American Bankers Lif v. Evans, Darrell J. ( 2003 )


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  •                            In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________
    No. 02-2500
    AMERICAN BANKERS LIFE ASSURANCE COMPANY
    OF FLORIDA and AMERICAN BANKERS INSURANCE
    COMPANY OF FLORIDA,
    Plaintiffs-Appellants,
    v.
    DARRELL J. EVANS,
    Defendant-Appellee.
    ____________
    Appeal from the United States District Court
    for the Southern District of Illinois.
    No. 02-CV-126-WDS—William D. Stiehl, Judge.
    ____________
    ARGUED DECEMBER 13, 2002—DECIDED FEBRUARY 11, 2003
    ____________
    Before RIPPLE, KANNE, and ROVNER, Circuit Judges.
    ROVNER, Circuit Judge. When Darrell Evans sued
    American Bankers Life Assurance Company of Florida,
    American Bankers Insurance Company of Florida (collec-
    tively “American”), and Lowe’s Home Centers, Inc., in an
    Illinois court, American responded by petitioning a fed-
    eral court to compel Evans to arbitrate his claims instead.
    The district court granted Evans’s motion to dismiss Amer-
    ican’s petition for lack of subject matter jurisdiction, and
    American appeals. We affirm.
    The Federal Arbitration Act governs the arbitration
    agreement in Evans’s cardholder contract but does not
    2                                                No. 02-2500
    grant independent federal-question jurisdiction and so the
    court, after noting that the parties are of diverse citizen-
    ship (Evans is an Illinois citizen and American is incorpo-
    rated and has its principal place of business in Florida), set
    out to determine whether the stakes of an arbitration of
    Evans’s claim would exceed $75,000. See 
    9 U.S.C. § 4
    ; 
    28 U.S.C. § 1332
    ; Moses H. Cone Mem’l Hosp. v. Mercury
    Constr. Corp., 
    460 U.S. 1
    , 25 n.32 (1983); Caudle v. Am.
    Arbitration Ass’n, 
    230 F.3d 920
    , 922 (7th Cir. 2000); We
    Care Hair Dev., Inc. v. Engen, 
    180 F.3d 838
    , 840 n.1, 841
    (7th Cir. 1999); The Barbers, Hairstyling for Men &
    Women, Inc. v. Bishop, 
    132 F.3d 1203
    , 1204 (7th Cir. 1997).
    Evans’s state-court complaint, in which he sought to rep-
    resent a nationwide class of Lowe’s credit card holders,
    accused American of violating the Illinois Consumer
    Fraud and Deceptive Business Practices Act (“Consumer
    Fraud Act”) by charging credit insurance premiums to his
    Lowe’s account without his consent but did not request
    a specific type or amount of damages, although it did
    specify that the damages awarded were “in no event to
    exceed” $75,000. The district court properly ignored this
    detail—it was neither a limit on recovery, see 735 ILCS 5/2-
    604; BEM I, L.L.C. v. Anthropologie, Inc., 
    301 F.3d 548
    , 552
    (7th Cir. 2002); The Barbers, 132 F.3d at 1205, nor a
    demand for $75,000, see De Aguilar v. Boeing Co., 
    47 F.3d 1404
    , 1408 (5th Cir. 1995)—and looked instead to the
    claim’s actual value, see In re Brand Name Prescription
    Drugs Antitrust Litigation, 
    248 F.3d 668
    , 671 (7th Cir.
    2001), which the court determined included both actual
    and punitive damages.
    Evans introduced evidence showing that his actual
    damages were low: a letter written to his attorney by
    Wendy Hufford, Senior Litigation Counsel for the company
    that administers Lowes’s credit program, in which Hufford
    stated that Evans had been charged a total of $118.05
    in credit insurance premiums and that those charges
    had been placed “in dispute” and the coverage cancelled at
    No. 02-2500                                                 3
    Evans’s request, and an authenticated copy of a credit card
    bill indicating that the amount ($118.05) was disputed.
    American offered no contrary evidence on the amount
    of Evans’s actual damages, but it did offer an affidavit
    from a law professor named George Priest who opined
    that the total amount in controversy in the case exceeded
    $75,000 based on his “research and study of damages
    verdicts awarded in Illinois and in other jurisdictions.”
    Priest summarized the allegations in Evans’s state-court
    complaint and listed the amounts of damages awarded
    by courts in several other cases but included no addi-
    tional facts about Evans’s claim and offered no opinion on
    the outcome of an arbitration of that claim. The district
    court reviewed the cases cited in Priest’s affidavit and noted
    that some of them included awards for emotional distress
    (a type of “actual” damages, as American points out, see,
    e.g., Aiello v. Providian Fin. Corp., 
    239 F.3d 876
    , 878 (7th
    Cir. 2001)), but because there was no evidence (and no
    suggestion in the complaint itself) that Evans suffered
    emotional distress and, in the court’s view, “no[ ] attempt”
    by American to refute Evans’s assertion that his actual
    damages were limited to his $118.05 economic loss, the
    court adopted Evans’s figure.
    The parties offered no additional evidence on the amount
    of punitive damages an arbitrator might award, but the
    court noted that Professor Priest averred in his affidavit
    that court-awarded punitive damages often exceed compen-
    satory damages “by some multiple.” The affidavit did not
    offer categorized damages estimates, however, and the
    court does not appear to have given it any particular
    weight (something American does not argue was error).
    Instead, the court observed that a punitive award of nearly
    $75,000—one 635 times Evans’s actual damages—was
    untenable on the facts before it and thus concluded it was
    “sufficiently certain as a matter of federal law” that the
    jurisdictional amount was not satisfied. The court cited Del
    4                                               No. 02-2500
    Vecchio v. Conseco, Inc., 
    230 F.3d 974
     (7th Cir. 2000), in
    which we held that no diversity jurisdiction existed over
    a suit filed in federal court that depended on a punitive
    award 125 times the compensatory damages to satisfy
    the amount-in-controversy requirement and noted that
    such an award would be excessive.
    American first insists that the district court erred in
    failing to accord a presumption of correctness to its own
    assessment of the amount in controversy. While it is true
    that American, as the federal-court plaintiff, enjoyed such
    a presumption initially, see The Barbers, 132 F.3d at 1205,
    it lasted only until Evans introduced specific evidence
    showing that the real amount was much lower, see, e.g.,
    Sapperstein v. Hager, 
    188 F.3d 852
    , 856 (7th Cir. 1999); The
    Wellness Cmty. (R)-Nat’l v. Wellness House, 
    70 F.3d 46
    , 49
    (7th Cir. 1995); Rexford Rand Corp. v. Ancel, 
    58 F.3d 1215
    , 1218 (7th Cir. 1995). As the party seeking to invoke
    federal jurisdiction American bore the ultimate burden
    of proof as to the jurisdictional amount. See, e.g., Del
    Vecchio, 
    230 F.3d at 979
    ; Chase v. Shop ‘N Save Ware-
    house Foods, Inc., 
    110 F.3d 424
    , 427 (7th Cir. 1997).
    American concedes as much, so we have difficulty under-
    standing its argument that the district court was required
    to assess an amount for emotional distress damages, for
    example, even though American introduced no evidence
    on this point. American similarly offered no evidence
    tending to show that its conduct was “outrageous” (a
    requirement for punitive awards under the Consumer
    Fraud Act, see Ekl v. Knecht, 
    585 N.E.2d 156
    , 164 (Ill. App.
    Ct. 1991)) or even an argument that such evidence ex-
    isted but was for some reason unavailable to American.
    All American did was point to the theoretical availability
    of certain categories of damages, and that is not enough.
    Cf. Anthony v. Sec. Pac. Fin. Servs., Inc., 
    75 F.3d 311
    , 316-
    17 (7th Cir. 1996) (no competent proof of jurisdiction where
    plaintiffs relied solely on facts alleged in complaint, which
    No. 02-2500                                               5
    described conduct not egregious enough to justify punitive
    damages under Illinois law).
    American also argues that the district court erred in
    relying on Del Vecchio because arbitral awards are not
    subject to the judicial review for excessiveness that we
    discussed in that case. That is true, see, e.g., Davis v.
    Prudential Sec., Inc., 
    59 F.3d 1186
     (11th Cir. 1995), but
    ultimately unimportant. Del Vecchio stands for the prop-
    osition that, when critically assessing speculative claims
    that “assert[ ] a right to punitive damages at the far upper
    end of the possible distribution of outcomes,” one factor
    courts may consider is whether an award in the neces-
    sary amount might be deemed excessive. 230 F.3d at 978-
    80. Enforcement of the statutory limits on federal court
    jurisdiction is no less important when the underlying
    claim involves arbitration; excessiveness cases therefore
    provide courts with a helpful benchmark in those cases
    as well.
    The judgment of the district court is AFFIRMED. Evans’s
    request for sanctions is DENIED.
    A true Copy:
    Teste:
    ________________________________
    Clerk of the United States Court of
    Appeals for the Seventh Circuit
    USCA-02-C-0072—2-11-03