Friedman v. New York Life Ins. Co, No. 04-11401.

• Decision Date: 06 June 2005
• Docket Number: No. 04-11401.
• Citation: 410 F.3d 1350
• Parties: Susan J. FRIEDMAN, Plaintiff-Appellant, v. NEW YORK LIFE INS. CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

410 F.3d 1350

Susan J. FRIEDMAN, Plaintiff-Appellant, v. NEW YORK LIFE INS. CO., Defendant-Appellee.

No. 04-11401.

United States Court of Appeals, Eleventh Circuit.

June 6, 2005.

Jeffrey M. Liggio, Liggio, Benrubi & Williams, PA, West Palm Beach, FL, Vanessa Reynolds, Conrad & Scherer, Ft. Lauderdale, FL, for Plaintiff-Appellant.

Phillip Edward Stano, George S. Franklin, Jorden Burt, LLP, Washington, DC, Irma Teresa Rebosa-Solares, Miami, FL, for Defendant-Appellee.

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

Before ANDERSON and WILSON, Circuit Judges, and OWENS^*, District Judge.

ANDERSON, Circuit Judge:

Plaintiff, Susan Friedman, appeals the district court's denial of her motion to remand to state court for lack of jurisdiction. This appeal stems from Friedman's suit on behalf of herself and all those similarly situated against her insurer, New York Life Insurance Co. Friedman claims that her premiums were raised in violation of certain statutory provisions of Florida law that were, she asserts, incorporated into her contract with New York Life.¹ She seeks reimbursement of the allegedly overpaid premiums, declaratory relief, and an injunction against continuing violation of Florida law. The case was brought in state court and removed by New York Life on diversity grounds. 28 U.S.C. § 1332. Because we conclude that New York Life failed to satisfy the $75,000 amount in controversy requirement, we conclude that the district court was without diversity jurisdiction.²

I. FACTS AND PROCEDURAL HISTORY

Friedman is a member of the American Veterinary Medical Association (AVMA), and her health plan is a group plan offered to AVMA members. At the time of her enrollment, there were three premium rating classes used by the AVMA: Standard, Standard Plus and Standard Plus 20. Due to her health history, Friedman was placed in the Standard Plus 20 rating class at enrollment, and her premium was 20% higher than the Standard premium rating class. At the time she enrolled, Standard Plus rates were 10% higher than the Standard premium rating class. Several years after she enrolled, New York Life raised the rates for the Standard Plus group to 15% higher than Standard, and for Standard Plus 20 to 50% higher than Standard. Friedman's proposed class is "all AVMA insureds in Florida rated Standard Plus and/or Standard Plus 20."

The suit was originally brought in the 15th Judicial Circuit Court in and for Palm Beach County. New York Life removed on diversity grounds. Friedman moved for remand to state court, claiming that the amount in controversy requirement had not been met. The district court denied the motion, as well as a motion for reconsideration.

The district court judge did not provide any reasoning for its denial of Friedman's motion for remand to state court or her motion for reconsideration. On appeal, New York Life offers three possible bases for a finding that the amount in controversy exceeds $75,000; 1) the aggregate total of the premium increases for which class members seek reimbursement exceeds $75,000; 2) the amount in controversy is equal to the face value of Friedman's policy, which exceeds $75,000; and 3) the value of injunctive relief to the plaintiffs exceeds $75,000.

II. DISCUSSION

Diversity is the only potential basis for jurisdiction in the instant case. As this Court explained in Morrison v. Allstate Indem. Co., 228 F.3d 1255 (11th Cir.2000): "lower federal courts are empowered to hear only cases for which there has been a congressional grant of jurisdiction, and once a court determines that there has been no grant that covers a particular case, the court's sole remaining act is to dismiss the case for lack of jurisdiction." Id. at 1261 (citations omitted). As this Court noted in Kirkland v. Midland Mortgage Co., 243 F.3d 1277 (11th Cir.2001), "[i]n removal cases, the burden is on the party who sought removal to demonstrate that federal jurisdiction exists. Where the plaintiff has not plead a specific amount of damages ... the defendant is required to show ... by a preponderance of the evidence that the amount in controversy" can be satisfied. Id. at 1281 n. 5 (citations omitted).

A. Aggregation

In Morrison, this Court outlined the relevant framework with regard to the aggregation issue that is the crux of this case:

Generally, if no single plaintiff's claim satisfies the requisite amount in controversy, there can be no diversity jurisdiction. However, there are situations in which multiple plaintiffs have a unified, indivisible interest in some common fund that is the object of litigation, permitting them to add together, or "aggregate," their individual stakes to reach the amount in controversy threshold. As explained by the Supreme Court in Zahn v. International Paper 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; but when several plaintiffs unite to enforce a single title or right, in which they have a common and undivided interest, it is enough if their interests collectively equal the jurisdictional amount.

Zahn, 414 U.S. 291 at 295, 94 S.Ct. 505 at 508 (quoting Troy Bank of Troy, Indiana v. G.A. Whitehead & Co., 222 U.S. 39, 40-41, 32 S.Ct. 9, 56 L.Ed. 81 (1911)).

Despite pervasive criticism of the "separate and distinct" versus "common and undivided" distinction as arcane and confusing, there appears to be a common thread in the relevant case law-the presence of a "common and undivided interest" is rather uncommon, existing only when the defendant owes an obligation to the group of plaintiffs as a group and not to the individuals severally. See Eagle v. American Tel. and Tel. Co., 769 F.2d 541, 546 (9th Cir.1985) ("[T]he character of the interest asserted depends on the source of plaintiffs' claims. If the claims are derived from rights that they hold in group status, then the claims are common and undivided. If not, the claims are separate and distinct."); National Org. for Women v. Mutual of Omaha Ins. Co., 612 F.Supp. 100, 107 (D.D.C.1985) ("[T]he cases that allow aggregation often speak of the presence of some fund to which a plaintiff class is seeking access[, and] ... they often involve an attempt to enforce a right that belongs to a group.").

Our predecessor court elucidated this point further in Eagle Star Ins. Co. v. Maltes, 313 F.2d 778 (5th Cir.1963), stating: "[T]he Supreme Court has evinced a desire to give a strict construction to allegations of the jurisdictional amount in controversy, so as to allow aggregation only in those situations where there is not only a common fund from which the plaintiffs seek relief, but where the plaintiffs also have a joint interest in that fund, such that if plaintiffs' rights are not affected by the rights of co-plaintiffs, then there can be no aggregation.... In other words, the obligation to the plaintiffs must be a joint one." Id. at 781; see also Gilman v. BHC Secs., Inc., 104 F.3d 1418, 1424 (2d Cir.1997) ("Plaintiffs in paradigm `common fund' cases assert claims to a piece of land, a trust fund, an estate, an insurance policy, a lien, or an item of collateral which they claim as common owners or in which they share a common interest arising under a single title or right.").

Morrison, 228 F.3d at 1262-64 (emphasis added in Morrison).

The Morrison case is similar to the instant case in several respects. It involved a class action against insurance company defendants. The issue was the $75,000 amount in controversy and whether the claims of the class members could be aggregated to reach that threshold. Also, like this case, the plaintiffs were not seeking the face amount of the policy, but rather were seeking a different amount. They sought damages for the diminished value of their wrecked vehicles after repair; in other words, they sought the difference in value between pre-wreck value and post-wreck value. In addition to their damage claims, they also sought injunctive relief. Applying the principles quoted above, this Court held that the nature of the right asserted was crucial, and that the rights asserted by the Morrison plaintiffs were separate and distinct and therefore could not be aggregated.

We conclude that Friedman and the other putative class members have separate and distinct claims, which do not constitute common and undivided claims to a common fund. Friedman and each of the other plaintiffs each claims a right to damages, namely a right to be reimbursed for the amounts that each has overpaid in premiums, which overpayments they allege violate Florida law. Each plaintiff could have brought a separate suit. If plaintiffs prevail, each plaintiff will recover precisely the amount of his or her overpayment (whether in the same or different amounts) without any effect on the rights of co-plaintiffs. Moreover, there is no common fund; the plaintiffs do not seek distribution of the face amount of the policy; rather, each plaintiff seeks only reimbursement of the amount he or she overpaid in premiums.

New York Life argues that there should be aggregation because the class members here are seeking the totality of all of the overcharged amounts, such that they seek to create a fund from which class members will benefit. We reject this argument because such a fund is not the type of common fund which is required for aggregation. As the Second Circuit noted in Gilman:

Such a "fund" is created to facilitate the litigation process in virtually every class action, and has nothing necessarily to do with whether the plaintiffs shared a pre-existing (pre-litigation) interest in the subject of the litigation.

Under the classic "common fund" cases, what controls is the nature of the right asserted, not whether successful vindication of the right will lead to a single pool of money that will be allocated among the plaintiffs....