Tremblay v. Philip Morris, Inc.

• Decision Date: 08 November 2002
• Docket Number: No. C-02-192-B.,C-02-192-B.
• Citation: 231 F.Supp.2d 411
• Parties: Denise TREMBLAY and Karen Lawrence, et al. v. PHILIP MORRIS, INC.
• Court: U.S. District Court — District of New Hampshire

231 F.Supp.2d 411

Denise TREMBLAY and Karen Lawrence, et al. v. PHILIP MORRIS, INC.

No. C-02-192-B.

United States District Court, D. New Hampshire.

November 8, 2002.

COPYRIGHT MATERIAL OMITTED

Charles G. Douglas, III, Douglas Monzione Leonard & Garvey, Concord, NH, Charles G. Douglas, III, John H. Vetne, Amesbury, MA, for Plaintiffs.

Douglas N. Steere, Getman, Stacey, Tamposi, Schulthess & Steer, Bedford, NH, for Defendant.

MEMORANDUM AND ORDER

BARBADORO, Chief Judge.

Denise Tremblay and Karen Lawrence, both residents of New Hampshire, brought this class action complaint in New Hampshire Superior Court against the defendant, Philip Morris, Inc. The plaintiffs allege that Philip Morris markets and sells "Marlboro Light" and "Marlboro Ultra-light" cigarettes (light cigarettes) in violation of the New Hampshire Consumer Protection Act. See N.H.Rev.Stat. Ann. (RSA) ch. 358-A (1995 & Supp.2001).

According to the complaint, Philip Morris intentionally designs its light cigarettes and manipulates their contents to produce misleading tar and nicotine ratings when measured by the Cambridge Filter Method, a method for measuring tar and nicotine levels in cigarettes that has been endorsed by the Federal Trade Commission (FTC). Philip Morris allegedly designed its light cigarettes to ensure that users are exposed to smoke with far higher tar and nicotine levels than detected by the Cambridge Filter Method. In other words, the plaintiffs allege that Philip Morris designed its light cigarettes to intentionally exploit the limitations of the Cambridge Filter Method, thereby allowing it to falsely claim in its advertising and marketing materials that its light cigarettes are low in tar and nicotine.¹ This, the plaintiffs allege, amounts to consumer fraud.

Philip Morris removed this case to federal court. It asserts that removal is authorized both by the general removal statute, 28 U.S.C. § 1441 (1994), because the court has diversity jurisdiction and Philip Morris is not a resident of New Hampshire, and by the federal officer removal statute, 28 U.S.C. § 1442(a)(1) (1994 & Supp.2002), because Philip Morris is "a person acting under" the direction of an officer of the United States. The plaintiffs move to remand the action to the New Hampshire Superior Court. For the reasons set forth below, I reject Philip Morris's arguments and grant plaintiffs' motion to remand.

I. STANDARD OF REVIEW

A defendant seeking to remove a state court action has the burden of demonstrating that the federal court has subject matter jurisdiction. See Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir.1999). If there is any doubt as to the right of removal, federal jurisdiction should be rejected and the case resolved in favor of remand. See Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir.2000), cert. denied, 530 U.S. 1229, 120 S.Ct. 2658, 147 L.Ed.2d 273 (2000); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994) ("where plaintiff and defendant clash about jurisdiction, uncertainties are resolved in favor of remand."); Arness v. Boeing North Am., Inc., 997 F.Supp. 1268, 1271 (C.D.Cal.1998); see also Danca, 185 F.3d at 4 (stating that "removal statutes are strictly construed").

I apply this standard in ruling on plaintiffs' motion to remand.

II. DISCUSSION

A. Removal Based on Diversity Jurisdiction

Philip Morris asserts that removal is warranted under § 1441 because the court has diversity jurisdiction and it is not a New Hampshire resident. The main issue presented by this jurisdictional claim is whether plaintiffs' complaint satisfies the $75,000 amount in controversy requirement of the diversity statute.²

The plaintiffs seek actual damages in the form of either a refund of all sums paid by class members who purchased light cigarettes since 1971, or disgorgement of the profits Philip Morris realized from the sales of such cigarettes to class members. They also seek treble damages and attorneys' fees, costs, and expenses associated with the suit. Although the named plaintiffs assert that the damages are each less than $75,000, Philip Morris argues that the actual damages claimed by named class member Karen Lawrence will exceed the jurisdictional threshold if they are trebled as may be permitted by RSA 358-A:10.³ Therefore, Philip Morris concludes that I have diversity jurisdiction over her claim and may exercise supplemental jurisdiction over the other class members' claims. See 28 U.S.C. § 1367 (1993); see also Kanter v. Warner-Lambert Co., 265 F.3d 853, 858 (9th Cir.2001) (court has supplemental jurisdiction over class claims if named plaintiff's damages exceed jurisdictional amount).

Philip Morris alternatively contends that the amount in controversy requirement can be satisfied by taking into account the attorneys' fees that plaintiffs will recover if they are successful. It makes this claim by first asserting that an award of attorneys' fees in this case would amount to at least $600,000. Next, it contends that the attorneys' fees should be distributed among the named plaintiffs rather than among the entire class. Using this methodology, Philip Morris concludes that "the amount in controversy is easily met." I address each argument in turn.

1. Lawrence's Damages

The complaint alleges that "[t]he plaintiffs' damages are each less than $75,000, as are the economic damages of each individual class member." Phillip Morris nevertheless argues that Lawrence's potential damages slightly exceed this amount because she claims to have smoked "one and one-half to two packs a day of Marlboro light cigarettes in New Hampshire for a period of approximately 30 years." Phillip Morris construes this assertion to mean that Lawrence smoked an average of two packs of Marlboro Light cigarettes for a full 30 years. It then takes the $1.24 average price for a pack of Marlboro Light cigarettes during the 30-year period and asserts that Lawrence's potential damages when trebled exceed $80,000 (2 [packs per day] × $1.24 [per pack] × 365 [days per year] × 30 [years] × 3 [damages trebled] = $81,468).

I reject Philip Morris's argument because it does not give a fair reading to the complaint as a whole. First, as the above-quoted language reveals, Lawrence claims that she smoked not two packs per day, but an average of one and one-half to two packs per day. The fairest way to read this assertion is to construe it to be a claim that she smoked an average of 1.75 packs per day during the period in question. Second, while Lawrence at one point alleges that she smoked Marlboro Light cigarettes for approximately 30 years, she makes another more precise assertion elsewhere in the complaint that she began smoking Marlboro Light cigarettes in 1973 or 1974 and stopped smoking them in February 2001. This assertion limits her claim to costs she incurred during a period of no more than 28 years and two months. If these more specific assertions are used in Phillip Morris's equation, Lawrence's damages are below the jurisdictional amount (1.75 [packs per day] × $1.24 [per pack] × 365 [days per year] × 28 [years] × 3 [damages trebled] = $66,532 + 1.75 × $1.24 × 59 [days in 2001] = $66,660). Given Lawrence's express assertion in the complaint that her damages are less than $75,000 and the fact that Philip Morris has failed to come forward with any contrary evidence, I am unpersuaded by its argument that Lawrence's damages could exceed the jurisdictional amount.⁴

2. Attorneys' Fees

Philip Morris also claims that, in addition to her actual damages, Lawrence, if successful, will recover her attorneys' fees and costs. See RSA 358-A:10 (authorizing award of attorney's fees to prevailing plaintiff). According to Philip Morris, "the potential attorneys' fees in this case would amount to at least $600,000." Philip Morris, citing In re Abbott Labs., 51 F.3d 524 (5th Cir.1995), claims that this amount should be split only among the named plaintiffs rather than among all class members. It thus concludes that Lawrence's potential attorneys' fees exceed the amount in controversy requirement.⁵ In the alternative, Philip Morris argues that her share of the fees, when added to her potential damages, push her total recovery above the jurisdictional minimum. I reject Philip Morris's argument.

Unlike the statute at issue in In Re Abbott Labs., RSA 358-A:10-a does not require that an award of attorneys fees be made to the named plaintiffs rather than the class as a whole. See id. at 526-27. Accordingly, the statute does not require deviation from the general rule announced by the Supreme Court in Snyder, 394 U.S. at 338, 89 S.Ct. 1053 and Zahn, 414 U.S. at 301, 94 S.Ct. 505 that the damages of class members should not be aggregated when determining whether the diversity statute's jurisdictional amount has been satisfied. Spielman, 251 F.3d at 8-9. Further, while the New Hampshire Consumer Protection Act provides for an award of attorneys' fees at the discretion of the state trial court, see N.H.Rev.Stat. Ann. § 358-A:10-a, "[t]he possibility of an aggregated award through the exercise of the [state trial] court's discretion does not justify disregarding the anti-aggregation principles of Snyder and Zahn." Spielman, 251 F.3d at 10 (referencing Snyder, 394 U.S. at 339-40, 89 S.Ct. 1053; Zahn, 414 U.S. at 301, 94 S.Ct. 505); see generally, James Wm. Moore, 15 Moore's Federal Practice § 102.108[4][c] (Matthew Bender's 3d ed.) ("[a]ttorney's fees recoverable in a putative class action may not be aggregated when the purpose of the award under state law is compensatory rather than punitive and the statutory remedies give each individual plaintiff in the class the right to recover attorney's fees.").

Because I reject Philip Morris's aggregation argument, I must also determine whether Lawrence's pro rata share of potential attorneys' fees pushes her damages beyond $75,000. Even if one were to double Philip Morris's estimate regarding attorneys' fees, a class...