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Whaley v. Bay View Law Group, Pc

United States District Court, S.D. Georgia, Augusta Division

September 30, 2014

ROLINDA WHALEY, on behalf of Herself and all others Similarly situated, Plaintiff,


J. RANDAL HALL, District Judge.

Presently pending before the Court is Plaintiff Rolinda Whaley's ("Whaley") Motion to Remand.[1] (Doc. 14.) Defendants Robert G. Ainsworth and Management Resources of America (collectively, "MRA Defendants") timely removed this case to the United States District Court for the Southern District of Georgia, Augusta Division, from the Superior Court of Richmond County, Georgia pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d). Upon due consideration, the Court finds the MRA Defendants have not proved by a preponderance of the evidence that the amount in controversy is greater than $5 million. The remand motion is hereby GRANTED.


This consumer class action arises out of alleged violations of the Georgia Debt Adjustment Act ("GDAA"), O.C.G.A. § 18-5-1 et seq., by Texas- and California-based "debt settlement" companies and their respective owners or agents. (Doc. 1, Ex. A ("Pl.'s Am. Compl."), ¶¶ 1, 3-13, 24.) Plaintiff Whaley alleges that at a point when she was experiencing personal financial troubles to the tune of $31, 000, Defendants contacted her through a targeted marketing scheme. (Id. ¶¶ 27, 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 (40) to sixty (60) cents on the dollar. (Id. ¶ 28.) Defendants further represented that they had ample experience and historical success achieving such results for other customers, which allegedly was materially false. (Id.) Although Whaley does not describe the nature of the services she actually received or from which Defendants she received them, Whaley asserts that Defendants charged, accepted, and wholly retained $669 in fees. (Id. ¶¶ 31, 32.) This amount, as a percentage of the total monthly funds distributed to Whaley's creditors, exceeds the 7.5 percent ceiling set forth in O.C.G.A. § 18-5-2. (Id. ¶¶ 31, 32.) Whaley alleges that on average, in fact, Defendants collected fees reaching 40 percent of the total monies Georgia residents paid during the course of their debt settlement programs. (Id.)

Plaintiff Whaley filed her initial complaint in the Superior Court of Richmond County, Georgia, on August 8, 2013. (Doc. 1, at 2 n.2.) On December 12, 2013, Whaley recast her complaint to include the MRA Defendants as parties. (Pl.'s Am. Compl. ¶¶ 12, 13.) According to the Amended Complaint, Whaley brings claims individually and on behalf of the class - "[a]ll persons who, while residing in the State of Georgia, received Debt Settlement and/or Debt Adjusting services from [Defendants], and from whom any of the Defendants accepted, either directly or indirectly, any charge, fee, contribution, or combination thereof" - for violations of the GDAA and negligent misrepresentation. (Id. ¶¶ 36, 53-69.) In addition to class certification, Whaley seeks (1) compensatory damages, including the statutory relief provided by the GDAA; (2) an order for equitable relief that requires Defendants to cease charging unlawful fees and to disgorge unlawfully collected funds, (3) an order freezing Defendants' assets, and (4) the expenses of litigation, including attorney's fees. (Id. VII.)

On February 18, 2014, the MRA Defendants timely filed a Notice of Removal to this Court pursuant to 28 U.S.C. § 1446(b), contending that jurisdiction was appropriate because the action qualified as a "mass action" under CAFA. (Doc. 1, ¶¶ 4, 7.) Whaley filed the instant motion to remand on March 4, 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, exclusive of interest and costs. According to Whaley, the Amended Complaint and additional communications between the parties are clear that the amount in controversy is no more than $3.16 million. As such, Whaley further requests that the Court grant her attorney's fees incurred as a result of this request to remand.


Federal courts are of limited jurisdiction and thus may only hear a case if authorized to do so by federal law or the Constitution. Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377 (1994); Burns v. Windsor Ins. Co. , 31 F.3d 1092, 1095 (11th Cir. 1994). CAFA confers upon the federal courts jurisdiction over class actions in which (1) the aggregate amount in controversy exceeds $5 million, exclusive of interest and costs; (2) the number of proposed class members is not less than 100; (3) "minimal diversity" is met, or any member of the proposed plaintiff class is a citizen of a state different from any defendant; and (4) common questions of law or fact exist among the plaintiffs' claims. 28 U.S.C. § 1332(d)(2); Thomas v. Bank of America Corp. , 570 F.3d 1280, 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, as the party removing the case to the district court, bears the burden of proof with regard to establishing federal jurisdiction. Evans v. Walter Indus., Inc. , 449 F.3d 1159, 1164 (11th Cir. 2006). "[R]emoval from state court is [jurisdictionally] proper if it is facially apparent from the complaint that the amount in controversy exceeds the jurisdictional requirement." Pretka v. Kolter City Plaza II, Inc. , 608 F.3d 744, 754 (11th Cir. 2010). "Where, as here, the plaintiff has not pled a specific amount of damages, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional requirement." Id .; see also Lowery v. Alabama Power Co. , 483 F.3d 1184, 1187 (11th Cir. 2007). In assessing whether the defendant has met its burden, "the court may consider facts alleged in the notice of removal, judicial admissions made by the plaintiffs, non-sworn letter submitted to the court, or other summary judgment type evidence that may reveal that the amount in controversy requirement is satisfied." Pretka , 608 F.3d at 754. This evidence may be "combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations." Id . "[N]either the defendants nor the court may speculate, " however, and "the existence of jurisdiction should not be divined by looking to the stars." Lowery , 483 F.3d at 1215. Consequently, all doubts about the propriety of removal should be resolved in favor of remand. King v. Gov't Emps. Ins. Co., No. 13-14794, 2014 WL 4357480, at *3 (11th Cir. Sept. 4, 2014) (citing Miedema v. Maytag Corp. , 450 F.3d 1322, 1328-29 (11th Cir. 2006)).


The MRA Defendants offered three types of evidence in order to carry their burden of establishing, by a preponderance of the evidence, that the value of the proposed class's claims exceeds $5 million: (1) Whaley's Amended Complaint; (2) the sworn declaration of Eric C. Fisher, counsel for the MRA Defendants; and (3) the sworn declaration of Stefanie Anne Espinola, an executive assistant at MRA who "provides back-end support for the companies with which MRA works." (Doc. 1, Exs. B, & C.) Each item was submitted in conjunction with the Notice of Removal. The MRA Defendants assert that the $5 million amount in controversy is satisfied because (1) the statutory fines of the putative class - which is "predictably larger than 384 members" - exceed $1.92 million; (2) the unlawful fees in controversy exceed $2 million, 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; and (4) Whaley's demand for "disgorgement" of "all monies" in its prayer for relief is "expressly targeting [nonfee] monetary relief over and above " that which is recoverable under the GDAA, thereby adding an additional $1.86 to $3 million to the total. (Doc. 1, ¶¶ 22-26; Doc. 14, at 5-11.)

Whaley responds that the MRA Defendants have not carried their burden under CAFA to establish federal diversity jurisdiction over this class action. Specifically, she points to the limiting language asserted in her 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 the 384 class members' claims total only $3.16 million. (Doc. 11, at 4, 5 (emphasis added).) Whaley also contests Defendants'"tortured" characterization of her prayer for injunctive relief, namely the inclusion of non-fee, non-GDAA damages. (Id. at 5-8.) Lastly, Whaley "merely request[s] attorney's fees [be] paid out of the common fund for recovery for the class." (Id. at 8.) The Court addresses each category of potential recovery in turn.

A. Statutory Fines

The GDAA provides that."[a]ny person who engages in debt adjusting in violation of the provisions of [O.C.G.A. § 18-5-2] shall further be liable to the debtor in an amount equal to the total of all fees, charges, or contributions paid by the debtor plus $5, 000.00." O.C.G.A. § 18-5-4(b)(2). In the Amended Complaint, Whaley asserts that Defendants, as a collective group, provided debt adjustment services "to over 300 residents of the State of Georgia since July 1, 2003." (Pl.'s Am. Compl. ¶ 41.) Whaley's counsel later clarified in an e-mail to Eric C. Fisher, counsel for the MRA Defendants, that the putative class includes 384 known ...

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