April Scarlott v. Nissan North America, Inc
771 F.3d 883
5th Cir.
2014

Background

  • Plaintiff April Scarlott bought a 2006 Nissan Murano advertised to have a HomeLink mirror; the vehicle lacked that system, and the dealer arranged for Hurricane to install it at no charge.
  • Over the next two years the vehicle experienced intermittent electrical problems; dealer diagnosis in 2009 attributed them to the HomeLink mirror installation and Hurricane agreed to repair it.
  • Scarlott sued in Texas state court (breach of express and implied warranty; DTPA); defendants removed under federal-question jurisdiction invoking the Magnuson‑Moss Warranty Act (MMWA), which requires an amount in controversy of at least $50,000.
  • Scarlott later moved to remand for lack of federal subject‑matter jurisdiction; the district court denied remand, excluded her expert, granted summary judgment to defendants, and awarded attorneys’ fees and costs under 28 U.S.C. § 1927.
  • The Fifth Circuit majority held the district court lacked jurisdiction because defendants failed to prove by a preponderance that the MMWA jurisdictional threshold ($50,000) was met and therefore reversed summary judgment and remanded to state court; it vacated the fees order for reconsideration.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether federal court had jurisdiction under MMWA (≥ $50,000) Complaint selected Level 1 discovery and stated the case involved $50,000 or less; did not demand a specific amount; damages (diminished value + incidental/consequential) are below $50,000 MMWA gives federal jurisdiction; damages could exceed $50,000 when combining purchase price, incidental costs, repairs, and speculative lost profits Court: Plaintiff did not plead a specific amount; defendants failed to prove by a preponderance that amount in controversy ≥ $50,000; remand required
Whether damages were "facially apparent" to exceed $50,000 Complaint shows purchase price <$39,289 and limited factual pleading about incidental losses — not facially apparent to reach $50,000 Removal proper because defects and multiple repairs plausibly push damages above threshold Court: Not facially apparent; purchase price and pleaded facts do not show $50,000 likely
Whether defendants produced sufficient summary‑judgment‑type evidence of amount in controversy Scarlott noted defendants produced no reliable diminished‑value evidence and her expert’s report was excluded below; she did not allege lost profits Defendants produced some incidental cost figures and argued lost profits could be claimed based on deposition Court: Defendants’ evidence (rental, towing, repairs, battery) plus full purchase price still fell short (~$42,934); lost‑profits speculative and not alleged; burden not met
Appropriate disposition of district court’s award of attorneys’ fees and costs under §1927 Fees order should be vacated given lack of jurisdiction; remand for reconsideration appropriate (majority) Fees were awarded for prolonged/unreasonable litigation conduct; award stands or should be vacated without remand (dissent) Court (majority): Vacate fees order and remand to district court to reconsider fees and costs in light of lack of jurisdiction; dissent would vacate without remand

Key Cases Cited

  • United States v. Hazlewood, 526 F.3d 862 (5th Cir. 2008) (federal courts are courts of limited jurisdiction)
  • Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392 (5th Cir. 2013) (burden on removing party to show federal jurisdiction; ambiguities construed against removal)
  • Sherrod v. American Airlines, Inc., 132 F.3d 1112 (5th Cir. 1998) (de novo review for remand rulings)
  • Boelens v. Redman Homes, Inc., 748 F.2d 1058 (5th Cir. 1984) (use state law to measure damages under MMWA; exclude personal injury and certain other categories)
  • MacKenzie v. Chrysler Corp., 607 F.2d 1162 (5th Cir. 1979) (legislative history supports resort to state law to determine MMWA damages)
  • Samuel‑Bassett v. KIA Motors America, Inc., 357 F.3d 392 (3d Cir. 2004) (attorneys’ fees cannot be included in MMWA jurisdictional amount)
  • De Aguilar v. Boeing Co., 11 F.3d 55 (5th Cir. 1993) (when complaint alleges no specific amount, removing party must prove jurisdictional amount by preponderance)
  • Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th Cir. 1995) (amount in controversy may be found if facially apparent)
  • White v. FCI USA Inc., 319 F.3d 672 (5th Cir. 2003) (court may rely on summary‑judgment‑type evidence to determine amount in controversy)
  • St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250 (5th Cir. 1998) (same principle for using evidence when jurisdiction not facially apparent)
  • Voelker v. Porsche Cars North America, Inc., 353 F.3d 516 (7th Cir. 2003) (cannot determine MMWA jurisdiction without evidence of value of defective vehicle)
  • Hernandez v. Conriv Realty Associates, 116 F.3d 35 (2d Cir. 1997) (district court may reconsider sanctions despite lack of jurisdiction; procedural sanctions distinct from adjudication on merits)
  • Browning v. Kramer, 931 F.2d 340 (5th Cir. 1991) (§1927 sanctions are penal, strictly construed; only excess fees for unreasonable/vexatious multiplication of proceedings)
  • Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521 (5th Cir. 1996) (require detailed findings to support §1927 sanctions)
  • Choo v. Exxon Corp., 764 F.2d 1148 (5th Cir. 1985) (district court cannot award sanctions for conduct occurring in state court)
  • Willy v. Coastal Corp., 503 U.S. 131 (1992) (procedural sanctions do not implicate same constitutional concerns as merits adjudication)
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