Respondents Brief — Ford Motor Co. v. McCauley

! ” Sabecme t Coan, Ue.

‘ rijLege

JUN 6 Oe

No. 01-896

WeHCE OF THE CLERR

IN THE

Supreme Court of the United States

FORD MOTOR COMPANY and

CITIBANK (SOUTH DAKOTA), N.A.,

Petitioners,

Vv.

JOHN B. McCAULEY, et al.,

Respondents.

On Wait oF CERTIORARI TO THE

UnNitep STATES CourRT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR RESPONDENTS

Steve W. BERMAN

Counsel of Record

ANDREW M. VOoLk

R. BRENT WALTON

HAGENS BERMAN

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

Counsel for Respondents

(Additional Counsel for Respondents Listed on Signature Page)

174347 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

BEST AVAILABLE COPY

i

QUESTION PRESENTED

Whether a class action lawsuit seeking damages and

injunctive relief may be heard in federal court where, from

the face of the complaint, the potential award of damages

for “separate and distinct” claims could not possibly exceed

the per plaintiff $75,000 amount-in-controversy requirement

imposed under 28 U.S.C. § 1332, but where the injunctive

relief requested, if granted, would impose administrative

costs on one of the defendants in excess of $75,000.

il iii

STATEMENT PURSUANT TO RULE 29.6 TABLE OF CONTENTS

Respondents are individuals and thus have no corporate Page

parents and do not issue stock. EE, Kcccscencteserececceasces i

Statement Pursuant to Rule 29.6 .......... 6006. il

Aad nsccenccccecccscccasccess ill

Table of Cited Authorities ..... 0.0.0... .6 0000s Vv

: EET cccocccccccnccecescesces l

| Summary OF ATMUMOME 2... cc ccc ccs ccccscees 9

| PEE Su webSUSEGbGCOCesereocenesceceeees 17

I. The Amount-In-Controversy Requirement

Under 28 U.S.C. § 1332 Is Strictly Construed

Against Expanding Federal Jurisdiction ... 17

Il. The Rule For Valuing Injunctive Relief

To Determine Whether The Amount-In-

Controversy Requirement Under The

Diversity Statute Is Well-Settled And

Prohibits Federal Jurisdiction In This Case

Because The Value Of The “Object Of The

Litigaticn ’ Does Not Exceed The Requisite

Amount-In-Controversy ..............5. 20

A. When An Injunction Is Prayed for,

the Amount-In-Controversy Is Measured

by the Value of the “Object of the

DET S6GeceGebeeereccecccces 20

iv

Contents

Page

B. Historically, the Plaintiff’s Viewpoint or

Objective Has Been Determinative in

Valuing the “Object of the Litigation”

and the Amount-In-Controversy ...... 24

1. Plaintiff's viewpoint determines the

value assigned to the “object of the

BEES ovcvdccucccececeesss 25

2. The “paramount policy” of this

Court is that plaintiff's complaint

controls jurisdiction ............ 31

C. The Doctrine of Stare Decisis Militates

Against Adopting the “Either Viewpoint”

ED Saveséecncecduncaecsdecenens 33

Ill. The “Object Of The Litigation” Here

Cannot Exceed The Requisite Amount-In-

Controversy Without Violating The Non-

Aggregation Principle Applicable To Class

REED co ccccvecccucsceecacedsescuases 38

A. The Non-Aggregation Principle and Its

Serict AMWUCRMIOR . ww wee cccccceces 38

B. Plaintiffs’ Claims Are Separate and

Distinct; the Claims Cannot Be

TTT eT Tee 39

C. The “Either Viewpoint” Rule Does Not

Provide an Exception to the Non-

Aggregation Principle .............. 43

PD . 2c de aeneueneubedensebesasaune 47

Vv

TABLE OF CITED AUTHORITIES

Page

Cases:

Alfonso v. Hillsborough County Aviation Authority,

308 F.2d 724 (Sth Cir. 1962) ............005. 21

Alvarez v. Pan American Life Insurance Co.,

375 F.2d 992 (Sth Cir. 1967) ............20.. 41

Berryman v. Board of Trustees,

PEED Gnbed eb eecccanssccndces 27

Bitterman v. Louisville & Nashville R.R. Co.,

ee SEE wveccesecedcscccseccoss 12, 27

In re Brand Name Prescription Drugs

Antitrust Litigation,

123 F.3d 599 (7th Cir. 1997) ...........005. passim

Caterpillar, Inc. v. Williams,

Te 13, 31, 32, 44

Clark v. Paul Gray, Inc.,

Tee 27, 39, 40

Clay v. Field,

eee 39

Conroy v. Aniskoff,

Be GE ER GUEEED wcvecccccecccecsccccess 35

Del Vecchio v. Conseco, Inc.,

230 F.3d 974 (7th Cir. 2000) ...........0045. 40

vi

Cited Authorities

Page

Elgin v. Marshall,

106 U.S. (16 Otto.) 578 (1882) .............. 39

Elliott v. Empire Natural Gas Co.,

Se Ge GEE occecesccccssscess 20, 23

Ericsson GE Mobile Communs. v. Motorola

Communs. & Electrics,

120 F.3d 216 (11th Cir. 1997) ............... 21

Freeman v. Dawson,

ED 6 cdicuneedecenésnesedes 29

Gibson v. Shufeldt,

dd coe ceececdegeweet 28, 29, 40

Gilman v. BHC Security,

104 F.3d 1418 (2d Cir.1997) ................ 40

Glenwood Light & Water Co. v.

Mutual Light, Heat & P. Co.,

ll Ee 12, 21, 24, 25, 26

Great Northern Railway Co. v. Alexander,

DPE acotavdasedesstaceeéose 13, 32

Healy v. Ratta,

DAD cc.cnceceesdeuses 10, 18, 34, 36

Healy v. Sea Gull Specialty Co.,

gE EE ee 31, 32

Hunt v. New York Cotton Exchange,

Dt <vccecuscedddeekeded 12, 21, 26

vii

Cited Authorities

Page

Hunt v. Washington State Apple Adver. Comm'n,

Se Se SO EIOTED covccccccccseses 1-2, 10, 20, 21

Justice v. Atchison, T. & S.F-R. Co.,

927 F.2d 503 (10th Cir. 1991) ............... 21

Lonnquist v. J.C. Penney Co.,

421 F.2d 597 (10th Cir. 1970) ............... 7,21

Lorillard v. Pons,

Ps SPEED bccdstecccocedenscesess 14, 34

Market Co. v. Hoffman,

101 U.S. (11 Otto) 112 (1879) ............... 29, 30

Massachusetts State Pharm. Association v.

Federal Prescription Serv., Inc.,

431 F.2d 130 (8th Cir. 1970) ................ 21

McNeil v. Southern R. Co.,

BE Wee DE GEOSED ccccccccecccccccesccees 28

McNutt v. General Motors Acceptance Corp.,

Be eh CHOSE cccccccccesccccoeccoces 21

Merrell Dow Pharm., Inc. v. Thompson,

Se SEED cc ccccccoseececcocevces 31, 32

In re Microsoft Corp. Antitrust Litigation,

127 F. Supp. 2d 702 (D. Md. 2001) ........... 45

Mississippi & Missouri Railroad Co. v. Ward,

67 U.S. (2 Black) 485 (1863) ................ 29, 30

vill

Cited Authorities

Page

Morrison vy. Allstate Indem. Co.,

228 F.3d 1255 (11th Cir. 2000) .............. 40

North Pacific S.S. Co. v. Soley,

Sy ED onuceedencesecnsceendas 19

Oliver v. Alexander,

31 U.S. (6 Pet.) 143 (1832) ............0e0es 39, 40

Packard v. Provident Nat'l Bank,

994 F.2d 1039 (3d Cir. 1993) ................ 21

Patterson v. McLean Credit Union,

Se EEE occredcnccsdecccsenesne 13, 33

Payne v. Tennessee, .

Pe CED. eoccesececescecevcesees 33

Ridder Bros. v. Blethen,

142 F.2d 395 (9th Cir. 1944) ............2... 7

Rivet v. Regions Bank,

DE scecurscodeasseseeséens 31

Ross v. Prentiss,

44 U.S. (3 How.) 771 (1845) ............... passim

Russell v. Stansell,

DPD cceésessenceseseesecess 22, 39

Saint Paul Mercury Indem. Co. v. Red Cab Co.,

DPD cocsnesseseseonecseeces passim

ix

Cited Authorities

Page

Sanchez v. Monumental Life Ins. Co.,

102 F.3d 398 (9th Cir. 1996) ................ 7

Scott v. Frazier;

PAD cousececeeceeses 12, 27, 28, 34

Shamrock Oil & Gas Corp. v. Sheets,

ED cccvancoguuessoessse 10, 18, 36

Shields v. Thomas,

$8 U.S. (17 How.) 3 (1855S) ....cccccccewses 29

Smith v. Adams,

PD cndcnneceeesesess 11, 12, 20, 23

Snow v. Ford Motor Co.,

561 F.2d 787 (9th Cir. 1977) ............... passim

Snyder v. Harris,

SP SPEED ccccvecccseseccecosves passim

Thomson v. Gaskill,

315 U.S. 442 (1942) 2... cc cccccccees 19, 27, 39, 42

Walter v. Northeastern R. Co.,

PE vecccccecedeossncénsees 39

Wheless v. St. Louis,

DD bcoccsscoseessececooees 28, 39

Zahn v. International Paper Co.,

EEE odecesccodeosseecesees passim

x

Cited Authorities

Page

Statutes:

28 U.S.C. § 1291 2... cece ccc eee eee eens 4

28 U.S.C. § 1331 0... cece eee e cece ence cree 17

28 U.S.C. $ 1332 .... cece ccrccccevcccceeres passim

28 U.S.C. § 1407 .... cc cece cece nee eeeeeeee 2

28 U.S.C. § 1441(b) 6.6 ee eee eee ee eee eee 31

S. 1712 and H.R. 2341 «1... cee ee ee ee eee eee 14, 36

Miscellaneous:

Thomas E. Baker, The History and Tradition

of the Amount in Controversy Requirement:

A Proposal to Up the Ante’ in

Diversity Jurisdiction,

102 F.R.D. 299 (1985) .....- eee eee ee eee 10, 19, 34

Armistead M. Dobie, Jurisdictional Amount in the

United States District Court,

38 Harv. L. Rev. 733 (1925) .....-.. secre eeee 21, 30

C. T. Drechsler, Criterion of Jurisdictional Amount

to Vest Jurisdiction of Federal Court Where

Injunction Is Sought,

30 A.L.R. 2d 602 (1954 & Supp. 2002) ....... 28

Note, 34 Columbia L. Rev. 311 (1934) ...-.----- 20

|

STATEMENT OF THE CASE

This case concerns a class action involving parties of

different states' and “separate and distinct” claims of

individuals brought exclusively under state law. In Snyder v.

Harris, 394 U.S. 332 (1969), and Zahn v. International Paper

Co., 414 U.S. 291 (1973), this Court held that Rule 23 did

not alter the long-standing traditional rule that “separate and

distinct claims of two or more plaintiffs cannot be aggregated

in order to satisfy the jurisdictional amount requirement”

of the diversity statute. 394 U.S. at 334; 414 U.S. at 294.

In contrast, where “several plaintiffs unite to enforce a single

title or right, in which they have a common and undivided

interest,” their claims may be aggregated to reach the

jurisdictional threshold. Zahn, 414 U.S. at 294.

In this case, there is no dispute that Respondents’

(“Plaintiffs”) underlying claims are “separate and distinct,”

J.A. 113, nor is there any dispute that this case was brought

as a class action and thus is governed by the non-aggregation

principle confirmed by this Court in Snyder and Zahn.

In addition to compensatory damages, however, Plaintiffs

prayed for injunctive relief. Petitioners contend that the

plaintiffs have a “common and undivided” interest in the

prayed for relief. Pet. Br. at 26-31. Admittedly, this Court

has not spoken conclusively about how to value the amount-

in-controversy in the class action context where, like here,

injunctive relief is requested as the surrogate through which

the “separate and distinct” damage claims can be realized.

Yet, there is no doubt that “[iJn actions seeking declaratory

or injunctive relief, it is well established that the amount in

controversy is measured by the value of the object of the

litigation.” Hunt v. Washington State Apple Adver. Comm'n,

1. It is undisputed that the parties are completely diverse.

J.A. 112. References to the Joint Appendix in this brief are

abbreviated to “J.A.”.

2

432 U.S. 333, 347 (1977). Here, the value of the “object of

the litigation” is less than $75,000 per plaintiff. J.A. 95,

97, 118.

The genesis of this action arises from Ford Motor

Company’s (“Ford”) and Citibank (South Dakota), N.A.’s

(“Citibank”) termination of a credit card rebate program

(“Rebate Program”). In each of the six original actions,

Plaintiffs filed their cases under state law asserting state law

claims in the state courts of Washington, Oregon, California,

Illinois, Alabama and New York. J.A. 109. Generally,

Plaintiffs alleged that Ford and Citibank breached their

contractual obligation to allow plaintiffs to obtain monetary

rebates payable towards the purchase or lease of certain Ford

vehicles from their use of the co-branded Ford/Citibank credit

card. J.A. 57-58. Plaintiffs further alleged that the ability to

obtain rebates was part of the promised consideration owed

to plaintiffs for choosing the Ford/Citibank credit card as

opposed to the many other cards available on the market.

J.A. 51-53. Plaintiffs also alleged that Petitioners’ conduct,

in terminating the program after duping Plaintiffs and the

class into obtaining and using the card, constituted an unfair

and deceptive trade practice for which Petitioners are liable

for damages under the consumer laws of the various states.

J.A. 59-61.

Petitioners removed each case to federal court and

petitioned the Judicial Panel on Multidistrict Litigation

(“MDL Panel”) to consolidate the cases for pretrial

proceedings under 28 U.S.C. § 1407. J.A. 109. The MDL

Panel granted the petition, plaintiffs consented to the transfer,

and all cases were transferred to the Western District of

Washington. J.A. 31-32. The district court received the cases

for limited, pretrial purposes. /d.

3

In the Case Management Order proposed by the parties,

the district court noted that the cases were “consolidated for

pretrial purposes,” and ordered that “a consolidated

complaint” — if one was to be filed — must “be filed

within fifteen (15) days after this Order becomes effective.”

J.A. 41, 44. Although Plaintiffs recognized that they could

have, in good faith, challenged the district court’s jurisdiction,

they made a strategic decision not to engage in a protracted

jurisdictional battle that would drain plaintiffs’ resources and

delay pursuit of the merits of plaintiffs’ claims. J.A. 70.

Moreover, to further streamline the pretrial proceedings, the

plaintiffs filed a single, consolidated complaint. J.A. 70.

Among other things, the consolidated complaint sought

compensatory and punitive damages, and an injunction

reinstating the wrongfully terminated Rebate Program.

J.A. 110.

After some initial discovery, Plaintiffs filed a motion

for class certification. J.A. 92. The briefing became protracted

when Citibank claimed — due to its own faulty record

keeping — determination of class membership might be

difficult. The district court thereupon allowed the Plaintiffs

to conduct discovery to explore the newly-raised “faulty

record-keeping” defense, and allowed each party to submit

supplemental briefing. At that point — and in contradiction

to the position they now take — Petitioners’ argued:

“This case, after all, does not involve a common fund or a

joint interest among cardholders. Instead, it involves a

collection of individual claims based on individual patterns

of consumer purchasing decisions. The Ninth Circuit has

made clear that aggregated damages may not be awarded in

this type of case... .” J.A. 92.

Accordingly, after class certification discovery, and

following an initial hearing on class certification, sua sponte

the district court issued an order to show cause why the action

4

should not be dismissed for lack of jurisdiction and why the

six original cases “should not be. . . remanded to state court.”

J.A. 66. in response, Petitioners argued only that the district

court had diversity jurisdiction; Petitioners did not question

that the six original actions (originally filed in state court)

must be remanded to their state courts of origin upon a finding

of no subject matter jurisdiction in federal court. J.A. 73-86.

On October 29, 1999, the district court found that it lacked

subject matter jurisdiction over the claims in the consolidated

complaint, which it therefore dismissed, J.A. 91-101, and

remanded to state court each of the six actions originally

filed in state court and removed to federal court by

Petitioners. J.A. 100-101.’

1. The district court dismissed the consolidated

complaint for lack of jurisdiction. In response to the district

court’s show cause order, Petitioners argued for diversity

jurisdiction, while Respondents suggested that jurisdiction

was “questionable.” J.A. 92-93. Even though no plaintiff or

putative class member could possibly have a claim for

compensatory damages greater than $75,000, Petitioners

contended that the jurisdictional amount-in-controversy was

met for three reasons: (i) plaintiffs requested an aggregate

award of damages “without reference to the damages incurred

by any individual cardholder”, J.A. 95; (ii) the cost of

compliance with the injunctive relief requested would

2. Petitioners have consistently and erroneously contended

that the consolidated complaint “superceded” the original state

law complaints thus rendering the state actions “non-existent.”

See, e.g., J.A. 126. The district court dismissed the consolidated

complaint and indicated an intention to dispose of the federal action

while remanding the cases back to their original state courts.

J.A. 100-101, 124-126. Thus, the court of appeals concluded that

the district court’s decision was reviewable under 28 U.S.C. § 1291.

J.A. 111-112. The district court’s order remanding the state actions

is not before the Court, and the panel below concluded that it was

not reviewable. J.A. 126.

5

be “significantly in excess of $75,000”, J.A. 96; and

(iii) punitive damages were prayed for and should be

aggregated to determine whether the requisite amount-in-

controversy was met, J.A. 97.’ The district court rejected each

one of Petitioners’ arguments and dismissed the consolidated

complaint for lack of jurisdiction.‘

The district court rejected Petitioners’ “aggregate award”

argument because the district court found that the action

involved “separate and distinct” claims, and thus under this

Court’s holdings of Snyder and Zahn, such claims could

not be aggregated to meet the amount-in-controversy

requirement. J.A. 94-96.

The district court also rejected Petitioners’ argument that

the jurisdictional minimum was met by the cost of complying

with the injunctive relief requested. The district court did so

for two reasons: (i) the cost to comply with an injunction

could not serve to satisfy the amount-in-controversy

requirement “[wJhere, as here, the nature and value of the

injunctive relief sought is identical to the nature and value

of the monetary relief sought,” as to do so would run contrary

to the “principles of Snyder and Zahn,” J.A. 96-97;° and

3. Petitioners did not argue to the district court that “any

plaintiff’s recovery of punitive plus compensatory damages could

reach $75,000 (at that level, a recovery for six million class members

would be the absurd total of $450 billion).” J.A. 97.

4. The Question Presented to the Court concerns (i) and (ii),

thus further discussions of punitive damages and the underlying

findings and rulings relevant to the punitive damages issue are

omitted.

5. In particular, the district found:

The injunctive relief sought ... is simply a means to

vindicate each plaintiff’s separate and individual claim

(Cont’d)

6

(ii) even under the “either viewpoint” rule, the district court

found that Petitioners “failed to show that the value of the

injunction enforced as to any one cardholder would exceed

$75,000,” J.A. 97 (emphasis added).° Accordingly, the district

court found that Petitioners failed to carry their burden of

proving by a preponderance of the evidence that it would

cost more than $75,000 to reinstate the Rebate Program even

for one plaintiff.

2. The Ninth Circuit affirmed the dismissal of the

consolidated complaint for lack of jurisdiction.’ The panel

(Cont'd)

for accrual of rebates for five years. Plaintiffs’ having

made class action allegations does not alter the nature

of the rights asserted. Where, as here, the nature and

value of the injunctive relief sought is identical to the

nature and value of the monetary relief sought, to permit

aggregation of the former but not the latter would

undermine the principles of Snyder and Zahn.

J.A. 96-97.

6. Contrary to Petitioners’ contention that they “demonstrated

that the plaintiffs have a common and undivided interest in the their

claim for an injunction,” the district court found otherwise. J.A. 96-

97. Additionally, the only evidence in the record about the monetary

cost of compliance with any injunction is the cost to Citibank,

J.A. 87-89; there is no evidence in the record that an injunction would

impose any similar costs on Ford. In fact, according to the declaration

of Sheryl Behar, Citibank provided the “administrative services”

under the Rebate Program which, if reinstated, would cost Citibank

in excess of $75,000, while “Ford provided cardholders with rebate

credits... .” J.A. 87-88. As the district court found, these rebate

credits could total no more than $3,500 to each plaintiff. J.A. 95.

7. On appeal, Petitioners did not contend that plaintiffs’ damages

claims could be aggregated to meet the amount-in-controversy

requirement, or that plaintiffs’ claims were “common and undivided”

as opposed to “separate and distinct.” J.A. 113.

7

first confirmed that it had jurisdiction to review the district

court’s order, J.A. 111-112, and then addressed Petitioners’

contention that the cost of compliance with the requested

injunctive relief carries them over the jurisdictional threshold.

The court began its analysis by reviewing the history of

applying the “either viewpoint” rule to multi-plaintiff

actions.* Under the “either viewpoint” rule, the Ninth Circuit

has held that the amount-in-controversy requirement can be

satisfied if “the pecuniary result to either party which the

judgment would directly produce” exceeds the jurisdictional

amount. J.A. 113 (citing Ridder Bros. v. Blethen, 142 F.2d

395, 399 (9th Cir. 1944). However, the panel also noted that

Snow v. Ford Motor Co., 561 F.2d 787, 790 (9th Cir. 1977),

specifically foreclosed application of the “either viewpoint”

rule to class actions. J.A. 114.

According to the panel, Snow declined to extend Ridder

to class actions because of the long-standing non-aggregation

principle and the Court’s decisions in Snyder and Zahn.

It stated, “the threshold question is aggregation, and it must

be resolved affirmatively before total detriment [to the

defendant] can be considered. Otherwise, the principle of

Snyder and Zahn would be subverted, i.e., plaintiffs with

minimal damages could dodge the non-aggregation rule

by praying for an injunction.” J.A. 115 (citation & internal

quotation omitted). Accordingly, “where the equitable relief

sought is but a means through which the individual claims

8. The Ninth Circuit has rejected the “plaintiff viewpoint” rule

when determining the value of non-class claims for purposes of

determining whether the amount-in-controversy requirement is

satisfied. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 405

n.6 (9th Cir. 1996) (en banc); Ridder Bros. v. Blethen, 142 F.2d 395,

399 (9th Cir. 1944).

9. Courts equate “total detriment” to aggregation. See Snow,

561 F.2d at 790; Lonnquist v. J.C. Penney Co., 421 F.2d 597, 599

(10th Cir. 1970).

8

may be satisfied, the ban on aggregation applies with equal

force to the equitable as well as monetary relief.” /d.

Thus, the panel correctly noted that in multi-plaintiff

cases seeking declaratory or injunctive relief, the amount-

in-controversy is measured by the “nature and value of the

right asserted.” J.A. 115 (citing Snow, 561 F.2d at 790).

Furthermore, the panel emphasized that if plaintiffs were

asserting a “common and undivided” right, it could look to

“either viewpoint” to determine jurisdiction. But if the right

asserted was “separate and distinct,” the jurisdictional test

“is the cost to the defendants of an injunction running in

favor of one plaintiff.” J.A. 115-116 (citing Jn re Brand Name

Prescription Drugs Antitrust Litig., 123 F.3d 599, 610 (7th

Cir. 1997)).

Applying those standards, just like the district court, the

panel first held that plaintiffs do not possess a “common and

undivided interest in accruing rebates under the program,”

which is the injunctive relief requested. J.A. 116-117.

The court even noted that Petitioners originally argued this

position in opposition to the motion for class certification

when they concluded “[b]ecause the [putative] class members

in this case do not in any sense possess joint ownership of,

or an undivided interest in a common res, their claims...

are separate and distinct.” J.A. 117 (quoting Petitioners).

In line with Petitioners’ earlier position, which is contrary

to the position Petitioners take before this Court, the panel

concluded that the “right [to injunctive relief] is distinct to

each plaintiff, is based on his or her individual contractual

relationship with Ford and Citibank, and is worth no more

than $3,500.” J.A. 117. In other words, the court found that

the equitable relief sought in this case and under these facts

was merely a “means through which the individual claims

may be satisfied” and “no plaintiff has an individual claim

worth more than $75,000.” J.A. 118.

9

Following the finding that the injunctive relief claims

are “separate and distinct” and valued at no more than $3,500

per plaintiff, the panel proceeded to test whether the cost of

an injunction running in favor of one plaintiff would exceed

$75,000. Departing some from the disjunctive rationale of

the district court,’ the panel concluded, as a matter of law,

that fixed administrative compliance costs that would be

imposed if the injunction were granted could not satisfy the

amount-in-controversy requirement. The court reasoned that,

if permitted, “‘every case, however trivial, [brought] against

a large company would cross the [jurisdictional] threshold.’”

J.A. 118-119 (quoting and citing Brand Name, 123 F.3d

at 610).

SUMMARY OF ARGUMENT

By its plain terms, the unambiguous diversity statute

grants the federal district courts original jurisdiction

over “all civil actions” involving completely diverse parties

where “the matter in controversy exceeds the sum or value

of $75,000.” 28 U.S.C. § 1332(a)(1). Thus, one essential

element of federal jurisdiction under the diversity statute is

the amount or value of the litigation. Here, Plaintiffs seek

damages and an injunction as a means to provide value to

their individual contract rights. There is no dispute that

Plaintiffs’ contract claims are “separate and distinct” and thus

under this Court’s long-settled interpretation of the amount-

in-controversy requirement, the value of the claims cannot

be aggregated to meet the jurisdictional threshold of $75,000.

Snyder v. Harris, 394 U.S. 332 (1969). Moreover, according

to the parties and the courts below, no plaintiff has an

10. In addition to concluding that the injunctive relief was the

means through which plaintiffs sought to satisfy their individual

claims, the district court also found that Petitioners had failed to

meet its burden of proving that the amount-in-controversy was

satisfied even for one plaintiff under the “either viewpoint” rule.

J.A. 97. The panel did not distr’) this finding.

10

individual claim exceeding $75,000. However, Plaintiffs

prayed for an injunction as well. “In actions seeking

declaratory or injunctive relief, it is well established that the

amount in controversy is measured by the value of the object

of the litigation.” Hunt v. Washington State Apple Adver.

Comm'n, 432 U.S. 333, 347 (1977). Thus, the question in

this case is how to value the “object of the litigation” and

whether that value exceeds the jurisdictional threshold for

each plaintiff.

Petitioners ask this Court to value the “object of the

litigation” from the defendant’s viewpoint or, alternatively

to conclude that plaintiffs’ request for injunctive relief is a

“common and undivided” interest that may be aggregated to

determine the amount-in-controversy. For all of the following

reasons, Petitioners’ request should be denied and the

judgment should be affirmed.

I. The policy of this Court is to construe the amount-in-

controversy requirement strictly and against expanding

federal jurisdiction. Healy v. Ratta, 292 U.S. 263, 270 (1934);

Snyder, 394 U.S. at 339-40. This is done to respect the proper

role of state courts in actuating the federal judicial system

and to ensure that the federal courts are not burdened without

Congress’s explicit authorization. Healy, 292 U.S. at 270;

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09

(1941); Snyder, 394 U.S. at 339-40; Thomas E. Baker, The

History and Tradition of the Amount in Controversy

Requirement: A Proposal to ‘Up the Ante’ in Diversity

Jurisdiction, 102 F.R.D. 299, 302-18 (1985).

I1.A. The rule for valuing injunctive relief for purposes

of determining the amount-in-controversy is settled and has

been for some time: “the amount in controversy is measured

by the value of the object of the litigation.” Hunt, 432 U.S.

at 347 (citing cases back to 1907). It is generally understood

11

that the “object of the litigation” is the right or rights that

plaintiffs seek to protect. In other words, the “matter in

dispute” is “the subject of litigation, the matter upon which

the action is brought and issue is joined, and in relation

to which, if the issue be one of fact, testimony is taken.”

Smith v. Adams, 130 U.S. 167, 175 (1889).

Here, the relevant rights that Plaintiffs seek to protect

are their separate contractual rights. In particular, plaintiffs

seek to hold Ford and Citibank to their bargain and permit

each class member to “earn up to $700 in rebates over any

consecutive 12-months for a maximum rebate of $3,500 over

a 5-year period” toward the purchase or lease of certain Ford

vehicles. J.A. 49, 109. The relevant controversy is whether

Ford and/or Citibank owe Plaintiffs this right and these

rebates.'' Thus, in this case, the “object of the litigation” is

the value of the right to be protected and gained by Plaintiffs,

which the courts below have valued at less than $75,000 per

plaintiff.

Nevertheless, Petitioners contend that the administrative

costs imposed by the injunctive relief requested can and

should be used to determine the value of the “object of the

litigation” in all cases where injunctive relief is requested.

Petitioners are mistaken. Such administrative costs are

collateral to the rights that plaintiffs seek to protect and thus

are not included in the jurisdictional calculus. Ross v.

Prentiss, 44 U.S. (3 How.) 771, 772 (1845). Indeed, one can

see that they are collateral to the “object of the litigation” by

virtue of the fact that Plaintiffs are not required to present

11. There are additional objectives of the litigation under

consumer protection statutes and the common law unjust enrichment

claim (e.g., disgorgement), but these objectives do not appear relevant

to the Question Presented and Petitioners have not emphasized these

aspects of the litigation in their briefs at any stage of the litigation.

Thus, Respondents similarly omit discussion of these issues.

12

testimony about these administrative costs to establish their

rights, and such administrative costs are no defense to a

breach of contract claim. Consequently, Petitioners would

not introduce such testimony either. Cf Smith v. Adams,

supra.

B.1. Furthermore, this Court has historically valued the

“object of the litigation” solely from the plaintiff’s viewpoint.

Indeed, on several occasions, this Court has expressly stated

that this is the rule. See, e.g., Scott v. Frazier, 253 U.S. 243,

244 (1920) (“It is well settled the . . . amount in controversy

must equal the jurisdictional sum as to each complainant.”);

Glenwood Light & Water Co. v. Mutual Light, Heat & P.

Co., 239 U.S. 121 (1915) (holding jurisdictional amount

is tested “by the value of the object to be gained by

complainant”); Bitterman v. Louisville & Nashville R.R. Co.,

207 U.S. 205, 225 (1907) (“[T]he substantial character of

the jurisdictional averment in the bill is to be tested, not by

the mere immediate pecuniary damage resulting from the acts

complained of, but by the value of the . . . rights of property

which the complainant sought to have recognized and

enforced.”); Hunt v. New York Cotton Exchange, 205 U.S.

322, 336 (1907) (“The object of this suit is to protect that

right. The right, therefore, is the matter in dispute, and its

value to the Exchange [the plaintiff] determines the

jurisdiction”).

B.2. Given the paramount policy that the plaintiff is the

master of the complaint and that the complaint controls

jurisdiction, it is easy to understand why the plaintiff’s

viewpoint is used to test the value of the “object of the

litigation.” First, such a rule is consistent with the general

rule that “the sum claimed by the plaintiff controls” if the

claim is made in good faith. Saint Paul Mercury Indem. Co.

v. Red Cab Co., 303 U.S. 283, 288 (1938). Second, such an

approach is also consistent with the well-pleaded complaint

rule and removal statute. Jd. at 291. Third, the plaintiff’s

13

viewpoint rule is the one bright line rule that is consistent

with the long-established right of plaintiffs to decide which

jurisdiction to bring his or her case in, and which law to rely

upon. If a defendant, by merely recasting the complaint or

adding allegations about the cost of the injunctive relief

requested, could defeat a plaintiff’s choice of law or forum,

then, in the words of this Court, “the plaintiff would be master

of nothing.” Caterpillar Inc. v. Williams, 482 U.S. 386, 399

(1987); see also Great Northern Ry. Co. v. Alexander, 246

U.S. 276, 281 (1918) (jurisdiction is “to be determined by

the allegations of the complaint ... it cannot be made

removable by any statement in the petition for removal or in

subsequent pleadings by the defendant”). This is especially

true in cases brought against large multinational corporations

that would likely incur in excess of $75,000 in administrative

costs for any injunction issued against them. See Brand Name,

123 F.3d at 610.

C. Additionally, considerations of stare decisis militate

against opening the federal courts to every completely diverse

action that seeks injunctive relief, which would be the effect

if this Court were to adopt the “either viewpoint” rule as

Petitioners propose. Considerations of stare decisis are

especially important where, as here, the Court is interpreting

a statute because Congress is “free to alter what we have

done.” Patterson v. McLean Credit Union, 491 U.S. 164, 172-

173 (1989).

As noted above, the relevant decisions of this Court have

stood for decades and, more importantly, are the products of

over 100 years of this Court’s jurisprudence. Other than

increasing the amount-in-controversy threshold to

establishing federal jurisdiction, the relevant text of the

diversity statute has remained essentially unchanged by

Congress since the statute was originally enacted. Moreover,

14

Congress has presumably read and understood these holdings

when setting the requisite amount-in-controversy. Indeed,

Congress has ratified the Court’s interpretation. Lorillard v.

Pons, 434 U.S. 575, 580-81 (1978). Thus, it would be

inappropriate for this Court to expand federal jurisdiction

where Congress has chosen not to. Zahn, 414 U.S. at 300-

01.

Congress’s current consideration of S. 1712 and H.R.

2341 (the “Class Action Fairness Act of 2001”) implicitly

acknowledges that this case cannot presently be brought in

federal court. These bills seek to amend 28 U.S.C. § 1332

to federalize class actions and modify the amount-in-

controversy requirements to undo the effect of this Court’s

holdings interpreting section 1332’s amount-in-controversy

requirement. If enacted, the Class Action Fairness Act would

establish the new rules of federal jurisdiction in class actions

that Petitioners ask this Court to write but at a different and

higher threshold, well above the present $75,000.

If Congress chooses to, it can and should amend section

1332 to adopt and incorporate Petitioners’ position and fix

any perceived error. However, this Court should not

pronounce a new rule that would open the federal courts to

the hundreds, if not thousands, of state court actions filed

across the country annually that pray for injunctive relief,

especially at time when this Court has expressed its concern

over the caseloads in federal court. See 1999 Year-End Report

on the Federal Judiciary. Instead, this Court should reaffirm

its prior holdings and state clearly that the plaintiff’s

viewpoint controls the “object of the litigation,” and defer

to Congress the determination of whether diversity

jurisdiction should be expanded to include all diverse cases

and/or class actions where plaintiffs seek injunctive relief.

ee eee

iii, see

15

Assuming that the Court rejects the “either viewpoint”

approach Petitioners propose and reaffirms its holdings that

“plaintiff’s viewpoint” determines the amount-in controversy,

diversity jurisdiction is lacking here because the value of

the “object of the litigation” from the plaintiff’s perspective

does not exceed $75,000 per plaintiff. Thus, the judgment

should be affirmed on this basis alone.

IlIl.A. The non-aggregation principle also precludes

federal jurisdiction over this case. According to the traditional

interpretation of the diversity statute, the non-aggregation

principle holds that the “separate and distinct claims of two

or more plaintiffs cannot be aggregated in order to satisfy

the jurisdictional amount requirement.” Snyder, 394 U.S. at

335. The only time aggregation is permitted in multi-plaintiff

cases is where “two or more plaintiffs unite to enforce a single

title or right in which they have a common and undivided

interest.” Id. (emphasis added).

B. Here, Plaintiffs’ claims are separate and distinct. In

fact, Petitioners concede this point. J.A. 113, 117. Thus, the

non-aggregation principle applies. Furthermore, contrary to

Petitioners’ position, it does not matter whether Plaintiffs

share a “common and undivided” interest in the injunctive

relief because the non-aggregation principle applies whenever

plaintiffs unite to enforce (i) “a single title or right,” that is

(ii) “common and undivided,” and here. Petitioners concede

that Plaintiff do not share a united title or right, even to the

relief requested. Accordingly, Plaintiffs’ claims cannot be

aggregated to meet the jurisdictional threshold.

Additionally, even if Plaintiffs’ claims could be

aggregated, defendants’ costs cannot. Here, the record reveals

that although Citibank would incur over $75,000 in

administrative costs if an injunction reinstating the Rebate

Program were to issue, there is no evidence that an injunction

16

would impose similar costs on Ford. In fact, according to

the declaration of Sheryl Behar, Citibank provided the

“administrative services” under the Rebate Program which,

if reinstated, would cost Citibank in excess of $75,000, while

“Ford provided cardholders with rebate credits. . . .” J.A. 87-

88. As the district court found, these rebate credits

could total no more than $3,500 to each plaintiff. J.A. 95.

Thus, even if the defendant’s viewpoint is considered and

jurisdiction is tested by “the cost to each defendant of an

injunction running in favor of one plaintiff,”’? finding

jurisdiction here violates the non-aggregation principle

because the cost to Ford is at most $3,500 per plaintiff.

Therefore, the district court’s finding that Petitioners failed

to meet their burden under the “either viewpoint” rule should

be upheld. J.A. 97.

C. Finally, the “either viewpoint” rule, if adopted in the

form that Petitioners’ request (i.e., to include defendant’s

administrative compliance costs in the jurisdictional

calculus), would create such a porous exception to the non-

aggregation principle that the principle would be rendered

non-existent. Indeed, as Judge Posner has noted, “every case,

however trivial, against a large company would cross the

[jurisdictional] threshold,” if such administrative costs were

included. Brand Name, 123 F.3d at 610.

The Court need not take this bait. Not only are such costs

collateral to the “object of the litigation” and thus excluded

from the definition of amount-in-controversy, see Ross, 44

U.S. at 772, but also the Ninth Circuit held that these costs

cannot be considered as a matter of law if the non-aggregation

principle is to be respected. The Court should affirm the Ninth

Circuit’s ruling because failing to place such a limitation on

the “either viewpoint” rule would mean that the federal

courthouse doors would be open to every large corporation

12. Brand Name, 123 F.3d at 610.

17

whenever completely diverse parties sue them and seek

injunctive relief — including individual actions — and to

every diverse plaintiff who wished access to the federal courts

simply by including a prayer for injunctive relief. Not only

would such an expansion of federal jurisdiction render the

non-aggregation principle effectively meaningless, but it

would also be contrary to this Court’s interpretations and

policies pertaining to the diversity statute. If federal

jurisdiction is to be expanded this way, the Court should defer

to Congress.

ARGUMENT

I. The Amount-In-Controversy Requirement Under

28 U.S.C. § 1332 Is Strictly Construed Against

Expanding Federal Jurisdiction

One of the essential elements of federal jurisdiction under

the diversity statute is the amount or value of the subject

matter in litigation. By its plain terms, the unambiguous

diversity statute grants the federal district courts original

jurisdiction over “all civil actions” involving completely

diverse parties where “the matter in controversy exceeds

the sum or value of $75,000.” 28 U.S.C. § 1332(a)(1)."

Thus, the question presented here is whether this case, in

which Plaintiffs seek damages perhaps totaling in the millions

and an injunction as a means to provide value to their

individual contract rights which admittedly would cost

Citibank more than $75,000 to implement, but would not

cost Ford more than $75,000 per plaintiff, establishes the

requisite amount-in-controversy even though no plaintiff

would obtain more than $75,000 in pursuit of his or her

separate and distinct contractual claim.

13. For years the federal question jurisdiction statute, 28 U.S.C.

§ 1331, contained a similar amount-in-controversy requirement. Some

of the cases cited in Respondents’ brief involve that requirement.

18

Since the creation of the federal courts with the Judiciary

Act of 1789, which has remained essentially unchanged since

its inception, suits between citizens of different states, and

at times those based on a federal question, and involving

less than a certain prescribed amount could neither be brought

in a federal court ~iginally nor removed to federal court

from a state court. Indeed, the only material changes to the

statute have been for Congress to limit the number of federal

cases by increasing the amount-in-controversy threshold.'*

In Healy v. Ratta, 292 U.S. 263 (1934), this Court held, with

regard to the policy of Congress in fixing a minimum

jurisdictional amount for the federal courts:

Pursuant to this policy the jurisdiction of federal

courts of first instance has been narrowed

by successive acts of Congress, which have

progressively increased the jurisdictional amount.

The policy of the [diversity] statute calls for its

strict construction. . . . Due regard for the rightful

independence of state governments, which should

actuate federal courts, requires that they

scrupulously confine their own jurisdiction to the

precise limits which the statute has defined.

Id. at 270; see also Shamrock Oil & Gas Corp. v. Sheets, 313

U.S. 100, 108-09 (1941)

The power reserved to the states under the

Constitution to provide for the determination of

controversies in their courts, may be restricted

only by the action of Congress in conformity to

the Judiciary Articles of the Constitution. Due

regard for the rightful independence of state

governments, which should actuate federal courts,

14. See Pet. Br. at 10 n.3 citing the requisite amounts and the

amendments to the diversity statute.

19

requires that they scrupulously confine their own

jurisdiction to the precise limits which the statute

has defined.

(Internal quotation omitted). Saint Paul Mercury Indem. Co.

v. Red Cab Co., 303 U.S. 283, 288 (1938) (“The intent of

Congress drastically to restrict federal jurisdiction in

controversies between citizens of different states has always

been rigorously enforced by the courts.”); Snyder, 394 U.S.

at 339-40 (refusing to overrule the “aggregation doctrine” in

part because it would rewrite the “settled interpretation” of

the diversity statute incorporating that doctrine, and because

it would expand the federal caseload which would “undercut

the purpose” of the amount-in-controversy threshold

requirement). Thus, it is one governing principle and purpose

of the diversity statute — and perhaps the principal purpose

— to narrow federal jurisdiction in favor of jurisdiction

in state courts, and correspondingly limit those cases that

can be brought in federal court.'° See Thomas E. Baker,

The History and Tradition of the Amount in Controversy

Requirement: A Proposal to ‘Up the Ante’ in Diversity

Jurisdiction, 102 F.R.D. 299, 302-18 (1985).

The strict reading of the scope of diversity jurisdiction

applies here and to Petitioners’ request that this Court expand

federal jurisdiction by revisiting how to value the “object of

the litigation” to include the costs to the defendant of the

requested injunctive relief. Because such a reading of the

diversity statute would be inconsistent with, if not contrary

to, the Court’s settled jurisprudence, Petitioners’ request

should be rejected.

15. Federal courts, of course, are courts of limited jurisdiction.

Indeed, federal courts must, at all times, be ever vigilant in ensuring

that the requisite amount-in-controversy is satisfied, else jurisdiction

is lacking and the case must be dismissed. See, e.g., Thomson v.

Gaskill, 315 U.S. 442, 446 (1942); Saint Paul, 303 U.S. at 290-91;

North Pacific S.S. Co. v. Soley, 257 U.S. 216, 221 (1921).

20

II. The Rule For Valuing Injunctive Relief To Determine

Whether The Amount-In-Controversy Requirement

Under The Diversity Statute Is Well-Settled And

Prohibits Federal Jurisdiction In This Case Because

The Value Of The “Object Of The Litigation” Does

Not Exceed The Requisite Amount-in-controversy

A. When An Injunction Is Prayed for, the Amount-

In-Controversy Is Measured by the Value of the

“Object of the Litigation.”

This Court has interpreted and settled what is a “matter

in controversy” for purposes of the diversity statute in suits,

such as this one, seeking in an injunction: “it is well

established that the amount in controversy is measured by

the value of the object of the litigation.” Hunt, 432 U.S. at

347. As has been noted by commentators and courts over

the years, it is difficult to establish a rule more concrete

than this, because the “object of the litigation” can and will

differ depending on the facts and circumstances of each case.

See, e.g., Elliott v. Empire Natural Gas Co., 4 F.2d 493, 496

(8th Cir. 1925) (“No rules as to how jurisdictional amount

shall be arrived at can be laid down governing every case,

for there are different shades of fact differentiating the various

cases, and each one is dependent upon its own particular facts

and circumstances.”’) It is generally understood that the

subject or object of the litigation or matter in dispute is

“the matter upon which the action is brought and issue is

joined, and in relation to which, if the issue be one of fact,

testimony is taken.” Smith v. Adams, 130 U.S. 167, 175

(1889); see Note, 34 CoLumsia L. Rev. 311, 311 (1934). Stated

otherwise, the “matter in controversy” or “the object of the

litigation” is properly understood as the right(s) sought to be

protected by the complaint. Thus, under Hunt, it is the value

of these rights that determines whether the amount-in-

controversy requirement is satisfied when injunctive relief

is requested. |

“eae

21

Here, the object of Plaintiffs’ complaint is to hold Ford and

Citibank to their bargain and permit each class member to “earn

up to $700 in rebates over any consecutive 12-months for a

maximum rebate of $3,500 over a 5-year period” toward

the purchase or lease of certain Ford vehicles. J.A. 49, 109.

The relevant controversy is whether Ford and/or Citibank owe

Plaintiffs this right and these rebates. Thus, in this case, the

“object of the litigation” is the value of the right to be protected

and gained by Plaintiffs; it is not how much it would cost the

Petitioners to administer the relief to give value to Plaintiffs’

right, assuming their contractual rights were vindicated. Hunt,

432 US. at 347 (citing McNutt v. General Motors Acceptance

Corp., 298 U.S. 178, 181 (1936); Glenwood Light & Water Co.

v. Mutual Light, Heat & Power Co., 239 U.S. 121, 126 (1915);

Hunt v. New York Cotton Exchange, 205 U.S. 322, 336 (1907));

Armistead M. Dobie, Jurisdictional Amount in the United States

District Court, 38 Harv. L. Rev. 733, 734 (1925) (suggesting

that the amount-in-controversy is “always” determined by the

“value to the plaintiff of the right” that plaintiff seeks to

protect).'® To the extent that the Ninth Circuit’s opinion takes a

different approach from the above well-established precedent

of this Court, Respondents respectfully disagree with the panel’s

rationale.

If the object of this litigation were not clear from the

face of the complaint, it becomes abundantly clear from the

realization that were Petitioners to give each putative class

16. Several courts of appeal agree with Judge Dobie, at least in

the context of multi-plaintiff cases or class actions. See, e.g., Packard v.

Provident Nat'l Bank, 994 F.2d 1039, 1050 (3d Cir. 1993); Alfonso v.

Hillsborough County Aviation Auth., 308 F.2d 724, 726-27 (Sth Cir.

1962); Massachusetts State Pharm. Asso. v. Federal Prescription Serv.,

Inc., 431 F.2d 130, 132 n.1 (8th Cir. 1970); Snow, 561 F.2d at 790 (9th

Cir. 1977); Lonnquist, 421 F.2d at 599 (10th Cir. 1970); Ericsson GE

Mobile Communs. v. Motorola Communs. & Elecs., 120 F.3d 216, 219-

20 (11th Cir. 1997); but see Brand Name, 123 F.3d at 609-10 (7th Cir.);

Justice v. Atchison, T. & S.F-R. Co., 927 F.2d 503, 505 (10th Cir. 1991).

22

member $3,500 toward the purchase or lease of their next

qualifying Ford vehicle, the “controversy” relevant to the

injunction sought would disappear. In Russell v. Stansell, 105

U.S. 303 (1882), appellants petitioned the district court to enjoin

Stansell from collecting on an assessment worth more than

$70,000 decreed against the Levee Board of Mississippi.

The plaintiffs in the case became involved because the Levee

Board did not satisfy the decree, and under the provisions of

the statute creating the Levee Board, Stansell could obtain an

assessment and collection of the charge from the owner of the

lands in the district, which Stansell had done. Despite the fact

that the plaintiffs sought to enjoin Stansell from collecting an

amount more than the requisite amount-in-controversy, this

Court held that jurisdiction was lacking. /d. at 304. In doing so,

this Court stated that the “object was to relieve each separate

owner from the amount for which he personally, or his property,

was found to be accountable. An injunction, if granted, would

necessarily be to prevent { Stansell] from collecting from each

owner the amount for which he was separately liable.” /d.

(emphasis added). This Court then held that the plaintiffs’

interests were “distinct and separate” and thus could not be

“united” or aggregated “for the purpose of making up the amount

necessary to give us jurisdiction on appeal” even though the

injunction sought, if granted, would cost Stansell more than the

requisite amount-in-controversy. /d.

This case presents the converse to Russell. Instead of

seeking an injunction to prevent someone from collecting

what they separately owe, the object of the injunction sought

is to force the Petitioners to pay each plaintiff what they

are separately owed under their individual contracts.

And, Petitioners can relieve themselves of further liability by

paying to each what they owe. In other words, the nature of the

right Plaintiffs seek to protect through the equitable relief

requested is merely the “means through which the individual

claims may be satisfied.” J.A. 117. This is the object of the

litigation.

23

Moreover, for Plaintiffs to establish their right to

their individual rebate amounts, it does not matter that

Citibank would incur administrative costs in excess of

$75,000; those costs are simply a collateral effect of the

litigation. Ross v. Prentiss, 44 U.S. (3 How.) 771, 772 (1844)

(holding jurisdiction does not depend upon the amount of

any contingent loss or damage which one of the parties may

sustain, but upon the amount in dispute between them);

Elliott, 4 F.2d at 501 (same). Indeed, no testimony about the

administrative costs would be taken to establish and protect

the rights at issue. Cf Smith v. Adams, supra. In Ross v.

Prentiss, land worth more, and mortgaged for more than

$2,000, was about to be sold on execution for a debt of a

lesser sum, and a complaint by the mortgagee to stay the

sale was dismissed. The mortgagee appealed, and insisted

that jurisdiction depended on the value of the property, and

that he might lose the whole right of his mortgage by a forced

sale. In rejecting these arguments and dismissing the appeal,

this Court stated:

The only matter in controversy between the

parties is the amount claimed on the execution.

The dispute is whether the property in question is

liable to be charged with it or not. The jurisdiction

does not depend upon the amo: ‘nt of any contingent

loss or damage which one of the parties may sustain

by a decision against him, but upon the amount in

dispute between them; and as that amount is in this

case below two thousand dollars, the appeal must

be dismissed.

Ross, 44 U.S. at 772 (emphasis added).

Similarly, here, the relevant controversy is whether the

Petitioners breached the individual’s contract when they

unilaterally terminated the Rebate Program. The amount-in-

24

controversy is the damage, if any, each plaintiff suffered as a

result of the contractual breach, not the administrative costs

of the Rebate Program, which is collateral to the value of the

contractual right.'’ And, the value of the contractual right

undisputedly is less than $75,000 each.

B. Historically, the Plaintiff’s Viewpoint or Objective

Has Been Determinative in Valuing the “Object of

the Litigation” and the Amount-In-Controversy.

If the Court were to agree with Petitioners that their costs

are the “object of the litigation” and specifically endorse

equating the defendant’s costs with the test for determining

jurisdiction, the Court would be uprooting over a 100 years

of settled jurisprudence and fundamental principles

that Congress has relied upon in setting the amount-in-

controversy threshold only to expand federal jurisdiction

needlessly. Snyder, 394 U.S. at 338-42. To be sure, valuing

the “object of the litigation” has caused courts problems over

the years. This confusion has lead lower courts to create the

so-called “either viewpoint” rule. However, this Court has

consistently valued the “object of the litigation” from the

plaintiff’s viewpoint, in large measure because jurisdiction

is tested on the face of the complaint. Indeed, this Court has

expressly stated on several occasions that the jurisdictional

amount is to be tested “by the value of the object to be gained

by complainant.” See, e.g., Glenwood Light & Water Co.,

239 U.S. at 125. The Court should reaffirm this principle

and provide the lower courts with clear guidance explaining

17. To see just how collateral these administrative costs are,

consider the fact that although Citibank will incur administrative costs

in excess of $75,000, according to the allegations in the complaint,

Citibank will actually profit financially if the Rebate Program were

reinstated. J.A. 54. The Rebate Program was discontinued because

of Ford’s contingent liability for the outstanding rebates. J.A. 54-55.

It is the money that Ford will pay to Plaintiffs in redeeming the rebates

that are in controversy.

25

that plaintiffs are the master of the complaint and jurisdiction,

and thus it is their perspective that is paramount.

1. Plaintiff’s viewpoint determines the value

assigned to the “object of the litigation.”

Because jurisdiction is determined from and contingent

upon the allegations in the complaint, it is natural to assess

the value of the “object of the litigation” or right sought to

be enforced from the plaintiff’s perspective as well. Indeed,

this Court has declared this the rule.

In Glenwood Light & Water Co., forexample, this Court

stated “the jurisdictional amount is to be tested by the value

of the object to be gained by complainant.” Id. at 125

(emphasis added). What is of additional significance though

is that this Court specifically rejected the notion that

jurisdiction could be established by the cost to the defendant.

In Glenwood Light the plaintiff sought to enjoin the defendant

from erecting telephone poles and wires that were causing

injury to the plaintiff’s poles, wires, and business. The district

court had held “that the jurisdictional amount was fixed by

the cost to defendant of removing its poles and wires in the

streets and alleys where they conflicted or interfered with

the poles and wires of complainant, and replacing defendant’s

poles and wires in such position as to avoid conflict and

interference.” Jd. (emphasis added). That amount, as fixed

by the cost to the defendant, was less than the requisite

amount-in-controversy and the case was dismissed.

On appeal, this Court expressly held that it was erroneous to

test the jurisdictional amount by the cost to the defendant.

Instead, “the rule applicable generally to suits for injunction

to restrain a nuisance, a continuing trespass, or the like, viz.,

that the jurisdictional amount is to be tested by the value of

the object to be gained by complainant.” Id. (emphasis

added). And, because the plaintiff sued to “maintain and

26

operate its plant and conduct its business free from wrongful

interference by defendant,” it was the value that the remedy

would bring to the plaintiff that was “determinative of the

jurisdiction.” Jd. at 126.

Similarly, in Hunt v. New York Cotton Exchange,

205 U.S. 322 (1907), plaintiff Exchange brought suit to enjoin

the defendant from receiving, using, or selling quotations of

the Exchange without its consent or approval. The defendant

contended that the amount-in-controversy requirement was

not met because what plaintiff sought to enjoin was his

contract with a telegraph company from whom he received

quotations, and that contract was less than jurisdictional

prerequisite. In response, this Court first noted that plaintiff’s

injury, and the reason or “object” of the lawsuit, was not the

fee paid by Hunt under contract to the telegraph company,

but instead was

to enjoin the appellant from receiving, using or

selling, directly or indirectly, the Exchange’s

quotations or permitting or maintaining any wire

to his office over which the quotations are passing,

or distributing the quotations, until he shall have

acquired the right to receive them either by

contract of purchase from the Exchange, or

with its consent and approval, from one of the

Telegraph Companies authorized to distribute

them.

Id. at 336. This Court continued, stating:

And the right to the quotations was declared, as

we said in Board of Trade v. Christie Grain &

Stock Company, to be property, and the Exchange

may keep them to itself or communicate them to

others. The object of this suit is to protect that

27

right. The right, therefore, is the matter in dispute,

and its value to the Exchange determines the

jurisdiction, not the rate paid by appellant to the

Telegraph Company.

Id. (emphasis added).

Bitterman v. Louisville & Nashville R.R. Co., 207 U.S.

205 (1907), is yet another case where this Court expressly

held that the jurisdictional amount is determined from the

plaintiff’s perspective. In Bitterman, the railroad sought to

enjoin ticket brokers from dealing non-transferable tickets

at reduced rates. In response to a jurisdictional challenge,

this Court stated:

[T]he substantial character of the jurisdictional

averment in the bill is to be tested, not by the mere

immediate pecuniary damage resulting from the

acts complained of, but by the value of the

business to be protected and the rights of property

which the complainant sought to have recognized

and enforced.

Id. at 225 (emphasis added); see also Thomson v. Gaskill,

315 U.S. at 446-47 (valuing the amount-in-controversy in

suit seeking and injunction and damages from the face of

the complaint and solely from the “pecuniary consequence”

to plaintiffs); Clark v. Paul Gray, Inc., 306 U.S. 583, 587-89

(1939) (refusing to value the amount-in-controversy from

the defendants’ perspective in a case seeking injunctive relief

of a tax statute despite, if enjoined, the direct pecuniary

deprivation to defendant California would have exceeded the

jurisdictional threshold); Scott v. Frazier, 253 U.S. 243, 244

(1920) (“It is well settled that . . . amount in controversy must

equal the jurisdictional sum as to each complainant.”);

Berryman v. Board of Trustees, 222 U.S. 334, 345-46 (1912)

28

(valuing the amount in controversy, in a suit to enjoin the

collection of a tax against plaintiff on the ground that it was

perpetually exempt from taxation by contract, in accordance

with the value of the right plaintiff sought to protect); McNeil

vy. Southern R. Co., 202 U.S. 543, 558 (1906) (valuing rights

sought to be enforced in the action from the plaintiff's

perspective); Wheless v. St. Louis, 180 U.S. 379, 382 (1901)

(valuing an injunction and stating:

The ‘matter in dispute’ within the meaning of the

statute is not the principle involved, but the

pecuniary consequence to the individual party,

dependent on the litigation, as, for instance, in

this suit the amount of the assessment levied,

or which may be levied, as against each of the

complainants separately. The rules of law which

might subject complainants to or relieve them

from assessment would be applicable alike to all,

but each would be so subjected, or relieved, in a

certain sum, and not in the whole amount of the

assessment.

Gibson v. Shufeldt, 122 U.S. 27, 39 (1887) (“The sole matter in

dispute .. . is between the defendants and each plaintiff as

to the amount which the latter shall recover”); see generally

C. T. Drechsler, Criterion of Jurisdictional Amount to Vest

Jurisdiction of Federal Court Where Injunction Is Sought, 30

A.L.R.2d 602 (1954 & Supp. 2002). |

Despite this Court’s pronouncement of such a clear rule

that the “amount in controversy must equal the jurisdictional

sum as to each complainant,” Scott v. Frazier, supra,

Plaintiffs acknowledge that this Court has not always

seemingly determined the value of the “object of the

litigation” from the “plaintiff's viewpoint”, though it has

always valued the objective from the rights plaintiffs put

29

at issue and the allegations contained in the complaint.

See, e.g., Mississippi & Missouri Railroad Co. v. Ward, 67

U.S. (2 Black) 485, 492 (1863); Market Co. v. Hoffman, 101

U.S. (11 Otto) 112, 113 (1879). Petitioners latch onto these

two cases to support their contention that “either viewpoint”

rule controls federal jurisdiction under the diversity statute

whenever plaintiffs’ seek an injunction. However, these cases

are not contrary to the well-settled rule that it is the plaintiff's

complaint and the plaintiff’s “object of the litigation” that is

controlling.

First, Market Co. v. Hoffman, is inapposite. As this Court

has noted, it is a case involving several plaintiffs with a

common and undivided interest and thus the value of the

litigation was the aggregate amount at stake by the sale of

the market stalls. See Gibson, 122 U.S. at 34 (grouping

Market Co. with Shields v. Thomas, 58 U.S. (17 How.) 3

(1855), and Freeman v. Dawson, 110 U.S. 264 (1884)).

In Market Co., 206 complainants, all occupiers of the stalls

in the market, sued jointly to enjoin (and did enjoin) the

market company from selling the stalls for more than

$60,000. On appeal, this Court stated, “the decree is a single

one in favor of them all, and in denial of the right claimed

by the company, which is of far greater value than the sum

which, by the act of Congress, is the limit below which

an appeal is not allowable.” Market Co., 101 U.S. at 113.

Furthermore, the purpose of the lawsuit was to enjoin the

sale. Thus, the “object of the litigation,” from the plaintiff’s

perspective also happened to be the cost to the defendant.

Mississippi & Missouri Railroad Co. v. Ward, however,

is a little more problematic, though it too is reconcilable

with the “plaintiff’s viewpoint” rule. Suing as a “public

prosecutor,” the plaintiff in Ward sought to abate a public

nuisance. In particular, the plaintiff sought removal of the

30

Rock Island Bridge, which spanned the Mississippi river, on

the theory that the bridge was an obstruction to navigation

and amounted to a public nuisance. No damages were asked.

This Court noted, in sustaining jurisdiction, “[b]ut the want

of a sufficient amount of damage having been sustained to

give the Federal Courts jurisdiction will not defeat the

remedy, as the removal of the obstruction is the matter of

controversy, and the value of the object must govern.” 67

U.S. at 492. Courts and commentators have interpreted this

statement as proof that the “defendant’s viewpoint” can be

considered in valuing the amount-in-controversy. See, e.g.,

Dobie, supra, at 740. However, this Court’s decision in Ward

is consistent with the “plaintiff’s viewpoint” rule even though

the amount-in-controversy was measured by the cost to

remove the bridge. Indeed, properly understood, Ward is yet

another case where the “object of the litigation” is determined

by the complaint and plaintiff’s viewpoint, and valued in

accordance with what the plaintiff sought to accomplish or

obtain through the litigation (i.e., the removal of the bridge).

Thus, in Ward and Market Co., and like many other cases,

the value of the litigation to the plaintiff was identical to the

cost to the defendant. See Pet. Br. at 10 (“the recovery sought

by the plaintiff usually equals the liability faced by the

defendant” and citing authorities).

Accordingly, because this Court has historically valued

the “object of the litigation” solely from the plaintiff’s

viewpoint, and because Congress has relied on this Court’s

precedent in establishing the requisite amount-in-controversy,

the Court should reject Petitioners’ invitation to adopt the

“either viewpoint” rule when determining how to value the

“object of the litigation” and explicitly reaffirm that the

plaintiff’s viewpoint is the only viewpoint relevant to the

calculus.

31

2. The “paramount policy” of this Court is that

plaintiff’s complaint controls jurisdiction.

Expressly adopting a plaintiff viewpoint rule is consistent with

the “paramount policy” of this Court that “the plaintiff is the master

of the complaint,”'* and the general rule governing dismissal

for want of jurisdiction in cases brought in federal court is that

“the sum claimed by the plaintiff controls if the claim is apparently

made in good faith.” Saint Paul, 303 U.S. at 288. Furthermore,

taking the plaintiff's viewpoint and objective is consistent with

the well-pleaded complaint rule’? and the removal statute as

“the status of the case as disclosed by the plaintiff's complaint

is controlling in the case of a removal, since the defendant

must file his petition before the time for answer or forever lose

his right to remove.” Jd. at 291.”° In fact, if on the face of the

complaint, it is obvious to a court that a suit cannot involve

the necessary amount, dismissal of the federal action is required.

Id." Accordingly, the Court should reaffirm the bright line test

that the plaintiff's viewpoint determines jurisdiction.

18. Caterpillar, Inc. v. Williams, 482 U.S. 386, 398-99 (1987);

Healy v. Sea Gull Specialty Co., 237 U.S. 479, 480 (1915) (Holmes, J.).

19. This Court has long held that “the presence or absence of

federal-question jurisdiction is governed by the ‘well-pleaded complaint

rule,’ which provides that federal jurisdiction exists only when a federal

question is presented on the face of the plaintiff’s properly pleaded

complaint.” Rivet v. Regions Bank, 522 U.S. 470, 475 (1998) (quoting

Caterpillar, Inc. v. Williams, 482 U.S. at 392).

20. A defendant may remove a case only if the claim could have

been brought in federal court. 28 U.S.C. § 1441(b). “Jurisdiction may

not be sustained on a theory that the plaintiffhas not advanced.” Merrell

Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 810 n.6 (1986) (emphasis

added).

21. Certain amici suggest that so much emphasis on the

plaintiff’s perspective might unfairly prejudice defendants. Abiding

(Cont'd)

32

Such “bright line” principles are basic to plaintiffs’ long-

established rights to decide “what jurisdiction [they] will

appeal to,” Sea Gull, 237 U.S. at 480, and “what law

[they] will rely upon.” Merrell Dow, 478 U.S. at 810 n.6.

If a defendant, by merely recasting the complaint or adding

allegations about the cost of the injunctive relief requested

could defeat a plaintiff’s choice of law or forum, then, in the

words of this Court, “the plaintiff would be master of

nothing.” Caterpillar, 482 U.S. at 399; see also Great

Northern R. Co. v. Alexander, 246 U.S. 276, 281 (1918)

(jurisdiction is “to be determined by the allegations of the

complaint . . . it cannot be made removable by any statement

in the petition for removal or in subsequent pleadings by the

defendant”). This is especially true in a case such as this one

against two behemoth corporations that do business in all 50

states and across the globe, where any injunctive relief

requested would realistically cost them in excess of $75,000

in administrative compliance costs regardless of the number

of plaintiffs. Brand Name, 123 F.3d at 610 (noting “every

case, however trivial, against a large company would cross

the threshold, whether the threshold was $50,000 or as it

now is $75,000, even if the plaintiff were asking for an

injunction against disclosing his unlisted telephone number”).

(Cont'd)

by strict adherence to the complaint and the plaintiffs’ objective in

the litigation does not unfairly prejudice defendants. In most litigation

a defendant can choose to become the plaintiff in the same

controversy by invoking the Declaratory Judgment Act or a state’s

analog, choose the jurisdiction that they wish to be in, and the law

that they wish to apply. In this case, had defendants attempted to

take such an approach, they would have sought an order validating

their alleged right to terminate the individual agreements between

them and the putative class members and avoid payment of the rebates

Plaintiffs allege they are owed. The “controversy” would remain the

same, and the same amount of money would be at issue.

_ =

C. The Doctrine of Stare Decisis Militates Against

Adopting the “Either Viewpoint” Rule.

As this Court has stated, stare decisis is “the preferred

course because it promotes the evenhanded, predictable, and

consistent development of legal principles, fosters reliance

on judicial decisions, and contributes to the actual and

perceived integrity of the judicial process.” Payne v.

Tennessee, 501 U.S. 808, 827 (1991). “Considerations of

stare decisis have special force in the area of statutory

interpretation, for here, unlike in the context of constitutional

interpretation, the legislative power is implicated, and

Congress remains free to alter what we have done.” Patterson

v. McLean Credit Union, 491 U.S. 164, 172-173 (1989).

Petitioners’ request that the Court adopt the “either

viewpoint” rule threatens to undermine, if not overrule, this

Court’s precedent interpreting the unambiguous provisions

of the diversity statute. In short, Petitioners request that the

Court value the “object of the litigation” differently than this

Court has ever done. As discussed above, the relevant

decisions of this Court have stood for decades and, more

importantly, are the products of over 100 years of this Court’s

jurisprudence. These decisions also include the non-

aggregation principle discussed below, which is equally

impacted by Petitioners’ request.

Other than increasing the amount-in-controversy

threshold to establishing federal jurisdiction, the relevant text

of the diversity statute and the scope of federal diversity

jurisdiction have remained essentially unchanged by

Congress since the statute was originally enacted. It is settled

that “[t]he policy of the [diversity] statute calls for its strict

construction. ... Due regard for the rightful independence

of state governments, which should actuate federal courts,

requires that they scrupulously confine their own jurisdiction

34

to the precise limits which the statute has defined.” Healy,

292 U.S. at 270; Snyder, 394 U.S. at 339-40. Indeed,

Congress has understood the purpose of amount-in-

controversy requirement as to preserve the proper role of

state courts and to avoid the overburdening of federal courts.

See Baker, supra, 102 F.R.D. at 302-18. Thus, without

Congress acting to amend the diversity statute to adopt the

“either viewpoint” rule or amend the non-aggregation

principle, it would be inappropriate for this Court to revisit

the holdings to expand federal jurisdiction where “Congress,

with complete understanding of how the courts had construed

the statute,” has chosen not to. Zahn, 414 U.S. at 300-01;

Snyder, 394 U.S. at 339-42.”

Admittedly, there may be valid policy reasons to consider

the defendant’s viewpoint in valuing the “object of the

litigation” and Petitioners and amici more than adequately

provide the Court with this discussion (e.g., ensuring that

the case is substantial, and help protect from bias, though it

is fair to wonder just how biased Petitioners would be in any

state as they do business in every state). However, this Court

should not pronounce a new rule reinterpreting how to value

the “object of the litigation” when that procedure has been

long settled. E.g., Scott v. Frazier, 253 U.S. at 244 (“It is

well settled ... amount in controversy must equal the

jurisdictional sum as to each complainant.”).

22. In fact, any change purporting to alter the definition of the

“amount in controversy” would conflict with the command of Rule

82. Snyder, 394 U.S. at 337-38. The cases discussed in this brief for

the most part predate the 1958 amendment to the diversity statute.

Thus, Petitioners’ discussion in note 4 of their brief is simply

irrelevant as Congress is presumed to know the Court’s interpretation

of the statute, and when essentially left unchanged for over one

hundred years, Congress is deemed to have ratified the Court’s

interpretation. Lorillard v. Pons, 434 U.S. 575, 580-81 (1978).

35

Furthermore, the Court should be leery of adopting

Petitioners’ request because that would open the federal courts

to the hundreds, if not thousands, of state court actions filed

across the country annually that pray for injunctive relief,

especially when this Court has expressed its concern over the

caseloads in federal court. See 1999 Year-End Report on the

Federal Judiciary.” Indeed, the U.S. Department of Justice

expressed its concern to Congress about the impact that the Class

Action Fairness Act of 2000 would have had on the federal

courts, stating: it “would flood the Federal courts with class

action suits at a time when the Chief Justice, among others, has

reportedly expressed serious concerns about the increasingly

burdensome workload of the Federal court.” Letter from

Robert Raben, Asst. Attorney General, to Sen. Leahy, dated June

9, 2000, at 3, available at www.citizen.org/documents/

ACF219.PDF. If the provisions of the Class Action Fairness

Act caused the U.S. Department of Justice to note the “flood”

of additional lawsuits the federal courts would be asked to hear,

Petitioners’ request to adopt the untethered “either viewpoint”

rule would result in an absolute deluge of additional cases.

If Congress chooses to, it can and should amend section 1332

to incorporate defendant’s viewpoint. See, e.g., Conroy v.

Aniskoff, 507 U.S. 511, 528 (1993) (Scalia, J., concurring) (“The

language of the statute is entirely clear, and if that is not what

Congress meant then Congress has made a mistake and Congress

will have to correct it.””) However, this Court’s precedent simply

forecloses an interpretation of the “object of the litigation” that

incorporates the defendant’s viewpoint in valuing the amount-

in-controversy. See supra.

Another reason that this Court should await Congressional

action is that Congress is best suited to making the policy

decisions implicated. For example, Congress should determine

where to draw the line as to the “due regard” to be given to state

23. In 2001, the filings in the federal courts of appeal reached

an all-time high at 57,464. Civil filings in 2001 were also substantial,

totaling 258,517. 2001 Year-End Report on the Federal Judiciary.

36

governments and their courts. See Shamrock Oil, Healy, supra.

Indeed, the Court should decline to adopt Petitioners’ expansive

interpretation of the diversity statute because it would invariably

result in the “unnecessary federalization of traditional state court

matters” at a time when the federal courts are burdened heavily

already. 1999 Year-End Report on the Federal Judiciary (quoting

Chief Justice Rehnquist).

Petitioners should take some solace from the fact that

Congress may give them what they ask of this Court. Pending

before Congress are S. 1712 and H.R. 2341 (the “Class Action

Fairness Act of 2001”).** These bills seek to amend 28 U.S.C.

§ 1332 to federalize class actions and modify the amount-in-

controversy requirements. In fact, since at least 1998, Congress

has been attempting to amend the diversity statute as applied to

class actions because several legislators perceive, just as

Petitioners do, the need to amend the diversity statute to undo

the effect of this Court’s holdings interpreting the amount-in-

controversy provision and the non-aggregation principle so

recently reaffirmed in Snyder and Zahn.” If enacted, the Class

Action Fairness Act would establish the new rules of federal

jurisdiction in class actions that Petitioners ask this Court to

write but at a different and higher threshold, well above the

present $75,000.”°

24. The fact that the Class Action Fairness Act is pending before

Congress implicitly acknowledges that a case such as this one, where

plaintiffs’ state law claims are separate and distinct, cannot be aggregated

or otherwise brought in federal court on the basis of diversity jurisdiction

or through removal.

25. Asimilar bill, each one entitled “Class Action Fairness Act of

[Year]”, has been introduced in the House and Senate every year since

1998.

26. In relevant part, the Act would modify section 1332 to read:

(d)(2) The district courts shall have original jurisdiction

of any civil action in which the matter in controversy

(Cont'd)

37

In sum, because this Court has historically valued the

“object of the litigation” from the plaintiff’s viewpoint and

has historically declared that to be the rule, this Court should

not uproot its long-settled interpretation of the amount-in-

controversy requirement to view the “object of the litigation”

from the defendant’s viewpoint. Instead, this Court should

reaffirm its prior holdings and state clearly that the plaintiff’s

viewpoint controls the “object of the litigation,” and defer

to Congress the determination of whether diversity

jurisdiction should be expanded.”’

(Cont'd)

exceeds the sum or value of $2,000,000, exclusive of

interest and costs, and is a class action in which —

(A) any member of a class of plaintiffs is a citizen

of a State different from any defendant;

(d)(4) In any class action, the claims of the individual

class members shall be aggregated to determine whether

the matter in controversy exceeds the sum or value of

$2,000,000, exclusive of interests and costs.

Resp. App. at 16a-17a; 38a-39a.

The Act would also amend the removal statute to include a

provision to make most orders remanding a class action to state court

immediately appealable.

27. If the Court concludes that the “object of the litigation”

here, viewed solely from the plaintiff's perspective, is merely the

reinstitution of the Rebate Program in the abstract, including all of

the attendant costs, and not Plaintiffs’ subsequent use and monetary

entitlements under the program which alone bring value to Plaintiffs’

contractual rights, Plaintiffs concede that the amount-in-controversy

(Cont'd)

38

Ill. The “Object Of The Litigation” Here Cannot Exceed

The Requisite Amount-In-Controversy Without

Violating The Non-Aggregation Principle Applicable

To Class Actions

The primary object of this litigation, as is uncontested,

is for Plaintiffs to receive the benefit of the bargain of the

Rebate Program that Ford and Citibank unlawfully

terminated. That is, Plaintiffs seek the opportunity to accrue

rebates and spend them on the purchase or lease of qualifying

Ford vehicles, viz., it is to collect and use their rebates.

That right was valued at $3,500 — at most — for any one

plaintiff. J.A. 95, 113. Thus, because the “object of the

litigation” was valued at no more than $3,500 per plaintiff,

in accordance with non-aggregation principle applicable to

class actions, this case does not meet the jurisdictional

threshold on the facts. To find jurisdiction under the diversity

statute under these facts would require this Court to overrule

Snyder and Zahn and over 100 years of precedent.

A. The Non-Aggregation Principle and Its Strict

Application.

According to the traditional interpretation of the diversity

statute, the non-aggregation principle holds that the “separate

and distinct claims of two or more plaintiffs cannot be

aggregated in order to satisfy the jurisdictional amount

requirement.” The only time aggregation is permitted in

multi-plaintiff cases is where “two or more plaintiffs unite

to enforce a single title or right in which they have a common

and undivided interest.” Snyder, 394 U.S. at 335 (emphasis

(Cont’d)

requirement is satisfied. However, Plaintiffs’ allege that the “object

of the litigation” is more than the reinstatement of the program in

the abstract, as it is only the use of the program and redemption of

the rebates that brings value to Plaintiffs’ rights.

39

added); see also Zahn, 414 U.S. at 295-96 (same); Clark v.

Paul Gray, Inc., 306 U.S. 583, 588-89 (1939) (same);

Wheless, 180 U.S. at 382 (same); Clay v. Field, 138 U.S.

464, 479 (1891) (same); Russell v. Stansell, 105 U.S. at 304

(same); Oliver v. Alexander, 31 U.S. (6 Pet.) 143, 145-47

(1832) (same). The non-aggregation principle equally applies

in multi-defendant cases. Walter v. Northeastern R. Co., 147

U.S. 370, 373-74 (1893). Thus, no plaintiff or defendant may

enter federal court by “rid[ing] on another’s coattails.” Zahn,

414 US. at 301.

The non-aggregation principle is applied strictly.

Indeed, so strictly has it been applied, that, in cases

where, although the entire matter in dispute in the

suit exceeds in value the jurisdictional limit,

nevertheless, if there are several and separate

interests in that sum, belonging to distinct parties,

and constituting distinct causes of action, although

actually united in one suit and growing out of the

same transaction, the jurisdiction of the court has

been constantly denied.

Elgin v. Marshall, 106 U.S. (16 Otto.) 578, 582 (1882).

The strict construction is demanded even where plaintiffs allege

a “common and undivided” interest. See, e.g., Thomson, 315

U.S. at 446 (dismissing for want of jurisdiction where the record

failed to contain the contracts upon which plaintiffs’ allegedly

“common and undivided” claims were brought).

B. Plaintiffs’ Claims Are Separate and Distinct; the

Claims Cannot Be Aggregated.

Petitioners concede that plaintiffs’ claims are separate

and distinct. J.A. 113, 117. Thus, plaintiffs have no single

title or right in which they share a common and undivided

40

interest. However, Petitioners contends that the relief sought,

in particular reinstitution of the Rebate Program, is common

and undivided and thus its value to Plaintiffs may be

aggregated to meet the jurisdictional threshold even while

conceding that plaintiffs do not have a united title or right

to the relief requested. Pet. Br. at 26-31. Petitioners

misapprehend the non-aggregation principle.

By its very terms, the non-aggregation principle only

applies to claims, i.e., the “single titles or rights” in which

the parties share a common and undivided interest that one

or more plaintiffs seek to protect. It does not apply to the

relief requested, no matter how “common and undivided”

that interest may be. Snyder, 394 U.S. at 336-37; Clark, 306

U.S. at 588; Saint Paul, 303 U.S. at 294 (“[t}he claim,

whether well or ill founded in fact, fixes the right of the

defendant to remove”); Gibson, 122 U.S. at 30 (“the test is

whether they claim it under one common right .. . or claim

it under separate and distinct rights”) (emphasis added);

Oliver, 31 U.S. at 146 (“If the cause of action is several, the

suit must be several also.””); Morrison v. Allstate Indem. Co.,

228 F.3d 1255, 1264 (11th Cir. 2000) (“For amount in

controversy purposes, however, it is the nature of the right

asserted, not that of the relief requested, that determines

whether the claims of multiple plaintiffs may be aggregated”);

Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977-78 (7th Cir.

2000) (noting that remedy sought, seeking imposition of

constructive trust, does not convert claims of putative class

members entitled to their own separate recovery into common

and undivided interest); Gilman v. BHC Sec., 104 F.3d 1418,

1422-24 (2d Cir. 1997) (discussing the non-aggregation

principle and focusing on the rights to be protected); Snow,

561 F.2d at 790 (9th Cir.) (“the proper focus ... is not

influenced by the type of relief requested, but rather continues

to depend upon the nature and value of the right asserted,”

41

(i.e., the object of the litigation)); Alvarez v. Pan American

Life Ins. Co., 375 F.2d 992, 993-94 (Sth Cir. 1967) (holding

class conversion and contract claims are separate and distinct

even though relief sought was class-wide and not individual).

Here, it is uncontested that Plaintiffs’ claims and causes

of action are separate and distinct. J.A. 113, 117. Indeed, the

contracts at issue do not grant any plaintiff any interest,

title, or right in any other plaintiff’s contract. Moreover,

because Plaintiffs’ claims are separate and distinct, each class

member will be owed a separate rebate amount and damages,

assuming that the lawsuit is successful.”* Accordingly,

aggregating Plaintiffs’ claims would violate the non-

aggregation principle.

Additionally, the district found that “(t]he injunctive

relief sought ... is simply a means to vindicate each

plaintiff’s separate and individual claim for accrual of rebates

for five years.” J.A. 96. Consequently, if the Court were to

accept Petitioners’ argument that simply by virtue of

including a request for injunctive relief, separate and distinct

claims, which cannot be aggregated to obtain federal

jurisdiction, could suddenly be bootstrapped into federal

court. This result would “undermine the principles of Snyder

and Zahn.” J.A. 96-97. Thus, because the separate value of

the lawsuit to each plaintiff is less than $75,000, this case

28. Petitioners suggest that they have no interest in how the

damages of this suit are apportioned or what rebates are owed to

each plaintiff and class member. Pet. Br. at 27-28. This contention

seems incongruous with the purpose of the lawsuit, which is to

enforce the contractual right to the rebate and give each class member

his or her separate opportunity to cash this right in on the purchase

or lease of a qualifying Ford vehicle. See supra. And, as Petitioners

acknowledge, the value of this right is dependant on cardholder usage.

Pet. Br. at 28; see also J.A. 53-54, 87-88.

42

cannot meet the requirements for jurisdiction without running

afoul of the non-aggregation principle.

Even under the “either viewpoint” rule, obtaining federal

jurisdiction in this case requires aggregation. Although

Petitioners contend that the business cost of reinstating the

Rebate Program, even for one plaintiff, exceeds the $75,000

threshold, the district court found that Petitioners failed to

prove this jurisdictional fact. J.A. 97. The district court did

so for a good, but albeit, unstated reason: the evidence in the

record simply fails to support Petitioners. Because there are

multiple defendants, neither defendant can ride the coattails

of the other to assert federal jurisdiction. Here, even if the

Court were to conclude that the “object of the litigation” is

more than $75,000 per plaintiff, the evidence in the record”

about the costs of administering the Rebate Program fails to

prove that Ford would incur costs or liabilities more than

$75,000 per plaintiff. In fact, not only have Petitioners failed

to include a copy of the Ford-Citibank contract which might

permit a court to determine if they have a “common and

undivided” interest in the Rebate Program, see Thomson, 315

U.S. at 446, but they have also submitted evidence that the

costs of the program are not shared equally. Indeed, according

to the record, Citibank shoulders the administrative costs of

the program while Ford provides the rebate credits, J.A. 87-

88, which can be no more than $3,500 per plaintiff. J.A. 95,

113. Thus, even accepting Petitioners’ argument that the costs

of implementing Rebate Program count toward valuing the

amount-in-controversy, this case would run afoul of the non-

aggregation principle because the costs to Ford must be

aggregated to exceed the jurisdictional threshold. Stated

otherwise, even if the defendant’s viewpoint is considered

and jurisdiction is tested by “the cost to each defendant of

29. The Court is limited to the record in assessing whether the

jurisdictional amount is sufficient. Thomson, 315 U.S. at 446.

43

an injunction running in favor of one plaintiff,”*° finding

jurisdiction here violates the non-aggregation principle

because the cost to Ford is at most $3,500 per plaintiff.

Accordingly, the district court’s finding that Petitioners failed

to meet their burden under the “either viewpoint” rule should

be upheld. J.A. 97.

C. The “Either Viewpoint” Rule Does Not Provide

an Exception to the Non-Aggregation Principle.

Every court expressly adopting the “either viewpoint”

rule has held that it is limited by the non-aggregation principle

articulated in Snyder and Zahn. See, e.g., Brand Name, 123

F.3d at 609-10. Thus, every court must value the “object of

the litigation” without aggregating “separate and distinct”

claims. Petitioners’ request that this Court recognize

administrative compliance costs as part of the value of the

“object of the litigation” is tantamount to rewriting the non-

aggregation principle to include an exception that would

swallow the rule. Respectfully, such costs should simply be

deemed collateral to the “object of the litigation” and thus

irrelevant to the jurisdictional calculation. See Ross, supra.

Alternatively, this Court should uphold the Ninth Circuit’s

ruling that such costs are, as a matter of law, excluded from

the amount-in-controversy as this will adhere to the purpose

of the non-aggregation principle and limit federal jurisdiction.

No court under any approach has accepted the argument

that ministerial or administrative business costs of compliance

with an injunction satisfy the amount-in-controversy

requirement. Just like the panel below, in Brand Name, Judge

Posner specifically emphasized that if such an argument

were accepted, “then every case, however trivial, against a

large company would cross the threshold.” 123 F.3d at

610. For example, although Petitioners contend otherwise,

30. Brand Name, 123 F.3d at 610.

ae

see Pet. Br. at 23, Snow v. Ford would be removable under the

rule Petitioners ask this Court to adopt. Snow v. Ford Motor

Co., 561 F.2d 787 (9th Cir. 1977).

In Snow, the plaintiff filed suit in state court seeking

damages and an injunction against Ford from continuing to sell

trailering special packages without a wiring connector kit.

Like the present case, Ford removed and argued that the requisite

amount-in-controversy was met because of the business right

Snow sought to enjoin, as it would affect all of Ford’s future

sales and impose substantial costs on Ford. Jd. at 790. The court

disagreed, as the injury Ford allegedly caused each plaintiff and

putative class member was $11. According to the court, this

was the nature and value of the right asserted, it was not the

administrative business expenses Ford would incur. Jd. However,

including the administrative costs that a business would incur

in complying with an injunction when making the amount-in-

controversy determination, including those in Snow, would

easily bring such cases into federal court. Indeed, simply the

cost of duplicating and disseminating such an order within a

large corporation alone might exceed the jurisdictional threshold.

See Brand Name, 123 F.3d at 610.

If Petitioners’ request to include these administrative costs

in valuing the “object of the litigation” were adopted in full, the

kinds of cases suddenly capable of being brought in federal court

would not simply be limited to multi-party cases either. Indeed,

if such administrative compliance costs were considered, there

would be nothing to stop large corporate defendants from

removing every diversity case seeking an injunction to federal

court, and thereby render plaintiffs “master of nothing.”

Cai. -pillar, 482 U.S. at 399. Nor would there be anything to

stop plaintiffs from accessing the federal courts if all any diverse

plaintiff had to do was pray for injunctive relief. Snow, 561

F.2d at 791. In short, adoption of the “either viewpoint” rule

would blow the federal courthouse doors wide open. Thus, even

i CY

45

if the Court accepts Petitioners’ argument that defendants’

viewpoint matters in valuing the amount-in-controversy, this

Court should uphold the panel’s ruling that administrative

compliance costs of the nature involved here, as a matter of

law, cannot be included in the jurisdictional calculus.

Fundamentally, there is little reason to include these

kinds of compliance costs in any event. These business costs

are simply not the kind of business costs that courts would

consider even under the “either viewpoint” approach.

Pre-litigation, the Petitioners had the Rebate Program in

place, the business apparatus had been designed, employees

had been hired, and the Rebate Program was operational.

The injunction requested, at the time the suit was filed, was

simply to keep the business practice going as a means to

compensate Plaintiffs for the damages suffered. J.A. 95-96.

It was not as though the injunction requested Ford or Citibank

to design a new program or create a new product and thus

substantially alter their business practices. See, e.g., Jn re

Microsoft Corp. Antitrust Litig., 127 F. Supp. 2d 702, 718-

19 (D. Md. 2001) (noting the value of the litigation (i.e.,

creating a Windows operating system untied from the Internet

Explorer) would cost more than $58 million to create).

Instead, the injunction requested would simply have

maintained the business practice that Petitioners established

uniil each plaintiff had been paid up to $3,500 in value, which

is exactly what Plaintiffs bargained for in signing up for the

co-branded credit card.

In sum, adoption of the “either viewpoint” rule would

open the courthouse doors to every large corporation

whenever any diverse plaintiff (or plaintiffs) sues them and

seeks injunctive relief. Moreover, it would permit any diverse

plaintiff to assert federal against a large corporation

jurisdiction simply by including a prayer for injunctive relief.

The “either viewpoint” rule thus subverts the non-aggregation

46

principle entirely. Moreover, as emphasized already,

expansions of federal jurisdiction are not the province of this

Court; they are Congress’s responsibility. And, adoption

of the “either viewpoint” rule would expand diversity

jurisdiction in a manner inconsistent with the settled

interpretations and policies of the diversity statute and Snyder

and Zahn. Accordingly, the Court should reject Petitioners’

invitation.*!

31. Plaintiffs would be remiss if they ignored several of the

amici’s contention that state courts are somehow beholden to

plaintiff’s lawyers or incapable of handling class actions. The state

court judges who are elected are beholden to the electorate, as is any

elected official. Over the years they have proven exceptionally

capable jurists. And, though some state courts may have fewer

resources at their disposal than the federal courts, this fact does not

equate with a lesser form of justice. State courts seek to do justice

and work diligently at it. Moreover, both state and federal judges are

capable of committing errors with the resources they have.

47

CONCLUSION

For the reasons explained above, the judgment should

be affirmed.

MICHAEL J. ROSENFELD

KALB, ROSENFELD & EssiG

283 Commack Road

Commack, NY 11725

(516) 499-3800

James G. Lewis

9911 W. Pico Blvd, Suite 503

Los Angeles, CA 90035

(310) 553-1661

Russe_i J. DRAKE

WuatLey Drake LLC

2323 2nd Ave., North

P.O. Box 10647

Birmingham, AL 35202-0647

(205) 328-9576

Respectfully submitted,

Steve W. BERMAN

Counsel of Record

ANDREW M. VOLK

R. BRENT WALTON

HAGENS BERMAN

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

RoGeR W. KIRBY

ANDREA BIERSTEIN

Kirsy McINERNEY & SQUIRE

830 Third Ave., 10" Floor

New York, NY 10022

(212) 317-2300

JoHn H. ALEXANDER

ALEXANDER & ASSOCIATES

100 W. Monroe Street

21* Floor

Chicago, IL 60603

(312) 263-7731

Counsel for Respondents