Commercial Litigation and Arbitration

Removal — When Does a State Court Complaint that Fails to Recite a Damages Number over $75,000 Trigger § 1446(b)’s 30-Day Period? Caselaw Split

Napier v. Humana Marketpoint, Inc., 2011 U.S. Dist. LEXIS 139114 (N.D. Tex. Dec. 1, 2011):

In Chapman [v. Powermatic, Inc., 939 F.2d 160], the Fifth Circuit held that a plaintiff's original complaint triggers 28 U.S.C. § 1446(b)'s thirty-day clock "only when [the] pleading affirmatively reveals on its face that the plaintiff is seeking damages in excess of the minimum jurisdictional amount of the federal court." Id. at 163. Though Chapman purported to establish a "bright-line" rule for removal on the basis of an initial pleading that does not specify numerical damages, district courts in this Circuit have split in their application of Chapman. See, e.g., Capturion Network, LLC v. Daktronics, Inc., No. 2:08cv232-KS-MTP, 2009 U.S. Dist. LEXIS 49171, at *8-10 (S.D. Miss. 2009) (explaining the split in district court opinions); cf. Charles A. Carlson, Removal to Federal Court on the Basis of Diversity Jurisdiction: The "Amount in Controversy" Controversy, 69 FLA. B.J. 77, 78 (Oct. 1995) ("Courts and lawyers have struggled with the question of whether the removability of a case can be 'ascertained,' and, if so, when. Describing the case law in this area as 'unsettled' is an understatement."). Some district courts have interpreted Chapman as holding that an initial pleading triggers section 1446(b)'s removal period only when that pleading explicitly states — either numerically or in so many words — that the amount in controversy satisfies the federal jurisdictional requirement. See, e.g., Grooms v. Saint, No. 1:10CV175-A-D, 2010 U.S. Dist. LEXIS 128099, at *4-12 (N.D. Miss. 2010); Capturion, 2009 U.S. Dist. LEXIS 49171, at *10-20; Staton v. Wells Fargo Bank, N.A., 192 F. Supp. 2d 681, 683-84 (N.D. Tex. 2002) (Lynn, J.); Freeman v. Witco Corp., 984 F.Supp. 443, 446-47 (E.D. La. 1997).

However, the majority of district courts in this Circuit construe Chapman as holding that the defendant's receipt of an initial pleading triggers the removal period even when the pleading does not specifically recount numerical damages. See, e.g., Borquez, 2010 U.S. Dist. LEXIS 23129, at *12-15; Carleton v. CRC Indus., Inc., 49 F. Supp. 2d 961, 963 (S.D. Tex. 1999); see also Capturion, 2009 U.S. Dist. LEXIS 49171, at *9-10 (noting that the larger contingent of district courts follow the latter approach and collecting cases); Salomon, 2010 U.S. Dist. LEXIS 61755, at *10-11 (explaining that a majority of district courts in the Fifth Circuit follow the latter approach). These courts reason that "Chapman's bright line rule should not be treated as a 'head in the sand' rule." Capturion, 2009 U.S. Dist. LEXIS 49171, at *10. Thus, if the nature of a plaintiff's claims as described in the initial pleading would "place a reasonable defendant on notice" that the amount in controversy exceeds the jurisdictional minimum, the initial pleading provides for removal and starts section 1446(b)'s removal period.

Footnote 2. Put another way, "the Chapman 'bright line rule' is simply an attempt to avoid an inquiry into 'what the defendant knew at the time it received the initial pleading and what the defendant would have known had it exercised due diligence.'" Salomon, 2010 U.S. Dist. LEXIS 61755, at *11. The "prevailing view" then, "merely requires that a state court complaint be sufficiently definite on its face to enable defendants to ascertain removability without reliance on speculation or conjecture." Id. at *11-12 (citations omitted).

Id. The Court agrees with the majority. Accordingly, it looks to whether the face of Napier's Original Petition would have put a reasonable defendant on notice that the amount in controversy exceeded $75,000.

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