Hills McGee v. Sentinel Offender Services, LLC , 719 F.3d 1236 ( 2013 )

Case: 11-14077 Date Filed: 06/06/2013 Page: 1 of 17
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-14077
________________________
D.C. Docket No. 1:10-cv-00054-JRH-WLB
HILLS MCGEE,
Plaintiff - Counter
Defendant -Appellant,
versus
SENTINEL OFFENDER SERVICES, LLC,
Defendant - Counter
Claimant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(June 6, 2013)
Case: 11-14077 Date Filed: 06/06/2013 Page: 2 of 17
Before TJOFLAT and BLACK, Circuit Judges, and MOTZ, ∗ District Judge.
PER CURIAM:
I.
On October 23, 2008, Hills McGee pled “no contest” to two misdemeanor
offenses in the State Court for Richmond County, Georgia. The trial court
sentenced McGee to consecutive prison sentences of twenty-four months, but
suspended the execution of the sentences, instead placing him on probation for
twenty-four months. As a condition of his probation, McGee had to pay a $39
monthly Probation Supervision Fee to Sentinel Offender Services, LLC
(“Sentinel”), a private probation services company that contracted with Richmond
County to provide supervision for probationers. 1
In the summer of 2009, McGee stopped reporting to his probation officer
and had failed to pay $186 in overdue supervision fees. Sentinel therefore
petitioned the trial court to revoke McGee’s probation. On January 13, 2010, the
∗
The Honorable J. Frederick Motz, District Judge, United States District Court for the
District of Maryland, sitting by designation.
1
The Georgia legislature has authorized Georgia counties to contract with private
entities to provide probation services. O.C.G.A. § 42-8-100(g)(1) provides:
The chief judge of any court within the county, with the approval of the governing
authority of that county, is authorized to enter into written contracts with
corporations, enterprises, or agencies to provide probation supervision,
counseling, collection services for all moneys to be paid by a defendant according
to the terms of the sentence imposed on the defendant as well as any moneys
which by operation of law are to be paid by the defendant in consequence of the
conviction, and other probation services for persons convicted in that court and
placed on probation in the county.
2
Case: 11-14077 Date Filed: 06/06/2013 Page: 3 of 17
court held a revocation hearing. Prior to the hearing, McGee signed a form stating
that he waived the assistance of counsel. At the hearing, the probation officer
established McGee’s noncompliance with the conditions of his probation—failure
to report to his probation officer and to pay the $39 monthly fee. The court
revoked McGee’s probation and imposed an alternative sanction. If McGee
immediately paid the $186 arrearage due Sentinel, his probation would be
terminated. If he failed to pay the $186, McGee would be confined in the county
jail for two months. McGee did not pay the $186 and was sent to jail.
On January 22, 2010, McGee filed a petition for a writ of habeas corpus,
pursuant to O.C.G.A. § 9-14-1 et seq., in the Superior Court of Richmond County,
seeking release from confinement. On January 28, 2010, the court granted
McGee’s petition, holding that McGee lacked the mental competence to waive his
right to counsel at his probation revocation hearing. The court found that the
continued confinement of McGee would be unlawful and ordered his release.
More than a month after his release, on March 8, 2010, McGee received a
letter from a Sentinel employee assigned to oversee his probation. The letter stated
that McGee had failed to report to his probation officer and that he must pay $186
to Sentinel at his next reporting date on March 16, 2010. On April 1, 2010, McGee
received another letter from Sentinel that stated that McGee had failed to report to
his probation officer on March 16, 2010. It went on to say that if McGee failed to
3
Case: 11-14077 Date Filed: 06/06/2013 Page: 4 of 17
report on April 12, 2010, Sentinel would petition the court to revoke his probation.
On April 16, 2010, in response to these letters, McGee filed a suit against Sentinel
in the Superior Court of Richmond County. The suit was initiated with a document
styled “Petition to Hold Sentinel Offender Services, LLC in Willful Contempt of
Court and Petition for Damages” (the “complaint”). That same day, the court
issued a temporary restraining order against Sentinel and ordered it to show cause
why the court should not hold it in willful contempt of court for seeking the
revocation of McGee’s probation after the court had issued a writ of habeas corpus
effectively terminating his probation.2
The complaint contained two counts. Count I requested that the court hold
Sentinel in criminal contempt of court for resisting the Superior Court’s order
granting McGee a writ of habeas corpus and “using its position as a probation
company to attempt to collect a debt that is not owed or due by threatening to have
[McGee] jailed without bond.” Record, no. 1-1, at 4. Count I also sought an
injunction that would forbid Sentinel from taking any action against McGee based
on what McGee described as his “voided conviction.” Count II, which was
brought as a class action for damages,3 alleged that Sentinel engaged in a pattern of
2
Though its order to show cause did not so state, the court was apparently treating
Sentinel’s potential contempt as criminal contempt and using the civil case McGee had brought
as the foundation for the criminal proceeding.
3
McGee’s purported class consisted of all individuals (1) who had been convicted of a
misdemeanor or ordinance violation in the State of Georgia; (2) who are under probation
4
Case: 11-14077 Date Filed: 06/06/2013 Page: 5 of 17
racketeering activity as defined by the Georgia Racketeer Influenced and Corrupt
Organization Act (RICO), O.C.G.A. § 16-14-1 et seq. Count II asserted that
Sentinel had attempted to commit two acts of racketeering activity, specifically
two acts of theft by deception, by sending McGee the March 8, 2010, and April 1,
2010, letters. Finally, in two paragraphs of seemingly out-of-place allegations,
Count II also requested that the court declare O.C.G.A. § 42-8-100(f) 4 invalid
under the Georgia constitution.
On April 23, 2010, Sentinel removed the suit to the United States District
Court for the Southern District of Georgia pursuant to the diversity jurisdiction
granted to federal courts by the Class Action Fairness Act (CAFA), 28 U.S.C. §
1332(d)(2). McGee v. Sentinel Offender Servs., LLC, No. 110-054 (S.D. Ga. Apr.
23, 2010). McGee moved the court to remand the case to state court, but the court
denied his motion.
On April 29, 2010, upon the consent of the parties, the District Court issued
a permanent injunction forbidding Sentinel from taking any action to collect any
fee or to have any arrest warrant issued that would interfere with the habeas relief
supervised by Sentinel; and (3) who have paid any fee to Sentinel. The District Court did not
hold a hearing to determine class certification.
4
The provision that McGee references in his petition is now codified at O.C.G.A. § 42-
8-100(g). See supra note 1. We refer to the statute as it is currently codified.
5
Case: 11-14077 Date Filed: 06/06/2013 Page: 6 of 17
granted McGee by the Superior Court of Richmond County. 5 In the same order,
the court acknowledged that McGee had withdrawn his petition for contempt. In
its answer to the complaint, Sentinel asserted a counterclaim seeking a declaration
affirming the constitutionality of O.C.G.A § 42-8-100(g). On February 14, 2011,
Sentinel moved the District Court for summary judgment, asserting that McGee’s
RICO claim and constitutional challenge to O.C.G.A. § 42-8-100(g) failed as a
matter of law. On the same day, McGee moved the court for partial summary
judgment on his constitutional challenge to O.C.G.A. § 42-8-100(g).
The District Court granted Sentinel’s motion and denied McGee’s. The
court found that the RICO claim failed to present a genuine issue for trial because
McGee failed to show any evidence that Sentinel intended to commit theft by
deception in sending the letters. Sentinel produced sworn statements from Trinity
Claros, the Sentinel employee assigned to oversee McGee’s probation; Crystal
Page, the Area Manager for Sentinel’s Augusta office; and Mark Contestabile,
Sentinel’s Chief Operating Officer, all asserting that the letters were sent because
of an error in their computer system and not with the intent to create a false
impression or to collect any money from McGee after he had obtained habeas
corpus relief. In assessing McGee’s response, the District Court noted that McGee
5
Neither McGee’s application for the injunction nor the order granting the injunction
indicated the basis for the court’s issuance of the injunction. Whether the court had any
authority to issue it is not at issue in this appeal.
6
Case: 11-14077 Date Filed: 06/06/2013 Page: 7 of 17
offered no affidavit, deposition, or other citation to the record to suggest Sentinel
intended to deceive him; he merely denied the statements offered by Sentinel. The
court then found that McGee had failed to meet his burden on summary judgment
to demonstrate a genuine issue for trial with respect to the element of intent,
holding that “no reasonable juror could find Sentinel specifically intended to create
a known false impression in Plaintiff and committed the predicate act of attempted
theft by deception.” Record, no. 55, at 15.
Though it was not alleged as such, the District Court treated McGee’s
constitutional challenge as a separate claim for relief and dismissed it. The court
observed that Georgia law requires that the Attorney General of Georgia be given
notice whenever a Georgia statute’s constitutionality is challenged and that this
requirement is jurisdictional in nature. Finding that the Attorney General had not
been given notice of this suit, the court held that it lacked subject matter
jurisdiction to consider the constitutionality of O.C.G.A. § 42-8-100(g). The court
entered final judgment in favor of Sentinel and closed the case.
McGee appeals the District Court’s judgment granting summary judgment in
favor of Sentinel.
7
Case: 11-14077 Date Filed: 06/06/2013 Page: 8 of 17
II.
A.
First, McGee attacks the District Court’s subject matter jurisdiction by
asserting that his case was improperly removed from state court because Sentinel
did not satisfy its burden of establishing the $5,000,000 amount-in-controversy
requirement under CAFA. 6 See 28 U.S.C. § 1332(d)(2). We review de novo
whether a district court properly exercised removal jurisdiction. Henson v. Ciba-
Geigy Corp., 261 F.3d 1065, 1068 (11th Cir. 2001).
A party seeking to remove a case to federal court bears the burden of
establishing federal jurisdiction. Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164
(11th Cir. 2006). Typically, we look to the complaint to establish the amount in
controversy. McGee’s complaint, however, does not plead a specific amount of
damages. In this scenario, “the removing defendant must prove by a
preponderance of the evidence that the amount in controversy exceeds the
jurisdictional requirement.” Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th
Cir. 2001). A removing defendant may rely on its own affidavits, declarations, or
other documentation to establish the amount in controversy. Pretka v. Kolter City
Plaza II, Inc., 608 F.3d 744, 755 (11th Cir. 2010).
6
At the outset, we affirm the District Court’s judgment dismissing without prejudice
McGee’s facial challenge to the constitutionality of O.C.G.A. § 42-8-100(g). McGee lacks
standing to seek a declaration of its invalidity because he has suffered no harm under the statute
since the Superior Court granted him habeas relief.
8
Case: 11-14077 Date Filed: 06/06/2013 Page: 9 of 17
Here, Sentinel submitted a declaration from its Chief Operating Officer
indicating that “Sentinel has collected $5,675,639.20 in supervision fees from
individuals who have been convicted of misdemeanor or ordinance violations in
the State of Georgia and are presently under probation supervised by Sentinel,” as
well as $2,086,811.08 in electronic-monitoring fees and $183,049.00 in drug-
screening fees from the same population, for a total of $7,945,499.28. Record, no.
1-4, at 1–2. McGee asserts that this declaration is insufficient because it is “too
sweeping.” Appellant’s Br. at 15. McGee attempts to equate Sentinel’s
declaration with the insufficient affidavit in Miedema v. Maytag Corp., 450 F.3d
1322 (11th Cir. 2006), but this comparison fails. In Miedema, a products-liability
case seeking damages for defective ovens, we held that the affidavit submitted by
Maytag was insufficient to establish CAFA jurisdiction because its computation of
the amount in controversy was based on the manufacturer’s suggested retail price
of each defective oven. Id. at 1331. Because the amount in controversy had been
calculated based on an estimate rather than actual sales data, we held that Maytag
had not met its burden in establishing by a preponderance of the evidence that the
amount in controversy exceeded $5,000,000. Id. at 1332. By contrast, Sentinel’s
declaration unequivocally provides the amount of fees collected from the relevant
probationers. McGee has failed to show or even suggest that these amounts are
uncertain, erroneous, or otherwise based on guesswork.
9
Case: 11-14077 Date Filed: 06/06/2013 Page: 10 of 17
McGee also asserts the declaration is insufficient because it does not show
“exactly when the fees were collected and during what applicable statute of
limitations.” Appellant’s Br. at 15. This argument is without merit. When
determining the amount in controversy, we do not consider whether some damages
claimed by the plaintiff might be precluded by a statute of limitations. As we
stated in Miedema,
The district court also found it significant that Maytag’s calculation of
the amount in controversy did not account for the effect of any
applicable statutes of limitations. When determining the amount in
controversy for jurisdictional purposes, however, courts cannot look
past the complaint to the merits of a defense that has not yet been
established.
450 F.3d at 1332 n.9.
Finally, McGee contends that Sentinel is a governmental entity and therefore
cannot assert federal jurisdiction under CAFA. See 28 U.S.C. § 1332(d)(5)(A)
(stating that CAFA jurisdiction does not apply to any class action in which “the
primary defendants are States, State officials, or other governmental entities
against whom the district court may be foreclosed from ordering relief”).
According to McGee, Sentinel is a governmental entity because the Georgia Court
of Appeals has determined that private probation companies are “officer[s] of the
court.” Huzzie v. State, 253 Ga. App. 225, 226, 558 S.E.2d 767, 768 (Ct. App.
2002). McGee overlooks that the same court also recognized that the probation
company in that case was a private entity with whom the State of Georgia
10
Case: 11-14077 Date Filed: 06/06/2013 Page: 11 of 17
contracted for services. Id. Just as private attorneys are officers of the court yet
could not remotely be considered governmental entities, so too does Sentinel carry
out its responsibility to the court without adopting the trappings of the state.7
B.
Next, McGee argues that the District Court erred in granting Sentinel
summary judgment on his Georgia RICO claim on the ground that he failed to
raise a genuine issue about whether Sentinel possessed the intent to commit
attempted theft by deception. We review de novo a district court’s grant of
summary judgment, considering all of the evidence and the inferences it may yield
in the light most favorable to the nonmoving party. Ellis v. England, 432 F.3d
1321, 1325 (11th Cir. 2005). When the nonmoving party has the burden of proof
at trial, to prevail at summary judgment the moving party has the burden of either
negating an essential element of the nonmoving party’s case or showing that there
is no evidence to prove a fact necessary to the nonmoving party’s case. See Clark
v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). If the moving party
shows an absence of evidence of a material fact, the burden of production shifts to
the nonmoving party, who must identify evidence in the record or present
7
McGee argues in his brief that, though Sentinel is a private company, it still qualifies as
a governmental entity under 28 U.S.C. § 1332(d)(5)(A) because Sentinel is entitled to Eleventh
Amendment immunity. Whatever the merits of this argument, we decline to address it because it
was not raised before the District Court. See Bryant v. Jones, 575 F.3d 1281, 1308 (11th Cir.
2009) (“[A]bsent extraordinary circumstances, legal theories and arguments not raised squarely
before the district court cannot be broached for the first time on appeal.”).
11
Case: 11-14077 Date Filed: 06/06/2013 Page: 12 of 17
“additional evidence sufficient to withstand a directed verdict motion at trial based
on the alleged evidentiary deficiency.” Fitzpatrick v. City of Atlanta, 2 F.3d 1112,
1116 (11th Cir. 1993).
The offense of criminal attempt requires proof that the defendant acted with
the intent to commit a specific crime. O.C.G.A. § 16-4-1. A civil RICO claim will
lie if the plaintiff can show that the defendant committed at least two predicate acts
of racketeering activity. O.C.G.A. §§ 16-14-3(8)(A). Theft by deception is a
predicate act of racketeering activity under Georgia’s RICO Act. O.C.G.A. § 16-
14-3(9)(A)(ix). It requires the intentional use of “deceitful means or artful
practice,” O.C.G.A. § 16-8-3(a), with the specific intent to create a known false
impression, Avery v. Chrysler Motors Corp., 214 Ga. App. 602, 606, 448 S.E.2d
737, 740 (Ct. App. 1994). Thus, to establish criminal attempt to commit theft by
deception, a party must show that the defendant had the specific intent to create a
known false impression. McGee, as the complaining party, would have the burden
to establish Sentinel’s specific intent at trial.
At summary judgment, Sentinel produced three sworn statements asserting
that the March 8, 2010, and April 1, 2010, letters demanding payment and
threatening McGee’s arrest were sent because of a clerical error and not with the
intent to deceive McGee into paying money he did not owe. According to the
District Court, these statements indicated that there was an absence of evidence to
12
Case: 11-14077 Date Filed: 06/06/2013 Page: 13 of 17
support an essential element of McGee’s claim, to wit, that McGee had failed to
present any evidence that Sentinel intended to deceive him by sending the letters.
At that point, the District Court shifted the burden of production to McGee to
identify evidence in the record, or present additional evidence, sufficient to create a
factual issue for trial. McGee, however, produced nothing to rebut these
statements—he merely denied them. On that basis the District Court found that
there was “absolutely no evidence to suggest Sentinel was actually attempting to
deceive Plaintiff and collect funds from him that he no longer owed.” Record, no.
55, at 15.
McGee argues that no amount of testimonial evidence is sufficiently
probative to shift the burden of production to him at summary judgment. He notes
that, as this court has said, “[c]ases in which the underlying issue is one of
motivation, intent, or some other subjective fact are particularly inappropriate for
summary judgment, as are those in which the issues turn on the credibility of the
affiants.” Slavin v. Curry, 574 F.2d 1256, 1267 (5th Cir. 1978) (citation omitted)
(overruled on other grounds by Sparks v. Duval Cnty. Ranch Co., 604 F.2d 976(5th Cir. 1979)). McGee is correct that summary judgment based on testimonial
evidence is inappropriate when the moving party is attempting to negate an
element of the nonmoving party’s claim; it is acceptable to consider testimonial
evidence, however, when it is offered to support the moving party’s contention that
13
Case: 11-14077 Date Filed: 06/06/2013 Page: 14 of 17
there is no evidence in the record regarding an essential element of the nonmoving
party’s claim. See, e.g., Webster v. Offshore Food Serv., Inc., 434 F.2d 1191,
1194 (5th Cir. 1970) (holding that summary judgment was appropriate in light of
unequivocal expert testimony offered in support of the motion, which indicated an
absence of evidence in the record to support plaintiff’s claim and which was not
rebutted by opposing evidence). As its order granting summary judgment plainly
indicates, the District Court held that the record contained “absolutely no
evidence” of Sentinel’s specific intent to deceive. The District Court therefore did
not err in shifting the burden of production to McGee in response to Sentinel’s
testimonial evidence.
The only question left for us to review is whether there is any evidence in
the record of Sentinel’s intent to deceive—a question that goes to the peculiar
nature of corporate criminal liability. McGee seeks to find Sentinel, a limited
liability company, liable for criminal acts whose commission requires specific
intent to deceive. That a company can specifically intend to do an act is, of course,
a legal fiction—a company has no heart or soul with which to form a guilty mind.
The Supreme Court tells us that a company may be held liable for specific intent
offenses based on the “knowledge and intent” of its employees. N.Y. Cent. &
Hudson River R.R. Co. v. United States, 212 U.S. 481, 495, 29 S. Ct. 304, 307, 53
L. Ed. 613 (1909). In other words, a company only acts or wills by virtue of its
14
Case: 11-14077 Date Filed: 06/06/2013 Page: 15 of 17
employees. See Am. Thread Co. v. Rochester, 82 Ga. App. 873, 885, 62 S.E.2d
602, 609 (Ct. App. 1950) (“A corporation can only act by its agents, yet for such
acts it is responsible and a simple direct statement that it committed a tortious act
by the agent makes the corporation responsible.”). Accordingly, in Georgia,
corporate criminal liability is a product of the common law doctrine of respondeat
superior. To state a claim for theft by deception against Sentinel and survive
summary judgment, McGee would have had to allege, and present evidence at
summary judgment, that a Sentinel employee acted with specific intent to commit
theft by deception. After reviewing the record, it is apparent that McGee made no
such allegation and presented no such evidence. The testimony offered by Sentinel
underscored the lack of evidence in the record on this point. Without any evidence
suggesting a Sentinel employee had the requisite intent to commit theft by
deception, McGee could not present a genuine issue of material fact regarding
Sentinel’s intent. Summary judgment therefore was appropriate.
McGee argues that Sentinel’s sending of the letters a month after it knew
McGee had been released is itself sufficient to raise a jury question of criminal
intent. Although McGee is not express in saying so, the thrust of his argument is
that Sentinel, through the actions of its various agents, possessed “collective
intent,” which permits a jury to infer Sentinel had the specific intent to deceive
McGee. Because Sentinel’s attorney appeared before the Superior Court of
15
Case: 11-14077 Date Filed: 06/06/2013 Page: 16 of 17
Richmond County through the conclusion of McGee’s habeas proceeding, McGee
argues that the knowledge possessed by Sentinel’s attorney—that the habeas
proceeding resulted in McGee’s release—should be imputed to Sentinel. McGee
likewise asserts that the act of a Sentinel employee sending the letters to McGee is
also an act of Sentinel. Accordingly, McGee contends that Sentinel—as an
entity—was aware of McGee’s release when it sent the letters to him, thus raising
an inference of specific intent to deceive, even though McGee has not alleged that
any Sentinel employee had similar criminal intent.
McGee has offered no citation to support this theory of corporate liability.
Our sister circuits have encountered litigants who have attempted to weave the
fragmented actions of various agents into corporate mens rea, but they have either
regarded this theory with skepticism 8 or have tethered it to the doctrine of
respondeat superior.9 Whatever the theory’s status in other jurisdictions, we have
8
See Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 366 (5th Cir.
2004) (holding that when determining whether a statement made by a corporation was made with
scienter it is “appropriate to look to the state of mind of the individual corporate official or
officials who make or issue the statement . . . rather than generally to the collective knowledge of
all the corporation’s officers and employees”); United States v. Science Applications Int’l Corp,
626 F.3d 1257, 1274 (D.C. Cir. 2010) (expressing doubt about “the legal soundness of the
‘collective intent’ theory, under which . . . a corporation’s specific intent to defraud can be
inferred if the company’s public statements contradict the accumulated ‘collective knowledge’ of
the corporation’s employees”) (internal quotation marks and citation omitted); Nordstrom, Inc. v.
Chubb & Son, Inc., 54 F.3d 1424, 1435 (9th Cir. 1995) (“[T]here is no case law supporting an
independent ‘collective scienter’ theory.”).
9
See United States v. Bank of New England, 821 F.2d 844, 856 (1st Cir. 1987) (holding
that an instruction permitting the jury to infer corporate knowledge of facts through the
16
Case: 11-14077 Date Filed: 06/06/2013 Page: 17 of 17
not identified anything to suggest that Georgia law recognizes it. As a court sitting
in diversity, we decline to recognize it here.
III.
For the foregoing reasons, the judgment of the District Court is
AFFIRMED.
accumulation of individual knowledge was permissible where proof of the proscribed intent
depended on the wrongful intent of specific employees).
17