United States Court of Appeals,
Eleventh Circuit.
No. 95-6766.
ERICSSON GE MOBILE COMMUNICATIONS, INC., a Delaware Corporation, Plaintiff-
Appellee,
v.
MOTOROLA COMMUNICATIONS & ELECTRONICS, INC., an Illinois corporation,
Birmingham, City of, a municipal corporation, Richard Arrington, Jr., in his official capacity as
Mayor of the City of Birmingham, Defendants-Appellants.
Aug. 22, 1997.
Appeals from the United States District Court for the Northern District of Alabama. (No. CV-94-
AR-808-S), William M. Acker, Jr., Judge.
Before ANDERSON, Circuit Judge, and FAY and KRAVITCH, Senior Circuit Judges.
KRAVITCH, Senior Circuit Judge:
Ericsson GE Communications ("EGE") brought this diversity action pursuant to the Alabama
Competitive Bid Law, Ala.Code §§ 41-16-50, et seq. (1991 & Supp.1996), to enjoin the execution
of a contract between Motorola Communications & Electronics, Inc. ("Motorola") and the City of
Birmingham (the "City") for the purchase of a new public safety communications system. Because
we conclude that the value of an injunction voiding the contract between Motorola and the City,
from the perspective of plaintiff-appellee EGE, is too speculative to satisfy the amount in
controversy requirement of the diversity statute, 28 U.S.C. § 1332, we remand the case to the district
court with instructions to dismiss for lack of subject matter jurisdiction.
I.
This action arises out of the City's purchase of an 800 MHZ trunked simulcast radio
communication system for its police and fire departments.1 In the early 1990's, the Mayor of
Birmingham decided that the City needed a new public safety communications system and hired a
consultant to research the City's needs and to assist the City in preparing bid specifications and in
1
We recite only those facts necessary for the resolution of the jurisdictional issue, which
generally depends on the facts as alleged in the plaintiff's complaint. See St. Paul Mercury
Indemnity Co. v. Red Cab Co., 303 U.S. 283, 287, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).
evaluating competing bids. In May 1993, the City issued a Request for Bids ("RFB") for two
different communication technology systems, the APCO 16 and the APCO 25.2 The RFB provided
that a vendor could submit bids for either or both of these technology systems. Only EGE and
Motorola submitted bids in response to the City's request; EGE bid on the APCO 16 system for
$9,758,053 and Motorola bid on the APCO 25 system for $11,336,282. After the submission of
bids, the Mayor concluded that the APCO 25 system technology would better serve the City's needs.
The City then rejected the bids of both EGE and Motorola, and negotiated a new contract with
Motorola.
Alleging among other things that the consultant hired by the City was biased in favor of
Motorola and that he skewed the decision-making process in that company's favor, EGE brought this
action to enjoin the enforcement of the contract between Motorola and the City and to have itself
declared the lowest responsible bidder. Motorola and the City moved unsuccessfully to dismiss
EGE's claim for lack of subject matter jurisdiction. After certification to the Alabama Supreme
Court,3 the district court conducted a trial before an advisory jury. Adopting that jury's verdict, the
district court concluded that the City's decision to purchase the APCO 25 technology was the result
of improper influence exerted by Motorola on the City's decision makers and, therefore, violated the
2
The APCO 16 and APCO 25 are sets of specifications for public radio systems. The APCO
25, a newer technology, is based on specific technological requirements for the equipment while
the APCO 16 is based on functional standards.
3
In Ericsson GE Mobile Communications, Inc. v. Motorola Communications & Electronics,
Inc., the Alabama Supreme Court held that the City's use of alternative bidding did not, by itself,
violate the competitive bid law. 657 So.2d 857, 865 (Ala.1995). It further concluded that EGE
could prove a violation of the bid law by demonstrating that the City's selection of the APCO 25
system was based on " "ignorance through lack of inquiry,' or was "the result of improper
influence,' or was otherwise arbitrary and capricious." Id. (quoting White v. McDonald Ford
Tractor Co., 287 Ala. 77, 248 So.2d 121, 129 (1971)).
2
competitive bid law. Accordingly, the district court voided the contract.4 Motorola and the City
appeal this judgment, as well as the district court's order denying their motion to dismiss.
II.
As a threshold matter, we must determine whether this action properly was brought in
federal court. EGE alleged jurisdiction under the diversity statute, 28 U.S.C. § 1332, which, at the
time this action was filed, provided for federal subject matter jurisdiction over actions between
citizens of different states5 in which the matter in controversy exceeds $50,000.6 Because EGE
sought only declaratory and injunctive relief, "it is well established that the amount in controversy
is measured by the value of the object of the litigation." Hunt v. Washington State Apple Advertising
Comm'n, 432 U.S. 333, 345, 97 S.Ct. 2434, 2443, 53 L.Ed.2d 383 (1977); see also Occidental
Chemical Corp. v. Bullard, 995 F.2d 1046, 1047 (11th Cir.1993).
A. Governing Perspective
Whether courts, in determining the amount in controversy, are to measure the value of the
object of the litigation solely from the plaintiff's perspective or whether they may also consider the
value of the object from the defendant's perspective is considerably less well-established. The
4
In a subsequent order, the district court articulated an additional alternative ground for
finding a violation of the Alabama Competitive Bid Law. The district court concluded that the
Mayor had violated § 6.09 of the Mayor-Council Act of 1955 by negotiating a contract directly
with Motorola after having rejected the bids of both EGE and Motorola and without first having
readvertised for the bids.
5
It is undisputed that this diversity of citizenship requirement is satisfied.
6
Since the filing of this action, the amount in controversy requirement has been raised to
$75,000. See 110 Stat. 3847, 3849 (1996).
3
Supreme Court has provided no clear guidance on this question,7 and, as a result, federal courts are
divided as to the proper perspective to use in determining the amount in controversy.8
Moreover, district courts in this circuit, reading our prior cases to conflict, have expressed
uncertainty as to whether the plaintiff-viewpoint rule governs in this circuit or whether courts are
free to consider the value of the object of the litigation to either party.9 After carefully reviewing
this circuit's precedents, however, we find no conflict, and we conclude that this court's predecessor
purposefully and conspicuously adopted the plaintiff-viewpoint rule.10
In our view, several cases from the former Fifth Circuit establish the plaintiff-viewpoint rule.
In Vraney v. County of Pinellas, a non-resident property owner and taxpayer brought a diversity
action to enjoin a county waterworks program. 250 F.2d 617 (5th Cir.1958) (per curiam). Even
7
Various Supreme Court opinions have been cited by courts and the parties in this case in
support of both the plaintiff-viewpoint and either-viewpoint rules. See, e.g., Snyder v. Harris,
394 U.S. 332, 337-38, 89 S.Ct. 1053, 1058-59, 22 L.Ed.2d 319 (1969) (prohibiting aggregation
of claims of plaintiffs in class actions); Glenwood Light & Water Co. v. Mutual Light, Heat &
Power Co., 239 U.S. 121, 124, 36 S.Ct. 30, 32, 60 L.Ed. 174 (1915) ("The district court erred in
testing the jurisdiction by amount that it would cost defendant to [comply with injunction].");
Smith v. Adams, 130 U.S. 167, 174, 9 S.Ct. 566, 569, 32 L.Ed. 895 (1889) (amount in
controversy judged by "pecuniary result to one of the parties immediately from the judgment");
Market Co. v. Hoffman, 101 U.S. 112, 25 L.Ed. 782 (1879)(referring to right claimed by the
defendant in determining amount in controversy). As far as we are aware, however, the Court
never has expressly embraced either position in a case in which the value differed depending on
the perspective from which it was measured. Therefore, we do not read any of its apparently
conflicting opinions to have resolved this issue. See 14A Charles A. Wright et al., Federal
Practice and Procedure, § 3703 at 63-66 (1985) (concluding that Supreme Court cases are
inconclusive).
8
Compare Kheel v. Port N.Y. Auth., 457 F.2d 46, 48-49 (2d Cir.), cert. denied, 409 U.S. 983,
93 S.Ct. 324, 34 L.Ed.2d 248 (1972) (adopting plaintiff viewpoint rule) and Massachusetts St.
Pharm. Ass'n v. Federal Prescrip. Serv., Inc., 431 F.2d 130, 132 (8th Cir.1970)(same) with
Oklahoma Retail Grocers Ass'n v. Wal-Mart Stores, Inc., 605 F.2d 1155, 1160 (10th Cir.1979)
(adopting either-viewpoint rule) and McCarty v. Amoco Pipeline Co., 595 F.2d 389, 395 (7th
Cir.1979) (same). It appears that the majority of federal courts have chosen to use the
plaintiff-viewpoint rule. See 15 James W. Moore, Moore's Federal Practice, § 102.109[3] at
198 (1997).
9
See, e.g., Shelly v. Southern Bell Tel. & Tel. Co., Inc., 873 F.Supp. 613, 617 (M.D.Ala.1995);
Bassett v. Toyota Motor Credit Corp., 818 F.Supp. 1462, 1466 (S.D.Ala.1993); Mutual First,
Inc. v. O'Charleys of Gulfport, Inc., 721 F.Supp. 281, 283 (S.D.Ala.1989).
10
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc ), we adopted
as binding precedent decisions of the former Fifth Circuit rendered prior to October 1, 1981.
4
though the complaint clearly alleged that the value of the waterworks program to the defendant
county exceeded the amount in controversy, the court dismissed the action for lack of jurisdiction
because "there is no averment showing or tending to show that the value to the plaintiff of the object
or right sought to be enforced exceeds the sum or value" required by the diversity statute. Id. at 618
(emphasis added). The court reiterated that "[u]nder the decisions in taxpayers' actions, as well as
others, the value of the plaintiff's right sought to be enforced must exceed the jurisdictional amount
in order to confer federal jurisdiction." Id. (emphasis added).
In Alfonso v. Hillsborough County Aviation Authority, 308 F.2d 724 (5th Cir.1962), this
circuit's predecessor again refused to consider the value of the object of the litigation from the
defendant's perspective in determining the amount in controversy. In Alfonso, a group of
homeowners brought a class action against the county aviation authority seeking to enjoin expansion
of the county's airport. Citing Vraney, the Alfonso court stated that "[t]he value to the plaintiff of
the right to be enforced or protected determines the amount in controversy" and concluded that the
alleged damage to the homes of the individual plaintiffs was insufficient to satisfy the amount in
controversy requirement. 308 F.2d at 726-27 (emphasis added). The court expressly rejected the
plaintiffs' contention that "the amount in controversy is the value of the air rights to the defendants."
Id.; see also Texas Acorn v. Texas Area 5 Health Systems Agency, Inc., 559 F.2d 1019, 1023 (5th
Cir.1977) ("Surely a plaintiff cannot satisfy the jurisdictional amount any time a private defendant's
annual budget exceeds [the requisite amount in controversy].").11
In our view, these cases firmly establish that this circuit has adopted the plaintiff-viewpoint
rule. Commentators and other courts likewise have read these cases as endorsing the
plaintiff-viewpoint approach. See, e.g., McCarty v. Amoco Pipeline Co., 595 F.2d 389, 392 n. 3 (7th
11
Advance Tank and Const. Co., Inc. v. Arab Water Works, 910 F.2d 761, 763 (11th
Cir.1990), on which appellee relies, provides no guidance on this question. Although the court
in Advance Tank exercised jurisdiction over a claim for injunctive relief under the Alabama
Competitive Bid Law, the plaintiff in that case also brought a claim for monetary damages under
42 U.S.C. § 1983, which provided an independent basis for federal jurisdiction. In noting
jurisdiction, we specifically referred to the fact that the district court had assumed jurisdiction
under both §§ 1331 and 1332. Id. at 763 n. 4.
5
Cir.1979) (citing Alfonso); 14A Charles A. Wright et al., Federal Practice and Procedure, § 3703
at 61 n. 1 (citing Alfonso and Vraney ).12 Moreover, the Fifth Circuit recently indicated that the
plaintiff-viewpoint rule of Vraney and Alfonso is still controlling. See Webb v. Investacorp, Inc.,
89 F.3d 252, 257 n. 1 (5th Cir.1996) (stating that because value to plaintiff and defendant was the
same, calculation of amount in controversy did not violate plaintiff-viewpoint rule of Alfonso).
We do not read Duderwicz v. Sweetwater Sav. Ass'n, 595 F.2d 1008 (5th Cir.1979), on which
appellee relies, to disturb or undermine the holdings of the cases discussed above. In Duderwicz,
plaintiffs sought to recover interest charged or to be charged by defendant pursuant to allegedly
usurious notes. The court first determined that interest contracted for but not yet paid was properly
subject to forfeiture under Georgia law. 595 F.2d at 1013. Having made this determination, the only
question left for the court to resolve was whether "the pecuniary consequence of this forfeiture may
be considered as part of the value of the matter in controversy." Id. at 1014. The Duderwicz court
held that such a pecuniary consequence provided a proper basis for calculating the amount in
controversy.
In reaching this conclusion, the Duderwicz court stated that "[d]ismissal of a diversity action
for want of jurisdiction is justified only where it appears to a legal certainty that plaintiff cannot
recover the jurisdictional amount." 595 F.2d at 1012 (emphasis added). It further noted that state
law is relevant to define "the nature and extent of the right plaintiff seeks to enforce." Id. (emphasis
added). This language indicates to us that Duderwicz understood and applied the governing
plaintiff-viewpoint rule.
12
Some courts have suggested that the plaintiff-viewpoint rule is required only in class
actions, and, in non-class actions, courts are free to evaluate the amount in controversy from
either party's perspective. See, e.g., Indianer v. Franklin Life Ins. Co., 113 F.R.D. 595, 603-04
(S.D.Fla.1986). We find nothing in our precedents, however, to justify such a limitation on the
plaintiff-viewpoint rule in this circuit. Vraney involved a single plaintiff, and although Alfonso
involved a class action, it relied on Vraney and other non-class action cases in rejecting valuation
from the defendant's viewpoint. Moreover, we find nothing in the language of either of these
opinions to suggest that they intended such a narrow plaintiff-viewpoint rule. Cf. Webb v.
Investacorp, Inc., 89 F.3d 252, 257 n. 1 (5th Cir.1996) (applying Alfonso in non-class setting).
6
Appellee nevertheless relies on the following language from Duderwicz: "[T]he value of the
matter in controversy is measured not by the monetary judgment which the plaintiff may recover,
but by the pecuniary consequence to those involved in the litigation." Id. at 1014. We do not read
this language to be inconsistent with the plaintiff-viewpoint rule. Rather, the Duderwicz court
simply recognized that the plaintiff's claim for monetary damages need not, by itself, exceed the
requisite statutory amount because the immediate financial consequences of the litigation to the
plaintiff—in that case, the financial benefit of not having to pay the interest contracted to be
charged—may also be considered in calculating the amount in controversy.13 We therefore do not
read Duderwicz to have altered the law of this circuit.14
Although we recognize that there are persuasive arguments to support the adoption of the
either-viewpoint rule,15 as a panel of this court, we remain bound to follow the plaintiff-viewpoint
rule regardless of the wisdom we may attach to it. Only an en banc decision of this court or an
intervening decision of the Supreme Court can alter the controlling law of this circuit.
B. Value of the Object of the Litigation
13
As in many cases, the perspective used to determine the amount in controversy was
immaterial in Duderwicz because the value of the object of the litigation was the same whether
measured from the plaintiff's or the defendant's perspective. See also Webb, 89 F.3d at 257 n. 1.
We therefore decline to accord great weight to the Duderwicz court's reference to "those
involved in the litigation."
14
We recognize that some district courts have read Duderwicz to signal this circuit's
abandonment of the plaintiff-viewpoint rule. See Indianer v. Franklin Life Ins. Co., 113 F.R.D.
595, 604 n. 8 (S.D.Fla.1986) (concluding that Duderwicz indicates that this circuit has "clearly
moved away from" the plaintiff-viewpoint rule); State of Louisiana v. Fedders Corp., 539
F.Supp. 582, 585 (M.D.La.1982) (concluding that Duderwicz may represent "a change of
opinion in this Circuit away from Alfonso "). We think that these courts, however, have
misinterpreted the reasoning and import of Duderwicz.
15
See 14A Charles A. Wright et al., Federal Practice and Procedure, § 3703 at 66-68 (1985)
("[The either-viewpoint rule] seems to be the desirable rule, since the purpose of a jurisdictional
amount requirement—to keep trivial cases away from the court—is satisfied when the case is
worth a large sum to either party."); 15 James W. Moore, Moore's Federal Practice, §
102.109[4] at 199 (1997) ("[T]he jurisdictional-amount requirement reflects a congressional
judgment that federal judicial resources should be devoted only to those diversity cases in which
the financial stakes rise to a predetermined level. It is difficult to understand why those financial
stakes are not implicated when either party stands to gain or lose the statutorily determined
amount or its equivalent.").
7
Having determined that the plaintiff-viewpoint rule governs, we now consider whether EGE
has alleged an amount in controversy sufficient to satisfy the diversity statute. We first must
determine the remedies available to EGE under Alabama law, and then consider the monetary value
of the available relief.
The Alabama Competitive Bid Law provides that certain municipal expenditures such as the
purchase of a public safety communications system "shall be made under contractual agreement
entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder."
Ala.Code § 41-16-50(a). It further states that "[a]ny taxpayer of the area within the jurisdiction of
the awarding authority and any bona fide unsuccessful bidder on a particular contract shall be
empowered to bring a civil action in the appropriate court to enjoin execution of any contract entered
into in violation of the provisions of this article." Ala.Code § 41-16-61; see also Ala.Code § 41-16-
51(d) ("Contracts entered into in violation of this article shall be void....").
Although EGE originally sought a declaration that it was the lowest responsible bidder (and
thus entitled to the contract with the City), the district court refused to grant such relief.16 More
importantly, we find no basis in Alabama law for such an award. Rather, under Alabama law, the
sole remedy available to EGE in an action challenging a contract under the competitive bid law is
an injunction voiding the contract between Motorola and the City. See Crest Const. Corp. v. Shelby
County Bd. of Educ., 612 So.2d 425, 432 (Ala.1992) (holding that bid preparation expenses are not
recoverable under this section); City of Montgomery v. Brendle Fire Equipment, Inc., 291 Ala. 216,
279 So.2d 480, 484 (1973) (holding that bid law does not provide basis to enjoin future contracts).
"The courts cannot direct the authorities as to how they shall exercise [their] discretionary power,
nor to whom they must let a contract, but may only enjoin them from doing so illegally...."
Townsend v. McCall, 262 Ala. 554, 80 So.2d 262, 265 (1955).
16
The district court concluded that "in the present posture of the pleadings [EGE] cannot
obtain either monetary relief or a mandatory injunction ordering the City to award the contract to
it." (R1-15:2).
8
Simply put, the Alabama Competitive Bid Law, which was designed to benefit the public,
"creates no enforceable rights in the bidders." Crest, 612 So.2d at 432. "There is no indication in
this statute [ ] that an unsuccessful bidder has any right or expectancy to insist upon the award of
a contract. To the contrary, the statute is carefully crafted to limit the remedy "to enjoin[ing]
execution of any contract entered into in violation of the provisions of this article.' " Jenkins, Weber
& Assocs. v. Hewitt, 565 So.2d 616, 617 (Ala.1990) (interpreting identical language of another
portion of the Alabama Competitive Bid Law, § 41-16-31) (quoting Urban Sanitation Corp. v. City
of Pell City, 662 F.Supp. 1041, 1044 (N.D.Ala.1986)).17
Based on these cases, it appears to a legal certainty that EGE can obtain only an injunction
voiding the contract entered into by the City and Motorola. We must now determine whether the
value of this injunctive relief to EGE is sufficiently measurable and certain to satisfy the $50,000
amount in controversy requirement of the diversity statute. EGE points to no authority to suggest
that, in the event of an injunction, the City would be required to rebid the project. Moreover, in the
event that the City did decide to rebid the contract, it appears that the City would be free to submit
an alternative bid proposal for both the APCO 16 and APCO 25 systems, and absent improper
influence, would be free to conclude again that the APCO 25 technology is best suited for serving
its needs. Ericsson, 657 So.2d at 865-67. It is important to remember that on rebid, as always, the
City's "determination of the lowest responsible bidder and its formation of bid specifications may
be exercised with a wide margin of discretion." Id. at 861.
Any benefit that EGE could receive from the injunctive relief awardable by the district
court—namely, the chance to rebid for the contract—is, in our view, too speculative and
immeasurable to satisfy the amount in controversy requirement. See Newman & Sons, Inc. v.
Washington Suburban Sanitary Comm'n, 696 F.Supp. 160, 162 (D.Md.1988) (concluding that
benefit from a rebid is too speculative to satisfy the jurisdictional amount), aff'd, 873 F.2d 1438 (4th
17
The Alabama Supreme Court has determined that the Alabama legislature intended §§ 41-
16-31 & 41-16-61 to have the same meaning. Crest, 612 So.2d at 432.
9
Cir.), cert. denied, 493 U.S. 854, 110 S.Ct. 158, 107 L.Ed.2d 116 (1989). Because EGE cannot
reduce the speculative benefit resulting from a rebid "to a monetary standard, [ ] there is no
pecuniary amount in controversy." See Texas Acorn v. Texas Area 5 Health Systems Agency, Inc.,
559 F.2d 1019, 1023-24 (5th Cir.1977).18 We therefore hold that EGE has failed to satisfy the
$50,000 amount in controversy requirement of 28 U.S.C. § 1332.
III.
Accordingly, the district court's order is REVERSED, and this case is REMANDED with
instructions to dismiss for lack of subject matter jurisdiction.
18
EGE has made no efforts in its pleadings or briefs to place a monetary value on its right to
rebid. In its complaint, EGE merely stated that amount in controversy exceeded $50,000.
10