Cohen v. Office Depot, Inc.

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
___________________________ ELEVENTH CIRCUIT
02/24/2000
THOMAS K. KAHN
No. 98-4787 CLERK
___________________________
D.C. Docket No. 97-3611-Civ-JAL
CHERYL COHEN, on behalf of herself and
others similarly situated,
Plaintiff - Appellant,
versus
OFFICE DEPOT, INC., a Florida corporation,
Defendant - Appellee.
____________________________
Appeal from the United States District Court
for the Southern District of Florida
____________________________
(February 24, 2000)
ON PETITION FOR REHEARING AND
SUGGESTION OF REHEARING EN BANC
Before BIRCH and CARNES, Circuit Judges, and MILLS*, Senior District Judge.
__________________
*Honorable Richard Mills, Senior U.S. District Judge for the Central District of Illinois, sitting
by designation.
CARNES, Circuit Judge:
In our prior opinion in this case, we held that Florida Statute § 768.72
conflicts with and must yield to the “short and plain statement” rule contained in
Federal Rule of Civil Procedure 8(a)(3), and as a result a Florida plaintiff in federal
court because of diversity jurisdiction need not obtain leave of court before
pleading a request for punitive damages. Cohen v. Office Depot Inc., 184 F.3d
1292, 1295 - 99 (11th Cir. 1999) (“Cohen I”). We adhere to and leave that part of
our earlier opinion intact.1
Relying on Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1358-59
(11th Cir. 1996), we also held that “in a class action lawsuit punitive damages may
be aggregated to satisfy the amount-in-controversy requirement for each class
member,” at least “where state law provides that an award of punitive damages is
for the ‘public benefit’ or ‘collective good,’ and the award would reflect ‘the
wrongfulness of the defendant’s course of conduct as a whole.’” Cohen I, 184
F.3d at 1295 (quoting Tapscott, 77 F.3d at 1358). Combining our two holdings, we
concluded that the complaint satisfied the amount in controversy requirement
because it requested $10,000,000 in punitive damages for the entire class of
approximately 39,000 Office Depot catalogue customers. See id. at 1299.
1
For a full recitation of the relevant facts of this case, see Cohen I, 184 F.3d at 1293-94.
2
In its petition for rehearing, Office Depot has belatedly pointed out the
tension between the Tapscott decision, on which we relied in our earlier opinion in
this case, and the decision in Lindsey v. Alabama Telephone Co., 576 F.2d 593(5th Cir. 1978). Of course, pre-split or “Old Fifth” decisions such as Lindsey are
binding on us, see Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.
1981), and where two prior panel decisions conflict we are bound to follow the
oldest one. See United States v. Steele, 147 F.3d 1316, 1318 (11th Cir. 1998) (en
banc) (“It is the firmly established rule of this circuit that each succeeding panel is
bound by the holding of the first panel to address an issue of law, unless and until
that holding is overruled en banc, or by the Supreme Court.”) (internal quotation
marks and citation omitted); United States v. Dailey, 24 F.3d 1323, 1327 (11th
Cir. 1994) (where there is an intracircuit conflict of authority, “the earliest panel
opinion resolving the issue in question binds this circuit until the court resolves the
issue en banc”) (internal quotation marks and citation omitted).
For reasons we will soon discuss, we conclude that Tapscott’s holding about
aggregation of punitive damages is inconsistent with the earlier holding on the
same legal issue in Lindsey, and accordingly we must follow Lindsey. Doing so,
we conclude that the total of $10,000,000 in punitive damages that was pleaded for
the class of 39,000 members in this case is insufficient to satisfy the $75,000
3
amount in controversy requirement. This conclusion requires us to address
plaintiff, class-representative Cohen’s remaining arguments involving alternative
theories for satisfying the amount in controversy requirement, which are that it is
satisfied because of the value of the requested injunctive relief, and because of the
amount of attorney fees due if the class prevails. We will discuss those issues in a
later part of this opinion, but we begin with a discussion of the inconsistency of
Tapscott (and our own prior opinion following it) with Lindsey.
I. THE CONFLICT BETWEEN LINDSEY AND TAPSCOTT REGARDING
AGGREGATION OF PUNITIVE DAMAGES
To avoid adding confusion to conflict, we first explain why referring to the
“aggregation” of punitive damages in the context of a class action can be a bit
misleading. In this case, as in Lindsey and Tapscott, the punitive damages claim is
a single claim on behalf of the entire class; it is not the sum total of 39,000
individual punitive damages claims. Because each class member could have
sought punitive damages in individual suits, courts sometimes phrase the question
as whether a class claim for punitive damages can be “aggregated” to satisfy the
jurisdictional amount in controversy requirement for a class. The question,
however, is not whether distinct punitive damages claims can be added together,
but instead it is whether the single punitive damage claim on behalf of the class can
be attributed in toto to each and every class member so they can individually
4
satisfy the requisite amount in controversy, a requirement mandated by Zahn v.
International Paper Co., 414 U.S. 291, 94 S. Ct. 505 (1973).2 If the single punitive
damages claim cannot be attributed as a whole to each class member, it must be
allocated or divided pro rata among the class members, and after that is done the
total amount of relief sought by each plaintiff must satisfy the jurisdictional
amount. With that clarification of the question, we turn to the conflicting answers
of Lindsey and Tapscott.3
Lindsey involved a state law class action suit against two telephone
companies alleged to have unlawfully extracted excessive cash deposits from the
class. See Lindsey, 576 F.2d at 593. The defendants removed the case to federal
court on diversity grounds. See id. at 593-94. The complaint, as construed by the
Court, sought: (1) $2,000 compensatory damages for Lindsey, (2) an unspecified
sum of compensatory damages for the class, which contained an unspecified
2
Cohen argues that Zahn’s holding requiring dismissal from a class suit of any plaintiff whose
individual claim does not satisfy the amount in controversy requirement has been superseded by the
1990 amendments to 28 U.S.C. § 1367. As will be discussed, we need not decide that issue to
resolve the present case. See infra note 13.
3
Although the term “aggregation” is slightly misleading in the context of punitive damages and
attorneys fees, it is commonly used by courts when addressing the issue of whether the total amount
of a class claim should be attributed to each member of the class. Therefore, to avoid further
confusion and for the sake of consistency, we will continue to refer to the issue as one of
“aggregation.”
5
number of plaintiffs, and (3) $1,000,000 punitive damages on behalf of the class.
See id. at 595.
The Lindsey Court began its analysis by citing Snyder v. Harris, 394 U.S.
332, 89 S. Ct. 1053 (1969), for the broad proposition that multiple plaintiffs suing
in a class may not aggregate any claims for the purpose of satisfying the amount in
controversy requirement of diversity jurisdiction. Lindsey, 576 F.2d at 594. The
Court then noted that each member of a class must individually satisfy the
jurisdictional amount to avoid being dismissed from the class suit. See id. (citing
Zahn, 414 U.S. at 300, 94 S. Ct. at 511). Because the Lindsey plaintiff had failed
to plead a specific number of class members, the Court explained that it could not
determine “what dollar amount represent[ed] the ‘amount in controversy’ for each
member of the class.” Id. at 595 (emphasis added). Noting that the grounds for
removal jurisdiction must be found in the plaintiff’s complaint itself, the Court
explained that “it was not open for [the] defendants to attempt to show that the
class was small enough that the claims on its behalf exceeded the sum of $10,000
per capita,” id., which was the amount in controversy requirement at that time, see
id. at 593.
Because it could not tell from the complaint the number of class members,
the Lindsey Court could not determine whether each member’s claim satisfied the
6
jurisdictional amount, and it therefore held that the total specified damage claim
for the class – $1,002,000 – had not been shown to satisfy the amount in
controversy requirement. See id. at 595. A necessary part of Lindsey’s reasoning
is the holding that for amount in controversy purposes a class punitive damages
claim must be allocated pro rata to each class member. Otherwise, the result in that
case would have been different. If the Lindsey Court had concluded that a class
claim for punitive damages could be attributed in toto to each class member, i.e.,
considered in the aggregate, for amount in controversy purposes, the $1,000,000
punitive damages claim clearly would have sufficed, regardless of whether the
number of class members in Lindsey had been two or two million. The number of
class members would have been irrelevant, instead of the critical factor in the
decision. Thus, Lindsey inescapably stands for the proposition that a federal court
cannot exercise diversity jurisdiction over a class action – even with completely
diverse parties – solely because the total punitive damages claim on behalf of the
entire class exceeds the jurisdictional amount in controversy. Instead, under
Lindsey, the punitive damages claim for the class must be assigned on a pro rata
basis to each class member for amount in controversy purposes. See id.
Three years after Lindsey, we split from the Fifth Circuit but retained its
decisional law as our own, see Bonner, 661 F.2d at 1207, and fifteen years after the
7
split, this Court decided Tapscott v. MS Dealer Serv. Corp. In that case, we faced
another attempt to base diversity jurisdiction on a class claim for punitive damages,
but we mistakenly considered the matter as one of first impression.4 See Tapscott,
77 F.3d at 1358. The plaintiffs in Tapscott brought a state law class action,
alleging a class of over 10,000 members. See id. at 1355 n.2. The class sought
statutory damages, injunctive relief, and an unspecified amount of compensatory
and punitive damages, based on the defendant’s allegedly fraudulent conduct in the
sale of extended service contracts. See id. at 1355. The defendants removed the
case to federal court on diversity jurisdiction grounds. See id. The plaintiffs
contested the removal with affidavits attesting that the individual recovery for each
plaintiff would not exceed $50,000, the amount in controversy required for
diversity jurisdiction at the time. See id. The defendants responded that, for
jurisdictional purposes, the class claim for punitive damages should be considered
in the aggregate. See id. at 1357-59. We agreed and upheld the removal of the
case to federal court. See id. at 1359.
4
The Tapscott opinion cites Lindsey for the proposition that each member of a class must
individually satisfy the amount in controversy requirement in order to avoid being dismissed from
the suit. See Tapscott, 77 F.3d at 1357 n.9. But the opinion does not mention the part of Lindsey
that requires a pro rata distribution of the claimed punitive damages for purposes of determining the
amount in controversy.
8
In Tapscott, this Court pointed to the Supreme Court’s discussion in Snyder,
which indicated that multiple plaintiffs may aggregate claims if they have “a single
title or right in which they have a common and undivided interest.” Id. at 1357(quoting Snyder, 394 U.S. at 335, 89 S. Ct. at 1056). We then considered the
nature of punitive damages under Alabama law, finding that Alabama awards
punitive damages to plaintiffs not “as a matter of right,” but rather as a means to
punish and deter wrongful conduct. See id. at 1358. Because punitive damages
were intended to serve the collective good, we reasoned that the class had a
“common and undivided interest” in the punitive damages claim. See id. at 1358-
59. That is why this Court in Tapscott permitted the punitive damages claim to be
used to satisfy the requisite amount in controversy for the entire class; in effect,
we let the whole amount of the punitive damages claim be used by each class
member for that purpose, a result inconsistent with the decision in Lindsey almost
twenty years earlier. See id. at 1359.
Attempting to distinguish Tapscott from Lindsey, Cohen points to the
analysis in Tapscott addressing whether the punitive damages claim constituted a
“single collective right in which [the class members had] a common and undivided
interest.” Id. She contends that the “common and undivided interest” issue was
never presented to us in Lindsey, and thus, there is no real conflict between our
9
Lindsey and Tapscott decisions. Cohen’s contention misconstrues the operation of
our prior panel precedent rule. The issue in Tapscott was the same as that in
Lindsey: whether a class claim for punitive damages can be considered in the
aggregate in order to establish diversity jurisdiction over all potential members of a
class, or must instead be attributed pro rata to each class member.
“Common and undivided interest” is simply the standard used to decide
which, if any, claims by multiple plaintiffs may be considered in the aggregate for
jurisdictional purposes, and which must be divided among the class members. See
Snyder, 394 U.S. at 335, 89 S. Ct. at 1056. But we had already decided in Lindsey
that a class claim for punitive damages could not be considered in the aggregate
for each class member, or at least that such a claim arising under Alabama law
could not be. Our conclusion to the contrary in Tapscott, which also involved
Alabama punitive damages law, is inconsistent with the result in Lindsey. Because
the same state law governed punitive damages in each case, there can be no
difference between the two cases insofar as the “common and undivided interest”
analysis is concerned.5
5
Compare Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th Cir. 1995) (allowing aggregated
class claim for punitive damages because, under Mississippi law, plaintiffs had a “common and
undivided interest” in punitive damages claim), with Ard v. Transcontinental Gas Pipe Line Corp.,
138 F.3d 596, 602 (5th Cir. 1998) (disallowing aggregated class claim for punitive damages in
Louisiana case and stating that “[i]t is unclear to us what Mississippi law regarding punitive
damages drove the Allen panel to depart from Lindsey’s rule, but we find no principle in Louisiana
10
The fact that this case involves a Florida law punitive damages claim does
not distinguish it from Lindsey, because as we concluded in our prior panel
opinion in this case, the nature of punitive damages is the same under Florida law
as under Alabama law. See Cohen I, 184 F.3d at 1295. We explained that both
states award punitive damages to serve the collective good, noting particularly that
“Florida law, like Alabama law, provides that ‘punitive damages are warranted
only where the egregious wrongdoing of the defendant ... constitutes a public
wrong.’” Id. (citation omitted). Consequently, there can be no difference between
this case and Lindsey stemming from a “common and undivided interest” analysis
of state punitive damages law.6
law ... that permits us to depart from Lindsey”).
6
As we noted in our prior opinion in this case, our decision in Tapscott to consider the class
punitive damages claim in the aggregate was also based on the fact that “the award of punitive
damages [would] reflect not the wrong done to any single individual but the wrongfulness of the
conduct as a whole.” See Cohen I, 184 F.3d at 1295 (citing Tapscott, 77 F.3d at 1358-59)). The
class in that case consisted of over 10,000 members, and the allegedly fraudulent transaction
underlying each member’s claim involved relatively small amounts of money. See Tapscott, 77 F.3d
at 1358-59. Reasoning that “where the wrong to the individual is small but the course of conduct
is large, the potential punitive damages would be to punish and deter the course of conduct as a
whole,” we concluded in Tapscott that it was appropriate to view the class claim for punitive
damages in the aggregate. Id. at 1359. We also suggested that if the facts indicated the punitive
damages award “would be determined on an individualized consideration of the egregiousness of
the harm done to individual class members,” id. at 1359 n.13, instead of the “wrongfulness of the
defendant’s course of conduct as a whole,” id. at 1358, then aggregation might not be proper. See
id. at 1359 n.13. In view of this analysis in Tapscott, the Lindsey decision arguably could be viewed
as holding only this: when a plaintiff fails to specify the size of the class, thereby preventing the
court from determining the extent of the defendant’s wrongful course of conduct, the class claim for
punitive damages cannot be viewed in the “aggregate,” i.e., it cannot be attributed in toto to each
class member.
11
Cohen’s real argument is that the result and holding of Lindsey are wrong
because we failed to apply a “common and undivided interest” analysis – she says
it was not even considered. Even if we thought Lindsey wrong, the prior panel
precedent rule is not dependent upon a subsequent panel’s appraisal of the initial
decision’s correctness. Nor is the operation of the rule dependent upon the skill of
the attorneys or wisdom of the judges involved with the prior decision – upon what
Unfortunately, our analysis in Lindsey forecloses that potential distinction between that case
and Tapscott. In Lindsey, we stated that if the plaintiff had alleged a specific number of class
members, that allegation “would have permitted the court to ascertain what dollar amount represents
the ‘amount in controversy’ for each member of the class.” Lindsey, 576 F.2d at 595 (emphasis
added). Significantly, our analysis in Tapscott suggests that the aggregation of punitive damages
is proper when the defendant’s course of conduct affects a large number of individuals. See
Tapscott, 77 F.3d at 1359. But according to our prior analysis in Lindsey, a “large” class is exactly
what would have prevented the amount in controversy requirement from being satisfied. Our
concern in Lindsey was that the number of class members, or the divisor, might be so large that the
$1,000,000 punitive damages claim, when divided by the number of class members, would result
in an amount less than $10,000 (the requisite amount in controversy at the time). We indicated in
Lindsey that the class would satisfy the amount in controversy requirement if the complaint alleged
a total number of members that “was small enough that the claims on its behalf exceeded the sum
of $10,000 per capita.” Lindsey, 576 F.2d at 595 (emphasis added). Thus, while our opinion in
Lindsey does not explicitly forbid the aggregation of a class claim for punitive damages, the
reasoning and result in that opinion does.
Under our reasoning in Lindsey, a punitive damages claim must be divided by the total
number of class members with the quotient attributable to each class member for amount in
controversy purposes. See id. Our inability to determine the number of class members, or the
divisor, was critical not because we could not determine the nature of the defendants’ course of
conduct, but because without a divisor we could not do the division necessary. We could not divide
the class punitive damages claim by the number of class members without knowing that number.
A Fifth Circuit panel recently acknowledged the necessary implication of our Lindsey decision. See
Ard, 138 F.3d at 601 (construing Lindsey to “appl[y] Snyder’s reasoning that compensatory damage
claims cannot be aggregated for jurisdictional purposes to the context of punitive damage claims”);
see supra at note 6.
12
was argued or considered. Unless and until the holding of a prior decision is
overruled by the Supreme Court or by the en banc court, that holding is the law of
this Circuit regardless of what might have happened had other arguments been
made to the panel that decided the issue first.
Lindsey held that, for purposes of deciding whether the amount in
controversy requirement had been satisfied, the amount of an Alabama punitive
damages claim was to be divided by the number of class members and the result
attributed to each member of the class. Tapscott decided to the contrary. Because
Lindsey predates Tapscott, we must follow Lindsey as the precedent of this Court.
See Steele, 147 F.3d at 1318; Dailey, 24 F.3d at 1327.
Accordingly, we rescind that part of our prior opinion in this case that relied
upon Tapscott to hold that the $10,000,000 punitive damages claim on behalf of
Cohen’s proposed class satisfied the amount in controversy requirement for
diversity jurisdiction over this case. See Cohen I, 184 F.3d at 1294-95. The
punitive damages claim does not satisfy the amount in controversy requirement,
because when the $10,000,000 class claim for punitive damages is divided among
the alleged 39,000 class members, as Lindsey requires for amount in controversy
purposes, each member’s share of the claim is approximately $256.
13
We now address Cohen’s other two grounds for satisfying the requisite
amount-in-controversy: (1) the value of the requested injunctive relief, and (2) the
amount of attorney fees due if the class prevails.
II. COHEN’S OTHER GROUNDS FOR DIVERSITY JURISDICTION
A. INJUNCTIVE RELIEF
In addition to requesting compensatory and punitive damages, this lawsuit
seeks to enjoin Office Depot from engaging in unfair and misleading advertising
regarding the catalogue prices of its products. Cohen claims that Office Depot’s
advertising indicates that the prices for products purchased from its catalogues are
the lowest prices available anywhere, but that the truth is some products are less
expensive if purchased at Office Depot stores. She argues that enjoining such
allegedly misleading advertising would “result[] in changes to Office Depot’s
advertising and business practices, thereby benefitting the Plaintiff class, as a
whole, by an amount that is clearly in excess of the jurisdictional requirement of
Section 1332.” Appellant’s Br. 44-45.
When a plaintiff seeks injunctive or declaratory relief, the amount in
controversy is the monetary value of the object of the litigation from the plaintiff’s
perspective. See Ericsson GE Mobile Communications, Inc. v. Motorola
Communications & Elecs., Inc., 120 F.3d 216, 218-20 (11th Cir. 1997). In other
14
words, the value of the requested injunctive relief is the monetary value of the
benefit that would flow to the plaintiff if the injunction were granted. In this case,
Cohen maintains that the class has a “common and undivided interest” in the
injunctive relief, and thus, if considered in the aggregate, the monetary value of it
to the class – alone or combined with the other claims for relief – would satisfy the
$75,000 amount in controversy requirement. However, we need not address
whether the monetary value of the requested injunctive relief should be considered
in the aggregate, or instead attributed pro rata among the class members, because
we conclude that the monetary value of the injunctive relief to the class plaintiffs in
this case is “too speculative and immeasurable” to establish the requisite amount in
controversy in either event. See id. at 221-222.
We have little trouble concluding “to a legal certainty” that the value of the
injunctive relief does not satisfy the jurisdictional amount in this case, see St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S. Ct. 586, 590
(1938), because we doubt that any monetary value at all would accrue to the class
plaintiffs upon issuance of the prospective injunction. If the requested injunctive
relief were granted, Office Depot would not be required to offer its products at the
lowest price available, but instead could simply raise the price of the products in its
stores a sufficient amount that its advertising of catalogue prices was no longer
15
false. That result would comply with the injunction the class seeks, but it would be
of no monetary benefit to them. Indeed, to the extent class members also buy
products in Office Depot stores, the injunction would cost them money under that
scenario.
But let us assume Office Depot’s reaction to the requested injunction would
be to leave product prices as they are and clarify its advertising to remove any
statement that catalogue prices are the same as store prices. That result is the most
the class could hope for from the requested injunction, but it is one which would be
of little or no monetary value to class members. The benefit of the injunction to
the class plaintiffs would be the knowledge that some office products were less
expensive when purchased at Office Depot stores than when purchased through the
catalogue. However, upon class certification and notice, the class plaintiffs would
already have known that, because the allegedly misleading advertising is the very
basis of the class action.
Although Cohen’s complaint seeks class certification under subdivisions
(b)(1)(A), (b)(1)(B), and (b)(3) of Fed. R. Civ. P. 23, Cohen’s class, if certified,
would likely be certified as a (b)(3) class.7 Certification under Rule 23(b)(3)
7
Because Cohen’s class seeks compensatory damages, it cannot be certified as a (b)(1)(A) class.
See In re Dennis Greenman Sec. Litig., 829 F.2d 1539, 1545 (11th Cir. 1987). As for potential
certification under (b)(1)(B), we fail to see from the complaint’s allegations how individual suits
against Office Depot brought by one or more class members “would as a practical matter be
16
would require that the class members receive notice of the suit “well before the
merits of [it] are adjudicated.” See Schwarzschild v. Tse, 69 F.3d 293, 295 (9th
Cir. 1995) (citations omitted); Fed. R. Civ. P. 23(c)(2); see also 7B Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure § 1788 (2nd ed. 1986).
As a result, before any injunction were granted, the class would already know that
the catalogue price of some Office Depot products is higher than the store price.
Or, stated differently, if the injunction were not granted, the class plaintiffs would
still know that the advertising is sometimes false and that they can avoid paying the
higher catalogue prices simply by shopping elsewhere or by purchasing the
products at Office Depot’s stores. The injunctive relief itself would not be of any
monetary value to the class members. Cf. Crawford v. American Bankers Ins. Co.
of Fla., 987 F. Supp. 1408, 1415 (M.D. Ala. 1997) (explaining that the class
members’ “financial recovery will come ... from their tort and [restitution] claims,
not from the prospective injunctive relief”).
dispositive of the interests of the other members ... or substantially impair or impede their ability to
protect their interests.” Fed. R. Civ. P. 23(b)(1)(B); see also 7A Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 1774 (2nd ed. 1986) (explaining that “(b)(1)(B) allows
class actions to be brought in cases in which separate suits might have undesirable effects on the
class members”). Moreover, the possibility that an individual suit “will have either precedential or
stare decisis effect on later [suits] is not sufficient” for (b)(1)(B) class certification. In re Dennis
Greenman Sec. Litig., 829 F.2d at 1546.
17
The remote possibility – if there be any – that monetary value might
somehow flow to the class plaintiffs from the requested injunctive relief is “too
speculative and immeasurable to satisfy the amount in controversy requirement.”
Ericsson, 120 F.3d at 221-222. In Ericsson, the plaintiff company, Ericsson,
claimed that the City of Birmingham improperly handled the bidding process for
its purchase of a communications system, resulting in the company losing the
communications system contract to Motorola. See id. at 217. Ericsson sought to
enjoin the city’s contract with Motorola and also to have the court declare Ericsson
the lowest responsible bidder, entitling it to the contract with the city worth almost
$10,000,000. See id. However, the district court noted that, under Alabama law,
the only remedy available to Ericsson was to have the district court enjoin the
performance of the city’s contract with Motorola as void. See id. at 221. Not only
did the court lack authority to declare Ericsson the lowest bidder, it could not even
require the city to rebid the contract. See id.Consequently, the only benefit to Ericsson from its injunctive relief would
have been the possibility that the city might rebid the contract and that, during the
rebid, the city might select Ericsson’s communications system and price. See id. at
221-22. We refused to pile possibility onto possibility to estimate the value of that
benefit, but instead held that “[b]ecause [Ericsson could not] reduce the speculative
18
benefit resulting from a rebid ‘to a monetary standard, [] there [was] no pecuniary
amount in controversy.’” Id. at 222 (quoting Texas Acorn v. Texas Area 5 Health
Sys. Agency, Inc. 559 F.2d 1019, 1023 (5th Cir. 1977)).
Similarly, the injunctive relief in this case involves too many contingencies,
such as the manner in which Office Depot might alter its pricing schemes and the
extent to which the class members’ purchasing patterns might change. Because of
these contingencies, any benefit to the class from the injunction cannot be reduced
to a reasonable monetary estimate.8 See id. at 222. We therefore conclude that any
monetary value to Cohen’s class from the injunction is either non-existent, or at
least too tenuous of a foundation for diversity jurisdiction. In reaching this
conclusion, we also note that the policy underlying 28 U.S.C. § 1332(a), which is
to reserve federal court diversity jurisdiction for disputes involving relatively
substantial damages, further informs our refusal to speculate about the value of a
8
Like the plaintiff in Ericsson, Cohen has not established a monetary value for the injunctive
relief claim. See id. at 222 n.18. Cohen argues that her proposed amended complaints provide bases
for valuing the injunctive relief claim, primarily the substantial expense Office Depot would incur
by “retooling” its pricing scheme and advertising. The potential cost of compliance to the defendant,
however, is irrelevant in determining the value of the benefit that would be obtained by the plaintiff
from an injunction. See Ericsson, 120 F.3d at 218-20. For that reason, the proposed amended
complaint did not establish the requisite amount in controversy based on the value of the injunctive
relief, and accordingly, the district court did not abuse its discretion in denying leave to amend. See
Halliburton & Assocs., Inc. v. Henderson, Few & Co., 774 F.2d 441, 444 (11th Cir. 1985) (noting
that when “a complaint as amended is still subject to dismissal, leave to amend need not be given”)
(citation omitted).
19
prospective injunction to the class plaintiffs in this case. See Packard v. Provident
Nat’l Bank, 994 F.2d 1039, 1044-45 (3rd. Cir. 1993) (noting that § 1332(a) “must
be narrowly construed so as not to frustrate the congressional purpose behind it”).
The total compensatory and punitive damages claim for each class member in this
case is about $260,9 well below the $75,000 threshold for diversity jurisdiction.
Because the class claim for injunctive relief is too speculative to satisfy the
amount in controversy requirement, we turn now to the question of whether the
potential recovery of attorney fees, alone or in combination with the damages
claims, can establish the jurisdictional amount in controversy.
B. ATTORNEY FEES
On behalf of the class, Cohen brought claims under Florida statutes that
prohibit deceptive business practices, see Fla. Stat. § 501.201 et seq., and
misleading advertising, see Fla. Stat. § 817.41. Both statutory causes of action
authorize a court to award attorney fees to the prevailing party. See Fla. Stat. §
501.2105; Fla. Stat. § 817.41. Cohen contends that when a statutory cause of
9
While there are persuasive reasons for viewing the amount in controversy as the total liability
faced by a defendant, instead of as the amount each plaintiff stands to gain, “the Supreme Court has
long since closed that door.” Davis v. Carl Cannon Chevrolet-Olds, Inc., 182 F.3d 792, 798 (11th
Cir. 1999). In this case, the approximate compensatory damages claim of each member, assuming
Cohen’s claim is representative of the other class members, is $3.57. Each member’s share of the
punitive damages claim is approximately $256. The total damages claim of each class member,
therefore, is less than $260.
20
action entitles a party to recover reasonable attorney fees, the amount in
controversy includes consideration of the amount of those fees. She is correct. See
Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 202, 54 S. Ct. 133, 134 (1933);
Premier Indus. Corp. v. Texas Indus. Fastener Co., 450 F.2d 444, 447 (5th Cir.
1971).
Cohen also contends that the attorney fees in this case will clearly surpass
the $75,000 threshold for the amount in controversy; and she argues that the
amount of fees she anticipates will be awarded either should be (1) attributed to her
as the prevailing party, with jurisdiction over the other class plaintiffs established
under 28 U.S.C. § 1367(a) (the supplemental jurisdiction provision), or (2)
considered in the aggregate and attributed in toto to each member based on their
“common and undivided interest” in the attorney fees. Assuming away our doubts
that Cohen has established a sufficient basis for her contention that an award of
21
attorney fees in this case will reach $75,000 or more,10 we address in turn her
arguments as to how that amount of fees should be attributed.
First, we find no basis for attributing the potential award of attorney fees to
Cohen, either individually or as the class representative. The claim for attorney
fees in this case is based on two Florida statutes: Fla. Stat. § 501.2105(1),
authorizing an award of attorney fees to “the prevailing party” in an action based
on deceptive business practices; and Fla. Stat. § 817.41(6), mandating an award of
attorney fees to “[a]ny person prevailing” in an action based on misleading
advertising. If this class action were successful on the merits, the entire class of
plaintiffs – not just Cohen – would “prevail” in the action, and accordingly, it is the
class and not just Cohen who would recover attorney fees under the statutes.11
10
We doubt that Cohen has sufficiently established that $75,000 in attorneys fees will be
recovered in this case. In her proposed amended complaint, Cohen contends that over $60,000 in
reasonable attorneys fees had been incurred up to that point in the litigation and that ultimately over
$100,000 in fees would be incurred. However, Cohen provided no documentation supporting those
contentions or specific explanation for the substantial amount claimed. Arguably, when the amount
in controversy substantially depends on a claim for attorneys fees, that claim should receive
heightened scrutiny. Cf. Packard, 994 F.2d at 1046 (explaining that when a “[punitive damages]
claim comprises the bulk of the amount in controversy and may have been colorably asserted solely
or primarily [for jurisdictional purposes], that claim should be given particularly close scrutiny”).
However, because of the permissive nature of St. Paul’s “legal certainty” standard for the sufficiency
of a plaintiff’s amount in controversy allegation, and because our decision would not be different
even if the claimed amount of fees were accurate, we will assume that Cohen has alleged a sufficient
basis for a potential attorneys fee award exceeding $100,000, as estimated in her proposed amended
complaint.
11
Cohen’s citation to In re Abbot Labs., 51 F.3d 524 (5th Cir. 1995), is inapposite. The Court
in that case attributed a claim for attorney fees to the class representatives, because the relevant
Louisiana statute provided that a “court may allow the representative parties their reasonable
22
In addition, as an individual class member, Cohen stands to recover no more
than $260 in damages. In her first proposed amended complaint, Cohen indicated
that over $100,000 in reasonable attorney fees would be incurred in the litigation.
Attributing to one plaintiff an anticipated attorney fees award that is over 384 times
greater than that plaintiff’s stake in the litigation could raise serious questions
about the reasonableness of the fee award. For these reasons, we conclude the
claim for attorney fees in this case is not attributable solely to Cohen, but instead to
the entire class. Because of that conclusion, we must now decide how the claimed
attorney fees should be attributed to each class member for amount in controversy
purposes.12
expenses of litigation, including attorney[] fees, when as a result of the class action a fund is made
available, or a recovery or compromise is had which is beneficial, to the class.” Id. at 526 (emphasis
added). Unlike the statute in Abbott, the Florida statutes at issue here do not contain language
indicating that the award of attorneys fees should go to the class representatives.
12
Cohen asks us to join the Fifth and Seventh Circuits in concluding that Congress statutorily
overruled Zahn’s holding that each plaintiff must assert a claim satisfying the requisite amount in
controversy to avoid being dismissed from a class action based on diversity jurisdiction. See
Stromberg Metal Works v. Press Mechanical, Inc., 77 F.3d 928, 930-33 (7th Cir. 1996); In re
Abbott Lab., 51 F.3d at 527-29. She contends that the 1990 amendments to 28 U.S.C. § 1367authorize a court to exercise supplemental jurisdiction over the claims of the entire class, once the
claim of one class member is found to satisfy the amount the controversy requirement. However,
we need not address that argument. Because the claimed attorney fees in this case are not
attributable solely to Cohen, no member of the class has an individual claim that satisfies the
requisite amount in controversy. Therefore, diversity jurisdiction will exist in this case only if the
claimed attorney fees may be considered in the aggregate, attributed as a whole to each class
member.
23
Cohen maintains that the class members share a “common and undivided
interest” in the anticipated award of attorney fees, and thus, the claim for those fees
should be viewed in the aggregate, with the total amount attributed to each class
member. Office Depot responds that, like the class claim for punitive damages, the
amount of the claimed attorney fees should be divided pro rata among each
individual class member. In light of a recent decision by this Circuit and the
relevant Florida case law, we conclude that the claim for attorney fees is not “a
single title or right in which [the class members] have a common and undivided
interest” in the claimed attorney fees. See Snyder, 394 U.S. at 335, 89 S. Ct. at
1056. Therefore, for amount in controversy purposes, the estimated total attorney
fees award should be divided among all of the class members.
In Darden v. Ford Consumer Finance Co., ___ F.3d ___ (11th Cir. 2000), the
defendant attempted to remove a class action to federal court on diversity grounds,
arguing that the class plaintiffs’ claim for attorney fees under the Georgia RICO
statute should be considered in the aggregate for amount in controversy purposes.
We rejected that argument. Following the principles laid down by the Supreme
Court in Snyder, we concluded that the claimed attorney fees did not constitute a
“single title or right” in which the class members had a “common and undivided
interest.” See id. at *3-6. In reaching that conclusion, we noted that each class
24
plaintiff could have recovered his attorney fees in individual suits under the RICO
statute. See id. at *5. It followed that the class members did not share a “single
title or right” in the claimed attorney fees, but instead, each member had a
“separate and distinct statutory right or claim to recover those attorney[] fees.” Id.
Noting further that under Georgia law the statutory award of attorney fees serves to
compensate injured plaintiffs, we reasoned that considering the fees in the
aggregate would contravene Snyder’s prohibition against aggregating
compensatory damages.13 See id. Therefore, we refused to aggregate the claimed
attorney fees of the class.14
We construe Darden to hold that a statutory claim for attorney fees may not
be considered in the aggregate for amount in controversy purposes, at least not
when both of these factors are present: (1) the class members have a “separate and
distinct” right to recover attorney fees under the relevant statute; and (2) state law
13
Darden distinguished the “collective good” purposes of the punitive damages in Tapscott from
the compensatory nature of the attorneys fees in that case. See Darden. Therefore, the decision in
Darden did not depend on the continued validity of the Tapscott decision. However, if Darden had
somehow reiterated the part of Tapscott that conflicts with Lindsey, we would still be compelled to
follow Lindsey, to the extent of any conflict. The prior panel precedent rule precludes us from
“hold[ing] that two subsequent panel opinions can implicitly overrule a prior panel opinion.”
Johnson v. City of Fort Lauderdale, Fla., 126 F.3d 1372, 1380 n. 10 (11th Cir. 1997).
14
This Court also rejected the aggregation of an attorney fees award in Davis, 182 F.3d at 796-
97. However, the precedential effect of Davis on this case is minimal, because that case did not
involve a statutory right to attorneys fees. Instead, Davis addressed only the “narrow question ...
[of] whether a fee to be deducted from a [class action] common fund may, if it exceeds $75,000,
satisfy the amount-in-controversy requirement.” Id. at 796.
25
provides that the statutory attorney fees serve to compensate the class members for
their injuries.15 Applying that holding to the facts of this case, we conclude that the
claimed attorney fees may not be considered in the aggregate to establish the
requisite amount in controversy.
As for the first factor, the class members in this case could recover their
individual attorney fees incurred in separate, individual suits under Florida’s
consumer protection statutes. See Fla. Stat. § 501.2105(1) (authorizing fee award
for “prevailing party”); Fla. Stat. § 817.41(6) (mandating fee award for “[a]ny
person prevailing” under the statute). Like the Georgia RICO statute involved in
Darden, the Florida statutes in this case provide “each individual plaintiff in a
putative class the right to recover attorney[] fees in the case.” Darden, The
members of Cohen’s class are not joining to “enforce a single title or right” in the
statutory award of attorney fees, see Syder, 394 U.S. at 335, 89 S. Ct. at 1056,
because each member has a “separate and distinct right” in the claimed fees. See
Darden.
The second factor is also present. Like the attorney fees award under the
Georgia RICO statute in Darden, an attorney fees award under Florida consumer
15
Because both factors are present in this case, we need not decide whether either one standing
alone would prevent aggregation of attorney fees to satisfy the amount in controversy.
26
protection statutes serves an important compensatory purpose. In BMW of North
Amer., Inc. v. Krathen, 510 So.2d 366, 368 (Fla. 4th Dist. Ct. App. 1987), the
District Court of Appeals for the Fourth District noted that “the obvious purpose of
the ‘Little FTC Act’ [which includes § 501.2105(1)] is to make consumers whole
for losses caused by fraudulent consumer practices [and that] ... [t]hese aims are
not served if the attorney[] fees are not included in the protection.” Id. at 368
(citation omitted); cf. Florida Erection Serv. v. McDonald, 395 So.2d 203, 207-08
(Fla. 1st Dist. Ct. App. 1981) (explaining that an award of attorney fees, unlike an
award of punitive damages, “does not provide remuneration to the claimant over
and above the amount necessary to compensate him for his loss”). Even though
the primary purpose of such an award is to encourage private enforcement of
statutory policies, thus benefitting the public, see Standard Guaranty Ins. Co. v.
Quanstrom, 555 So.2d 828, 833-34 (Fla. 1990), that does not mean attorney fees
are not also compensatory in nature. The Florida Supreme Court has recognized
that private individuals cannot be expected to pursue statutory causes of action
unless their own losses and costs, including their attorney fees, will be fully
compensated. See id. (noting that “[i]f ... consumers cannot recover in full their
attorney fees, they will quickly determine it is too costly ... to file suit, and
individual enforcement of this act will fail”) (quoting LaFerney v. Scott Smith
27
Oldsmobile, Inc., 410 So.2d 534, 536 (Fla. 1st Dist. Ct. App. 1978)). Because the
statutory attorney fees involved in this case serve a significant compensatory
purpose, in this case as in Darden, aggregating the claimed attorneys fees would be
inconsistent with Snyder. Consequently, the nature and purpose of the statutory
right to attorney fees in this case strongly resemble those of the statutory right to
attorneys fees in Darden; it follows that the result should be the same.
Because the attorney fees authorized by the Florida statutes in this case serve
to compensate plaintiffs for losses resulting from allegedly unlawful business
practices, and because claims for those fees could be asserted by the class plaintiffs
in individual suits, we conclude that the claimed fees do not constitute “a single
title or right in which [the class members] have a common and undivided interest.”
Snyder, 394 U.S. at 335, 89 S. Ct. at 1056. It follows that the amount of claimed
attorney fees may not be considered in the aggregate – may not be attributed in
whole to each class member – but instead, like the class claim for punitive
damages, it must be divided out among the total number of class members for
amount in controversy purposes. Because each class member’s damages claim
approximates $260, and the claimed attorney fees must be divided pro rata among
39,000 class members, an astronomical amount of attorney fees would have to be
28
recovered in order to satisfy the amount in controversy requirement.16 Such a
recovery is not possible, and therefore, neither is diversity jurisdiction.
III. CONCLUSION
Because we conclude that Cohen has failed to allege a sufficient amount in
controversy to establish jurisdiction under 28 U.S.C. § 1332(a), we vacate our prior
opinion reversing the district court’s dismissal of this case and remanding for
further proceedings. We now affirm the district court’s order dismissing the case
for lack of subject matter jurisdiction.
AFFIRMED.
16
Each class member must, in effect, “recover” $74,740 in attorneys fees ($75,000 required for
diversity jurisdiction minus the $260 in damages per class member). That means the class would
have to recover a total of $2.9 billion in attorneys fees ($74,740 multiplied by the alleged 39,000
class members).
29