Practical Answers to Two Removal Questions
Apr 1, 2011 | Raleigh, NC, United States
James M. Weiss
By: Jamie Weiss
We all remember from law school that you need complete diversity of the parties and $75,000 in controversy to file a removal of a regular civil case. This article discusses two twists to the normal rules and how to remove those cases.
The first is a case where the complaint is silent on the amount of damages the plaintiff is seeking. The second is a case where you have more than one plaintiff, but at least one plaintiff has a claim for less than $75,000. Are these cases removable? If so, how do you remove them?
The Complaint Is Silent as to the Amount Sought
One challenging removal question arises when the petition or complaint does not allege a specific amount in controversy, or if the allegations only specify a minimum amount of damages below the statutory threshold (e.g., "damages in excess of $10,000"). Because the burden is on the defendant to prove that the jurisdictional amount is satisfied, this situation can present particular difficulties.
28 U.S.C. § 1446(b) requires that a defendant remove a case within 30 days of its receipt of the initial pleading. That section does contain an exception, however, for cases in which "the case stated by the initial pleading is not removable." Id. When that exception applies, a removal can be filed "within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable," though not more than one year from filing if the case is being removed on diversity grounds. Id. Circuit courts agree that the removal clock does not begin running until the plaintiff serves the defendant with a piece of paper (complaint or otherwise) that "explicitly specifies the amount of monetary damages sought." Moltner v. Starbucks Coffee Co., 624 F.3d 34, 37-38 (2d Cir. 2010).
In other words, when a complaint does not expressly allege the amount in controversy, it is "not removable" under 28 U.S.C. § 1446(b). The practical question is how to turn an unremovable complaint into a removable one? The easiest way is to get a copy of an "amended pleading, motion, order or other paper" that makes the case removable. Case law describes a variety of ways to do this, for example, by serving written discovery or by discovering the amount of damages in a deposition. See Hines v. AC & S, Inc., 128 F. Supp. 2d 1003, 1006 (N.D. Tex. 2001).
Answers to Interrogatories
One way to ascertain the amount in controversy is to serve interrogatories on the opposing party. This method has the advantage of requiring the plaintiff to disclose the damages he is seeking in his lawsuit. Courts hold that answers to interrogatories qualify as "other paper" within the meaning of 28 U.S.C. § 1446(b) such that the removal clock begins ticking when the interrogatory responses are received by the defendant. See Cabibbo v. Einstein/Noah Bagel Partners, L.P., 181 F. Supp. 2d 428, 432-33 (E.D. Pa. 2002).
Responses to Requests for Admission
Another way to force the plaintiff to disclose the real amount in controversy is with requests for admission. In Murchison v. Progressive Northern Ins. Co., 564 F. Supp. 2d 1311 (E.D. Okla. 2008), the court denied a motion to remand after removal. The complaint only alleged that the plaintiff suffered damages in excess of $10,000 on each of her three claims. Id. at 1312. Several months after the case was filed, the defendant issued a request for admission to the plaintiff, "Admit that Your [sic] total alleged damages against Progressive do not exceed $75,000.00." Id. at 1313. The plaintiff attempted to evade the question, objecting to the request as premature and that it violated the Oklahoma pleading code, but she included in her objection the statement that "discovery is at its earliest stages, and accordingly Plaintiff lacks sufficient information to admit or deny this request, and therefore denies the same." Id. (emphasis in original). The court held that this denial of the request for admission was "other paper" under the meaning of § 1446(b). Id. at 1313-14. Moreover, the court held that the non-denial denial of the request was confirmation to the defendant that the plaintiff was seeking more than $75,000 in damages. Id. at 1315. Not amused with the plaintiff's attempt to hide behind the evasive objection, the court concluded that many cases are in similar positions: "[t]he Plaintiff knows the amount sought exceeds $75,000. The Defendant knows the amount sought exceeds $75,000. The court knows the amount sought exceeds $75,000. Indeed, the court knows the parties themselves know it." Id. at 1316 (emphasis in original).
Other paper is not limited to written discovery. The transcript from a deposition also qualifies. See Peters v. Lincoln Elec. Co., 285 F.3d 456, 465 (6th Cir. 2002). As one court put it, "we hold that if a defendant is able to ascertain for the first time from the plaintiff's deposition testimony that a case is removable, then a notice of removal is properly filed if it is filed within 30 days of that deposition." Peters, 285 F.3d at 466.
Other "Other Paper"
Some states have unique pleadings or discovery requests that can also be used to discover the true amount of a plaintiff's claim. For example, in my state of North Carolina, one court suggested utilizing the "request for monetary relief sought" procedure in N.C. R. Civ. P. 8(a)(2). See Hoffman v. Vulcan Materials Co., 19 F. Supp. 2d 475 (W.D.N.C. 1998). In North Carolina (as in other states) a plaintiff asserting a claim for negligence is prohibited by rule from alleging a particular demand for monetary relief other than asserting that the damages exceed $10,000. The ordinary negligence case is not removable because the complaint is silent on whether the jurisdictional amount is satisfied. Rule 8(a)(2) expressly allows a defendant to "request of the claimant a written statement of the monetary relief sought," to which the plaintiff must respond within 30 days. This is similar to the methodology discussed in the Moltner case cited above: New York has a similar provision under N.Y. C.P.L.R. § 3017(c). 624 F.3d at 36-38.
Multiple Plaintiffs Where at Least One Has a Claim Under $75,000.
Another challenging problem is when you have multiple plaintiffs, but some plaintiffs have claims below the jurisdictional threshold. For example, let's assume you meet with a client who tells you that three brothers were injured at his restaurant in Philadelphia a few months ago and the brothers have now sued him in state court in New Jersey. The brothers are all New Jersey residents and your client's restaurant is a Pennsylvania corporation. The problem is that one brother alleges damages over $100,000, but the other two each only allege $10,000 in damages. You and your client discuss removal. You pause because you wonder whether there is federal jurisdiction over the claims of the brothers with only $10,000 in damages. After all, if those brothers had sued individually, their cases would not be removable.
But when all three bring their claims in one lawsuit, that case is removable. In Exxon Mobil Corp. v. Allapattah Svcs, Inc., 545 U.S. 546, 549 (2005), the Supreme Court held that "where the other elements of jurisdiction are present, and at least one named plaintiff in the action satisfies the amount-in-controversy requirement, [28 U.S.C.] § 1367 does authorize supplemental jurisdiction over the claims of the other plaintiffs in the same Article III case or controversy, even if those claims are for less than the jurisdictional amount specified in the statute setting forth the requirements for diversity jurisdiction." In other words, you can remove your case if one plaintiff has a claim over $75,000, because the court can exercise supplemental jurisdiction over the other plaintiffs' claims. Remember, though, that you still cannot aggregate multiple plaintiffs' claims together to reach the $75,000 limit – at least one plaintiff has to individually have claims that exceed $75,000. E.g., McMillian v. Sheraton Chicago Hotel & Towers, 567 F.3d 839, 844 (7th Cir. 2009).
The Supplemental Jurisdiction Statute Alters 70 years of Case Law
For 70 years, settled law was that every single plaintiff must meet all plaintiff-specific jurisdictional requirements such as the amount-in-controversy requirement to bring a case in federal court. Clark v. Paul Gray, Inc., 306 U.S. 583 (1939). But in 1990, Congress passed the Judicial Improvements Act, codifying the requirements for supplemental jurisdiction at 28 U.S.C. § 1367. In Exxon Mobil, the Supreme Court held that § 1367 overruled Clark. 545 U.S. at 566-67. Therefore, when some, but not all, plaintiffs in a diversity action allege a sufficient amount in controversy, federal jurisdiction is proper. Id.
Exxon Mobil did not involve a removal, but relied on its earlier decision in Chicago v. Int'l. College of Surgeons, 522 U.S. 156 (1997), where the Supreme Court found jurisdiction was proper over all the claims in a removed action that contained both federal causes of action and state law causes of action. 522 U.S. at 166. Cases since have agreed that the Exxon Mobil rationale applies to cases removed from state court. E.g., Treat v. Thermoguard Equip., Inc., No. 09-CV-59-TCK-PJC, 2009 WL 2588865, *3 (N.D. Okla. Aug. 19, 2009); but see Cooley v. Am. Family Mut. Ins. Co., No. 08-cv-01041-WYD-MEH, 2008 WL 4821208, *9 n.1 (D. Colo. Nov. 3, 2008) (wrongfully limiting Exxon Mobil's holding to class actions).
Before you counsel your client that he can remove his case to federal court, you need to examine the language of 28 U.S.C. § 1367(b) and 28 U.S.C. § 1367(c), which create exceptions to supplemental jurisdiction.
Under 28 U.S.C. § 1367(b), there is no jurisdiction over claims by plaintiffs against defendants made parties pursuant to Fed. R. Civ. P. 14, 19, 20, or 24, or claims by plaintiffs who themselves are in the case pursuant to Fed. R. Civ. P. 19 or 24. 28 U.S.C. § 1367(b).
Under 28 U.S.C. § 1367(c), a district court has the discretion to refuse to exercise supplemental jurisdiction over the additional claims if "(1) the claim raises a novel or complex issue of state law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are compelling reasons for declining jurisdiction." 28 U.S.C. § 1367(c). The first prong of 28 U.S.C. § 1367(c) could be a practical burden in complex cases. E.g., Shah v. Hyatt Corp., 2010 WL 365632, *3 (E.D. Pa. Feb. 1, 2010) (declining to exercise jurisdiction over novel issues of state law arising out of Pennsylvania employment law).
We can now add several tools to our arsenal of ways to remove cases to federal court even when the initial pleading might not look removable. When faced with a complaint silent as to the amount in controversy, we can still timely remove the case after some initial discovery to pin down as the amount a plaintiff is seeking. With multiple plaintiffs, as long as we can find one plaintiff who has a claim exceeding $75,000, we can remove the case as to all plaintiffs if their injuries arose out of the same case or controversy.