Cohen v. Office Depot

• Decision Date: 24 February 2000
• Docket Number: No. 98-4787,98-4787
• Citation: 204 F.3d 1069
• Parties: (11th Cir. 2000) CHERYL COHEN, on behalf of herself and others similarly situated, Plaintiff - Appellant, v. OFFICE DEPOT, INC., a Florida corporation, Defendant - Appellee
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1069

204 F.3d 1069 (11th Cir. 2000)

CHERYL COHEN, on behalf of herself and others similarly situated, Plaintiff - Appellant, v. OFFICE DEPOT, INC., a Florida corporation, Defendant - Appellee.

No. 98-4787

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Feb. 24, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Southern District of Florida

ON PETITION FOR REHEARING AND SUGGESTION OF REHEARING EN BANC

Before BIRCH and CARNES, Circuit Judges, and MILLS^*, Senior District Judge.

CARNES, Circuit Judge:

In our prior opinion in this case, we held that Florida Statute 768.72 conflicts with and must yield to the "short and plain statement" rule contained in Federal Rule of Civil Procedure 8(a)(3), and as a result a Florida plaintiff in federal court because of diversity jurisdiction need not obtain leave of court before pleading a request for punitive damages. Cohen v. Office Depot Inc., 184 F.3d 1292, 1295 - 99 (11th Cir. 1999) ("Cohen I"). We adhere to and leave that part of our earlier opinion intact.¹

Relying on Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1358-59 (11th Cir. 1996), we also held that "in a class action lawsuit punitive damages may be aggregated to satisfy the amount-in-controversy requirement for each class member," at least "where state law provides that an award of punitive damages is for the 'public benefit' or 'collective good,' and the award would reflect 'the wrongfulness of the defendant's course of conduct as a whole.'" Cohen I, 184 F.3d at 1295 (quoting Tapscott, 77 F.3d at 1358). Combining our two holdings, we concluded that the complaint satisfied the amount in controversy requirement because it requested $10,000,000 in punitive damages for the entire class of approximately 39,000 Office Depot catalogue customers. See id. at 1299.

In its petition for rehearing, Office Depot has belatedly pointed out the tension between the Tapscott decision, on which we relied in our earlier opinion in this case, and the decision in Lindsey v. Alabama Telephone Co., 576 F.2d 593 (5th Cir. 1978). Of course, pre-split or "Old Fifth" decisions such as Lindsey are binding on us, see Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981), and where two prior panel decisions conflict we are bound to follow the oldest one. See United States v. Steele, 147 F.3d 1316, 1318 (11th Cir. 1998) (en banc) ("It is the firmly established rule of this circuit that each succeeding panel is bound by the holding of the first panel to address an issue of law, unless and until that holding is overruled en banc, or by the Supreme Court.") (internal quotation marks and citation omitted); United States v. Dailey, 24 F.3d 1323, 1327 (11th Cir. 1994) (where there is an intracircuit conflict of authority, "the earliest panel opinion resolving the issue in question binds this circuit until the court resolves the issue en banc") (internal quotation marks and citation omitted).

For reasons we will soon discuss, we conclude that Tapscott's holding about aggregation of punitive damages is inconsistent with the earlier holding on the same legal issue in Lindsey, and accordingly we must follow Lindsey. Doing so, we conclude that the total of $10,000,000 in punitive damages that was pleaded for the class of 39,000 members in this case is insufficient to satisfy the $75,000 amount in controversy requirement. This conclusion requires us to address plaintiff, class-representative Cohen's remaining arguments involving alternative theories for satisfying the amount in controversy requirement, which are that it is satisfied because of the value of the requested injunctive relief, and because of the amount of attorney fees due if the class prevails. We will discuss those issues in a later part of this opinion, but we begin with a discussion of the inconsistency of Tapscott (and our own prior opinion following it) with Lindsey.

I. THE CONFLICT BETWEEN LINDSEY AND TAPSCOTT REGARDING AGGREGATION OF PUNITIVE DAMAGES

To avoid adding confusion to conflict, we first explain why referring to the "aggregation" of punitive damages in the context of a class action can be a bit misleading. In this case, as in Lindsey and Tapscott, the punitive damages claim is a single claim on behalf of the entire class; it is not the sum total of 39,000 individual punitive damages claims. Because each class member could have sought punitive damages in individual suits, courts sometimes phrase the question as whether a class claim for punitive damages can be "aggregated" to satisfy the jurisdictional amount in controversy requirement for a class. The question, however, is not whether distinct punitive damages claims can be added together, but instead it is whether the single punitive damage claim on behalf of the class can be attributed in toto to each and every class member so they can individually satisfy the requisite amount in controversy, a requirement mandated by Zahn v. International Paper Co., 414 U.S. 291, 94 S. Ct. 505 (1973).² If the single punitive damages claim cannot be attributed as a whole to each class member, it must be allocated or divided pro rata among the class members, and after that is done the total amount of relief sought by each plaintiff must satisfy the jurisdictional amount. With that clarification of the question, we turn to the conflicting answers of Lindsey and Tapscott.³

Lindsey involved a state law class action suit against two telephone companies alleged to have unlawfully extracted excessive cash deposits from the class. See Lindsey, 576 F.2d at 593. The defendants removed the case to federal court on diversity grounds. See id. at 593-94. The complaint, as construed by the Court, sought: (1) $2,000 compensatory damages for Lindsey, (2) an unspecified sum of compensatory damages for the class, which contained an unspecified number of plaintiffs, and (3) $1,000,000 punitive damages on behalf of the class. See id. at 595.

The Lindsey Court began its analysis by citing Snyder v. Harris, 394 U.S. 332, 89 S. Ct. 1053 (1969), for the broad proposition that multiple plaintiffs suing in a class may not aggregate any claims for the purpose of satisfying the amount in controversy requirement of diversity jurisdiction. Lindsey, 576 F.2d at 594. The Court then noted that each member of a class must individually satisfy the jurisdictional amount to avoid being dismissed from the class suit. See id. (citing Zahn, 414 U.S. at 300, 94 S. Ct. at 511). Because the Lindsey plaintiff had failed to plead a specific number of class members, the Court explained that it could not determine "what dollar amount represent[ed] the 'amount in controversy' for each member of the class." Id. at 595 (emphasis added). Noting that the grounds for removal jurisdiction must be found in the plaintiff's complaint itself, the Court explained that "it was not open for [the] defendants to attempt to show that the class was small enough that the claims on its behalf exceeded the sum of $10,000 per capita," id., which was the amount in controversy requirement at that time, see id. at 593.

Because it could not tell from the complaint the number of class members, the Lindsey Court could not determine whether each member's claim satisfied the jurisdictional amount, and it therefore held that the total specified damage claim for the class - $1,002,000 - had not been shown to satisfy the amount in controversy requirement. See id. at 595. A necessary part of Lindsey's reasoning is the holding that for amount in controversy purposes a class punitive damages claim must be allocated pro rata to each class member. Otherwise, the result in that case would have been different. If the Lindsey Court had concluded that a class claim for punitive damages could be attributed in toto to each class member, i.e., considered in the aggregate, for amount in controversy purposes, the $1,000,000 punitive damages claim clearly would have sufficed, regardless of whether the number of class members in Lindsey had been two or two million. The number of class members would have been irrelevant, instead of the critical factor in the decision. Thus, Lindsey inescapably stands for the proposition that a federal court cannot exercise diversity jurisdiction over a class action - even with completely diverse parties - solely because the total punitive damages claim on behalf of the entire class exceeds the jurisdictional amount in controversy. Instead, under Lindsey, the punitive damages claim for the class must be assigned on a pro rata basis to each class member for amount in controversy purposes. See id.

Three years after Lindsey, we split from the Fifth Circuit but retained its decisional law as our own, see Bonner, 661 F.2d at 1207, and fifteen years after the split, this Court decided Tapscott v. MS Dealer Serv. Corp. In that case, we faced another attempt to base diversity jurisdiction on a class claim for punitive damages, but we mistakenly considered the matter as one of first impression.⁴ See Tapscott, 77 F.3d at 1358. The plaintiffs in Tapscott brought a state law class action, alleging a class of over 10,000 members. See id. at 1355 n.2. The class sought statutory damages, injunctive relief, and an unspecified amount of compensatory and punitive damages, based on the defendant's allegedly fraudulent conduct in the sale of extended service contracts. See id. at 1355. The defendants removed the case to federal court on diversity jurisdiction grounds. See id. The plaintiffs contested the removal with affidavits attesting that the individual recovery for each plaintiff would not exceed $50,000, the amount in controversy required for diversity jurisdiction at the time. See id. The defendants responded that, for jurisdictional purposes, the class claim for punitive damages should be considered in the aggregate. See id. at 1357-59. We agreed and upheld the removal of the case to ...