LeBlanc v. Spector

• Decision Date: 30 November 1973
• Docket Number: Civ. No. 14941.
• Citation: 378 F. Supp. 301
• Court: U.S. District Court — District of Connecticut
• Parties: Placide N. LeBLANC, on behalf of himself and all others similarly situated v. George SPECTOR.

378 F. Supp. 301

Placide N. LeBLANC, on behalf of himself and all others similarly situated v. George SPECTOR.

Civ. No. 14941.

United States District Court, D. Connecticut.

November 30, 1973.

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David S. Fishman, East Hartford, Conn., for plaintiff.

Lewis B. Stackell, New York City, Karl Fleischmann, Hartford, Conn., for defendant.

RULING ON MOTION TO DISMISS

BLUMENFELD, Chief Judge.

Plaintiff has alleged that defendant held himself out to plaintiff as qualified to advise and assist plaintiff in the preparation and presentation to the Patent Office of plaintiff's application for a patent on his invention, a magnetic sash lock. Plaintiff further alleges that he paid a total of $960 to defendant for his services, and that defendant, while holding himself out as qualified to perform the services rendered to plaintiff, had in fact been disbarred and excluded from practice before the Patent Office prior to his dealings with plaintiff. While plaintiff does not claim that his application for a patent was prejudiced by defendant's alleged misrepresentations as to his qualifications, plaintiff does claim that he personally has suffered $1,000 in damages, a figure apparently based on his payments to defendant.

Plaintiff asserts that the above allegations give rise to three causes of action against defendant, and brings suit on each cause of action on behalf of a class of persons similarly situated, i. e., the class of persons who have engaged defendant's services in reliance on his representations as to his being qualified to assist in the preparation of patents. Plaintiff seeks injunctive relief and also "demands judgment and damages against defendant in the amount of $10,000.00 for himself and for each member of the class hereinafter determined, which amount shall include compensatory and exemplary damages, together with costs, disbursements, attorneys' fees as set forth in 35 U.S.C. § 285, and interest, all as permitted by law."

What plaintiff terms three different causes of action are actually three different remedies for a single cause of action — the course of allegedly wrongful conduct set forth above. Plaintiff's first "cause of action" pursues a quasi-statutory remedy, to wit, the civil remedy which plaintiff contends is implied in a federal penal statute forbidding persons not authorized to practice before the Patent Office from representing themselves as qualified to prepare patent applications. 35 U.S.C. § 33. Plaintiff's second "cause of action" seeks recovery under the Lanham Act, 15 U.S.C. § 1125(a). In addition to the money damages noted above, plaintiff seeks by his first two "causes of action" to have defendant enjoined from further violations of 35 U.S.C. § 33 and 15 U.S.C. § 1125(a). Plaintiff's final "cause of action" seeks damages only, and states a common-law tort claim of fraudulent misrepresentation. Defendant has moved for dismissal of plaintiff's entire complaint, contending that this Court lacks jurisdiction over any of plaintiff's asserted "causes of action."

Plaintiff Lacks Standing Under Lanham Act

Plaintiff's second "cause of action," the Lanham Act claim, may be disposed of easily. Plaintiff has conceded that Colligan v. Activities Club of New York, 442 F.2d 686 (2d Cir. 1971), cert. denied, 404 U.S. 1004, 92 S.Ct. 559, 30 L.Ed.2d 557 (1971), squarely controls this claim, adversely to plaintiff's interests. Colligan held that the Act created "a special and limited unfair competition remedy" and conferred no rights on consumers as opposed to competitors. 442 F.2d at 692. "The Act's purpose . . . is exclusively to protect the interests of a purely commercial class against unscrupulous commercial conduct." Ibid. Plaintiff has thus failed to state a claim upon which relief can be granted under the Lanham Act, and his second "cause of action" is accordingly ordered dismissed.

Diversity Claim Challenged Re Jurisdictional Amount

More troublesome is plaintiff's third "cause of action." Plaintiff has alleged that this Court has diversity jurisdiction over this tort claim under 28 U.S.C. § 1332(a).¹ While the requisite diversity of citizenship is not disputed, the parties have argued vigorously whether plaintiff's prayer for damages suffices to place in controversy the jurisdictional amount. It is undisputed that these damages must be determined according to Connecticut law.

Plaintiff has claimed only $1,000 in general damages and has conceded that the jurisdictional amount cannot be obtained by an aggregation of the claims of the class he purports to represent. Snyder v. Harris, 394 U.S. 332, 336-337, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969); Givens v. W. T. Grant Co., 457 F.2d 612, 614 n. 4 (2d Cir. 1972), vacated and remanded on other grounds, 409 U.S. 56, 93 S.Ct. 451, 34 L.Ed.2d 266 (1972). Plaintiff insists instead that his claim of exemplary damages suffices to make up the difference between his alleged $1,000 actual damages and his $10,000 prayer.

Defendant does not dispute the established rule that "Where both actual and punitive damages are recoverable under a complaint each must be considered to the extent claimed in determining the jurisdictional amount. Therefore even though the petitioner is limited to actual damages of $1,000 . . . the question remains whether it is apparent to a legal certainty from the complaint that he could not recover, in addition, sufficient punitive damages to make up the requisite jurisdictional amount." Bell v. Preferred Life Society, 320 U.S. 238, 240, 64 S.Ct. 5, 6, 88 L.Ed. 15 (1943). This rule as to punitive damages is but an application of the more general rule that "the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).

Legal Certainty Argument

Without expressly questioning plaintiff's good faith, defendant has attempted to win dismissal under the "legal certainty" standard. Defendant relies on Connecticut law limiting exemplary damages in tort actions to "the amount of the expenses of litigation in the suit, less taxable costs." Collens v. New Canaan Water Co., 155 Conn. 477, 488, 234 A.2d 825, 831 (1967); Givens v. W. T. Grant Co., supra, 457 F.2d at 614. Moreover, Connecticut law demands that an award of punitive damages be based on evidence and not mere speculation. Chykirda v. Yanush, 131 Conn. 565, 567-569, 41 A.2d 449 (1945). Thus the term "punitive" is a misnomer, as "punitive" damages in Connecticut serve a compensatory function limited by plaintiff's actual costs, rather than a punitive function which computes damages in terms of the wantonness of defendant's conduct. See Collens v. New Canaan Water Co., supra, 155 Conn. at 488. Defendant accordingly asserts that Connecticut law could not possibly condone an award of some $9,000 in "punitive" damages in a case involving only $1,000 in actual damages.²

The flaw in defendant's argument is that the Connecticut rule of punitive damages relates to actual and not necessarily reasonable costs of litigation, and thus does not necessarily disallow a judgment of punitive damages many times the amount of actual damages caused by a tort, if the plaintiff can show that he has really expended such an amount in seeking vindication of his legal rights. Thus defendant's argument as to the "legal certainty" of plaintiff not recovering $9,000 in punitive damages amounts only to speculation, however reasonable, as to how much the action will cost plaintiff, and how much plaintiff is willing to spend. Yet the general rule laid down in St. Paul Mercury Indemnity Co. v. Red Cab Co., supra, clearly affords the plaintiff, not the defendant, the initiative in speculating as to the amount the plaintiff may be entitled to recover. In order successfully to controvert the plaintiff's claim of the jurisdictional amount, the defendant must either demonstrate the legal impossibility of the plaintiff's recovering the jurisdictional amount, or show that the plaintiff's initial speculation as to his possible recovery was made in bad faith. By claiming in the instant case that plaintiff's prayer is unreasonably speculative, defendant is really challenging plaintiff's good faith rather than establishing with any legal certainty a ceiling to plaintiff's possible recovery of punitive damages.

Speculativeness of Claim as Basis for Inference of Bad Faith

It is an unresolved question to what extent bad faith may be inferred from the extreme speculativeness of a claim for unliquidated damages or, as here, exemplary damages. The Supreme Court appeared to dispose of this issue in 1961 by treating good faith and legal certainty as but two sides to a single coin. The Court thereby seemed to state that bad faith could be found only when a prayer was made for damages which could be shown to a legal certainty to be unrecoverable. "The general federal rule has long been to decide what the amount in controversy is from the complaint itself, unless it appears or is in some way shown that the amount stated in the complaint is not claimed `in good faith.' In deciding this question of good faith we have said that it `must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.'" Horton v. Liberty Mut. Ins. Co., 367 U.S. 348, 353, 81 S.Ct. 1570, 1573, 6 L.Ed.2d 890 (1961).

The Courts of Appeals have been loath to follow literally the Supreme Court's equation of the bad faith and legal certainty tests, at least where there is objective evidence of bad faith to supplement the inference of bad faith subjectively drawn from an exorbitant and speculative claim of damages. Thus a prayer for an amount of damages which while speculative is legally possible of...