Appeal from the United States District Court for the Western District of Missouri.
Before SMITH, HANSEN, and SHEPHERD, Circuit Judges.
Brian and Jacqueline Hartis ("class representatives"), individually and on behalf of the putative class, appeal from the district court's denial of their motion to remand to state court, asserting that the district court erroneously concluded that the $5 million amount in controversy under the Class Action Fairness Act (CAFA) was satisfied. We vacate the district court's order and remand.
The class representatives filed a class action suit against Chicago Title Insurance Company ("Chicago Title") in Missouri state court alleging that Chicago Title failed to reimburse numerous customers for excess money collected at real estate closings for recording fees. The class representatives alleged in their petition that Chicago Title retained $24 in excess recording fees charges related to the purchase of their home in Kansas City, Missouri, representing a $3 overcharge on one transaction and a $21 overcharge on a second transaction. According to the petition, "Chicago [Title] collected a recording fee from Missouri residents alone over a five year period on more than 71,000 transactions." The petition also alleged that Chicago Title acts as an escrow and disbursement agent in 16 other states and the District of Columbia and that, in many of those transactions, just as it did in the class representatives' transactions, Chicago Title kept for itself the excess money paid by purchasers for recording fees. The petition asserted a claim for conversion and sought money damages for the class members that was "fair and reasonable," reasonable attorneys' fees and expenses, and other relief. Chicago Title filed a timely notice of removal, invoking 28 U.S.C. §§ 1332, 1441, 1446, and 1453.
In its notice of removal, Chicago Title asserted that it is deducible from the face of the petition that the amount in controversy exceeds $5 million. Chicago Title pointed to the petition's contention that Chicago Title collected a recording fee from Missouri residents alone on more than 71,000 transactions over a five-year period. Chicago Title reasoned that, due to the volume of transactions that it has conducted in just one state over a five-year period and the fact that the proposed class, as outlined in the petition, includes potential members in 17 states and the District of Columbia, the amount in controversy clearly exceeds $5 million. Chicago Title provided the district court with an affidavit from Janet E. Ellis, Senior Vice President and Chief Technology Officer of Fidelity National Management Services, in which Ellis stated that she provides information technology support services to Chicago Title and that, based on the information available to her in her professional capacity, Chicago Title collected recording fees in approximately 2,235,000 transactions during the five-year period between 2002 and 2006. Chicago Title suggested that if the class representatives' overcharges ($12 on average per transaction) are typical of the putative class, and if the district court looked at either 71,000, the transaction quantity figure presented by the class representatives for a five-year period in Missouri, or 2,235,000, the national figure presented in the Ellis affidavit, the $5 million jurisdictional minimum is clearly exceeded.
The class representatives moved to remand to state court, asserting that the district court lacked subject matter jurisdiction because a preponderance of the evidence does not indicate that the amount in controversy exceeds $5 million. They maintained that Chicago Title's jurisdictional argument, as it stands, which is based on the number of transactions in which an overcharge could have occurred rather than on actual evidence of overcharges, is insufficient. They contended that in order to meet its burden, Chicago Title must provide extensive evidence of specific overcharges sufficient to prove up the $5 million threshold.
The district court denied the class representatives' motion to remand, stating that "[t]he jurisdictional question at hand is not whether the damages are greater than the requisite amount 'but whether a fact finder might legally conclude that they are."' Appellants' Addendum at 3 (quoting Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002)). The court noted that because the class representatives were not demanding a specific monetary amount, it had to make a factual inquiry into whether the jurisdictional amount was satisfied. The court also found that, in determining whether the jurisdictional amount was met, it could "consider the potential value of Plaintiffs' attorneys' fees." Id. at 2. In its first determination of jurisdiction, the district court wrote:
Based on the damages alleged in Plaintiffs' petition, the size of the potential class in this case, Plaintiffs' allegation that Chicago Title over-collected in many of its transactions, and the information provided by Defendant in the Ellis affidavit, the Court finds this case meets the $5 million jurisdictional threshold set forth in CAFA.
The potential value of attorneys' fees (whether statutory or not) is not listed as a factor in the district court's calculation of the jurisdictional amount in this initial finding.
Later in its order, when discussing whether or not the jurisdictional threshold would be reached if Chicago Title's transactions in only 12 states were considered (as opposed to the 17 states and the District of Columbia pleaded in the petition), the court did include "the potential for collection of significant attorneys' fees" as a factor in determining that, even with a ...