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finding the defendant failed to establish the jurisdictional amount where "defendant is only able to calculate plaintiff's damages for lost wages to be $27,520" and mere speculations of plaintiffs' attorney's fees, emotional distress, "without more, are insufficient to prove it more likely than not that the plaintiffs' claims exceed" $75,000
Summary of this case from BUTLER v. RUE 21, INC.Opinion
No. 1:04-cv-205 Edgar.
December 20, 2004
MEMORANDUM
Plaintiffs move to remand this action to the Chancery Court of Hamilton County, Tennessee, on the ground that the amount in controversy does not exceed the jurisdictional limit of $75,000 required by 28 U.S.C. § 1332. [Court File No. 6]. After reviewing the record the Court concludes that the motion to remand will be GRANTED.
After plaintiffs initially filed their complaint in state court, defendant removed the case to federal district court, contending that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. [Court File No. 1]. Plaintiffs are citizens of Tennessee. Defendant is incorporated under the laws of Florida and has its principal place of business in a state other than Tennessee. It is undisputed that there exists complete diversity of citizenship between the parties for purposes of diversity jurisdiction under § 1332. The issue before the Court is whether the amount in controversy exceeds the jurisdictional limit of $75,000, exclusive of interests and costs. The Court lacks subject matter jurisdiction under 28 U.S.C. § 1332(a) because the requisite amount in controversy does not exist.
The first and most fundamental question presented in every case brought to federal district court is whether there is subject matter jurisdiction to hear and adjudicate the case. Caudill v. N. Am. Media Corp., 200 F.3d 914, 916 (6th Cir. 2000) (citing Douglas v. E.G. Baldwin and Assoc., 150 F.3d 604, 607 (6th Cir. 1998)). Federal courts are courts of limited jurisdiction and may exercise only those powers authorized by the United States Constitution and federal statutes enacted by Congress. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); Douglas, 150 F.3d at 606. It is presumed that a cause of action lies outside this limited jurisdiction. Id. The removing party, defendant Winn-Dixie, bears the burden of overcoming this presumption and establishing that this Court has subject matter jurisdiction over the plaintiffs' claims. Id.
A civil case brought in a state court is not removable to a federal court unless it could have been brought in federal court originally. 28 U.S.C. § 1441(a). A federal district court has original diversity jurisdiction where the suit is between citizens of different states and the amount in controversy exceeds $75,000, exclusive of costs and interest. 28 U.S.C. § 1332(a); see also Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). A defendant removing a case bears the burden of proving these diversity jurisdiction requirements. Rogers, 230 F.3d at 871 (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92, 97 (1921)). The removing defendant must show that it is "more likely than not" that the plaintiffs' claims meet the amount in controversy requirement. Id. (citing Gafford v. Gen. Elec. Co., 997 F.2d 150, 158 (6th Cir. 1993)). A removal petition is to be strictly construed, with all doubts resolved against removal. Her Majesty The Queen v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989); see also Shamrock Oil Corp. v. Sheets, 313 U.S. 100, 108-09 (1941).
Defendant Winn-Dixie has failed to satisfy its burden. Under well-settled principles, the plaintiffs are masters of their claim. A claim for specifically less than the § 1332(a) amount in controversy requirement typically precludes removal. Rogers, 230 F.3d at 871 (citing Gafford, 997 F.2d at 157). "The general federal rule has long been to decide what the amount in controversy is from the complaint itself, unless it appears or is in some way shown that the amount in the complaint is not claimed `in good faith.'" Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 353 (1961) (quoting St. Paul Mercury Indem. Co. v. Red Cab. Co., 303 U.S. 283, 288-89 (1938)). If a plaintiff "does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove." St. Paul, 303 U.S. at 294; see also 14C C. Wright, A. Miller and E. Cooper, Federal Practice and Procedure: Jurisdiction 3d § 3725 (1998).
In this case, the plaintiffs have chosen to sue for less than the jurisdictional amount, thereby precluding removal. The ad damnum clause of the complaint specifically states that "[t]otal damages do not exceed $74,000.00." [Court File No. 1, Exhibit A]. Further, in their motion to remand, plaintiffs assure the Court that total damages, including compensatory damages, punitive damages, and attorney's fees, do not exceed $74,000. [Court File No. 7]. By including this ad damnum clause, plaintiffs cannot recover more than $74,000 under Tennesse law. In Tennessee, "[a] judgment that exceeds the ad damnum clause is invalid." Cross v. City of Morristown, No. 03A0I-9606-CV-00211, 1996 WL 605248, at *3 (Tenn.Ct.App. Oct 23, 1996) (citations omitted); see also Gaylor v. Miller, 59 S.W.2d 502, 504 (Tenn. 1933) (citing Murphy v. Johnson, 64 S.W. 894, 895 (Tenn. 1901)); McCracken v. City of Millington, No. 02A01-9707-CV-00165, 1999 WL 142391, at *9 (Tenn Ct. App. Mar. 17, 1999); Harrison v. Laursen, No. 01A01-9705-CH-00238, 1998 WL 70635, *5 (Tenn.Ct.App. Feb 20, 1998). Consequently, by virtue of the ad damnum clause in the complaint, the amount in controversy does not exceed $74,000, and this Court does not have diversity jurisdiction under § 1332.
This Court is aware of Rogers v. Wal-Mart Stores, Inc., where the Sixth Circuit determined that Tennessee Civil Procedure Rule 54.03 permits a plaintiff to "claim in her complaint an amount lower than the federal amount in controversy but nevertheless seek and recover damages exceeding the amount prayed for." 230 F.3d 868, 871 (6th Cir. 2000). However, Rogers did not discuss substantive Tennessee case law prohibiting plaintiffs from recovering damages that exceed the ad damnum clause in the complaint. See Gaylor, 59 S.W.2d at 504; Murphy, 64 S.W. at 895; McCracken, 1999 WL 142391, at *9; Harrison, 1998 WL 70635, *5; Cross, 1996 WL 605248, at *3. Because jurisdiction in this case would be based on 28 U.S.C. § 1332, this Court is required to apply Tennessee state law "in accordance with the then controlling decision of the highest state court." Ziegler v. IBP Hog Market, Inc., 249 F.3d 509, 517 (6th Cir. 2001) (citations and internal quotations omitted). Where a state's highest court has not addressed an issue, this Court must consider a decision of the state appellate court on point, regardless of whether that decision is published or unpublished. Id. (citations omitted). This Court must follow and apply Tennessee case law limiting a plaintiff's recovery to the amount of damages specified in the ad damnum clause of a complaint. As a result, the amount in controversy in the instant case is $74,000, which is insufficient to invoke diversity jurisdiction under 28 U.S.C. § 1332.
Assuming arguendo that the plaintiffs could potentially recover total damages exceeding the ad damnum clause, defendant has not met its burden of showing it more likely than not that the plaintiffs' claims exceed the jurisdictional threshold of $75,000. In its petition for removal, defendant is only able to calculate plaintiff's damages for lost wages to be $27,520. [Court File No. 1]. To reach the jurisdictional amount in controversy threshold, defendant has to "estimate" plaintiffs' attorney's fees and "presume" substantial damages for emotional distress, humiliation and embarrassment, and pain and suffering. Id. These mere speculations by Winn-Dixie, without more, are insufficient to prove it more likely than not that the plaintiffs' claims exceed the § 1332(a) jurisdictional amount.
The defendant's proof that the plaintiffs' claims exceed the jurisdictional amount is substantially weaker than that presented in Rogers. 230 F.3d at 870. In Rogers, the plaintiff initially filed suit seeking approximately $950,000 in damages; after the district court dismissed the case without prejudice, the plaintiff filed a new complaint in state court seeking to recover an amount "not exceeding $75,000." Id. The defendant in Rogers had proof through discovery that the plaintiff estimated her damages at $447,000. Id. In contrast, defendant Winn-Dixie only presents this Court with $27,520 in lost wages and an estimate based on speculation to cover the remainder of the § 1332 amount in controversy. In light of the defendant's burden, Winn-Dixie's proffered proof is insufficient.
Defendant also argues that the Court has diversity jurisdiction because plaintiff refused to stipulate that all damages do not exceed $74,000. [Court File No. 1]. However, the Court is not persuaded that this demonstrates a sufficient amount in controversy. Where a defendant asks a plaintiff to stipulate that the damages are below the § 1332 jurisdictional amount and the plaintiff refuses, the case cannot be removed based solely on this refusal. Davis v. BASF Corp., No. CIV. 03-40198, 2003 WL 23018906, at *2 (E.D.Mich. Nov 24, 2003). Because defendant Winn-Dixie has failed to satisfy its burden, the case will be REMANDED to the Chancery Court of Hamilton County, Tennessee.
In addition to remand, plaintiffs seek to recover attorney's fees incurred for responding to the removal. [Court File No. 6]. 28 U.S.C. § 1447(c) provides in pertinent part: "An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." That removal was not warranted in this case does not necessarily mean that the plaintiffs must recover their attorney's fees. See Ahearn v. Charter Township of Bloomfield, No. 97-1187, 1998 WL 384558, at *2, n. 2 (6th Cir. June 18, 1998). This Court has discretion on this issue. Id. Defendant Winn-Dixie has a colorable argument for removal and the Court will not award attorney's fees to plaintiffs under § 1447(c). Id. at *2-3.
An order will enter GRANTING the plaintiffs' motion insofar as it seeks to remand this case for lack of subject matter jurisdiction, and DENYING the plaintiffs' motion to the extent it seeks recovery of attorney's fees under 28 U.S.C. § 1447(c).
ORDER
In accordance with the accompanying memorandum, the plaintiffs' motion to remand [Court File No. 6] is GRANTED. This cause of action is hereby REMANDED to the Chancery Court of Hamilton County, Tennessee.
SO ORDERED.