COLIN BROWN v. THE ALLSTATE CORPORATION (2025)

REPORT AND RECOMMENDATION

Plaintiff Colin Brown, on his own behalf and on behalf of a putative class of similarly situated plaintiffs, brings this action against Defendants Allstate Insurance Company (“Allstate Insurance”), Allstate Fire & Casualty Insurance Company (“Allstate Fire”), Allstate Indemnity Company (“Allstate Indemnity”), and Allstate Property & Casualty Insurance Company (“Allstate P&C”) (collectively, “Defendants”).¹ See generally Dkt. No. 23. The operative complaint alleges individual and class action claims against Defendants for violations of New York's Comprehensive Motor Vehicle Reparations Act, New York Insurance Law §§ 5101 et seq. (the “No-Fault Statute”), breach of contract, and violations of New York General Business Law § 349 (“GBL § 349”). Id. ¶¶ 41-54.

Presently before this Court, on a referral from the Honorable Kiyo A. Matsumoto, United States District Judge, is Defendants’ motion to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). See Dkt. No. 57; see also Referral Order dated June 6, 2025. For the reasons set forth below, the undersigned respectfully recommends that the Court grant Defendants’ motion to dismiss for lack of subject matter jurisdiction.²

I. Background

A. Factual Background

The following facts arise from the Amended Complaint and are construed in the light most favorable to Plaintiff. See TradeComet.com LLC v. Google, Inc., 647 F.3d 472, 473 (2d Cir. 2011) (viewing facts in the light most favorable to the plaintiff); Gartenberg v. Cooper Union for the Advancement of Sci. & Art, 765 F. Supp. 3d 245, 253 (S.D.N.Y. Feb. 5, 2025) (“In assessing [the defendant's] motion to dismiss under Rule 12(b)(6), the Court is required to assume that all well-pleaded facts in the Complaint are true and view them in the light most favorable to [the plaintiff's] claims” (citing Galper v. JP Morgan Chase Bank, N.A., 802 F.3d 437, 443 (2d Cir. 2015))).

According to the Amended Complaint, Plaintiff is the “resident spouse of Polene Burgess.” Dkt. No. 23 ¶¶ 29-30. At all times relevant to the Amended Complaint, Burgess held a policy of motor vehicle insurance (policy number 000943255089) with Defendant Allstate Fire.³ Id. ¶ 29; Dkt. No. 57-1 at 7; Dkt. No. 57-5 at 7.

On April 28, 2019, Plaintiff was injured in an automobile accident with a third person. Id. ¶ 31. Plaintiff further contends that he maintained “an actual monthly wage in excess of $2,000.00 per month” at the time of the accident. Id. ¶ 32.

Plaintiff applied to Defendants for “First Party Benefits” pursuant to Burgess's insurance policy, affording Plaintiff certain rights and protections as a resident spouse policy holder. Id. ¶ 30. Plaintiff asserts that Defendants’ insurance policy provided him with “$50,000 in Basic Economic Loss Benefits.” Id. ¶ 33. Plaintiff alleges that Defendants “paid a total of $30,292.01 in First Party medical benefits, and over a period of nine months paid [Plaintiff] $12,512.13 in net First Party wage benefits, applied a credit of $4,420.00 for New York State Disability benefits[,] and an offset of $2,775.86 to reach its determination that it paid to or on behalf of [Plaintiff] a total of First Party benefits of $50,000” under Insurance Law § 5102(b) of the No-Fault Statute. Id. ¶ 34.

On March 18, 2020, Defendants’ “centralized claims service, holding company system, adjustment bureau[,] or association determined that [Plaintiff's] no-fault benefits were terminated because he had exhausted his Basic Economic Loss coverage of $50,000.00[.]” Id. ¶ 35. Plaintiff claims that Defendants’ determination was made despite the fact that “under § 5102(a)[,] [Plaintiff] had only received Basic Economic Loss coverage of $48,292.01, comprised of $30,292.01 in medical benefits under § 5102(a)(1) and $18,000 in wage benefits under § 5102(a)(2) (nine months of wages capped at $2,000 per month).” Id. ¶ 35. As a result, Plaintiff was unable to pay the $1,707.99 balance of necessary First Party medical benefits and/or receive additional First Party Wage Benefits. Id. ¶ 38.

B. Procedural History

Plaintiff filed this action on August 26, 2022, and subsequently amended his Complaint on March 2, 2023. See generally Dkt. Nos. 1, Dkt. No. 23.

In the Amended Complaint, Plaintiff alleges that Defendants have “improperly reduced the Insurance Law § 5102(a)(2) Basic Economic Loss coverage limits for wages by more than the ‘two thousand dollars per month’ cap set forth in § 5102(a)(2) for ‘covered persons,’ including [Plaintiff], who earn actual wages in excess of ‘two thousand dollars per month.’ ” Dkt. No. 23 ¶ 4. Plaintiff alleges a putative class consisting of “all eligible injured persons” covered by insurance administered by Defendants “who earned gross monthly wages in excess of two thousand dollars per month at any point during the period in which they were covered, who have submitted First Party Benefit claims to, and received payment from Defendants for First Party Benefits that included claims for lost wages, and which, after paying at least one month of First Party wage benefits, defendants determined that the mandatory $50,000 coverage (or $75,000 in coverage where Optional Basic Economic Loss coverage is applicable), whether defined as Personal Injury Protection (PIP), no-fault coverage, or Economic Loss benefits, had fully exhausted on or after August 26, 2016.” Id. ¶ 39.

Plaintiff's first cause of action alleges violations of Section 5101 of New York's No-Fault Statute for Defendants’ improperly reducing the Basic Economic Loss for “covered persons” who earn actual wages in excess of $2,000.00 per month. Id. ¶¶ 41-43. Next, Plaintiff alleges breach of contract for failure to perform duties under insurance contracts and failing to fulfill their obligation to pay the $50,000.00 in Basic Economic Loss owed. Id. ¶¶ 44-48. Additionally, Plaintiff alleges violation of GBL § 349 for the allegedly improper reductions of Basic Economic Loss and “reducing the amount of First Party Benefits to which [Plaintiff] and the class are entitled.” Id. ¶¶ 49–54. Plaintiff seeks, inter alia, class-wide damages and injunctive relief. Id. ¶ 55.

Plaintiff claims jurisdiction in this Court because the amount in controversy exceeds the value of $5,000,000.00 without interests and costs, and at least one member of the Plaintiff class is a citizen of a different state than at least one defendant. Id. ¶ 26. Plaintiff asserts that the Court has personal jurisdiction over Defendants because the causes of action each arise under business transactions conducted in New York, and that venue is proper because a substantial part of the events occurred in this district. Id. ¶¶ 27–28.

Defendants answered the Amended Complaint on March 28, 2023. See Dkt. No. 25.

Plaintiff moved to certify the class on July 29, 2024. Dkt. No. 38. Attached as an exhibit to the motion for class certification was an expert report, which estimated total class damages at $2,368,763.00. See Dkt. No. 38-3. Defendants subsequently filed a request for a pre-motion conference request in anticipation of their motion to dismiss the case for lack of subject matter jurisdiction. See generally Dkt. No. 40.

On October 2, 2024, Judge Matsumoto held a pre-motion conference regarding Defendants’ anticipated motion to dismiss for lack of subject matter jurisdiction. See Minute Entry dated October 2, 2024. In light of concerns about whether the amount in controversy requirement is satisfied in this case, the Court stayed the briefing schedule on Plaintiff's motion for class certification until the jurisdictional issue is resolved. Id.

On December 3, 2024, the undersigned held a discovery conference, where the Court permitted Plaintiff to obtain jurisdictional discovery from Allstate Insurance and Allstate Fire regarding the relationship among the various Allstate entities named in the Amended Complaint. See Text Order dated December 3, 2024.

Based off Defendants’ discovery responses, Plaintiff's experts authored a second report dated March 7, 2025. See generally Dkt. No. 57-4. Plaintiff's expert estimated that the total class damages from the data produced by Allstate Insurance and Allstate Fire totaled $4,505,052, consisting of $1,202,762 in damages attributable to Allstate Insurance, and $3,303,290 attributable to Allstate Fire. Id. at 4; Dkt. No. 57-1 at 10; Dkt. No. 57-5 at 8.

Jurisdictional discovery closed on March 21, 2025. See Dkt. No. 52. A briefing schedule regarding Defendants’ anticipated motion was then set by the Court. See Text Order dated March 21, 2025.

C. Defendants’ Motion to Dismiss

Defendants filed their motion to dismiss on May 30, 2025. See Dkt. No. 57. Defendants argue that Plaintiff lacks Article III standing against all Defendants except Allstate Fire. See Dkt. No. 57-1 at 7-13. Defendants also argue that this Court lacks subject matter jurisdiction over all of Plaintiff's claims against Defendants because the damages fall below the $5,000,000 amount-in-controversy requirement for jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C. 1332(d)(2)(A). See id. at 13-16. Plaintiffs oppose Defendants’ motion. See Dkt. No. 57-5.

II. Legal Standards

Article III of the United States Constitution restricts federal court power to hearing “cases” and “controversies.” See U.S. Const. Art. III, § 2, cl. 1. A case or controversy cannot exist if the plaintiff lacks a personal stake, or “standing.” TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021). “To establish [Article III] standing, a plaintiff must show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” Id. (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)).

“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ ” Spokeo, Inc. v. Robins, 578 U.S. 330, 339 (2016) (quoting Lujan, 504 U.S. at 560). As noted in Spokeo and TransUnion, “a statutory violation alone, however labeled by Congress, is not sufficient for Article III standing[,]” because it lacks a sufficiently concrete injury-in-fact. Harty v. W. Point Realty, Inc., 28 F.4th 435, 444 (2d Cir. 2022); see Spokeo, 578 U.S. at 341 (“Article III standing requires a concrete injury even in the context of a statutory violation.”); TransUnion, 594 U.S. at 426-27 (“Congress's creation of a statutory prohibition or obligation and a cause of action does not relieve courts of their responsibility to independently decide whether a plaintiff has suffered a concrete harm under Article III ․”).

“The party invoking federal jurisdiction has the burden of establishing standing.” Liu v. Democratic Nat'l Comm., No. 21-3021, 2022 WL 4372587, at *1 (2d Cir. Sept. 22, 2022) (citing Rajamin v. Deutsche Bank Nat'l Tr. Co., 757 F.3d 79, 84 (2d Cir. 2014). “[S]tanding is a threshold matter of justiciability, and if a plaintiff lacks standing to sue, the Court has no choice but to dismiss the plaintiff's claim for lack of subject-matter jurisdiction.” Dunston v. Piotr & Lucyna LLC, No. 21-CV-6402 (AMD) (SJB), 2023 WL 5806291, at *4 (E.D.N.Y. July 26, 2023), report and recommendation adopted, 2023 WL 5806253 (Sept. 7, 2023) (citing Tavarez v. Moo Organic Chocolates, LLC, No. 21-CV-9816 (VEC), 2022 WL 3701508, at *4 (S.D.N.Y. Aug. 26, 2022)). “An allegation of future injury may suffice if the threatened injury is certainly impending, or there is a substantial risk that the harm will occur.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014) (citation and internal quotation marks omitted). But an allegation of future injury cannot be merely “conjectural or hypothetical.” Id. (citation and internal quotation marks omitted).

“A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it. See Fed. R. Civ. P. 12(b)(1).” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). “In considering a motion to dismiss under Rule 12(b)(1), the ‘[C]ourt must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of [the] plaintiff.” Id. (internal quotation marks and citation omitted). The Court may also “consider evidence outside the pleadings.’ ” Town of Babylon v. James, 707 F. Supp. 3d 213, 220-21 (E.D.N.Y. 2023) (Matsumoto, J.) (quoting Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd, 561 U.S. 247 (2010)). “The Court may also “consider evidence outside the pleadings.” Id. (citations omitted). “When ․ subject matter jurisdiction is challenged under Rule 12(b)(1), evidentiary matter may be presented by affidavit or otherwise.” Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986) (citations omitted).

III. Discussion

A. Standing

Defendants assert that “Plaintiff had no involvement whatsoever” with Allstate Insurance, Allstate Indemnity and Allstate P&C and “therefore he cannot—as a matter of law—plead any viable claims against them.” Dkt. No. 57-1 at 6. Plaintiff, in contrast, argues that Defendants “acted as a unified enterprise” with Allstate Insurance “supplying” the wage loss formula and adjusters to other Allstate entities. See Dkt. No. 57-5 at 12.

“As the Supreme Court has stressed, ‘plaintiffs must demonstrate standing for each claim that they press against each defendant, and for each form of relief that they seek.’ ” Am. Ass'n of Univ. Professors v. United States Dep't of Just., No. 25-CV-2429 (MKV), 2025 WL 1684817, at *11 (S.D.N.Y. June 16, 2025) (quoting Murthy v. Missouri, 603 U.S. 43, 44 (2024)); see also NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 159 (2d Cir. 2012). (“Indeed, we have said that, ‘[t]o establish Article III standing in a class action ․ for every named defendant there must be at least one named plaintiff who can assert a claim directly against that defendant, and at that point standing is satisfied and only then will the inquiry shift to a class action analysis.”). “If plaintiffs lack Article III standing, a court has no subject matter jurisdiction to hear their claim.” Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 198 (2d Cir. 2005). “A plaintiff lacks standing if the alleged injury is not fairly traceable ‘to the challenged action of the defendant.’ ” D.H. v. City of New York, 309 F. Supp. 3d 52,68 (S.D.N.Y. 2018).

Courts generally hold that “parent companies and their subsidiaries are distinct legal entities” and “refuse to impute the operating activities of an indirectly owned limited liability company to a parent holding company.” Dames v. JP Morgan Chase & Co., No. 22-CV-6962 (NGG) (SJB), 2023 WL 5047776, at *2 (E.D.N.Y. Aug. 8, 2023) (internal citations and quotation omitted). A contract involving one affiliated company with an individual thus does not legally bind other affiliated companies. Hatteras Enters., Inc. v. Forsythe Cosm. Grp., Ltd., No. 15-CV-05887 (ADS) (ARL), 2019 WL 9443845, at *6 (E.D.N.Y. Jan. 14, 2019). As such, courts in New York are “reluctant to disregard the distinction between corporate entities.” Id. (citing Carte Blanche (Singapore), Pte, Ltd. v. Diners Club Int'l, 2 F.3d 24, 26 (2d Cir. 1993); accord Fletcher v. Atex, Inc., 68 F.3d 1451, 1461-62 (2d Cir. 1995) (explaining that courts in this Circuit have found that “[t]he presence of a parent's logo on documents created and distributed by a subsidiary, standing alone, does not confer authority upon the subsidiary to act as an agent.”).

Here, the undersigned agrees with Defendants that Plaintiff lacks standing to sue Allstate Insurance, Allstate Indemnity, and Allstate P&C. The parties do not dispute that the relevant policy was issued by only Allstate Fire, which also disbursed the benefit payments to Plaintiff. Dkt. No. 57-1 at 7; Dkt. No. 57-5 at 7. After permitting discovery over Defendants’ objection, Defendants affirmed in their discovery responses to Plaintiff's First Set of Interrogatories that “Allstate Fire is a subsidiary of Allstate Insurance Company.” Dkt. No. 57-2 at 7-10. The discovery responses further asserted that “there is no privity of contract between Plaintiff and any of the Non-Allstate Fire Defendants” and that “none of the Non-Allstate Fire Defendants were involved in the adjustment, handling or payment of Plaintiff's claim for No-Fault Personal Injury Protection Benefits under his policy of insurance issued by Allstate Fire.” Id. at 3. Defendants Allstate Insurance, Allstate Indemnity, Allstate P&C, and Allstate Fire are thus separate legal entities, which Plaintiff does not contest. See Dames, 2023 WL 5047776, at *2 (stating that “parent companies and their subsidiaries are distinct legal entities”).

Nothing submitted by the parties suggests that Allstate Insurance, Allstate Indemnity, and Allstate P&C had any legal relationship or involvement with Plaintiff and his claims, let alone acted in an adverse capacity that could have conferred Plaintiff with Article III standing. Nor does Plaintiff explain why his alleged injury stemming from Allstate Fire's purported conduct bears in any way “on [his] Article III standing to sue other defendants, even if they engaged in similar conduct that injured other parties.” See Mahon v. Ticor Title Ins. Co., 683 F.3d 59, 65 (2d Cir. 2012); Pryce v. Progressive Corp., No. 19-CV-1467 (RJD) (RER), 2022 WL 969740, at *4 (E.D.N.Y. Mar. 31, 2022). Allstate Fire's alleged improper conduct simply cannot extend to separate legal entities—handling distinct insurance contracts with distinct individuals—by virtue of any parent-subsidiary or affiliate relationship alone. That Defendants used a common formula to calculate First Party Benefit claims or shared claims adjusters does not cure Plaintiff's failure to show that any entity except All State Fire “handled [his] insurance claims and correspondingly injured [him] by reducing [his] policy coverage.” Lanzillotta v. Gov't Emps. Ins. Co., No. 19-CV-1465 (DLI) (JRC), 2023 WL 2652265, at *4 (E.D.N.Y. Mar. 25, 2023) (acknowledging similar assertions of shared resources amongst parent and subsidiary companies but finding them inapposite to the plaintiff's ultimate demonstration of standing).⁴

Plaintiff asserts that Defendants “acted as a unified enterprise, with [Allstate Insurance] supplying its unlawful wage loss formula and adjusters to the other Allstate entities.” Id. at 12. In support of his theory, Plaintiff invokes the U.S. Court of Appeals for the Second Circuit's decision in Carver v. City of New York, arguing that Allstate Insurance “thus had a ‘determinative [and] coercive effect’ on every class member, including Plaintiff, regardless of which Allstate entity issued their policy.” Id. at 10 (quoting 621 F.3d 221, 226 (2d Cir. 2010)). In Carver, the court explained that a plaintiff has standing to sue a separate actor if “the defendant's actions had a ‘determinative or coercive effect upon the action of someone else’ who directly caused the claimed injury.” 621 F.3d at 226 (citing Bennett v. Spear, 520 U.S. 154, 169 (1997)). The court concluded that causation therefore “turns on the degree to which the defendant's actions constrained or influenced the decision of the final actor in the chain of causation.” Id.

Plaintiff's argument is unpersuasive. Nothing presently before the Court suggests that any Defendant exerted a “determinative or coercive effect” upon Allstate Fire's conduct giving rise to the instant suit. Plaintiff does not substantiate his assumption that the formula at issue was used by Allstate Fire “at the behest of a parent company.” See Lanzillotta, 2023 WL 2652265, at *4 (rejecting similar argument). In fact, the parties stipulated that “the form wage loss calculation worksheet that is generally used by the Allstate Remaining Defendants” and is “generally used to calculate First Party Benefit claims.” Dkt. No. 53 ¶ 8 (emphasis added); Dkt. No. 57-5 at 7. The permissive language of the stipulation, coupled with the stipulation's subsequent non-exhaustive list of when the calculation worksheet is inapplicable (Dkt. No. 53 ¶ 8), undermines Plaintiff's appeal to Carver’s standing doctrine. Without more, there is not enough support for a determination that Allstate Fire's conduct was constrained or influenced by any other Defendant.⁵

As aptly stated by Defendants, “it would eviscerate the basic principles of Article III standing, i.e., that a plaintiff's injury must be caused by the defendant's conduct in order for standing to exist” if a plaintiff “could at any time sue every affiliate of a corporate entity, regardless of whether that plaintiff has suffered some injury that is traceable to each defendant's conduct.” Dkt. No. 57-6 at 8 (citing Thole v. U. S. Bank N.A., 590 U.S. 538 (2020)) (emphasis in original).

Accordingly, the undersigned respectfully recommends that the Court dismiss claims against Defendants Allstate Indemnity, Allstate Insurance, and Allstate P&C for lack of standing under Article III.

B. CAFA Jurisdiction

Pursuant to 28 U.S.C. § 1332(d) and under the provisions of CAFA, district courts have original federal jurisdiction over any class action in which (i) at least 100 members are in the proposed class, (ii) any member of the class is a citizen of a state different from any defendant, and (iii) the amount in controversy exceeds $5,000,000, exclusive of interests and costs. 28 U.S.C. § 1332(d). The only dispute between the parties is the amount in controversy requirement of 28 U.S.C. § 1332(d)(2). If a class were certified and limited in scope to Allstate Fire, there would still be 590 class members—well over the 100 required by CAFA. See Dkt. No. 57-4 at 49; 28 U.S.C. § 1332(d)(5). Additionally, there is diversity of citizenship between Plaintiff and Allstate Fire, as Plaintiff is a citizen of New York and Allstate Fire is a corporation with its principal place of business in Illinois. See Dkt. No. 23 ¶ 9; 28 U.S.C. § 1332(d)(2)(A). Thus, the crux of the dispute rests upon whether Plaintiff has satisfied the amount-in-controversy requirement of the CAFA: that the present litigation exceeds $5 million, exclusive of interests and costs. See 28 U.S.C. § 1332(d)(iii); Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56 (2d Cir. 2006).

Ordinarily, as the party asserting subject matter jurisdiction, plaintiffs carry the burden of establishing, by a preponderance of the evidence, that CAFA jurisdiction exists. See Blockbuster, 472 F.3d at 57-58 (holding that the party asserting CAFA jurisdiction must demonstrate a “reasonable probability” that the jurisdictional requirements are satisfied); see also Int'l House v. Consol. Edison Comp. of N.Y., Inc., No. 22-CV-08705 (VEC), 2023 WL 2898623, at *3 (S.D.N.Y. Apr. 11, 2023) (“The party seeking to avail itself of an exception to CAFA jurisdiction has the burden of proving, by a preponderance of the evidence, that the exception applies.”).

In circumstances where “the aggregate amount in controversy is not obvious from the face of the complaint, the party invoking jurisdiction under CAFA must show that there is a ‘reasonable probability’ that the amount in controversy meets the threshold of $5,000,000.” Campbell v. Zerocater, Inc., No. 23-CV-05742 (MMG), 2025 WL 964106, at *4 (S.D.N.Y. Mar. 31, 2025) (quoting Blockbuster, 472 F.3d at 58). Courts thus consider “other evidence in the record” when evaluating a pleading that inconclusively invokes the amount in controversy requirement. Id. (citing United Food & Com. Workers Union v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 305 (2d Cir. 1994)); Broidy Cap. Mgmt. LLC v. Benomar, 944 F.3d 436, 441 (2d Cir. 2019) (“[T]he district court can refer to evidence outside the pleadings when resolving a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1)” (quotations and citations removed)).

Moreover, Courts in this Circuit “recognize ‘a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy.’ ” Colavito v. N.Y. Organ Donor Network, Inc., 438 F.3d 214, 221 (2d Cir. 2006) (quoting Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 63 (2d Cir. 1999)). “Once a plaintiff has made such a good-faith complaint, the party opposing jurisdiction must show ‘to a legal certainty’ that the amount does not meet the jurisdictional threshold.” Doeman Music Grp. Media & Photography LLC v. DistroKid, LLC, No. 23-CV-04776 (MMG), 2024 WL 4349480, at *7 (S.D.N.Y. Sept. 30, 2024) (citing Scherer v. Equitable Life Assurance Soc'y of U.S., 347 F.3d 394, 397 (2d Cir. 2003)). “[T]he legal impossibility of recovery must be so certain as virtually to negat[e] the plaintiff's good faith in asserting the claim[.]” Chase Manhattan Bank, N.A. v. Am. Nat. Bank & Tr. Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir. 1996); Metcalf v. TransPerfect Translations Int'l, Inc., 632 F. Supp. 3d 319, 326 (S.D.N.Y. 2022) (same).

Here, Plaintiff's Amended Complaint asserts that “the matter in controversy exceeds the sum or value of $5,000,000 exclusive of interests and costs[.]” Dkt. No. 23 ¶ 26.⁶ That statement “creates a presumption that the amount in controversy requirement of CAFA has been met,” see Hart v. Rick's NY Cabaret Int'l, Inc., 967 F. Supp. 2d 955, 961 (S.D.N.Y. 2014); Colavito, 438 F.3d at 221, when resolving all doubts “in favor of the subjective good faith of [P]laintiff.” See Chase Manhattan Bank, N.A., 93 F.3d at 1070; Metcalf, 632 F. Supp. 3d at 326 (explaining that the CAFA amount in controversy threshold “is not a heavy burden” to satisfy for a plaintiff to be entitled to the good faith presumption). Defendants thus must show that Plaintiff's pleading “was so patently deficient as to reflect to a legal certainty that [the plaintiff] could not recover the amount alleged or that the damages alleged were feigned to satisfy jurisdictional minimums.” Id. (quoting Wolde-Meskel, 166 F.3d at 63).

Upon review of the pleadings, as well as the expert report Plaintiff submitted to support his motion for class certification, see Dkt. No. 38-3; Dkt. No. 57-4; see also Jackson v. Madison Sec. Grp., Inc., No. 21-CV-8721 (JGK), 2022 WL 4538290, at *2 (S.D.N.Y. Sept. 28, 2022) (“[W]here jurisdictional facts are disputed, the Court has the power and the obligation to consider matters outside the pleadings[.]”), Plaintiff fails to satisfy CAFA jurisdictional requirements. Plaintiff's submissions do not reflect facts that would support the existence of a large enough class to satisfy CAFA's $5 million threshold. See Dkt. Nos. 23, 57-4; 28 U.S.C. § 1332(d)(2).

Plaintiff's expert report estimates that there are 590 potential class members with claims against Allstate Fire, and 198 class members with claims against Allstate Insurance Company. Dkt. No. 57-4 at 49. The report further estimates that the total damages incurred by all 788 potential class members are $4,505,052, consisting of $3,302,290 attributable to Allstate Fire and $1,202,762 attributable to Allstate Insurance Company. Id. Even assuming Plaintiff had standing to proceed against Allstate Insurance Company (he does not), the proposed class would still fall below CAFA's $5 million bar. See 28 U.S.C. § 1332(d)(2).⁷

In addition to failing to meet the amount in controversy requirement, Plaintiff's expert acknowledged that the methodology used for calculating damages resulted in an overestimation of damages. Dkt. No. 57-4 at 155-156 (“There are [ ] maybe some estimates that aren't exactly correct at this point, but the underlying theory is that there are benefits that are being paid”). As explained in the report, the methodology used for calculating lost wages applied the most frequent wage amount over $2,000, regardless of variations in actual lost wages. Id. at 151-152. When this method was applied to Plaintiff's actual wage payments, the lost wages came out to $2,687.04, compared to actual lost wages of $2,060.16. Id.; see also Dkt. No. 57-4 at 6.

Indeed, it is troubling that there are conflicting claims of Plaintiff's incurred damages as set forth in his pleadings and his expert's report. Plaintiff's expert contends that Plaintiff's individual damages as a result of Allstate Fire's purportedly unlawfully calculations resulted in $2,687.04 in damages. Dkt. No. 57-4 at 152 (containing excerpt of Plaintiff's expert's deposition where he affirms that Plaintiff's estimated damages, “through [his] methodology, of the most frequent, as $2,687.04). According to Plaintiff's Amended Complaint, however, Plaintiff asserts that he “was unable to pay the $1,707.99 balance of necessary First Party medical benefits and/or to receive additional First Party Wage Benefits.” Dkt. No. 23 ¶ 38. Caution in accepting any proposed calculated damages by Plaintiff's expert is further warranted by deposition testimony, where he conceded he overcalculated a putative class member's damages by $3,884.00. See Dkt. No. 57-4 at 132 (containing testimony where Plaintiff's expert acknowledges he overstated a putative class member's calculated damages by $3,884). Defendants highlight that the deficiencies in Plaintiff's expert's overestimations “has resulted in a gross exaggeration of estimated class ‘damages’ by at least $550,000.” Dkt. No. 57-1 at 21.

Plaintiff does not attempt to rebut allegations of overestimation or inconsistent findings, and further fails to address or justify his expert's methodology in the opposition to Defendant's motion. Instead, Plaintiff claims that attorneys’ fees will cover the difference between the damages and CAFA's $5 million threshold. Dkt. No. 57-5 at 13-14. Accepting the expert testimony in the light most favorable to Plaintiff, the potential class members for Defendant Allstate Fire numbers 590 individuals for a total of $3,302,290 in damages, which would require an attorney's fee of approximately $1.7 million to satisfy the amount in controversy requirement of CAFA. Dkt. No. 57-4 at 49; Dkt. No. 57-5 at 18.

Attorneys’ fees may be considered for satisfying the amount in controversy threshold “only ‘if they are recoverable as a matter of right pursuant to statute or contract.’ ” Melendez v. R.W. Garcia Co. Inc., No. 24-CV-9500 (JAV), 2025 WL 1220903, at *4 (S.D.N.Y. Apr. 28, 2025) (quoting Schwartz v. Hitrons Sols., Inc., 397 F. Supp. 3d 357, 365 (S.D.N.Y. 2019)); cf. Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 199 (2d Cir. 2003) (“Under the general rule in New York, attorneys’ fees are the ordinary incidents of litigation and may not be awarded to the prevailing party unless authorized by agreement between the parties, statute, or court rule.”).

Where, as here, a plaintiff alleges a simple breach of contract claim, “the standard rule that a litigant may not be awarded attorneys’ fees and costs[.]” Hallinan v. Republic Bank & Tr. Co., 519 F. Supp. 2d 340, 355 (S.D.N.Y. 2007) (collecting cases), aff'd, 306 F. App'x 626 (2d Cir. 2009); see also Pollock v. Trustmark Ins. Co., 367 F. Supp. 2d 293, 298 (E.D.N.Y. 2005) (“So as to the common law breach of contract claim, attorney's fees cannot be added in a calculation of the amount in controversy.”); King v. Liberty Mut. Ins. Co., No. 25-CV-00345 (MAD) (TWD), 2025 WL 1677074, at *5 n.4 (N.D.N.Y. June 13, 2025) (recognizing that attorneys’ fees are generally not recoverable on a breach of contract claim). Similarly, an award of attorneys’ fees under GBL § 349 is discretionary and thus “cannot be included in the calculation of the amount in controversy.” Malendez, 2025 WL 1220903, at *4 (quoting Schwartz, 397 F. Supp. 3d at 365). Any attorneys’ fees awarded from Plaintiff's second and third causes of action thus cannot be considered for purposes of satisfying the amount in controversy requirement.

Plaintiff's first cause of action under the No-Fault Statute does provide for an award of attorneys’ fees, subject to its implementing regulation. See N.Y. Ins. Law § 5106(a) (explaining that a successful claimant “shall also be entitled to recover his attorney's reasonable fee, or services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations”). The statute's implementing regulation caps the recoverable attorneys’ fees to “a maximum of $1,360.” N.Y. Comp. Codes R. & Regs. Tit. 11, § 65-4.6(d). No authority that the undersigned could locate, however, supports an inference that any award of attorneys’ fees would be recoverable by every putative class member for purposes of establishing the amount in controversy.

And even if every class member could recover the statutory maximum $1,360 in attorneys’ fees, the amount still fails to satisfy CAFA's jurisdictional threshold. Assuming each of the 590 potential class members against Defendant Allstate Fire recouped $1,360 in attorneys’ fees, that would merely add an additional $802,400 to the $3,303,290 total proffered by Plaintiff's expert. Dkt. No. 57-4 at 49; Dkt. No. 57-5 at 18. Plaintiff's purported damages would equal $4,105,690—nearly $900,000 shy of the statutory mandate. Plaintiff thus cannot establish that the amount in controversy alleged in the Amended Complaint confers CAFA jurisdiction.⁸

At bottom, Plaintiff has not shown “by a preponderance of the evidence,” that “the amount-in-controversy requirement has been satisfied.” See Gaska v. DARCARS of R.R. Ave., Inc., 673 F. Supp. 3d 157, 165 (D. Conn. 2023) (quoting Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014)). Accordingly, the undersigned respectfully recommends that Defendants’ motion be granted.

Finally, the undersigned will also consider the interest of justice factors that would render declination of jurisdiction an appropriate exercise of judicial discretion. See 28 U.S.C. § 1332(d)(3). “CAFA contains [ ] several enumerated exceptions to its grant of jurisdiction.” Conley v. Fordham Univ., No. 23-CV-05962 (MMG), 2025 WL 1380683, at *3 (S.D.N.Y. May 12, 2025); see also Hart v. Rick's NY Cabaret Int'l, Inc., 967 F. Supp. 2d 955, 962 (S.D.N.Y. 2014) (discussing CAFA exceptions). “Under 28 U.S.C. § 1332(d)(3), the ‘interests of justice’ exception, ‘[a] district court may, in the interests of justice and looking at the totality of the circumstances, decline to exercise jurisdiction under [CAFA] over a class action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed.’ ” Conley, 2025 WL 1380683, at *3 (quoting 28 U.S.C. § 1332(d)(3)).

The party opposing the exercise of jurisdiction bears the burden of proving, by a preponderance of evidence, the applicability of the interests of justice exception. See Conley, 2025 WL 1380683, at *3; Dkt. No. 57-1. Notably, no such argument or request was made in the Defendant's motion to dismiss.

But even if such a request were properly before this Court, the first step would be assessing what percentage of the putative class were citizens of New York. As described in CAFA, the interest of justice factors can be considered to dismiss a class action when, “greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed.” 28 U.S.C. § 1332(d)(3). In this case, it is unclear what percentage of potential class members are citizens of New York, but it is undisputed that Defendant is a corporation with its principal place of business in Illinois. Dkt. No. 23 ¶ 9. Because Defendant is not a citizen of the state where the action was filed, the interest of justice exception of CAFA is not applicable. 28 U.S.C. § 1332(d)(3); see Dkt. No. 23 ¶ 6-22 (asserting that Defendant All State Fire maintains its principal place of business ins Illinois).

Considering the discussion above, the undersigned respectfully recommends that the Court dismiss the class action claims against Defendant Allstate Fire due to lack of subject matter jurisdiction.

C. Jurisdiction For Plaintiff's Individual Claim

Finally, should the Court adopt the above recommendations, the undersigned also respectfully recommends a finding that the Court lacks subject matter jurisdiction over Plaintiff's individual claim.

Federal subject matter jurisdiction is limited and available only when: (1) a “federal question” is presented, 28 U.S.C. § 1331; or (2) the plaintiff and defendant are of diverse citizenship and the amount in controversy exceeds $75,000.00. 28 U.S.C. § 1332(a). “Ordinarily, the amount in controversy is measured as of the time a complaint is filed, and it is established by the face of the complaint and the dollar-amount actually claimed.” Raviv v. Bank Leumi Le-Israel Corp., No. 24 CV 4225 (HG) (RML), 2025 WL 1640508, at *1 (E.D.N.Y. June 2, 2025) (quotations and citations omitted). Similar to the CAFA jurisdiction discussion above, where the pleadings are inconclusive of whether the amount in controversy for diversity jurisdiction has been established, “the courts may look to documents outside the pleadings to other evidence in the record to determine the amount in controversy.” Ma v. United Rentals (N. Am.), Inc., 678 F. Supp. 3d 412, 415 (S.D.N.Y. 2023) (citing Yong Qin Luo v. Mikel, 625 F.3d 772, 775 (2d Cir. 2010)).

“[S]ubject-matter jurisdiction, because it involves the court's power to hear a case, can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). Courts “have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999)).

Here, and as discussed above, the undersigned recommends a finding that Plaintiff and Allstate Fire are diverse. Dkt. No. 23 ¶ 6 (asserting that Plaintiff is a resident of New York); id. ¶ 9 (asserting that Allstate Fire maintains its principal place of business in Illinois).

Plaintiff, however, fails to satisfy the amount-in-controversy threshold required for diversity jurisdiction under 28 U.S.C. § 1332(a). Although Plaintiff does not assert any individual damages for his claims, the Amended Complaint represents that he “only received Basic Economic Loss coverage of $48,292.01” of the $50,000 Basic Economic Loss coverage to which he was entitled under the policy with Allstate Fire. Dkt. No. 23 ¶ 35. Plaintiff thus incurred damages in the sum of $1,707.99, which is $73,292.01 short of threshold under 28 U.S.C. § 1332(a). See id. ¶¶ 35, 38; 28 U.S.C. § 1332(a) (“The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs ․”). Even including the possible attorneys’ fees Plaintiff could recover under the No-Fault statute, as discussed above, Plaintiff's individual claims could recover a maximum of $3,067.99—still $71,932.02 short of the minimum requirement. See N.Y. Comp. Codes R. & Regs. Tit. 11, § 65-4.6(d) (limiting the recovery of attorneys’ fees to $1,360).

Accordingly, as the undersigned respectfully recommends that the Court lacks subject matter jurisdiction over Plaintiff's individual claims.

IV. Conclusion

For the reasons set forth above, the undersigned respectfully recommends that Defendants’ motion to dismiss Plaintiff's Amended Complaint under Federal Rule of Civil Procedure 12(b)(1) be granted in its entirety. Additionally, the undersigned recommends that the Court lacks subject matter jurisdiction over Plaintiff's individual claims under 28 U.S.C. § 1332(a).

A copy of this Report and Recommendation is being electronically served on counsel. Any objections to this Report and Recommendation must be filed within 14 days after service of this Report and Recommendation. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2). See also Fed. R. Civ. P. 6(a) & (d) (addressing computation of days).

Any requests for an extension of time for filing objections must be directed to Judge Matsumoto. Failure to file objections within this period designating the issues to be reviewed waives the right to appeal the district court's order. See 28 U.S.C. § 636(b); Fed. R. Civ. P. 72(b)(2); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010); Kotlyarsky v. United States Dep't of Just., No. 22-2750, 2023 WL 7648618 (2d Cir. 2023); see also Thomas v. Arn, 474 U.S. 140 (1985).

SO ORDERED.

FOOTNOTES

1.   Per the March 21, 2025 Stipulation of Dismissal, the following entities have been dismissed from this action: Deerbrook Insurance Company; The Allstate Corporation; Allstate New Jersey Property & Casualty Insurance Company; Allstate New Jersey Insurance Company; Allstate County Mutual Insurance Company; Allstate Northbrook Indemnity Company; Allstate Vehicle and Property Insurance Company; Encompass Holdings, LLC; Encompass Insurance Company; Encompass Indemnity Company; Esurance Insurance Company; Esurance Property and Casualty Insurance Company. See Dkt. No. 54.

2.   Anna Sargeantson, a judicial intern who is a student at Washington University School of Law, is gratefully acknowledged for her assistance in the research of this Report and Recommendation.

3.   Plaintiff refers to Defendants collectively as “ALLSTATE” in the Amended Complaint, without specifying which Allstate entity issued the policy. See Dkt. No. 23 ¶ 2 (capitalization in original). The parties do not dispute that the issuing entity was Allstate Fire. Dkt. No. 57-1 at 7; Dkt. No. 57-5 at 7.

4.   Plaintiff further asserts that Defendant “ignores Plaintiff's request for declaratory relief,” and that “[i]f this Court declares [Defendants’] wage loss formula unlawful, as Plaintiff requests, all Allstate entities would be forced to calculate benefits directly.” Dkt. No. 57-5 at 11. But Plaintiff abandoned his request for declaratory and injunctive relief, however, when he amended the complaint. Compare Dkt. No. 1 ¶¶ 54-58, with Dkt. No. 23.

5.   To the extent Plaintiff's allegations are construed to infer Allstate Insurance should be held liable for Allstate Fire's conduct by way of its status as the parent corporation (see, e.g., Dkt. No. 57-5 at 10 (“[Allstate Insurance] both designed the unlawful wage loss formula and employed the adjusters responsible for its implementation”); id. at 12 (“Defendants acted as a unified enterprise, with Allstate Insurance supplying its unlawful wage loss formula and adjusters to the other Allstate Entities”)), the undersigned notes that “[i]t is well accepted that a parent corporation is not liable for the actions of its subsidiary absent facts sufficient to pierce the corporate veil.” Weinstein v. eBay, Inc., 819 F. Supp. 2d 219, 223 (S.D.N.Y. 2011) (citing Billy v. Consol. Mach. Tool Corp., 412 N.E.2d 934, 941 (N.Y. 1980)) (finding that the plaintiff did not have standing to sue a parent corporation for the acts of its subsidiary absent a showing that the corporate veil should be pierced); Doheny v. Int'l Bus. Machines, Corp., 714 F. Supp. 3d 342, 370 (S.D.N.Y. 2024) (explaining that “[c]orporate entities are generally not liable for the acts of other corporate entities” unless the corporate veil is pierced to impose liability on the entity that would otherwise not be liable (citing Kertesz v. Korn, 698 F.3d 89, 91 (2d Cir. 2012)). Plaintiff's pleadings and filings, however, are devoid of any such attempt.

6.   The undersigned notes that the Amended Complaint contains only the single, conclusory statement concerning the CAFA amount in controversy requirement, as quoted above. See Dkt. No. 23 ¶ 26. Courts have found that pleadings merely asserting the amount in controversy requirement is met, in conclusory fashion and without factual support, are insufficient to entitle the plaintiff to the presumption that the jurisdictional requirement is actually established. See Campbell, 2025 WL 964106, at *5 (collecting cases). Whether Plaintiff is entitled to the presumption that damages exceed $5 million exclusive of interest and costs, however, does not alter the undersigned's ultimate recommendation, as explained below, in light of the applicability of Plaintiff's expert report in either circumstance.

7.   Alleged violations by other subsidiaries and named defendants are not relevant as they were dismissed from the current lawsuit. See Section III.A. The potential damages recovery thus falls significantly short of CAFA's $5 million threshold. See 28 U.S.C. § 1332(d)(2).

8.   Given the inaccurate, inflated calculations by Plaintiff's expert, the Court need not speculate as to the attorneys’ fees recoverable against Allstate Insurance, especially considering the recommendation that Plaintiff possesses no Article III standing against the entity.

JOSEPH A. MARUTOLLO United States Magistrate Judge