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The Rocket’s Red Glare or How to Keep an Unfair and Deceptive Trade Practices Claim out of Federal Court

We wrote last summer about a decision applying the trebling feature in N.C. Gen. Stat. § 75-16 to satisfy the minimum amount in controversy required to remove a case to federal court based on diversity jurisdiction.  In that case, the court found that a removing defendant did satisfy the threshold by including the trebled damages.

A recent decision from the United States District Court for the Middle District of North Carolina addressed the same issue, but emerged with a different result.  In Cannon v. Automoney, Inc., United States Magistrate Judge Joi Peake recommended granting the plaintiffs’ motion to remand.  That recommendation was later adopted by United States District Court Judge Catherine Eagles, and the matter was remanded to Guilford County Superior Court.

A Case about Car Title Loans

Plaintiffs are 148 North Carolina residents who visited one of Automoney’s offices in South Carolina to get a car title loan.  Plaintiffs complain that Automoney charged them each an interest rate that exceeds the maximum rate allowable under North Carolina law.

Plaintiffs alleged that the excessive interest rates violated both the North Carolina Consumer Finance Act, N.C. Gen. Stat. § 53-165 et seq. and N.C. Gen. Stat. § 24-1.1 (regarding usury). 

Plaintiffs also alleged that these loans amounted to an unfair and deceptive trade practice under N.C. Gen. Stat. § 75-1.1.

Opening Round of Fire

The battle joined on September 6, 2019.  Automoney moved to dismiss or to transfer venue to South Carolina.  Plaintiffs fired back the same day, claiming that the amount in controversy did not satisfy the $75,000 requirement for diversity jurisdiction.

Because the motion to remand raised questions of subject matter jurisdiction, the court turned to that issue first.

The Battle Commenced

The first fracas focused on how to evaluate the amount in controversy in a case with 148 plaintiffs.  The court reminded the combatants that for purposes of diversity jurisdiction, claims of separate plaintiffs are not aggregated.  In other words, for jurisdiction to attach, defendants had to show that at least one individual plaintiff’s claim exceeded the $75,000 threshold.  If they did, the court could exercise supplemental jurisdiction over the claims of the remaining plaintiffs.

The court continued by identifying the two plaintiffs with the largest individual claim, Plaintiff Bunch ($25,647.99) and Plaintiff Nixon ($27,922.08).  Those amounts included the principal, interest, fees, and voiding of any unpaid balance on their loans.  On its face, those numbers seemed to meet the threshold when trebled.

But when the court calculated the appropriate trebling, it withheld the voiding of unpaid balances from the calculation.  That resulted in $71,087.51 for Plaintiff Bunch and $71,700.94 for Plaintiff Nixon.  When the unpaid balances were added back to the damages, the result was $72,310.62 for Plaintiff Bunch and $72,300.29 for Plaintiff Nixon.  These shots just missed the top of the ramparts, leaving Automoney in a precarious position.

Automoney then tried to add in Plaintiffs’ separate usury claims to get over the wall, but the court ruled that since those were pleaded in the alternative, plaintiffs would not recover section 75-1.1 damages and damages under the usury statute.

What about Attorneys’ Fees?

Automoney looked at that $2,700 gap and recalled that Plaintiffs might also be entitled to attorneys’ fees under N.C. Gen. Stat. § 75-16.1.  Automoney argued that the attorneys’ fees would put them over the top based on either (1) a one-third contingency recovery or (2) plaintiff’s counsel’s hourly rate of $350.

Plaintiffs fought back this attack as well.  Remember that there were 148 plaintiffs pursuing remand.  Plaintiffs’ counsel argued that their work necessarily benefited all 148 plaintiffs, and should be shared equally on a per-plaintiff basis.

If that was the case, the total attorneys’ fees recovery would need to exceed $400,000 to make up a $2,700 gap per plaintiff.  To explain how large that figure is, plaintiffs’ counsel noted that they had spent 60 hours on the case so far, which only accounted for only $141 in fees per plaintiff.

The court agreed, and the attorneys’ fee hook failed to connect.

What about Plaintiffs’ Refusal to Stipulate to a Lower Amount of Damages?

Defendants’ final argument was that plaintiffs refused to stipulate that they would not seek nor accept more than $75,000.  This assault failed as well.  Judge Peake cited several earlier decisions finding that there is no requirement for a plaintiff to make such a stipulation to confirm remand.

Finally, the court concluded that if that scenario came to pass and plaintiffs indicated a desire to recover more than $75,000, defendants could once again remove the case to federal court under 28 U.S.C. § 1447(c)(3).  In that scenario, defendants could do so more than one year after the suit was filed because 28 U.S.C. § 1447(c)(3)(B) would apply, allowing removal that late when “plaintiff deliberately failed to disclose the actual amount in controversy to prevent removal.”


Cannon is an important reminder that when looking at the amount in controversy, both parties need to keep all their guns in line.  Here, the parties needed to consider the treble damages feature of section 75-16, the attorneys’ fee provision in section 75-16.1, and an arcane issue like not trebling the amount voided from an unpaid loan—a scenario not unlike the Boston Pops on the Fourth of July marshalling cannons, church bells, and a symphony orchestra.

Plaintiffs were very thorough on each of these points in arguing for remand, and it paid off with a trip back to state court.

Author: Jamie Weiss

July 21, 2020 James M. Weiss
Posted in  Attorney Fees Damages