November 29, 2022

Volume XII, Number 333

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November 29, 2022

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November 28, 2022

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Ninth Circuit Panel Holds Attorneys’ Fees May Be Included in the Magnuson-Moss Warranty Act’s Amount in Controversy when Available to Prevailing Plaintiffs

In Shoner v. Carrier Corporation, No. 20-56327 (9th Cir. Apr. 14, 2022), the Ninth Circuit recently held awardable attorneys’ fees can be counted toward the minimum amount in controversy required by the Magnuson-Moss Warranty Act (MMWA) for federal court jurisdiction to exist.

The plaintiff, Nicholas Shoner, brought a putative class action asserting express and implied state law warranty claims, along with a federal MMWA claim based on his allegation that the purchased air conditioner was defective. In a separate memorandum disposition, the Ninth Circuit had previously affirmed the district court’s dismissal of Shoner’s state law claims, over which the district court properly had jurisdiction pursuant to the Class Action Fairness Act (CAFA). But in dismissing all of the plaintiff’s state law claims, the district court did not address whether it had subject matter jurisdiction over the remaining MMWA claim. Following the district court’s dismissal of all of Shoner’s claims, a different panel of the Ninth Circuit clarified, in Floyd v. Am. Honda Motor Co.966 F.3d 1027, 1034 (9th Cir. 2020), that a plaintiff asserting an MMWA class claim must name 100 class members in the complaint. On appeal, in his reply brief, Shoner admitted the district court therefore lacked jurisdiction over the MMWA class claim but argued the district court still had federal question jurisdiction over his individual MMWA claim.

Although the MMWA is a federal law, federal courts do not have jurisdiction over an MMWA claim if the amount in controversy is less than $50,000. The MMWA provides that federal jurisdiction is not available under certain circumstances, including “if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit.” 15 U.S.C. § 2310(d)(3) (emphasis added).

Here Shoner alleged he paid $1,266 for his allegedly defective air conditioner and argued his awardable attorneys’ fees could provide the remaining $48,000 required. The panel in Shoner therefore was presented with the narrow question of whether attorneys’ fees are considered “costs” and thus do or do not count toward the MMWA’s amount in controversy requirement, an issue that had not yet been addressed in the Ninth Circuit.

Four circuits have held attorneys’ fees are “costs” under the MMWA and are therefore excluded from the amount in controversy calculation. The Fourth Circuit first analyzed this issue and concluded attorneys’ fees were a form of “costs” and thus not included in calculating the amount in controversy under the MMWA. Saval v. BL Ltd., 710 F.2d 1027, 1032-33 (4th Cir. 1983). In Saval, the court reasoned that allowing attorneys’ fees to be included in the amount in controversy would render superfluous the MMWA requirement of a $25 minimum amount at issue for individual claims; the Eleventh, Third, and Fifth Circuits adopted the Fourth Circuit’s reasoning. See Ansari v. Bella Auto. Grp., 145 F.3d 1270, 1271 (11th Cir. 1998); Suber v. Chrysler Corp., 104 F.3d 578, 588 n.12 (3d Cir. 1997); Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1069 (5th Cir. 1984). The Seventh Circuit, on the other hand, does include attorneys’ fees toward the MMWA’s amount in controversy requirement. See Burzlaff v. Thoroughbred Motorsports, Inc., 758 F.3d 841, 844-45 (7th Cir. 2014).

In acknowledging the prior decisions in other circuits, the Shoner panel concluded the MMWA’s language must be interpreted consistently with the traditional diversity and CAFA jurisdiction provisions. In both the traditional diversity and CAFA contexts, attorneys’ fees may be included in the amount in controversy where an underlying statutory claim authorizes an award of attorneys’ fees. Thus, the panel held attorneys’ fees are not “costs” within the meaning of the MMWA and may be included in the amount in controversy calculation if they are available to a prevailing plaintiff pursuant to a state fee-shifting statute. The panel further noted several district courts within the Ninth Circuit had already taken this approach to analyzing the MMWA’s amount in controversy requirement. Noting the concern raised in the Fourth Circuit’s decision, that the MMWA’s jurisdictional hurdles are meant to restrict access to the federal courts, the Shoner panel emphasized its statutory construction is consistent with this purpose. Referencing the facts in the case before it, the panel noted that even if a plaintiff were statutorily entitled to attorneys’ fees, those fees must total more than $48,700 before he could bring his individual claim in federal court.

The panel then considered whether there were attorney’s fees available to Shoner sufficient to satisfy the amount in controversy requirement. Neither of the Michigan statutes covering express and implied warranties, upon which plaintiff’s MMWA claim was based, grant a prevailing plaintiff attorneys’ fees. Likewise, the Michigan Consumer Protection Act, pursuant to which the plaintiff also asserted a claim, states that attorneys’ fees are not available in a class action — thus not available to Shoner, who brought this claim as part of a putative class action. Because attorneys’ fees were unavailable under the plaintiff’s state law claims, he failed to meet the amount in controversy requirement for the federal court to have subject matter jurisdiction over his MMWA claim. The panel vacated the district court’s judgment on the MMWA claim and remanded with instructions to dismiss the claim for lack of subject matter jurisdiction.

This decision clarifies, in the Ninth Circuit, whether attorneys’ fees can be included when determining if the MMWA’s amount in controversy requirement has been met. For practical purposes, it remains to be seen whether including attorneys’ fees where available under a state statute markedly increases the number of cases where federal jurisdiction exists under the MMWA. As the specifics of the Shoner case demonstrate, many states laws may not permit recovery of attorneys’ fees in these instances, and very few individual MMWA claims involve damages at all close to $50,000, even after adding in reasonable attorneys’ fees. Regardless, both plaintiffs and defendants should be aware of how courts in different circuits interpret the amount in controversy requirement to determine whether the federal court actually has jurisdiction over an MMWA claim.

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 159
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About this Author

Jai Singh, Partner, Litigator, Foley Lardner law firm, San Diego, Los Angeles, California, class actions
Partner

Jai Singh is a partner and litigation lawyer with Foley & Lardner LLP. His practice focuses on representing clients throughout the United States in high-stakes business and commercial litigation and the defense of consumer and employment class actions, primarily in the retail, food and beverage, multifamily housing, health care, manufacturing and financial industry sectors.

858-847-6717
Jessica N. Walker Attorney Business Litigation & Dispute Resolution Lawyer Foley
Associate

Jessica N. Walker is an associate with Foley & Lardner LLP. She is a member of the Business Litigation & Dispute Resolution Practice.

Jessica has experience in all aspects of commercial litigation in federal and state court and arbitration. Her practice includes representing businesses and individuals in class action, false advertising, unfair competition, business tort, investigations, warranty, product liability, lemon law, securities and other litigation matters. Jessica also represents museums, foreign sovereigns, and artists in artwork ownership disputes.

213-972-4675
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