Opinion
Docket No. 00-CV-0245E(F)
February 16, 2001
Paul J. Yesawich, III, Esq. and Patrick J. Maxwell, Esq., c/o Harris Beach Wilcox, Rochester, NY, Attorneys for the Plaintiff.
Lawrence J. Vilardo, Esq. and Mark R. Uba, Esq., c/o Connors Vilardo, Buffalo, NY, Daniel J. Sponseller, Esq., and Paul K. Stockman, Esq., c/o Kirkpatrick Lockhart, St., Pittsbugh, PA, Attorneys for the Defendant.
MEMORANDUM and ORDER
Plaintiffs John and Judith Davies and William and Ann Snyder, on behalf of themselves and all others similarly situated, filed this action in New York State Supreme Court for the County of Chautauqua, against defendant Belden Blake Corporation ("Belden") alleging that Belden had been underpaying royalties owed to the plaintiffs for natural gas. The plaintiffs alleged seven state law causes of action — viz. (1) to (3) for breach of contract, (4) for breach of covenant to market, (5) for unjust enrichment, (6) for breach of fiduciary duty and (7) for an accounting. Belden removed this action to this Court alleging diversity jurisdiction under 28 U.S.C. § 1332. Plaintiffs filed a motion to remand this case to state court on the basis that this Court lacks subject matter jurisdiction over this case because the amount in controversy does not exceed $75,000. Such motion is presently before this Court for disposition.
Plaintiffs filed this action on behalf of themselves and all others similarly situated and intend to move for certification as a class action; accordingly this Court will assume that the plaintiffs' prospective class has already been certified for purposes of deciding the present motion to remand. Plaintiffs are landowners who lease the right to remove natural gas from their land to Belden, a corporation involved in the extraction and distribution thereof. Belden pays the landowners royalties in the amount of one-eighth of the sale price per thousand cubic feet ("MCF") of the natural gas it extracts. Plaintiffs allege that Belden did not use the true sale price in calculating their royalties and deducted improper expenses, resulting in their royalty payments being diminished. In their complaint, plaintiffs demand compensatory damages based on the difference between the royalties actually paid and the royalties that should have been paid, interest thereon, at least $100,000,000 in punitive damages, declaratory and injunctive relief, reasonable attorney fees, costs and disbursements. The size of the prospective class is not stated in the complaint; consequently the amount of recovery sought for each plaintiff is not clearly discernable. In its notice of removal, Belden stated that the
"amount in controversy exceeds the sum of Seventy-Five Thousand Dollars ($75,000.00), exclusive of interest and costs, as to each plaintiff. Plaintiffs seek compensatory and punitive damages of at least one hundred million dollars ($100,000,000.00), which, if granted, would as to each named plaintiff exceed the jurisdictional threshold amount of this Court." Notice of Removal ¶ 5.
A defendant can remove an action filed in state court to federal district court, if the federal court has original subject matter jurisdiction. Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 271 (2d Cir. 1994). Pursuant to 28 U.S.C. § 1332 a federal district court has original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75,000 exclusive of interest and costs, and is between * * * citizens of different states * * *. The Plaintiffs have moved to remand this action on the basis that none of the representative plaintiffs or the prospective class members has a claim that exceeds $75,000 and therefore this Court lacks subject matter jurisdiction. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447 (c). Only the representative plaintiffs must be diverse from the defendants in order to satisfy diversity jurisdiction in a class action. E.R. Squibb Sons, Inc. v. Accident Casualty Insurance Co., 160 F.3d 925, 931 (2d Cir. 1998). The representative plaintiffs are citizens of New York, Belden is a corporation which is both incorporated and has its principal place of business in Ohio. Accordingly there is complete diversity between the parties and the only issue to be determined is whether the amount in controversy exceeds $75,000. However, the "requirement that a certain amount be at stake is an unwaivable jurisdictional one" — id. at 933 — and "[r]emoval statutes are to be strictly construed against removal and all doubts should be resolved in favor of remand." Leslie v. Banctec Service Corp., 928 F. Supp. 341, 347 (S.D.N.Y. 1996).
Internal citations and quotation marks omitted.
The party seeking to invoke federal jurisdiction bears the "burden of proving that it appears to a 'reasonable probability' that the claim is in excess of the statutory jurisdictional amount." Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir. 1994). When the plaintiffs challenge removal on the basis that their claim is for less than the required amount in controversy for diversity jurisdiction, the defendant must support its alleged jurisdictional facts with "competent proof" and justify its allegations by a preponderance of the evidence. United Food Local 919 v. Centermark Properties, 30 F.3d 298, 305 (2d Cir. 1994). This is required because the plaintiffs are the masters of their own complaint and may avoid federal jurisdiction by suing for less than the jurisdictional minimum; however, when the amount in controversy is not discernable from the pleadings, the court may look to other evidence in the record to determine if the amount in controversy requirement is satisfied. Ibid. "[A]bsolute certainty in valuation of the right involved is not required to meet the amount in controversy requirement but rather the requirement is that there be a reasonable probability of an amount in controversy exceeding [the] jurisdictional amount if an amount can be ascertained pursuant to some realistic formula." Moore v. Betit, 511 F.2d 1004, 1006 (2d Cir. 1975). When "punitive damages are permitted under the controlling law, the demand for such damages may be included in determining whether the jurisdictional amount is satisfied." A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82, 87 (2d Cir. 1991). When "jurisdiction is lacking, * * * dismissal is mandatory." Id. at 301.
Belden argues that this Court has diversity jurisdiction if the claims of any of the prospective class members exceed $75,000. In Zahn v. International Paper Co., 414 U.S. 291, 301 (1973), it was held that the claims of each and every prospective class member must exceed the amount in controversy requirement to satisfy diversity jurisdiction. Belden argues that this requirement was overruled with the enactment of 28 U.S.C. § 1367. Although some courts have held that the enactment of 28 U.S.C. § 1367 overruled the Supreme Court's ruling in Zahn that each class member must satisfy the jurisdictional prerequisite for diversity jurisdiction, the Second Circuit Court of Appeals has not yet ruled on this issue. Mehlenbacher v. Akzo Nobel Salt Inc., 216 F.3d 291, 297-298 (2d Cir. 2000). Even though the Second Circuit Court of Appeals has not yet decided whether the enactment of section 1367 overruled Zahn, "every district court in this circuit that has addressed the issue has held that Zahn is still good law" and that each and every plaintiff "in a class action must individually satisfy the minimum-amount-in-controversy requirement where the plaintiffs are asserting separate and individual claims." Briggs v. Goodyear Tire Rubber Co., 79 F. Supp.2d 228, 234 n. 4 (W.D.N.Y. 1999).
In support of this contention, Belden has submitted an affidavit showing that four unnamed royalty holders have received royalty payments of $252,040.24, $122,543.97, 311,254.57 and $133,284.68 respectively over the period from 1992-1999. Decl. of Woodburn in Opp. to Mot. to Remand. at 1-2.
"(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.
"(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332." 28 U.S.C. § 1367.
The Fifth and Seventh Circuit Courts of Appeals have concluded that 28 U.S.C. § 1367 overruled Zahn, — Free v. Abbott Labs, 51 F.3d 524, 528 (5th Cir. 1995) and Stromberg Metal Works, Inc. v. Press Mechanical Inc., 77 F.3d 928, 930 (7th Cir. 1996) — however the Third, Eighth and Tenth Circuit Courts of Appeals have ruled that it did not — Meritcare, Inc. v. St. Paul Mercury Insurance Co., 166 F.3d 214, 222 (3d Cir. 1999), Trimble v. Asarco, Inc., 232 F.3d 946, 961 (8th Cir. 2000) and Leonhardt v. Western Sugar Company, 160 F.3d 631, 640 (10th Cir. 1998).
In opposing the removal, plaintiffs have asserted that the none of the individual claims, either of the representative plaintiffs or the prospective class members, exceeds $75,000. In support thereof, John R. Davies and William Snyder have submitted affidavits, as has their attorney Paul J. Yesawich, III, Esq. Yesawich states that the class action potentially contains 15,360 plaintiffs. The specific amount of compensatory damages sought is not specified in the complaint; however the amount of punitive damages is. Dividing the amount of punitive damages sought — $100,000,000 — by the prospective class members — 15,360 — equates to $6,510 in punitive damages per plaintiff. Belden pays the royalty holders one-eighth of the sale price of the natural gas. The Davies and Snyders were paid royalties based on an average sale price of $2.35 per MCF. Based on the plaintiffs' investigation, the representative end user sale price of the natural gas is $6.00 per MCF; therefore the plaintiffs allege that the sale prices Belden used to calculate royalties may have been undercalculated by as much as $3.65 per MCF on the average.
This figure is reached by dividing Belden's 1998 New York production of 3,162,088 MCF by the average annual production per well in New York of 3,089 MCF to determine the approximate number of wells operated by Belden in New York. This equates to 1,024 wells. For each well plaintiffs assume approximately three royalty holders — the underground wells extend under multiple property lines — therefore in New York there would be approximately 3,072 royalty owners. Belden operates natural gas wells in four other states. Assuming a similar number of royalty owners in these states, the prospective class would total approximately 15,360 plaintiffs. Yesawich Aff. and attached Exs.
According to their affidavits, the prospective recoveries for John and Judith Davies and William and Ann Snyder, respectively, are as follows. Over the period from 1994-1999 the Davies were paid a total of $3,375.95 in royalties, based on a sale price of $2.31 per MCF of natural gas. Insofar as the plaintiffs claim that the sale price may have been as high as $6.00 per MCF the proper sale price to calculate their royalties may have been underestimated by $3.69. Assuming this to be true their compensatory damages would be $5,401.52 for 1994 to 1999. Their share of the punitive damages as calculated above is $6,510. The total recovery for the Davies is thus $11,911.52, an amount substantially below the $75,000 jurisdictional threshold. During the 1994-1999 period, the Snyders were paid a total of $1,151.27 based on a sale price of $2.38 per MCF of natural gas. The plaintiffs claim the sale price should have been as high as $6.00 per MCF which would mean that the sale price used to calculate their royalties may have been underestimated by as much as $3.62 per MCF. Again, assuming these facts to be true, the Snyders compensatory damages would amount to $1,726.91, which combined with punitive damages of $6,510 would amount to a total recovery of $8,236.91 — again, substantially below the jurisdictional requirement.
This figure is reached by dividing the $3.69 by which the royalties were allegedly underpaid by the $2.31 actually paid to determine that the compensatory damages would be 1.6 times the royalties received.
This figure is reached by dividing the $3.62 by which the royalties were allegedly underpaid by the $2.38 actually paid to determine that the compensatory damages would be 1.5 times the royalties received.
Belden opposes the motion to remand and argues that this Court does have subject matter jurisdiction because the amount in controversy does exceed $75,000. In support of this contention, Belden argues that the Court has jurisdiction if any one of the prospective class members has a claim exceeding $75,000 or, alternatively, that the claims of the representative plaintiffs — the Davies and the Snyders — do in fact exceed $75,000. Belden raises five arguments in support of its contention that the claims of the representative plaintiffs exceed $75,000 — viz., (1) that attorney fees are to be included in the representative plaintiffs' recovery, (2) that the claims of all royalty holders for a single well must be aggregated, (3) that the years 1992-1993 are not excluded by the statute of limitations due to the allegation of fraudulent concealment, (4) that the value of declaratory and injunctive relief for future years must be included, and (5) that punitive damages should be divided based on the number of wells, not the number of plaintiffs.
Preliminarily, this Court notes that Belden's contention that this Court has jurisdiction if any one of the prospective class members has a claim in excess of $75,000 is meritless. Regardless of whether or not Zahn has been statutorily overruled by section 1367, at least one of the representative plaintiffs must have a claim in excess of $75,000 to satisfy the amount in controversy requirement for diversity jurisdiction. E.g., 5 James Wm. Moore et al., Moore's Federal Practice ¶ 23.07(3)(c) (3d Ed. 1998); Mehlenbacher, at 297; In re Brand Name Prescription Drug Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997), cert. denied, 522 U.S. 1153 (1998) ("At least one named plaintiff must satisfy the jurisdictional minimum."); Amundson Assocs. Art Studio v. National Council on Compensation Ins., Inc., 977 F. Supp. 1116, 1123 (D. Kan. 1997) (rejecting defendant's argument that, where prospective class members but not the representative plaintiffs satisfy the amount in controversy requirement, the court can exercise supplemental jurisdiction over the entire class); Sanderson, Thompson, Ratledge Zimney v. AWACS, 958 F. Supp. 947, 961 (D. Del. 1997) (the "court does not have subject matter jurisdiction to hear the claims of any members of the class when none of the named parties independently satisfy [sic] the amount in controversy requirement."); Bishop v. General Motors Corp., 925 F. Supp. 294, 299 (D.N.J. 1996) ("even those courts which have declined to apply Zahn in its strictest sense have required that the named plaintiff meet the jurisdictional amount"); and Poore v. American-Amicable Life Ins. Co., No. CV 498-259, 2000 WL 1901632, at *8 (S.D. Ga. Dec. 20, 2000). Therefore this Court need not address Belden's assertion that Section 1367 overruled Zahn — thereby giving this Court original subject matter jurisdiction over this action if any of the prospective class members has a claim in excess of $75,000, unless at least one of the representative plaintiffs has a claim in excess of $75,000, the minimum amount in controversy required to confer diversity jurisdiction on this Court.
Belden's first argument in support of its contention that the claims of the representative plaintiffs exceed $75,000 is that because the plaintiffs request attorney fees, such should be considered in determining whether the $75,000 jurisdictional limit is exceeded. In their complaint, plaintiffs sought certification of a class action pursuant to N.Y. C.P.L.R. § 909 which states that
"If a judgment in an action maintained as a class action is rendered in favor of the class, the court in its discretion may award attorneys' fees to the representatives of the class based on the reasonable value of legal services rendered and if justice requires, allow recovery of the amount awarded from the opponent of the class."
"State statutes providing for awards of attorneys' fees and costs ordinarily apply to state law claims in federal court." Christensen v. Kiewit-Murdock Investment Corporation, 815 F.2d 206, 214 (2d Cir.), cert. denied, 484 U.S. 908 (1987). Section 909 therefore may be applicable to the present case insofar as the plaintiffs raise several state causes of action. Belden alleges that, based on the allegations in the lawsuit, "it is almost inconceivable that, if a judgment for the full amounts claimed by Plaintiffs were ultimately awarded to the alleged class after trial, claims for attorneys fees would be less than $300,000." Mem. in Opp. to Mot. to Remand at 10. Belden thus argues that, when attorney fees are factored in, the representative plaintiffs claims will exceed $75,000. Belden's argument that attorney fees may be included in determining whether the amount in controversy requirement is satisfied primarily relies on Free v. Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995). Therein the court held that, under Louisiana law, attorney fees were attributable to the representative plaintiffs and could be used to satisfy the jurisdictional requirement. Id. at 526-527. However the main issue that court was addressing was whether the attorney fees were to be apportioned among the class as a whole or were attributable solely to the representative plaintiffs, as opposed to whether attorney fees were properly considered in satisfying the amount in controversy requirement. Ibid. The Ninth Circuit Court of Appeals, in contrast, has held that Zahn prohibits attributing attorney fees solely to the representative plaintiffs. Goldberg v. CPC Int'l, Inc., 678 F.2d 1365, 1367 (9th Cir.), cert. denied, 459 U.S. 945 (1982).
Within the Second Circuit it is settled that "[attorney] fees may not be included in determining the jurisdictional amount unless they are recoverable as a matter of right." Givens v. W.T. Grant Company, 457 F.2d 612, 614 (2d Cir.), vacated on other grounds by, 409 U.S. 56 (1972); ASI Sign Systems, Inc. Architectural Systems, Inc., No. 98 Civ. 4823 (SAS), 1999 WL 553825, at *2 (S.D.N.Y. July 29, 1999). Section 909 does not allow the representatives to recover attorney fees as a matter of right. In order to recover attorney fees under Section 909 four conditions must be satisfied — viz., (1) the prospective class must be certified, (2) the plaintiffs must ultimately prevail, (3) the court must choose to award attorney fees pursuant to its discretion and (4) the court must find that justice requires the attorney fees be recovered from the defendant. Based on this analysis, numerous district courts in the Second Circuit have refused to consider possible awards of attorney fees in determining whether the representative plaintiffs have alleged a claim in excess of the jurisdictional amount. Trapanotto v. Aetna Life Insurance Co.-Aetna Health Plans, No. 95 CIV. 10704 (LAP), 1996 WL 417519, at *8-10 (S.D.N.Y. July 25, 1996) ("It does not appear that § 909 of the C.P.L.R. was intended to serve as such an easily invoked jurisdictional hook"); Colon v. Rent-A-Center, Inc., 13 F. Supp.2d 553, 562 (S.D.N.Y. 1998) (declining "to treat prospective attorneys' fees in class actions as a bootstrap for establishing federal jurisdiction"); Greenberg Trace International Holdings, Inc., No. 99 Civ. 0306 (SHS), 1999 WL 587935, at *4 (S.D.N.Y. Aug. 4, 1999) ("no reasonable method to gauge the plaintiffs' likelihood of success * * * at this point in the litigation"). Therefore this Court declines to allow Belden to establish the required amount in controversy by assuming a purely speculative award of attorney fees — without even showing that there is a "reasonable probability" that sufficient attorney fees would be awarded to satisfy the amount in controversy requirement. Tongkook, at 784.
Belden's second argument is that the claims of all royalty holders for a single well must be aggregated and by doing such the representative plaintiffs would satisfy the jurisdictional requirement. In support of this contention, Belden cites Rocket Oil Gas Co. v. Arkla Exploration Co., 435 F. Supp. 1303 (W.D. Okla. 1977). In Rocket Oil, the court held that the royalty interests in gas "may be aggregated to satisfy the federal jurisdictional amount requirement." Id. at 1305. The court did not hold that the claims must be aggregated; further, it was not even ruling on general principles of law, but rather was interpreting a specific Oklahoma statute and administrative order, which created a "common and undivided interest in the 1/8 royalty interest in all gas produced from the pooled formation by virtue of the communitization of their fractional mineral interests under the pooling order." Ibid. The other case Belden cites in support of this proposition is Crawford v. Texaco, Inc., 40 F.R.D. 381 (S.D.N.Y. 1966). In this case the court interpreted Louisiana law which also created a forced pooling group while addressing an issue of joinder, not of jurisdiction. Id. at 383. The court ruled that all royalty holders in a forced pooling group had to be joined because the plaintiff was seeking termination of the lease and the other royalty holders were necessary parties because their interests would be affected if the lease was cancelled. Id. at 383-384. In the present case, in contrast to the facts in the cases cited by Belden, there is no reason to require aggregation of the claims of the royalty holders of each well. While it is true that in some instances there are multiple royalty holders for a single well — based on plaintiffs' calculations, there are an average of three royalty holders per well — the interests of the royalty holders in the wells are not only divisible but Belden has already divided the royalty owner's respective percentages. For instance the Davies have a 6.4254 percent royalty interest in the J. Davies #1 well and a 2.3868 percent royalty interest in the J. Davies #2 well, while the Snyders own a 3.906 percent royalty interest in the Sager Unit #1 well. Yesawich Aff. Ex. A (Belden Blake Royalty Revenue Check Attachments). Distinguishing Rocket Oil, the court in Leroy Cattle Co., Inc. v. Fina Oil Chemical Co. held that, where the defendant is "required to pay each of the royalty owners according to their individual royalty interests in their respective leases," each of the prospective class members has an "independent claim predicated on his own 'separate and distinct' royalty interest." Civ. A. No. 93-1286-MLB, 1994 WL 151105, at *6 (D. Kan. March 2, 1994). "The individual right of one royalty owner to recover, as well as the amount of his recovery, is not affected by any of the other royalty owners' rights or amounts of recovery." Ibid. When the claims of the plaintiffs are separate and distinct because "they seek recovery for their losses as individuals only, and not collectively," they "may not be aggregated to satisfy the jurisdictional amount in controversy." Mehlenbacher, at 296. Based on the facts alleged in the present case, the undersigned holds that aggregation is not appropriate because, insofar as the exact percentage of royalties each landowner is entitled to from each separate well is contained within the leases with Belden, the present situation is more akin to the "separate and distinct" interests in Leroy Cattle than the "pooled" or "communitized" interests in Rocket Oil and Crawford. Therefore the royalties from each well will not be aggregated to satisfy the jurisdictional amount.
Belden's third argument is that the value of alleged losses for the years 1992-1993 must be included in the plaintiffs claims. Mem. in Opp. to Mot. to Remand at 15. Assuming a six-year statute of limitations for breach of contract — N.Y. C.P.L.R. § 213(2) — the plaintiffs did not factor lost royalties from 1992-1993 into their claimed damages. Belden argues that the Court must consider such losses in assessing whether the amount in controversy requirement is met, because the plaintiffs allege fraudulent concealment in their complaint, which could tell the statute of limitations until the plaintiffs "discovered the fraud, or could with reasonable diligence have discovered it." N.Y. C.P.L.R. § 213(8). This Court will therefore assume that losses by the Snyders from 1992-1993 should be considered in determining whether their claim is in excess of $75,000. The average compensatory damages per year for the Snyders is $287.82 multiplied by two years this equates to $575.64 which will increase the Snyder's total damages from $8,236.91 to $8,812.55 which is still below the $75,000 amount in controversy requirement. Belden did not acquire either of the Davies' wells until August 1, 1994 — Sup. To Decl. of Woodburn in Opp. to Mot. to Remand at 1 —; therefore their claim need not be adjusted.
Belden's fourth argument is that the value of the declaratory and injunctive relief sought by the plaintiffs must be considered in determining the amount in controversy. "In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 347 (1977). The Court will assume arguendo that the value of the future increase in royalty payments should be considered in determining the amount in controversy and that the proper time frame to utilize is fifteen years, as suggested by Belden in its Memorandum in Opposition to Motion to Remand at 16. The compensatory damages for the Davies amounts to an average of $900.25 per year, multiplied by fifteen years this amounts to $13,503.75. Combining this amount with the $11,911.52 in damages anticipated by the plaintiffs, the total damages amount to $25,415.27. The Snyders average compensatory damages amount to $287.82 per year, multiplied by fifteen years this equals $4,317.30. Combined with their anticipated damages of $8,236.91 and $575.64 to cover the two-year period from 1992-1993, their total damages would amount to $13,129.85. Neither of these figures satisfies the amount in controversy requirement even though not even discounted to present value.
Neither any decrease in production nor the sale of the Davies well #1 (Belden sold the J. Davies well #1 July 27, 1999 — Yesawich Aff. Ex. B) is factored into these calculations. The future losses could therefore be less than assumed for purposes of calculating the amount in controversy. For instance the production from the J. Davies #1 well from 1992 to May 5, 2000 was 161,551 MCF; however the total production during the period after Belden bought it August 1, 1994 to May 5, 2000 was only 55,576 MCF. Sup. To Decl. of Woodburn in Opp. to Mot. to Remand at 1.
Belden calculates the anticipated production from the J. Davies #2 well over the next fifteen years to be 83,497 MCF. Dec1. of Wing in Opp. to Mot. to Remand at 2. Multiplying this amount by the Davies 2.3868 percent royalty interest equals 1,992.91 which multiplied by $3.69 equates to $7,353.84 in future damages — even less than obtained utilizing the above method.
Belden's fifth and final argument is that the punitive damages should be divided based on the number of wells, not on the number of prospective plaintiffs, because the "interests of all royalty owners in a well are common and must be considered in the aggregate." Mem. in Opp. to Mot. to Remand at 16. This argument relies on the same proposition as Belden's argument that the claims of all royalty holders in a single well must be aggregated — which was considered and rejected by this Court herein above. Punitive damages may not be aggregated unless the underlying claim on which they are based is also aggregated. Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1430-1431 (2d Cir. 1997). "To hold otherwise, and aggregate punitive damages even when the actual damages could not be aggregated, would eviscerate the holdings of Snyder and Zahn and would run counter to the strict construction of the amount-in-controversy requirement those cases mandate." Id. at 1431. Therefore the Court will not divide the requested punitive damages based on wells instead of on plaintiffs.
Internal quotations and citations omitted.
Insofar as Belden has failed to show by a preponderance of the evidence that the claims of any of the representative plaintiffs exceed $75,000; this Court need not consider whether 28 U.S.C. § 1367 has overruled the holding in Zahn that the individual claims of each prospective class member must exceed the amount in controversy requirement for the court to have diversity jurisdiction. Belden has failed to establish that the amount in controversy exceeds $75,000, therefore this Court does not have subject matter jurisdiction pursuant to 28 U.S.C. § 1332 and this case must be remanded.
Accordingly it is hereby ORDERED that this case shall be remanded to the New York State Supreme Court for the County of Chautauqua and that this case file shall be closed in this Court.