Whaley v. Bay View Law Group, PC et al, No. 1:2014cv00050 - Document 21 (S.D. Ga. 2014)
Court Description: ORDER granting 11 Motion to Remand. The Clerk is directed to terminate all other pending motions (Docs. 7 & 8) and remand the case to the Superior Court of Richmond County, Georgia. No costs or fees are awarded. Signed by Judge J. Randal Hall on 09/30/2014. (thb)
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Whaley v. Bay View Law Group, PC et al Doc. 21 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA AUGUSTA DIVISION ROLINDA WHALEY, on behalf of Herself and all others Similarly situated, Plaintiff, v. BAY VIEW LAW GROUP, RELIEF CENTER; THURKETTLE, DOUGLAS A. PC; US DEBT JEDEDIAH individually; CV 114-050 CROWDER, individually; JAMES COMEAUX, individually; EFA PROCESSING, L.P.; KENNETH TALBERT, individually; individually; individually; individually; PAUL F. BOYD, PHILIP DANEMAN, DOUGLAS WILLIAMS, MANAGEMENT RESOURCES OF AMERICA; ROBERT G. and AINSWORTH, individually, Defendants. ORDER Presently pending before the Court is Plaintiff Whaley's ("Whaley") Motion to Remand.1 (Doc. 14.) Robert Resources G. Ainsworth and Management Rolinda Defendants of America (collectively, "MRA Defendants") timely removed this case to the United for States District Court the Southern District of 1 This Court, upon request of the parties, entered an Order on March 7, 2014 staying all pending deadlines on earlier-filed motions until resolution of this motion to remand. (Doc. 13.) Dockets.Justia.com Georgia, Augusta Division, County, 2005 Georgia ("CAFA"), Court pursuant 28 U.S.C. finds the from the to the Superior Court of Class § 1332(d). MRA Action Richmond Fairness Act of Upon due consideration, Defendants have not proved the by a preponderance of the evidence that the amount in controversy is The remand motion is hereby GRANTED. greater than $5 million. I. BACKGROUND This consumer class action arises out of alleged violations of the Georgia Debt Adjustment Act et seq., by Texas- and ("GDAA") , O.C.G.A. California-based "debt companies and their respective owners or agents. ("PL's Am. Compl."), 1M 1, 3-13, 24.) that at troubles through a point to a when the she tune targeted was of settlement" (Doc. 1, Ex. A Plaintiff Whaley alleges experiencing personal $31,000, marketing § 18-5-1 Defendants scheme. financial contacted (Id. UK 27, her 30.) Defendants represented to Whaley that they would negotiate with her creditors to lower her interest rates and principal balance, culminating in resolution of her debts for forty (60) cents on represented success the that dollar. they achieving had such (Id. ample results allegedly was materially false. describe from the which nature of Defendants the she 1 28.) (Id.) services received to sixty Defendants experience for (4 0) other and further historical customers, which Although Whaley does not she actually them, Whaley received asserts or that Defendants charged, accepted, and wholly retained $669 in fees. 2 (Id. H1I 31, 32.) This amount, as a percentage monthly funds distributed to Whaley's creditors, percent ceiling set forth in O.C.G.A. 32.) Whaley alleges collected fees that on average, in paid during programs. Whaley filed course of total (Id. fact, HH 31, Defendants total monies Georgia (Id.) Plaintiff the the exceeds the 7.5 § 18-5-2. reaching 40 percent of the residents of her their initial 1, at 2 n.2.) On December 12, settlement complaint Superior Court of Richmond County, Georgia, (Doc. debt on August 8, 2013, 1111 12, 13.) the 2013. Whaley recast her complaint to include the MRA Defendants as parties. Compl. in (PL's Am. According to the Amended Complaint, Whaley brings claims individually and on behalf of the class — "[a]11 persons who, Debt while residing in the State of Georgia, Settlement [Defendants] , and and/or from whom Debt any Adjusting of the received services Defendants from accepted, either directly or indirectly, any charge, fee, contribution, or combination thereof" - misrepresentation. for violations of the GDAA and negligent (Id. 1M 36, 53-69.) In addition to class certification, Whaley seeks (1) the statutory relief provided by the GDAA; equitable relief that requires compensatory damages, including Defendants (2) an to cease order charging unlawful fees and to disgorge unlawfully collected funds, order freezing Defendants' assets, litigation, including attorney's fees. and (4) the (Id. § VII.) for (3) an expenses of On February 18, 2014, the MRA Defendants timely Notice of Removal to this Court pursuant to 28 U.S.C. filed a § 1446(b), contending that jurisdiction was appropriate because the action qualified as a "mass action" under CAFA. Whaley filed the instant motion to (Doc. remand If 4, March on 1, 4, 7.) 2014, contending that removal was improper because the MRA Defendants have not proved that the amount in controversy exceeds the sum or value of $5 million, According to Whaley, exclusive the Amended of interest Complaint and and costs. additional communications between the parties are clear that the amount in controversy further is no requests more that than the $3.16 Court million. grant As her such, Whaley attorney's fees incurred as a result of this request to remand. II. Federal courts are LEGAL of STANDARD limited jurisdiction and thus may only hear a case if authorized to do so by federal law or the Constitution. U.S. 1095 375, (11th Kokkonen 377 (1994); Cir. jurisdiction Guardian Burns v. 1994) . over v. class Life Ins. Windsor Ins. CAFA confers actions in Co. of Am., 511 Co. , 31 F.3d 1092, upon the which (1) federal the courts aggregate amount in controversy exceeds $5 million, exclusive of interest and costs; than 100; (2) (3) the number of proposed class members is not less "minimal diversity" is met, or any member of the proposed plaintiff class is a citizen of a state different from any defendant; and (4) among the plaintiffs' Bank of America common questions claims. Corp. , 570 28 U.S.C. F.3d 1280, of law or fact exist § 1332(d)(2); Thomas v. 1282 (11th Cir. 2009). The only jurisdictional disagreement between the parties in this matter is whether Defendants have proven CAFA's amount in controversy requirement such that removal was proper. A defendant, court, bears federal 1159, as the party removing the case to the district the burden jurisdiction. 1164 (11th complaint jurisdictional 2006). proper that proof Evans v. Cir. [jurisdictionally] of the if it requirement." 754 plaintiff pled has not to Walter Indus., is from establishing Inc., 449 state court facially apparent in controversy Pretka v. (11th Cir. a regard "[R]emoval amount Inc. , 608 F.3d 744, with Kolter 2010). specific is from the exceeds the City Plaza II, "Where, amount F.3d of as here, damages, the the removing defendant must prove by a preponderance of the evidence that the amount requirement." F.3d 1184, defendant controversy (11th met its alleged in the notice the exceeds Id. ; see also Lowery v. 1187 has in plaintiffs, Cir. 2007) . burden, "the of removal, non-sworn In letter the jurisdictional Alabama Power Co. , 483 assessing court may whether consider the facts judicial admissions made by submitted to the court, or other summary judgment type evidence that may reveal that the amount F.3d at in controversy 754. This requirement is evidence may be satisfied." "combined with Pretka, 608 reasonable deductions, reasonable extrapolations." may Id. speculate," inferences, or other reasonable "[N]either the defendants nor the court however, and "the existence of jurisdiction should not be divined by looking to the stars." Lowery, at 1215. removal Consequently, should be Emps. Ins. Sept. 4, 1328-29 resolved Co. , No. 2014) all doubts in favor of 13-14794, the propriety remand. 2014 WL 4357480, (citing Miedema v. (11th Cir. about 483 F.3d King v. at *3 Maytag Corp., of Gov't (11th Cir. 450 F.3d 1322, 2006)). III. DISCUSSION The MRA Defendants offered three types of evidence in order to carry their burden of establishing, evidence, $5 that the value of the proposed class's claims exceeds million: (1) declaration of and (3) the executive Whaley's Eric sworn assistant C. Amended Fisher, item Removal. was The putative of at "provides MRA submitted who in MRA Defendants members" — class exceed for declaration assert — which $1.92 is controversy exceed $2 million, Anne the sworn Espinola, an support for back-end (Doc. 1, Exs. A, B, & C.) that (1) with the the (2) the the $5 Notice of million amount statutory fines of "predictably million; (2) the MRA Defendants; Stefanie conjunction in controversy is satisfied because the Complaint; counsel the companies with which MRA works." Each by a preponderance of the larger unlawful than fees 384 in not the "understated" figure of $1.24 million assessed by Whaley; (3) attorney's fees and expenses of litigation must be included at a contingency rate of 33 percent; monies" fee] and (4) Whaley's demand under the GDAA, to the total. over and above" which is [non- recoverable (Doc. 1, ff 22-26; Doc. 14, at 5-11.) burden that under limiting the CAFA jurisdiction over this the that "all thereby adding an additional $1.86 to $3 million Whaley responds to of in its prayer for relief is "expressly targeting monetary relief their for "disgorgement" MRA Defendants to establish asserted not carried diversity she points her in federal Specifically, class action. language have — complaint that it only seeks "a total amount of damages to the named Plaintiff of less than $75,000.00 individually, and Plaintiff Class Members of less than $5,000,000.00" — and that her counsel openly shared that (Doc. the 384 11, Defendants' at class 4, members' 5 (emphasis "tortured" injunctive relief, damages. (Id. at attorney's fees [be] for the class." claims the 5-8.) Lastly, paid out at 8.) of potential recovery in turn. inclusion of the only $3.16 million. Whaley added).) characterization namely (Id. total also contests of of Whaley common her prayer non-fee, "merely fund for non-GDAA request[s] for recovery The Court addresses each category A. Statutory Fines The GDAA provides that "[a]ny person who adjusting in violation of the provisions of engages [O.C.G.A. in debt § 18-5-2] shall further be liable to the debtor in an amount equal to the total of all fees, plus $5,000.00." Complaint, group, Whaley charges, or contributions paid by the debtor O.C.G.A. asserts § 18-5-4 (b) (2) . that In Defendants, as the a Amended collective provided debt adjustment services "to over 300 residents of the State of Georgia since July 1, 2003." (PL's Am. Compl. f 41.) Whaley's counsel later clarified in an e-mail to Eric C. Fisher, counsel for the MRA Defendants, includes 384 known members. (Doc. 1, that the putative class Ex. C.) Therefore, the parties calculate the minimum anticipated recovery of statutory fines to be $1.92 million.2 The MRA Defendants, almost certainly bigger According to the argue plaintiffs is than 1, that likely contend "the alleged class is 384 members." of Stefanie (Doc. Anne 14, at Espinola, 5.) MRA adjustment services for approximately 190 (Doc. Defendants however, declaration alone performed debt individuals. (Doc. 1, f 22; Doc. 11, at 5.) Ex. C, Whaley's "outdated f 5.) Moreover, calculation by more than the MRA of 384 putative a year" because Whaley's counsel obtained the number in connection with a prior lawsuit 2 that limited recovery to a single service provider - $1,920,000 is the $5,000 statutory fine multiplied by 384, the size of the class as provided by Whaley. 8 Global Client Solutions — through only February 7, 14, 2013. (Doc. at 6.) The question of how many customers received debt adjustment services issue, from MRA and the other defendants is an important not only because of CAFA's numerosity requirement — which plainly is met here — but also because individual claims must be aggregated to threshold. determine Generally, whether members sufficient See to Pretka, shed 608 speculative more over the light CFO's the $5 million identity or quantity of prospective which F.3d meet a document or declaration provided by a defendant that reveals the class they the on at defendant the 771 value exercised of (finding declaration that control plaintiffs' sufficient a claims. and developer is non- collected than $5 million in condominium purchase deposits because, having access to the records, the CFO "performed the ministerial determination" that the complaint called for") . of course, Unlike Pretka, the claim value brought forth by the MRA Defendants does not cross the $5 million threshold standing alone, and thus the Court must look to other evidence. The Court acknowledges the value "hard data," but at the same time, hedge their position as to of the MRA Defendants' the MRA Defendants appear to whether the 190 additional individuals to whom they provided debt adjustment services are actually entitled to relief so as to be included in the class.3 See Cato v. Cir. 2011) Serv. 507 Int'l, 833 F. Supp. 2d 1324, 1330 (11th (finding "most important[]" in its decision to remand the defendants' its Corp. failure employees classes and similar to to submit any evidence had that colorable those those claims employees' alleged action for unpaid wages). by the within damages named suggesting that the described be factually would plaintiffs in a class Additionally, they indicate there may be overlap of claims among Defendants.4 (Doc. 1, Ex. C, f 5.) The MRA Defendants further admit they do not have access to the information necessary to provide the Court with a more accurate global estimate of putative class members. (Doc. Neither in the Notice of Removal nor briefs, Defendants explicitly request that the 14, in fact, Court at 6.) do the MRA add their 190 customers to Whaley's asserted 384 class members for the purpose of the amount extrapolate to in controversy an unknown calculation, degree to only that account Court three for the other corporate defendants and later-serviced Global Client Solutions customers. (Doc. 1, at n.6; Doc. 14, at 5-6.) 3 Paragraph 5 of Stefanie Anne Espinola's declaration states that "MRA performed services for approximately 190 individuals who may be included in the putative 'class,'" according to her understanding Complaint. (Doc. 1, Ex. C, U 5 (emphasis added).) 4 190 to the Amended Paragraph 6 of Stefanie Anne Espinola's declaration indicates that the individuals to whom MRA provided debt adjustment services paid approximately $1 million in fees "to a combination of MRA and one or more of the other Defendants identified in the Complaint." (Doc. 1, Ex. C, ^| 6 (emphasis added).) 10 The class may in fact be larger than 384 members, the absence of more specific evidence, but in the Court will not engage in guesswork to divine its size, a figure that critically serves as the basis Bank of Am. Ga. Jan. for all other calculations Corp. , No. 12, 2009), 3:08-CV-68CDL, aff'd, in this case. 2009 WL 88450, 570 F.3d 1280 Thomas v. at *3 (11th Cir. (M.D. 2009). As the Court cannot even articulate a range of statutory fines owed to a nebulous 384 members class, as recoverable it limits its calculations asserted by Whaley. statutory fines is to include the Accordingly, capped at the value of million for $1.92 purposes of this motion. B. Unlawful Fees in Controversy Although Complaint of Whaley the proffered total fees no estimate charged in in the violation of Amended O.C.G.A. § 18-5-2 and paid by members of the putative class,5 Plaintiff's counsel later represented to the MRA Defendants that value of the million of suit is $3.16 million. this estimate is understated. 5 Ex. B.) $1.24 only retained As they provided debt adjustment identified that the amount entire or The MRA Defendants contend to approximately 190 putative plaintiffs Whaley Defendants 1, this amount constitutes wrongfully accepted fees, roughly $3,229 per class member.6 services (Doc. the total she as paid a fee. Defendants (PL's Am. who $669 paid and Compl. M "a that 31, 32.) 6 The MRA Defendants calculate $1.24 million by subtracting $1.92 million in statutory fines from $3.16 million, the total estimated value of the suit. See supra Section III.A. 11 little over" $1 million in fees, it contends the average should be higher, or roughly $5,263 per class member. (Doc. 1, 1 22 & Ex. C, H 6; Doc. 14, at 7.) The Court finds preponderance of the the MRA Defendants have not shown by evidence - or by any evidence - that sums allegedly owed to a the the 190 putative plaintiffs to whom MRA provided services are similar to those of the rest of the class such that "fee" $5,263 per member is the better, damages. The MRA Defendants argue proper estimate of that it is "more logical to use the hard data" it has provided the Court because Whaley has not provided "any supporting documentation to show how her counsel determined that 384 putative class members paid only $1,240,000 in fees." her counsel have defendants' burden, available to (Doc. 14, at 7.) no duty to do them despite at the the so at this Simply, Whaley and stage. It narrow universe of point of establish that claims are "factually, a § 1446(b) is the information removal, not just legally, to similar" when extrapolating values between named and unnamed parties for amount in controversy calculations. Pretka, 608 F.3d at 769. The typicality element of a class action alone does not permit such an inference. Id. before it substantial individual — the claim as pled Thus, ($669) 12 considering disparity and the the only between parties' evidence Whaley's estimates ($3,229 and $5,263) — the Court declines to take up the MRA Defendants' position that the highest is the best.7 C. Attorney's Fees Generally, in attorney's controversy fees calculation, are but not included in "[w]hen a the amount statutory cause of action entitles a party to recover reasonable attorney fees, the amount in controversy, includes consideration Inc. , 204 F.3d 1069, diversity jurisdiction, for purposes of of those 1079 fees." (11th Cir. Cohen v. 2000) . Office Depot, The MRA Defendants contend that the Court should include a potentially substantial award of attorney's controversy, fees in calculating the amount in as Whaley and the putative class may seek recovery of such fees as "prevailing plaintiffs" under the Georgia Fair Business Practices Act seq. (Doc. that "a 1, § 18-5-4(d). finds 1975 H 20; Doc. violation additionally court of be a ("FBPA"), 14, of at 9-10.) Code violation O.C.G.A. of The FBPA statute in any action . . . the that 10-1-390 et The GDAA sets forth Section then § 18-5-2 [FBPA]." provides that there has . . . shall O.C.G.A. "[i]f the been a violation, . . . the person injured by such violation shall, in addition to other relief . . . and irrespective of the amount in controversy, be awarded reasonable attorneys' fees and expenses 7 In any case, adding this category of relief at either level of recovery-per-plaintiff to the $1.92 million in estimated statutory fines remains below the amount-in-controversy threshold of $5 million. 13 of litigation O.C.G.A. incurred in § 10-1-399(d). connection with Assuming Whaley's representation pursuant to a said action." counsel accepted the contingency arrangement, the MRA Defendants urge the Court to include at least $1,052,2808 to the amount in controversy total. (Doc. 1, 1 26.) The Court declines to include any proposed amount. As the Amended Complaint reflects, Whaley has not pursued a claim under (See PL's Am. Compl. 1M 53-69.) the FBPA. Therefore, that a proven violation of the GDAA is Ipso facto a violation of the FBPA is of case. no moment Clearly, pursuant such to the before the The to the fees issue will of attorney's not be awarded FBPA when a claim under that fees in this automatically statute is not court. MRA Defendants proposition by Standard plaintiff, cannot stipulate prior to class certification that the will named attorney's fees — so as to prevent removal. Standard Fire Ins. Knowles, 133 S. Ct. 1345, — the statutorily-awarded v. damages as here, Co. seek Whaley, Fire for not that citing Insurance class the counter 1349 (2013) . Indeed, unless the proffered stipulation is binding and conclusive as to all absent class members, purports to represent." The anything. 8 Court finds, Plaintiffs Whaley "does not speak for those he Id. at 1348-49. however, are that masters Whaley of is their not stipulating own complaints. $1,052,280 is 33.3% of $3.16 million, the value of the suit as assessed by Whaley. 14 Burns v. Windsor Ins. Co., 31 F.3d 1092, seek the favorable litigants. (11th Cir. 1994). whether well or ill founded, It is Whaley's prerogative, not to relief afforded 1095 by the FBPA to GDAA Another class member certainly could intervene with an amended complaint to include an FBPA claim, and the Court might permit the action to proceed with a new representative, but Whaley is under no duty to frame her case in that manner. See Standard Fire, that statutory 133 S. Ct. attorney at 1349. fees may The Court thus concludes not be considered in the aggregate to establish the requisite amount in controversy. D. Equitable Relief for "Disgorgement" Finally, $1.86 the million MRA in Defendants non-fee jurisdictional analysis.9 for relief K collected" f (Doc. 9 The asserts, for at MRA the money [a] be an additional counted in which in part the They (PL's contend substantive payments to seeks permanent order disgorging collected." added).) distribution "fees" 14, all (emphasis includes Defendants violative of that The MRA Defendants point to the prayer preliminary and/or Defendants § VII, should in Whaley's Amended Complaint, "temporary, the money contend Am. Compl. "all money held in escrow by creditors, not merely the each defendant charged for services rendered. 7-9.) Defendants In support reverse of calculated this this argument, figure: if, the as MRA Whaley the total fees unlawfully retained by Defendants at a rate of 40 percent equal $1.24 million, then $1.86 million represents the remaining 60 percent collected by Defendants to be distributed to creditors. (Doc. 14, at 8.) 15 Defendants also point to Whaley's allegation in the pleadings that Defendants are liable to each plaintiff "in an amount equal to the (Doc. total 1, of all fees, charges, H 24 (emphasis added).) or contributions paid." They go as far to argue that the statutory terms "charges" and "contributions" refer to the money distributed to creditors "for other debt-related charges." (Id. ; Doc. 14, at 7-9.) they assert, Viewing these two provisions together, "Plaintiff is expressly targeting monetary relief over and above (Doc. 14, fines and fees recoverable under the GDAA." at 7.) Apart from the fact that the MRA Defendants have not cited any legal authority in support of their interpretive position, "a district court determining whether need the not . . . shelve face of a complaint the jurisdictional amount." F.3d 1058, What 1062 (11th 2010) fail Complaint sense in . . . establishes Roe v. Michelin N. Am., Inc., 613 Cir. the MRA Defendants Whaley's Amended common (internal to admit merely is tracks citation omitted). that the the language of language statute and the relief the GDAA expressly affords. of the To give the MRA Defendants' interpretation credence would render nonsensical the GDAA's language contribution [s] prohibiting ... in excess of "charge[s] , 7.5 percent fee [s], of paid monthly . . . for distribution to creditors."10 10 the [or] amount The Court If the Court were to interpret "charges" and "contributions" as the MRA Defendants suggest, the GDAA would prohibit "distributions to creditors, fee[s], [or] distributions to creditors ... in excess of 7.5 percent of the 16 therefore will not consider the proposed $1.86 million in "non- fee money collected" to establish the requisite amount in controversy. IV. CONCLUSION Although "a removing defendant is not required to prove the amount in controversy uncertainty about it," great uncertainty consequently, at 754 beyond this about all Court the doubt number of likely than not there remains members See Pretka, and, 608 F.3d By the Court's calculation, exceeds all banish class Defendants have failed to prove that the more to concludes that the amount in controversy. (emphasis added). or the MRA amount in controversy $3,940,992, at best.11 This uncertainty must be resolved in favor of remand. For the reasons set forth above, for Remand (Doc. 11) is GRANTED. Plaintiff Whaley's Motion The Clerk is DIRECTED to terminate all other pending motions (Docs. 7 & 8) and remand the case to the Superior Court of Richmond County, Georgia. No costs or fees are awarded.12 amount paid monthly . . . for distribution to creditors." See O.C.G.A. § 18- 5-2. 11 $3,940,992 is $1,920,000 in statutory fines plus $2,020,992 in charges, fees, and contributions that Defendants are alleged to have collected unlawfully at the more favorable rate of $5,263 per class member. See supra Part III.B. 12 The Supreme Court has explained that "[a]bsent unusual circumstances, courts may award fees under [28 U.S.C] § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Even though this Court disagrees with the MRA Defendants' grounds for removal, the Court does not find that they "lacked an objectively reasonable basis" in pursuing it. 17 ORDER ENTERED at Augusta, Georgia, this ^n*kay of September, 2014. HALL STATES DISTRICT DISTRICT JUDGE OF GEORGIA Therefore, the Court declines to exercise its discretion to award costs and fees to Whaley. 18
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