                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                ___________
                                  No. 07-2770
                                  ___________

Advance America Servicing of          *
Arkansas, Inc., d/b/a/ Advance America*
Cash Advance; Advance America Cash    *
Advance Centers of Arkansas, Inc.;    *
Advance America, Cash Advance         *
Centers, Inc.,                        * Appeal from the United States
                                      * District Court for the Western
          Plaintiffs - Appellants,    * District of Arkansas.
                                      *
     v.                               *
                                      *
Brenda McGinnis,                      *
                                      *
          Defendant - Appellee.       *
                                 ___________

                            Submitted: March 13, 2008
                                Filed: May 23, 2008
                                 ___________

Before MURPHY, BRIGHT, and BENTON, Circuit Judges.
                           ___________

MURPHY, Circuit Judge.

      Advance America Servicing of Arkansas, Inc. (Advance America) and
associated entities1 brought this action against Brenda McGinnis seeking to compel

      1
       Plaintiffs include other corporate entities - Advance America Servicing of
Arkansas; Advance America Cash Advance; Advance America Cash Advance Centers
of Arkansas, Inc.; Advance America, Cash Advance Centers, Inc.
arbitration of their dispute over a series of loan agreements. McGinnis moved to
dismiss for lack of subject matter jurisdiction. The district court2 granted the motion
after determining that the amount in controversy was below the requisite minimum for
diversity jurisdiction, and Advance America appeals. We affirm.

       Underlying this lawsuit are six loan transactions which Advance America and
McGinnis entered into between September 2006 and February 2007. Advance
America offers cash loans in exchange for personal checks drawn on the customer’s
bank account. Under the terms of the loan Advance America agrees not to cash the
customer’s check for a specified period of time. At the end of that period, the
customer must redeem the loan for the full amount of the check or may renew it by
paying the interest due on the original loan and presenting a new check for the original
loan amount with interest for the extended term. The loan agreement provides for
arbitration for any dispute pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

       McGinnis brought a putative class action in Arkansas state court on February
27, 2007, alleging that she had been charged more than 150% interest in violation of
usury laws and that Advance America had engaged in deceptive, oppressive, and
unconscionable conduct in violation of the Arkansas Deceptive Trade Practices Act
(ADTPA), Ark. Code. Ann. § 4-88-101, et seq. Her complaint sought invalidation of
the contracts, twice the amount of interest paid by each member of the class,
enforcement of a prior settlement agreement involving Advance America, and
attorney fees and costs. Advance America filed an answer and motion to compel
arbitration in the state court action; its motion had not been decided at the time of
briefing in this case.




      2
        The Hon. Robert T. Dawson, United States District Judge for the Western
District of Arkansas.

                                          -2-
       Advance America brought this action against McGinnis in federal district court
to compel arbitration and to stay the state court proceedings, initially asserting
jurisdiction on the basis of the Class Action Fairness Act (CAFA), 28 U.S.C. §
1332(d). McGinnis moved to dismiss, pointing out that Advance America had not
removed the state action and that its federal complaint contained no class action
allegations as required by CAFA. Advance America then amended its complaint to
allege diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Such jurisdiction exists
if there is complete diversity of citizenship and the amount in controversy is greater
than $75,000. Capitol Indem. Corp. v. Russellville Steel Co., 367 F.3d 831, 835 (8th
Cir. 2004). McGinnis moved to dismiss on the grounds that Advance America could
not satisfy the $75,000 amount in controversy requirement for diversity cases.

       The district court granted McGinnis’ motion after concluding that Advance
America had failed to establish that at least $75,000 is at issue in this action. No class
has been certified to date, and the district court found that the state court damage claim
is worth less than $1,000.3 First acknowledging that it must view the value of the
right sought to be enforced from Advance America’s perspective, the district court
went on to reject its argument that the costs of defending the state court class action
and any potential judgment in favor of a class should be considered part of the amount
in controversy here. The district court relied on New England Mortgage Sec. Co. v.
Gay, 145 U.S. 123 (1892), in deciding that the amount in controversy should be
determined by looking at what is involved in the case before the court rather than by
trying to predict possible effects resulting from a judgment.

      Advance America argues on appeal that the district court erred by focusing on
the amount of McGinnis’ possible recovery in the state action, rather than the


      3
        Only one of the contracts between McGinnis and Advance America is in the
record. The agreement provides that McGinnis was to receive $250 in cash in return
for a $278.83 check and shows an annual percentage interest rate of 150.32%.

                                           -3-
consequential damages it could suffer from an adverse judgment. To support its
argument, Advance America submitted a declaration by its corporate counsel stating
that its potential liability in the state court action includes compensatory damages,
class action exposure, and business cessation in Arkansas, and that its potential
liability could easily exceed $75,000.4 It cites to the Supreme Court's decision in Hunt
v. Washington State Apple Advert. Comm., which held that "[t]he value of [the right
sought to be enforced] is measured from the losses that will follow from the
[challenged state] statute's enforcement." 432 U.S. 333, 347 (1977).

       McGinnis points out that Advance America could have attempted to remove her
state court action to federal court under diversity jurisdiction but instead chose to
bring an action under the Federal Arbitration Act seeking a declaratory judgment and
injunctive relief to enforce the arbitration provision in their contract. She argues that
the object of the litigation here is limited to the amount involved in the arbitration
between the two parties. Asserting that the value of her damage claims was less than
$1,000, McGinnis submits that the district court appropriately determined that
Advance America failed to meet the jurisdictional threshold. She contends that the
courts must look to the possible award resulting from the arbitration which Advance
America seeks in this action in order to determine whether the requisite amount in
controversy is satisfied. Advance America's other potential future damages and
contingent costs are therefore not relevant she argues.

       The Federal Arbitration Act does not create independent federal question
jurisdiction. Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 26


      4
        Counsel's declaration rested on conclusory speculations about potential costs
and damages arising from an adverse state court judgment. Since Advance America
uses the same form contract with all of its customers in Arkansas, it asserts that
invalidation of its agreement with McGinnis would affect its other contracts in the
state, resulting in unspecified damages over $75,000. Counsel did not address the
potential value of an adverse arbitration award.

                                          -4-
n.32 (1983). Rather, § 4 of the Act "provides for an order compelling arbitration only
when the federal district court would have jurisdiction over a suit on the underlying
dispute; hence, there must be diversity of citizenship or some other independent basis
for federal jurisdiction before the order can issue." Id. We review de novo the district
court’s ruling that it had no subject matter jurisdiction over Advance America's claim.
See Minnesota Ass'n of Nurse Anesthetists v. Allina Health Syst. Corp., 276 F.3d
1032, 1040 (8th Cir. 2002). The party invoking federal jurisdiction has the burden to
prove the requisite amount by a preponderance of the evidence. Rasmussen v. State
Farm Mut. Auto. Ins. Co., 410 F.3d 1029, 1031 (8th Cir. 2005). A complaint will be
dismissed for lack of subject matter jurisdiction if it appears to a legal certainty that
the value of the claim is less than the required amount of $75,000. In re Minnesota
Mut. Life Ins. Co. Sales Practices Litigation, 346 F.4d 830, 834 (8th Cir. 2003).

        In our circuit the amount in controversy is determined by the value to the
plaintiff of the right sought to be enforced. Massachusetts State Pharm. Ass'n v. Fed.
Prescription Serv., Inc., 431 F.2d 130, 132 (8th Cir. 1970). In the case just cited, the
plaintiff was a group of pharmacies seeking to bring a class action to enjoin the
defendant from filling prescriptions at discount prices. We pointed out that to value
the jurisdictional amount from the point of view projected by the defendant would
effectively permit plaintiffs to aggregate their individual claims without having to
fulfill the normal class action aggregation requirements. See id. at 132 n.1. Under the
plaintiff's viewpoint rule, value is measured by focusing on the object of the particular
litigation brought by the plaintiff. See Hunt, 432 U.S. at 347.

       Although Advance America may suffer substantial costs as a result of an
adverse class action judgment, possibly exceeding $75,000 in damages, the object of
the action before the court is to compel arbitration of the dispute between McGinnis
and Advance America concerning their loan transactions which have a small monetary
value. Advance America's amended complaint in this action asserts that it has been
injured by her refusal to honor the loan agreement and to submit her dispute to the

                                          -5-
arbitration process. The object of this litigation is thus the value at stake in the
arbitration dealing with the loan transactions between these two parties. Cf. We Care
Hair Dev., Inc. v. Engen, 180 F.3d 838, 841 (7th Cir. 1999) ("[S]ince the present suit
is not a removal suit but rather an independent federal suit, it is the stakes of the
arbitration and not the possible state court award that control.").

       While we adhere to the circuit rule that the value of the underlying controversy
must be viewed from the perspective of the federal plaintiff, see Massachusetts State
Pharm. Ass'n, 431 F.2d at 132, Advance America seeks to extend this principle to
include costs of its potential exposure in the uncertified class action in state court and
its increased costs in defending such a suit compared to the two party arbitration
sought here. The cases cited by Advance America in support of its argument are
inapposite or distinguishable. It relies on an unpublished opinion, Fitzgerald Railcar
Serv. of Omaha, Inc. v. Chief Indus., Inc., 141 Fed. Appx. 491 (8th Cir. 2005),
holding that the losses of a commercial tenant from breach of a lease, including likely
termination of a profitable business and relocation, should be considered in the value
of the litigation. Those losses were directly involved in that action since the tenant’s
contractual rights under the lease included an option to renew for many years for a
specified amount, easily exceeding $75,000. See id. at 492-93. Also in contrast to the
case before the court, no other lawsuit was implicated in their dispute.

       Advance America cites another unpublished opinion, Republic Bank & Trust
Co. v. Kucan, 245 Fed. Appx. 308, 314 (4th Cir. 2007), which stated that while it is
the "possible award in the requested arbitration that is determinative of the amount-in-
controversy question," courts may "look through the petition to compel to the
controversy underlying the arbitration request." The plaintiff bank, a payday lender,
argued that it would suffer potential damages exceeding $75,000 if a class action were
certified in an underlying state case and its loan agreements became unenforceable.
See id. The Fourth Circuit found it significant that the bank had not sought to
intervene in or remove the putative state court class action, but rather had "initiated

                                           -6-
an independent action in federal court naming only the three borrowers and seeking
arbitration of only their claims." Id. The case had originally been dismissed in the
district court for lack of standing so the record on jurisdictional amount had not been
developed. Id. at 310. Despite the small loan amounts involved in the requested
arbitration with three borrowers ($500 or less), the Fourth Circuit took note of the fact
that they were seeking injunctive relief in the state action which could result in costs
of compliance and thought it fair to remand to give the bank "the opportunity to
establish that the amount in controversy in the arbitration . . . exceeds $75,000." Id.
at 315. Here in contrast, the record shows that Advance America had an opportunity
to submit evidence in the district court and did submit a declaration by its corporate
counsel seeking to show that the amount in controversy in the arbitration of its
contractual dispute with McGinnis exceeds $75,000. The district court found that
Advance America had not met its burden of proof on the jurisdictional amount. We
conclude that the district court did not err in finding counsel's conclusory declaration
insufficient to establish that the amount of the possible award in the arbitration would
exceed $75,000. See Republic Bank, 245 Fed. Appx. at 314 (possible award in
arbitration determines amount in controversy question).

        The Seventh Circuit has similarly refused to adopt the view that the value of the
object of the federal litigation should be measured by the potential value of avoiding
state court litigation, pointing out that courts must look to the pecuniary result which
the plaintiff would receive from the arbitration it seeks to compel. See America's
MoneyLine, Inc. v. Coleman, 360 F.3d 782, 786 (7th Cir. 2004). The Second
Circuit’s decision in Doctor's Assocs., Inc. v. Hamilton, 150 F.3d 157 (2d Cir. 1998),
is also consistent with the principle that it is the possible arbitration award that
determines the amount in controversy on the jurisdictional issue. The damages sought
in a state action may nevertheless help inform "the possible award resulting from the
desired arbitration." Id. at 160. In Hamilton, the value of the dispute exceeded the
jurisdictional minimum amount because the underlying state court complaint between
the parties alleged actual and punitive damages over $1 million. Id. at 161. See also

                                          -7-
Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995) ("[T]he amount in
controversy in a petition to compel arbitration . . . is determined by the underlying
cause of action that would be arbitrated."); Webb v. Investacorp, Inc., 89 F.3d 252,
257 n.1 (5th Cir. 1996) (per curiam) (applying the plaintiff’s point of view and
holding that the amount in controversy is the difference "between winning and losing
the underlying arbitration"); 13B Charles Alan Wright et al., Federal Practice &
Procedure: Jurisdiction § 3569, at 172-73 (2d ed. 1984) ("amount is measured by the
possible award that might reasonably result from an arbitration").

        Even the Sixth Circuit's unpublished opinion in Woodmen of the World/Omaha
Woodmen Life Ins. Soc. v. Scarbro, 129 Fed. Appx. 194 (6th Cir. 2005) (per curiam),
fails to support Advance America's argument that the amount in controversy here is
the value of avoiding the underlying state court litigation. In Woodmen, Scarbro
sought damages of $20,000 under an insurance policy, plus attorney fees and
compensatory and punitive damages. Id. at 196. Because of these possible damage
claims against the insurer, the Sixth Circuit concluded that there was no legal certainty
that the value of the arbitration would be below $75,000 in light of the insurer's
potential liability in the underlying state court litigation. Id. In contrast, the value of
the object of the litigation between Advance America and McGinnis has not been
shown to exceed $75,000. While it may be true that an adverse finding could cast
doubt on other Advance America contracts, future contingent losses not directly
arising from its dispute with McGinnis should not be considered in evaluating the
amount in controversy between these two parties. See Wabash Ry. Co. v.
Vanlandingham, 53 F.2d 51, 52 (8th Cir. 1931).

       Advance America also asserts that the potential costs of litigating McGinnis'
claims in state court, as opposed to conducting a less costly arbitration, should be
considered in analyzing the amount in controversy. To advance this argument, it
relies on cases which found relevant to the amount in controversy the additional cost
of conducting arbitration proceedings at an alternate location. In Richard C. Young

                                           -8-
& Co., Ltd. v. Leventhal, 389 F.3d 1 (1st Cir. 2004), the First Circuit affirmed the
district court's finding that the amount in controversy requirement had been met
because of the expense of holding the arbitration in California instead of Boston.
Similarly, in S.J. Groves & Sons Co. v. American Arbitration Ass'n, 452 F. Supp. 121
(D. Minn. 1978), the district court held that costs associated with the location of an
arbitration come into play when determining the amount in controversy. These cases
are not relevant to our inquiry because they address the question of where, rather than
whether, to arbitrate. McGinnis rightly points out that if the difference in cost
between arbitration and ordinary court litigation were considered, virtually every
petition to compel arbitration would meet the amount in controversy requirement,
regardless of the size of the individual dispute at issue.

       Advance America submits that even if the amount at stake in the arbitration is
considered the object of the litigation, that amount exceeds $75,000 in light of
McGinnis' possible claims for attorney fees. We agree with McGinnis, however, that
there is nothing in the record supporting Advance America's speculation that attorney
fees awarded by the arbitrator could possibly exceed $75,000 when the value of the
disputed loan transactions was found by the district court to be below $1,000. For the
same reason, Advance America's argument that McGinnis could seek to recover
damages for emotional distress through the arbitration is unfounded. Nothing in her
state court complaint alleges such damages, prohibiting recovery under the Arkansas
Deceptive Trade Practices Act. See FMC Corp. v. Helton, 360 Ark. 465, 202 S.W.3d
490, 502-03 (2005) (no mental anguish award absent allegation of physical injury or
intentional infliction of mental distress under ADTPA). Since McGinnis has not
alleged that she suffered physical injury or that Advance America sought intentionally
to inflict mental distress on her, the argument that she might recover damages for
emotional distress exceeding the $75,000 amount in controversy requirement is
inconsistent with established Arkansas law.

      For these reasons we affirm the judgment of the district court.
                         _________________________



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