AUTO-OWNERS INSURANCE COMPANY v. STEVENS & RICCI INC.; Hymеd Group Corporation Hymed Group Corporation, Appellant
No. 15-2080
United States Court of Appeals, Third Circuit.
Argued January 20, 2016 (Opinion Filed: September 1, 2016)
388
Robert S. Stickley, Langsam Stevens Silver & Hollaender, LLP, 1818 Market Street, Suite 3400, Philadelphia, PA 19103
Timothy P. Tobin [ARGUED], Gislason & Hunter LLP, 701 Xenia Ave. South, Suite 500, Minneapolis, MN 55416, Counsel for Appellee
Before: JORDAN, HARDIMAN, and GREENAWAY, JR., Circuit Judges.
OPINION OF THE COURT
JORDAN, Circuit Judge.
In this insurance coverage dispute, Auto-Owners Insurance Company (“Auto-Owners“) seeks a declaration that it has no obligation to defend or indemnify its insured, Stevens & Ricci, Inc. (“Stevens & Ricci“), in connection with a $2,000,000 judgment entered against Stevens & Ricci
I. BACKGROUND
This case began with the improper use of what now seems an old-fashioned method of communication: fax machines. Stevens & Ricci was solicited by an advertiser claiming to have a fax advertising program that complied with the TCPA. Relying on that representation, Stevens & Ricci allowed the advertiser to fax thousands of advertisements to potential customers on its behalf. The advertiser sent 18,379 unsolicited advertisements by fax in February 2006.
Much later, on June 1, 2012, Hymed filed a class action lawsuit in the United States District Court for the Eastern District of Pennsylvania against Stevens & Ricci, claiming that the advertisements actually did violate the TCPA, see Hymed Grp. Corp. v. Stevens & Ricci, Inc., Civil Action No. 12-CV-3093 (the “Underlying Action“), which prohibits the “use [of] any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement ....”
During the time that Stevens & Ricci had the unsolicited faxes sent to Hymed and other class members, it was covered by a “Businessowners Insurance Policy” (the “Policy“) issued by Auto-Owners. (J.A. at 555.) The Policy obligates Auto-Owners to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury,’ ‘property damage,’ ‘personal injury’ or ‘advertising injury’ to which this insurance applies.” (J.A. at 563.) The present dispute centers on whether the sending of unsolicited faxes inflicted two of those four types of injury on the members of the class: property damage and advertising injury.
The term “property damage” is defined in the Policy as “[p]hysical injury to tangible property, including all resulting loss of use of that property.” (J.A. at 576.) For “property damage” to be covered under the Policy, it must be caused by an “occurrence” (J.A. at 563), which the Policy defines as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions” (J.A. at 575). Despite its use of the term, the Policy does not separately define an “accident,” though it does exclude from coverage any property damage “expected or intended from the standpoint of the insured.” (J.A. at 564-65.)
The Policy defines “advertising injury” as injury arising out of one or more of the following events:
a. Oral or written publication of material that slanders or libels a person or organization or disparages a person‘s or organization‘s goods, products or services;
b. Oral or written publication of material that violates a person‘s right of privacy;
c. Misappropriation of advertising ideas or style of doing business; or
d. Infringement of copyright, title or slogan.
(J.A. at 573.) To be covered, an “advertising injury” must also be inflicted “in the course of advertising [the insured‘s] goods, products or services.” (J.A. at 563.)
Auto-Owners agreed to defend Stevens & Ricci in the Underlying Action, but reserved its right to later challenge whether the alleged misconduct (i.e., the sending of unsolicited faxes) fell within the terms of the insurance policy‘s coverage. In November 2013, Hymed, Stevens & Ricci, and Auto-Owners reached an agreement to compromise and settle the Underlying Action. Among other things, the parties agreed to entry of judgment in favor of the class, and against Stevens & Ricci, in the amount of $2,000,000. Hymed and the class also agreed to seek recovery to satisfy the judgment only from Auto-Owners under the Policy. On December 4, 2014, the District Court in the Underlying Action entered an order and final judgment approving the settlement and entering the judgment against Stevens & Ricci. In its order, the Court specifically found that Stevens & Ricci “did not willfully or knowingly violate the TCPA.” (J.A. at 24.)
By that time, Auto-Owners had already filed this case to clarify its obligations under the Policy. In particular, on December 28, 2012, Auto-Owners filed the present declaratory judgment action, pursuant to
II. DISCUSSION
A. Jurisdiction
This is an action under the Declaratory Judgment Act,
The second requirement for federal jurisdiction under the diversity statute
As the party invoking diversity jurisdiction, Auto-Owners bears the burden to prove, by a preponderance of the evidence, that the amount in controversy exceeds $75,000. Judson v. Travelers Prop. Cas. Co. of Am., 773 F.3d 495, 506-07 (3d Cir. 2014). But that burden is not especially onerous. In reviewing the complaint, “the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938). “Accordingly, the question whether a plaintiff‘s claims pass the ‘legal certainty’ standard is a threshold matter that should involve the court in only minimal scrutiny of the plaintiff‘s claims.” Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir. 1997).
In making that assessment, “[t]he temporal focus of the court‘s evaluation ... is on the time that the complaint was filed.” Id.; see also Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 152 (3d Cir. 2009) (“[U]nder a long-standing rule, federal diversity jurisdiction is generally determined based on the circumstances prevailing at the time the suit was filed.“). Subsequent events cannot reduce the
In its amended complaint, Auto-Owners alleged that the amount in controversy exceeded $75,000. Typically, “[s]uch a general allegation when not traversed is sufficient, unless it is qualified by others which so detract from it that the court must dismiss sua sponte or on defendants’ motion.” Gibbs v. Buck, 307 U.S. 66, 72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939). Auto-Owners based its allegation on averments in the then-pending Underlying Action,9 which claimed that Stevens & Ricci had violated the TCPA, that statutory damages were $500 per violation, and that “more than 39 other recipients” had received the faxes without their permission. (J.A. at 545.) Thus, at a minimum, Auto-Owners‘s potential financial exposure when it filed its amended complaint was $20,000, i.e., $500 statutory damages for each of 40 fax recipients. But the complaint in the Underlying Action also noted that damages could be trebled, further increasing that minimum to $60,000. Again, that sum represents the minimum exposure, given trebling, and the complaint in the Underlying Action specifically noted that “morе than 39” other individuals received the disputed faxes, with no limitation. (J.A. at 545 (emphasis added).) Using the statutory measure of damages and considering the potential for trebling, only eleven additional faxes would be necessary for damages to exceed $75,000.10 Importantly, the $60,000 minimum does not include the expense Auto-Owners would certainly incur in providing a legal defense against Hymed‘s class action, as the Policy imposes on Auto-Owners a “duty to defend” its insured. (J.A. at 563.) That cost of defense in the Underlying Action, which can fairly be assumed to be well in excess of the $15,000 difference between $60,000 and the $75,000 jurisdictional threshold, is properly included in determining the amount in controversy here. See State Farm Mut. Auto. Ins. Co. v. Powell, 87 F.3d 93, 98 (3d Cir. 1996) (“[W]here the underlying instrument or contract itself provides for their payment, costs and attorneys’ fees must be considered in determining the jurisdictional
We have previously recognized that “the amount in controversy is not measured by the low end of an open-ended claim, but rather by a reasonable reading of the value of the rights being litigated.” Angus v. Shiley Inc., 989 F.2d 142, 146 (3d Cir. 1993). Here, in light of the costs that Auto-Owners would incur if required to defend the Underlying Action and the plausibility of there being a few additional fax recipients, we cannot say to a legal certainty that Auto-Owners‘s declaratory judgment action was valued at or below $75,000 when it was filed. We likewise cannot conclude that the complaint‘s allegation that the amount in controversy exceeded $75,000 was made in bad faith.
Consistent with that conclusion, Hymed does not argue that Auto-Owners claimed more than $75,000 in bad faith.12 Instead, it contends that, by adding up the potential damages owed to each of the various class members, Auto-Owners is improperly aggregating those claims to cross the jurisdictional threshold. Again, the “claims of several plaintiffs, if they are separate and distinct, cannot be aggregated for purposes of determining the amount in controversy.” Werwinski, 286 F.3d at 666 (internal quotation marks omitted).13 Although declaratory judgment actions do not directly involve the award of monetary
Hymed argues that the “object of the litigation” here is resolution of a dispute between the many members of the class and the insurer, and that Auto-Owners can thus only satisfy the amount-in-controversy requirement by improperly aggregating those various claims. To Hymed, “this action always has been a multi-party dispute between Auto-Owners and the multiplicity of class claimants.” (Hymed Jan. 8, 2016 Letter Br. at 9.) Unsurprisingly, Auto-Owners disagrees, viewing the case as a unitary controversy between it and its insured. Taking that perspective, Auto-Owners argues that, “in coverage litigation commenced by an insurer, the focus is on the amount the insurer will owe to its insured or the value of its coverage obligation.” (Auto-Owners Jan. 4, 2016 Letter Br. at 1.) Given those two competing positions, we must decide whether this case is properly viewed as a dispute between Auto-Owners and the many class members—which would givе rise to aggregation problems—or as a dispute between Auto-Owners and its insured concerning its overall obligation to defend and indemnify under the Policy.
Although we have never before spoken precedentially on this question,14 we find persuasive the opinion of the United States Court of Appeals for the Seventh Circuit in Meridian Security Insurance Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006) (Easterbrook, J.). There, much like here, an insurer sought a declaratory judgment against its insured to avoid any obligation to defend a class action alleging that the insured had sent unsolicited fax advertisements in violation of the TCPA. Id. at 537. Also as here, the underlying class action was still pending at the time the declaratory judgment action was filed. Id. at 538. In concluding that the district court indeed had diversity jurisdiction, the Seventh Circuit rejected the very argument that Hymed now advances. According to that court, “[the insurer] has not aggregated multiple parties’ claims. From its perspective there is only one claim—by its insured, for the sum of defense and indemnity costs.” Id. at 539. The Seventh Circuit thus held that “the anti-aggregation rule does not apply .... Just because the unitary controversy between these parties reflects the sum of many smaller controversies. No more need be said on this subject.” Id.15
We recognize that this results in a situation in which an insurer can invoke federal jurisdiction in a declaratory judgment action while class members cannot. Echoing that notion, the Dissent says we are taking an “insurance-company viewpoint approach” to the amount-in-controversy question. (Dissent Op. at 414.) But our decision reflects no partiality. The fact that Auto-Owners can invoke federal jurisdiction simply follows from application of the amount-in-controversy requirement and its accompanying anti-aggregation rule. To Auto-Owners, the amount in controversy exceeds $75,000; we need not aggregate claims to cross that threshold. To each member of the class, the amount in controversy falls short. Only one party may invoke our diversity jurisdiction because only that party has the requisite amount at stake. We note, however, that any concern about one-sidedness should be mitigated by the Class Action Fairness Act (“CAFA“),
Next, the Dissent says there is tension between our standing jurisprudence, “in which we have stressed that parties like Hymed have a significant stake” in insurance coverage actions, and our amount-in-controversy conclusion that “parties like Hymed cannot assert federal jurisdiction in declaratory actions seeking similar relief.” (Dissent Op. at 411.) There is no such tension. Standing and amount-in-controversy are two distinct inquiries. Hymed certainly had standing to participate in this insurance coverage action, see supra note 7, but that does not alter the $75,000 amount-in-controversy threshold that it must meet in order for the dispute to fall within our jurisdiction.
The Dissent then cites In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001) for the proposition that we should look directly “to Hymed‘s underlying suit to determine the amount in controversy.” (Dissent Op. at 412-13.) But Ford involved multiple plaintiffs who each sought injunctive relief. Id. at 955-56. In dismissing that case, the United States Court of Appeals for the Ninth Circuit took the same plaintiff-focused approach that we now take and held that the amount at stake “depend[s] upon the nature and value of the right asserted” by each plaintiff. Id. at 959. Our approach here is thus entirely consistent with Ford.16 The Dissent nonetheless labors to create an aggregation problem. Indeed, its approach to determining the amount in controversy in declaratory judgment cases—to effectively ignore the declaratory judgment action altogether and look only at the Underlying Action—is unprecedented.17 We must look to the Underlying Action to discern the value of the right being litigated here, but we cannot, and do not, ignore party status when determining whether the plaintiff in the case before us is improperly aggregating claims to reach the jurisdictional threshold. From Auto-Owners‘s perspective, the basic dispute is one between it and its insured over the scope of overall insurance coverage. Principles of anti-aggregation thus remain intact.
Finally, the Dissent would not take into account potential attorney‘s fees when determining the amount in controversy here, and faults us for an “unnecessary expansion of our jurisprudence” on the subject. (Dissent Op. at 414.) Even if we were to set attorney‘s fees aside entirely, that would not change our conclusion that the amount in controversy exceeds $75,000, for the reasons just set forth. But we ought not discount those costs. As we have endeavored to explain, supra note 11, Auto-Owners is seeking a declaration of its rights and responsibilities with respect to a contract that requires it to pay its insured‘s defense costs. Our precedent on the subject is straightforward: “costs and attorneys’ fees should be considered part of the amount in controversy for jurisdictional purposes when they are mandated by underlying instruments or contracts.” Powell, 87 F.3d at 98.18 Here, the underly
Accordingly, satisfaction of the amount-in-controversy requirement in this case does not violate the anti-aggregation rule, and the District Court had diversity jurisdiction under
B. Standard of Review
Both parties moved for summary judgment under
C. Analysis
A federal court sitting in diversity must apply state substantive law. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000). Here, the ultimate merits question is whether the sending of faxes in the described circumstances fell under the Policy‘s definition of either “property damage” or “advertising injury,” as a matter of state law.19 But before reaching that question, we must determine which state‘s law to apply. The parties disagree on that point. Auto-Owners urges Pennsylvania law, given Pennsylvania‘s role as the forum
Because the Policy itself did not contain a choice-of-law provision, to determine which state‘s substantive law applies we “must apply the choice of law rules of the forum state.” Krustix v. Ookuma Mach. Tool, Inc., 40 F.3d 52, 55 (3d Cir. 1994) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 497, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). As in all applications of state law, our task “is to predict how the [state] Supreme Court would rule if it were deciding this case.” Norfolk S. Ry. Co. v. Basell USA Inc., 512 F.3d 86, 91-92 (3d Cir. 2008). This action was filed in the Eastern District of Pennsylvania, so we apply Pennsylvania choice-of-law rules. In contract cases, those rules are not entirely settled. Before 1964, Pennsylvania courts applied the law of the place where the contract was formed (“lеx loci contractus“). That stood in contrast to the rule in tort cases, which required application of the law of the place where the injury occurred (“lex loci delicti“). In Griffith v. United Air Lines, Inc., the Pennsylvania Supreme Court abandoned the “lex loci delicti” rule for torts “in favor of a more flexible rule which permits analysis of the policies and interests underlying the particular issue before the court.” 416 Pa. 1, 203 A.2d 796, 805 (1964). The Griffith court did not address whether its new flexible approach to choice-of-law questions would also apply to contract claims, thus also displacing the “lex loci contractus” rule. Nor, in the years since, has the Supreme Court of Pennsylvania had occasion to answer that question.
But we have, twice. Almost 40 years ago, we “predict[ed] that Pennsylvania would[] extend its Griffith methodology to contract actions.” Melville v. Am. Home Assurance Co., 584 F.2d 1306, 1312 (3d Cir. 1978). More recently, in Hammersmith v. TIG Insurance Co., we thoroughly analyzed subsequent precedent and again concluded that Pennsylvania would apply Griffith‘s flexible approach to choice-of-law questions in contract cases. 480 F.3d 220, 226-29 (3d Cir. 2007). In particular, we emphasized that, in Budtel Associates, LP v. Continental Casualty Company, the Pennsylvania Superior Court had concluded “[a]fter careful reflection” that the “spirit and weight of th[e] Commonwealth‘s precedents mandate we follow the Griffith rule in the contract law context.” Id. at 228 (quoting Budtel Assocs., LP v. Cont‘l Cas. Co., 915 A.2d 640, 644 (Pa. Super. Ct. 2006)). Although Hymed argues that the previous “lex loci contractus” rule should control—and thus we should apply Arizona law—it cites no intervening Pennsylvania authority that calls our prediction in Hammersmith into question. Accordingly, we will continue to follow our previous prediction and apply Griffith‘s flexible choice-of-law analysis.
Hymed cites “two significant conflicts” between Arizona and Pennsylvania substantive law. (Opening Br. at 17.) First, it contends that a basic Pennsylvania principle of contract interpretation—that courts enforce unambiguous policy language—does not apply to the interpretation of insurance contracts under Arizona law. Instead, as Hymed‘s argument goes, Arizona courts interpret insurance contracts by looking to the “reasonable expectations of the insured.” (Id. at 18 (internal quotation marks omitted).) According to Hymed, “in Arizona, even clear and unambiguous boilerplate language is ineffective if it contravenes the insured‘s reasonable expectations.” (Id.)
We reject that argument. To begin with, we do not agree that there is a conflict; both states, with limited exceptions not applicable here, give dispositive weight to clear and unambiguous insurance contract language.21 But, even if a conflict existed on that broad interpretive principle, Hymed makes no effort to detail how or why the use of the “reasonable expectation” test would give rise to a relevant conflict in the substantive law applicable here. As best we can tell, Hymed is using thе “reasonable expectation” test to empower it to conduct a fifty-state legal sur
Hymed‘s second alleged conflict is more tenable and relates to differing interpretations of Arizona and Pennsylvania courts as to the meaning of “property damage.” The Policy requires that any covered “property damage” be caused by an “occurrence” (J.A. at 563), which is defined as an “accident” (J.A. аt 575). The Policy does not define the term “accident,” though it does separately exclude from coverage any property damage “expected or intended from the standpoint of the insured.” (J.A. at 565.) Hymed contends that the two states define an “accident” differently. Specifically, it says that the two states’ laws are in conflict over whether an insurance policy that covers “accidents” would extend to the “unintended consequences of intentional acts,” in this instance, damage to a fax recipient from an intentionally-sent fax. (Opening Br. at 19.)
Hymed argues that “a construction of Pennsylvania law” results in such damages being excluded from coverage. (Opening Br. at 19.) We agree. In Donegal Mutual Insurance Co. v. Baumhammers, the Supreme Court of Pennsylvania said that, when “accident” is undefined in an insurance policy, Pennsylvania courts should treat the term as “refer[ring] to an unexpected and undesirable event occurring unintentionally ....” 595 Pa. 147, 938 A.2d 286, 292 (2007).
[T]he key term in the definition of the “accident” is “unexpected” which implies a degree of fortuity. An injury therefore is not “accidental” if the injury was the natural and expected result of the insured‘s actions.... See also Minnesota Fire & Cas. Co. v. Greenfield, 579 Pa. 333, 354, 355, 855 A.2d 854, 870 (2004) (” ‘Accident’ has been defined in the context of insurance contracts as an event or happening without human agency or, if happening through human agency, an event which, under circumstances, is unusual and not expected by the person to whom it happens.“)
Id. (internal citations omitted). That definition comports with the basic purpose of insurance: “to cover only fortuitous losses.” United Servs. Auto. Ass‘n v. Elitzky, 358 Pa. Super. 362, 517 A.2d 982, 986 (1986).
The intentional conduct of third parties may still be a covered “accident” under that definition. By way of example, Baumhammers involved a killing spree perpetrated by the son of the insured. 938 A.2d at 288. The estates of several of the victims sued both the son and his parents, alleging, among other claims, negligence on the part of the parents “in failing to take possession of [his] gun and/or alert
Here, in contrast, Hymed‘s claimed injury is the use of ink, toner, and time that was caused by the receipt of junk faxes. Those injuries are the natural and expected result of the intentional sending of faxes, a far cry from Pennsylvania‘s definition of an “accident.” Though it did not intend injury, Stevens & Ricci clearly intended for the third-party advertiser to send the fax advertisements to the members of the class. Barring a problem with the communication devices, the sending of faxes necessarily results in the receipt of faxes, and any sender of a fax knows that its recipient will need to consume paper and toner and will temporarily lose the use of its fax line. That does not happen by accident. While the Supreme Court of Pennsylvania has not addressed whether unintended damages from faxes sent in violation of the TCPA constitute an “accident,” we predict that the court would reject coverage under the “property damage” provision of the Policy.22
In its effort to manufacture a conflict, Hymed next claims that Arizona law would cover its claim as an “accident.” Unfortunately for Hymed, Arizona law defines an “accident” much the same way as does Pennsylvania law:
[A]n effect which was or should have been reasonably anticipated by an insured person to be the natural or probable result of his own voluntary acts is not accidental. Or to put it in the affirmative form, if the result is one which in the ordinary course of affairs would not be anticipated by a reasonable person to flow from his own acts, it is accidental. The test is, what effect should the insured, as a reasonable man, expect from his own actions under the circumstances.
Cal. State Life Ins. Co. v. Fuqua, 40 Ariz. 148, 10 P.2d 958, 960 (1932); see Lennar Corp. v. Auto-Owners Ins. Co., 214 Ariz. 255, 151 P.3d 538, 547 (Ct. App. 2007) (“Whether an event is accidental is evaluated from the perspective of the insured.... [A]n accident is anything that happens or is the result of that which is unanticipated and takes place without the insured‘s foresight or expectation or intention.” (citations and internal quotation marks omitted)). Following that definition, as a matter of Arizona law just as under Pennsylvania law, the use of ink, toner, and time can be regarded as the natural result of the intentional sending of faxes.23
Finally, Hymed argues that coverage is available because the damage to class members from receipt of the junk faxes qualifies as “advertising injury” under the Policy. Because Hymed does not contend that the Arizona definition of “advertising injury” differs from that of Pennsylvania, we look to Pennsylvania law to answer that question.24 We again conclude, as did the District Court, that the claimed injury falls outside of the scope of the Policy‘s coverage.
The Policy defines “advertising injury” as, among other things: “Oral or written publication of material that violates a person‘s right of privacy.” (J.A. at 573.)25 Al
The Policy does not cover that injury. Read in context, the Policy provides coverage only for violations of the privacy interest in secrecy, and thus does not cover violations of a right to seclusion. This is amply demonstrated by the other three offenses that the Policy includes within the definition of “advertising injury“: “Oral or written publication of material that slanders or libels a person or organization or disparages a person‘s or organization‘s goods, products or services“; “Misappropriation of advertising ideas or style of doing business“; and “Infringement of copyright, title or slogan.” (J.A. at 573.) All three of thоse offenses—slander, misappropriation, and infringement—“focus on harm arising from the content of an advertisement rather than harm arising from mere receipt of an advertisement.” Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 551 (7th Cir. 2009) (interpreting an identical “advertising injury” provision to exclude coverage for the sending of unsolicited faxes). That content-dependent coverage clarifies the scope of the Policy‘s “advertising injury” provision: it protects against injuries caused by the improper content of a published advertisement.26 The Policy‘s protection of the “right of privacy” is thus logically limited to a privacy interest the infringement of which depends upon the content of the advertisements: in other words, the privacy right to secrecy.
And what the provision‘s context suggests its plain text confirms. Again, as relevant here, the Policy defines “advertising injury” to include “[o]ral or written publication of material that violates a person‘s right of privacy.” (J.A. at 573 (emphasis added).) In that definition, the phrase “that violates a person‘s right of privacy” modifies the term “material.” See Pa. Dep‘t of Banking v. NCAS of Del., LLC, 596 Pa. 638, 948 A.2d 752, 760 (2008) (“[T]he last antecedent rule ... advises that a proviso usually is construed to apply only to the provision or clause immediately preceding it.“); Bunis v. Gen. Am. Life Ins. Co., 136 Pa. Super. 284, 7 A.2d 93, 95 (1939) (applying rule of the last antecedent to the interpretation of an insurance contract).27 Thus, it must be the “material” itself, rather than its “publication,” that violates a person‘s right of privacy. See ACS Sys., Inc. v. St. Paul Fire & Marine Ins. Co., 147 Cal. App. 4th 137, 53 Cal. Rptr. 3d 786, 796 (2007) (construing analogous provision and concluding “that ‘material’ is not only the last antecedent of ‘that’ but is also its only antecedent“). That “would be the case only if the material contained confidential information and violated the victim‘s right to secrecy.” State Farm Gen. Ins. Co. v. JT‘s Frames, Inc., 181 Cal. App. 4th 429, 104 Cal. Rptr. 3d 573, 586 (2010) (using the rule of the last antecedent to construe identically-worded provision). The text of the relevant provision of the Policy, as well as its broader context, thus compels a content-dependent view of the privacy interest meant to be protected.
Of course, our ultimate endeavor is to apply Pennsylvania law to determine the scope of the Policy‘s “advertising injury” provision. Although the Supreme Court of Pennsylvania has not addressed that question, the Superior Court in Brethren interpreted verbatim contract language and reached the same conclusion as we do here, for largely the reasons we have addressed. Brethren, 5 A.3d at 337. We regard decisions of an intermediate appellate court as “indic[ative] of how the state‘s highest court might decide the issue.” McGowan v. Univ. of Scranton, 759 F.2d 287, 291 (3d Cir. 1985) (internal quotation marks omitted). Such decisions can even constitute “presumptive evidenсe” of state law. Nat‘l Sur. Corp. v. Midland Bank, 551 F.2d 21, 30 (3d Cir. 1977). We emphasize that this case raises the exact same question as did Brethren—the policy language is identical, the underlying TCPA violation is identical, and the claimed damages for that violation are identical.28 We
III. CONCLUSION
For the foregoing reasons, we will affirm the judgment of the District Court.
GREENAWAY, JR., Circuit Judge, dissenting.
I would dismiss for lack of subject matter jurisdiction. In deciding that the amount-in-controversy threshold is satisfied, the majority adopts the reasoning in Meridian Security Insurance Co. v. Sadowski, 441 F.3d 536, 539 (7th Cir. 2006), to conclude that the rule against aggregation does not apply to this declaratory judgment action because “at the time of filing of the declaratory judgment complaint, Auto-Owners‘s quarrel was with Stevens & Ricci regarding its indemnity obligation under the Policy ... [and] [i]ts dispute was thus with its insured, not the class.” Majority Op. at 399. I write separately because I am unconvinced that this approach is permissible in light of the anti-aggregation rule, and believe that, in reaching its conclusion, the majority obfuscates our jurisprudence in two important areas.
First, the majority‘s view that the instant controversy is “unitary” is questionable as a practical matter and creates tension with our previous decisions. Plaintiff-Appellee Auto-Owners Insurance Company named Appellant Hymed Group Corporation as a defendant in its declaratory action “in the hope of attaining a binding judgment against both the insured and the injured party,” American Automobile Insurance Company v. Murray, 658 F.3d 311, 319 (3d Cir. 2011); moreover, Hymed, not Stevens & Ricci, Inc., has been defending the suit from the beginning. In other words, we are not presented with a unitary controversy between Auto-Owners and Stevens & Ricci because, in reality, the presence of Hymed reflects the fact that a
It is hard to conceive of what controversy actually exists between Auto-Owners and Stevens & Ricci given the fact that Stevens & Ricci has not so much as entered an appearance in the matter. As Auto-Owners itself states in its Brief: “Hymed and Auto-Owners are the parties currently engaged in the ‘real dispute’ that has reached this Court on appeal ... and Hymed (and the class members) are the only ones that have a financial interest in the coverage issue ....” Appellee‘s Supp. Br. at 12.
The notion that insurance coverage disputes occur only between the insurance company and its insured fits uneasily with our Article III standing decisions in which we have stressed that parties like Hymed have a significant stake. See Murray, 658 F.3d at 319 (explaining that an injured party has a “particularized interest” in an insurance coverage suit “because a determination of ... coverage would dictate its ability to receive the full benefit of the ... lawsuit“); see also Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 354 (3d Cir. 1986) (“Concluding that the injured party has an independent, and not a derivative right, to be heard, is not only jurisprudentially sound, but is also realistic.“).
As the majority notes, the import of its decision is that parties like Hymed cannot assert federal jurisdiction in declaratory actions seeking similar relief. In my view, this retreats from our previous decisions emphasizing the particularized interest of the injured party. The majority observes that “[s]tanding and amount-in-controversy arе two distinct inquiries.” Majority Op. at 400. It misses the point. My uneasiness with the majority‘s characterization of coverage disputes arises from the practical anomaly of the real party in interest losing part of its stake in the suit.
Further, I believe that the majority‘s approach is essentially a run around the anti-aggregation rule. We have prohibited measuring the amount-in-controversy by the defendant‘s total cost on the basis that it violates anti-aggregation principles. In Packard v. Provident National Bank, 994 F.2d 1039, 1050 (3d Cir. 1993) we stressed that “allowing the amount in controversy to be measured by the defendant‘s cost would eviscerate Snyder [v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969)]‘s holding that the claims of class members may not be aggregated in order to meet the jurisdictional threshold,” and thus declined to do so.
The majority‘s response to this reasoning is that it is not aggregating but rather assessing the amount-in-controversy as the total “value of the right being litigated” from the perspective of Auto-Owners. Majority Op. at 400. On this point, the majority invokes the plaintiff‘s viewpoint rule, under which the test for determining the amount-in-controversy relies solely on the value of the benefit to the plaintiff. In other words, the majority believes that because the defendant in the underlying action is now the plaintiff, the reasoning in Packard does not apply.
But the majority‘s approach does not actually elude the aggregation of class members’ claims. This becomes clear if we consider courts’ treatment of the “either-viewpoint” approach, under which the amount-in-controversy is based on the pecuniary result to either party that would be produced by the judgment. See 14AA Charles A. Wright et al., Federal Practice and Procedure § 3702.5 (4th ed. 2016).
Courts addressing the either-viewpoint aрproach have declined to adopt the rule in suits involving class actions, for the simple fact that total cost is the same as aggrega
The Ninth Circuit Court of Appeals has made the same point. In Ford Motor Co., 264 F.3d at 958, class-action plaintiffs seeking injunctive relief invoked the “either viewpoint” rule and argued that the amount-in-controversy should be viewed as the total detriment to the defendant. The court rejected this approach because of the “inherent conflict” between the application of the approach and the anti-aggregation rule, explaining that “total detriment” is basically the same thing as aggregation, and ... where the equitable relief sought is but a means through which the individual claims may be satisfied, the ban on aggregation applies with equal force to the equitable as well as the monetary relief.” Id. at 959.
Here, the relief requested is different but the implications are the same. Auto-Owners asks us to view the amount-in-controversy as its total detriment on the presumption that this eludes application of the anti-aggregation rule. But the “inherent conflict” noted in Ford does not really disappear simply by assessing the amount-in-controversy from the plaintiff-insurance company‘s viewpoint. This is because in a declaratory action, the court looks to the underlying suit to determine the amount in controversy. See e.g., Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995) (“[T]he amount in controversy in a petition to compel arbitration or appoint an arbitrator is determined by the underlying cause of action that would be arbitrated.“).1 That means, regardless of party status in the declaratory action, the plaintiff‘s claim in the underlying suit still provides the basis from which we calculate the amount in controversy. Put differently: merely labeling the amount as the “total amount the insurance company will owe” does not sidestep the fact that, practically speaking, we are deriving that amount by aggregating the individual claims of the class members in the underlying suit.2
The majority believes that its approach is “consistent” with Ford. Majority Op. at 400. I disagree. Ford straightforwardly explained that it would not consider the total detriment of the defendant in reaching the amount in controversy because “total detriment” and “aggregation” are one and the same. Here, the majority concludes that total detriment and aggregation are not the same simply because the insurance company is the plaintiff in the declaratory action. Rather than being consistent with Ford, the majority skirts the relevant point of Ford through a narrow focus on party status.
Thus to calculate the amount-in-controversy, I would do what our precedents suggest: look to Hymed‘s underlying suit
To be sure, the total amount potentially owed by Auto-Owners also falls short of the $75,000 threshold. The majority attempts to overcome this problem by tacking onto the amount the cost of hypothetical attorneys’ fees. I also depart from this approach. Generally, attorneys’ fees are not considered a part of the amount-in-controversy.
The majority relies on Powell in concluding that attorneys’ fees are duly included here, but that case provides only apparent support. In Powell, we declined to include arbitration costs in the amount-in-controversy because the policy at issue did “not specifically impose a duty to pay on the part of the [insurance company].” Id. Similarly, the Policy contains no provision specifically imposing on Auto-Owners a duty to pay attorneys’ fees and costs. While the majority points out that the Policy imposes on Auto-Owners a general “duty to defend,” this duty only applies to suits that fall within coverage. Thus, it is not an unconditional requirement from which we could comfortably speculate as to costs that may be incurred.
The way the majority presents it, it might appear that Powell straightforwardly adopts the position it embraces. Not so. The full text of the language cited by the majority is as follows:
As an initial matter, we question the reasoning of the district court‘s decision in [Nationwide Mutual Insurance Company v. Rowles, 818 F.Supp. 852 (1993)]. In arriving at its conclusion, the Rowles court relied upon two cases, [Springstead v. Crawfordsville State Bank, 231 U.S. 541, 34 S.Ct. 195, 58 L.Ed. 354 (1913)] and [Farmers Insurance Company v. McClain, 603 F.2d 821 (10th Cir. 1979)] which held that costs and attorneys’ fees should be considered part of the amount in controversy for jurisdictional purposes when they are mandated by underlying instruments or contracts. In those two cаses, however, the contracts at issue called for the payment of attorneys’ fees and costs by the party breaching the contract.
Id. at 98. What should be readily apparent is that the majority takes Powell out of context. There, we did not hold that “costs and attorneys’ fees should be considered part of the amount in controversy for jurisdictional purposes when they are mandated by underlying instruments or contracts;” we merely cited a district court case that made a conclusion to that effect. The upshot of Powell‘s holding is more limited—it is, where an underlying instrument does not “specifically impose a duty to pay” fees and costs, such costs are not duly included in the amount in controversy. Id.
To be clear, I would agree that where a contract requires a breaching party to pay attorneys’ fees, those may be considered part of the amount in controversy—after all, in those contexts, “the costs [are] essentially additional damages to be assessed against the party found to have breached the instrument.” Id. This narrow exception to the general prohibition does not apply
In sum, the inclusion of attorneys’ fees here is an unnecessary expansion of our jurisprudence for which the majority articulates no basis.3 The majority believes that those fees are an “inseparable” part of the controversy and to ignore them is to “ignore the reality of what is at stake in this litigation.” Majority Op. at 402. But in my view, by including these fees, the majority ignores the express language of
“It is axiomatic that federal courts are courts of limited jurisdiction, and as such are under a continuing duty to satisfy themselves of their jurisdiction before proceeding to the merits of any case.” Packard, 994 F.2d at 1049 (citations omitted). Here, I am afraid the majority has “ben[t] over backwards ... to persuade itself that subject matter jurisdiction exists.” Travelers Prop. Cas. v. Good, 689 F.3d 714, 718 (7th Cir. 2012).
Thus, because of the difficult fit between the majority‘s reasoning and our Article III standing jurisprudence in similar contexts, the tension between the insurance-company viewpoint approach and the anti-aggregation rule, and my reservations regarding the inclusion of the attorneys’ fees to reach the amount-in-controversy, I am not satisfied of our jurisdiction over this dispute. I would dismiss the appeal on that ground and therefore respectfully dissent.
Sara ROSENBERG, Individually and as Trustee of the Douglas Rosenberg 2004 Trust, Separately and as General Partner of The Pennsylvania Limited
Notes
KENT A. JORDAN
UNITED STATES CIRCUIT JUDGE