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DECASTRO v. AWACS

August 2, 1996

WAYNE DECASTRO, et al., Plaintiffs,
v.
AWACS, INC, d/b/a COMCAST METROPHONE, Defendant.



The opinion of the court was delivered by: KUGLER

 Presently before the court is the plaintiffs' motion to remand the above-entitled action to the Superior Court of New Jersey, Law Division, Camden County. As explained below, this Court finds that the plaintiffs' claims are not removable under the complete pre-emption doctrine, nor has the defendant met its burden of demonstrating that diversity jurisdiction exists. For these reasons, the Court holds that it lacks subject matter jurisdiction over the above-entitled action, and the plaintiffs' motion to remand shall be granted pursuant to 28 U.S.C. § 1447(c).

 INTRODUCTION

 On February 23, 1996, Plaintiffs Wayne DeCastro, Paul Weiss, and John Solano, individually and on behalf of others similarly situated, filed in state court a class complaint against Defendant AWACS, Inc., d/b/a Comcast Metrophone ("Comcast"), alleging consumer fraud and other state law claims for Comcast's alleged failure to disclose to its cellular telephone customers certain billing practices. Specifically, the Complaint alleges that contrary to industry custom and practice, Comcast begins to bill their customers when a call is initiated, rather than when a connection is made. This "non-communication period," for which Comcast charges between $ .34 and $ .75 per peak air-time minute, is extended by Comcast's practices of requiring its customers to input a personal identification number before a call is connected and charging for time in whole-minute increments, rounded up to the next minute. Count I contains a claim under the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq., alleging that Comcast's knowing failure to disclose this billing practice to its customers constitutes an unfair and deceptive practice and misrepresentation made in connection with the defendant's sale of its telecommunication services. Count II contains a breach of contract claim, alleging that Comcast's failure to disclose this billing practice is inconsistent with a reasonable interpretation of the fee schedule incorporated in Comcast's contracts with its customers. Plaintiffs claim in Count III that the defendant has breached the implied duty of good faith and fair dealing by its use of this billing practice, and Count IV raises a claim for unjust enrichment. Plaintiffs seek money damages, including treble damages and attorneys' fees under the New Jersey Consumer Fraud Act, interest and costs, and an injunction prohibiting the defendant from utilizing this billing practice in the future. The purported class (Comcast provides telecommunications services to approximately 600,000 persons, Compl. para. 17.) consists of all persons who maintained a contract for cellular telephone services with Comcast during the period February 15, 1990 through the present.

 On March 25, 1996, Defendant Comcast removed the action to this Court, claiming that jurisdiction is proper on diversity grounds under 28 U.S.C. § 1332, or, alternatively, that the plaintiffs' causes of action are completely preempted by the Federal Communications Act of 1934, 47 U.S.C. §§ 151 et seq., as amended, and federal common law, thereby conferring federal question jurisdiction under 28 U.S.C. § 1331. On May 9, 1996, the plaintiffs filed the instant motion to remand pursuant to 28 U.S.C. § 1447(c), claiming that this Court lacks subject matter jurisdiction over this action.

 DISCUSSION

 An action removed to federal court may be remanded to state court "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction. . ." 28 U.S.C. § 1447(c). When confronted with a motion to remand, the removing party has the burden of establishing the propriety of removal. Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1045 (3d Cir. 1993), cert. denied sub nom. Upp v. Mellon Bank, N.A., 510 U.S. 964, 114 S. Ct. 440, 126 L. Ed. 2d 373 (1993). Removal statutes are strictly construed, and all doubts are resolved in favor of remand. Boyer v. Snap-On-Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085, 112 L. Ed. 2d 1046, 111 S. Ct. 959 (1991).

 A. Diversity Jurisdiction

 Diversity jurisdiction requires complete diversity among the parties and an amount in controversy in excess of $ 50,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Plaintiffs, while conceding that diversity exists among the parties, claim that the amount in controversy is not satisfied for each class member. Under the New Jersey Consumer Fraud Act, the plaintiffs seek recovery of "their actual damages or $ 100.00, whichever is greater for each violation." (Compl. para. 29.) As damages for unjust enrichment, the plaintiffs seek recovery of all amounts collected by Comcast as a result of its alleged unlawful and unfair business practice. (Compl. para. 40 and p. 12 para. (c)). Finally, the plaintiffs seek treble damages and attorneys' fees under the New Jersey Consumer Fraud Act.

 Putative class actions, prior to certification, are to be treated as class actions for jurisdictional purposes. In re School Asbestos Litig., 921 F.2d 1310, 1317 (3d Cir. 1990), cert. denied sub nom. U.S. Gypsum Co. v. Barnwell Sch. Dist. No. 45, 499 U.S. 976, 111 S. Ct. 1623 (1991); Garcia v. General Motors Corp., 910 F. Supp. 160, 162 (D.N.J. 1995). It is well-established that members of a class may not aggregate their claims in order to reach the $ 50,000 amount in controversy requirement; each member must individually claim at least the jurisdictional amount. Zahn v. Int'l Paper Co., 414 U.S. 291, 301, 38 L. Ed. 2d 511, 94 S. Ct. 505 (1973); Packard v. Provident Nat'l Bank, 994 F.2d at 1045.

 It is the defendant's "heavy burden," as the removing party asserting that federal jurisdiction is proper, to show that the amount in controversy is satisfied. Packard v. Provident Nat'l Bank, 994 F.2d at 1045. In an action removed to federal court where no specific damages are claimed, there is a "strong presumption" that the plaintiffs have not claimed an excessive amount of damages in order to obtain federal jurisdiction. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 290-91, 82 L. Ed. 845, 58 S. Ct. 586 (1938); Spellman v. Mellon Bank, F.3d , 1995 WL 764548 (3d Cir. 1995) ("In assessing the amount claimed where the defendant seeks removal, we place great confidence in the allegations of the plaintiff's complaint, because we presume that the plaintiff has not claimed an excessive amount in order to obtain federal jurisdiction"), amended, 1996 WL 20762 (3d Cir. Jan. 12, 1996), reh'g en banc granted, opinion vacated (Feb. 16, 1996). *fn1"

 The Garcia court set out the general rule for determining whether the amount in controversy reaches the jurisdictional minimum upon removal:

 
Several standards have emerged for deciding the amount in controversy when a defendant removes a complaint seeking an unspecified amount of damages. . . . The Third Circuit has not decided the appropriate standard to apply in these circumstances. It has simply indicated that where a complaint does not request a precise monetary amount, the district court must make an independent inquiry into the value of the claims alleged. Further, "the general Federal rule is to decide the amount in controversy from the complaint itself." In such cases, the amount in controversy should be measured "by a reasonable reading of the value of the rights being litigated."

 Garcia, 910 F. Supp. at 165 (citations omitted).

 In support of this contention, Comcast recognizes the Supreme Court's holding in Zahn v. Int'l Paper Co., 414 U.S. 291, 38 L. Ed. 2d 511, 94 S. Ct. 505 (1973), that diversity jurisdiction exists over class actions only when the claim of each plaintiff exceeds the amount in controversy requirement, but Comcast argues that the adoption of 28 U.S.C. § 1367(a) overruled Zahn and allows for the exercise of supplemental jurisdiction over class claims that do not reach the $ 50,000 requirement. Section 1367(a) provides for supplemental jurisdiction over claims that form part of the same case or controversy over which a federal court has original jurisdiction, and "such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties." While it is true, as Comcast points out, that both the Fifth and Seventh Circuits recently have ruled that the adoption of § 1367(a) affected the holding in Zahn, see In Re Abbott Laboratories, 51 F.3d 524, 529 (5th Cir.), reh'g denied, 65 F.3d 33 (1995), and Stromberg Metalworks, Inc. v. Press Mechanical, Inc., 77 F.3d 928, 931-32 (7th Cir. 1996), the court in Garcia, faced with the same challenge to Zahn as Comcast makes here, found that the Third Circuit had decided not to disturb the Zahn holding after the enactment of § 1367. Garcia, 910 F. Supp. at 164 (citing Packard, 994 F.2d at 1045-46 & n.9) ("To date, Zahn and Packard remain good law in the Third Circuit.") In fact, in Packard the Third Circuit discussed the debate about whether § 1367(a) overruled Zahn so as to permit supplemental jurisdiction over class members who do not meet the jurisdictional minimum, but declined to decide the issue, 994 F.2d at 1045 n.9, and in subsequent cases, the Third Circuit has cited Zahn without explication for the proposition that each class member must meet the jurisdictional minimum. Spellman, F.3d , 1995 WL 764548, at *8; In Re Corestates Trust Fee Litig., 39 F.3d 61, 64 (3d Cir. 1994). In the absence of express Third Circuit direction on whether § 1367(a) overrules Zahn, this court will not disturb the finding of Garcia. *fn2"

 Regardless of the outcome of the debate over Zahn, "even those courts which have declined to apply Zahn in its strictest sense have required that the named plaintiff meet the jurisdictional amount." Bishop v. General Motors, 925 F. Supp. 294, 299 (D.N.J. April 29, 1996) (Irenas, J.) (citing In re Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995), Neff v. General Motors Corp., 163 F.R.D. 478 (E.D. Pa. 1995)). The named plaintiffs in this case are Wayne DeCastro, Paul Weiss, and John Solano. Although Comcast has identified one potential class member, "Customer No. 90744095," as generating enough telephone calls to meet the jurisdictional amount of damages under the plaintiffs' allegations, and has predicted that several others may also meet the jurisdictional minimum, it has failed to address the claims of the named plaintiffs in this case. Neither have the plaintiffs presented the Court with an estimation of the named plaintiffs' damages, and the Court is unable to perform the kind of calculation done in Garcia and Bishop to assess the reasonable value of the plaintiffs' claims without evidence of the named plaintiffs' actual or average number of calls made under their service agreements with Comcast. The Court assumes that Customer No. 90744095 is a high-volume subscriber and that not all potential class members have made 85,000 calls within the applicable time period. Further, the Court notes that the plaintiffs seek compensation for that period of time during a telephone call between the act of dialing and the moment of connection, rounded up the next full minute; this period of time is likely measured in seconds or, at the most, a few minutes, and the rates charged by Comcast, according to the contracts attached to the plaintiffs' Complaint, range from $ .34 to $ .75 per peak air-time minute. Even accounting for treble damages under the New Jersey Consumer Fraud Act and a pro rata division of a reasonable award of attorneys' fees, the Court is left to rely upon the "strong presumption" that the plaintiffs alleged individual damages in an amount less than $ 50,000 to find that the defendant has not met its "heavy burden" of demonstrating that the amount in controversy is satisfied as to each individual class member. See In re Amino Acid Lysine Antitrust Litig., 1996 WL 238825 (N.D. Ill. 1996) (defendant not entitled to remove class action on diversity grounds where defendant had not shown that claims of named plaintiffs satisfied amount in controversy, but rather only the claims of some unidentified putative class members). Accordingly, the court holds that federal jurisdiction is improper on diversity grounds.

 B. Pre-Emption under the Federal Communications Act

 Comcast also argues that jurisdiction is proper under federal question jurisdiction because the Federal Communications Act pre-empts the state-law class allegations. Federal courts are courts of limited jurisdiction, empowered to hear only those cases authorized by the Constitution or other acts of Congress. Under 28 U.S.C. § 1441(a), only state court actions over which "the district courts of the United States have original jurisdiction, may be removed by the defendant." Absent diversity jurisdiction, federal jurisdiction must be based upon an action "arising under the Constitution, laws or treaties of the United States." 28 U.S.C. § 1331. The presence or absence of federal-question jurisdiction is governed by the "well-pleaded complaint rule," which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987). "The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Id. Under this rule, federal pre-emption is ordinarily a defense to the plaintiff's suit, and, as it does not appear on the face of a well-pleaded complaint, it does not provide a basis for removal under 28 U.S.C. § 1441. "It is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Id. at 393.

 An "independent corollary" to this rule is the complete pre-emption doctrine, which arises where "the pre-emptive force of a federal statute is so 'extraordinary' that it 'converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Id. at 393 (quoting Metropolitan Life Insur. Co. v. Taylor, 481 U.S. 58, 65, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987)). Once an area of state law has been pre-empted, any claims purportedly based upon that state law will be ...


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