Bishop v. General Motors Corp.

• Decision Date: 29 April 1996
• Docket Number: Civil No. 95-04794.
• Citation: 925 F. Supp. 294
• Parties: Peter R. BISHOP, Plaintiff, v. GENERAL MOTORS CORP., Defendant.
• Court: U.S. District Court — District of New Jersey

925 F. Supp. 294

Peter R. BISHOP, Plaintiff, v. GENERAL MOTORS CORP., Defendant.

Civil No. 95-04794.

United States District Court, D. New Jersey.

April 29, 1996.

COPYRIGHT MATERIAL OMITTED

Daniel Gsovski, Herzfeld & Rubin, New York City, Lawrence Lavigne, Hanlon Lavigne Topchik, Edison, NJ, for defendant.

Peter Masnik, Kalikman & Masnik, Haddonfield, NJ, Robert G. Eisler, Mager Liebenberg & White, Philadelphia, PA, for plaintiff.

OPINION

IRENAS, District Judge:

Plaintiff Peter Bishop moves to remand his complaint to the state court from which it was removed by defendant General Motors. Because we hold that Bishop's claim does not meet the amount in controversy required to establish federal subject matter jurisdiction, and because we decline to treat attorneys' fees or highly speculative punitive damages as aggregable for purposes of meeting the amount in controversy, plaintiff's motion to remand will be granted.

I. BACKGROUND

Defendant General Motors ("GM") is the manufacturer of the Chevrolet Lumina, Buick Regal, Oldsmobile Cutlass Supreme and Pontiac Grand Prix. These automobiles are known collectively as the "GM W-Body Car" and are built on the same GM platform. This putative class action involves the owners and lessees of the GM W-Body cars for the model years 1988 to 1993. Plaintiff Peter Bishop owns a 1992 Oldsmobile Cutlass Supreme.

The GM W-body cars are outfitted with brakes that were designed and manufactured by Delphi Chassis Systems, a division of GM. Plaintiff contends that the brakes of the GM W-body cars are defective, that GM was aware of this defect prior to marketing the cars or shortly thereafter, and that GM failed to disclose this fact to present and future owners of the GM W-body cars. Plaintiff contends that he and the other purported members of his class have suffered economic harm as a result of having to pay for repairs or due to the diminution in the value of their cars because of public disclosure of the defect. Plaintiff does not assert that he or any other class member has been injured as a result of the brakes' defect.

II. DISCUSSION

An action removed to federal court may be remanded to state court if the district court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). When confronted with a motion to remand, the removing party has the burden of establishing the propriety of removal. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991). All doubts must be resolved in favor of remand. Boyer, 913 F.2d at 111. Jurisdiction in this case is based on diversity under 28 U.S.C. § 1332(a)(1). Diversity jurisdiction is proper only where the amount in controversy exceeds the sum of $50,000. 28 U.S.C. § 1332(a)(1). The calculation of the amount in controversy lies at the heart of the present motion.

1. Aggregating Common Interests

In Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969), the Supreme Court held that in federal diversity actions a class plaintiff cannot aggregate the claims of all class members to satisfy the jurisdictional amount in controversy. Id. at 335, 89 S.Ct. at 1056. However, the Court recognized an exception to this general rule where "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest...." Id. Defendant asserts that the claims of all class members for punitive damages are common and undivided and should be aggregated in calculating the amount in controversy.

Distinguishing between claims characterized as separate and distinct and those which are common and undivided has proved difficult. Cases in which the courts have applied the "common and undivided interest" rule to permit aggregation include: an action by the holders of two notes, both secured by the same lien, who were suing to assert that lien; a wrongful death action for the benefit of all surviving beneficiaries; an action by the distributees of an estate against one alleged to have converted estate assets; an action by a debtor and his creditors seeking to collect the proceeds of a fire insurance policy; and an action by an Indian tribe to quiet title to a tract of land. See 14A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure, § 3704 (2d ed. 1985).

More recently the Eleventh Circuit held in Tapscott v. MS Dealer Service Corp., 77 F.3d 1353 (11th Cir.1996), that in a class action suit against a seller of automobile service contracts the plaintiffs possessed a "common and undivided" interest in their punitive damage claims, which may therefore be aggregated for purposes of meeting the amount in controversy. Id. at 1358; see also Allen v. R & H Oil and Gas Co., 63 F.3d 1326 (5th Cir.1995) (aggregating punitive damages in a joint (non-class action) mass tort claim); Berman v. Narragansett Racing Assn., 414 F.2d 311 (1st Cir.1969) (aggregating a compensatory damage common fund). The Tapscott court reached its conclusion for four reasons: (1) "punitive damages reflect the defendant's course of conduct towards all of the putative class members"; (2) punitive damages are a "single collective right in which the putative class has a common and undivided interest; the failure of one plaintiff's claim will increase the share of successful plaintiffs"; (3) punitive damages are a "public good," their purpose being to protect society by punishing and deterring wrongful conduct; and (4) the defendant is not concerned with the distribution of the award among the plaintiffs. Id. at 1359.

We believe that Tapscott represents an unwarranted and ill-considered extension of the doctrine of "common and undivided interest" to highly speculative punitive damages claims. The paradigm cases of "common and undivided interest" set forth supra are those which involve a single indivisible res, such as an estate, a piece of property (the classic example), or an insurance policy. These are matters that cannot be adjudicated without implicating the rights of everyone involved with the res. This is not true of punitive damages. Individual plaintiffs can sue separately for punitive damages, and, whether they prevail on the merits or not, whether they are awarded punitive damages or not, the rights of subsequent plaintiffs remain unaffected. Indeed, one of the many cogent criticisms of punitive damages is that multiple punitive liability can both bankrupt a defendant and preclude recovery for tardy plaintiffs. See e.g., Dan B. Dobbs, Law of Remedies, § 3.11(8), p. 501 (2d ed. 1993).

The potential plaintiffs' claims for punitive damages in this case are thus not a "single right"; rather, they are separate and distinct, to be brought together in a class action only for the convenience of the plaintiffs.¹ The test for aggregation is not the defendant's interest, in our view, but whether the plaintiffs' interests are inextricably intertwined.

In cases which do find a "common and undivided interest" the res is generally clearly defined. When dealing with a piece of property, an insurance policy, or an estate, a court can be reasonably confident of its value for jurisdictional purposes. But punitive damages are frequently little more than a lawyer's fantasy. A precise amount is impossible to ascertain at the pleading stage. Such damages are very easy to plead and, given the large number of plaintiffs in many class actions, under the Tapscott rule the federal courts would have jurisdiction over any sizeable diversity class action with a colorable malice claim.² Such a result directly contravenes the purpose behind the amount in controversy requirement, which is to limit the federal docket to substantial cases.

Finally, we believe it is inconsistent to permit the aggregation of punitive damages to meet the jurisdictional minimum when the Third Circuit has held explicitly that attorneys' fees may not be aggregated to meet the jurisdictional minimum,³ and where it has long been the law that compensatory damages may not be aggregated.⁴

2. The Named Plaintiff

a. Compensatory Damages

In Zahn v. International Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973), the Supreme Court held that multiple plaintiffs with separate and distinct claims, as we have found in the case at bar, must each satisfy the amount in controversy requirement. Id. at 301, 94 S.Ct. at 511. There is some question as to whether Zahn is still good law after Congress created supplemental jurisdiction in the Judicial Improvements Act of 1990, 28 U.S.C. § 1367. In In re Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995), the Fifth Circuit held that the jurisdictional amount in controversy need be established only by the named plaintiffs, and that supplemental jurisdiction will then follow over unnamed plaintiffs who do not meet the amount in controversy requirement. Id. at 526-529. The Third Circuit has declined to rule on this issue. Packard v. Provident Nat. Bank, 994 F.2d 1039, 1045 n. 9 (3d Cir.1993).

Whether Zahn continues to require that the jurisdictional amount be established by each and every class member is thus not clear in this Circuit. Nonetheless, even those courts which have declined to apply Zahn in its strictest sense have required that the named plaintiff meet the jurisdictional amount. In re Abbott Laboratories, 51 F.3d 524 (5th Cir.1995); Neff v. General Motors Corp., 163 F.R.D. 478 (E.D.Pa.1995).⁵

The Third Circuit has held that, where a complaint does not request a precise monetary amount, the district court must make an independent inquiry into the value of the claims alleged. Angus v. Shiley, Inc., 989 F.2d 142, 146 (3d Cir.1993). The amount in controversy should be measured "by a reasonable reading of the value of the rights being litigated." Id.⁶

A reasonable reading of the value of Bishop's claim compels the conclusion that it is worth less than $50,000. Depending on the particular model, a 1992 Oldsmobile Cutlass Supreme has...