Bank v. Hydra Group LLC, 433 Fed. Appx. 50 (2nd Cir. 2011), involved an appeal from the sua sponte dismissal of a class action complaint. The district court dismissed the case for lack of subject matter jurisdiction due to insufficient amount in controversy under CAFA. 2010 U.S. Dist. LEXIS 100436 (E.D.N.Y. Sept. 24, 2010). The plaintiff filed suit in federal court alleging that he received three separate unsolicited advertisements via e-mail in violation of the California Business & Professional Code. Although the plaintiff contended that damages could reach in the billions, the district court noted that the statute’s liquidated damages provision limited damages to $1 million per incident. The court concluded that based on the three incidents mentioned in the complaint, the amount in controversy was only $3 million. The plaintiff disputed the district court’s interpretation of the liquidated damages provision.
On appeal the Second Circuit overturned the remand order. The Court noted that dismissal is warranted only if it appears to a legal certainty that a claim is for less than the jurisdictional amount. A review of the complaint coupled with the lack of case law interpreting the state statute at issue, led the Second Circuit to conclude that the legal certainty test had not been met. The dismissal was vacated and the case remanded for further proceedings.