Practitioners contemplating removal of a civil action from state court to federal court based upon diversity of citizenship must be mindful of the interplay between inconsistent state and federal statutory requirements. An attorney who is not fully cognizant of this relationship may find himself or herself at the wrong end of an order remanding the action to state court, in some cases permanently.
The procedure for removing a state court action to a United States district court is set forth in 28 U.S.C. § 1446. Subsection (b) of the statute identifies the time parameters within which a notice of removal must be filed, and requires a defendant to file removal papers within 30 days after he or she is served with the summons and complaint, or “[i]f the case stated by the initial pleading is not removable,” within 30 days after the defendant receives some “other paper from which it may first be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b). At first glance, § 1446 appears reasonably straightforward. However, practitioners attempting to remove an action from state court based upon diversity of citizenship quickly recognize the difficulty in ascertaining whether certain cases are removable based purely upon the allegations of an ambiguous complaint, or whether some “other paper” must first be acquired before the action becomes removable.
In most situations, there is little doubt after reading a complaint as to whether the $75,000 jurisdictional amount has been satisfied and complete diversity of citizenship exists. However, the quandary caused by ambiguous complaints is most prevalent in states where pleading requirements do not mandate that a plaintiff allege an ad damnum with specificity. For example, Colorado and Florida plaintiffs may file lawsuits in their states’ district court (for Colorado) or circuit court (in Florida) so long as their damages are alleged to exceed $15,000. C.R.S.A. § 13-6-104 and Fla. Stat. § 26.012(2)(a) and 34.01(1)(c). Similarly, Massachusetts plaintiffs can maintain lawsuits in superior court so long as they allege an amount in controversy over $25,000. M.G.L.A. 212 § 3. Some states even place limitations upon plaintiffs in pleading too specific an ad damnum in their prayers for relief. The Illinois Code of Civil Procedure, for example, states in relevant part:
[I]n actions for injury to the person, no ad damnum may be pleaded except to the minimum extent necessary to comply with the circuit rules of assignment where the claim is filed.
735 ILCS 5/2-604 (emphasis added). Thus, in the Circuit Court of Cook County, Illinois, prayers for relief are often limited to a general request for “damages in excess of $30,000,” the minimum amount one must plead in order for a case to be assigned to the Circuit Court of Cook County, Law Division. Cir. Ct. Cook Co. G.O. 2.1.
The interplay between state pleading requirements similar to those discussed above and federal jurisdictional statutes frequently results in situations where plaintiffs suffer hundreds of thousands of dollars of damages, but file a complaint containing an ad damnum that asks generally for damages in excess of $30,000, $25,000, or even $15,000. Once this complaint reaches the desk of a defendant’s attorney, he or she must determine whether the complaint, on its face, provides enough information to remove the action to federal court. Although this analysis appears simple enough, the outcome may surprise you.
Assume you receive a complaint in which a plaintiff alleges your client’s negligence caused her to become “permanently and totally disabled” and responsible for “significant medical care and treatment, lost wages and future pain and suffering” in excess of $50,000. These are, of course, generic allegations present in many, if not the majority, of personal injury cases filed throughout the country. Having not yet conducted any discovery, is it your duty as defense counsel to speculate as to whether the plaintiff’s damages exceed not only the $50,000 alleged in the complaint, but also the $75,000 jurisdictional limit? As a general rule, no. A defendant is not under a duty to investigate and remove an action to federal court if the complaint does not clearly disclose that the case is removable. See, e.g., Soto v. Apple Towing, 111 F. Supp. 2d 222 (E.D.N.Y. 2000). Courts have explicitly held that no purpose is served by requiring a defendant to “speculate as to the amount in controversy when such can be ascertained from the plaintiff within a reasonable amount of time through normal discovery procedures.” See, e.g., Rollwitz v. Burlington Northern R.R., 507 F. Supp. 582 (C.D. Mont. 1981). However, if a court determines a defendant had actual knowledge that a plaintiff’s damages satisfy the jurisdictional amount for diversity, even when presented with a “bare bones” complaint, then the defendant must file his removal petition within 30 days of receiving the complaint. See, e.g. Mozee v. Dugger, 616 F. Supp. 2d 672 (W.D. Ky. 2009). Courts have even held that knowledge may be imputed upon a defendant from a “reasonable and commonsense reading of the complaint” even when the complaint contains the same vague and generic allegations of damage as those set forth in the above hypothetical. Fullbright v. Royal Caribbean Cruises, Ltd., 06-cv-00554, (N.D. Ill. June 16, 2006). Thus, if a defendant does not promptly file its removal petition, it will likely lose its removal rights permanently, but if it jumps the gun and removes its case prematurely, it may be required to reimburse the plaintiff for any fees and costs incurred in seeking to remand the matter. 28 U.S.C. § 1447(c). What, then, should a practitioner do when presented with such an ambiguous complaint, from which he is not yet certain whether diversity jurisdiction exists?
The first step that should be taken in an attempt to eliminate the uncertainty accompanying a plaintiff’s complaint is to prepare an affidavit or stipulation declaring that plaintiff’s total damages, exclusive of interest and costs, do not exceed $75,000. Send the affidavit to opposing counsel along with a letter requesting that plaintiff sign the affidavit within seven days (or less depending on how much time remains to file your removal petition). If plaintiff signs this affidavit, you are in pretty good shape, as there is little chance that any court will fault a defendant for failing to remove a lawsuit to federal court after it receives a certification from the plaintiff, which swears under oath that his damages are less than $75,000.
If after seven days you have not received the signed affidavit, immediately file your removal petition, and attach the letter and unsigned affidavit as exhibits in support of your petition. A court will be less inclined to declare your petition premature in light of the fact that you attempted to procure an affidavit from plaintiff with respect to the amount in controversy, which the plaintiff refused to sign. It is possible at this stage that the plaintiff will concede his damages exceed $75,000, in which case you will be free to litigate the remainder of the lawsuit in federal court. If, however, plaintiff challenges your removal petition with a motion to remand, get him to commit that his actual damages are less than $75,000. If the case is then remanded, plaintiff’s admission before the federal tribunal may help limit his damages at a later stage of litigation.
Even after taking the above steps, there still is a chance a court will declare your petition premature and remand the case back to state court. In such a situation, your diligence in attempting to procure an affidavit from the plaintiff, and the plaintiff’s refusal to sign the affidavit, should provide you with a sufficient basis to successfully avoid paying any of plaintiff’s costs and fees, which would not have been incurred had plaintiff cooperated with you prior to the filing of your removal petition.
If your case is remanded due to a finding of prematurity, do not worry; courts frequently entertain multiple removal petitions. See, e.g., Benson v. SI Handling Systems, Inc., 188 F.3d 780 (7th Cir. 1999). Thus, upon remand to state court, immediately engage plaintiff in discovery pertaining to the amount of his damages. So long as you discover information to show that plaintiff’s damages exceed $75,000—and you do so within the relevant one year statute of repose—you can seek to remove the case again. This outcome is ideal for practitioners seeking to litigate cases in federal court. To be sure, consider the alternative: had you initially decided that it is unclear from the face of the complaint as to whether the plaintiff’s damages exceed $75,000, and a federal court later disagrees, you will have likely lost your right to remove the case altogether, even if the plaintiff eventually claims millions of dollars in damages. By taking the steps suggested herein, you may find yourself disagreeing with the court the first time around, but you will still have a second bite at the apple—something litigators do not often receive.
Jeffrey Becker is an associate with the law firm of Swanson, Martin & Bell, LLP, a boutique litigation firm in Chicago, Illinois. He can be reached at email@example.com.
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