United States District Court, W.D. Arkansas, Harrison Division
KANDIS K. SMITH PLAINTIFF
MIDLAND FUNDING, LLC and MIDLAND CREDIT MANAGEMENT, INC. DEFENDANTS
OPINION AND ORDER
TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE
removed the instant matter to this Court from the Circuit
Court of Carroll County, Arkansas, on April 19, 2018. (Doc.
1). The notice of removal stated that the basis for federal
jurisdiction was complete diversity of citizenship, plus an
amount in controversy exceeding $75, 000, as per 28 U.S.C.
§ 1332(a)(1). The Complaint filed in state court
asserted a single cause of action for violations of the
Arkansas Fair Debt Collection Practices Act, Ark. Code Ann.
§ 17-24-501, et seq., and requested statutory
damages of up to $1, 000 per Defendant (for a total of $2,
000) and reasonable attorney's fees and costs. The
Complaint did not disclose a claim for actual damages
suffered by Plaintiff as a result of Defendants'
allegedly deceptive acts in attempting to collect an old
pending before the Court are Plaintiffs Motion to Remand
(Doc. 11) and Brief in Support (Doc. 12). Defendants have
filed a collective Response in Opposition (Doc. 23) to
remand. In the Motion, Plaintiff asserts that amount in
controversy is, at most, $2, 000 in statutory damages, plus a
reasonable amount of attorney's fees and costs. Although
Plaintiff brings her case in the form of a putative class
action, the amount in controversy for purposes of
establishing federal jurisdiction may only be measured as to
her individual claims, and cannot be aggregated with the
claims of any putative class members. See
Crawford v. Hoffman-La Roche, Ltd., 267 F.3d 760,
765 (8th Cir. 2001) (holding that individual class
members' claims for statutory damages, punitive damages,
restitution, and attorney fees cannot be aggregated to
satisfy the statutory minimum for federal jurisdiction).
Accordingly, Plaintiff argues that it is implausible to
assume, as Defendants have, that the amount of attorney's
fees attributable to her individual case will exceed $73, 000
and meet the jurisdictional minimum.
respond, first, that the Motion to Remand is premature, and
they ask for time to conduct jurisdictional discovery into
the issue of the amount in controversy. The Court rejects
this request because the amount of statutory damages demanded
by Plaintiff is a set, capped amount, and no amount of
jurisdictional discovery will shed light on the issue of what
a potential, reasonable attorney's fee will be as to
Plaintiff's individual claim. Next, Defendants contend
that it is quite plausible that Plaintiff will be awarded
attorney's fees and costs in excess of $73, 000 on her
individual claim. In support of this argument, they cite the
Court to an unreported case from the Middle District of
Florida called Baez v. LTD Financial Services, LP.,
No. 6:15-CV-1043 (M.D. Fla. 2015). Defendants believe
Baez is "the best example of the amount of
attorneys' fees at issue in this case, " (Doc. 1,
para. 24), because Baez, like the case at bar,
concerned class claims over fair debt collection practices.
Baez, the district court certified a class
consisting of 33, 993 persons who alleged that the defendant
collection company violated the federal Fair Debt Collection
Practices Act. After a jury trial, class counsel on behalf of
all class members petitioned the court for a collective
attorney's fee of $186, 450. See No.
6:15-CV-1043, Doc. 139. As of yet, the court has deferred
ruling on the petition for fees until after the appellate
court has ruled on the merits. See Id. at Doc. 170.
Not to be deterred, Defendants in the case at bar argue that
Baez and the instant case are so similar that this
Court may find that the future award of fees in this case
will, to a legal certainty, and notwithstanding
Plaintiff's protestations to the contrary, exceed $73,
parties acknowledge in their briefing, this Court has an
affirmative duty to ensure that any claims before it are
within its subject matter jurisdiction. Crawford v.
United States, 796 F.2d 924, 928 (7th Cir. 1986). The
removing party has the burden of showing that jurisdiction in
federal court is proper and that the requisite amount in
controversy has been met. Hatridge v. Aetna Cas. &
Sur. Co., 415 F.2d 809, 814 (8th Cir. 1969). Federal
courts must strictly construe the federal removal statute and
resolve any ambiguities about federal jurisdiction in favor
of remand. Transit Casualty Co. v. Certain Underwriters
at Lloyd's of London, 119 F.3d 619, 625 (8th Cir.
the Court finds that Defendants have failed to establish that
the minimum amount in controversy has been met and that the
Court should continue to exert subject matter jurisdiction in
this case. Assuming without deciding that the minimum amount
in controversy may be calculated by estimating the potential
future attorney's fee that would be awarded at
the end of the litigation, the Court finds that a fee in
excess of $73, 000 is wildly disproportionate to
Plaintiff's claimed damages capped at $2, 000, and is not
supported by the outcome in Baez. The class
attorneys in Baez made a request for
fees-as distinguished from receiving an award of
fees-for $186, 450 on behalf of the entire class.
The class in Baez exceeded 30, 000 members. The
Eighth Circuit has previously held that "fees cannot be
aggregated to meet the amount-in-controversy requirement and
must be determined on a pro rata basis." Kessler v.
Natl Enters., 347 F.3d 1076, 1080 (8th Cir. 2003)
(internal citation and quotation marks omitted). Therefore,
even if the Court were to estimate a pro rata fee in the
Baez case, based on the aggregate fee demand and the
number of class members, there is no plausible way that the
pro rata fee would approach $1, 000, let alone $73, 000.
have therefore failed to meet their burden of proof that the
amount in controversy in this case exceeds $75, 000.
Accordingly, as it appears to a legal certainty that the
claim at issue is for far less than the jurisdictional
amount, IT IS ORDERED that Plaintiff's
Motion to Remand (Doc. 11) is GRANTED, and
the Clerk of Court is directed to immediately
REMAND the matter to the Circuit Court of
Carroll County, Arkansas, for further disposition. The Court
DECLINES Defendants' alternative request
to condition remand upon Plaintiff and her counsel signing a
binding stipulation as to the potential award of
attorney's fees and costs.
IS FURTHER ORDERED that the Motion to Certify
Questions to the Arkansas Supreme Court (Doc. 16) is
MOOT in view of the Court's lack of
jurisdiction over this case and decision to remand the matter
to state court.
FURTHER ORDERED that Defendants' Motion to Dismiss (Doc.
5) is PRESERVED for ...