United States District Court, Central District of Illinois, Peoria Division
August 22, 1996
IN RE HIGH FRUCTOSE CORN SYRUP ANTITRUST LITIGATION. THIS DOCUMENT RELATES TO ALL ACTIONS.
The opinion of the court was delivered by: Mihm, Chief Judge.
Over the course of the last nine months, the Judicial Panel
on Multidistrict Litigation transferred a number of cases to this
Court pursuant to 28 U.S.C. § 1407. In each of these cases the
Plaintiffs allege that they have been the victims of a price
fixing scheme perpetrated by Defendants Archer Daniels Midland
Co., Inc. ("ADM"), CPC International, Inc., A.E. Staley
Manufacturing, Co., Cargill, Inc., and American Maize Company.
Many of these cases were originally filed in state courts
alleging only violations of state law. The Defendants removed
these state court cases to federal court based on diversity
jurisdiction, 28 U.S.C. § 1332. Pursuant to Fed.R.Civ.P. 23, on
May 29, 1996, this Court certified a class of Plaintiffs who were
direct purchasers of high fructose corn syrup. The class
Plaintiffs have alleged that the Defendants' actions violated the
Sherman Act, 15 U.S.C. § 1.
There are twelve cases in which the Plaintiffs have filed
Motions to Remand. During oral argument on the Motions to Remand
on August 1, 1996, counsel for the parties informed this Court
that in ten of the cases the parties had stipulated that the
Plaintiffs neither directly purchased HFCS nor satisfied the
amount in controversy requirements set forth in § 1332.
Therefore, this Court GRANTS the following Motions to Remand:
Abbott v. ADM, et al., Case No. 96-1337; Batson v. ADM, et al.,
Case No. 96-1333; Guzman v. ADM, et al., Case No. 96-1336; MCFH
v. ADM, et al., Case No. 96-1282; Noldin v. ADM, et al., Case No.
96-1335; NuLaid Foods v. ADM, et al., Case No. 96-1334; Patane v.
ADM, et al., Case No. 96-1287; Rainbow Acres v. ADM, et al., Case
No. 96-1286; Ricci v. ADM, et al., Case No. 96-1283; and St.
Stan's Brewing v. ADM, et al., Case No. 96-1206. Each of these
cases is hereby REMANDED to state court. Additionally, counsel
for Kagome Foods informed this Court that its Motion to Remand
This leaves only one case with a Motion to Remand pending,
Freda's v. ADM, et al., Case No. 96-1204. Freda's filed suit in
West Virginia State Court alleging violations of the West
Virginia Antitrust Act ("the Act"), W.Va.Code § 47-18-1, et seq.
Defendant Cargill, Inc. ("Cargill") removed the case to the
United States District Court for the Southern District of West
Virginia alleging diversity jurisdiction under 28 U.S.C. § 1332.
This Court has thoroughly reviewed the pleadings and heard oral
argument from counsel. For the reasons set forth herein, this
Court GRANTS the Motion to Remand.
Under 28 U.S.C. § 1441, "any civil action brought in a state
court of which the district courts of the United States have
original jurisdiction, may be removed by the defendant . . . to
the district court of the United States for the district and
division embracing the place where such action is pending." As
noted, Cargill removed this action pursuant to § 1332. Section
1332 requires diverse citizenship of the parties and an amount in
controversy in excess of $50,000, exclusive of interest and
costs. 28 U.S.C. § 1332. As a federal court sitting in diversity
jurisdiction, this Court will apply the substantive law of the
forum state, West Virginia. Erie R. Co. v. Tompkins, 304 U.S. 64,
58 S.Ct. 817, 82 L.Ed. 1188 (1938); see also S.A. Healy Co. v.
Milwaukee Metropolitan Sewerage Dist., 60 F.3d 305, 309-10 (7th
Freda's concedes that its matter satisfies the diversity of
citizenship provision of § 1332. However, it contends that
Cargill has failed to demonstrate that it meets the amount in
controversy requirement of § 1332. The removing party bears the
burden of establishing the district court's jurisdiction by a
preponderance of evidence. See Shaw v. Dow Brands, Inc.,
994 F.2d 364, 366 (7th Cir. 1993) (citing Wilson v. Republic Iron & Steel
Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921)).
Defendants may bear this burden by presenting "proof to a
reasonable probability that jurisdiction exists." Id. (citations
Two Supreme Court cases stand for the proposition that
members of a class action must each have the jurisdictional
$50,000, in dispute. See Snyder v. Harris, 394 U.S. 332, 340, 89
S.Ct. 1053, 1059, 22 L.Ed.2d 319 (1969); Zahn v. International
Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 512, 38 L.Ed.2d 511
(1973). Cargill argues that the 1990 amendments to Title 28
implicitly overrule the holdings in Snyder and Zahn.
Specifically, it relies upon the new supplemental jurisdiction
statute which provides:
[I]n any civil action in which the district courts
have original jurisdiction, the district courts shall
have supplemental jurisdiction over all other claims
that are so related to claims in the action within
such original jurisdiction that they form part of the
same case or controversy under Article III of the
United States Constitution.
28 U.S.C. § 1367(a). Cargill asserts that only one class member
must have the requisite amount in controversy for this Court to
have supplemental jurisdiction over the remainder of the claims.
In support of this proposition, Cargill cites Stromberg Metal
Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir.
In Stromberg, two sub-contractors filed suit against a
general HVAC contractor because it did not pay the subs. 77 F.3d
at 930. The subs sued the general under the Maryland Construction
Trust Fund Statute. Id. The Seventh Circuit first noted that
subcontractor # 1 had a claim in excess of $50,000 but that
sub-contractor # 2 did not. Id. Writing for the court, Judge
Easterbrook found that § 1367 allowed the district court to
exercise jurisdiction over the pendant claim of sub-contractor #
2. Id. at 931. In the course of the opinion, the court noted
that, unlike Zahn, Stromberg was not a class action but that the
Supreme Court's opinions in Snyder and Zahn did not distinguish
between class actions and other forms of suit. Stromberg, 77 F.3d
at 931. Thus, the Seventh Circuit concluded that § 1367 had
altered the previous rule established in Zahn that each class
member must have the requisite amount in controversy at issue.
Id. at 931-32.
The Stromberg decision relied heavily upon the Fifth Circuit
decision of In re Abbott Laboratories, 51 F.3d 524, 527-29 (5th
Cir. 1995). Stromberg, 77 F.3d at 931 ("we are reluctant to
create a conflict among the circuits on a jurisdictional issue").
Interestingly, at issue in Abbott were the plaintiffs' allegation
that the defendants had conspired to fix the price of infant
formula. Abbott, 51 F.3d at 525. The Fifth Circuit directly
addressed the issue of whether § 1367 abrogated Snyder and Zahn
as to Rule 23 class actions and held that the district courts
could exercise supplemental jurisdiction over the class members.
Id. at 525, 529. Although the court did not find that the named
plaintiffs must satisfy the statutory amount in controversy, it
is noteworthy that the class representatives in Abbott had over
$50,000 at issue. Id. at 529.
The Honorable Milton Shadur has addressed this very issue in
the In re Lysine Antitrust cases. Judge Shadur held that the
named plaintiffs must have the requisite dollar amount at issue
before § 1367 would affect the court's jurisdiction over the
"pendant claims" of the other class members. In so doing, he
relied on Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356, 41
S.Ct. 338, 65 L.Ed. 673 (1921) and In re Agent Orange Prod. Liab.
Litigation, 818 F.2d 145, 162 (2d Cir. 1987). The Agent Orange
It is hornbook law, based on 66 years of Supreme
Court precedent, that complete diversity is required
only between the named plaintiffs and the named
defendants in a federal class action.
In re Agent Orange, 818 F.2d at 162. This Court agrees with the
logic employed by Judge Shadur. Therefore, the question of
whether this action satisfies the amount in controversy
requirement of § 1332 must be answered by examining Freda's
Cargill merely speculates as to the amount of damages Freda's
has sustained. Speculation will not bear the burden imposed by
Shaw, 994 F.2d at 366, or Wilson, 257 U.S. at 97, 42 S.Ct. at 37.
The arguments presented by Cargill in response to the Motion to
Remand do not permit this Court to ascertain whether Freda's
claim meets § 1332's requirements. See Gaus v. Miles, Inc.,
980 F.2d 564, 567 (9th Cir. 1992) (where a plaintiff seeks to recover
prove by a preponderance of the evidence that the amount in
controversy is not less than $50,000) (citing McNutt v. General
Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80
L.Ed. 1135 (1936)).
Defendants also argue that attorneys' fees and the
availability of treble damages impact the jurisdictional amount
in controversy. The Supreme Court held that as a general rule,
attorneys' fees are excludable in determining the amount in
controversy. Missouri State Life Insurance Co. v. Jones,
290 U.S. 199, 54 S.Ct. 133, 78 L.Ed. 267 (1933). However, where a statute
mandates or allows the payment of such fees, that sum can be
considered in determining whether a plaintiff has satisfied §
1332. Id.; Velez v. Crown Life Insurance, 599 F.2d 471, 474 (1st
Cir. 1979); Cordero, Miranda & Pinto v. Winn, 721 F. Supp. 1496,
1497 (D.Puerto Rico 1989) ("It is axiomatic that attorney's fees
are not to be included in calculating jurisdictional amount
unless authorized by statute"). It would seem logical to apply
the same rule to treble damages. See Kenebrew v. Connecticut
General Life Ins. Co., 882 F. Supp. 749, 751 (N.D.Ill. 1995)
(looking to the treble damages proviso of state law to determine
whether plaintiff met the amount in controversy).
As the West Virginia Act provides for both attorneys' fees
and treble damages, this Court will attempt to determine what
effect these factors have upon Freda's amount in controversy. As
to the issue of treble damages, Cargill's position is
unimpressive. Trebling an unknown amount of damages leads only to
a second unknown. Thus, this Court finds, assuming an award of
treble damages, that Cargill has not demonstrated by a
preponderance of evidence that Freda's would satisfy the amount
in controversy requirements.
Moving now to the issue of attorneys' fees, this Court has
examined two appellate court decisions on the issue, and the
decisions appear to conflict. In Goldberg v. CPC Intern., Inc.,
678 F.2d 1365, 1367 (9th Cir.), cert. denied, 459 U.S. 945, 103
S.Ct. 259, 74 L.Ed.2d 202 (1982), the court held that under
California antitrust laws, the Cartwright Act, named plaintiffs
alone to satisfy the jurisdictional amount. However, in Abbott,
supra, the Fifth Circuit found that the Louisiana statute which
provided for an award of attorneys' fees allowed attribution to
the representative class plaintiffs. 51 F.3d at 526-27.
Freda's advocates a pro rata distribution of the award of
attorneys' fees, as in Goldberg, 678 F.2d at 1367. Freda's argues
that its suit is distinguishable from Abbott because the West
Virginia Act does not provide for an award of attorneys' fees to
the named plaintiffs. The relevant provision of the Act states:
Any person who shall be injured in his business or
property by reason of a violation of the provisions
of this article may bring an action therefor and
shall recover . . . reasonable attorneys' fees,
filing fees and reasonable costs of the action.
W.VA.CODE § 47-18-9. Freda's cites Gilman v. Wheat, First
Securities, Inc., 896 F. Supp. 507 (D.Md. 1995), as supportive of
its argument in favor of a pro rata distribution of attorneys'
fees. In Gilman, the court analyzed whether an award of
attorneys' fees under the Maryland Securities Act should be
attributed to the named plaintiffs. 896 F. Supp. at 510-11. The
Maryland Securities Act provided that "a buyer may sue either at
law or in equity . . . to recover . . . reasonable attorneys'
fees." Md. Corps. & Ass'ns Code Ann. § 11-703(b)(1)(i) (1993).
The court found that this language supported a pro rata
distribution of the possible fee award. Gilman, 896 F. Supp. at
This Court finds the West Virginia Act distinguishable from
the Louisiana law examined by the Fifth Circuit in Abbott. The
plain language of the Act awards fees to each person who has
suffered an antitrust injury. In this respect, Freda's case is
more similar to the statute examined in Goldberg, supra.
For the reasons set forth herein, this Court GRANTS the
Motion to Remand pending in Freda's v. ADM, et al., Case No.
FURTHER, this Court GRANTS the Motions to Remand pending in
the following cases: Abbott v. ADM, et al., Case No. 96-1337;
Batson v. ADM, et al. Case No. 96-1333; Guzman v. ADM, et al.,
Case No. 96-1336; MCFH v. ADM, et al., Case No. 96-1282; Noldin
v. ADM, et al., Case No. 96-1335; NuLaid Foods v. ADM, et al.,
Case No. 96-1334; Patane v. ADM, et al., Case No. 96-1287;
Rainbow Acres v. ADM, et al., Case No. 96-1286; Ricci v. ADM, et
al., Case No. 96-1283; and St. Stan's Brewing v. ADM, et al.,
Case No. 96-1206.
FURTHER, the Motion to Remand pending in Kagome Foods, Inc.
v. ADM, et al., Case No. 96-1205, has been withdrawn.
© 1992-2003 VersusLaw Inc.