Gavriles v. Verizon Wireless

• Decision Date: 29 March 2002
• Docket Number: No. 01-CV-71598-DT.,01-CV-71598-DT.
• Citation: 194 F.Supp.2d 674
• Parties: James GAVRILES and Sahar Yaldoo, Individually and as Representatives of a class of all those similarly situated, Plaintiffs, v. VERIZON WIRELESS, an assumed name of Primeco Personal Communication Limited Partnership, a Delaware Partnership, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

194 F.Supp.2d 674

James GAVRILES and Sahar Yaldoo, Individually and as Representatives of a class of all those similarly situated, Plaintiffs, v. VERIZON WIRELESS, an assumed name of Primeco Personal Communication Limited Partnership, a Delaware Partnership, Defendant.

No. 01-CV-71598-DT.

United States District Court, E.D. Michigan, Southern Division.

March 29, 2002.

John T. Alexander, Southfield, MI, Gregory D. Demopoloulos, Livonia, MI, for plaintiffs.

Todd R. Mendel, Detroit, MI, Daniel Costello, Columbus, OH, for defendant.

OPINION AND ORDER REMANDING CASE TO WAYNE COUNTY CIRCUIT COURT

ROSEN, District Judge.

I. INTRODUCTION

The above-captioned action was originally filed in Wayne County Circuit Court on March 22, 2001 and timely removed to this Court on April 24, 2001. The matter is presently before the Court on (1) the Court's Order to Show Cause directing Defendant Verizon Wireless, the removing party, to show cause why this case should not be remanded to the state court for lack of federal subject matter jurisdiction, and (2) Plaintiffs' contemporaneously filed Motion to Remand. The parties have fully briefed the pertinent jurisdictional issues, and having reviewed and considered the parties' briefs, supporting documents and the entire file of this matter, the Court has concluded that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(e)(2), this matter will be decided on the briefs. This Opinion and Order sets forth the Court's ruling.

II. FACTUAL AND PROCEDURAL BACKGROUND

Defendant Verizon Wireless ("Verizon") is a provider of cellular telephone service. Plaintiffs James Gavriles and Sahar Yaldoo are Verizon customers. Both Gavriles and Yaldoo are Michigan citizens. Verizon is an assumed name of NewPar, a Delaware general partnership.¹ The general partners in NewPar are Verizon Wireless (VAW), LLC and AirTouch Cellular Eastern Region, LLC, both of which are limited liability companies whose sole member is Celco Partnership. None of the general partners of Celco are Michigan citizens. See Notice of Removal, ¶¶ 7-17.²

Verizon's service contract for cellular telephone service provides a limited monthly usage in exchange for a fixed monthly charge. A customer's monthly usage which exceeds the specified maximum monthly limit incurs additional per minute usage charges. Plaintiff James Gavriles contracted for Verizon's "Local 125 plan," which provides 125 minutes of airtime per month at a monthly rate of $25.00. There is no specific allegation as to Plaintiff Sahar Yaldoo's contract, however, the Court assumes for purposes of this Opinion that Plaintiff Yaldoo has a contract with Verizon for a similar plan.³

Verizon's business practice measures monthly usage by aggregating the time for individual calls where the time for each call is rounded up to the next whole minute increment. Verizon includes the time of both incoming and outgoing calls in the monthly usage aggregation. Plaintiffs allege that when they signed contracts for cellular telephone service with Verizon, they were not informed that they would be charged for calls rounded up to the next minute or for incoming calls. They also allege that due to Verizon's billing practices, they do not receive their full allotment of airtime minutes.

Based upon the above allegations regarding their service contracts and Verizon's business practices, Plaintiffs initiated this lawsuit in Wayne County Circuit Court. In their Complaint, Plaintiffs allege three substantive counts: violation of the Michigan Consumer Protection Act (Count I), "silent fraud" (Count II), and breach of contract (Count III). Plaintiffs further allege "class action allegations," in which they seek to represent the entire class of current and former Verizon and AirTouch Cellular in Michigan dating back to March 21, 1995. See Complaint, ¶ 18.⁴

With respect to the class action allegations, Plaintiffs state that "equitable and declaratory relief would not be appropriate with respect to the class because each member has suffered financial losses." Id. ¶ 5. However, Plaintiffs seek class action certification because "[t]he damages suffered by individual Class members are relatively small," and, therefore, they contend that it would be "virtually impossible" for individuals to seek redress through individual litigation. Id. at ¶ 30.

Based upon the foregoing allegations, on April 24, 2001, Defendant removed Plaintiffs' action to this Court, alleging diversity jurisdiction pursuant to 28 U.S.C. § 1332. The Court subsequently issued an Order to Show Cause directing Defendant to show cause in writing why this case should not be remanded to state court, noting that because of the "non-aggregation rule," the $75,000.00 amount in controversy requirement might not be satisfied here. The Court's Order to Show Cause apparently crossed in the mail with Plaintiffs' Motion to Remand in which Plaintiffs requested remand based upon the same non-aggregation rule.

III. SUMMARY OF THE PARTIES' ARGUMENTS

Plaintiffs argue that remand is proper because each individual class member's claim is less than the minimum $75,000 threshold for this Court's diversity of citizenship subject matter jurisdiction to attach. Specifically, Plaintiffs argue that neither the claims presented nor the potential attorney's fees can be aggregated by the Defendant to meet this court's minimum amount in controversy requirement.

Verizon counters that the Plaintiffs' claim includes a claim for disgorgement, injunctive relief and attorney's fees. Verizon argues that a disgorgement claim should be treated as multiple claims against an undivided interest, which allow aggregation of the plaintiff's individual claims to meet the minimum claim amount threshold. Verizon further argues that its potential expenses incurred to comply with injunctive relief would satisfy the minimum claim amount threshold. Additionally, Verizon claims that attorneys' fees should be aggregated and allocated pro rata among the two named Plaintiffs only and, therefore, the Court should find the amount in controversy requirement satisfied.

IV. DISCUSSION

A. APPLICABLE STANDARDS

The standard of review for jurisdictional purposes in removal is summarized as follows:

The District Court must resolve "all disputed questions of fact and ambiguities in the controlling... state law in favor of the non-removing party." Id. [Alexander v. Electronic Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994)] All doubts as to the propriety of removal are resolved in favor of remand. See id.

Coyne v. American Tobacco Company, 183 F.3d 488, 493 (6th Cir.1999). See also Knauer v. Ohio State Life Ins. Co., 102 F.Supp.2d 443, 445 (N.D.Ohio 2000) (court to look to face of complaint to determine if amount in controversy is satisfied). The burden is on the defendant in a removal case to prove that the requirements for diversity jurisdiction have been satisfied. See Gafford v. General Electric, 997 F.2d 150, 155 (6th Cir.1993).

B. DEFENDANT IS NOT ENTITLED TO AGGREGATION OF DAMAGES FOR PURPOSES OF MEETING THE AMOUNT IN CONTROVERSY REQUIREMENT IN THIS CASE

The seminal case with respect to satisfaction of the amount in controversy requirement in class action cases is Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969), in which the Supreme Court granted certiorari to review the decisions entered by federal district courts in two separate class actions, Snyder v. Harris and Gas Service Company v. Coburn. Each of these cases involved a single plaintiff suing on behalf of himself and "all others similarly situated."

In the Snyder case, the plaintiff, a corporate shareholder, brought suit in the United States District Court for the Eastern District of Missouri on the basis of diversity of citizenship against members of the company's board of directors alleging that they had sold their shares of the company's stock for an amount far in excess if its fair market value, that this excess represented payment to these directors to obtain complete control of the company, and that under Missouri law, the excess should properly be distributed among all the shareholders of the company, not merely to a few of them. Since the allegations in complaint showed that Snyder sought for herself only $8,740 in damages, the defendants moved to dismiss on the ground that the amount in controversy requirement for diversity jurisdiction was not satisfied.⁵ Snyder argued, however, that her claim should be aggregated with those of the other members of her putative class, approximately 4,000 shareholders of the company stock, and if all 4,000 potential claims were aggregated, the amount in controversy would be $1,200,000.00.

The district court rejected Snyder's argument and held that the claims could not be aggregated to meet the statutory requirement for federal jurisdiction and the Eight Circuit Court of Appeals affirmed.

Coburn involved an action brought by a resident of Kansas in the federal district court in that state against the Gas Service Company which marketed natural gas in Kansas. The complaint alleged that the Gas Service Company had billed and illegally collected a city franchise tax from the plaintiff and others living outside of cities in the state. Coburn alleged in the complaint damages to himself of only $7.81. Styling his complaint as a class action, however, Coburn sought relief on behalf of 18,000 other Gas Service Company customers living outside of city limits. The amount by which other customers were overcharged was indicated as "unknown," but, in any event, the Complaint alleged that the aggregation of these claims exceeded $10,000, the then existing federal jurisdictional amount.

The Gas Service Company moved to dismiss Coburn's complaint for failure to satisfy the statutory amount in controversy requirement, but the district court denied the motion and the Tenth Circuit Court of Appeals affirmed, holding that because...