Sherfey v. Volkswagen Grp. of Am., Inc.

• Decision Date: 03 May 2016
• Docket Number: CASE NO.1:16CV776
• Parties: CHAD SHERFEY, ET AL., Plaintiff, v. VOLKSWAGEN GROUP OF AMERICA, INC., Defendant.
• Court: U.S. District Court — Northern District of Ohio

CHAD SHERFEY, ET AL., Plaintiff, v. VOLKSWAGEN GROUP OF AMERICA, INC., Defendant.

CASE NO.1:16CV776

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

May 3, 2016

JUDGE CHRISTOPHER A. BOYKO

OPINION AND ORDER

CHRISTOPHER A. BOYKO, J:

This matter is before the Court on Plaintiffs' Motion to Remand (ECF # 3) and Defendant Volkswagen Group of America, Inc.'s Motion to Stay Proceedings Pending Action by the Judicial Panel on Multidistrict Litigation (ECF # 5). For the following reasons, the Court denies Defendant's Motion to Stay, and grants Plaintiffs' Motion to Remand on the condition that Plaintiffs first file a separate stipulation on the amount of damages signed by all Plaintiffs.

On February 26, 2016, Plaintiff Chad Sherfey and approximately 80 other named plaintiffs filed their Complaint against Defendant in Lorain County Court of Common Pleas alleging violations of the Ohio Consumer Sales Practices Act, fraudulent concealment, breach of implied warranty, rescission and restitution and punitive damages. According to the Complaint, Defendant made material misrepresentations concerning the fuel efficiency and emissions of certain VW models sold to the named Plaintiffs.

All named Plaintiffs are Ohio residents while Defendant is a New Jersey registered company with its principal place of business located in Virginia. Plaintiffs' Complaint alleges only state law claims.

On March 30, 2016, Defendant removed the above-captioned case to United States District Court for the Northern District of Ohio based on diversity jurisdiction. According to Defendant, there is diversity of citizenship on the face of the Complaint and the jurisdictional amount in controversy exceeds $75,000 because Plaintiffs seek, restitution, rescission and/or treble damages, attorney fees and punitive damages. Although the Complaint does not allege an amount of damages, Defendant contends the amount in controversy exceeds $75,000 in light of the claims and relief sought by Plaintiffs. In certain circumstances Ohio law permits recovery of the purchase price of the vehicle or three times the actual economic damages suffered by a consumer. Plaintiffs allege the purchase price of the vehicles in question did not exceed $40,000. However, Defendant contends that, under Plaintiffs' theories of damages, Plaintiffs may recover three times actual economic damages. When combined with potential punitive damages and attorney fees, all of which are properly considered by the Court for purposes of determining the amount in controversy, Defendant has established that the amount in controversy is $75,000 or greater.

Plaintiffs oppose the Motion on the bases of the stipulation contained in the Complaint, disclaiming recovery, including punitive damages and attorney fees, in excess of$74,999.00. This action is not plead as a class action, therefore, the recovery of each individual Plaintiff is not aggregated for purposes of establishing the amount in controversy. Plaintiffs have also disclaimed any injunctive relief. Given the plain language of the stipulation, Plaintiffs contend Defendant has not met its burden to the show the jurisdictional amount in controversy is met and the case must be remanded to Lorain County Court of Common Pleas.

LAW AND ANALYSIS

Standard of Review

28 U.S.C. § 1441 "provides that an action is removable only if it could have initially been brought in federal court." Cole v. Great Atl. & Pacific Tea Co., 728 F.Supp. 1305, 1307 (E.D. Ky.1990). Put another way, "[a] civil case that is filed in state court may be removed by the defendant to federal district court if the plaintiff could have chosen to file there originally." Warthman v. Genoa Twp. Bd. of Trs., 549 F.3d 1055, 1059 (6th Cir.2008). The burden of establishing federal jurisdiction rests upon the removing party, i.e., the defendant. Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994). "Concern about encroaching on a state court's right to decide cases properly before it, requires this court to construe removal jurisdiction narrowly." Cole, 728 F.Supp. at 1307 (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941)). A removed case must be remanded if the district court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). In addition, "[w]here there is doubt as to federal jurisdiction, the doubt should be construed in favor of remanding the case to the State court where there is no doubt as to its jurisdiction." Walsh v. Am. Airlines, Inc., 264 F.Supp. 514, 515 (E.D.Ky.1967); see also Breymann v. Pennsylvania, O. &D. R.R., 38 F.2d 209, 212 (6th Cir.1930). In order "[f]or a federal district court to have original jurisdiction over a civil action based on diversity of citizenship, the amount in controversy must exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a)." Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006); Freeland v. Liberty Mutual Fire Insurance Co., 632 F.3d 250, 252 (6th Cir. 2011). Generally, "attorney fees are excludable in determining the amount of controversy" unless a statute "expressly allows the payment of such fees. Williamson v. Aetna Life Ins., 481 F.3d 369, 376 (6th Cir.2007);

Plaintiffs' Stipulation

Plaintiffs Complaint contains the following stipulations and disclaimers:

1. Each Plaintiff expressly stipulates that he, she, or it each claim damages (inclusive of compensatory damages, punitive damages, relief under any other law, attorneys' fees, costs, interest, and any other relief plead herein) in a cumulative amount less than $74,999. Each plaintiff has only one car made the subject of this lawsuit. Accordingly, there is no amount of relief or combination of relief and damages sought by any one Plaintiff that exceeds $74,999. Each Plaintiff so stipulates.

2. Each Plaintiff expressly stipulates that he, she, or it does not seek injunctive relief.

3. Each Plaintiff expressly stipulates that he, she, or it does not seek a class action, does not seek to be a class representative, and wishes to pursue his, her, or its claim on an individual basis in this Court.

Under the heading "Jurisdiction- Stipulated Limitation of Damages" Plaintiffs' Complaint further represents:

116. The entirety of Plaintiffs' claims and causes of actions are based upon the statutes and common law of the State of Ohio. There are no claims or causes of action in this complaint that are based upon federal law. Each Plaintiff so stipulates.

117. This court has jurisdiction over the claims and causes of action assertedherein, and this matter is not removable to Federal Court. Each Plaintiff, in this action, stipulates that he, she, or it seeks damages, costs, attorney's fees and prejudgment interest will not exceed $74,999 total.

Plaintiffs further stipulate that any judgment that may be entered by the Court herein should not, under any circumstances, cumulatively total more than $74,999 for any one Plaintiff. Plaintiffs are willing that this stipulation be binding throughout the course of this litigation until its conclusion.

Defendant offers evidence that the amount in controversy, absent the stipulations, exceeds $75,000. Plaintiffs do not challenge Defendant's representation on the amount of damages at issue but rely strictly on the unequivocal stipulation.

Stipulations by plaintiffs to an amount below the federal jurisdictional amount are enforceable and are sufficient to defeat diversity jurisdiction. Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1350, 185 L. Ed. 2d 439 (2013) ("... federal courts permit individual plaintiffs, who are the masters of their complaints, to avoid removal to federal court, and to obtain a remand to state court, by stipulating to amounts at issue that fall below the federal jurisdictional requirement. That is so."). "A plaintiff may stipulate to a claim less than the federal jurisdictional amount 'where a plaintiff provides specific information about the amount in controversy for the first time ....'" Shupe v. Asplundh Tree Expert Co., 566 F. App'x 476, 481 (6th Cir. 2014) quoting Egan v. Premier Scales & Sys., 237 F.Supp.2d 774, 778 (W.D.Ky.2002). "[O]nly unequivocal statement[s] and stipulation[s] limiting damages will serve this purpose." Shupe, 566 F.3d at 481. An actual limitation on the amount of a potential judgment "is essential to any such stipulation." Id. "To merely say that one will not accept money in excess of a certain amount limits neither the judgment nor the demand." Id.

Defendant opposes remand, asking the Court to stay the action until a final decision isentered on transferring the case to the Volkswagen multi-district litigation transferee court in the Northern District of California. If transfer is ordered, the MDL court will have the authority to grant or deny a motion to remand.

Defendant also contends that remand is improper because the Ohio Civil Rules prohibit plaintiffs from specifying in the demand the amount of damages sought. Here, the stipulations are made in the Complaint and, according to Defendant, run afoul of Ohio Rule of Civil Procedure 8(a)'s prohibition. Lastly, Defendant contends it has met its burden showing that the amount in controversy exceeds $75,000.

There is no dispute that motions to remand may be addressed by the transferor court or the transferee court when a conditional MDL transfer order has been entered. "We note, first, that remand motions can be presented to and decided by the transferee judge." In re Prudential Ins. Co. of Am. Sales Practices Litig., 170 F. Supp. 2d 1346, 1347 (J.P.M.L. 2001), citing In re Ivy, 901 F.2d 7 (2nd Cir.1990); In re Air Crash Disaster at Florida Everglades on December 29, 1972, 368 F.Supp. 812, 813 (J.P.M.L.1973). "Whether to grant a stay of proceedings pending a final ruling of the MDL Panel on the transfer of a case is within the inherent power of the court and is discretionary." Fox v. Depuy Orthopaedics, Inc., No. 3:11 CV 387 CRS, 2011 WL 6057509, at *1 (W.D. Ky. Dec. 6, 2011). "While some courts choose to...