the use of the section 425.11 statement of damages is not
appropriate in this case. Whatever weight such a statement might
have in a typical personal injury action, it deserves less
credence in an insurance case such as this one in which the
statement was neither required nor binding.
Second, and more importantly, while plaintiffs estimates far
exceed the minimum for diversity jurisdiction, the Court finds
no support for them in either plaintiffs complaint or
defendant's Notice of Removal. "Although the court normally
defers to the statement of damages presented in the complaint,
the court also has an `independent obligation' to examine its
jurisdiction where doubts arise." Marchionna v. Ford Motor
Company, 1995 WL 549124 (N.D.Ill. Sept. 8, 1995).
At bottom, plaintiffs complaint seeks to remedy defendant's
refusal to repair or replace her Hyundai. Plaintiff purchased
the car for $3,800. Shortly after plaintiff's accident, Reliance
estimated the value of the car to be between $4,100 and $2,630.
Plaintiff's complaint alleges that the car's value at the time
of the accident was $4,530. In other words, plaintiffs
underlying damage claim does not appear to be any greater than
The leap from this $5,000 in property damage to plaintiffs
statement that she suffered $210,040 in total damage is
difficult to credit. Defendant provides no evidence that
plaintiff suffered any particular emotional injury or that she
ever sought treatment for her alleged distress. Indeed, neither
plaintiff nor defendant even indicate whether the $200,000
figure is based on plaintiffs pain, emotional distress,
inconvenience, or some combination of the three. In short,
defendant points to no facts in this case to indicate that a
damages award anywhere near $75,000 — much less $210,000 — is
likely. "While a federal court must of course give due credit to
the good faith claims of the plaintiff, a court would be remiss
in its obligations if it accepted every claim of damages at face
value, no matter how trivial the underlying injury." Diefenthal
v. Civil Aeronautics Bd., 681 F.2d 1039, 1052 (5th Cir. 1982).
See also Christensen v. Northwest Airlines, Inc., 633 F.2d 529
(9th Cir. 1980) (affirming dismissal on ground that injury was
to small to establish requisite amount of damages); Anthony v.
Security Pac. Fin. Serv. Inc., 75 F.3d 311, 318 (7th Cir.
1996). In this case, the Court cannot accept plaintiffs
statement of damages as a conclusive indication of subject
The Court is aware of only one published case in which a
plaintiffs "statement of damages" was accepted by the court as
proof that the amount in controversy requirement had been met.
See Rahwar v. Nootz, 863 F. Supp. 191 (N.J. 1994). In Rahwar,
the New Jersey district court concluded that a statement of
damages similar to the one in this case was sufficient to
establish the minimum amount in controversy. However, the
Rahwar opinion did not mandate as a general rule that a
statement of damages is binding for the purposes of
determining subject matter jurisdiction. Rather, the Rahwar
court held only that it could consider the plaintiffs
statement of damages as a part of the state court record. Id.
at 192. To the extent that Rahwar is persuasive, it is so only
for that narrow proposition. Nothing in Rahwar indicates that
the Court must necessarily accept a plaintiffs statement of
damages at face value if that statement does not find support in
the complaint or the record.
In this case, the only damage claim concretely supported by
the complaint is a claim for approximately $5,000 in property
damage. While plaintiff might have suffered $210,000 in
damages as a result of defendant's failure to reimburse her, the
record currently before the Court does not support that
conclusion. No case, including Rahwar, compels the Court to
accept plaintiffs estimate of damages in such a circumstance.
Because defendant has failed to meet its burden of persuasion,
the Court rejects its contention that the
amount in controversy requirement has been satisfied.
B. Attorney's Fees
In addition to compensatory damages, plaintiffs complaint
requests an award of attorney's fees, and defendant urges the
Court to consider this potential recovery in determining the
amount in controversy. "When an underlying statute authorizes an
award of attorneys' fees, either with mandatory or discretionary
language, such fees may be included in the amount in
controversy." Gait G/S v. JSS Scandinavia, 142 F.3d 1150, 1156
(9th Cir. 1998). In breach of good faith actions like this one,
California law permits the plaintiff to recover attorney's fees
at the discretion of the Court. See Brandt v. Superior Court,
37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796 (1985).
Therefore, the Court must consider attorney's fees as an element
of the amount in controversy in this case.
However, defendant has not provided any evidence whatsoever to
establish the approximate cost of plaintiffs attorney's fees in
this case. Defendant has not estimated the amount of time that
the case will require, nor has it revealed plaintiffs counsel's
hourly billing rate. Rather than proffer any evidence on this
issue, defendant's brief summarily states that plaintiffs
Brandt fees "may well, in and of themselves, exceed the
jurisdictional minimum." This bald statement, unsupported by any
evidence, does not suffice to create subject matter
C. Punitive Damages
In calculating the amount in controversy, the Court must also
consider punitive damages that plaintiff can recover as a matter
of law. See Richmond v. Allstate Ins. Co., 897 F. Supp. 447,
450 (S.D.Cal. 1995). In this case, the facts alleged in the
complaint suggest the possibility of a punitive damages award.
See Neal v. Farmers Ins. Exch., 21 Cal.3d 910,
148 Cal.Rptr. 389, 582 P.2d 980 (1978) (punitive damages permitted in
California bad faith action against insurer).
Once again, however, defendant proffers absolutely no evidence
of potential punitive damages other than plaintiff's March 2000
"statement of damages." Nor does anything in the record indicate
that plaintiffs $1,000,000 estimate is anything but a bold and
In order to establish probable punitive damages, a party
asserting federal diversity jurisdiction may introduce evidence
of jury verdicts in cases involving analogous facts. See
Faulkner v. Astro-Med, Inc., 1999 WL 820198 at *4 (N.D.Cal.);
Miller v. Michigan Millers Ins. Co., 1997 WL 136242
(N.D.Cal.). Defendant has submitted no such evidence in this
case. In the absence of any evidence regarding punitive damages,
the Court concludes that defendant has failed to meet its burden
in this case.
D. Administrative Cost of Compliance with a Potential Court
Finally, defendant argues that, even if plaintiffs individual
damages do not amount to $75,000, the potential cost of
complying with an injunction under Business and Professions Code
section 17200 will surely exceed the jurisdictional minimum.
Defendant asserts that it may be required to spend thousands of
dollars in administrative costs merely to determine whether any
other Reliance policy-holders are "similarly situated" to
plaintiff. These administrative costs, defendant argues, may
propel the total amount in controversy beyond $75,000.
Defendant's argument fails for two reasons. First, it is not
at all clear that the Court should consider defendant's costs
when determining the amount in controversy. As a general matter,
defendant's argument is correct: in determining jurisdiction,
the Court may consider the cost to the defendant of complying
with an injunction. See Schwarzer, Tashima & Wagstaffe, Cal.
Practice Guide: Fed. Civ.
Pro. Before Trial ¶ 2:483 (The Rutter Group 2000). However, in
class suits under Rule 23, this general rule does not apply.
Rather, in class actions, each class member must individually
satisfy the amount in controversy requirement as long as the
claims of individual class members seek to enforce "separate and
distinct" rights. Snyder v. Harris, 394 U.S. 332, 335-36, 89
S.Ct. 1053, 22 L.Ed.2d 319 (1969). In the context of equitable
relief, the Ninth Circuit has held that, "where the equitable
relief sought is but a means through which the individual claims
may be satisfied, the ban on aggregation [applies] with equal
force to the equitable as well as the monetary relief." Snow v.
Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977). In other
words, in class suits, courts should not consider the cost to
defendant of complying with a potential injunction.
Defendant argues that this case represents an exception to
these accepted principles because plaintiffs section 17200 cause
of action is not a class claim. Therefore, according to
defendant, the Court can consider the cost of administrative
compliance in determining the amount in controversy. The Court
is aware of two district court cases in this Circuit which
support defendant's argument. In Mangini v. R.J. Reynolds
Tobacco Co., 793 F. Supp. 925 (N.D.Cal. 1992), the court held
that, because a section 17200 claim is not officially a class
action under Rule 23, the holding of the Snow court did not
apply. Rather, in Mangini, the district court considered the
detrimental value of the suit to the defendant in determining
the jurisdictional amount at issue. In Myers v. Merrill Lynch &
Co., Inc., 1999 WL 696082 (N.D.Cal.), the district court relied
on Mangini in holding that the value of injunctive relief
should be viewed from the defendants' perspective in a section
The Court finds neither Mangini or Myers convincing on
this point. Adopting the reasoning of those cases would
essentially create federal jurisdiction over any section 17200
claim between diverse parties, no matter how small the injury to
the representative plaintiff. Such a result is untenable.
Section 17200 is not a federal cause of action.
Instead, the Court adopts the reasoning of another district
court case from this Circuit. See Phipps v. Praxair, Inc.,
1999 WL 1095331 (S.D.Cal.). The Phipps court rejected
Mangini, noting that the attempted distinction between class
actions and section 17200 representative actions was essentially
a distinction without a difference. The rule prohibiting
plaintiffs from aggregating their claims need not apply only to
class actions brought under Rule 23. Phipps, 1999 WL 1095331
at *5. Indeed, the prohibition on aggregation applies in
non-class multiple-plaintiff cases as well. Id.; see also
Borgeson v. Archer-Daniels Midland Co., 909 F. Supp. 709, 714
(C.D.Cal. 1995) (citing Snyder, 394 U.S. 332, 89 S.Ct. 1053,
22 L.Ed.2d 319) ("[T]he doctrine of aggregation of claims [is]
not and [has] never been based on the categories of
Rule 23. . . . Rather, the doctrine is in fact based on the Supreme
Court's interpretation of `matter in controversy,' within the
meaning of the diversity statute."). Like class actions, claims
under section 17200 seek relief on behalf of numerous
individuals. Accordingly, in determining jurisdiction over
section 17200 claims, courts should not consider the potential
costs to the defendant of compliance with a potential
injunction. See also Arnold v. General Motors Corp., 1998 WL
827726 (N.D.Cal.); Morison v. Rand McNally & Co., 1997 WL
564028 (N.D.Cal. Sept. 4, 1997).
Applying this reasoning, the Court is convinced that the rule
explained in Snow should be applied in plaintiffs case. In the
context of defendant's argument, this outcome makes a great deal
of sense. In its response the Court's July 10 Order to Show
Cause, defendant urges the Court to consider the administrative
costs of paying awards to individual policyholders in the
aftermathofan adverse judgment. These costs clearly arise from
the separate claims of individual policyholders rather than
any aggregated claim on behalf of a unified group. Because these
costs address the distinct claims of numerous injured
individuals, they will not be considered by the Court in
determining the amount in controversy.
The Court's second reason for rejecting defendant's
"administrative costs" argument is much more basic. Even if the
Court were to consider the cost to defendant of complying with
an injunction, that extra cost would not raise the total amount
in controversy to the jurisdictional level. According to the
declaration of Trinh Hinson, submitted by defendant in support
of its response to the Court's July 10 order, the total
administrative cost of compliance with an injunction in this
case may total approximately $20,000. Even if the Court accepts
this figure as a component of the amount in controversy in this
case, defendant has still failed to meet its burden of
establishing that $75,000 is at issue. For these reasons, the
Court rejects defendant's "administrative costs" argument.
Defendant has failed to meet its burden of establishing that
the amount in controversy in this case exceeds $75,000. In the
Court's view, this is a $5,000 case. Neither plaintiffs bold and
unsupported demand nor plaintiffs section 17200 allegation can
change this basic fact. Therefore, the Court hereby REMANDS the
case to the Superior Court of Alameda County. Each party shall
bear its own fees and costs in connection with this removal.
IT IS SO ORDERED.
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