Hinsley v. CreditBox.com, LLC
| Decision Date | 20 July 2021 |
| Docket Number | 2:21-cv-00281-WJ-GJF |
| Citation | 550 F.Supp.3d 993 |
| Parties | Tiffany HINSLEY, Plaintiff, v. CREDITBOX.COM, LLC, Defendant. |
| Court | U.S. District Court — District of New Mexico |
Nicholas H. Mattison, Feferman & Warren, Albuquerque, NM, for Plaintiff.
Kevin D. Pierce, Seth J. Barany, Jeffrey Adam Wright, Megan Muirhead, Tiffany L. Roach Martin, Modrall Sperling Roehl Harris & Sisk, P.A., Albuquerque, NM, for Defendant.
THIS MATTER is before the Court upon Plaintiff's Motion for Remand, filed April 4th, 2021 (Doc. 11). Plaintiff submits that the Tenth Circuit's anti-aggregation principle precludes aggregation of attorney's fees in determining whether the amount in controversy meets the threshold for federal jurisdiction. Defendant responds that recent caselaw from this District Court opens the door to considering aggregated attorney's fees in the context of claims brought under the New Mexico Unfair Trade Practices Act (the "UPA"), NM Stat § 57-12-10 (2019). Having reviewed the parties’ submissions and the controlling law, the Court has decided that remand back to state court is proper but no attorney's fees will be awarded to Plaintiff for filing her Motion for Remand.
In 2017, Plaintiff Tiffany Hinsley entered into a series of loans with Defendant CreditBox.com LLC ("Defendant" or "CreditBox"), an internet loan provider licensed in New Mexico. Doc. 1-1 at 3, ¶¶ 16-17. In each loan, CreditBox required the use of debit authorizations for repayment of the loan—so called "payday loans," as defined in NMSA § 58-15-2(H). Id. , ¶¶ 19-20. Plaintiff alleges that the charges drawn from her account were significantly more than was permitted under New Mexico law. For instance, CreditBox imposed a finance charge on one loan in the amount of $4,760.72, when finance charges were capped at $248.50 by NMSA § 58-15-33(A) through (D). Id. , ¶¶ 22-24. Ultimately, Plaintiff was unable to pay back her loans, and CreditBox continued to demand payment. Id. , ¶¶ 27-28.
On February 9, 2021, Plaintiff filed her Class Complaint for Damages (Doc. 1-1) in the First Judicial District Court, Rio Arriba County. Therein, Plaintiff alleges that CreditBox violated the UPA, and asks the Court to void the allegedly unlawful loans CreditBox made to class members and enjoin CreditBox from collecting any further interest on the loans. Doc. 1-1. On March 26, 2021, CreditBox removed the case to the United States District Court for the District of New Mexico. Doc. 1. Plaintiff now challenges the Court's subject matter jurisdiction under 28 U.S.C. § 1332(a), claiming that Defendant has failed to establish that the amount in controversy could possibly exceed the $75,000 required for this case to remain in federal court. See Doc. 11 at 2-2.
28 U.S.C. § 1332(a) grants original jurisdiction to federal district courts in "all civil actions where the amount in controversy exceeds the sum of $75,000 exclusive of interest and costs, [ ] between ... citizens of different States." The amount in controversy includes actual damages and a "reasonable estimate" of attorney's fees. See Miera v. Dairyland Ins. Co. , 143 F.3d 1337, 1340 (10th Cir. 1998). Moreover, in the context of class action litigation, the amount of controversy must be established by a single plaintiff and a single defendant, not through an aggregation of the claims across the class. See Snyder v. Harris , 394 U.S. 332, 336, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969).
When diversity jurisdiction is challenged, the removing "defendant must prove facts in support of the amount in controversy by a ‘preponderance of the evidence.’ " McPhail v. Deere & Co. , 529 F.3d 947, 953 (10th Cir. 2008) (quoting McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936) ). Once the jurisdictional facts have been established by a preponderance of the evidence, a defendant's claim that the amount in controversy exceeds $75,000 need only be plausible to remain in federal court. See Dart Cherokee Basin Operating Co. v. Owens , 574 U.S. 81, 89, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).
Therefore, "the defendant must affirmatively establish jurisdiction by proving jurisdictional facts that ma[k]e it possible that $75,000 [is] in play ..." McPhail 529 F.3d. at 955 (emphasis removed). Jurisdictional facts may be established by:
[C]ontentions, interrogatories or admissions in state court; by calculation from the complaint's allegations[;] by reference to the plaintiff's informal estimates or settlement demands[;] or by introducing evidence, in the form of affidavits from the defendant's employees or experts, about how much it would cost to satisfy the plaintiff's demands. The list is not exclusive; any given proponent of federal jurisdiction may find a better way to establish what the controversy between the parties amounts to, and this demonstration may be made from either side's viewpoint ....
Id. at 954 (citing Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 540–43 (7th Cir. 2006) ).
Generally, attorney's fees are not aggregated in calculating the amount in controversy for diversity jurisdiction. See Martin v. Franklin Capital Corp. , 251 F.3d 1284, 1293 (10th Cir. 2001) (). However, footnote 7 of Martin states that "[t]he result might be different if the state statute under which fees are sought expressly awards those fees solely to the class representatives." Id. at 1293 n.7 (emphasis added).
Parties do not dispute that diversity of citizenship exists. Doc. 11 at 2. Plaintiff disputes whether Defendant has met its burden with respect to the amount in controversy for federal jurisdiction.
Defendant and Plaintiff agree that Plaintiff's claim for actual damages cannot be aggregated across the class. Doc. 11 at 4. Defendant suggests that Plaintiff's actual damages amount to $7,541.68. Doc. 1 at 7. Plaintiff argues that the amount of actual damages is $6,185.28. Doc. 11 at 4. The award of actual damages may be subject to trebling pursuant to the UPA. NMSA § 57-12-10(B). Under either calculation of actual damages, the potential amount of damages is $18,555.84 or $22,625.04, significantly less than the $75,000 threshold for diversity jurisdiction.
Therefore, for the Court to maintain federal jurisdiction over this matter, the sum of the "reasonable estimate" of attorney's fees must surpass roughly $56,444.16, per Plaintiff's calculations, or $52,374.96, per Defendant's calculations, to meet the $75,000 jurisdictional threshold. See Miera 143 F.3d at 1340. Whether a "reasonable estimate" of the attorney's fees could exceed the required amounts listed above depends on whether the attorney's fees are calculated on a pro rata or aggregated basis. Id. When attorney's fees are calculated on a pro rata basis, the attorney's fees awarded to a plaintiff's counsel must be divided across all members of the class, and once divided by the number of members in a class action, the attorney's fees can then be added with the potential damages to determine the amount in controversy. For example, on a pro rata basis, $101,000 in attorney's fees awarded to a named plaintiff across a 101-person class becomes $1,000 towards the amount in controversy.1
In this case, if the attorney's fees were calculated on a pro rata basis, the attorney's fees would need to be $5,700,860.17, assuming a class of 101 people, to achieve the jurisdictional amount upon pro rata division among the class members. Plaintiff correctly calculates that this would require Plaintiff's counsel to bill over 22,803 hours at the current rate of $250 per hour. Doc. 11 at 9. This is not a "reasonable estimate of attorney's fees." See Miera 143 F.3d at 1340. Therefore, the jurisdictional requirement will not be met if attorney's fees are calculated on a pro rata basis.
Defendant argues that the attorney's fees should not be calculated on a pro rata basis, but should instead be aggregated under Buscema v. Wal-Mart Stores East LP , which allowed for the aggregation of attorney's fees as to the amount in controversy in an action brought under the UPA. 485 F.Supp.3d 1319, 1333 (D.N.M. 2020) (J. Vázquez). When attorney's fees are aggregated, such fees are not dispersed across the class, but rather, class-wide attorney's fees are attributed to the named plaintiff. For example, under an aggregation basis, $101,000 in class-wide attorney's fees awarded to the named plaintiff's counsel becomes $101,000 towards the amount in controversy, regardless of class size. If attorney's fees were aggregated, then Plaintiff's counsel would only need to bill $56,444.17, or approximately 226 hours, in order to reach the jurisdictional threshold of $75,000. This could be a "reasonable estimate of attorney's fees." See Miera 143 F.3d at 1340.
The question presented here is whether the estimated attorney's fees can be aggregated for class actions brought under the UPA when calculating the amount in controversy. Plaintiff submits that aggregation is not allowed, referring to the only authoritative case on the matter, Martin v. Franklin Capital Corp . In Martin , the Tenth Circuit held that attorney's fees could not be aggregated and attributed entirely to a named plaintiff in assessing whether such fees met the amount in controversy requirement for federal jurisdiction. 251 F.3d at 1293. Defendant responds that Martin does not preclude aggregation because the court in Martin specified that its finding "might be different if the statute under which the fees are sought expressly awards those fees solely to the class representatives," thus creating an exception later recognized by this District Court as allowing for...
To continue reading
Request your trial