Commercial Litigation and Arbitration

Removal — If Complaint Seeks Nonmonetary Relief, Notice of Removal Need Only Plausibly Allege That Amount in Controversy Exceeds $75,000 — Valuing Injunctive Relief from Plaintiff’s vs. Defendant’s Viewpoint (Circuit Split)

Heartland Mt. Airy of Cincinnati OH., LLC v. Johnson, 2015 U.S. Dist. LEXIS 18688 (S.D. Ohio Feb. 17, 2015):

Federal courts have jurisdiction over actions between citizens of different states when the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). When a plaintiff invokes federal jurisdiction by filing an action in federal court, the amount-in-controversy allegation is accepted if made in good faith. Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 553 (2014). 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 [*4]  for removal." 28 U.S.C. § 1446(a). If the plaintiff's state court complaint demanded a specific amount of monetary damages, "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy" for purposes of determining jurisdiction. 28 U.S.C. § 1446(c)(2). When the plaintiff's complaint seeks nonmonetary relief, the defendant's notice of removal may state the amount in controversy. § 1446(c)(2)(A)(i).

The statutory language in § 1446(a) that the defendant must file a notice of removal "containing a short and plain statement of the grounds for removal" purposefully "tracks the general pleading requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure." Dart Cherokee, 135 S. Ct. at 553. Just as a federal court should accept a plaintiff's good faith allegation of the amount in controversy, the removal statute instructs that "a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold." Id. at 554. Accordingly, a removing "defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court." Id. at 553.

The Federal Courts Jurisdiction and Venue Clarification Act of 2011 amended § 1446 and "clarifies the procedure in order when a defendant's assertion of the amount in [*5]  controversy is challenged." Dart Cherokee, 135 S. Ct. at 553. Section 1446(c)(2)(B) provides that "removal of the action is proper on the basis of an amount in controversy asserted" in the notice of removal "if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds" $75,000. 28 U.S.C. § 1446(c)(2)(B); Dart Cherokee, 135 S. Ct. at 553-54.

When the defendant's amount-in-controversy allegation is challenged, "[e]vidence establishing the amount is required by § 1446(c)(2)(B)" and "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been met." Dart Cherokee, 135 S. Ct. at 553-54. The statutory amendments clarify that "defendants do not need to prove to a legal certainty that the amount in controversy requirement has been met," but when the amount in controversy is disputed "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, at 16 (2011)).

"The burden of persuasion for establishing diversity jurisdiction . . . remains on the party asserting it" and "[w]hen challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof." Hertz Corp. v. Friend, 559 U.S. 77, 96-97 (2010). When federal jurisdiction [*6]  is invoked by the filing of a notice of removal, it is the defendant who bears "the burden of demonstrating by competent proof that the complete-diversity and amount-in-controversy requirements are met." Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th Cir. 2010).

Accordingly, the defendant bears the burden of proof by a preponderance of the evidence that the amount in controversy exceeds $75,000 when the plaintiff challenges the amount alleged in the notice of removal. 28 U.S.C. § 1446(c)(2)(B); Dart Cherokee, 135 S. Ct. at 553-54.2

In actions seeking injunctive relief, "the amount in 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 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 viewpoint." Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006) (quoting Olden v. LaFarge Corp., 383 F.3d 495, 503 n.1 (6th Cir. 2004)). If the value is measured from the perspective 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 503 n.1. The value of injunctive relief from the plaintiff's viewpoint is "the value of the right to be protected or the extent of the injury to be prevented." Reusser v. Saxon Mortgage Servs., Inc., No. 2:12-cv-87, 2012 WL 3241973, at *3 (S.D. Ohio Aug. 3, 2012) (quoting Goldsmith v. Sutherland, 426 F.2d 1395, 1398 (6th Cir. 1970)). Reasonable attorney's fees may be included in determining the amount in controversy when allowed by statute. Charvat v. GVN Mich., Inc., 561 F.3d 623, 630 n.5 (6th Cir. 2009).

See also H.R. Rep. 112-10, [*7]  at 16 ("If the defendant establishes by a preponderance of the evidence that the amount exceeds $75,000, the defendant, as proponent of Federal jurisdiction, will have met the burden of establishing jurisdictional facts.").


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