By: WISCONSIN LAW JOURNAL STAFF//September 26, 2011//
United States Court of Appeals
Civil
Civil Procedure
CAFA
Where it would only require a multiplier of 5 for punitive damages combined with actual damages to exceed $5 million, it was error to remand a class action to state court for failure to allege the jurisdictional minimum damage claim.
“Plaintiffs’ claim arises from the policy’s written terms. Any tort therefore is not concealable. This implies a low multiplier (if any is appropriate). See A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869 (1988). On the other hand, each policyholder’s loss is small, which could justify a substantial multiplier—at least if this were individual rather than class litigation. See Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003) (describing the tradeoff between the punitive-damages multiplier and class litigation when per-person stakes are small). Considerations such as these are properly part of the damages determination after the merits have been resolved. They should not be smuggled into the jurisdictional inquiry, which is supposed to be simple and mechanical. See Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., No. 09-3975 (7th Cir. July 8, 2011) (en banc). We therefore do not think it ‘legally impossible’ for the class to recover more than $3 million in punitive damages. Improbable, perhaps, but not impossible.”
Reversed and Remanded.
11-8018 Keeling v. Esurance Ins. Co.
Petition for Permission to Appeal from the United States District Court for the Southern District of Illinois, Herndon, J., Easterbrook, J.