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Pazol v. Tough Mudder Inc.

United States Court of Appeals, First Circuit

April 26, 2016

LISA C. PAZOL, MARIA C. NEWMAN, LISA RUSS, and AUDREY J. BENNETT, on behalf of themselves and others similarly situated, Plaintiffs, Appellants,
v.
TOUGH MUDDER INCORPORATED, TOUGH MUDDER, LLC, and BK BRIDGE EVENTS, LLC, Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, Hon. Timothy S. Hillman, U.S. District Judge.

Barry M. Altman, with whom Altman & Altman, James L. O'Connor, James M. Galliher, C. Deborah Phillips, and Nickless, Phillips and O'Connor were on brief, for appellants.

Maria C. Newman, Lisa Russ, Audrey J. Bennett, and Michael J. Tuteur, with whom Jaclyn V. Piltch and Foley & Lardner LLP were on brief, for appellees.

Before Barron, Circuit Judge, Souter, Associate Justice, [*] and Lipez, Circuit Judge.

BARRON, CIRCUIT JUDGE

This case turns on the standards for showing that a class action has an amount in controversy of more than $5 million, which is the threshold for enabling a case to be removed to federal court under the Class Action Fairness Act of 2005 ("CAFA"). Because we conclude that the defendants did not meet their burden of showing that the amount in controversy in this class action exceeds that threshold -- at least at this stage in the litigation -- we agree with the plaintiffs that removal was improper. We thus do not reach the other issues that the District Court resolved in dismissing this suit, and we remand with instructions to the District Court to remand the case to state court for lack of jurisdiction.

I.

The defendants are business entities that organize physically challenging obstacle course events in various locations in the United States. The four named plaintiffs registered to participate in one of those events -- the "Mudderella" event --scheduled to take place on September 6, 2014, in Haverhill, Massachusetts.

This suit began in Massachusetts Superior Court. The plaintiffs' complaint alleged that, on August 22, 2014, the defendants notified the plaintiffs that the event had been moved approximately twelve miles from Haverhill, to Amesbury, Massachusetts.[1] The complaint also alleged that, on August 29, 2014, just a week before the event, the defendants again notified the plaintiffs that the event had been moved, this time to Westbrook, Maine, which is 79 miles from Haverhill. The complaint alleged that, as a result of that second -- and final -- change in location, the four named plaintiffs were unable to participate in the event, and that the defendants refused to refund the plaintiffs their registration fees.

The complaint asserts various claims under Massachusetts law. Those claims are breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A.

Of particular significance to this appeal is what the complaint pleads with respect to relief. The complaint states that those seeking relief are, pursuant to Rule 23 of the Massachusetts Rules of Civil Procedure, not just the four named plaintiffs but also:

All persons who paid registration fees and/or other sums to Defendants to participate in Mudderella Boston at Kimball Farm in Haverhill and did not participate at the changed location;
All persons who participated in Mudderella Boston in Westbrook, Maine and traveled additional distance due to the change in location and thereby incurred added expenses including, but not limited to gas, food and/or lodging; and/or
Such other class, classes, or sub-classes as certified by the Court.

The complaint further states that the class seeks, in addition to damages "in amounts to be determined at trial, " an unspecified amount in "reasonable" attorneys' fees and costs, restitution, disgorgement, rescission, a permanent injunction prohibiting defendants "from engaging in the conduct described herein, " and "such other relief as the Court deems just."

The plaintiffs served the complaint on the defendants in November 2014. The defendants then timely removed the case to federal court. See 28 U.S.C. § 1446(b). The defendants asserted that removal was permitted under the Class Action Fairness Act of 2005 (CAFA), which provides for federal subject matter jurisdiction over class actions alleging state-law claims where certain conditions are met, including minimal diversity between parties and that "the matter in controversy exceeds the sum or value of $5, 000, 000." 28 U.S.C. § 1332(d)(2).

The plaintiffs moved to remand the case to state court. The plaintiffs' sole argument for remand was that the District Court lacked subject matter jurisdiction under CAFA because the defendants had failed to show that over $5 million was in controversy. The defendants responded with estimates of the amount in controversy that were based on the references in the plaintiffs' complaint to "registration fees" and "added expenses, including, but not limited to gas, food, and/or lodging."

The District Court denied the plaintiffs' motion to remand the case to state court. The District Court's explanation, in its entirety, was that the "[d]efendants hav[e] shown a reasonable probability that the ...


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