Grawitch v. Charter Communications, Inc. , 750 F.3d 956 ( 2014 )

United States Court of Appeals
For the Eighth Circuit
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No. 13-1606
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Matt Grawitch; Mike Woody, individually and on behalf of all others similarly situated
lllllllllllllllllllll Plaintiffs - Appellants
v.
Charter Communications, Inc.
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: January 16, 2014
Filed: May 2, 2014
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Before WOLLMAN, BYE, and MELLOY, Circuit Judges.
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WOLLMAN, Circuit Judge.
Matt Grawitch and Mike Woody, the named plaintiffs in a purported class
action, filed suit against Charter Communications, Inc. (Charter), in Missouri state
court, claiming that Charter violated the Missouri Merchandising Practices Act
(MMPA), Mo. Rev. Stat. § 407.010 et seq., and breached its contract with the class
members. The complaint alleged that Charter had provided the class members with
Internet modems that were incapable of operating at the speed that Charter had
promised. Charter removed the case to federal district court and then moved to
dismiss the complaint. The district court1 granted Charter’s motion, and we affirm.
I. Background
Charter is a broadband communications company that provides cable, Internet,
and telephone services. The plaintiffs subscribed to Charter’s “Plus” Internet service
under Charter’s Internet Residential Customer Agreement (the Agreement) in 2011.
Charter provided the plaintiffs with DOCSIS 2.0 modems at the time their Internet
services were installed.
In December 2011, Charter upgraded its “Plus” and “Ultra” services in order
to provide its customers with increased download speeds of up to 30 megabits per
second (Mbps). Although DOCSIS 2.0 modems continued to function following the
upgrade, they could not operate at the 30 Mbps speed. Instead, DOCSIS 3.0 modems
were required to obtain the increased speed. Months after the upgrade, when the
plaintiffs discovered that they were not receiving the 30 Mbps download speed
because they did not have DOCSIS 3.0 modems, they contacted Charter and
requested a refund. Charter denied this request.
The plaintiffs then filed suit in Missouri state court on behalf of themselves and
a proposed nationwide class defined as follows: “All persons who, from September
14, 2007, to the date of final judgment, subscribed to Charter Internet Residential
Service under the names of ‘Charter Plus,’ ‘Max’ and ‘Ultra’ speeds and which were
1
The Honorable Audrey G. Fleissig, United States District Judge for the
Eastern District of Missouri.
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provided a modem of less than DOCSIS 3.0 standard.”2 The plaintiffs alleged that
Charter violated the MMPA and breached the Agreement by representing that the
plaintiffs would receive the 30 Mbps download speed, while failing to provide them
with modems that could operate at that speed. The plaintiffs further alleged that they
suffered damages of “the difference in the cost and value of the service they paid for,
and the useable service they received[,]” and that these damages exceeded $50,000
collectively, but not individually.
Charter removed the case to federal district court under the Class Action
Fairness Act of 2005 (CAFA), 28 U.S.C. §§ 1332(d), 1453, and then moved to
dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim. The district court dismissed the complaint with prejudice on three
independent grounds, concluding (1) that the plaintiffs had not pleaded facts
sufficient to demonstrate pecuniary loss, (2) that the plaintiffs’ January 2012 bills
gave them notice that their modems needed to be upgraded to obtain the increased
download speed, and (3) that the plaintiffs’ claims were foreclosed by a speed
disclaimer in the Agreement. The plaintiffs moved to alter or amend the judgment,
and for the first time argued that the case should have been remanded to state court
because the district court lacked subject matter jurisdiction. The district court denied
the motion. On appeal, the plaintiffs challenge each of the grounds the district court
relied on in granting Charter’s motion to dismiss and, in the alternative, argue that the
district court did not have jurisdiction.
2
Charter submitted an affidavit along with its notice of removal establishing
that it has more than 50,000 customers nationwide that “receive internet service under
the names ‘Charter’s Plus,’ ‘Max’ and ‘Ultra Speeds’ and lease a DOCCSIS 1.0 or a
DOCCSIS 2.0 modem.”
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II. Discussion
A. Removal
We review a court’s exercise of removal jurisdiction de novo. See Hargis v.
Access Capital Funding, LLC, 674 F.3d 783, 789 (8th Cir. 2012). “Under CAFA,
federal courts have jurisdiction over class actions in which the amount in controversy
exceeds $5,000,000 in the aggregate; there is minimal (as opposed to complete)
diversity among the parties, i.e., any class member and any defendant are citizens of
different states; and there are at least 100 members in the class.” Westerfeld v. Indep.
Processing, LLC, 621 F.3d 819, 822 (8th Cir. 2010). “[A] party seeking to remove
under CAFA must establish the amount in controversy by a preponderance of the
evidence[.]” Hargis, 674 F.3d at 789 (first alteration in original) (quoting Bell v.
Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009)). “Under the preponderance standard,
‘[t]he jurisdictional fact . . . is not whether the damages are greater than the requisite
amount, but whether a fact finder might legally conclude that they are[.]’” Id. (first
and second alterations in original) (quoting Bell, 557 F.3d at 959). The court’s
jurisdiction is measured at the time of removal. Id.The plaintiffs argue that removal under CAFA was improper because Charter
failed to prove by a preponderance of the evidence that the amount in controversy
exceeded $5 million. Accordingly, the plaintiffs contend that the district court should
have remanded the case to state court because it did not have subject matter
jurisdiction. In their complaint, however, the plaintiffs alleged a nationwide class
consisting of at least 50,000 members, who overpaid for Internet services each month
from September 14, 2007, to the date of final judgment. Furthermore, the plaintiffs
sought to recover up to $50,000 in damages per class member. Based on these
allegations, a jury might conclude that the class suffered damages of more than $5
million dollars, even if the individual class members’ monthly overpayment was
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minimal. We thus conclude that Charter met its burden of showing that the amount
in controversy exceeded CAFA’s $5 million jurisdictional threshold.
B. Motion to Dismiss
“We review de novo the district court’s grant of a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6), accepting the plaintiff’s factual allegations
as true and construing all reasonable inferences in favor of the plaintiff.” Alexander
v. Hedback, 718 F.3d 762, 765 (8th Cir. 2013). “To withstand a motion under Rule
12(b)(6), a complaint must plead sufficient facts to ‘state a claim to relief that is
plausible on its face.’” Id. (quoting Retro Television Network, Inc. v. Luken
Commc’ns, LLC, 696 F.3d 766, 768 (8th Cir. 2012)). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id.The plaintiffs argue that even if the district court had jurisdiction, it erred in
dismissing their complaint for failure to plead facts sufficient to demonstrate
pecuniary loss. Under Missouri law, the plaintiffs must prove that they suffered
pecuniary loss in order to prevail on their MMPA claim, see Ward v. W. Cnty. Motor
Co., 403 S.W.3d 82, 84 (Mo. 2013) (en banc), and breach of contract claim, see
Keveney v. Mo. Military Acad., 304 S.W.3d 98, 104 (Mo. 2010) (en banc).3 The
plaintiffs contend that they adequately pleaded damages by alleging that they suffered
a monetary loss of “the difference in the cost and value of the services they paid for,
and the useable service they received.” The complaint, however, does not allege facts
to support the plaintiffs’ allegation of damages because it does not allege that the
plaintiffs paid extra for the 30 Mbps download speed. Moreover, according to
3
The parties agree that Missouri law governs the merits of their dispute.
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Charter, the plaintiffs could not make that allegation because Charter provided the
service upgrade for free. In the absence of factual support for the plaintiffs’
allegation of damages, the plaintiffs’ complaint is insufficient to withstand a motion
to dismiss under Rule 12(b)(6). See Farm Credit Servs. of Am., FLCA v. Haun, 734
F.3d 800, 806 (8th Cir. 2013).
The plaintiffs further contend that “[i]f, based on the pleading, there are no
damages, then there cannot be an amount in controversy of more than five million
dollars.” The plaintiffs thus maintain their claim that removal under CAFA was
improper. As set forth above, we measure the district court’s jurisdiction at the time
of removal. At that time, the district court could fairly assume that the plaintiffs had
stated a claim and that a fact finder might legally conclude that the class damages
were greater than $5 million. Indeed, the plaintiffs themselves did not challenge
removal until after their claims were dismissed. Accordingly, we find no error in
removing this case under CAFA, even though this case was later dismissed for failure
to plead pecuniary loss. Because we conclude that the district court correctly
dismissed the plaintiffs’ complaint for failure to plead facts sufficient to demonstrate
pecuniary loss, we need not address the remaining grounds upon which the district
court granted Charter’s motion to dismiss.
III. Conclusion
The judgment is affirmed.
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