CE Design, Ltd. v. American Economy Insurance Com
2014 U.S. App. LEXIS 11577
| 1st Cir. | 2014Background
- CE Design Ltd. filed a 2008 TCPA/IPDA class action in Cook County, Illinois against Ernida, LLC seeking statutory damages and other relief, expressly disclaiming any individual recovery over $75,000.
- Ernida’s insurer, American Economy Insurance Company, defended the Cook County action and reserved rights to withdraw or deny coverage.
- CE later sued American in federal court for a declaratory judgment on American’s duty to defend/indemnify Ernida, asserting diversity jurisdiction under 28 U.S.C. § 1332.
- The district court dismissed for lack of a justiciable controversy, holding CE lacked cognizable standing under Illinois law since the underlying state action had not yet resulted in a judgment.
- American urged, and CE acknowledged, that the Cook County action’s $75,000 cap and the potential aggregation of claims could affect the amount in controversy; CE could not demonstrate sufficient jurisdiction.
- On appeal, the First Circuit vacated and remanded to dismiss for lack of subject-matter jurisdiction, concluding CE’s claim did not satisfy the $75,000 amount-in-controversy requirement and rejecting CE’s proposed aggregation or defendant-viewpoint approaches.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the federal action meets the amount-in-controversy requirement | CE argues indemnity exposure exceeds $75,000 in the Cook County action | CE waived relief over $75,000 and cannot aggregate with others | No; CE failed to show the requisite amount-in-controversy. |
| Whether the common and undivided interest exception applies to aggregation | CE relies on a common and undivided interest to aggregate claims | No clear common/undivided interest; claims are separate and individually capped | Not applicable; aggregation not permitted. |
| Whether the amount should be assessed from the plaintiff’s or defendant’s viewpoint | Evaluate from plaintiff’s perspective; aggregation may be allowed | Evaluate from defendant’s perspective to reflect potential indemnity costs | Rejected; plaintiff viewpoint governs absent valid exception. |
| Whether CE lacks standing or a justiciable controversy | NA | NA | Court proceeded to jurisdictional analysis; held lack of subject-matter jurisdiction and remanded to dismiss. |
Key Cases Cited
- Zahn v. International Paper Co., 414 U.S. 291 (1973) (antAggregation rule; each plaintiff must meet amount-in-controversy separately (pre-Exxon))
- St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938) (burden on plaintiff to prove amount; if legally certain amount not met, dismissal)
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) (overruled Zahn’s per-plaintiff rule on supplemental jurisdiction; §1367 context)
- Williams v. Kleppe, 539 F.2d 803 (1st Cir. 1976) (footnote cited for defendant-viewpoint considerations (limited))
- Massachusetts v. United States Veterans Administration, 541 F.2d 119 (1st Cir. 1976) (footnote discussion on defendant-viewpoint considerations; limited precedential value)
- In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599 (7th Cir. 1997) (non-aggregation rule; claims must be evaluated separately)
- In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952 (9th Cir. 2001) (non-aggregation rule for class actions; apply per-plaintiff rights)
- Meridian Security Insurance Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006) (insurer plaintiff context; perspective matters for amount in controversy)
- Oklahoma Retail Grocers Ass’n v. Wal-Mart Stores, Inc., 605 F.2d 1155 (10th Cir. 1979) (perspective-based considerations in some disputes)
- Tatum v. Laird, 444 F.2d 947 (D.C. Cir. 1971) (context where defendant-viewpoint may be relevant)