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December 3, 2015 by Susana Cruz HodgeDownload PDF

Trebling Troubles - Keeping Damages Below CAFA's $5M ThresholdSusana  Cruz Hodge

The Class Action Fairness Act of 2005 (“CAFA”) allows a defendant to remove to federal court a class action case filed in state court if the total amount in controversy exceeds $5,000,000. As a result, it is possible that claims for punitive or treble damages can enable a case to be punted to federal court, where defendants often prefer to be. One key issue to examine is whether plaintiff seeks to treble all damages in the complaint. In Chulsky v. First Niagara Bank, N.A., No. 15-421, 2015 U.S. Dist. LEXIS 10238 (D.N.J. Aug. 5, 2015), Judge Shipp examined whether statutory damages should be trebled for the purposes of establishing the jurisdictional $5,000,000 limit.

In Chulsky, plaintiff brought claims under the New Jersey Uniform Commercial Code, N.J.S.A. 12A:1-101 (“UCC”), the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 (“CFA”), and the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act, N.J.S.A. 56:12-14 (“TCCWNA”). Defendant removed the action to federal court, arguing that plaintiff’s damages exceeded CAFA’s $5,000,000 jurisdictional limit. Because the sole dispute was over the amount in controversy requirement, defendant had the burden of showing with legal certainty that, based on the complaint, plaintiff might be entitled to recover the jurisdictional amount. The Third Circuit established that principle in Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007)).

The CFA carries with it mandatory treble damages. TCCWNA, however, offers either actual damages or statutory damages, and plaintiff was seeking only $100 in statutory damages on that claim. The case thus came down to whether plaintiff sought to treble all damages, or only those arising from defendant’s CFA violation. Plaintiff calculated the class damages (of a 280-member class) as:

Plaintiff’s Damages
Class Damages
CFA Trebled  
Total Damages

Defendant, on the other hand, argued that plaintiff’s damages calculation was incorrect and that trebling the total damages resulted in plaintiff’s damages exceeding CAFA’s $5,000,000 limit:
Plaintiff’s Damages $6,333.61
Plaintiff’s Damages Trebled $19,000.83
Class Size 280 members
Total Damages $5,320,232.40

Judge Shipp found that “all non-CFA related causes of action are to be accounted for separately” and that statutory damages are not ascertainable losses under the CFA, and thus, only the CFA damages can be trebled. Luckily, the plaintiff’s complaint requested treble damages under CFA, which caused Judge Shipp to find that plaintiff “clearly indicates that only ascertainable losses should be trebled.” Finding that plaintiff’s damages were “far less than the $5 million jurisdictional threshold of CAFA,” Judge Shipp granted plaintiff’s motion to remand.

Defendants are often very creative in finding ways to perceive an amount in controversy that exceeds $5,000,000, so that they can move class action cases out of state court and into federal court. Plaintiffs need to be very attentive to how they plead damages if they want to keep their class action cases in state court.