisfied. Id. at 1281 n.5
(citations omitted).
A. Aggregation
In Morrison, this Court outlined the relevant framework with regards to the
aggregation issue that is the crux of this case:
Generally, if no single plaintiff's claim satisfies the requisite amount
in controversy, there can be no diversity jurisdiction. However, there
are situations in which multiple plaintiffs have a unified, indivisible
interest in some common fund that is the object of litigation,
permitting them to add together, or "aggregate," their individual
stakes to reach the amount in controversy threshold. As explained by
the Supreme Court in Zahn v. International Paper Co.:
When two or more plaintiffs, having separate and
distinct demands, unite for convenience and economy in
a single suit, it is essential that the demand of each be of
the requisite jurisdictional amount; but when several
plaintiffs unite to enforce a single title or right, in which
they have a common and undivided interest, it is enough
if their interests collectively equal the jurisdictional
amount.
5
Zahn, 414 U.S. 291 at 295, 94 S.Ct. 505 at 508 (quoting Troy Bank of
Troy, Indiana v. G.A. Whitehead & Co., 222 U.S. 39, 40-41, 32 S.Ct.
9, 56 L.Ed. 81 (1911)).
Despite pervasive criticism of the "separate and distinct" versus
"common and undivided" distinction as arcane and confusing, there
appears to be a common thread in the relevant case law–the presence
of a "common and undivided interest" is rather uncommon, existing
only when the defendant owes an obligation to the group of plaintiffs
as a group and not to the individuals severally. See Eagle v. American
Tel. and Tel. Co., 769 F.2d 541, 546 (9th Cir. 1985) ("[T]he character
of the interest asserted depends on the source of plaintiffs' claims. If
the claims are derived from rights that they hold in group status, then
the claims are common and undivided. If not, the claims are separate
and distinct."); National Org. for Women v. Mutual of Omaha Ins.
Co., 612 F.Supp. 100, 107 (D.D.C. 1985) ("[T]he cases that allow
aggregation often speak of the presence of some fund to which a
plaintiff class is seeking access [, and]. . . they often involve an
attempt to enforce a right that belongs to a group.").
Our predecessor court elucidated this point further in Eagle Star Ins.
Co. v. Maltes, 313 F.2d 778 (5th Cir. 1963), stating: "[T]he Supreme
Court has evinced a desire to give a strict construction to allegations
of the jurisdictional amount in controversy, so as to allow aggregation
only in those situations where there is not only a common fund from
which the plaintiffs seek relief, but where the plaintiffs also have a
joint interest in that fund, such that if plaintiffs' rights are not affected
by the rights of co-plaintiffs, then there can be no aggregation. . . . In
other words, the obligation to the plaintiffs must be a joint one." Id. at
781; see also Gilman v. BHC Secs., Inc., 104 F.3d 1418, 1424 (2d
Cir. 1997) ("Plaintiffs in paradigm 'common fund' cases assert claims
to a piece of land, a trust fund, an estate, an insurance policy, a lien,
or an item of collateral, which they claim as common owners or in
which they share a common interest arising under a single title or
right.").
Morrison, 228 F.3d at 1262-63 (emphasis added in Morrison).
6
The Morrison case is similar to the instant case in several respects. It
involved a class action against insurance company defendants. The issue was the
$75,000 amount in controversy and whether the claims of the class members could
be aggregated to reach that threshold. Also, like this case, the plaintiffs were not
seeking the face amount of the policy, but rather were seeking a different amount.
They sought damages for the diminished value of their wrecked vehicles after
repair; in other words, they sought the difference in value between pre-wreck
value and post-wreck value. In addition to their damage claims, they also sought
injunctive relief. Applying the principles quoted above, this Court held that the
nature of the right asserted was crucial, and that the rights asserted by the
Morrison plaintiffs were separate and distinct and therefore could not be
aggregated.
We conclude that Friedman and the other putative class members have
separate and distinct claims, which do not constitute common and undivided
claims to a common fund. Friedman and each of the other plaintiffs each claims a
right to damages, namely a right to be reimbursed for the amounts that each has
overpaid in premiums, which overpayments they allege violate Florida law. Each
plaintiff could have brought a separate suit. If plaintiffs prevail, each plaintiff will
recover precisely the amount of his or her overpayment (whether in the same or
7
different amounts) without any effect on the rights of co-plaintiffs. Moreover,
there is no common fund; the plaintiffs do not seek distribution of the face amount
of the policy; rather, each plaintiff seeks only reimbursement of the amount he or
she overpaid in premiums.
New York Life argues that there should be aggregation because the class
members here are seeking the totality of all of the overcharged amounts, such that
they seek to create a fund from which class members will benefit. We reject this
argument because such a fund is not the type of common fund which is required
for aggregation. As the second circuit noted in Gilman:
Such a “fund” is created to facilitate the litigation process in virtually
every class action, and has nothing necessarily to do with whether the
plaintiffs shared a pre-existing (pre-litigation) interest in the subject
of the litigation.
Under the classic “common fund” cases, what controls is the nature of
the right asserted, not whether successful vindication of the right will
lead to a single pool of money that will be allocated among the
plaintiffs. To call any recovery that a class might win a “fund” to
which the class members are jointly entitled is “merely added
verbage. There is no fund. The claim remains one on behalf of ...
separate individuals for the damage suffered by each due to the
alleged . . . conduct of the defendant.”
104 F.3d at 1427 (citations omitted). See Morrison, 228 F.3d at 1264 (citing
Gilman as having explained “cogently the difference between a common fund
permitting aggregation and the common fund that is usually generated in any class
8
action”). As in Gilman, the claims in the instant case remain separate and distinct
claims of separate individuals for reimbursement of the amount each overpaid.
New York Life also argues that Friedman and her putative class members
are mere certificate holders, and that there is only one policy which was issued by
New York Life to AVMA. Indeed, the only ground upon which New York Life
seeks to distinguish Morrison is that Morrison involved multiple insurance
policies, whereas the instant case involves only a single insurance policy. We find
New York Life’s attempted distinction of Morrison to be unpersuasive. The
instant plaintiffs are not asserting a claim for the proceeds of that single policy;
rather, each plaintiff is asserting a claim to be reimbursed the amount of overpaid
premiums which each plaintiff paid.
Also, New York Life’s suggestion that the individual certificate holders do
not have individual contracts with New York Life is undermined by the Florida
case law. In Equitable Life Assurance Society of the United States v. Waggoner,
269 So.2d 747, 748 (4th DCA 1972), the Florida court stated: “While the
authorities are divided on the question, we believe the better view to be the one
which holds that under group life insurance policies there is a contract between the
insurer and the individual insured, that the contract consists both of the master
policy and the certificate of insurance construed together.” This portion of
9
Waggoner was quoted with approval in Rucks v. Old Republic Life Ins. Co., 345
So.2d 795, 796 (4th DCA 1977), and Rucks was quoted with approval by this court
in Davis v. Crown Life Ins. Co., 696 F.2d 1343, 1345 (11th Cir. 1983). See also
Lutz v. Protective Life Ins. Co., 328 F.Supp.2d 1350, 1362 (S.D. Fla. 2004) (under
indistinguishable facts involving a group policy, holding that each individual
certificate holder had an individual policy with the insurance company, and that
aggregation was not proper).
In support of its argument that certificate holders like Friedman do not have
individual contracts with New York Life, and in support of its argument that this
fact has crucial significance for the “common and undivided interest issue,” New
York Life cites Eagle v. AT&T, 769 F.2d 541 (9th Cir. 1985); Phoenix Ins. Co. v.
Woosley, 287 F.2d 531, 533 (10th Cir. 1961); Bishop v. General Motors Corp., 925
F.Supp. 294, 298 (D. N.J. 1996); Broenen v. Beaunit Corp., 305 F.Supp. 688, 691-
92 (E.D. Wis. 1969), aff’d, 440 F.2d 1244 (7th Cir. 1970); Edgerton v. Armour &
Co., 94 F. Supp. 549 (C.D. Calif. 1950).
All of these cases are distinguishable; each involved some variation of a
common fund and an undivided interest. In Eagle, plaintiffs were shareholders of
a utility company and their claim was akin to a shareholders’ derivative suit. 769
F.2d at 547. Broenen also involved shareholder plaintiffs. The trust indenture
10
they jointly held prohibited each from taking any action that would affect the
rights of others. 305 F.Supp. at 692. In Edgerton, plaintiffs were all shareholders
or assignees of a dissolved corporation. 94 F.Supp. at 549. In Phoenix, the parties
were seeking distribution of the proceeds of a fire insurance policy, and had a
common and undivided interest in the claim. 287 F.2d at 533.3
Indeed, New York Life can point to no case in this or any other circuit
allowing aggregation for jurisdictional purposes where each plaintiff has a claim
of the kind described above – i.e., one which plaintiff could have brought
separately; in which the amount received does not vary depending upon whether
other plaintiffs join or drop out; and in which a potential plaintiff’s non-
3
New York Life does point to one aggregation case, Black v. Beame, 550 F.2d 815,
818 (2d Cir. 1977), which does not fit neatly with the common fund cases cited above. In Black,
nine siblings, some of whom were in foster care, sued the state on a theory that the state could
preserve the family unity without increasing the state’s overall expenditure by taking the children
out of foster care and using those funds to hire a social worker to help the family get on its feet.
On its way to dismissing the plaintiffs’ statutory claims, the Second Circuit reversed the district
court’s finding of no jurisdiction. In the court’s view, the case was properly aggregated because
plaintiffs were seeking to redirect the expenditure of state welfare funds in excess of the
jurisdictional amount, and because the siblings’ interest in family services was common and
undivided. Id. at 817-18. Black v. Beame provides little guidance for our inquiry here due to
the wholly dissimilar factual context underlying the case. The plaintiffs’ interest in family
services was “obviously” common and undivided there, id. at 818, whereas the claims here for
reimbursement of discreet overpayments by individuals plaintiffs are separate and distinct.
Moreover, Black v. Beame involved federal question jurisdiction which at the time required a
$10,000 jurisdictional amount. In Morrison, 228 F.3d at 1270, n.13, we noted that courts were
more indulgent in finding federal jurisdiction in that context in order to address significant
federal questions.
11
participation does not result in that plaintiff’s alleged damages inuring to the
benefit of any other party.
To see the difference between the instant case and the cases involving
common fund scenarios subject to aggregation, it is useful to consider a
hypothetical that simplifies the facts of the instant case and provides, for
illustrative purposes only, some figures. Suppose that Friedman’s class initially
had 50 members and that, if each prevailed on the merits and the court ordered
repayment of the disputed premiums, each member would receive the amount that
he or she had overpaid in premiums. Suppose further that the overpayment
amount is the same for each class member and that the overpayment amount is
$2,000. Finally, suppose that 45 class members lose interest in the case and drop
out, leaving only 5 members in the class. Each of the remaining 5 members
would receive the same $2,000 he or she would have received prior to the
departure of the others. Conversely, if the class grew to 200 members, the original
50 would not see their recovery in any way diminished.4
Finally, New York Life argues that if the plaintiffs get relief in this case,
4
Contrast the situation described in our hypothetical with the paradigmatic
common fund case, in which multiple plaintiffs assert “claims to a piece of land, a trust fund, an
estate, an insurance policy, or lien, or an item of collateral. . .” Gilman, 104 F.3d at 1424. In
those cases, one plaintiff’s decision to drop his or her claim results in that plaintiff’s share being
divided up among the remaining claimants. Conversely, the addition of new plaintiffs results in a
proportionate reduction of the original claimants’ share of the pie.
12
then the entire group will be affected by future premium changes. Specifically,
New York Life claims that there is a common relationship between the class
members and that future premiums will shift between the various class members
and/or between the class members and other insureds as a result of any declaratory
or injunctive relief obtained by Friedman. According to New York Life, cost-
shifting from any one class will increase the premium rates of the remaining
people insured through the group policy.
We have no reason to doubt that, if New York Life loses on the merits of
this case, one possible response might be an attempt to shift some of this cost
amongst its other insureds. However, we are not persuaded that the possibility of
such cost-shifting, which is characteristic of insurance generally, should trigger
aggregation for purposes of calculating the amount in controversy.5 New York
Life’s argument proves too much; if prospective cost-shifting in response to
lawsuits triggered aggregation, aggregation would be the rule, and not the strictly
construed exception. Morrison, 228 F.3d at 1262-63; Eagle Star Ins. Co., 313
5
Such cost-shifting seems to be more in the nature of a possible collateral
consequence of an insurance company’s losing a lawsuit, rather than anything related to the
nature of the right asserted by the plaintiff. See Morrison, 228 F.3d at 1264 (“For amount in
controversy purposes, . . . it is the nature of the right asserted . . . that determines whether the
claims of multiple plaintiffs may be aggregated”).
13
F.2d at 781.6
In sum, aggregation is not permissible in this case.
B. Face Value
New York Life contends that even if aggregation is improper, the case meets
the amount in controversy requirement because “the face value of the policy
controls” and Friedman’s policy has a face value of $2 million. In support of this
proposition, New York Life cites Guardian Life Insurance Co. v. Muniz, 101 F.3d
93, 94 (11th Cir. 1996) (per curiam); C.E. Carnes & Employers’ Liability Assurance
Corp. 101 F.2d 739, 741 (5th Cir. 1939); New York Life Insurance Co. v. Swift, 38
F.2d 175, 176 (5th Cir. 1930).
These cases are easily distinguishable, as each involved a dispute about the
validity of the policy or the scope of coverage for a claim that put the face amount
of the policy at issue. In both Guardian, 101 F.3d at 94, and Swift, 38 F.2d at 176,
the insurer alleged that the insured had procured life insurance by fraud and sought
to cancel the policy.
6
As we note infra Part II(C) regarding injunctive relief, this prospective cost-
shifting argument is both speculative (because it is just one possible response to a negative ruling
on the merits) and describes a consequence that flows not from the right asserted, but rather from
New York Life’s potential response to a ruling in favor of plaintiffs. See Morrison, 228 F.3d at
1268 (the amount in controversy is determined from the plaintiff’s perspective).
14
In Carnes, one of the defendants had insured a truck with plaintiff, an
insurance company. 101 F.2d 739. The truck was used by this defendant for
hauling liquid butane. When the truck blew up, killing and injuring multiple
people, the insurer sought a declaratory judgment against all claims to the policy by
those who suffered losses in the explosion, on grounds that the policy did not cover
use of the truck for hauling liquid butane. The court stated that “[t]he amount in
controversy is the value of that which is sought to have declared free from doubt –
the policy for $25,000.” Id. at 741.
Where, as here, there is no controversy involving the face value of the
policy, but only with regards to certain premiums, it would make no sense to
consider the policy’s face value to be the amount in controversy.
C. Injunctive Relief.
Finally, New York Life argues that the value of any injunctive relief should
be added to the value of the compensatory damages. However, New York Life
conceded at oral argument that it has not argued that any single plaintiff is seeking
relief which would total $75,000, including any and all aspects of such relief.
Therefore, New York Life’s argument that the $75,000 amount in controversy is
satisfied necessarily depends upon its aggregation argument.
15
We have already determined the nature of the right asserted by Friedman and
the other putative class members, namely that they are asserting individual rights
that are separate and distinct from the other class members. And we have already
determined that the nature of the rights asserted here do not permit aggregation.7
In its briefs to the district court and on appeal, New York Life makes a
conclusory argument that the injunction sought by Friedman would require future
premiums for this group policy to be based upon a completely different rate
structure, which, New York Life argues, would mean that the premiums to be paid
by all future certificate holders would be affected. New York Life argues that this
is sufficient to convert Friedman’s claim into one representing a common and
undivided interest in a single res. We see several flaws in New York Life’s
argument. First, this argument focuses on Friedman’s routine and tag-along prayer
for injunction, while ignoring Friedman’s primary claim for reimbursement of
overpaid premiums. As demonstrated above, Friedman’s primary claim for
reimbursement clearly asserts an individual right that is separate and distinct from
7
See Morrison, in which we held:
Aggregation is determined by the right asserted, not the relief requested ....
Accordingly, when an injunction protects rights that are separate and distinct
among the plaintiffs, the value of the injunction to the individual plaintiffs may
not be aggregated to sustain diversity jurisdiction.
228 F.3d at 1271 (citations omitted).
16
that of other class members. See Morrison, 228 F.3d at 1266 (rejecting an
argument that attorney’s fees could be aggregated even though they may partake of
a factor suggestive of a common and individual interest, i.e., a punitive nature, and
holding that attorney’s fees may not be aggregated because plaintiffs had separate
and distinct rights to recover attorney’s fees, the “paramount issue with respect to
... the aggregation of any claim”).
Even if the tag-along prayer for injunction might have more significance
than we are inclined to accord it, it is hard to ascertain from New York Life’s
description that there is in fact a common res or that the plaintiffs’ claims would
properly be deemed to be undivided interests therein. New York Life suggests that
the common res might be deemed to be the future premiums to be paid by all the
certificate holders in this group policy under a revamped rate structure. However,
it is difficult to say that Friedman and the other putative class members have a
common and undivided interest in any such res given that each plaintiff has a
separate and distinct right and any injunction merely protects that right. See
Morrison, 228 F.3d at 1271 (“[W]hen an injunction protects rights that are separate
and distinct . . ., the value of the injunction to the individual plaintiffs may not be
aggregated to sustain diversity jurisdiction.”).
An additional flaw in New York Life’s argument is that it is speculative in at
17
least two ways. New York Life’s creative interpretation of the kind of injunction
Friedman sought is merely New York Life’s own speculation of one possible
response it might take. Should plaintiffs prevail on the merits, it is utter
speculation as to what course or courses of action New York Life might take with
respect to future rate structuring, and Friedman certainly did not specifically seek
any particular injunctive remedy. While the description suggested in New York
Life’s briefs is one possible response, there are undoubtedly several others. For
example, New York Life might find ways to cut costs, or even decide to simply
cancel the policy. See Lutz, 328 F.Supp.2d at 361 (discussing the speculative
nature of injunctive relief in a similar context, noting that the insurance company
could simply cancel the policy and terminate the relationship). New York Life’s
argument is also speculative in that New York Life makes no attempt to quantify
the benefit of any particular injunctive relief to Friedman and the other putative
class members. See Morrison, 228 F.3d at 1268 (holding that for amount in
controversy purposes, the value of injunctive relief is to be measured from the
plaintiffs’ perspective). The speculative nature of the value of any such benefit to
plaintiffs is closely intertwined with the uncertainty regarding the response which
New York Life might take to an adverse merits ruling.
Finally, we reject New York Life’s approach because, in addition to being
18
speculative, it would create a situation in which the existence of diversity
jurisdiction would often be dependant upon which of several possible responses a
defendant claimed it would take in response to an adverse ruling. Whatever its
other ramifications, such an approach amounts to an impermissible attempt to
measure injunctive relief from the perspective of the defendant. Id.
III. CONCLUSION
For the foregoing reasons, we are persuaded that New York Life has failed to
carry its burden of establishing an amount in controversy in excess of $75,000.
Accordingly, the district court did not have jurisdiction to hear this case. We
vacate the judgment of the district court and remand this case with instructions for
the district court to remand the case to the state court.
VACATED and REMANDED.
19