past damages, combined with the value of injunctive relief,
would be approximately $45,000, see Item 19, p. 6, which is
significantly more than the $7,200 Ms. Kershaw projects. Item 8,
¶ 6 (Kershaw).
Further, Ms. Barnes reports that at least seven members of the
Kershaw putative plaintiff class "would have received in
excess of $75,000 in additional royalty payments for the 6 year
period between 1994 through 1999 if the actual calculated
royalty volumes were multiplied by 3.78." Item 19, Exh. 1, ¶ 5
III. Court's Conclusion on Value of Claims
For the reasons explained herein, the court finds that the
likely value of a claim by an average member of the Freeman
class would be approximately $16,000, while the likely value of
a claim by an average member of the Kershaw class would be
A. Claims for Compensatory Damages
Although the Freemans project that a typical member of their
class will have a compensatory claim of almost $3,100, the court
finds that a more accurate projection would amount to just under
$10,300.*fn7 Similarly, while Ms. Kershaw estimates that the
typical member of her plaintiff class will have a compensatory
claim of just under $3,000, the court finds that a more accurate
projection would reach just over $9,730.*fn8
B. Claims for Punitive Damages
The Freemans insist that there will likely be over 26,000
members of their class once it is certified. See Item 5, ¶ 15
and Exhs. D, E (Freeman). Similarly, Ms. Kershaw maintains
that there will be over 24,000 members of her class once it is
certified. See Item 9, ¶ 16 and Exh. D (Kershaw). Thus,
claims for punitive damages would amount to little more than
$3,850 for each member of the Freeman class, and $4,200 for
each member of the Kershaw class.
The Freeman defendants argue that there will only be 740
potential Freeman plaintiffs. See Item 18, p. 12 (Freeman)
(yielding punitive damages claim of $135,000 for each class
member). However, the Freeman defendants base their
calculation of the putative class size strictly on the number of
wells allegedly operated by the defendants in New York State,
which is 740. Id. For reasons set forth infra, the court
rejects the idea that the value of plaintiffs' claims must be
allocated on a per-well basis.
In any event, the Freemans state that the defendants operate
natural gas wells in eleven states besides New York. See
Item 5, ¶ 16 and Exh. E. The Freeman
defendants apparently operate 740 wells in New York State alone.
Thus, the number of wells at issue in Freeman is bound to be
much greater than the 740 cited by the Freeman defendants.
Conservatively, the number of wells at issue in Freeman could
amount to 4,000 to 5,000 wells in all.*fn9 Thus, the likely
number of members in the Freeman plaintiff class would be
approximately 14,400. In that case, each member of the putative
Freeman class would have a punitive damages claim of just
The Kershaw defendants insist that any putative class will
be "significantly fewer than [the] 24,000 claimants" that Ms.
Kershaw estimated in her moving papers. Item 19, p. 8
(Kershaw) (assailing Ms. Kershaw's estimates of plaintiff
class's size as "wildly unscientific"). The Kershaw defendants
believe that the court could reasonably set the number of
putative plaintiffs at 8,000, which is the number of wells that
Ms. Kershaw alleges the defendants operate in various states.
See Item 19, p. 8.
Even if the court were to agree with the Kershaw defendants,
and allocated punitive damages on a per-well basis and assumed
that there were 8,000 wells at issue, a typical member of the
Kershaw putative class would still only have a punitive damages
claim of approximately $12,500.
I. Standard of Law
As a general matter, district courts may exercise diversity
jurisdiction only where: (1) the parties are completely diverse;
and (2) the amount in controversy exceeds $75,000, exclusive of
interests and costs. 28 U.S.C. § 1332(a). The parties in
Freeman and Kershaw agree that the diversity requirement has
been met. Both the Freemans and Ms. Kershaw, however, deny that
the defendants can show that the amount-in-controversy
requirement is satisfied.
Courts in this circuit must "construe the removal statute
narrowly, resolving any doubts against removability." Somlyo v.
J. Lu-Rob Enters., Inc., 932 F.2d 1043, 1046 (2d Cir. 1991).
Moreover, defendants who seek to remove an action to federal
court have an initial burden of showing that there is a
"reasonable probability" that the amount in controversy
requirement will be met. United Food & Commercial Workers
Union, Local 919, AFL-CIO v. CenterMark Properties Meriden
Square, Inc., 30 F.3d 298, 304-05 (2d Cir. 1994). Further, "the
party asserting jurisdiction must support those facts with
`competent proof' and `justify [its] allegations by a
preponderance of evidence.'" Id. at 305 (quoting McNutt v.
General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189,
56 S.Ct. 780, 80 L.Ed. 1135 (1936)). In many instances, a
removing defendant will satisfy this burden by relying on
allegations contained in the plaintiffs complaint. See, e.g.,
Cygielman v. Cunard Line Ltd., 890 F. Supp. 305, 306 (S.D.N.Y.
1995) ("In this Circuit, the damage allegations in the complaint
ordinarily must be taken at face value. . . .").
If the removing defendant is able to meet its initial burden,
the burden shifts back to plaintiff to show, by a legal
certainty, that the claim is actually for $75,000 or less. See
Stott v. Revere Transducers, Inc., 993 F. Supp. 125, 127
II. Attorneys' Fees
As a threshold matter, the court finds that defendants cannot
rely on a potential award of attorneys' fees in a class action
in order to show a reasonable probability that the
jurisdictional minimum has been met.
New York State's CPLR § 909 provides that "[i]f a judgment in
an action maintained as a class action is rendered in favor of
the class, the court in its discretion may award attorneys' fees
to the representatives of the class based on the reasonable
value of legal services rendered and if justice requires, allow
recovery of the amount awarded from the opponent of the class."
Thus, section 909 "provides for two contingencies: first, the
court can award attorneys' fees and order that they be taken out
of the judgment; second, the court can award attorneys' fees to
be paid by the class opponent. It is only the latter which
augments the amount in controversy." Trapanotto v. Aetna Life
Ins. Co., 1996 WL 417519, at *9 n. 5 (S.D.N.Y. July 25, 1996)
In Trapanotto, Judge Preska went on to hold:
I must certainly decline at this early stage of the
litigation to find that "justice requires" attorneys'
fees, if awarded, should be awarded from the class
opponent rather than taken out of the judgment. To do
so now would be premature. . . .
The class here has not yet been certified.
Without certification, of course, it is impossible
to award fees under § 909. Even if a class was
certified, there is no factual predicate to
estimate reasonably the representative plaintiffs
own damages, other than to assume, given the nature
of the case, that they are small. Nor is there any
basis to estimate reasonably the amount of work
required for the case, the value of that work to
the class, or the likely amount of attorneys' fees,
much less what fees would be "reasonable." Hence,
there is an inadequate basis from which to infer
that, even after adding attorneys' fees to the
plaintiffs damages, the [jurisdictional] threshold
would be met. . . .
I decline to add prospective attorneys' fees to
plaintiffs damages in order to satisfy § 1332's
1996 WL 417519, at *9-10 (citation and footnote omitted). In the
wake of Trapanotto, many district courts have concurred in
Judge Preska's reasoning and conclusion. See, e.g., Colon v.
Rent-A-Center, Inc., 13 F. Supp.2d 553, 561 (S.D.N.Y. 1998).
Both the Freeman and Kershaw defendants urge this court to
reject Trapanotto and its progeny.
Instead of considering whether it was clear to a
legal certainty that plaintiff could not obtain an
award of attorneys' fees before eliminating statutory
attorneys' fees from the amount-in-controversy
inquiry, Trapanotto and its progeny effectively
considered whether or not it was clear to a legal
certainty that the named plaintiffs could obtain
such an award — a 180-degree reversal from what
controlling precedent actually requires. This Court
should not perpetuate the error.
Item 19, pp. 9-10 (Freeman). The court disagrees with
defendants' understanding of Judge Preska's analysis.
Trapanotto does not depart from settled law by requiring proof
that there is a legal certainty that plaintiffs will receive
an award of attorneys' fees. Rather, under Trapanotto, a
removing defendant cannot establish a "reasonable probability"
of meeting the amount-in-controversy requirement when it relies
on a potential award of attorneys' fees as part of its proof.