Federal Jurisdiction — Diversity — Measuring the Value of Sought Injunctive Relief — Circuit Split — Statutory Claim for Attorney’s Fees May Be Considered for Amount in Controversy Purposes

Heartland of Urban, OH, LLC v. McHugh Fuller Law Grp., PLLC, 2015 U.S. Dist. LEXIS 46059 (S.D. Ohio April 8, 2015):

This matter is before the Court on Plaintiff's Motion for Remand. Doc. # 6. The action was originally filed in the Champaign County Court of Common Pleas. On January 6, 2015 , Defendant removed the action to this Court on grounds of diversity jurisdiction. For the reasons set forth below, the Court finds that the amount-in-controversy requirement is not satisfied; therefore, the motion is SUSTAINED.

I. Background and Procedural History

Plaintiff Heartland of Urbana OH, LLC, filed this action against Defendant McHugh Fuller Law Group, PLLC, in the Champaign County Court of Common Pleas on December 23, 2014. Doc. #1-1. Plaintiff is a skilled nursing facility with [*2]  its principal place of business in Urbana, Ohio. Defendant is a law firm with its principal place of business in Hattiesburg, Mississippi.

Plaintiff asserts claims for violations of the Ohio Deceptive Trade Practices Act, libel, libel per se, and false light invasion of privacy. Plaintiff alleges that Defendant placed false and deceptive advertisements in the Urbana Daily Citizen newspaper and an identical digital advertisement on Urbana Daily Citizen's website. The advertisement states, "[t]he government has cited Heartland of Urbana Nursing and Rehabilitation Center for failing to provide necessary care and services to maintain the highest well-being of each resident." .... Plaintiff claims, among other things, that the advertisements are false and misleading because they " fail[] to disclose that any alleged deficiency of the sort quoted in the advertisement in fact did not cause harm to any nursing home patient, or that [Plaintiff] corrected and removed the alleged deficiencies . . . ." ....

Plaintiff asserts that the advertisements have caused, and will continue to cause, irreparable reputational and stigmatic harm within the community and the skilled nursing [*3]  industry, loss of business opportunities, loss of contractual and business relationships, as well as immediate and irreparable harm to its goodwill. Plaintiff's complaint seeks injunctive relief and attorney's fees, but does not request monetary damages. Plaintiff also filed a Motion for Temporary Restraining Order ("TRO"), which the state court granted on December 24, 2014, enjoining further publication of the advertisement in print and internet forms. .... Subsequently, the parties stipulated to continue the TRO until a court of competent jurisdiction could hear Plaintiff's application for a preliminary injunction. Doc. #5.

On January 6, 2015, Defendant filed a Notice of Removal in this Court. Doc. #1. On January 13, 2015, Plaintiff filed a Motion for Remand to the Champaign County Court of Common Pleas. Doc. #6. The parties then filed memoranda in opposition to, and in support of, Plaintiff's Motion for Remand. Docs. ##8-9, 12, 21-22.


II. Legal Standard for Removal Jurisdiction

Federal courts are courts of limited jurisdiction; they possess only that power authorized by the Constitution and by statute. Everett v. Verizon Wireless, inc., 460 F.3d 818, 821 (6th Cir. 2006) (citing Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 552 (2005)). Pursuant to [*4]  28 U.S.C. § 1441, a defendant is authorized to remove "civil actions from state court to federal court when the action initiated in state court could have been brought, originally, in a federal district court." Id. (quoting Lincoln Prop. Co. v. Roche, 546 U.S. 81, 83 (2005)).

One such avenue to bring a claim in federal court is 28 U.S.C. § 1332(a), which grants federal courts original jurisdiction over actions between citizens of different states when the amount in controversy exceeds $75,000. However, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). Moreover, "[a] federal court must resolve any doubt concerning the propriety of removal in favor of state court jurisdiction." Heartland of Portsmouth OH, LLC v. McHugh Fuller Law Group, PLLC, Case No. 1:15-cv-007, 2015 U.S. Dist. LEXIS 19780, at *2 (S.D. Ohio Feb. 19, 2015).

If an action is originally filed in state court, a defendant may remove the case to federal court and invoke federal jurisdiction by filing a notice of removal "containing a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a). If the plaintiff's state court complaint demanded monetary relief, "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy" for purposes of determining [*5]  federal jurisdiction. 28 U.S.C. § 1446(c)(2). However, where the plaintiff's state court complaint seeks nonmonetary relief, such as injunctive relief, the defendant's notice of removal may assert the amount in controversy. 28 U.S.C. § 1446(c)(2)(A)(i).

The statutory requirement that the defendant must file a notice of removal "containing a short and plain statement of the grounds for removal" purposely "tracks the general pleading requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure." Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 553 (2014). Thus, pursuant to section 1446(a), "a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold." Id. at 554. If the defendant's amount-in-controversy allegation is not contested by the plaintiff or questioned by the court, it should be accepted. Id. at 553. Conversely, if it is contested or questioned, it should be accepted only "if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds" the jurisdictional threshold of $75,000. 28 U.S.C. § 1446(c)(2)(B). See also Dart Cherokee, 135 S. Ct. at 553-54 (explaining that this provision, as amended by the Federal Courts Jurisdiction and Venue Clarification Act of 20 11 , "clarifies the procedure in order when a defendant's assertion of the amount in controversy is challenged").

The party invoking [*6]  federal jurisdiction--in this case, Defendant--has the burden of demonstrating by competent proof that the amount-in-controversy requirement is met. Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010). Accordingly, Defendant bears the burden of proving, by a preponderance of the evidence, that the amount in controversy exceeds $75,000 since Plaintiff has challenged the amount alleged in Defendant's Notice of Removal. See 28 U.S.C. § 1446(c)(2)(B); Dart Cherokee, 135 S. Ct. at 553-54. Although the "defendant do[es] not need to prove to a legal certainty that the amount in controversy requirement has been met[,] . . . the district court must make findings of jurisdictional fact to which the preponderance standard applies." Dart Cherokee, 135 S. Ct. at 554 (quoting H.R. Rep. No. 112-10, p. 16 (2011)).

It is well established that in actions seeking injunctive relief, "the amount of controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). The Court of Appeals for the Sixth Circuit has recognized that "there is a circuit split as to whether a court may determine the amount in controversy from the perspective of either party (the 'either viewpoint rule') or whether a court may only consider the plaintiff's view point." Everett, 460 F.3d at 829 (quoting Olden v. LaFarge Corp., 383 F.3d 495, 502 n.1 (6th Cir. 2004)). The Sixth Circuit has not yet decided this issue.

If the value is measured from the perspective [*7]  of the defendant, the court must determine the "expected cost to the defendant of complying with the injunction which the plaintiffs seek." Olden, 383 F.3d at 502 n.1. On the other hand, if the value is measured from the perspective of the plaintiff, the court must determine the "value of the right that the plaintiff seeks to protect or the extent of the injury to be prevented." Mclntire v. Ford Motor Co., 142 F. Supp. 2d 911, 920 (S.D. Ohio 2001) (citing Goldsmith v. Sutherland, 426 F.2d 1395, 1398 (6th Cir. 1970)).

As a general rule, reasonable attorney's fees may be included in determining the amount in controversy, when allowed by statute. Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 376 (6th Cir. 2007). See also Clark v. Nat. Travelers Life Ins. Co., 518 F.2d 1167, 1168 (6th Cir. 1975) ("It is settled that the statutory penalty and a statutory attorney's fee can be considered in determining whether the jurisdictional amount is met").

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