Peterson v. Basf Corp.

• Decision Date: 30 June 1998
• Docket Number: Civ. No. 98-47 (JRT/RLE).
• Citation: 12 F.Supp.2d 964
• Parties: Ronald PETERSON, Barry Thune, David Morken, Owen Larson, Duane Evenson, Jeffrey Nesvig, Richard Moen, Christopher Grove, David Abentroth, Glenn Asbeck, Harold Schlothauer, Donald Steinbeisser, Stephen Pust, and David L. Pinkert, individually, and on behalf of all others similarly situated, Plaintiffs, v. BASF CORPORATION, a foreign corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

12 F.Supp.2d 964

Ronald PETERSON, Barry Thune, David Morken, Owen Larson, Duane Evenson, Jeffrey Nesvig, Richard Moen, Christopher Grove, David Abentroth, Glenn Asbeck, Harold Schlothauer, Donald Steinbeisser, Stephen Pust, and David L. Pinkert, individually, and on behalf of all others similarly situated, Plaintiffs, v. BASF CORPORATION, a foreign corporation, Defendant.

Civ. No. 98-47 (JRT/RLE).

United States District Court, D. Minnesota.

June 30, 1998.

COPYRIGHT MATERIAL OMITTED

Douglas J. Nill, Nill Law Office, Minneapolis, MN, Hugh V. Plunkett, Robert Kinney Shelquist, Bruce L. McLellan, Plunkett, Schwartz, Peterson, Minneapolis, MN, for Plaintiffs.

Winthrop A. Rockwell, John P. Mandler, Mark J. Carpenter, Faegre & Benson, Minneapolis, MN, for Defendant.

ORDER

TUNHEIM, District Judge.

The above-entitled matter comes before the Court upon the Report and Recommendation of United States Magistrate Judge Raymond L. Erickson, dated June 8, 1998. No objections have been filed to the Report and Recommendation in the time period permitted.

Based upon the Report and Recommendation of the Magistrate Judge, and all of the files, records and proceedings herein,

IT IS HEREBY ORDERED that:

1. Plaintiffs' Motion to Remand this matter to the Minnesota District Court for Norman County [Docket No. 13] is granted, and the Clerk of Court is directed to do so forthwith.

2. Defendant's Motion to Dismiss [Docket No. 6] is denied, as moot.

ORDER and REPORT AND RECOMMENDATION

ERICKSON, United States Magistrate Judge.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a general assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(A) and (B), upon the Plaintiffs' Motion to Remand this matter to the Minnesota District Court for Norman County, and upon the Defendant's Motions to Dismiss and to Bifurcate and Delay Discovery.

A Hearing on the Motions was conducted on May 19, 1998, at which time the Plaintiffs appeared by Robert K. Shelquist and Douglas J. Nill, Esqs., and the Defendant appeared by Winthrop A. Rockwell, John P. Mandler, and Mark J. Carpenter, Esqs.

For reasons which follow, we recommend that the Motion to Remand be granted¹ and, therefore, we recommend that the Defendant's Motion to Dismiss be denied, and we deny its Motion to Bifurcate and Delay Discovery, as being moot.²

II. Factual and Procedural Background

The Plaintiffs in this putative class action are fourteen farmers, who reside in the States of Minnesota, North Dakota, South Dakota, and Montana. The Defendant BASF Corporation ("BASF") is incorporated under the laws of Delaware, and is headquartered in New Jersey. Among BASF's various enterprises, it markets and sells herbicides in the national, agricultural market. Two of these herbicides, which are labeled a "Poast" and "Poast Plus," are sold for use in raising crops such as flax, beans, sugar beets, sunflowers, alfalfa, and potatoes.

On December 15, 1997, the Plaintiffs filed suit in Minnesota State Court, on behalf of themselves and a class of similarly situated farmers, claiming that BASF marketed Poast Plus in such a way as to lead purchasers to believe that it had not been registered with the EPA for use with minor crops, even though it had, in order to cause farmers to purchase the more expensive Poast for use on minor crops. Amended Compl. ¶ 29. The Plaintiffs claim that Poast Plus, which is the cheaper of the two herbicides, was conceived to help BASF compete in the more cutthroat major crop market. Id. ¶ 11. However, the Plaintiffs suggest that, because BASF retained dominance in the minor crop market, it schemed to prevent minor crop growers from purchasing the less expensive Poast Plus, by not informing them that Poast Plus was EPA-approved for their use. Id. The Plaintiffs claim that BASF violated the Minnesota Consumer Fraud Act, Minnesota Statutes Section 325F.69; the Minnesota Deceptive Trade Practices Act, Minnesota Statutes Section 325D.44, et seq.; the Minnesota False Advertising Statute, Minnesota Statute Section 325F.67; the New Jersey Consumer Fraud Act, N.J.Rev.Stat. §§ 56:8-1, et seq.; the Delaware Consumer Fraud and Deceptive Trade Practices Act, Del.Code Title 6, §§ 2513 and 2532(a); and that it had engaged in common law fraud and misrepresentation. The Plaintiffs request compensatory relief, including treble damages under the New Jersey Consumer Fraud Act, but they do not specify, in either their original or Amended Complaint, the amount of damages being requested.

On January 9, 1998, BASF removed the action to this Court, pursuant to Title 28 U.S.C. § 1441, on the basis of diversity jurisdiction. See, Title 28 U.S.C. § 1332. In support of its claim for an amount in controversy in excess of $75,000, BASF relies upon the claimed damages of Hector Farms, which is a member of the putative class of Plaintiffs, but which is not one of the named Plaintiffs in the Amended Complaint. Hector Farms, which is a farming partnership that is located in Hector, Minnesota, purchased 1,090 gallons of Poast, during the period from 1992 to 1996, from the Cenex Land-O-Lakes Agronomy. Johnson Aff. ¶ 2-3. A BASF officer, Bryan S. Wilson, attests that, during the period from 1992-1996, "the weighted average price differential between the two products * * * was approximately $4.00 per acre." Wilson Aff. ¶ 2. Therefore, BASF contends, as one gallon of Poast will cover eight acres of farmland, Hector Farms would have overpaid $34,880 during the period in question, see, Def.'s Mem. at 3-4, which, if trebled, would easily exceed the $75,000 jurisdictional threshold.

The Plaintiffs contend that, even if accepted as an appropriate basis for establishing the amount in controversy, the evidence relating to Hector Farms' purchases would not yield an overpayment of $34,880. Robert Burner, the General Manager of Farmers Union Oil in Climax, Minnesota, has explained that, while Poast covers eight acres per gallon, Poast Plus covers only 5.33 acres per gallon, which would lower Hector Farms' compensatory damages to $11,641.20. Burner Aff., ¶ 4-6. BASF insists that Wilson accounted for the differing application rates of the two herbicides when he calculated the weighted average price differential of approximately $4.00 per acre, and that he has prepared a precise damage calculation. See, Stipulation of BASF Corporation ¶ 2, Ex. A.³ Additionally, BASF has shown that, in a similar class action involving only North Dakota residents, a settlement was reached, in which approximately $738,000 was allocated to the class members, and the plaintiffs' attorneys recovered $1,250,000 in fees. Meister Aff. ¶ 4-5. BASF suggests that, if successful, these Plaintiffs and their attorneys would recover an amount of similar kind. In contrast, in moving to remand the case to Minnesota State Court, the Plaintiffs contend that BASF has not established the existence of diversity jurisdiction by a preponderance of the evidence.

III. Discussion

A. Standard of Review. In pertinent part, the Statute which governs the removal of cases to Federal Courts, Title 28 U.S.C. § 1441(a), states as follows:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

After removal, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Title 28 U.S.C. § 1447(c). In reviewing a Motion to Remand, the District Court must resolve all doubts in favor of a remand to State Court, and the party opposing a remand bears the burden of establishing Federal jurisdiction. In re Business Men's Assurance Co. of America, 992 F.2d 181, 183 (8th Cir.1993); Masepohl v. American Tobacco Co., 974 F.Supp. 1245, 1249 (D.Minn.1997).

Where, as here, all concede that complete diversity exists between the parties, our analysis necessarily focuses upon the amount in controversy threshold of $75,000. Blair v. Source One Mortgage Servs. Corp., 925 F.Supp. 617, 622 (D.Minn.1996). Although the Eighth Circuit has left this precise point open, we believe that, where a complaint fails to specify the amount of damages claimed, the party opposing remand must prove the requisite amount in controversy by a preponderance of the evidence. See, De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir.1993); Gafford v. General Elec. Co., 997 F.2d 150, 158 (6th Cir.1993); Commercial Coverage, Inc. v. Paradigm Ins. Co., 998 F.Supp. 1088, 1091, (E.D.Mo.1998); Gilmer v. Walt Disney Co., 915 F.Supp. 1001, 1007 (W.D.Ark.1996); Bergstrom v. Burlington Northern R. Co., 895 F.Supp. 257, 258 (D.N.D.1995).

Both punitive damages and attorneys' fees are included in the calculation of the amount in controversy. State of Missouri ex rel. Pemiscot County, Mo. v. Western Sur. Co., 51 F.3d 170, 173 (8th Cir.1995); Capitol Indem. Corp. v. Miles, 978 F.2d 437, 438 (8th Cir.1992); Allison v. Security Benefit Life Ins. Co., 980 F.2d 1213, 1215 (8th Cir.1992). "When determining the amount in controversy, we scrutinize a claim for punitive damages more closely than a claim for actual damages to ensure that Congress's limits on diversity jurisdiction are properly observed." State of Missouri ex rel. Pemiscot County, Mo. v. Western Sur. Co., supra at 173, citing Larkin v. Brown, 41 F.3d 387, 389 (8th Cir. 1994). Given the conjectural nature of the prospective measurement of attorneys' fees that would be awarded under State law, the Court's obligation to resolve all doubts in favor of remand necessitates that enhanced jurisdictional scrutiny be applied to claims for attorneys' fees.

B. Legal Analysis. For these purposes, we assume that BASF has established,...