Rolwing v. Nestle Holdings, Inc.

• Decision Date: 02 February 2012
• Docket Number: No. 11–3445.,11–3445.
• Citation: 666 F.3d 1069
• Parties: John M. ROLWING, Appellee, v. NESTLE HOLDINGS, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

666 F.3d 1069

John M. ROLWING, Appellee,

v.NESTLE HOLDINGS, INC., Appellant.

No. 11–3445.

United States Court of Appeals, Eighth Circuit.

Submitted: Dec. 14, 2011.Filed: Feb. 2, 2012.

Thomas E. Wack, St. Louis, MO, for appellant.

Brian Ruschel, Cleveland, OH, for appellee.

Before MURPHY, BOWMAN, and GRUENDER Circuit Judges.

GRUENDER, Circuit Judge.

Nestle Holdings, Inc. (“Nestle”) appeals the district court's ¹ order remanding this putative class action to the jurisdiction of the state courts of Missouri. Because at the time the case was removed it did not meet the requirements for federal subject matter jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §§ 1332(d), 1453, 1711–15, we affirm the order of the district court.

I. BACKGROUND

On January 15, 2001, Nestle agreed to a merger with Ralston Purina Company that provided for the cash purchase of Ralston Purina's common stock by Nestle. The merger agreement contained a choice-of-law provision selecting Missouri law as controlling its terms. The merger was completed on December 12, 2001. On December 18, 2001, Nestle paid Ralston Purina book-entry shareholders a total of $8,880,809,766.50 for their 265,098,799 outstanding common shares of Ralston Purina.

Ralston Purina book-entry shareholder John M. Rolwing filed this putative class action in Missouri state court on March 30, 2011, on behalf of himself and all other Ralston Purina book-entry shareholders at the time of the execution of the merger agreement (“the class”). Rolwing claims that Nestle was required to pay the class on December 12, that Nestle's December 18 payment was delinquent, and that the class is entitled to interest on the delinquent payment. Nestle removed the case to federal court on May 17, 2011, invoking CAFA-provided jurisdiction under 28 U.S.C. § 1332(d). It then filed a motion to dismiss on the basis of a prior resolution by the state courts of Ohio of a putative class action, brought by the same attorney on behalf of a different named plaintiff in that state, that claimed damages under the same theory for the same class.

Before the district court could rule on Nestle's motion to dismiss, Rolwing moved to remand the case to Missouri state court, arguing that the amount in controversy was not in excess of $5 million, as required by § 1332(d). Nestle responded by asserting that Rolwing's theory of the case clearly comprehended the possibility of damages in excess of $5 million. The interest due on Nestle's payment to the class, calculated at an annualized rate of nine percent as required by Missouri law, see Mo.Rev.Stat. § 408.020, would exceed $2 million for each day that the payment was late. If payment had been due on December 12 as Rolwing alleges, Nestle claims it would be exposed to damages well in excess of the $5 million threshold.

To counter any attempt at removal, however, Rolwing's complaint included a prayer for relief requesting “judgment against defendant in an amount that is fair and reasonable in excess of $25,000, but not to exceed $4,999,999.” The prayer stated further: “Plaintiff and the class do not seek—and will not accept—any recovery of damages (in the form of statutory interest) and any other relief, in total, in excess of $4,999,999.” Rolwing did this, according to his complaint, expressly so as “not to provide any United States District Court with jurisdiction under the terms of the Class Action Fairness Act of 2005 ... or any other provision(s) of law.” Rolwing also included two stipulations with his complaint: one stating that as named plaintiff and putative class representative he would not seek or accept any recovery in excess of $4,999,999 on his own behalf or on the behalf of the class, and a second signed by his counsel stating that no attorneys' fees would be sought or accepted other than on a contingency basis out of the maximum recovery of $4,999,999 provided for by the other stipulation. As with the complaint's prayer for relief, both stipulations stated that the limitation on damages sought was for the purpose of defeating federal jurisdiction.

The district court granted Rolwing's motion to remand on the basis of this disclaimer of damages and denied as moot a second motion to remand filed by Rolwing on the basis of the securities exception in 28 U.S.C. § 1332(d)(9)(C). Nestle filed a petition pursuant to 28 U.S.C. § 1453(c) requesting permission to appeal the district court's remand order, which we granted.

II. DISCUSSION

CAFA provides for federal subject matter jurisdiction over qualifying class actions where the aggregate amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). Such class actions generally are removable, and the usual one-year time limit on diversity-premised removal is inapplicable. 28 U.S.C. § 1453. Certain class actions dealing either with securities or claims relating to business governance arising out of state law are excepted from this general rule and are not removable. 28 U.S.C. § 1453(d). The courts of appeals are authorized to accept an appeal from an order granting or denying a motion to remand a class action. 28 U.S.C. § 1453(c).

“We review de novo a district court's order to remand a removed case for lack of subject matter jurisdiction.” Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir.2009). In the CAFA context, the party seeking removal bears the burden of proving by a preponderance of the evidence that the jurisdictional requirements for removal are met. Id. at 956–59. If the removing party meets this burden, the party seeking remand must establish to a legal certainty that the requirements for federal jurisdiction are not met. Id. at 959. Thus, for a remand to be justified, Rolwing must show that it is legally certain that recovery in this case cannot exceed $5 million. See id.

Rolwing has maintained throughout these proceedings that the disclaimer of damages greater than $4,999,999 in his prayer for relief and the accompanying stipulations makes it legally certain that the amount in controversy cannot exceed $5 million. Nestle counters that (1) Missouri law (which governed the merger agreement and therefore would control the suit) would not give effect to the disclaimer, and (2) Rolwing's purported disclaimer of part of the class's potential recovery is unenforceable because it “was inconsistent with the interests of and in breach of his fiduciary duties to the putative class.” Nestle contends that, absent certainty that the disclaimer will be enforced, it is not a legal certainty that the amount in controversy is not in excess of $5 million, rendering remand inappropriate.

We have previously stated that a binding stipulation limiting damages sought to an amount not exceeding $5 million can be used to defeat CAFA jurisdiction. Bell, 557 F.3d at 958 (“In order to ensure that any attempt to remove would have been unsuccessful, Bell could have included a binding stipulation with his petition stating that he would not seek damages greater than the jurisdictional minimum on remand.”). Stipulations of this sort, when filed contemporaneously with a plaintiff's complaint and not after removal, have long been recognized as a method of defeating federal jurisdiction in the non-CAFA context. See, e.g., De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir.1995); In re Shell Oil Co., 970 F.2d 355, 356 (7th Cir.1992) (per curiam) (“Litigants who want to prevent removal must file a binding stipulation or affidavit with their complaints.”).

Nestle first argues that Rolwing's prayer for relief and the stipulations are not enforceable under Missouri law and, therefore, not binding on the class. While it is unclear what effect, if any, Missouri law would give to the prayer for relief in Rolwing's complaint, see Mo.Rev.Stat. § 509.050.1(2) (prohibiting the specific pleading of damages “except to determine ... jurisdictional authority,” and providing that specific damage pleadings under that exception “shall not affect the conduct of trial with regard to stating, proving, or arguing damages”), it is not necessary for us to resolve this question. Instead, we conclude that the stipulations are independently enforceable under the doctrine of judicial estoppel and, therefore, binding within the meaning of Bell.

Under Missouri law, “[t]he doctrine of judicial estoppel provides that ‘[w]here a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him.’ ” Taylor v. State, 254...