Buller v. Owner Operator Independent Driver Risk

461 F.Supp.2d 757

Betty BULLER d/b/a Buller Trucking Co., individually and on behalf of others similarly situated, Plaintiff/Counter Defendant, v. OWNER OPERATOR INDEPENDENT DRIVE RISK RETENTION GROUP, INC., Defendant/Counterclaimant.

No. 05-CV-00164-MJR.

United States District Court, S.D. Illinois.

July 27, 2006.

COPYRIGHT MATERIAL OMITTED

Christopher T. Kolker, Charles Kolker Law Office, Belleville, IL, Elizabeth V. Heller, Goldenberg, Miller et al., Edwardsville, IL, for Plaintiff/Counter Defendant.

David A. Cohen, Paul D. Cullen, Sr., Randall Herrick-Stare, Cullen Law Firm, Washington, DC, Michael A. Lawder, Anderson & Gilbert, St. Louis, MO, for Defendant/Counterclaimant.

MEMORANDUM and ORDER

REAGAN, District Judge.

This matter comes before the Court on the Motion to Dismiss Case and Counterclaims brought by Plaintiff/Counter Defendant Betty Buller, d/b/a Buller Trucking Co., individually and on behalf of others similarly situated (Doc. 38). For the following reasons, the motion is GRANTED and this case is DISMISSED without prejudice.

INTRODUCTION

Buller owns and operates an independent trucking business, Buller Trucking Company ("BTC"). This case arises from an incident on July 29, 2003, in which the refrigeration system in a BTC truck failed, causing a $35,000 loss to the truck's perishable cargo. BTC's claim on its cargo loss insurance with Defendant Owner Operator Independent Driver Risk Retention Group, Inc., ("Risk Retention Group") was denied on the grounds that the loss was due to BTC's failure to maintain an adequate supply of refrigerant in the truck's cooling system, so that the loss was excluded from coverage under the terms of a Refrigeration Breakdown Endorsement ("RBE") in BTC's policy. On February 18, 2005, Buller filed this action against Risk Retention Group in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois.

Buller's complaint in this case alleges breach of contract, vexatious delay in paying insurance claims, and consumer fraud. Specifically, Buller alleges that the insurance coverage sold by Risk Retention Group is illusory and illegally shifts the burden of proof for exclusions from coverage to policyholders; she also challenges the claims adjustment practices of Risk Retention Group and affiliated entities. Buller's complaint seeks certification of three nationwide classes. "Plaintiff Class (a)" is defined as "All persons (or their assignors) who, during the period from January 7, 1994 to the date of final judgment, purchased a policy of insurance with Defendant that included the RBE." Doc. 2 ¶ 37(a). The second proposed class is defined as "All persons (or their assignors) who, are 1) members of `Plaintiff Class (a)'; 2) suffered damages and submitted a claim for damages under the RBE clause of the policy; and 3) had that claim denied, or reduced due to liability issues." Id. ¶ 37(b). Finally, the complaint requests certification of a defendant class of Risk Retention Group entities that "(a) sell insurance policies with the RBE ... and (b) adjust or deny claims." Id.

On March 7, 2005, Risk Retention Group removed this case to this Court, asserting federal subject matter jurisdiction under 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005, Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.) ("CAFA"). Oh the same day, Risk Retention Group removed a companion case docketed in the St. Clair County circuit court as case number 04-L-12, which was docketed in this Court as case number 05-165; although originally assigned to United States District Judge David R. Herndon, case number 05-165 later was transferred to the docket of the undersigned District Judge. After removal, Risk Retention Group brought a counterclaim against Buller. See Doc. 5. On September 29, 2005, the Court remanded both this case and case number 05-165 to state court for lack of subject matter jurisdiction. On petition for leave to appeal from the Court's Order of remand pursuant to 28 U.S.C. § 1453, the United States Court of Appeals for the Seventh Circuit vacated the Court's Order. After issuance of the Seventh Circuit's mandate, the Court directed the parties to submit briefs on the issue of federal subject matter jurisdiction. On November 21, 2005, Buller moved for voluntary dismissal of this case. The Court, having considered Buller's motion and Risk Retention Group's response thereto, now is prepared to rule.

DISCUSSION

A. Subject Matter Jurisdiction

Before the Court can address Buller's request for voluntary dismissal, the Court must resolve the issue of its subject matter jurisdiction. On Risk Retention Group's appeal from the Court's Order remanding this case to state court for lack of subject matter jurisdiction, the Seventh Circuit held that this case, which as noted was filed on February 18, 2005, the effective date of the CAFA, see Pub.L. 109-2, § 9, 119 Stat. 4, is subject to removal pursuant to the CAFA if the statute's jurisdictional prerequisites are met. See Doc. 33. The CAFA grants federal courts jurisdiction in diversity, with exceptions not at issue here, see 28 U.S.C. § 1332(d)(3), (d)(4), (d)(5)(A), over class actions with one hundred or more class members, see 28 U.S.C. § 1332(d)(5)(B), in which any member of the plaintiff class is a citizen of a state different from that of any defendant, or any member of a plaintiff class or any defendant is a foreign state or a citizen or subject of a foreign state. See 28 U.S.C. § 1332(d)(2). In a class action in which the CAFA's requirement of minimal diversity is met, a federal court has jurisdiction if, after aggregating class members' claims, more than $5 million, exclusive of interest and costs, is in controversy. See 28 U.S.C. § 1332(d)(2), (d)(6). In this case it is not disputed that minimal diversity of citizenship exists and, thus, the question for the Court to resolve is' whether the jurisdictional amount in this case exceeds $5 million.

Recent Seventh Circuit decisions have clarified the standard to be used in evaluating the amount in controversy in cases removed from state court to federal court in diversity. In Meridian Security Insurance Co. v. Sadowski, 441 F.3d 536 (7th Cir.2006), the court explained that

a proponent of federal jurisdiction must, if material factual allegations are contested, prove those jurisdictional facts by a preponderance of the evidence. Once the facts have been established, uncertainty about whether the plaintiff can prove its substantive claim, and whether damages (if the plaintiff prevails on the merits) will exceed the threshold, does not justify dismissal .... Only if it is "legally certain" that the recovery (from plaintiff's perspective) or cost of complying with the judgment (from defendant's) will be less than the jurisdictional floor may the case be dismissed.

Id. at 543. A removing party "need not show that the plaintiff will prevail or collect more than [the jurisdictional amount] if he does." Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813, 816 (7th Cir.2006) (emphasis omitted). Rather, the burden is to show "what the plaintiff hopes to get out of the litigation; if this exceeds the jurisdictional amount, then the case proceeds in federal court unless a rule of law will keep the award under the threshold." Id.

In Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir.2005), the court found that an amount in excess of $5 million was in controversy in a proposed class action brought under the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"), that had been removed from state court to federal court pursuant to the CAFA. The court noted that the TCPA, which prohibits businesses from sending unsolicited advertising faxes to prospective customers, imposes a minimum penalty of $500 for each violation of the statute, and that the penalty can be trebled for willful and knowing violations. See 427 F.3d at 447 (quoting 47 U.S.C. § 227(b)(3)). The court noted further that the defendant "concede[d] that it sent at least 3,800 advertising faxes," so that the potential damages in the case "could reach $5.7 million." Id. The court concluded that the jurisdictional minimum for CAFA purposes was satisfied:

Countrywide did all that is necessary [to establish jurisdiction] by admitting that one of its employees sent at least 3,800 fax ads. From this and the statutory text one can determine that the controversy exceeds $5 million. The complaint did not set a cap on recovery — as it might have done if the plaintiff had represented that the class would neither seek nor accept more than $5 million in aggregate. Nor did the complaint abjure trebled damages; it held open that possibility, depending on the state of the proof. (The complaint reads: "If the evidence shows that the violation was willful, plaintiff requests trebling of the damages.") Countrywide did not have to confess liability in order to show that the controversy exceeds the threshold. A judge may well award less than $1,500 per fax, but a recovery exceeding $5 million for the class as a whole is not "legally impossible."

Id. at 449. See also Meridian Sec. Ins. Co., 441 F.3d at 537, 543 (holding that the jurisdictional amount for diversity purposes was satisfied in an insurer's suit for a judicial declaration that it owed no duty to defend or indemnify an insured in a state-court class action brought under the TCPA, where the state-court complaint sought certification of a class of "more than 50" persons, so that an award of statutory treble damages would yield $76,500, and the insurer's jurisdictional allegations were uncontested).

In this case, the gravamen of Buller's allegations is that the coverage for cargo loss caused by refrigeration breakdown sold by Risk Retention Group is essentially valueless. Buller alleges that her policy provides coverage for

loss of or damage to refrigerated and or temperature controlled cargo but only when such...