Lewis v. Verizon Commc'n, Inc.

• Decision Date: 18 November 2010
• Docket Number: No. 10-56512,10-56512
• Citation: 627 F.3d 395
• Parties: Delores LEWIS, individually and on behalf of a class of similarly situated individuals, Plaintiff-Appellee, v. VERIZON COMMUNICATIONS, INC., a Delaware corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

627 F.3d 395 Delores LEWIS, individually and on behalf of a class of similarly situated individuals, Plaintiff-Appellee, v. VERIZON COMMUNICATIONS, INC., a Delaware corporation, Defendant-Appellant. No. 10-56512. United States Court of Appeals, Ninth Circuit. Argued and Submitted Nov. 3, 2010. Filed Nov. 18, 2010.

Michael J. McMorrow, Chicago, IL, for plaintiff-appellee Delores Lewis, et al.

Paul J. Watford, Los Angeles, CA, for defendant-appellant Verizon Communications, Inc.

Appeal from the United States District Court for the Central District of California, Philip S. Gutierrez, District Judge, Presiding. D.C. No. 2:10-cv-02337-PSG-MAN.

Before: MARY M. SCHROEDER, RICHARD C. TALLMAN and MILAN D. SMITH, JR., Circuit Judges.

OPINION

SCHROEDER, Circuit Judge:

This is an appeal under the Class Action Fairness Act ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.). The Act authorizes the removal of class action lawsuits from state to federal court where the amount in controversy exceeds $5 million, exclusive of interest and costs. 28 U.S.C. § 1332(d)(2). The issue before us is whether the district court properly remanded the case to state court on the ground that this requirement was not satisfied.

CAFA mandates a prompt disposition of controversies that arise over issues relating to jurisdiction under the Act. All of the deadlines have been satisfied by the parties, thus an appeal must be decided within 60 days after it is filed. 28 U.S.C. § 1453(c)(2). Hence, we are required to decide this appeal no later than November 22, 2010, 60 days after the petition for appeal was granted. See Amalgamated Transit Union v. Laidlaw Transit Services, Inc., 435 F.3d 1140, 1144 (9th Cir.2006) ("[T]here is no appeal until the petition for permission is granted, and the entry of the order granting permissionserves as the notice of appeal for all timing issues.").

In this circuit, when the complaint does not contain any specific amount of damages sought, the party seeking removal under diversity bears the burden of showing, by a preponderance of the evidence, that the amount in controversy exceeds the statutory amount. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir.2007); see also Lowdermilk v. U.S. Bank Nat'l Ass'n., 479 F.3d 994 (9th Cir.2007) (removing defendant has the burden to show amount in controversy "to a legal certainty" when complaint pleads damages less than CAFA's jurisdictional amount). To satisfy its burden in this case, the removing defendant, Verizon Communications, Inc. ("Verizon"), supplied an affidavit to show that the potential damages could exceed the jurisdictional amount. We conclude that this showing satisfies Verizon's burden. We therefore vacate the district court's order remanding the case to state court, and remand to the district court for further proceedings. In doing so, we reach a conclusion similar to that reached by the Seventh Circuit in Spivey v. Vertrue, Inc., 528 F.3d 982 (7th Cir.2008). That case, like this one, involved claims for unauthorized billings, and the defendant in that case, like Verizon, submitted an affidavit showing its total billings exceeded the jurisdictional amount. Id. at 985.

BACKGROUND

The named plaintiff, Delores Lewis, filed this case in California state court on December 9, 2009. The complaint concerns charges billed by the defendant, Verizon, on behalf of Enhanced Services Billing, Inc. ("ESBI"), a billing processor, or "aggregator," for third-party vendors who offer telephone-related services. This includes weather and traffic reports, sports scores, stock tips, and jokes-all of which are known as "premium content." ESBI bills customers for this premium content through local landline telephone providers, like Verizon, which places a charge on a subscriber's bill.

Lewis claims Verizon billed her for services that she never ordered. Describing these charges as "unauthorized," she seeks to represent a class of landline Verizon customers in California who have been billed for such services that they never expressly agreed to or requested. The operative complaint states no fixed amount for damages sought.

On March 30, 2010, Verizon filed a notice of removal in the District Court for the Central District of California alleging that the case satisfied the $5 million amount in controversy requirement under CAFA, 28 U.S.C. § 1332(d). That section provides in relevant part "[t]he district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and cost...." Id. at § 1332(d)(2).

In support of their notice of removal, Verizon submitted a declaration of Paul E. Glover, Verizon's Senior Consultant for Product Management and Development, to establish that members of the class were billed more than $5 million during the relevant period:

I have reviewed Verizon's records for charges billed by Verizon on behalf of ESBI to landline telephone subscribers in California from March 1, 2006 to the present. The records show that these subscribers were billed more than $5 million, exclusive of fees and interest, from March 1, 2006 until the present for ESBI charges....

On April 29, 2010, Plaintiff filed a motion to remand the action to state court on theground that Verizon failed to carry its burden of demonstrating that the case satisfies CAFA's amount in controversy requirement. Plaintiff's motion to remand proffered no evidence or new allegation that the amount the class might be entitled to receive was less than Verizon's total ESBI billings. Nor did Plaintiff concede that the class sought a recovery of less than $5 million. Instead, Plaintiff contended that, because the complaint challenged only "unauthorized" charges, there was a distinction between "unauthorized" and "authorized" charges for the purposes of determining the amount in controversy. Relying on such a distinction, Plaintiff attacked the Glover Declaration as "incompetent," since it only spoke to the amount of Verizon's gross billings to consumers for ESBI content. On June 30, 2010, the district court granted Plaintiff's motion to remand, and on September 24, 2010, we granted Verizon's petition for permission to appeal the remand pursuant to 28 U.S.C. § 1453(c), authorizing interlocutory review of a CAFA removal order.

In ordering the matter remanded to the state court, the district court adopted Plaintiff's distinction between "authorized" and "unauthorized" charges to hold that the complaint placed only the unauthorized charges into controversy. Lewis v. Verizon Commc'ns, Inc., 2010 WL 2650363, at *3 (C.D.Cal. June 30, 2010). Thus, according to the district court, the Glover Declaration did not satisfy the Defendant's burden to demonstrate the requisite amount in controversy, since it describes the total sum of all ESBI charges billed by Verizon, not just the "unauthorized" ones. Id. at *3. There was, however, no evidence to support the premise that some portion of the charges alleged in the complaint were "authorized." Nor did any pleading suggest the class recovery would be less than $5 million.

Verizon contends on appeal that, given the Plaintiff's refusal to limit the damages sought and Verizon's showing that the total billings exceed $5 million, the total billings constitute the "amount in controversy." We agree.

DISCUSSION

Prior to CAFA, a class action could be heard in federal court under diversity jurisdiction only if there was complete diversity, i.e., all class representatives were diverse from all defendants, and if at least one named plaintiff satisfied the amount in controversy requirement of more than $75,000. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). Viewing these two limitations as "defects in diversity jurisdiction," Congress, in 2005, passed CAFA, which significantly expanded federal jurisdiction in diversity class actions. See David Marcus, Erie, the Class Action Fairness Act, and Some Federalism Implications of Diversity Jurisdiction, 48 Wm. & Mary L.Rev. 1247, 1289-90 (2007).

CAFA, however, aimed to limit federal jurisdiction to larger class actions. CAFA originally included a $2 million amount in controversy requirement, but it was increased to $5 million after the Congressional Budget Office reported that "the bill would impose additional costs on the Federal district court system" since most class-action lawsuits would likely satisfy the $2 million requirement. See Letter from Dan L. Crippen, Dir., Cong. Budget Office, to F. James Sensenbrenner, Jr., Chairman, Comm. on the Judiciary, U.S. House of Representatives (Mar. 11, 2002), in H.R.Rep. No. 107-370, at 27.

CAFA was also designed to settle jurisdictional issues early. Thus, appeals must be filed "not more than 10 days" after a remand order. 28 U.S.C. § 1453(c)(1). If the court of appeals accepts the appeal, thecourt must issue a final judgment not more than 60 days later. Id. at § 1453(c)(2). And if the court of appeals does not issue judgment within the time allowed, "the appeal shall be denied." Id. at § 1453(c)(4).

Although CAFA is relatively new, the concept of an "amount in controversy" has a long history. Congress originally created a jurisdictional amount for diversity jurisdiction in the Judiciary Act of 1789. That statute established a $500 jurisdictional amount, intended as a floor for the size of cases that could reach the federal courts. "Congress has used the requirement of an amount in controversy to limit the original and derivative access to the lower federal courts." Thomas E. Baker, The History and Tradition of the Amount in Controversy Requirement: A Proposal to "Up the Ante" in Diversity Jurisdiction, 102 F.R.D. 299, 302-03 (1984). Over the years, Congress has seen fit to increase the amount, but its purpose has remained the same-"to ensure that a dispute is sufficiently important to warrant federal-court atte...