394 U.S. 332 (1969), 109, Snyder v. Harris

Docket Nº:No. 109
Citation:394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319
Party Name:Snyder v. Harris
Case Date:March 25, 1969
Court:United States Supreme Court
 
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Page 332

394 U.S. 332 (1969)

89 S.Ct. 1053, 22 L.Ed.2d 319

Snyder

v.

Harris

No. 109

United States Supreme Court

March 25, 1969

Argued January 21, 1969

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

Separate and distinct claims presented by and for various claimants in federal diversity actions may not be added together to provide the requisite $10,000 jurisdictional amount in controversy. Fed.Rule Civ.Proc. 23, as amended in 1966, did not change the scope of the statutory grant of district court jurisdiction, as the longstanding judicial interpretation of that statute cannot be changed by an amendment to the Rules, and there is no compelling reason for overturning settled judicial construction of "matter in controversy" in the light of consistent congressional reenactment of that language against a background of judicial interpretation that the phrase does not encompass the aggregation of separate and distinct claims. Pp. 332-342.

No. 109, 39,0 F.2d 204, affirmed; No. 117, 389 F.2d 831, reversed.

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

Title 28 U.S.C. § 1332 grants jurisdiction to United States district courts of suits between citizens of different States where "the matter in controversy exceeds the sum

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or value of $10,000. . . ." The issue presented by these two cases is whether separate and distinct claims presented by and for various claimants in a class action may be added together to provide the $10,000 jurisdictional amount in controversy.

Each of these cases involves a single plaintiff suing on behalf of himself and "all others similarly situated." In No. 109, Mrs. Margaret E. Snyder, a shareholder of Missouri Fidelity Union Trust Life Insurance Company, brought suit against members of the company's board of directors alleging that they had sold their shares of the company's stock for an amount far in excess of its fair market value, that this excess represented payment to these particular directors to obtain complete control of the company, and that, under Missouri law, the excess should properly be distributed among all the shareholders of the company, and not merely to a few of them. The suit was brought in the United States District Court for the Eastern District of Missouri, diversity of citizenship being alleged as the basis for federal jurisdiction. Since petitioner's allegations showed that she sought for herself only $8,740 in damages, respondent moved to dismiss on the grounds that the matter in controversy did not exceed $10,000. Petitioner contended, however, that her claim should be aggregated with those of the other members of her class, approximately 4,000 shareholders of the company stock. If all 4,000 potential claims were aggregated, the amount in controversy would be approximately $1,200,000. The District Court held that the claims could not thus be aggregated to meet the statutory test of jurisdiction, and the Court of Appeals for the Eighth Circuit, following a somewhat similar decision by the Court of Appeals for the Fifth Circuit in Alvarez v. Pan American Life Insurance Co., 375 F.2d 992, cert. denied, 389 U.S. 827 (1967), affirmed, 390 F.2d 204 (1968).

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In No. 117, Otto R. Coburn, a resident of Kansas, brought suit in the United States District Court for the District of Kansas against the Gas Service Company, a corporation marketing natural gas in Kansas. Jurisdiction was predicated upon diversity of citizenship. The complaint alleged that the Gas Service Company had billed and illegally collected a city franchise tax from Coburn and others living outside city limits. Coburn alleged damages to himself of only $7.81. Styling his complaint as a class action, however, Coburn sought relief on behalf of approximately 18,000 other Gas Service Company customers living outside of cities. The amount by which other members of the class had been overcharged was, and is, unknown, but the complaint alleged that the aggregation of all these claims [89 S.Ct. 1056] would, in any event, exceed $10,000. The District Court overruled the Gas Company's motion to dismiss for failure to satisfy the jurisdictional amount and, on interlocutory appeal, the Court of Appeals for the Tenth Circuit affirmed, holding that, because of a 1966 amendment to Rule 23 of the Federal Rules of Civil Procedure relating to class actions, separate and distinct claims brought together in a class action could now be aggregated for the purpose of establishing the jurisdictional amount in diversity cases. 389 F.2d 831. We granted certiorari to resolve the conflict between the position of the Courts of Appeals for the Fifth and the Eighth Circuits and that of the Court of Appeals for the Tenth Circuit.

The first congressional grant to district courts to take suits between citizens of different States fixed the requirement for the jurisdictional amount in controversy at $500.1 In 1887, this jurisdictional amount was increased to $2,000;2 in 1911 to $3,000;3 and in 1958 to $10,000.4

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The traditional judicial interpretation under all of these statutes has been from the beginning that the separate and distinct claims of two or more plaintiffs cannot be aggregated in order to satisfy the jurisdictional amount requirement. Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest. It is contended, however, that the adoption of a 1966 amendment to Rule 23 effectuated a change in this jurisdictional doctrine. Under old Rule 23, class actions were divided into three categories which came to be known as "true," "hybrid," and "spurious." True class actions were those in which the rights of the different class members were common and undivided; in such cases aggregation was permitted. Spurious class actions, on the other hand, were, in essence, merely a form of permissive joinder in which parties with separate and distinct claims were allowed to litigate those claims in a single suit simply because the different claims involved common questions of law or fact. In such cases, aggregation was not permitted: each plaintiff had to show that his individual claim exceeded the jurisdictional amount. The 1966 amendment to Rule 23 replaced the old categories with a functional approach to class actions. The new Rule establishes guidelines for the appropriateness of class actions, makes provision for giving notice to absent members, allows members of the class to remove themselves from the litigation and provides that the judgment will include all members of the class who have not requested exclusion. In No. 117, Gas Service Company, the Court of Appeals for the Tenth Circuit held that these changes in Rule 23 changed the jurisdictional amount doctrine as well. The court noted that:

Because the claims of the individuals constituting the class in the case at bar are neither "joint"

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nor "common," this action under Rule 23 before amendment would not have been classified as a "true" class action, and aggregation of claims would not have been permitted.

389 F.2d 831, 833. The Court of Appeals held, however, that a different result was compelled now that the amendment to Rule 23 abolished the distinctions between true and spurious class actions. The court held that, because aggregation was permitted in some class actions, it must now be permitted in all class actions under the new Rule. We disagree, and conclude, as did the Courts of Appeal for [89 S.Ct. 1057] the Fifth and Eighth Circuits, that the adoption of amended Rule 23 did not and could not have brought about this change in the scope of the congressionally enacted grant of jurisdiction to the district courts.

The doctrine that separate and distinct claims could not be aggregated was never, and is not now, based upon the categories of old Rule 23 or of any rule of procedure. That doctrine is based, rather, upon this Court's interpretation of the statutory phrase "matter in controversy." The interpretation of this phrase as precluding aggregation substantially predates the 1938 Federal Rules of Civil Procedure. In 1911, this Court said in Troy Rank v. Whitehead & Co.:

When two or more plaintiffs, having separate and distinct demands, unite for convenience and economy in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount. . . .

222 U.S. 39, 40. By 1916, this Court was able to say, in Pinel v. Pinel, 240 U.S. 594, that it was "settled doctrine" that separate and distinct claims could not be aggregated to meet the required jurisdictional amount. In Clark v. Paul Gray Inc., 306 U.S. 583 (1939), this doctrine, which had first been declared in cases involving joinder of

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parties, was applied to class actions under the then recently passed Federal Rules. In that case, numerous individuals, partnerships, and corporations joined in bringing a suit challenging the validity of a California statute which exacted fees of $15 on each automobile driven into the State. Raising the jurisdictional amount question sua sponte, this Court held that the claims of the various fee payers could not be aggregated "where there are numerous plaintiffs having no joint or common interest or title in the subject matter of the suit." 306 U.S. at 588. Nothing in the amended Rule 23 changes this doctrine. The class action plaintiffs in the two cases before us argue that, since the new Rule will include in the judgment all members of the class who do not ask to be out by a certain date, the "matter in controversy" now encompasses all the claims of the entire class. But it is equally true that, where two or more plaintiffs join their claims under the joinder...

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