UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

IN RE JACKSON NATIONAL LIFE

MDL NO. 1122

INSURANCE COMPANY PREMIUM

LITIGATION HON. DAVID W. McKEAGUE

This order relates to

Tench v. Jackson Nat'l

Life Ins. Co.,

W.D. Mich. No.

__________________________________/ 5:99-CV-132

ORDER OF REMAND

In accordance with the Court's memorandum opinion of even date;

The Court having found that defendant Jackson National Life Insurance Company has failed to demonstrate that the complaint of plaintiff Tisha S. Tench presents an action where the amount in controversy exceeds $75,000, as required by 28 U.S.C. § 1332(a);

IT IS HEREBY ORDERED that plaintiff's motion to remand this action to state court for lack of federal subject matter jurisdiction is GRANTED; and

IT IS FURTHER ORDERED that this action, Tench v. Jackson National Life Insurance Company, W.D. Mich. No. 5:99-CV-132, is hereby REMANDED, pursuant to 28 U.S.C. § 1447(c), to the Cook County (Illinois) Circuit Court.

Dated: April 14, 2000

HON. DAVID W. McKEAGUE

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

IN RE JACKSON NATIONAL LIFE

MDL NO. 1122

INSURANCE COMPANY PREMIUM

LITIGATION HON. DAVID W. McKEAGUE

This order relates to

Tench v. Jackson Nat'l

Life Ins. Co.,

W.D. Mich. No.

__________________________________/ 5:99-CV-132

MEMORANDUM OPINION

ON PLAINTIFF'S MOTION TO REMAND

This action, Tench v. Jackson National Life Insurance Company, et al., W.D. Mich. No. 5:99-CV-132, a putative class action, was commenced in Cook County (Illinois) Circuit Court on July 2, 1999. Defendants Jackson National Life Insurance Company and Brooke Life Insurance Company (referred to collectively as "Jackson National") removed the action to the United States District Court for the Northern District of Illinois on August 9, 1999. Plaintiff Tisha S. Tench timely moved for remand to state court for lack of subject matter jurisdiction. Before the motion to remand was addressed in the Northern District of Illinois, the case was transferred to this Court by the Multi-District Litigation Panel pursuant to 28 U.S.C. § 1407. The Court now addresses the outstanding motion to remand.

Jackson National's removal was premised on diversity jurisdiction. 28 U.S.C. § 1332. Plaintiff contends removal was improper because the $75,000 amount-in-controversy requirement of § 1332(a) is not satisfied. This is evident, she argues, from the

face of the complaint, which expressly claims relief below the federal jurisdictional amount.

I. STANDARD

Jackson National, as the party invoking the Court's jurisdiction, bears the burden of proving the diversity jurisdiction requirements. Gafford v. General Electric Co., 997 F.2d 150, 155 (6^th Cir. 1993). "The removal petition is to be strictly construed, with all doubts resolved against removal." Her Majesty the Queen v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989) . See also, Ahearn v. Charter Township of Bloomfield, 100 F.3d 451, 454 (6^th Cir. 1996) ("Due regard for state governments' rightful independence requires federal courts scrupulously to confine their own jurisdiction to precise statutory limits."); Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 949 (6^th Cir. 1994) (removal statutes are strictly construed).

The precise nature of a removing defendant's burden varies, depending on the allegations of the complaint. At a minimum, a removing defendant must show by a preponderance of the evidence that the amount in controversy more likely than not exceeds the jurisdictional amount. Gafford, 997 F.2d at 158. In Gafford, the Sixth Circuit employed the "more likely than not" standard to describe the defendant's burden where the plaintiff seeks to recover some unspecified amount that is not self-evidently greater or less than the federal amount-in-controversy requirement.

Where, on the other hand, the plaintiff has specifically claimed less than the jurisdictional amount, the Gafford court observed, removal is generally precluded, "since the plaintiff is master of the claim." Id., at 157.

Yet, the Sixth Circuit recognized that other courts have, under such circumstances, "considered allowing removal despite the plaintiff's attempt to defeat federal jurisdiction where the defendant establishes a 'substantial likelihood' or 'reasonable probability' that the plaintiff intends to seek damages in excess of the federal amount-in- controversy requirement." Id. at 158. Subsequently, two courts in this circuit have followed this dictum, concluding the "substantial likelihood or reasonable probability" standard applies where the plaintiff's complaint seeks less than

the jurisdictional amount. See In re Cardizem CD Antitrust Litigation, F.Supp.2d , 1999 WL 1569794 at *3 (E.D. Mich.)); Crosby v. America Online, Inc., 967 F.Supp. 257, 261 n.2 (N.D. Ohio 1997).

The Seventh Circuit has also adopted the "reasonable probability" standard. Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997). Other circuits have recently fashioned somewhat different standards.¹ However, this

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^{1 The Eleventh Circuit has held, out of deference to the plaintiff's prerogative to sue for less than the jurisdictional amount, that a removing defendant must bear the "heavy burden" of showing to a "legal certainty" that the plaintiff would not recover less than the jurisdictional amount if the plaintiff prevailed. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095-96 (11^th
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Court concurs with the conclusion reached in Cardizem and Crosby that the "substantial likelihood or reasonable probability" standard is truest to the balancing of competing interests which the Sixth Circuit has sought to achieve in Gafford. Accordingly, it is incumbent on Jackson National to demonstrate that, despite the contrary allegation of plaintiff's complaint, there is a substantial likelihood or reasonable probability that plaintiff will, if she prevails, recover more than $75,000.
II. ANALYSIS
In determining whether the amount-in-controversy requirement is met, the Court first examines plaintiff's complaint at the time of removal. Ahearn, 100 F.3d at 453; Klepper v. First American Bank, 916 F.2d 337, 340 (6^th Cir. 1990). The complaint asserts five claims: (1) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act and Uniform Deceptive Trade Practices Act; (2) negligent misrepresentation; (3) common law fraud; (4) breach of contract; and (5) breach of fiduciary duty. In ¶9 of the
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Cir. 1994). The Fifth Circuit has employed a different standard, holding that if a removing defendant can show by a preponderance that the actual amount in controversy exceeds the jurisdictional amount, then the burden shifts to the
plaintiff to prove to a legal certainty that the recovery will not exceed the jurisdictional amount. De Aguilar v. Boeing Co., 47 F.3d 1404, 1410-12 (5^th Cir. 1995), cert. denied, 516 U.S. 865 (1995).
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complaint, plaintiff alleges:

The compensatory and other relief individually sought by plaintiff Tench pursuant to this action are below the jurisdictional requirement for the original filing of this action in the United States District Court pursuant to 28 U.S.C. § 1332 or the removal of this action to the United States District Court pursuant to 28 U.S.C. § 1441.

Thus, plaintiff's complaint purports to claim less than the jurisdictional amount. Further, in support of her motion to remand, plaintiff explains that ¶9 of the complaint means "the compensatory and other damages and relief actually sought by plaintiff Tench under the complaint has been expressly capped at below $75,000," and "forestalls a greater recovery." Reply Memorandum, p.4.
Jackson National acknowledges that claims of putative class members which are individual and discrete in nature may not be aggregated for purposes of satisfying the jurisdictional amount and that plaintiff Tench's claims must therefore be evaluated independently. See Zahn v. Int'l Paper Co., 414 U.S. 291, 301 (1973); Sterling v. Velsicol Chemical Corp., 855 F.2d 1188, 1195 (6^th Cir. 1988). Yet, Jackson National maintains plaintiff Tench, if she prevailed on her claims, would be entitled to relief, consisting of monetary damages, punitive damages, attorney fees and costs, in excess of $75,000.
A. Compensatory Damages
Jackson National, through the affidavit of Document Specialist
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Annette K. Rose, estimates the compensatory damages to which plaintiff Tench would be entitled if she prevailed amounts to approximately $45,000, exclusive of punitive damages and attorney fees and costs. Plaintiff characterizes this estimate as "generous" and questions the integrity of Rose's calculations, but offers no rebutting evidence.
B. Punitive Damages
In addition, Jackson National contends punitive damages are potentially recoverable under plaintiff's common law fraud claim and her claim for violation of the Illinois Consumer Fraud Act. Jackson National offers no estimate as to the amount of punitive damages that might be recovered. Generally, potentially recoverable punitive damages are properly considered in determining the amount in controversy unless they are not recoverable as a matter of law. Klepper, 916 F.2d at 341.
Plaintiff maintains she has not expressly pled a claim for punitive damages in her complaint and, in her briefing on this motion, expressly disavows any claim for punitive damages. If plaintiff is indeed "master of her claim," then this express disavowal of punitive damages can hardly be defeated by the mere possibility that punitive damages might otherwise be hypothetically recoverable under certain claims asserted in the complaint. See Gianopolous v. Interstate Brand Corp., 1998 WL 171695, at *2 (N.D. Ill.) (plaintiffs have right to eschew claims, such as claim for
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punitive damages under the ICFA, in order to avoid federal jurisdiction); Hasek v. Chrysler Corp., 1996 WL 48602, at *3 (N.D. Ill.) (potential recovery of punitive damages under the ICFA not considered in evaluating jurisdictional amount unless claimed by plaintiff). The Court does not, therefore, consider punitive damages in determining the amount in controversy.
C. Attorney Fees
Jackson National contends plaintiff's potential recovery of attorney fees under the Illinois Consumer Fraud Act cannot be ignored. Plaintiff does not contest the point, but correctly argues any potential award of attorney fees must be allocated on a pro rata basis among the putative class members. See Nelson v. Associates Financial Services of Indiana, 79 F.Supp.2d 813, 821 (W.D. Mich. 2000); Crosby v. America Online, Inc., 967 F.Supp. 257, 262 (N.D. Ohio 1997). Plaintiff estimates there are approximately 10,000 Illinois policyholders who could potentially be members of the putative class, an estimate not disputed by Jackson National.
Thus, even accepting Jackson National's "generous" estimate that Tench would be entitled to $45,000 in monetary damages, a reasonable attorney fee award of $300 million would be required to yield the pro rata share of $30,000 needed by plaintiff to satisfy the jurisdictional amount. There simply is no substantial likelihood or reasonable probability that the class plaintiffs, collectively, would recover $300 million in attorney fees. Thus,
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it is clear that plaintiff's amount-in-controversy deficit cannot be made up through potential attorney fees.²}

Jackson National contends, however, that pro rata allocation of attorney fees is not appropriate in this case. Jackson National acknowledges that certification of the putative class is generally presumed at this stage for purposes of determining federal jurisdiction. This presumption is consistent with the requirements, discussed above, that the jurisdictional determination be made with reference to the allegations of the complaint at the time of removal and that all doubts be resolved against removal. Nonetheless, Jackson National asks the Court to disregard the presumption in this case because the Court has already denied other consolidated plaintiffs' motion for class certification in this multi-district case. See In re Jackson National Life Ins. Co. Premium Litigation, 183 F.R.D. 217 (W.D. Mich. 1998).

This argument would have appeal if the instant putative class were materially indistinguishable from that which the Court previously refused to certify, or if it were otherwise clear as a matter of law that the putative class were not certifiable. Neither circumstance exists, however.

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^{2 The same analysis applies with equal force to Jackson National's argument that plaintiff's potential recovery of expert witness fees under the Illinios Consumer Fraud Act must be considered. When the potentially recoverable expert witness fees are apportioned among the class members, Tench's share cannot conceivably rise to the needed amount.
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This Court has previously denied certification of a proposed nationwide class involving claims similar to plaintiff's claims. In short, the Court concluded the moving plaintiffs had failed to show "that common questions of law and fact predominate over those which require individualized inquiry." Id. at 223. That is, the Court found that individualized fact issues and variations among the laws of the 49 states predominated over common issues, rendering class action treatment "not superior" to other available methods of adjudication. Id. at 225.
Here, in contrast, plaintiff Tench, an Illinois resident, purports to represent a class of similarly situated Illinois residents. This statewide class is more narrowly drawn and does not implicate the state law variations deemed significant in the Court's earlier ruling. Thus, one of the impediments to certification of a nationwide class has been removed in the instant proposed statewide class. This difference is not necessarily dispositive, but it is material. Under these circumstances, it would clearly be inappropriate to disregard the presumption of class certification that generally applies to determination of the amount in controversy. The Court therefore rejects Jackson National's argument and concludes that pro rata allocation of attorney fees is appropriate.
III. CONCLUSION
Accordingly, for all the foregoing reasons, the Court
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concludes defendant Jackson National has failed to carry its burden of proving the diversity jurisdiction requirements are satisfied. Jackson National has arguably demonstrated there is a substantial likelihood or reasonable probability that plaintiff would be entitled to $45,000 in compensatory damages if she prevailed on her claims. It has failed to demonstrate additionally, however, that plaintiff's potential recovery of attorney fees and expert witness fees is likely to exceed $30,000. Jackson National has thus failed to establish that plaintiff's complaint, which it removed, satisfies the $75,000 amount-in-controversy requirement of 28 U.S.C. § 1332(a). It follows that this Court lacks subject matter jurisdiction and has no alternative but to remand the action to the Cook County (Illinois) Circuit Court. 28 U.S.C. § 1447(c).
An order consistent with this opinion, granting plaintiff's motion to remand and remanding this action to the state court, shall issue forthwith.
Dated: April 14, 2000
HON. DAVID W. McKEAGUE
UNITED STATES DISTRICT JUDGE
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