District judge in Arkansas sides with plaintiff in Miller County remand

Michelle Keahey Jun. 19, 2012, 3:28pm

District Judge Susan O. Hickey

TEXARKANA, Ark. (Legal Newsline) - In a pending class action lawsuit against Mona Vie juice products, U.S. District Judge Susan O. Hickey has granted plaintiff's motion to remand the case back to Miller County Circuit Court in Arkansas.

Hickey ruled that the plaintiff's complaint, which alleges misleading advertising, contained statements that were specific enough to avoid removal to federal court under the Class Action Fairness Act (CAFA).

She wrote that, "[R]emoval is defeated by adding to the complaint a binding stipulation promising not to seek greater damages than the jurisdictional minimum."

Named plaintiff Joe Neal Oliver, individually and as class representative on behalf of similarly situated persons, filed the class action against Mona Vie Inc. and Mona Vie L.L.C. on Dec. 16, 2010 in Miller County Circuit Court. In the complaint, the plaintiff stated that he was seeking less than $75,000 per class member and less than $5 million in total damages.

Oliver and the proposed class are represented by John C. Goodson and Matt Kiel of Kiel & Goodson in Texarkana and Michael B. Angelovich, Brad E. Seidel and Christopher Johnson of Nix, Patterson & Roach in Austin, Texas.

Mona Vie removed the case to the Western District of Arkansas, Texarkana Division on Dec. 16, 2011, arguing that diversity of jurisdiction existed and citing provisions of CAFA - namely that if the damages sought by plaintiffs exceed $5 million in total, then federal court is the appropriate jurisdiction.

The company's attorney, Darby Doan of Haltom & Doan in Texarkana, argued that case law requires the plaintiff to make the stipulations separate from the complaint, not within it.

Doan argued that plaintiffs were attempting to "game the system" by refusing to admit that damages will be lower than the federal court threshold.

"Because Oliver refuses to stipulate by admission that his damages award will be less than the jurisdictional limit, he has functionally denied that his damages claim is limited under $75,000 or $5,000,000 in aggregate, and the Court must disregard Oliver's unsworn pleading for purposes of jurisdiction," Doan wrote.

"Oliver's failure to stipulate to the jurisdictional limits and attempt to game the system should not be rewarded by the Court."

Hickey disagreed with the defendants and stated that in Arkansas, a stipulation within a complaint can function the same as a separate stipulation, because it binds the plaintiff.

Hickey's May 31 order goes on to state that Arkansas law allows a plaintiff to declare an amount in controversy in order to establish jurisdiction and if the plaintiff does so, the declaration is binding.

Hickey's order is consistent with an August 2011 order entered by District Judge Paul K. Holmes II in McClendon v. Chubb Corp., which found that the amount-in-controversy stipulation is valid even if included in its complaint rather than in a separate stipulation.

Holmes noted that an Arkansas plaintiff can plead damages specifically, and Arkansas law will hold the plaintiff to recovery below the federal jurisdictional threshold.

In contrast, Hickey's ruling is counter to District Judge Jimm Hendren's May 29 ruling in Thatcher v. Hanover Ins. Group Inc.

In that case, Hendren ruled that the plaintiffs need a separate affidavit or stipulation in order for the amount in controversy to be binding.

"Ad damnum clauses and disclaimers within a complaint are inadequate to cap the amount in controversy below the minimum for removal jurisdiction," Hendren wrote.

In each of the cases, the defendants argued that the plaintiffs could return to Miller County Circuit Court and amend their complaint asking for a higher amount of damages.

Hickey addressed the issue in Oliver, noting that the plaintiff's responses to questions about the amount-in-controversy issue are vague and "could equate to a refusal to admit being bound to the pleaded amounts."

However, she wrote that judicial estoppel would prevent Oliver from thwarting his stipulations once the case is back in Miller County Circuit Court.

"[A]s a general matter, courts are not friendly toward parties scheming to alter jurisdiction," Hickey wrote.

Attorneys Goodson and Angelovich are also the lead attorneys in the McClendon and Thatcher cases.

They have been accused of forum shopping and writing their complaints in a manner to keep the cases in the Circuit Court of Miller County, Arkansas, which is reputed to be plaintiff-friendly.

Those attorneys have made millions in fees from cases in which the defendants settled in an effort to limit escalating defense costs and extensive discovery requests in the rural court.

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