Ericsson GE Mobile Communications, Inc. v. Motorola Communications & Electronics, Inc.

Decision Date22 August 1997
Docket NumberNo. 95-6766,95-6766
Citation120 F.3d 216
CourtU.S. Court of Appeals — Eleventh Circuit
Parties11 Fla. L. Weekly Fed. C 344 ERICSSON GE MOBILE COMMUNICATIONS, INC., a Delaware Corporation, Plaintiff-Appellee, v. MOTOROLA COMMUNICATIONS & ELECTRONICS, INC., an Illinois corporation, Birmingham, City of, a municipal corporation, Richard Arrington, Jr., in his official capacity as Mayor of the City of Birmingham, Defendants-Appellants.

Demetrius C. Newton, Birmingham City Attorney's Office, Birmingham, AL, Peter Burke, Joe R. Whatley, Cooper, Mitch, Crawford, Kuy Kendall & Whatley, Birmingham, AL, Kenneth L. Thomas, Thomas, Means & Gillis, P.A., Montgomery, AL, Donald V. Watkins, Watkins, P.C., Birmingham, AL, for Defendants-Appellants.

Michael D. Knight, McDowell, Knight, Roeder and Sledge, LLC, Mobile, AL, for Motorola Electronics and Communications, Inc.

William G. Somerville, III, Johnston, Barton, Proctor & Powell, Birmingham, AL, for Plaintiff-Appellee.

Appeals from the United States District Court for the Northern District of Alabama.

Before ANDERSON, Circuit Judge, and FAY and KRAVITCH, Senior Circuit Judges.

KRAVITCH, Senior Circuit Judge:

Ericsson GE Communications ("EGE") brought this diversity action pursuant to the Alabama Competitive Bid Law, Ala.Code §§ 41-16-50, et seq. (1991 & Supp.1996), to enjoin the execution of a contract between Motorola Communications & Electronics, Inc. ("Motorola") and the City of Birmingham (the "City") for the purchase of a new public safety communications system. Because we conclude that the value of an injunction voiding the contract between Motorola and the City, from the perspective of plaintiff-appellee EGE, is too speculative to satisfy the amount in controversy requirement of the diversity statute, 28 U.S.C. § 1332, we remand the case to the district court with instructions to dismiss for lack of subject matter jurisdiction.

I.

This action arises out of the City's purchase of an 800 MHZ trunked simulcast radio communication system for its police and fire departments. 1 In the early 1990's, the Mayor of Birmingham decided that the City needed a new public safety communications system and hired a consultant to research the City's needs and to assist the City in preparing bid specifications and in evaluating competing bids. In May 1993, the City issued a Request for Bids ("RFB") for two different communication technology systems, the APCO 16 and the APCO 25. 2 The RFB provided that a vendor could submit bids for either or both of these technology systems. Only EGE and Motorola submitted bids in response to the City's request; EGE bid on the APCO 16 system for $9,758,053 and Motorola bid on the APCO 25 system for $11,336,282. After the submission of bids, the Mayor concluded that the APCO 25 system technology would better serve the City's needs. The City then rejected the bids of both EGE and Motorola, and negotiated a new contract with Motorola.

Alleging among other things that the consultant hired by the City was biased in favor of Motorola and that he skewed the decision-making process in that company's favor, EGE brought this action to enjoin the enforcement of the contract between Motorola and the City and to have itself declared the lowest responsible bidder. Motorola and the City moved unsuccessfully to dismiss EGE's claim for lack of subject matter jurisdiction. After certification to the Alabama Supreme Court, 3 the district court conducted a trial before an advisory jury. Adopting that jury's verdict, the district court concluded that the City's decision to purchase the APCO 25 technology was the result of improper influence exerted by Motorola on the City's decision makers and, therefore, violated the competitive bid law. Accordingly, the district court voided the contract. 4 Motorola and the City appeal this judgment, as well as the district court's order denying their motion to dismiss.

II.

As a threshold matter, we must determine whether this action properly was brought in federal court. EGE alleged jurisdiction under the diversity statute, 28 U.S.C. § 1332, which, at the time this action was filed, provided for federal subject matter jurisdiction over actions between citizens of different states 5 in which the matter in controversy exceeds $50,000. 6 Because EGE sought only declaratory and injunctive relief, "it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 345, 97 S.Ct. 2434, 2443, 53 L.Ed.2d 383 (1977); see also Occidental Chemical Corp. v. Bullard, 995 F.2d 1046, 1047 (11th Cir.1993).

A. Governing Perspective

Whether courts, in determining the amount in controversy, are to measure the value of the object of the litigation solely from the plaintiff's perspective or whether they may also consider the value of the object from the defendant's perspective is considerably less well-established. The Supreme Court has provided no clear guidance on this question, 7 and, as a result, federal courts are divided as to the proper perspective to use in determining the amount in controversy. 8

Moreover, district courts in this circuit, reading our prior cases to conflict, have expressed uncertainty as to whether the plaintiff-viewpoint rule governs in this circuit or whether courts are free to consider the value of the object of the litigation to either party. 9 After carefully reviewing this circuit's precedents, however, we find no conflict, and we conclude that this court's predecessor purposefully and conspicuously adopted the plaintiff-viewpoint rule. 10

In our view, several cases from the former Fifth Circuit establish the plaintiff-viewpoint rule. In Vraney v. County of Pinellas, a non-resident property owner and taxpayer brought a diversity action to enjoin a county waterworks program. 250 F.2d 617 (5th Cir.1958) (per curiam). Even though the complaint clearly alleged that the value of the waterworks program to the defendant county exceeded the amount in controversy, the court dismissed the action for lack of jurisdiction because "there is no averment showing or tending to show that the value to the plaintiff of the object or right sought to be enforced exceeds the sum or value" required by the diversity statute. Id. at 618 (emphasis added). The court reiterated that "[u]nder the decisions in taxpayers' actions, as well as others, the value of the plaintiff's right sought to be enforced must exceed the jurisdictional amount in order to confer federal jurisdiction." Id. (emphasis added).

In Alfonso v. Hillsborough County Aviation Authority, 308 F.2d 724 (5th Cir.1962), this circuit's predecessor again refused to consider the value of the object of the litigation from the defendant's perspective in determining the amount in controversy. In Alfonso, a group of homeowners brought a class action against the county aviation authority seeking to enjoin expansion of the county's airport. Citing Vraney, the Alfonso court stated that "[t]he value to the plaintiff of the right to be enforced or protected determines the amount in controversy" and concluded that the alleged damage to the homes of the individual plaintiffs was insufficient to satisfy the amount in controversy requirement. 308 F.2d at 726-27 (emphasis added). The court expressly rejected the plaintiffs' contention that "the amount in controversy is the value of the air rights to the defendants." Id.; see also Texas Acorn v. Texas Area 5 Health Systems Agency, Inc., 559 F.2d 1019, 1023 (5th Cir.1977) ("Surely a plaintiff cannot satisfy the jurisdictional amount any time a private defendant's annual budget exceeds [the requisite amount in controversy]."). 11

In our view, these cases firmly establish that this circuit has adopted the plaintiff-viewpoint rule. Commentators and other courts likewise have read these cases as endorsing the plaintiff-viewpoint approach. See, e.g., McCarty v. Amoco Pipeline Co., 595 F.2d 389, 392 n. 3 (7th Cir.1979) (citing Alfonso); 14A Charles A. Wright et al., Federal Practice and Procedure, § 3703 at 61 n. 1 (citing Alfonso and Vraney ). 12 Moreover, the Fifth Circuit recently indicated that the plaintiff-viewpoint rule of Vraney and Alfonso is still controlling. See Webb v. Investacorp, Inc., 89 F.3d 252, 257 n. 1 (5th Cir.1996) (stating that because value to plaintiff and defendant was the same, calculation of amount in controversy did not violate plaintiff-viewpoint rule of Alfonso).

We do not read Duderwicz v. Sweetwater Sav. Ass'n, 595 F.2d 1008 (5th Cir.1979), on which appellee relies, to disturb or undermine the holdings of the cases discussed above. In Duderwicz, plaintiffs sought to recover interest charged or to be charged by defendant pursuant to allegedly usurious notes. The court first determined that interest contracted for but not yet paid was properly subject to forfeiture under Georgia law. 595 F.2d at 1013. Having made this determination, the only question left for the court to resolve was whether "the pecuniary consequence of this forfeiture may be considered as part of the value of the matter in controversy." Id. at 1014. The Duderwicz court held that such a pecuniary consequence provided a proper basis for calculating the amount in controversy.

In reaching this conclusion, the Duderwicz court stated that "[d]ismissal of a diversity action for want of jurisdiction is justified only where it appears to a legal certainty that plaintiff cannot recover the jurisdictional amount." 595 F.2d at 1012 (emphasis added). It further noted that state law is relevant to define "the nature and extent of the right plaintiff seeks to enforce." Id. (emphasis added). This language indicates to us that Duderwicz understood and applied the governing plaintiff-viewpoint rule.

Appellee nevertheless relies on the following language from Duderwicz: "[T]he value of the matter in controversy is measured not by the monetary...

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