E-Alert Case Updates

Attorneys’ Fees Cannot Be Imputed to Named Plaintiffs in Class Action Cases for Purposes of Establishing the Amount in Controversy Requirement

Ashley Bond v. Zale Delaware, Inc.
(May 17, 2016) United States District Court for the Northern District of West Virginia
by Matthew J. McCloskey, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: https://ecf.wvnd.uscourts.gov/cgi-bin/show_public_doc?2016cv0043-18

In a recent opinion, the United States District Court for the Northern District of West Virginia granted the named class action plaintiff’s motion to remand after concluding that the defendant: (1) could not establish that a potential award of attorneys’ fees to the plaintiff would exceed $75,000; and (2) was not permitted to impute the total potential attorneys’ fees award to all class members to the sole named plaintiff for purposes of establishing the amount in controversy requirement.

On February 9, 2016, Plaintiff, Ashley Bond, filed a lawsuit on behalf of herself and a class of similarly situated individuals alleging that Defendant, Zale Delaware, Inc., d/b/a Zales Jewelers (“Zales”), violated the West Virginia Wage Payment and Collection Act (“WCPA”). In pertinent part, Plaintiff alleged that, after she was discharged from employment at Zales, Zales failed to pay her the wages within the time required by the WCPA. Plaintiff filed her lawsuit in Circuit Court for Harrison County, West Virginia, but Zales removed the case to the United States District Court for the Northern District of West Virginia on the basis of diversity jurisdiction. Plaintiff subsequently withdrew her motion for class certification and moved to remand that case, arguing that she had specifically filed along with her complaint a stipulation stating that she did not seek more than $75,000 in damages and that, for numerous reasons, Zales had failed to establish that the amount in controversy requirement had been met.

Judge Irene M. Keeley, writing for the Court, granted Plaintiff’s motion to remand. Initially, the Court rejected Plaintiff’s argument that the stipulation she filed along with her complaint sufficed to limit her recovery to less than $75,000. Under McCory v. Erie Ins. Co., 147 F. Supp. 2d 481, 485 (S.D.W. Va. 2001), such a stipulation is only effective to limit recovery if it is: (1) filed pre-removal; (2) signed by both counsel and client; (3) explicit in limiting recovery; (4) filed contemporaneously with the complaint; and (5) accompanied by a complaint containing a “sum-certain prayer for relief.” Here, although the stipulation met some of these elements, Plaintiff’s complaint did not contain a sum-certain prayer for relief. Accordingly, the stipulation itself did not preclude removal.

The Court therefore proceeded to analyze the amount in controversy between the parties. In this regard, the Court noted that, in a class action case, the amount in controversy as to each particular plaintiff could not be aggregated to meet the amount in controversy requirement. Nevertheless, the Court would assume supplemental jurisdiction over all plaintiffs if it was established that the requirement had been met for any named plaintiff. Thus, the Court sought to determine whether Ashley Bond’s claims were worth at least $75,000.

The Court concluded that her claims did not reach the $75,000 threshold for two (2) reasons. First, although attorneys’ fees may be awarded in a WPCA case, Zales failed to establish that those fees would increase Plaintiff’s recovery to $75,000. In fact, Plaintiff was able to produce several cases in which the attorneys’ fees awards were substantially less than $75,000. Thus, Zales’ argument in this regard was overly speculative as to the value of Plaintiff’s claim.

Second, Zales was not permitted to impute the total attorneys’ fees award for all potential class members to the named Plaintiff in order to reach the jurisdictional minimum. Instead, in the Fourth Circuit, the general rule is that attorneys’ fees awards must be apportioned pro rata between all class members. The Court took time to distinguish a Fourth Circuit case, Aikens v. Microsoft Corp., 159 F. App’x 471 (4th Cir. 2005), that appeared to contradict this conclusion. The Court noted that, in Aikens, the Fourth Circuit was forced to apply a procedural rule unique to Louisiana that required all attorneys’ fees to be awarded to the named plaintiffs in a class action. Because West Virginia had no analogous rule, the Court rejected Zales’ argument that the total award could be imputed to Plaintiff. Accordingly, and because Zales otherwise failed to show that Plaintiff’s claim was worth more than $75,000, the court granted Plaintiff’s motion to remand.