Dahir v. Cresco Capital, Inc.

Background

Ali Dahir brought a proposed class action originally in Hennepin County District Court. He alleged that Cresco Capital, Inc., and Lone Mountain Truck Leasing, LLC, violated Minnesota’s Uniform Commercial Code and Minnesota’s Consumer Fraud Act in connection with the repossession of a commercial truck. Dahir had purchased the truck in 2016 for $69,300, defaulted on his payment obligation, and had the truck repossessed on June 25, 2020. He later bought the truck back from the defendants for $3,992.50 and owned it free of obligations to them.

Dahir’s original complaint asserted four claims under Minnesota’s Uniform Commercial Code. His amended complaint asserted six theories of recovery, including additional Uniform Commercial Code and Consumer Fraud Act claims. The defendants removed the case to federal court under the Class Action Fairness Act, or CAFA, and moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim.

CAFA jurisdiction

CAFA provides federal jurisdiction over certain class actions when the proposed class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million. The court found that the allegations plausibly showed more than 100 potential class members and minimal diversity. The jurisdictional dispute concerned only the $5 million amount-in-controversy requirement.

A defendant removing a case from state court must allege facts plausibly showing that the jurisdictional amount is met. The amount in controversy is the amount a factfinder might award, not the amount the plaintiff is most likely to recover. For a proposed class action, the claims of the class members are aggregated. The relevant time for measuring the amount in controversy is when the case is removed.

Analysis

The court concluded that the defendants’ removal papers did not plausibly show more than $5 million was in controversy. The defendants relied on allegations about the total price of Dahir’s truck and the payments he was required to make, but those amounts were not themselves claimed as damages. The defendants also relied on allegations that they retained proceeds from truck sales, but neither the complaint nor the removal papers identified amounts that could be used to calculate those alleged damages.

The defendants also relied on an alleged $2,000 fee. The court found that this amount would require roughly 2,500 class members to exceed $5 million, while Dahir’s complaint alleged only that the proposed class included more than 100 truck drivers and did not plausibly suggest a class approaching that size.

The defendants characterized Dahir’s original complaint as seeking more than $50,000 for his individual claims. The court rejected that reading. Each count alleged that “Plaintiff and the Classes” had suffered damages reasonably believed to be more than $50,000. The court understood that language as referring to an aggregate amount for Dahir and the proposed classes, not more than $50,000 for Dahir individually or for each class member. At most, the complaint plausibly alleged an aggregate amount exceeding $50,000 for each of its four original counts, or more than $200,000 total.

The court also considered a $60,000 settlement demand made for Dahir individually before removal. It treated the demand as potentially relevant evidence but found that it did not plausibly establish the amount in controversy. The demand contained no explanation connecting the amount to Dahir’s individual claims, and the court found that using it to estimate potential class members’ damages would require speculation.

Finally, the defendants relied on damages allegations in another lawsuit involving the defendants. The court found that the other case could not establish the amount in controversy here because its factual allegations, legal theories, and requested damages were materially different from Dahir’s original complaint.

Disposition

The court held that the defendants had not plausibly alleged that the amount in controversy exceeded CAFA’s $5 million threshold. It therefore ordered that the case be remanded to Minnesota District Court, Fourth Judicial District, Hennepin County, under 28 U.S.C. § 1447(c). Because the case was being remanded, Judge Eric C. Tostrud denied the defendants’ motion to dismiss as moot. The court did not reach the merits of Dahir’s claims and did not order payment of Dahir’s attorney fees and costs.