CivPro Question...Removal with AIC less than 75K Forum

[happy187]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

[nymario]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

Within 30 days, D would have to allege that the amount in question is 75k -- that P could seek punitive damages or something to that effect. It really depends on the breach...If the 65k claim was a bad faith attempt to avoid federal court, removal should be easy. see Hutchens v. Progressive Paloverde Insurance Co., 211 F.Supp.2d 788 (S.D.W.Va.2002) for an example of that...

The standard for removal is higher than an original filing though...D will have to show that it is more likely than not that the plaintiff's claims will exceed 75k.

[random5483]

Removal is from last semester, so I might be a bit rusty. Anyways, D will have to show that the federal court has subject matter jurisdiction in the form of diversity jurisdiction. Unfortunately, the amount in controversy is not over 75k so unless D can show that the damages are actually higher, D will be unable to remove the case to federal court (no federal question jxd).

Courts generally assume that a Ps claim for damages is in good faith to meet the 75k+ requirement for diversity jxd. Thus, P could easily claim 75k damages and file the case in federal courts. However, D will have a hard time removing the case because the P's claim for damages is taken in good faith, and D will have to make a strong showing that P is wrong. Hypothetically, if P was claiming 75k+ damages and D was arguing that the amount in controversy requirement was not met, D would have to establish to a legal certainty that damages were under 75k.

Here, the issue is D trying to raise P's damage claim from 65k to 75k+. D would have difficulty doing this because it would be against his interest to make a showing for greater damages. Also, if the legal certainty standard applies (I know it applies when D tries to reduces damages claimed by P for the purposes of diversity jxd), then D would have a very hard time removing the case to the federal court.

[run26.2]

Read 28 USC 1441, 1443, 1332.

[Lucidity]

The AIC requirement in diversity jurisdiction isn't 75k. Its 75k and a penny, or anything above that. Make sure you remember this as it was something my prof loved to use to trip people up.

Also, it's the plaintiff that decides how much to sue for. Thus, if the plaintiff sues for less than 75k, i don't think you can remove based on diversity jurisdiction. The only way then to get it removed is to bypass diversity jurisdiction and somehow get it removed via federal question jurisdiction (where amounts in controversy is moot).

Just remember that there are 2 paths to removal to federal courts. The diversity and amounts in controversy requirements are only relevant to diversity jurisdiction. If you can get it removed because there is a federal question, you don't even have to look at domiciliary or amounts in question. Giving the student a bunch of facts involving diversity and amounts in controversy when a case really should be removed under federal question jurisdiction is another popular red herring professors use. Don't mix the 2 up.

[run26.2]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

In what state was the suit brought?

[happy187]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

In what state was the suit brought?

TX.

[run26.2]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

In what state was the suit brought?

TX.

I'm not sure what TX's laws are, but some states allow removal of diversity cases on counter-claims brought by defendants. You might look into that.

[vamedic03]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

TX.

I'm not sure what TX's laws are, but some states allow removal of diversity cases on counter-claims brought by defendants. You might look into that.

What?!

How would a state's laws effect the jurisdiction of a federal court? This is a question of pure federal law.

[run26.2]

Fact Pattern:

P (TX citizen) sues D (FL Citizen) and J (OK Citizen) for breach of K for 65K.

Question:

Assuming D desires to remove the case to federal court, what should D do to effectuate removal and how long does it have to do this?

TX.

I'm not sure what TX's laws are, but some states allow removal of diversity cases on counter-claims brought by defendants. You might look into that.

What?!

How would a state's laws effect the jurisdiction of a federal court? This is a question of pure federal law.

If it the state law requires the counterclaim to be filed or the defendant loses the legal right to file, i.e. it is compulsory, then some federal courts permit removal and some don't.

[ogurty]

I'm not sure what TX's laws are, but some states allow removal of diversity cases on counter-claims brought by defendants. You might look into that.

What?!

How would a state's laws effect the jurisdiction of a federal court? This is a question of pure federal law.

If it the state law requires the counterclaim to be filed or the defendant loses the legal right to file, i.e. it is compulsory, then some federal courts permit removal and some don't.

States can unilaterally expand the subject matter jurisdiction of the federal courts?

News to me.

I think random's answer was right - it seems like the plaintiff's choices in his pleading (ie the value of the remedies sought) answer the question of whether the action could have been brought in federal court, unless it can be proven to a legal certainty that the amount sought is actually higher than 75k; that is, you probably need to prove that the plaintiff accidentally or intentionally prayed for less relief than is necessarily in controversy. Seems like a tough standard.

[vamedic03]

If it the state law requires the counterclaim to be filed or the defendant loses the legal right to file, i.e. it is compulsory, then some federal courts permit removal and some don't.

On what premise would it be removable? It's unlikely that a federal counterclaim will make a case removable - consider the reasoning in Vornado v. Holmes Group.

[run26.2]

If it the state law requires the counterclaim to be filed or the defendant loses the legal right to file, i.e. it is compulsory, then some federal courts permit removal and some don't.

On what premise would it be removable? It's unlikely that a federal counterclaim will make a case removable - consider the reasoning in Vornado v. Holmes Group.

Diversity jx with the AIC on the counterclaim > $75K.

[nymario]

in the OP's example, the answer is clear. counterclaims count only in cases originally filed in federal court where the defendant did not originally object to subject matter jx. they do NOT count for the purposes of removal in Texas (not a state law matter, a Circuit matter - the state law compulsory nature of the claim matters, but Circuit/District precedent on whether it counts at all matters more -- in the 5th Circuit, it doesn't count even if it is a compulsory counterclaim per Texas law).

While the Fifth Circuit has not addressed this issue, the position taken in Swallow & Assoc. appears to be against the weight of authority. The majority of courts that have considered this issue have determined that the amount in controversy is found solely by reference to the plaintiff's original complaint. See e.g. Shaw v. Dow Brands, 994 F.2d 364, 366 (7th Cir.1993) ( “the amount in controversy [is determined] by merely looking at plaintiff's state court complaint ...”); Martin Pet Prod. v. Lawrence, 814 F.Supp. 56, 58 (D.Kan.1993) (holding that Tenth Circuit precedent precludes consideration of counterclaims in deciding amount in controversy); Video Connection of Am. v. Priority Concepts, Inc., 625 F.Supp. 1549, 1551 (S.D.N.Y.1986) (holding that only the contents of the state court petition may be considered for purposes of the amount in controversy).

Shortly thereafter, the 5th Circuit clarified:

The district court based its determination of the amount in controversy on Greenberg's counterclaim, in which he sought only the $35,000 policy limits and attorney's fees not to exceed $10,500. But this was error as a matter of law, given that neither this counterclaim nor Greenberg's state court petition were filed until after the filing of St. Paul's declaratory judgment complaint. Thus, neither of these pleadings may be considered in testing the amount here in controversy.

(see also 1999 WL 305107 - N.D. Tex)

the contrary "swallow" case mentioned above is 794 F.Supp. 660 (E.D. Mich. 1992) - and has not been followed in W.D. Mich (CMS North America, Inc. v. De Lorenzo Marble & Tile, Inc., 521 F. Supp. 2d 619 (W.D. Mich. 2007)), let alone outside the 6th Circuit (in unpublished dicta, the 6th has implied that it would not follow Swallow).

[nymario]

If it the state law requires the counterclaim to be filed or the defendant loses the legal right to file, i.e. it is compulsory, then some federal courts permit removal and some don't.

On what premise would it be removable? It's unlikely that a federal counterclaim will make a case removable - consider the reasoning in Vornado v. Holmes Group.

26.2 is talking about a compulsory state law counterclaim. While the reasoning in Vornado certainly leads me to believe that if scotus took on this issue, they'd agree, I don't feel that it is persuasive authority. The "Amount in Controversy" can be reasonably argued to include a counterclaim that is compulsory under controlling state law. As posted above, the 5th Circuit has held that it does NOT include such amounts. This is the majority view, and the view I happen to agree with. But it isn't settled scotus precedent.

[run26.2]

in the OP's example, the answer is clear. counterclaims count only in cases originally filed in federal court where the defendant did not originally object to subject matter jx. they do NOT count for the purposes of removal in Texas (not a state law matter, a Circuit matter - the state law compulsory nature of the claim matters, but Circuit/District precedent on whether it counts at all matters more -- in the 5th Circuit, it doesn't count even if it is a compulsory counterclaim per Texas law).

While the Fifth Circuit has not addressed this issue, the position taken in Swallow & Assoc. appears to be against the weight of authority. The majority of courts that have considered this issue have determined that the amount in controversy is found solely by reference to the plaintiff's original complaint. See e.g. Shaw v. Dow Brands, 994 F.2d 364, 366 (7th Cir.1993) ( “the amount in controversy [is determined] by merely looking at plaintiff's state court complaint ...”); Martin Pet Prod. v. Lawrence, 814 F.Supp. 56, 58 (D.Kan.1993) (holding that Tenth Circuit precedent precludes consideration of counterclaims in deciding amount in controversy); Video Connection of Am. v. Priority Concepts, Inc., 625 F.Supp. 1549, 1551 (S.D.N.Y.1986) (holding that only the contents of the state court petition may be considered for purposes of the amount in controversy).

Shortly thereafter, the 5th Circuit clarified:

The district court based its determination of the amount in controversy on Greenberg's counterclaim, in which he sought only the $35,000 policy limits and attorney's fees not to exceed $10,500. But this was error as a matter of law, given that neither this counterclaim nor Greenberg's state court petition were filed until after the filing of St. Paul's declaratory judgment complaint. Thus, neither of these pleadings may be considered in testing the amount here in controversy.

(see also 1999 WL 305107 - N.D. Tex)

the contrary "swallow" case mentioned above is 794 F.Supp. 660 (E.D. Mich. 1992) - and has not been followed in W.D. Mich (CMS North America, Inc. v. De Lorenzo Marble & Tile, Inc., 521 F. Supp. 2d 619 (W.D. Mich. 2007)), let alone outside the 6th Circuit (in unpublished dicta, the 6th has implied that it would not follow Swallow).

Good answer. I did not feel like digging through the district court or circuit court opinions to find this.

Can you think of any other ways for one of the Ds to remove?