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its Motion to Remand was withdrawn.
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 Cir. 1995).
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.
Two Supreme Court cases stand for the proposition that members
of a class action must each have the jurisdictional amount,
$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
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. 1996).
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 sub-contractor # 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 court wrote:
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
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 an unspecified
amount of damages, the defendant must 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, attorneys'
fees could not be attributed to the 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
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 511.
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. 96-1204.
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.
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