In the past, defense lawyers frequently found themselves hamstrung in their efforts to remove State Court cases to Federal Court based upon diversity jurisdiction. While complaints filed in State Court often allege the citizenship of the parties, they frequently do not specifically identify the amount in controversy, often simply alleging an amount in excess of the State Court’s jurisdictional limit. How many times have you seen or typed the following allegation: “The amount in controversy exceeds $15,000 exclusive of costs, interest and attorneys’ fees.”? Faced with allegations like this one, defense counsel were frequently prevented from removing cases to Federal Court and were forced to litigate cases in State Court.
Congress recently addressed this issue, among others, by its enactment of the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (the “Act”). Among other things, Section 103 of the Act amends 28 U.S.C. §1446(c) to allow removal based upon diversity jurisdiction when the amount in controversy exceeds $75,000 based upon either:
- The amount “demanded in good faith in the initial pleading;”
- The amount in controversy as asserted in the notice of removal if the initial pleading seeks monetary relief; or
- The amount in controversy as asserted in the notice of removal if “State practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded.”
When removal is based upon an amount in controversy set forth in the notice of removal, removal is proper “if the district court finds, by a preponderance of the evidence, that the amount in controversy exceeds” $75,000.
This new rule went into effect on January 6, 2012. Defense counsel looking to remove cases to Federal Court based upon diversity jurisdiction should be aware that they are no longer constrained by vague allegations in a complaint as to the amount in controversy.