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Walker v. Old Reliable Casualty Co.

United States District Court, W.D. Arkansas, Texarkana Division

December 4, 2014

JAMES R. WALKER, Individually and on behalf of all others similarly situated, Plaintiffs,
v.
OLD RELIABLE CASUALTY COMPANY, Defendant.

ORDER

SUSAN O. HICKEY, District Judge.

Before the Court is the Motion to Remand filed on behalf of Plaintiff James R. Walker ("Walker"). (ECF No. 17). Defendant Old Reliable Casualty Company ("Old Reliable") has responded. (ECF No. 24). The Court finds this matter ripe for its consideration.

Walker filed his class action complaint in the Circuit Court of Miller County, Arkansas on November 26, 2013. On December 20, 2013, Old Reliable filed a Notice of Removal in this Court, asserting that the Court has jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). Walker argues in his Motion to Remand that this Court does not have jurisdiction over this action because Old Reliable has failed to meet its burden of proving that the amount in controversy exceeds the $5 million minimum required under CAFA.

I. Discussion

A federal district court has jurisdiction under CAFA if, among other things, the matter in controversy exceeds the sum or value of $5, 000.000, exclusive of interest and costs, the parties are minimally diverse, and the number of class members exceeds 100. 28 U.S.C. §1332(d). "[A] party seeking to remove under CAFA must establish the amount in controversy by a preponderance of the evidence regardless of whether the complaint alleges an amount below the jurisdictional minimum." Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009). "Under the preponderance standard, [t]he jurisdictional fact... is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are....'" Id. at 959 (quoting Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002)) (alteration in original). If a defendant meets its burden, then a plaintiff seeking remand must establish to a legal certainty that the amount in controversy is less than the statute requires. Bell, 557 F.3d at 956. The legal-certainty standard is not met if even a possibility exists of recovering more than the statutory minimum. Back Doctors Ltd. v. Metro. Prop. & Cas. Ins. Co., 637 F.3d 827, 831 (7th Cir. 2011).

A. Compensatory Damages

In its Notice of Removal, Old Reliable asserts that Walker has put into controversy a total of $7.5 million. Old Reliable also alleges that, based on its own calculations, $1.6 million or more was depreciated in connection with claims for which it made "actual cash value" payments. Walker argues that, based on the evidence presented by Old Reliable, the $1.6 million is not an accurate portrayal of the compensatory damages alleged because that number takes into account the depreciation of both labor and material costs. Because Walker is not seeking to recover the depreciation of material costs, Walker claims that this figure used as a calculation is clearly erroneous.

Old Reliable submitted the affidavit of Greg Warnock, Assistant Vice President over Property Claims for Old Reliable. He asserted that Old Reliable paid out more than $7.9 million on claims on an "actual cash value" basis, which was the replacement value of the property at the time of the loss, less depreciation. Warnock indicated that, historically, the percentage of depreciation was 22.4%. Applying the percentage to the total amount paid, Warnock calculated that Old Reliable had depreciated "$1.6 million or more" in connection with actual cash value payments since November 26, 2003. Warnock then asserts that "the total amount placed at issue in this case for plaintiff's and the putative class' claims exceeds $7, 500, 000.00."

Walker argues that Old Reliable has not met its burden of proof because the affidavit does not contain facts from which the amount in controversy can be determined for jurisdictional purposes. Therefore, there is no factual basis upon which the Court can conclude that it has jurisdiction. However, the Eighth Circuit has made clear that, "when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are." Raskas v. Johnson & Johnson, 719 F.3d 884, 887 (8th Cir. 2013) (internal quotation marks omitted).

Old Reliable argues that the amount in controversy is $7.5 million, which is the total amount of the relevant transactions during the relevant time period. However, even if the lesser and more exact $1.6 million is used to calculate the amount, the Court finds that the amount in controversy is satisfied.[1] In Raskas, the Eighth Circuit held that each defendant's affidavits detailing the total sales of their medications should be used to meet the amount in controversy, when the total sale amounts were not at issue, but rather a more narrow category of sales. Id. Similarly, here, the total amount of depreciation can be used to calculate the amount in controversy.

Even if ultimately this estimate proves to be overly inclusive, Old Reliable has appropriately estimated the damages at this stage in the proceedings. See id. at 886-87.

B. Statutory Damages

The Complaint also asks for statutory penalties of 12% of the depreciated labor costs recovered. Arkansas law provides for a 12% penalty to insurers in cases where an insured brings suit and recovers "twenty percent (20%) of the amount demanded or which is sought in the suit." Ark. Code Ann. § 23-79-208(d). Assuming that the Plaintiff class is able to recover at least 20% of the damages they seek in this action, they will be entitled to recover a 12% penalty against Defendants. Accordingly, if the ...


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