United States District Court,
S.D. New York.
ABN AMRO VERZEKERINGEN BV, Plaintiff,
GEOLOGISTICS AMERICAS, INC. and Alfred James d/b/a Art Messenger and Delivery
April 5, 2005.
STATEMENT OF THE CASE
This is a diversity case to recover for damage to a large envelope-printing press during shipping from Europe to the United States. Geologistics was the freight-forwarder and customs broker, and Art Messenger was the New York trucker. This Court’s opinion dated March 31, 2003 denied summary judgment to all parties as to liability, but granted partial summary judgment in favor of defendants, limiting their liability to $50 each under a package limitation. ABN AMRO Verzekeringen BV v. Geologistics Americas, Inc., 253 F.Supp.2d 757, 771 (S.D.N.Y.2003).
Thereafter, the Court granted plaintiff’s motion for certification for immediate appeal pursuant to 28 U.S.C. § 1292(b). ABN AMRO Verzekeringen BV v. Geologistics Americas, Inc., No. 01 Civ. 5661(DC), 2003 WL 21543529, at 3 (S.D.N.Y. July 9, 2003). On January 20, 2004, the Second Circuit denied ABN’s petition for leave to file an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The Second Circuit ruled:
Appellants have not demonstrated that the district court order [limiting the Appellees’ liability to $50 each] “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the [district court] order may materially advance the ultimate termination of the litigation.”
ABN AMRO Verzekeringen BV v. Geologistics Americas, Inc., No. 03-8036, (2d Cir. Jan. 20, 2004) (quoting 28 U.S.C. § 1292(b)).
Both defendants have tendered $50 to plaintiff, as the maximum amount plaintiff could recover if the case were to be tried. (See Pantelopoulos Aff. ¶ 3; Letter from Hill Rivkins & Hayden LLP to the Court of 11/19/04 at 1). Neither Geologistics or Art Messenger admits to liability, negligence, or fault, but both have tendered the $50 in an effort to render the case moot and to avoid the cost of trying a case where plaintiff’s maximum recovery–absent a reversal of this Court’s package limitation ruling on appeal–will be $50. Plaintiff has rejected both tenders because neither defendant concedes liability. Plaintiff argues that by accepting defendants’ offers, it could lose its right to appeal this Court’s decision on the package limitation.
Both defendants move to dismiss for lack of subject matter jurisdiction, arguing that the case is moot. The issue presented is whether a case or controversy exists in view of defendants’ offer to pay plaintiff the maximum amount recoverable at trial.
A. Rule 12(b)(1)
1. Applicable Law
“A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the court lacks the statutory or constitutional power to adjudicate the case.” Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir.1996). As the party “seeking to invoke the subject matter jurisdiction of the district court,” the plaintiff bears the burden of demonstrating that there is subject matter jurisdiction in the case. Scelsa v. City Univ. of New York, 76 F.3d 37, 40 (2d Cir.1996). If a controversy is moot, then the Court lacks subject matter jurisdiction over the action. Church of Scientology v. United States, 506 U.S. 9, 12 (1992); see also Fox v. Bd. of Trs. of the State Univ. of New York, 42 F.3d 135, 140 (2d Cir.1994). “A case is moot, and accordingly the federal courts have no jurisdiction over the litigation, when the parties lack a legally cognizable interest in the outcome…. The required legally cognizable interest has alternatively been described as a requirement that a plaintiff have a personal stake in the litigation .” Fox, 42 F.3d at 140 (internal quotations and citations omitted). “Without such a personal stake, a court lacks subject matter jurisdiction and the case must be dismissed.” Ambalu v. Rosenblatt, 194 F.R.D. 451, 452 (E.D.N.Y.2000) (citing Fox, 42 F.3d at 140)). “[A] case becomes moot … when it is impossible for the court to grant any effectual relief whatever to a prevailing party.” In re Kurtzman, 194 F.3d 54, 58 (2d Cir.1999); see also Cook v. Colgate Univ., 992 F.2d 17, 19 (2d Cir.1993) (holding that a case becomes moot “when it becomes impossible for the courts, through the exercise of their remedial powers, to do anything to redress the injury”).
When a defendant offers the maximum recovery available to a plaintiff, the Second Circuit has held that the case is moot and “there is no justification for taking the time of the court and the defendant in the pursuit of minuscule individual claims which defendant has more than satisfied.” Abrams v. Interco Inc., 719 F.2d 23, 32 (2d Cir.1983); see also Weiss v. Fein, Such, Kahn & Shepard, P.C., No. 01 Civ. 1086(AGS), 2002 WL 449653, at 3 (S.D.N.Y. March 22, 2002) (finding case moot where “defendants’ offer of judgment contains all the available relief sought by plaintiff”). If the offer does not cover all potential relief, however, the case is not moot. Sibersky v. Borah, Goldstein, Altschuler & Schwartz, P.C., 242 F.Supp.2d 273, 278 (S.D.N.Y.2002); Lovelace v. United States, No. 00 Civ. 1274(LTS), 2001 WL 984686, at 3 (S.D.N.Y. Aug. 27, 2001) (holding case not moot because defendant “fails to provide plaintiff with all to which he would be entitled”).
Courts have had occasion to consider the issue of mootness in situations similar to the one presented here. These cases are typically filed as class actions, where prior to class certification defendant offers plaintiff the maximum amount that plaintiff could recover at trial. See, e.g., Abrams, 719 F.2d at 25; Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir.1991); Grief v. Wilson, Elser, Moskowitz, Edelman & Dicker LLP, 258 F.Supp.2d 157, 159-60 (E.D.N.Y.2003); Ambalu, 194 F.R.D. at 452-53; Weiss, 2002 WL 449653, at 3; Edge v. C. Tech Collections, Inc ., 203 F.R.D. 85, 87 (E.D.N.Y.2001); Tratt v. Retreival Masters Creditors Bureau, Inc., No. 00-CV-4560 (ILG), 2001 WL 667602, at 2 (S.D.N.Y. May 23, 2001).
These cases uniformly find it proper to dismiss a complaint for lack of subject matter jurisdiction when a plaintiff is offered all that the plaintiff could recover at trial. The “offers” in the above cited cases were Rule 68 offers of judgment.Other courts followed this reasoning but denied a defendant’s motion to dismiss where the plaintiff could potentially recover more than the offer submitted by the defendant. See, e.g., Sibersky, 242 F.Supp.2d at 278; Lovelace, 2001 WL 984686, at 3; Hennessey v. Conn. Valley Fitness Ctrs., Inc., No. CV980504488S, 2001 WL 1199840 (Conn.Super.Sept. 12, 2001) (“[T]his court finds that the offer of judgment failed to provide complete relief and did not moot [plaintiff’s] claim.”).
FN1. On September 20, 2004 and October 22, 2004, respectively, Art Messenger served two Rule 68 offers of judgment on Plaintiff. Those offers were rejected. Geologistics submitted a “tender” of judgment on or about November 19, 2004. Whether defendants’ tendered the $50 through a confession of judgment, offer of judgment, or tender is irrelevant to the ultimate conclusion, as both defendants have expressed a willingness to have judgment entered against them for $50 to avoid continuing this litigation.
Here, the ultimate question is whether ABN could recover at trial any relief in addition to the $50 offered by defendants. The answer is no, at this juncture in the litigation, in light of the Court’s ruling. The complaint in this case seeks only monetary relief, “for the amount of plaintiff’s damages, together with interest and costs.” (Compl. at 6). As defendants have offered the maximum amount of damages recoverable by plaintiff–$50–“plaintiff’s claim is moot and this Court lacks subject matter jurisdiction over the action.” Weiss v. Fein, Such, Kahn & Shepard, P.C., No. 01 Civ. 1086(AGS), 2002 WL 449653, at 3 (S.D.N.Y. March 22, 2002); Ambalu, 194 F.R.D. at 452-53. See also Fox, 42 F.3d at 139-40.
To be sure, negligence has not been determined. Indeed, in tendering $50, neither defendant concedes liability. Thus, whether defendants were negligent in the transport of the envelope-printing press is still an unresolved question. Given, however, this Court’s prior opinion limiting defendants’ liability to $50 each and defendants’ tender of $50, defendants’ negligence, or lack thereof, is academic. The remaining question is whether the Court’s opinion limiting defendants’ liability based on the package limitation is correct. This is not an issue for this Court, as it has ruled. The issue must be resolved by the Second Circuit, and the issue of negligence will present an actual case or controversy only if the Second Circuit reverses.
Still, plaintiff would have the Court conduct a trial now to determine liability. While there is arguably some logic to proceeding in this fashion, in the end it is not a viable option. See Abrams, 719 F.2d at 32 (concluding that “there is no justification for taking the time of the Court and the defendant[s]” in a trial to determine defendants’ liability where defendant has “more than satisfied” plaintiff’s damages claim).
Plaintiff’s principal argument for proceeding with a trial now is that it is error for the Court to enter judgment against defendants based on their tenders because defendants do not concede liability. (Pl.’s Opp. Mem. at 6 (“We have been unable, despite considerable research efforts, to uncover any case involving a monetary offer of judgment where the offeror has not conceded liability.”)). This argument is not supported by case law. The Second Circuit has affirmed a district court’s dismissal of a complaint for mootness following a Rule 68 offer of judgment even though the offer was “not to be construed either as an admission that the defendant is liable … or that the plaintiffs have suffered any damages.” Abrams, 719 F.2d at 25-26. Another court in this district granted a motion to dismiss for lack of a case or controversy following an offer by defendants to pay all plaintiff’s damages. Cresswell v. Prudential-Bache Sec., Inc., 675 F.Supp. 106, 107-08 (S.D.N.Y.1987). That offer did not include an admission of liability, but the court granted the motion “despite [plaintiff’s] eloquent protestations concerning the wrong allegedly practiced by [defendant] on unknowing investors.” Id. at 108. Thus, a tender of judgment that does not include an admission of liability still may render a case moot so long as defendants have offered all relief available to plaintiff.
More significantly, the case is now moot because this Court cannot grant plaintiff “any effectual relief” beyond the $50 already offered by defendants. Even if it prevailed at trial, plaintiff would be entitled to a maximum of $50 from each defendant, no more, and each defendant has already offered to pay $50. See Los Angeles County v. Davis, 440 U.S. 625, 631 (1979) (holding case moot when “neither party has a legally cognizable interest in the final determination of the underlying questions of fact and law”). As defendants stand to lose only $50 they have little interest in vigorously defending this case at trial, and it would be unfair to require defendants to spend tens of thousands of dollars defending a case where they have only $50 at risk. Even plaintiff lacks the necessary “legally cognizable interest in the outcome” because it is in the same position as defendants. See Fox, 42 F.3d at 140. It would be litigating a case at a significant expense where the most it could recover has already been offered. See Ambalu, 194 F.R.D. at 452. A trial at this stage would be a poor use of the Court’s resources and the parties’ time and money. The case is moot and the Court lacks subject matter jurisdiction. Abrams, 719 F.2d at 32-33.
For the foregoing reasons, defendants’ motions to dismiss are granted and the complaint is dismissed. Judgment will be entered against defendants in the amount of $50 each, without interest, fees, or costs, and against plaintiff dismissing its claims for damages in excess of $50. The Clerk of the Court shall close this case.