Strawn v. At & T Mobility LLC

• Decision Date: 30 June 2008
• Docket Number: No. 07-2084.,07-2084.
• Citation: 530 F.3d 293
• Parties: James STRAWN and James Staton, individually, and on behalf of all others similarly situated, Plaintiffs-Appellees, v. AT & T Mobility LLC, f/k/a Cingular Wireless LLC, Defendant-Appellant, and Cingular Wireless, a foreign corporation, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

530 F.3d 293

James STRAWN and James Staton, individually, and on behalf of all others similarly situated, Plaintiffs-Appellees, v. AT & T Mobility LLC, f/k/a Cingular Wireless LLC, Defendant-Appellant, and Cingular Wireless, a foreign corporation, Defendant.

No. 07-2084.

United States Court of Appeals, Fourth Circuit.

Argued: May 14, 2008.

Decided: June 30, 2008.

ARGUED: Jeffrey Michael Wakefield, Flaherty, Sensabaugh & Bonasso, PLLC, Charleston, West Virginia, for Appellant. William L. Bands, Bell & Bands, PLLC, Charleston, West Virginia, for Appellees. ON BRIEF: Scott L. Winkelman, Jennifer N. Waters, Lynn E. Parseghian, Katherine

J. Nesbitt, Crowell & Moring, LLP, Washington, D.C., for Appellant. Harry F. Bell, Jr., Tim J. Yianne, Bell & Bands, PLLC, Charleston, West Virginia, for Appellees.

Before WILLIAMS, Chief Judge, NIEMEYER, Circuit Judge, and Alexander WILLIAMS, Jr., United States District Judge for the District of Maryland, sitting by designation.

Reversed and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Chief Judge WILLIAMS and District Judge WILLIAMS joined.

OPINION

NIEMEYER, Circuit Judge:

After AT & T Mobility LLC, formerly known as Cingular Wireless LLC, removed a class action from a West Virginia state court to federal court under the Class Action Fairness Act of 2005, the district court remanded the case, finding that AT & T failed to show that the matter in controversy exceeded the sum or value of $5 million, exclusive of interest and costs, the jurisdictional threshold established by the Class Action Fairness Act.

The class action complaint challenges as unlawful under the West Virginia Consumer Credit and Protection Act a practice of "bundling," by which AT & T automatically enrolled each new cellular telephone customer in a "Roadside Assistance" program, charging the customer $2.99 per month if the customer did not opt out of the program. The complaint defined the class as all consumers in West Virginia who purchased cellular telephone service from AT & T and were charged a $2.99 monthly fee for Roadside Assistance service without ever having requested the service or having affirmatively enrolled in the program. AT & T demonstrated that 58,800 of its customers fell within this definition of the class.

On the plaintiffs' motion to remand, the district court read the complaint as defining a narrower class consisting of only those customers who paid the fee "unwillingly." When AT & T could not provide an estimate of how many customers paid the fee but did so unwillingly, the court held that AT & T had failed to carry its burden of demonstrating the basis for its allegation that the amount in controversy exceeded $5 million and remanded this case to state court.

We conclude that the district court either misread or construed too broadly the issues raised by the complaint and the definition of the putative class and therefore reverse its order remanding this case to the state court. We thus remand this case to the district court for further proceedings.

I.

James Strawn and James Staton commenced this class action against AT & T Mobility LLC in the Circuit Court of Kanawha County, West Virginia, alleging violations of the West Virginia Consumer Credit and Protection Act, W. Va.Code § 46A-1-101 et seq. Strawn and Staton alleged that they were AT & T cellular telephone subscribers and that in May 2006 they discovered that they were being assessed a $2.99 monthly charge for the Roadside Assistance service, which provides jump starts, flat tire assistance, and similar benefits. They asserted that they "never requested or enrolled for the service" and therefore were wrongfully charged for it.

Their complaint challenges AT & T's "pattern and practice" of automatically enrolling new cellular telephone customers in a free trial of its optional Roadside Assistance service and, when the free trial ends charging them $2.99 per month if they do not opt out. It alleges:

Plaintiffs and Class members were not given an option. Instead, the Roadside Assistance was part of a "bundled" transaction, whereby the Plaintiff and Class members had to catch the Roadside Assistance charge, and opt-out of it. Otherwise, if Plaintiff and Class members failed to catch the charge, [AT & T] automatically enrolled them for the Roadside Assistance service and imposed a $2.99 monthly charge.

Compl. ¶ 5. The complaint defines the purported class as:

[A]ll consumers who: (1) purchased [an AT & T Mobility cellular] account in the state of West Virginia; and (2) were charged a $2.99 monthly charge for the Roadside Assistance service without ever requesting or enrolling for said service.

Compl. ¶ 20. The definition of the class excludes business customers and persons affiliated with AT & T. To justify class certification, the complaint alleges common questions of law and fact that include "whether [AT & T] engaged in a pattern and practice of imposing a charge for the Roadside Assistance service without consumers requesting or enrolling for said service," and "whether [AT & T] violated the WVCCPA by imposing a charge for the Roadside Assistance service without consumers requesting or enrolling for said service." Compl. ¶ 23 (emphasis added).

For relief, the complaint seeks a declaratory judgment that the pattern and practice was deceptive and unlawful under West Virginia law — specifically, West Virginia Code §§ 46A-6-102(7)(L), 46A-6-102(7)(M), and 46A-6-104, defining and prohibiting various types of deception and fraud — and an injunction prohibiting AT & T from continuing the pattern and practice. The complaint also seeks "damages of which the individual recoveries do not exceed $75,000 for Plaintiffs or any member of the Class."

Attached to the complaint are three stipulations, two signed by the named plaintiffs Strawn and Staton and one signed by counsel for the named plaintiffs and purported class members. Each of the named plaintiffs stipulated that he is not seeking damages in excess of $75,000, and counsel stipulated that their law firm does not seek damages, including attorneys fees and costs, exceeding $75,000 for each class member and that the law firm "will not accept an aggregate award for attorneys fees and costs exceeding $5 million inclusive of any other damages awarded to each named Plaintiff and Class member."

Relying on the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4, AT & T filed a notice of removal. See 28 U.S.C. § 1453. In the notice of removal, AT & T alleged minimal diversity of citizenship, an aggregate amount in controversy exceeding $5 million, exclusive of interest and costs, and a class size greater than 100 persons. See id. § 1332(d). AT & T attached to its notice of removal an affidavit stating that from the introduction of the Roadside Assistance program in November 2004 through the filing of the complaint in September 2006, more than 58,800 AT & T customers, excluding business customers and AT & T employees, remained enrolled in the Roadside Assistance program beyond their initial free trial period and thereby were automatically charged the $2.99 monthly fee. The affidavit asserted that based on the minimum statutory damages of $200 for each person, see W. Va. Code § 46A-6-106(a), the amount in controversy was at least $11,760,000.

In their response, the plaintiffs argued that the class definition required AT & T to exclude from the number of class members those customers who willingly remained enrolled in the Roadside Assistance program. They also maintained that based on the stipulations attached to the complaint, they "effectively limited damages to $5 million or less," which is below the threshold amount for federal jurisdiction.

In light of the plaintiffs' response, the district court ordered AT & T to recalculate the estimated class size by narrowing it from 58,800, which represented all customers automatically enrolled in the Roadside Assistance service program beyond the free trial period, to "the more limited scope of the putative class" — the subset consisting of just those customers who did not willingly remain enrolled. AT & T responded that it was not possible to calculate this number, because it did not, nor could it, "track a hypothetical subset of Roadside Assistance customers who [were] being charged for Roadside Assistance but allegedly [did] not want it."

Based on AT & T's response, the district court entered a "Judgment Order" dated September 26, 2007, in which it remanded the case to the state court for lack of subject matter jurisdiction. In its supporting "Memorandum Opinion," the court rejected as ineffective the plaintiffs' effort to limit the amount in controversy through the stipulations attached to the complaint. Strawn v. AT & T Mobility, Inc., 513 F.Supp.2d 599, 602 (S.D.W.Va.2007). But the court also held that AT & T bore the burden of establishing the predicates under CAFA for federal jurisdiction, including the $5-million amount in controversy, id. at 604, and that AT & T failed to carry this burden because it did not "explain how many of the 58,800 eligible consumers who paid the [$2.99] fee did so unwillingly," id. at 606. The court reasoned, "the class alleged in the complaint includes only those consumers who were charged a fee without their authorization," and "[a] group that includes all of the consumers charged the $2.99 fee extends beyond the scope of the class sought in the complaint." Id. at 608. On that basis it granted the plaintiffs' motion to remand for lack of federal jurisdiction.

Under the authorization of 28 U.S.C. § 1453(c), AT & T filed this appeal, raising the issues of (1) "[w]hether the district court erred by imposing the burden of proof on [AT & T]" and (2) whether the district court erred in "finding the amount in controversy requirement of CAFA not satisfied." The plaintiffs did not cross-appeal to challenge the district court's ruling on the...