McQueen v. Woodstream Corp.

• Decision Date: 09 December 2009
• Docket Number: Civil Action No. 05-2068 (RMU).
• Citation: 672 F.Supp.2d 84
• Parties: Robert McQUEEN, Plaintiff, v. WOODSTREAM CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

672 F.Supp.2d 84

Robert McQUEEN, Plaintiff, v. WOODSTREAM CORPORATION, Defendant.

Civil Action No. 05-2068 (RMU).

United States District Court, District of Columbia.

December 9, 2009.

COPYRIGHT MATERIAL OMITTED

Robert McQueen, Washington, DC, pro se.

Lawrence M. Sung, Dewey & Leboeuf, LLP, Washington, DC, for Plaintiff.

Harvey B. Jacobson, Jr., Philip Lawrence O'Neill, Jacobson Holman, PLLC, Washington, DC, for Defendant.

MEMORANDUM OPINION

RICARDO M. URBINA, District Judge.

Granting The Defendant's Motion To Dismiss For Lack Of Subject Matter Jurisdiction

I. INTRODUCTION

This matter comes before the court on the defendant's motion to dismiss the plaintiff's fraudulent misrepresentation claim for lack of subject matter jurisdiction. The defendant asserts that the plaintiff cannot recover sufficient damages to satisfy the amount-in-controversy requirement to maintain this diversity action. The court concludes that the plaintiff's compensatory damages are limited to what he specifically gave up in reliance on the defendant's alleged misrepresentations, termed his "out-of-pocket" damages. The plaintiff has made no specific allegations with respect to such damages, instead focusing on damages he cannot recover under District of Columbia law. The plaintiff has also asserted a right to punitive damages. Because the plaintiff cannot recover a sufficient combination of compensatory and punitive damages to satisfy the amount-in-controversy requirement, the court grants the defendant's motion to dismiss.

II. FACTUAL & PROCEDURAL BACKGROUND

As the facts giving rise to the plaintiff's claims have been set forth in prior opinions, the court will not restate them in exhaustive detail here. See Mem. Op., 248 F.R.D. 73 (D.D.C.2008); Mem. Op., 244 F.R.D. 26 (D.D.C.2007). The plaintiff holds patents to technology used in insect and mouse traps. See Am. Compl. ¶¶ 5-6. In 1992, the defendant requested samples of the plaintiff's patented technology so that it could determine whether it wished to pursue a joint business venture with the plaintiff. Id. ¶ 8. The plaintiff sent the requested samples to the defendant, but negotiations between the plaintiff and the defendant soon broke down. Id. ¶¶ 8-10. The only subsequent contact between the parties consisted of the defendant repeatedly informing the plaintiff that no decision had been made with respect to the prospect of a joint business venture and that it was still assessing the technology for possible licensing and/or future development with the plaintiff. Id. ¶ 10. In 2003, after discovering that one of the defendant's products "incorporated all or most of the technology" that the plaintiff had disclosed to the defendant, the plaintiff commenced the instant suit. Id. ¶ 11.

The court has resolved several motions, including a motion to dismiss the plaintiff's breach of contract claim, which the court granted. See Mem. Op.; Mem. Op.. The only cause of action now remaining is the plaintiff's fraudulent misrepresentation claim. See Mem. Op.. The defendant moves to dismiss that claim for lack of subject matter jurisdiction, alleging that the plaintiff cannot meet the amount-in-controversy requirement. See generally Def.'s Mot. The court turns now to the applicable legal standards and the parties' arguments.

III. ANALYSIS

A. Legal Standard for a Motion to Dismiss Pursuant to Rule 12(b)(1)

Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938); see also Gen. Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C.Cir.2004) (noting that "[a]s a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction").

Because "subject-matter jurisdiction is an `Art[icle] III as well as a statutory requirement[,] no action of the parties can confer subject-matter jurisdiction upon a federal court.'" Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C.Cir. 2003) (quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982)). On a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the burden of establishing by a preponderance of the evidence that the court has subject matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Because subject matter jurisdiction focuses on the court's power to hear the claim, however, the court must give the plaintiff's factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim. Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001). Thus, the court is not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227, 241 (D.C.Cir.1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51 (1987). When necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir.1992).

B. Legal Standard for Diversity Jurisdiction

A federal district court has subject matter jurisdiction over a suit when the amount in controversy exceeds $75,000 and the parties are diverse in citizenship. 28 U.S.C. § 1332(a); DeBerry v. First Gov't Mortgage & Investors Corp., 170 F.3d 1105, 1106 n. 1 (D.C.Cir.1999); see also Stevenson v. Severs, 158 F.3d 1332, 1334 (D.C.Cir.1998) (per curiam) (identifying the $75,000 amount-in-controversy requirement for federal diversity jurisdiction under 28 U.S.C. § 1332(a)). The amount in controversy is established at the commencement of the action. 28 U.S.C. § 1335(a). Subsequent events reducing the amount in controversy will not divest the court of its jurisdiction. St. Paul, 303 U.S. at 289-90, 58 S.Ct. 586. If it becomes apparent during the course of litigation that from the outset the maximum conceivable amount in controversy was less than the jurisdictional minimum, the court must dismiss the case for lack of subject matter jurisdiction. Watson v. Blankinship, 20 F.3d 383, 387-88 (10th Cir.1994); Jones v. Knox Exploration Corp., 2 F.3d 181, 182-83 (6th Cir.1993). Where the plaintiff has alleged a sum certain that exceeds the requisite amount in controversy, that amount controls if made in good faith. St. Paul, 303 U.S. at 289-90, 58 S.Ct. 586. Additionally, to justify dismissal, it must appear to a legal certainty that the claim is for less than the jurisdictional amount. Id. at 288-89, 58 S.Ct. 586; Hartigh v. Latin, 485 F.2d 1068, 1071 (D.C.Cir.1973) (citing Gomez v. Wilson, 477 F.2d 411, 420 (D.C.Cir.1973)).

Punitive damages are properly considered as part of the amount in controversy. Hartigh, 485 F.2d at 1072 (citing Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, 64 S.Ct. 5, 88 L.Ed. 15 (1943)). In considering punitive damages to satisfy the jurisdictional minimum in a diversity case, the court must conduct a two-part inquiry. Bell, 320 U.S. at 240, 64 S.Ct. 5; Cadek v. Great Lakes Dragaway, Inc., 58 F.3d 1209, 1211-12 (7th Cir.1995). First, the court must determine whether the plaintiff can recover punitive damages as a matter of governing substantive law. Bell, 320 U.S. at 240, 64 S.Ct. 5. If so, the court has subject matter jurisdiction unless it is clear beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount. Cadek, 58 F.3d at 1212. In this second step, the plaintiff must present some factual evidence of entitlement to punitive damages. Larkin v. Brown, 41 F.3d 387, 388-89 (8th Cir.1994) (citing Esler v. Northrop Corp., 86 F.R.D. 20, 28 (W.D.Mo.1979) (recognizing that "when the plaintiff's allegation of the amount in controversy is challenged ... existence of the required amount must be supported by competent proof") (citing Hulsenbusch v. Davidson Rubber Co., 344 F.2d 730, 733 (8th Cir.1965))).

C. The Court Grants the Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction

1. The "Out-of-Pocket" Damages Measure Governs the Plaintiff's Claim for Compensatory Damages

In support of its motion, the defendant asserts that the "out-of-pocket" damages measure governs the plaintiff's fraudulent misrepresentation claim under District of Columbia law.¹ Def.'s Mot. at 6-9. Using this calculation method, the defendant argues that the plaintiff cannot recover more than fifteen dollars in compensatory damages, representing the cost of producing twelve traps and shipping them to the defendant. See id. at 9.

The plaintiff disagrees. See Pl.'s Opp'n at 9. He contends that all of the cases the defendant cites in reference to the "out-of-pocket" measure are inapposite because they involved claims of fraudulent inducement to contract for real property. Id. at 10. In this case, the plaintiff maintains, the appropriate method of calculating damages is unclear under District of Columbia law, and therefore the plaintiff urges the court to adopt the measure of damages set forth in the Restatement (Second) of Torts. Id. at 9-12. Based on the approach described in the Restatement, the plaintiff claims he is entitled to the "benefit of the bargain." Id.

The District of Columbia Court of Appeals has "explicitly recognized [the `out-of-pocket' damages measure] as the norm" in fraudulent misrepresentation cases. Dresser v. Sunderland Apartments Tenants Ass'n, 465 A.2d 835, 840 n. 18 (D.C. 1983); see also Horning v. Ferguson, 52 A.2d 116, 119 (D.C.1947) (reversing ...