Eufaula Drugs, Inc. v. Tmesys, Inc.

• Decision Date: 22 May 2006
• Docket Number: Civil Action No. 2:05cv300-MHT.
• Citation: 432 F.Supp.2d 1240
• Parties: EUFAULA DRUGS, INC., Plaintiff, v. TMESYS, INC., Defendant.
• Court: U.S. District Court — Middle District of Alabama

432 F.Supp.2d 1240

EUFAULA DRUGS, INC., Plaintiff, v. TMESYS, INC., Defendant.

Civil Action No. 2:05cv300-MHT.

United States District Court, M.D. Alabama, Northern Division.

May 22, 2006.

James Michael Terrell, Robert G. Methvin, Jr., McCallum Methvin & Terrell PC, Birmingham, AL, Kenneth Evan Riley, Farris, Riley & Pitt, LLP, Birmingham, AL, Richard A. Harrison, Eufaula, AL, for Plaintiff.

Adam Schwartz, David Matthew Allen, Carlton Fields, PA, Tampa, FL, Thomas Louis Coppedge, Maynard, Cooper & Gale, P.C., Birmingham, AL, for Defendant.

OPINION

MYRON H. THOMPSON, District Judge.

This lawsuit is before the court on plaintiff Eufaula Drugs, Inc.'s motion to remand to state court for want of subject-matter jurisdiction. The motion will be granted.

I. REMOVAL-AND-REMAND STANDARDS

"While a defendant does have a right, given by statute, to remove in certain situations, plaintiff is still the master of his own claim." Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994). Put differently, federal courts, as courts of limited jurisdiction, possess jurisdiction to hear a particular case only to the extent authorized by statute or the Constitution. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).

One statutory right of removal provided to the defendant, based on "complete" diversity-of-citizenship jurisdiction, is when the state citizenship of all plaintiffs is different from that of all defendants, and the amount in controversy exceeds $ 75,000. 28 U.S.C. §§ 1332(a), 1441. Another statutory right of removal exists under the Class Action Fairness Act of 2005 (hereinafter "CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.); CAFA authorizes diversity jurisdiction in class actions when the amount in controversy exceeds $ 5,000,000 and "minimal" diversity exists, that is, diversity exists between "any" plaintiff class member and "any" defendant. 28 U.S.C. § 1332(d)(2). For the purposes of CAFA, individual class members' claims may be aggregated to meet the amount-in-controversy requirement. 28 U.S.C. § 1332(d)(6).

II. FACTUAL BACKGROUND

Plaintiff Eufaula Drugs, Inc., a pharmacy in Alabama, has brought this putative class-action lawsuit, on behalf of all similarly situated persons or entities, against defendant Tmesys, Inc., for whose members and insureds Eufaula Drugs agreed to dispense prescription medication.

According to the complaint, Tmesys agreed to reimburse Eufaula Drugs for filling name-brand prescriptions at a rate based on the average wholesale price. Eufaula Drugs alleges that Tmesys's reimbursement policy does not adequately reflect the proper average wholesale price, resulting in under-reimbursements to Eufaula Drugs. Eufaula Drugs alleges that Tmesys has therefore defrauded numerous pharmacies and breached numerous contracts.¹

On February 14, 2005, Eufaula Drugs filed the complaint, which contained Tmesys's address and instructions for the clerk to serve the complaint through certified mail, in the Circuit Court for Barbour County, Alabama.² The clerk did not issue the summons until February 28, however, because Eufaula Drugs's counsel did not file the summons or a completed certified mail card or provide the appropriate postage to the state court clerk's office until then.

Tmesys removed the case to this court on April 1, 2005, and Eufaula Drugs filed the instant motion to remand on May 2. The court directed Eufaula Drugs to submit evidence as to why it failed to file the summons until two weeks after filing the complaint. The court then held an evidentiary hearing on April 26, 2006, to resolve a factual dispute as to the cause of the delay in filing the summons, postage card, and postage.

Debbie Howard, the Deputy Clerk of the Barbour County Circuit Court, stated that she has an "informal practice" regarding service of complaints. When the complaint is to be served by certified mail, plaintiff's counsel is expected to file a completed summons and a completed certified mail form, as well as provide the appropriate postage.³ If counsel fails to comply with the practice, Howard generally will call the lawyer and ask counsel to complete the forms, but she recalled that she had completed the summons and certified mail card on several occasions. However, she will not serve the complaint by mail (as opposed to arranging for service by the sheriff) unless the plaintiff provides the postage because the clerk's office budget is tight; in her own words, her practice is "about the money."

Howard further testified that her practice was not written or published and, to her knowledge, had nothing to do with the Alabama Rules of Civil Procedure, which she has not read. Nonetheless, most lawyers, including those from Birmingham, are aware of her practice. She testified that Richard Harrison, who was retained as counsel by Eufaula Drugs, usually completes the summons, postage card, and pays the postage when he files complaints in the Barbour County Circuit Court. She acknowledged that she was capable of completing the summons and postage card in this case and nothing prevented her from serving this complaint, that is, she had all the necessary service information and could have initiated service immediately after receiving the complaint.

David Nix, the Clerk of the Barbour County Circuit Court, stated that there is no requirement that plaintiffs file a summons along with the complaint or fill out the postage card, although most lawyers do as a courtesy to the clerk's office. He stated that the clerk's office generally does not pay for postage and generally will not serve the complaint by certified mail until the plaintiff pays for the postage, primarily because the clerk's office does not have sufficient money available. Nonetheless, he stated that the clerk's office had "fronted" the postage fee on five or six occasions during the 35 years he had served as clerk. Finally, Nix acknowledged that the clerk's office was perfectly capable of completing service of process when Eufaula Drugs's complaint was filed, even though the office did not do so until Eufaula Drugs provided the summons, certified mail card, and postage.

Richard Harrison, local counsel for Eufaula Drugs, testified that his secretary usually completes a summons, fills out the postage card, and affixes the correct postage to the envelop before filing the complaint, as a courtesy to the clerk's office; and that he did not file the summons or postage in this case simply and only because his secretary, whom he had recently hired, was not adept at using computers and took longer than expected to create the complaint, and he was pressed for time to file the complaint before 4:30 p.m., when the clerk's office closes. He fired his secretary the following day when she was unable to generate the summons properly. Although he was aware of Howard's practice, he felt no great urgency to complete the summons or certified mail card or pay the postage himself because it was his understanding of the Alabama Rules of Civil Procedure that the summons was not required to be filed along with the complaint and he expected that the clerk's office would notify him if there were any problems with serving the complaint. Essentially, because he was without secretarial help, he elected not to provide the courtesy to the clerk's office.

III. DISCUSSION

Tmesys advances two grounds of possible subject-matter jurisdiction over this case: the interaction of diversity-of-citizenship jurisdiction and supplemental jurisdiction, and jurisdiction under CAFA.

A. Diversity and Supplemental Jurisdiction

Because Eufaula Drugs made one claim for reimbursement to Tmesys in 2002, for the amount of $ 64.80, Eufaula Drugs's lawsuit does not satisfy the amount-in-controversy requirement for diversity jurisdiction.⁴ Nonetheless, Tmesys argues that, because Walgreens, a possible member of the putative class that is also diverse from Tmesys, could seek damages in excess of $ 75,000, this court can exercise jurisdiction over Eufaula Drugs's claim by virtue of supplemental jurisdiction, 28 U.S.C. § 1367. Essentially, Tmesys contends that the amount-incontroversy requirement of § 1332(a) can be satisfied by the claims of an unnamed class member, provided that the putative class member is also completely diverse in citizenship from the defendant.⁵

This argument is without merit. In Exxon Mobil Corp. v. Allapattah Servs., Inc., ___ U.S. ___, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005), the Supreme Court held that "where the other elements of jurisdiction are present and at least one named plaintiff in the action satisfies the amount-in-controversy requirement, § 1367 does authorize supplemental jurisdiction over the claims of other plaintiffs in the same Article HI case or controversy, even if those claims are for less than the jurisdictional amount specified in the statute setting forth the requirements for diversity jurisdiction." Id. at 2615 (emphasis added). This language clearly suggests that at least one class representative or named plaintiff must meet the amount-in-controversy requirement before supplemental jurisdiction can arise.

In fact, various circuit courts have explicitly held as much, Rosmer v. Pfizer Inc., 263 F.3d 110, 114 (4th Cir.2001) (" § 1367 confers supplemental jurisdiction in diversity class actions, so long as one named plaintiff has a claim giving a federal court original jurisdiction"); Gibson v. Chrysler Corp., 261 F.3d 927, 937 (9th Cir.2001) (court has original jurisdiction if the named plaintiff or plaintiffs satisfy the amount-in-controversy requirement); In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997) ("At least one named plaintiff must satisfy the jurisdictional minimum [for supplemental jurisdiction to exist]."); In re Abbott Labs., 51 F.3d 524, 529 (5th Cir. 1995) (supplemental jurisdiction exists only if a class...